LOCAL ROOTS, GLOBAL REACH From its humble roots in the Windward Islands, Winfresh is diversifying and branching out into the global marketplace. Following its re-branding last year, the Winfresh Group is on the verge of launching a range of new products. This will not take the Group away from its traditional banana base but, instead, will strengthen its product base to allow it to grow with confidence. As a supplier and manufacturer of food products, the Group has deliberately chosen products that appeal to consumers growing awareness of the wholesomeness of the food and food products they consume. The aim of the Group is to bring all natural healthful food and food products to consumers in the Caribbean and globally. This year’s annual report projects the “new” outlook of the company as it sets out on a Global path while maintaining its Local Roots.
Our Values, Our Promise.... • • • • • • •
All natural, fresh and wholesome products to the consumer; Efficient competitive services and products to our customers; Fair deals to all our suppliers and sensitivity; Care for the needs of our employees; Sensitivity for the concerns of all stakeholders; Sustainable growth in value for our shareholders; Promotion of a diversified, dynamic and sustainable agricultural sector for the Windward Islands.
1
CONTENTS Corporate Profile 03 Chairman’s Statement 05 Board of Directors 06 Directors Report 07 Management Team 10 Financial Highlights 11 Winfresh Family 14 Financial Report 18
2
CORPORATE PROFILE MISSION STATEMENT To serve our customers with high quality differentiated products and services at a just price and to return fair prices to our suppliers and 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 in providing products and services to our customers. INCORPORATION These financial statements include the financial statements of Winfresh Limited (“Winfresh”) and its wholly-owned subsidiary, Winfresh (UK) Limited, (“Winfresh UK”). Both companies were incorporated in 1994. Winfresh was incorporated under the laws of Saint Lucia and continued under the Company’s Act, 1996, while Winfresh UK was incorporated under the Companies Act, 1985 of England and Wales. THE WINFRESH GROUP The Winfresh Group comprises Winfresh, Winfresh UK and associated companies: Windward Isles Banana Company (UK) Limited, Windward Isles Banana Company Holdings (Jersey) Limited, Winfruit Limited and Lauders Agro Processors Inc. 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 Banana Corporation (“SLBC”), Dominica Banana Holding Company (“DBHC”); St Vincent Banana Growers’ Association (“SVBGA”) and the Grenada Banana Co-operative Society (“GBCS”). SVBGA and GBCS have been dissolved and the shares held by them are to be transferred in accordance with the provisions of the Shareholders’ Agreement. GROUP DIRECTORS
Montgomery Daniel - Chairman Cecil Ryan Vanoulst Jno Charles Deles Warrington Peter Josie Elias Amorsingh—February 2010 Ferron Lowe Gemma Bain-Thomas Bernard Cornibert (Winfresh UK only) Martina Edwin (Winfresh UK only)
GROUP EXECUTIVES
Bernard Cornibert Martina Edwin Trelford A E Douglas Roy Hugh Phil Collins Ashley James Errol Reid Eardley Barrett
LOCAL ROOTS,
Chief Executive Company Secretary Finance Director Sales & Marketing Director Procurement Director Operations Director Technical Director Caribbean Business Development Director
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CORPORATE PROFILE (cont’d) 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 BUSINESS ADDRESSES Winfresh 1st Floor • M&C Building • Bridge Street • P O Box 115 • Castries • Saint Lucia WI Telephone +1 758 457-8600 Fax +1 758 453-1638 Winfresh UK 3700 Parkway • Whiteley • Fareham • P015 7AL • United Kingdom Telephone +44 (0) 1489 587 570 Fax +44 (0) 1489 587 588 E-Mail info@wnfresh.net Web www.winfresh.net AUDITORS
PriceWaterhouseCoopers Pointe Seraphine • P O Box 195 • Castries • Saint Lucia WI
J M Shah & Company 3rd Floor • 24 Old Bond Street • London •W1S 4AP • United Kingdom
BANKERS
Bank of St Lucia Bridge Street • P O Box 1031 • Castries • Saint Lucia WI
Allied Irish Bank (AIB) 12 Old Jewry • London •EC2R 8DP • United Kingdom
Barclays Bank Plc 50 Pall Mall • London • SW1Y 5AX • United Kingdom
SOLICITORS
Crown Agents Bank St. Nicholas House • Sutton • Surrey • SM1 1EL • United Kingdom 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
4 LOCAL ROOTS,
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CHAIRMAN’S STATeMeNT
T
he last three years have been difficult for the Winfresh Group for a number of reasons and the period under review was no different. Indeed, the banana business, which remains as the Group’s core business, is becoming increasingly challenging. However, notwithstanding the relentless difficulties, the Group’s result for the period has shown a significant improvement over that of the previous period. While it is by no means an unqualified success in absolute terms, judging from where the Group had come in the previous year, we are pleased with the turnaround. The earnings of the Group remain exposed to the risks associated with the movements in the GBP-USD exchange rate, in fuel costs and the high cost and unreliability of supplies from the Windward Islands. However, the Group will do everything necessary and possible to limit the exposure and mitigate the impact of those risks. The performance of the Group will continue to fluctuate from one period to the next and the period immediately ahead is already proving difficult for certain key members of the Group and to a less extent for the Group’s core banana business. However, we are undaunted by these swings in fortunes and the Group will forge ahead with its business development and diversification plans. Indeed, the long term objective of the Group is to smooth these fluctuations by spreading the risks across a wider range of business activities and products.
We are particularly disappointed that while banana production in the Windward Islands has been declining, there has been no significant increase in the production of other crops, despite very clear signals from Winfresh of its interest in a range of non-banana crops. While the Winfresh Group will not limit its sources of supplies to the Windward Islands, the Group will continue to provide support and give priority to supplies from the Windward Islands based on commercial realism. The Group has made and continues to make some strategic investments in food processing in the Windward Islands not only to assist in the diversification of the agricultural sector but also to bring home the commercial realities of agricultural production. We will not look backwards except to avoid the mistakes of the past. Instead, we will continually look forward, anticipating the difficulties ahead and planning decidedly for a successful future for the Winfresh Group, its shareholders and other stakeholders. We are confident that the Group is on a path to sustainable growth and we hope that all will join Winfresh on its journey and share in the benefits of its success.
Montgomery Daniel CHAIRMAN
The continuing decline of banana production in the Windward Islands is a matter of serious concern to the Winfresh Group because the Windwards product remains a significant part of the Group’s banana offer. However, we recognise that the Windwards banana industry needs an urgent makeover if the decline is to be halted and the industry itself were to survive the challenging years ahead. Winfresh is ready to play its part in that overhaul provided that the changes are driven by the commercial realities of the market. The reduction in the EU import tariff on Dollar banana is undoubtedly damaging for the banana industry of the Windward Islands. Notwithstanding that, Winfresh is confident that a streamlined banana industry, along the lines it has proposed to the stakeholders, can survive and will continue to have a place in the market. LOCAL ROOTS,
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BOARD OF DIRECTORS
MONTGOMERy DANIEL
PETER JOSIE
CECIL RyAN
FERRON LOWE
Chairman
Director
Director
Director
St Vincent & The Grenadines VANOULST JNO CHARLES
Saint Lucia GEMMA BAIN-THOMAS
St Vincent & The Grenadines DELES WARRINGTON
Grenada
Director
Director
Director
Dominica
Grenada
Dominica
LOCAL ROOTS,
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Elias Amorsingh
Director Saint Lucia
DIRECTORS’ REPORT The Directors present their report and consolidated financial statements, in Eastern Caribbean Dollars (XCD), for the Winfresh Group for the period ended 2 January 2010. 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 Gregory Avril Ferron Lowe Gemma Bain-Thomas Bernard Cornibert—Winfresh UK only Martina Edwin—Winfresh UK only Resignations during the Year Gregory Avril —December 2009
The Directors do not recommend payment of a dividend for the period. REVIEW OF BUSINESS During the period under review, the Group was faced with most of the same challenges of the immediate past periods; erratic movement in supplies, continuing cost inflation and instability in the value of the Pound Sterling and deflationary market prices. Above all, the global economic slowdown engendered by the banking crisis undermined consumer confidence. This had a negative impact on the market which saw consumers trading down and purchasing low quality “value” products at discounted prices. However, notwithstanding the predictable difficulties of the first half of the trading calendar, the Group recovered to a relatively comfortable position by the end of the year. This was due largely to the improvement in the Sterling/Dollar exchange, which resulted in some recovery in the cost of sales as well as recovery of some of the 2008 foreign exchange losses on the value of the Company’s investments.
PRINCIPAL ACTIVITIES The principal activities of the Winfresh Group for the period under review were the importation, marketing and distribution of bananas and fresh produce. RESULTS AND DIVIDENDS The Group’s results for the period are set out in the Income Statement. The result after taxation was a profit of $11.2 million, compared to a loss of $19.0 million in the previous year. The factors that contributed to the $30.0 million turnaround were: (a) slightly better results from banana trading ($2.4 million), (b) gains in foreign exchange ($20.3 million) and (c) dividend and other income ($12.0 million). However, the overall improvement of $34.7 million in those areas was moderated by the drop in the Group’s share of profit in joint ventures. The movement in the results again demonstrates the different and fluctuating circumstances facing the companies within the Group, particularly their exposure to fluctuations in the Sterling/Dollar exchange rate.
LOCAL ROOTS,
The total volume of bananas purchased by the Group was marginally (3.5%) higher in the period under review compared to the previous period. However, average product cost in Pound Sterling was 20% higher compared to the previous period, the result of the fall in the Sterling/Dollar for the period as a whole. Sales revenue increased by 7.0% compared to the previous period, but this was more or less offset by the 6.9 % increase in the goods cost of sales. The increases in total and average sales revenue were the result of changes in product mix rather than any significant upward movement in market prices, which still lagged behind the increase in the Sterling product costs. In the period under review, the volume of bananas imported from the Windward Islands accounted for 54% of the Group’s total purchase, compared to 60% in the previous period. Overall, the Windwards volume fell by 8% and there was a significant shift to the Dominican Republic and other sources.
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DIRECTORS’ REPORT The volume of imports from non-Caribbean ACP sources fell in the period under review to 4% from 6% in the previous period. The reduction in imports by the Group from nonACP sources also resulted in a reduction in the total value of import duty paid by the Group. Banana imports from the ACP countries enjoy unlimited duty-free entry into the EU market. The Group remained one of the largest suppliers of Fairtrade bananas in the UK market. The volume and value of Fairtrade sales grew by 4.0% and 23.8 % respectively and accounted for 89.5% of total sales in the period under review (84.7% in the previous period). The amount paid by the Group in Fairtrade licence and Social premium increased by 20.8%. The Group continued with its programmes aimed at costs control and improving operational efficiency. While success has been achieved in some areas, others have proved more difficult, particularly those that involve high fuel energy usage. For example average distribution (transportation) cost increased by 31% in the period under review compared to the previous period. Once again, the performance of the Group in the period under review demonstrated the risk to the business of the heavy reliance on supplies from the Caribbean sources and in particularly the Windward Islands, and the exposure to fluctuations in the Sterling/Dollar exchange rate and fuel prices. During the period under review, the Group registered and successfully launched its new brand. The new Winfresh brand was intended to launch the Group into a new era of product development and diversification. However, there was the undeniable realism that this was not going to happen overnight and that it would take time before any new product was rolled out. Therefore, notwithstanding the rebranding and the promotion of the Group as a multi-product distributor, bananas still accounted for virtually 100% of the Group’s total turnover in the period under review. The Group acquired a fruit processing plant in La Sagesse, Grenada. The plant has the capacity to pulp a variety of tropical fruits and to process them into premium juices and jams.
LOCAL ROOTS,
88
REVIEW OF FUTURE DEVELOPMENTS The issue of the tariff on banana imports into the EU from the Most Favoured Nations (MFN) suppliers has now been resolved but the solution is a matter of concern to the Directors. The initial reduction from the €176 to €148 per tonne took effect from 15 December 2009 but has not been implemented. The directors remain deeply concerned about the likely negative impact of the initial cut on the competitiveness of supplies from the Group’s principal Caribbean sources. The EU Commission has proposed an adjustment package of €190 million to assist the ACP suppliers in adopting measures to improve their competitiveness and adapt to the changing market conditions. However, the Directors are concerned that the timing of the delivery of this assistance may not permit the necessary adjustments to be made in the banana industry in the Windward Islands to mitigate the impact of the initial tariff cut. More worryingly, the tariff reduction is taking place against the backdrop of a widening of the gap between the cost price of the Windward Islands product and those of the other supplying countries that are currently subjected to the import tariff. Following a comprehensive price review in 2009, the Fairtrade labelling Organisation (FLO) announced acrossthe-board increases in the minimum prices to be paid for Fairtrade bananas. The new prices, which came into effect in January 2010, were intended to cover increases in the cost of production. However, the increase in the Windward Islands price was the largest, thereby widening the price gap between the Windwards product and those of their competitor suppliers. Given that the market does not discriminate with respect to the price of Fairtrade bananas, the Directors are particularly concerned that the new prices will place the Windwards product and the Group at a cost disadvantage in the market. The Group will seek to address this concern with all involved, including the customers and Windwards suppliers, but also FLO which is embarking on another review in 2010. The Group will continue to develop and expand its production facility at Stansted. This will include the extension of the
GLOBAL REACH
DIRECTORS’ REPORT floor space to allow the Group to install new banana ripening chambers, if necessary but also to add new food processing and manufacturing units. The extension will also provide for more office space to allow the Group to consolidate its general administration and operations on a single site, at Stansted, early in 2011. It will enable the Group to achieve some efficiency savings in administration and overheads.
The Group will start launching those products in 2010-2011, as production come on stream.
The Group, through Winfresh UK, will increase its shareholding in Winfruit Limited, (formerly Hummingbird International Limited) from 50% to 75%. Winfruit will be manufacturing a fruit based alternative to premium ice cream.
EMPLOYEES
While product development by Winfruit is ongoing, some products are market ready and will be rolled out in 2010 from batch production. Full large scale production is expected to commence at a purpose built production facility at Stansted once the expansion development is completed there. The Group is advanced negotiations National Properties Limited, the Joint Venture partner in Lauders Agro-processors Inc. to acquire more shares in the company. The plan is for the Group to hold at least 60% of the shares in the company and to integrate the management of the company within that of the Winfresh Group. A decision has already been taken to rename the company Vincyfresh Limited and to market all its products under the Winfresh brand. The Group has also acquired a 65% stake in a St Lucia based water and beverage production company, Sunfresh Limited. The other 35% of the shares is held by Sunsmart Beverages Inc. As with the Vincyfresh products, the Sunfresh products will be marketed with Winfresh as the primary brand.
DIRECTORS AND THEIR INTERESTS None of the Directors who served during the period had any beneficial interests in shares in the company.
The Winfresh Group operates a policy of non-discrimination and equal opportunity for all of its employees. The Group is committed to ensuring that all matters of significant interest to the employees are communicated to them through regular management meetings and briefings at departmental levels, where they are consulted. AUDIT INFORMATION The Directors have taken all steps 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 such information. So far as they are aware, there is no relevant audit information of which the Group’s auditors are unaware By the Order of the Board
MARTINA EDWIN COMPANY SECRETARY Approved by the Directors on 16 September 2010
Sunfresh, Winfruit and the Group’s La Sagesse fruit processing plant will complement each other both in product development and production and sourcing of raw materials for finished products. The Group will exploit all areas of synergy and rationalization that can be realized within the Group to maximize cost savings and efficiency. While Vincyfresh will produce a range of products, initially, in the long term it will concentrate on the processing of root crops and vegetables.
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MANAGEMENT TEAM
01
02
03
04
05
06
07
08
01 05
BERNARD CORNIBERT
Group Chief Executive
ASHLEy JAMES
Operations Director (UK)
02 06
03
MARTINA EDWIN
Group Secretary & Personnel Director
PHILIP COLLINS
Procurement & UK Business Development Director
LOCAL ROOTS,
10
07
TRELFORD A E DOUGLAS
Group Finance Director
EARDLEy BARRETT
Caribbean Business Development Director
GLOBAL REACH
04 08
ROy HUGH
Sales & Marketing Director
DR ERROL REID
Technical Director & Officer in Charge (WI)
FINANCIAL HIGHLIGHTS Financial Highlights Changes in Shareholders’ Equity 200.0
$ Millions
150.0
100.0
50.0
0.0
00
01
02
03
04
05
06
07
08
09
Year-on-year increase: $23.287 (15.8%)
Changes in Retained Earnings 200.0
$ Millions
150.0
100.0
50.0
0.0
00
01
02
03
04
05
06
07
08
Year-on-year increase: $11.218 (7.6%) LOCAL ROOTS,
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09
FINANCIAL HIGHLIGHTS Changes In Long Term Debt
30.0
Changes In Long Term Debt
$Million$Million
25.0 30.0 20.0 25.0 15.0 20.0 10.0 15.0 5.0 10.0
0.0 5.0 00
01
02
03
04
05
06
07
08
09
0.0
00
01
02
03
04
05
06
07
Year-on-year increase:$0.00 (0.0%)
08
09
Year-on-year increase:$0.00 (0.0%) Changes In Working Capital 60.0
Changes In Working Capital
$Million$Million
40.0 60.0 20.0 40.0 0.0 20.0
(20.0) 0.0 (40.0) (20.0)
00
01
02
03
04
05
06
07
08
09
(40.0)
00 01 02 03 04 05 06 07 08 Year-on-year increase: $2.885 (-6.9%)
Year-on-year increase: $2.885 (-6.9%) 12 12 LOCAL ROOTS,
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09
FINANCIAL HIGHLIGHTS Changes in Year-end Cash Balance 40.0
$ Million
30.0 20.0 10.0
0.0 (10.0)
00
01
02
03
04
05
06
07
08
09
Year-on-year increase: $ 1.517 (-7.7%)
Profit & Loss 80.0 60.0
$ Million
40.0 20.0 0.0 (20.0) (40.0)
00
01
02
03
04
05
06
07
08
09
Year-on-year increase:$30.507 (158.0%) LOCAL ROOTS,
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THE WINFRESH FAMILY
Naturally Fresh
LOCAL ROOTS,
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simply fruit in every scoop
A St Vincent based member of the Winfresh family, Vincyfresh, aims to be a premier food processing company specialising in Caribbean root crops and vegetables. Vincyfresh will be rolling out its products, which will include a number of convenient (frozen) food packs but, in particular, it is developing a range of crisps (chips) such as the Caribbean consumer has never experienced before.
These crisps will be produced homestyle from well-known Caribbean root crops and vegetables with all natural ingredients delivered in a variety of mouth-watering flavours. Vincyfresh understands that time is precious but being time-poor need not determine what one eats or affect the quality of the food one eats. That is why Vincyfresh has developed its
range of wholesome convenience food packs comprising crops grown under the Caribbean sunlight and specially packaged to lock in their natural goodness, allowing anyone to save on preparation time without compromising on the goodness of the food. Vincyfresh sources and processes the best fresh produce through its network of producers. These are prepared and packaged - while still fresh - in innovative ways so that preparation of healthful, nutritious and delicious meals can be as fast as a call for delivery or a trip to the nearest fast food restaurant. Fresh, natural and easy! That’s the Winfresh Family way.
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Naturally Fresh Sunfresh, now part of the Winfresh family, will maintain the tradition of delivering natural freshness to the consumer through a variety of fruit juices and drinks using only natural ingredients. The aim of Sunfresh is to source all
of its supplies locally, through the Winfresh family network of producers. At Sunfresh we believe that local is not only what we grew on and learnt to enjoy but that local is also fresh and nutritious . That is why Sunfresh will deliver the juices and drinks from the
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fruits that you know well and love so much. Natural and fresh—that’s Sunfresh! Another proud member of the Winfresh family
simply fruit in every scoop Another member of the Winfresh family, Winfruit, has developed an innovative and unique food product which we name, “fruitful”. Fruitful is a dairy-free, low fat frozen dessert produced from careful blending of fruit. It offers a healthy alternative to frozen desserts for a variety of health conditions and life-style choices and it is delicious.
• No gluten, soya, rice, oats or any grain products; • Less than 1% fat content; • No added fat, colouring, or sodium; • Low in cholesterol; • All ingredients are naturally sourced;
As a “guilt-free” alternative to ice cream for the health conscious, fruitful has the following attributes:
Fruitful has the texture and appearance of ice cream but is suitable for: • The weight conscious; • Gluten and Lactose intolerances; • Vegans and Vegetarians ... And everyone who enjoys a fresh fruit taste.
• Minimum of 75% fruit content; • No dairy or lactose;
Fruitful is now manufactured in the United Kingdom but, eventually, the
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aim of Winfruit is to manufacture the product as close as possible to the fruit source. This will be both cost-effective and create opportunities and jobs for farmers and others in the farming communities where the fruits are produced. This will not only ensure freshness, it will save farmers money through reduction in the high level of wastage that is often associated with the cosmetic quality requirements of exporting fresh produce. Another great natural and healthful product from the Winfresh Family!
Winfresh Snacks Winfresh will soon be rolling out its brand of snack foods, including cassava products. The Winfresh family is investing in technology and processes to create wholesome and tasteful snacks from fresh Caribbean produce.
At Winfresh, we believe that snack foods can be healthy and so it is our aim to deliver healthful snacks utilising local suppliers of the kind of foods you trust and love.
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If it’s fresh, all natural and tasty, then it must be from the Winfresh family! Look out for the Winfresh label - the symbol of wholesome quality.
FINANCIALS
19
PriceWaterhouseCoopers Pointe Seraphine P.O.Box 195 Castries St. Lucia, West Indies Telephone (758) 456-2600 Facsimile (758) 452-1061
September 29 2010 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 January 2, 2010 and the consolidated statements of 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 conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as of January 2, 2010 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.
Chartered Accountants
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Consolidated Balance Sheet as of January 2, 2010 (expressed in Eastern Caribbean dollars)
January 2 2010 $
December 27 2008 $
Assets Current assets 19,805,777 1,184,919 29,988,247 12,936,103 5,790,183 256,179
21,064,684 1,147,023 23,525,702 14,087,022 6,660,603 116,034
Due from related parties (Note 9) Loan to related party (Note 9) Property, plant and equipment (Note 10) Investments in joint ventures and associate (Note 11)
69,961,408 890,307 – 29,774,475 100,994,537
66,601,068 1,082,557 10,620,524 4,656,461 89,127,690
Total assets
201,620,727
172,088,300
Bank overdraft (Note 5) Income tax payable Trade and other payables (Note 12) Dividend payable
1,636,338 213,938 29,116,484 –
1,378,218 248,144 21,095,371 2,000,000
Total liabilities
30,966,760
24,721,733
Share capital (Note 14) Contributed capital and reserves Currency translation reserve Retained earnings
20,000,000 336,908 (8,107,077) 158,424,136
20,000,000 363,486 (20,202,543) 147,205,624
Total equity
170,653,967
147,366,567
Total liabilities and equity
201,620,727
172,088,300
Cash and cash equivalents (Note 5) Held-to-maturity financial assets (Note 6) Trade and other receivables (Note 7) Inventories Due from related parties (Note 9) Deferred tax asset (Note 13)
Liabilities Current liabilities
Equity
Approved by the Board of Directors on September 16, 2010 Director
Director 21
Consolidated Statement of Income
For the year ended January 2, 2010 (expressed in Eastern Caribbean dollars)
January 2 2010 $
December 27 2008 $
Banana trading 270,508,073 (252,436,494)
252,775,404 (236,071,680)
18,071,579
16,703,724
(11,848,298) (14,381,888)
(13,907,088) (13,215,420)
(8,158,607)
(10,418,784)
4,432,857
(15,870,118)
13,075,516
1,132,691
Profit/(loss) before share of profit in joint ventures associates and income tax
9,349,766
(25,156,211)
Share of profit in joint ventures and associate (Note 11)
1,930,486
6,344,284
11,280,252
(18,811,927)
(82,718)
(226,978)
11,197,534
(19,038,905)
Sales Cost of goods sold
Profit from banana trading Distribution and selling Administrative and establishment
Other gains/(losses), net (Note 15) Other income (Note 16)
Profit/(loss) before income tax Income tax expense (Note 19)
Profit/(loss) for the year
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Consolidated Statement of Comprehensive Income For the year ended January 2, 2010 (expressed in Eastern Caribbean dollars)
January 2 2010 $
December 27 2008 $
Profit/(loss) for the year
11,197,534
(19,038,905)
Other comprehensive income Currency movement for the year
12,095,466
(20,644,815)
Total comprehensive income
23,293,000
(39,683,720)
23
Consolidated Statement of Changes in Equity
For the year ended January 2, 2010 (expressed in Eastern Caribbean dollars)
Share capital (Note 14) $
At December 29, 2007
Contributed capital and reserves $
20,000,000
395,888
Currency translation reserve $
Retained earnings $
Total $
442,272
168,212,127
189,050,287
Total comprehensive income: Profit for the year
–
–
–
(19,038,905)
(19,038,905)
Other comprehensive income: Currency translation movement
–
–
(20,644,815)
–
(20,644,815)
Total comprehensive income
–
–
(20,644,815)
(19,038,905)
(39,683,720)
Transactions with owner Dividends Transfer to reserves
– –
32,402
–
– –
(2,000,000) (32,402)
(2,000,000) –
At December 27, 2008
20,000,000
363,486
(20,202,543)
147,205,624
147,366,567
At December 27, 2008
20,000,000
363,486
(20,202,543)
147,205,624
147,366,567
Total comprehensive income: Profit for the year
–
–
–
11,191,934
11,191,934
Other comprehensive income: Currency translation movement
–
–
12,095,466
–
12,095,466
Total comprehensive income
–
–
12,095,466
11,191,934
23,287,400
Dividends Transfer to reserves
– –
26,578
–
– –
(2,000,000) (26,578)
(2,000,000) –
At January 2, 2010
20,000,000
336,908
(8,107,077)
158,424,136
170,653,967
LOCAL ROOTS,
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Consolidated Statement of Cash Flows For the year ended January 2, 2010 (expressed in Eastern Caribbean dollars)
January 2 2010 $
Cash flows from operating activities
December 27 2008 $
11,280,252
(18,811,927)
2,484,388 (1,878,616) (46,711) (75,237) (1,930,485) (10,896,025) 17,407
1,953,099 12,939,007 (5,826) (591,325) (6,344,284) – 2,721
1,045,027
(10,858,535)
Increase in trade and other receivables Decrease/(increase) in inventories Increase in trade and other payables Decrease in balance with related parties, net
(4,505,814) 2,188,939 10,168,512 1,062,670
(2,912,760) (6,263,225) 630,345 5,622,449
Cash generated from/(used in) operating activities Income tax paid Interest paid
7,869,280 (272,452) (17,407)
(13,781,726) (735,705) (2,721)
Net cash generated from/(used in) operating activities
7,579,421
(14,520,152)
Purchase of property, plant and equipment (Note 10) Investment in joint venture Interest received Dividend received Proceeds from disposal of property, plant and equipment
(27,356,459) (1,079,630) 37,341 10,896,025 91,166
(1,084,936) – 555,418
Net cash used in investing activities
(17,411,557)
(501,236)
(2,000,000) 10,315,109
– –
8,315,109
–
Net decrease in cash and cash equivalents Cash and cash equivalents, beginning of year
(1,517,027) 19,686,466
(15,021,388) 34,707,854
Cash and cash equivalents, end of year (Note 5)
18,169,439
19,686,466
Profit /(loss) before income tax Adjustments for: Depreciation (Note 10) Unrealised exchange (gains)/losses Gain on disposal of property, plant and equipment Interest income Share of profit in joint ventures and associate (Note 11) Dividend Income Finance costs Operating profit/(loss) before working capital changes
Cash flows from investing activities
Cash used in financing activities Dividends paid Loan for related party
Net cash generated from financing activities
25
28,282
Notes to Consolidated Financial Statements
January 2, 2010 (expressed in Eastern Caribbean dollars)
1
General information Incorporation These consolidated financial statements include the financial statements of Winfresh Limited (formerly Windward Islands Banana Development and Exporting Company Limited), (the Company) and its wholly-owned subsidiary, Winfresh UK Limited (formerly Windward Islands Banana Development & Exporting Company (UK) Limited). Both companies are private companies incorporated in 1994. WIBDECO 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 formerly undertaken by Windward Islands Banana Growers’ Association (“WINBAN”). On July 16, 2009 the registered name of the Company was changed to Winfresh Limited. WIBDECO (UK) was incorporated under the Companies Act, 1985 of the United Kingdom. The Company commenced trading in May 1994. On May 22, 2009 the registered name of the subsidiary company was changed to Winfresh (UK) Limited The Company’s registered office is located at 99 Chaussee Road, Castries, Saint Lucia. Principal activity The principal activity of the Group is the importation, marketing and distribution of bananas and fresh produce. Shareholdings The shareholders of the Company are the Governments of the four Windward Islands, Saint Lucia, Dominica, Saint Vincent and the Grenadines and Grenada and the banana grower associations (“BGAs”) of the four Windward Islands, St. Lucia Banana Growers’ Association (“SLBGA”), Dominica Banana Marketing Corporation (“DBMC”), St. Vincent Banana Growers’ Association (“SVBGA”) and Grenada Banana Co-operative Society (“GBCS”). The SLBGA was dissolved on October 1, 1998 and its operations taken over by the St. Lucia Banana Corporation (“SLBC”). The Company’s financial year represents a 52 week period ending January 2, 2010.
LOCAL ROOTS,
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GLOBAL REACH
Notes to Consolidated Financial Statements January 2, 2010 (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. Basis of preparation Winfresh Limited’s (formerly Windward Islands Banana Development and Exporting Company Limited) financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements have been prepared under the historical cost convention except for the revaluation of certain property, plant and equipment. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4. (a) Standard, amendment and interpretations effective and relevant to the Group The following standards, amendments to existing standards are mandatory for accounting periods beginning on or after January 1, 2009 and are relevant to the Group’s operations: •
IAS 1 (Revised), ‘Presentation of financial statements’, The revised standard prohibits the presentation of items of income and expenses (that is, ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ are to be presented separately from owner changes in equity. All non-owner changes in equity is required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). Where entities restate or reclassify comparative information, they are required to present a restated balance sheet as at the beginning comparative period in addition to the current requirement to present balance sheets at the end of the current period and comparative period. The company has selected the option to present two statements (the statement of income and statement of comprehensive income).
•
IAS 36 (Amendment), ‘Impairment of assets’ (effective from January 1, 2009). Where fair value less costs to sell is calculated on the basis of discounted cash flows, disclosures equivalent to those for value-in-use calculation should be made. The Group will apply the IAS 28 (Amendment) and provide the required disclosure where applicable for impairment tests from January 1, 2009.
•
IAS 37, ‘Provisions, contingent liabilities and contingent assets’, requires contingent liabilities to be disclosed, not recognised. IAS 19 has been amended to be consistent. The Group will apply the IAS 19 (Amendment) from January 1, 2009.
•
IFRS 3 (Revised), ‘Business combinations’ (effective from July 1, 2009). The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair vale or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed. The Group will apply IFRS 3 (Revised) prospectively to all business combinations from January 1, 2010. 27 27
Notes to Consolidated Financial Statements
January 2, 2010 (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued Consolidation (a) Subsidiaries Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the consolidated statement of income. Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries are consistent with the policies adopted by the Group. (b) Associates Associates are entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investment in associate is accounted for by the equity method of accounting and initially recognised at cost. The Group’s share of its associate’s post-acquisition profits or losses is recognised in the consolidated statement of income, and its share of post-acquisition movements in reserves recognised in reserves. The cumulative postacquisition 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. (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 impairment in the asset transferred.
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Notes to Consolidated Financial Statements January 2, 2010 (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies‌continued Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held with banks and bank overdrafts. Bank overdrafts are in current liabilities on the consolidated balance sheet. Investments The Group classifies its investments as loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of loans and receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to their original terms. Regular way purchases and sales of investments are recognised on trade-date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus, in the case of all financial assets not carried at fair value through profit and loss, 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 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 income. Inventories Inventories, which are comprised of shipments of bananas in transit, bananas held in storage in ripening centres 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 ripening centres. Cost for packaging materials is determined using the weighted average basis. Net realisable value for bananas represents the estimated sale proceeds net of any additional marketing and distribution costs in the United Kingdom.
29
Notes to Consolidated Financial Statements
January 2, 2010 (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued Property, plant and equipment Land and building comprise mainly 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 income during the financial period in which they are incurred. Increases in the carrying amount arising on revaluation of land and buildings are credited to other reserves in shareholders’ equity. Decreases that offset previous increases of the same asset are charged against other reserves directly in equity; all other decreases are charged to the consolidated statement of income. Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to the consolidated statement of income and depreciation based on the asset’s original cost is transferred from ‘other reserves’ to ‘retained earnings’. Land is not depreciated. Depreciation on other assets is calculated using the straight-line and reducing balance methods to allocate their cost or revalued amounts to their residual values over their estimated useful lives, as follows: Buildings - (straight-line) Plant and machinery - (straight-line) Office furniture and equipment - (straight line and reducing 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 carrying amount. These are included in the consolidated statement of income. Impairment of non-financial assets Assets that have an indefinite useful life 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.
LOCAL ROOTS,
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GLOBAL REACH
Notes to Consolidated Financial Statements January 2, 2010 (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued 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 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 12 months after the balance sheet date. Deferred income tax Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor 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 Company’s shareholders is recognised as a liability in the Company’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 contributed capital. This contributed capital is amortised to retained earnings on a straight line basis using the same rates used to provide depreciation on the applicable assets. Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as operating leases. Payments made under operating leases, net of any incentives received from the lessor, are charged to the consolidated statement of income on a straight-line basis over the period of the lease.
31
Notes to Consolidated Financial Statements
January 2, 2010 (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued Employee benefits Pension obligation The subsidiary company, Winfresh (UK) Limited (formerly Windward Island Banana Development and Exporting Company Limited (UK)) is party to a multi-employer defined benefit pension scheme. The actuaries of the scheme confirmed to the directors that the company is unable to identify its share of the underlying assets and liabilities of the scheme on a reasonably 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 plan is a pension plan under which the company pays fixed contributions into a separate entity. 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. Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown, net of discounts. Revenue is recognised as follows: (a) Banana trading Banana trading income (including fees, recoveries, sales and commissions) are 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 accrual basis. Foreign currency translation (a) Functional and presentation currency Items included in the consolidated financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The Group’s functional currencies include Eastern Caribbean dollars and the UK pound. The consolidated financial statements are presented in Eastern Caribbean dollars, which is the Group’s presentation currency. (b) 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
LOCAL ROOTS,
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GLOBAL REACH
Notes to Consolidated Financial Statements January 2, 2010 (expressed in Eastern Caribbean dollars)
2
Summary of significant accounting policies…continued
Foreign currency translation …continued (c) Group companies The results and financial position of all the group entities that have a functional currency different from the presentation currency are translated into the presentation 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 income are translated at the average exchange rates (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 shareholders’ equity. When a foreign operation is sold, exchange differences that were recorded in equity are recognised in the consolidated statement of 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. 3
Financial risk management Financial risk factors The Group’s activities expose it to a 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 minimize 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 company’s risk management policies and processes. The group’s overall risk management policies and processes focuses on identifying, analysing and monitoring the 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.
33
Notes to Consolidated Financial Statements
January 2, 2010 (expressed in Eastern Caribbean dollars)
3
Financial risk management…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 recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency. The group purchases its bananas and fresh produce in foreign currency and forward currency contracts are 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 dates. The following table summarises the Group’s exposure to foreign currency exchange rate risk at January 2 2010. EC $
US $
STG $
EURO $
Total $
At January 2, 2010 Financial assets Cash and cash equivalents Investments: Loans and receivables Trade and other receivables Due from related parties
255,583 1,184,919 2,757,154 5,790,183
4,303,984 – 1,565,281 –
15,187,395 – 25,665,812 –
58,815 – – –
19,805,777 1,184,919 29,988,247 5,790,183
Total financial assets Financial liabilities Bank overdraft Trade and other payables
9,987,839
5,869,265
40,853,207
58,815
56,769,126
1,636,338 1,990,935
– 11,861,413
– 15,264,136
– 55,645
1,636,338 29,172,129
Total financial liabilities
3,627,273
11,861,413
15,264,136
55,645
30,808,467
Net balance sheet financial position
6,360,566
(5,992,148)
25,589,071
3,170
25,960,659
13,058,418 5,736,625
4,896,763 8,691,734
45,812,875 8,045,230
333,037 –
64,101,093 22,473,589
7,321,793
(3,794,971)
37,767,645
333,037
41,627,504
At December 28, 2008 Financial assets Financial liabilities Net balance sheet financial position
At January 2, 2010 if the ECD had weakened/strengthened against the STG /UK pound by 10% with other variables held constant, post tax profit for the year would have been $2,558,907(December 27, 2008 - $3,776,764) 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.
LOCAL ROOTS,
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GLOBAL REACH
Notes to Consolidated Financial Statements January 2, 2010 (expressed in Eastern Caribbean dollars)
3
Financial risk management…continued (b) Credit risk 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. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, investments classified as loans and receivables, as well as credit exposure to customers, including trade receivables, due from related parties and committed transactions. 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 dependent rating, management assesses the credit quality of the customer, taking into account its 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 expect any losses from non-performance by these counterparties as at January 2, 2010 and December 27, 2008. 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. Cash and Cash equivalents:
Banks
Ratings:
January 2 2010 $
Bank 1
A- to A-2
1,718,276
A-1
8,248,344
Bank 2
AA- to A-1+
8,060,741
A-1+
3,298,926
Bank 3
A
8,625,221
A
9,301,760
Bank 4
A to A-1
1,096,664
–
–
Unrated
301,787
Ratings:
Unrated
19,802,689
December 27 2008 $
172,927 21,021,957
The rest of the balance sheet item cash and cash equivalent is cash on hand.
35
Notes to Consolidated Financial Statements
January 2, 2010 (expressed in Eastern Caribbean dollars)
3
Financial risk management…continued
(b)
Trade receivables - neither past due nor impaired
Credit risk…continued
Customers
Ratings
January 2 2010 $
1 2 3
A-3 B Unrated
11,061,906 2,731,596 2,644,448
Ratings
A-3 83 90
December 27 2008 $ 7,542,437 2,079,972 966,793
16,437,950 4,588,561
Unrated
10,589,202 5,509,470
Unrated
21,026,511
16,098,672
Counterparties without external credit ratings:
New customers less than 6 months Existing customers more than 6 months no defaults in the past Existing customers more than 6 months with defaults in the past
January 2 2010 $
December 27 2008 $
266,400 6,966,609 –
– 5,347,958 161,512
7,233,009 5,509,470 (c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and the ability of funding through an adequate amount of committed credit facilities. Bank overdrafts and trade and other payables are due within 12 months based on the remaining period at the balance sheet date to the contractual maturity date. The contractual undiscounted cash flows of bank overdrafts and trade payables approximate the carrying amounts at the balance sheet date as the impact of discounting is not significant. (d) Capital risk management The Company’s objectives when managing capital are to safeguard the Company’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 Company may adjust the amount of dividends paid to shareholders, return capital to shareholders. LOCAL ROOTS,
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GLOBAL REACH
Notes to Consolidated Financial Statements January 2, 2010 (expressed in Eastern Caribbean dollars)
4
Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Management does not consider that there are estimates and assumptions that will have a significant risk, causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
5
Cash and cash equivalents January 2 2010 $
December 27 2008 $
19,805,777
Cash at bank and in hand
21,064,684
For the purposes of the cash flow statement, cash and cash equivalents comprise the following: January 2 2010 $
6
December 27 2008 $
Cash at bank and in hand
19,805,777
21,064,684
Bank overdraft
(1,636,338)
(1,378,218)
18,169,439
19,686,466
Investments: Loans and receivables January 2
December 27
2010
2008 $
1,184,919
Debt securities at amortised cost
$ 1,147,023
Loans and receivables comprise of term deposits with banks. These term deposits mature within one year and bear interest at rates between 3% and 3.25% (December 27, 2008 - 3% and 3.25%) per annum.
37
Notes to Consolidated Financial Statements
January 2, 2010 (expressed in Eastern Caribbean dollars)
7
Trade and other receivables January 2 2010 $
December 27 2008 $
Trade receivables Less: provision for impairment of trade receivables
27,715,269 (854,543)
20,898,394 (668,083)
Trade receivables - net
26,860,726
20,230,311
3,033,298
3,211,862
94,223
83,529
29,988,247
23,525,702
Other receivables Prepayments
Included in trade and other receivables are amounts totalling of $1,072,042 (2008 - $346,305) due from related parties. No impairment has been recognised in respect of these balances. The credit quality of trade receivables is summarised as follows: January 2 2010 $
December 27 2008 $
Neither past due nor impaired Past due but not impaired Impaired
21,026,511 5,834,215 854,543
16,098,672 4,131,639 668,083
Gross
27,715,269
20,898,394
Trade receivables that are less than three months past due are not considered impaired. These relate to a number of independent customers for whom there is no recent history of default. The aging of trade receivables that are past due and not impaired is as follows: January 2 2010 $ Up to 1 month 1 to 2 months Over 2 months
LOCAL ROOTS,
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GLOBAL REACH
December 27 2008 $
5,186,764 168,402 479,049
1,195,980 460,733 2,474,926
5,834,215
4,131,639
Notes to Consolidated Financial Statements January 2, 2010 (expressed in Eastern Caribbean dollars)
7
Trade and other receivables‌continued The individually impaired receivables mainly relate to customers, which are in unexpectedly difficult economic situations. It was assessed that a portion of the receivables is expected to be recovered. The aging of trade receivables that are impaired is as follows:
Over 2 months
January 2 2010 $
December 27 2008 $
854,543
668,083
Other receivables and prepayments 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.
8
Provision for impairment of trade receivables
The movement in the provision for impairment of receivables is as follows: January 2 2010 $
December 27 2008 $
At beginning of year Provision made during the year
668,083 186,460
509,142 158,941
At end of year
854,543
668,083
The creation and release of provision for impaired receivables have been included in general and administrative expenses in the statement of income. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash.
9
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 (U.K.) Limited and Windward Isles Banana Company Holdings (Jersey) Limited and 40% of Lauders Agro Processors Limited. The following transactions were carried out with related parties:
Purchases of bananas from the BGAs Purchase of fresh produce
39
January 2 2010 $
December 27 2008 $
88,070,546 517,549
84,195,308 329,756
Notes to Consolidated Financial Statements
January 2, 2010 (expressed in Eastern Caribbean dollars)
9
Related party transactions and balances…continued Purchases from related parties were carried out on commercial terms and conditions and at market prices.
Key management compensation: Salaries and other short-term benefits
January 2 2010 $
December 27 2008 $
2,744,626
2,823,355
Year-end balances arising from sales/purchases of goods/services:
Due from related parties Current St. Vincent Banana Growers Association St. Lucia Banana Corporation Government of Saint Lucia Lauders Agro Processors
Non-current Grenada Banana Cooperative Society Dominica Banana Marketing Company
January 2 2010 $
December 27 2008 $
– 1,357,638 4,232,545 200,000
266,040 1,620,063 4,774,500 –
5,790,183
6,660,603
768,834 121,473
796,084 286,473
890,307
1,082,557
Balances with related parties are unsecured, non-interest bearing and have no fixed terms of repayment. The balance due from the Government of Saint Lucia represents Management’s best estimate of the consideration due for the compulsory acquisition of land and buildings of the Company situated at Roseau. The Company is currently in negotiations with the Government of Saint Lucia on the form of consideration. Loan to joint venture Windward Isles Banana Company Holdings (Jersey) Limited. January 2 2010 $ Beginning of year Loan repayments received Foreign exchange loss At end of year
December 27 2008 $
10,620,524 (10,315,109) (305,415)
14,390,340 – (3,769,816)
–
10,620,524
Loans due from the joint venture are interest free, unsecured and have no specific repayment terms. LOCAL ROOTS,
40
GLOBAL REACH
Notes to Consolidated Financial Statements January 2, 2010 (expressed in Eastern Caribbean dollars)
10
Property, plant and equipment
905,427 (88,041)
2,995,841
6,100,231 (3,104,390)
1,609,163 (317,193) 119,949 (2,602) (420,662)
1,609,163
4,587,251 (2,978,088)
861,739
750,253 (42,526) 686,529 (15,643) (516,874)
750,253
2,210,510 (1,460,257)
Computer Equipment $
964,414 (768,780)
195,634
(174,214)
464,903 (95,055) – –
464,903
1,179,155 (714,252)
Motor Vehicle $
4,656,461
13,270,556 (8,614,095)
4,656,461
6,784,732 (1,237,652) 1,084,936 (22,456) (1,953,099)
6,784,732
15,129,760 (8,345,028)
At December 27, 2008
Total $
147,186 – 817,386
2,995,841 (568,829) 166,404 (4,211) (804,364)
988,655
2,613,636 (1,751,897)
195,634
Office Furniture & Equipment $
Cost or valuation Accumulated depreciation 147,186
817,386 (214,049) 12,581 – (34,041)
1,784,841
3,727,125 (2,738,470)
861,739
Plant & Machinery $
Net book amount
147,186 – 99,473 – (2,944)
581,877
5,037,907 (3,253,066)
988,655
Land & Buildings $
Opening net book amount Currency translation adjustment Additions Disposals Depreciation charge
243,715
680,815 (98,938)
1,784,841
Leasehold Improvements $
Closing net book amount
246,659 (2,944)
581,877
At December 29, 2007
Cost or valuation Accumulated depreciation
243,715
Year ended December 27, 2008
Net book amount
41
Notes to Consolidated Financial Statements
January 2, 2010 (expressed in Eastern Caribbean dollars)
Leasehold Improvements $
680,815 (98,938)
Land & Buildings $
1,784,841
5,037,907 (3,253,066)
Plant & Machinery $
988,655
3,727,125 (2,738,470)
Office Furniture & Equipment $
861,739 45,986 674,928 (2,358) (497,052)
861,739
2,613,636 (1,751,897)
Computer Equipment $
455,515
195,634 11,470 485,596 (42,096) (195,089)
195,634
964,414 (768,780)
Motor Vehicles $
29,774,475
4,656,461 290,400 27,356,457 (44,455) (2,484,388)
4,656,461
13,270,556 (8,614,095)
Total $
Property, plant and equipment…continued
246,659 (2,944) 581,877
988,655 64,598 965,437 – (617,694)
1,083,243
10
Cost or valuation Accumulated depreciation 243,715
1,784,841 111,350 1,068,404 (1) (900,700)
1,400,996
At December 27, 2008
Net book amount
243,715 581,877 – 56,996 – 24,162,092 – – (4,933) (268,920)
2,063,894
Year ended January 2, 2010 Opening net book amount Currency translation adjustment Additions Disposals Depreciation charge 238,782 24,532,045
246,659 24,909,595 (7,877) (377,550)
2,063,894
6,422,220 (4,358,326)
1,400,996
4,970,716 (3,569,720)
1,083,243
3,307,766 (2,224,523)
455,515
29,774,475
1,144,901 41,001,857 (689,386) (11,227,382)
Closing net book amount
Cost or valuation Accumulated depreciation
238,782 24,532,045
At January 2, 2010
Net book amount
GLOBAL REACH
42
LOCAL ROOTS,
Notes to Consolidated Financial Statements January 2, 2010 (expressed in Eastern Caribbean dollars)
11.
Investments in joint ventures and associate January 2
December 27
2010
2008
$
$
At beginning of year Additions during the year Share in profit net, Dividends Currency translation adjustment
89,127,690 1,075,270 1,930,485 (10,896,205) 19,757,297
112,783,006 – 6,344,284 – (29,999,600)
At end of year
100,994,537
89,127,690
The Group’s share of the results of its joint ventures and its share of assets and liabilities are as follows: Assets $
Liabilities $
Revenues $
2010 Windward Isles Banana Company Holdings (Jersey) Limited Windward Isles Banana Company (UK) Limited. Lauders Agro Processors Inc
36,850,230 106,761,677 1,619,719
36,174,399 33,660744 316,717
201,177 105,075,675 324,432
2008 Windward Isles Banana Company Holdings (Jersey) Limited Windward Isles Banana Company (UK) Limited Lauders Agro Processors Inc.
90,894,811 102,319,954 888,493
43,740,782 62,476,904 23,909
6,936,846 101,109,148 201,587
Windward Isles Banana Company (UK) Limited (“WIBUK”) and Windward Isles Banana Company Holdings (Jersey) Limited (“WIBHJ”) are incorporated in the United Kingdom and Jersey, respectively, on a 50% joint-venture basis with Fyffes for the acquisition of the banana operating division of the Geest Group of Companies. Lauders Agro Processors Inc (LAP) is incorporated in St. Vincent and the Grenadines, on a 40% joint venture basis with National Properties Limited (NPL) of St. Vincent. Its principal activity is the processing and exporting of fresh produce. Associate During the year a group entity Winfresh UK Limited purchased 1000 B ordinary shares being a holding of 33.3% in Winfruit Limited. The company is incorporated in England and Wales. The principal activity of the company is that of research and development into the production, marketing and distribution of dairy free freezer fruit desert. The group’s share of the results of its associates and its share of assets and liabilities are as follows:
Winfruit Limited
43
Assets $
Liabilities $
Revenues $
43,833
407,788
32
Notes to Consolidated Financial Statements
January 2, 2010 (expressed in Eastern Caribbean dollars)
12
Trade and other payables
Trade payables Other payables Accrued expenses
January 2 2010 $
December 27 2008 $
18,858,287 10,136,084 122,113
15,745,670 2,300,573 3,049,128
29,116,484
21,095,371
Included in trade and other payables are balances due to related parties of $9,601,866 (December 27, 2008$5,081,841).
13
Deferred income tax asset Deferred income taxes are calculated in full on temporary differences under the liability method using a principal tax rate of 28% (December 27, 2008 - 28%). The movement on the deferred tax (asset) account is as follows:
January 2 2010 $
December 27 2008 $
At beginning of year Statement of income charge (Note 19) Exchange differences
(116,034) (125,086) (15,059)
(82,181) (65,206) 31,353
At end of year
(256,179)
(116,034)
Deferred taxes arose from decelerated capital allowances.
LOCAL ROOTS,
44
GLOBAL REACH
Notes to Consolidated Financial Statements January 2, 2010 (expressed in Eastern Caribbean dollars)
14
Share capital January 2 2010 $
December 27 2008 $
5,000,000 15,000,000
5,000,000 15,000,000
20,000,000
20,000,000
January 2 2010 $
December 27 2008 $
1,878,616 2,507,530 46,711
(12,939,007) (2,936,937) 5,826
4,432,857
(15,870,118)
January 2 2010 $
December 27 2008 $
10,896,025 74,625 50,456 2,054,410
– 591,325 47,340 494,026
13,075,516
1,132,691
Authorised: Unlimited ordinary shares Unlimited non-cumulative preference shares Subscribed: 500 ordinary shares 1,500 5% non-cumulative preference shares
15
Other losses, net
Foreign exchange (losses)/gains Unrealised gain/( losses) on translation of balances Realised losses on transactions Gain on disposal of property, plant and equipment 16
Other income
Dividend income Interest income Agency fees and commissions Other
45
Notes to Consolidated Financial Statements
January 2, 2010 (expressed in Eastern Caribbean dollars)
17
Expenses by nature
Direct costs Employee benefit expenses (Note 18) Depreciation (Note10) Equipment Repairs and maintenance Bad debt expense Legal and professional fees Director Allowances Travel and subsistence Utilities Rent Other expenses Communication Subsistence Printing, postage and office supplies Security expenses Insurance Telephone & Fax Advertising and promotions Audit fees Bank charges Vehicle expenses Subscriptions and donations Total cost of goods sold, administrative and general expenses 18
January 2 2010 $
December 27 2008 $
254,526,236 11,938,401 2,484,388 1,840,947 723,069 1,082,334 1,320,376 923,076 833,705 595,388 304,685 438,555 252,008 233,943 226,851 223,518 216,924 81,456 291,760 78,563 30,516 19,981 278,666,680
238,034,447 13,656,497 1,953,099 2,139,909 158,941 817,195 967,852 1,275,828 948,658 643,039 532,023 124,319 215,682 262,514 225,613 271,982 260,986 253,486 303,800 53,586 42,992 51,740 263,194,188
Employee benefit expense
Salaries and wages Other staff costs Social security costs
LOCAL ROOTS,
46
GLOBAL REACH
January 2 2010 $
December 27 2008 $
10,346,290 836,193 755,918
12,127,282 651,134 878,081
11,938,401
13,656,497
Notes to Consolidated Financial Statements January 2, 2010 (expressed in Eastern Caribbean dollars)
19
Income tax expense January 2 2010 $ Current tax Deferred tax charge (Note 13) Current tax charge
December 27 2008 $
207,804 (125,086)
292,184 (65,206)
82,718
226,978
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the applicable standard rate as follows: January 2 2010 $
December 27 2008 $
Profit before tax
11,246,016
(18,811,927)
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
3,373,805 (2,677,743) (570,962) 9,882 (13,340) (40,282)
(5,643,578) (1,920,257) 7,790,313 23,417 15,987 (38,904)
81,360
226,978
Tax charge 20
Pension costs The subsidiary company Winfresh (UK) Limited (formerly Windward Island Banana Development and Exporting Company Limited (UK)) is party to a multi-employer defined benefit pension scheme. Their actuaries 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 reasonably consistent basis. Consequently, the scheme has been accounted for as if it were a defined contribution pension scheme. The constitution of the scheme required that a triennial valuation is performed by independent actuaries and the last triennial valuation was carried out at December 31, 2009.However as at the date of approval of these financial statements the triennial valuation had not been completed. This was due to ongoing discussions between the scheme’s trustees and the company’s directors in relation to the valuation and manner in which future contributions to the scheme will be made. The previous triennial valuation at December 30, 2006 revealed a deficit of £4,638,000 in the scheme which represented a funding level of less that 90% as required by the minimum funding requirement rules. With effect from April 2008 all of the participating employers in the scheme have agreed to a revised schedule of contributions and annual payments, which is designed to restore the minimum funding requirement position of the scheme to an acceptable level. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge to the statement of income for the year with respect to the defined contribution scheme amounted to £90,658 (December 27, 2008 - £86,190). Included in accrued liabilities is an amount of £9,343 (December 27, 2008 – £9,455) relating to pension contributions payable.
47
Notes to Consolidated Financial Statements
January 2, 2010 (expressed in Eastern Caribbean dollars)
21
Commitments The group leases various land and buildings and equipment under non-cancellable operating lease agreements. The leases have varying terms and renewal rights. The future aggregate minimum lease payments under non -cancellable operating leases are as follows:
Within one year Between two and five years
22
January 2 2010 $
December 27 2008 $
210,371 396,181
174,030 9,034
606,552
183,064
Guarantees The subsidiary company has provided a payment guarantee to HM Revenue and Customs. At the balance sheet date the maximum amount payable under this guarantee totalled £250,000 (December 27, 2008 – £ 250,000)
23
Contingent liabilities The Group is contingently liable in respect of disputed liabilities that may be due under the banana contract sales agreements with the banana companies. These amounts are currently being negotiated, 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.
LOCAL ROOTS,
48
GLOBAL REACH
LOCAL ROOTS, GLOBAL REACH annual report
1st Floor, M&C Building, Bridge Street, P.O. Box 115, Castries, Saint Lucia W.I. Telephone: + 1 758 457 8600 Fax: + 1 758 453 1638
2009