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19252015Years
ANNUAL REPORT 2015
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Contents
About the Cover 2
Notice of Meeting 3
Milestones of our 90 Years 4
Companies owned by Agostini’s 6
Alliances for Growth: Companies owned by Caribbean Distribution Partners 10
Overview of Product Categories of our Companies 19
Board of Directors 20
Corporate Governance 22
Chairman’s Remarks 26
Management Discussion & Analysis 28
Report of the Directors 33
Corporate Information 34
Independent Auditor’s Report 35
Consolidated Statement of Financial Position 36
Consolidated Income Statement 38
Consolidated Statement of Comprehensive Income 39
Consolidated Statement of Changes In Equity 40
Consolidated Statement of Cash Flows 41
Notes to the Consolidated Financial Statements 42
Directors’ & Senior Officers’ Interest & 10 Largest Shareholders 79
Honouring Long Service / Company of the Year 80
Proxy Form 81
Management Proxy Circular 82
All figures in this report are quoted in TT$. The exchange rate was US$1.00=TT$6.3733 as at 30 September 2015.
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the CoverAbout
In 2015, Agostini’s Limited celebrated its 90th anniversary since commencement of its activities in 1925. The Group has never been stronger, with assets of $1.5 billion, sales of $1.7 billion and profits of $80.6 million, employing 1,890 persons and operating in six countries.
Registered Office: 18 Victoria Avenue,
P.O. Box 191, Port of Spain, Trinidad, West Indies
Phone: (868) 623-4871Fax: (868) 623-1966
www.agostinislimited.com
19252015Years
ANNUAL REPORT 2015
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of MeetingNotice
Notice is hereby given that the Seventy-Second Annual Shareholders’ Meeting of Agos-tini’s Limited will be held at the Marriott Hotel, Invaders Bay, Port of Spain on Monday, January 25, 2016 at 9:30 a.m. for the following purposes:
1. To receive and consider the Group’s Financial Statements for the year ended September 30, 2015 and the Reports of the Directors and Auditors thereon.
2. To re-elect the following Directors retiring by rotation: Mr. Anthony Agostini, Mr. Reyaz Ahamad, Ms. Gillian Warner Hudson and Mr. Gregor Nassief.
3. To appoint Auditors and to authorise the Directors to fix their remuneration.
4. To transact any other ordinary business of the Company.
By Order of the Board
R. Rajkumarsingh
Secretary
December 4, 2015
Documents available for inspection
No Service Contracts have been entered into between the Company and any of the Directors.
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Annual Report 2013
Milestonesof our 90 Years
1925JOHNNIE AGOSTINI BEGINS OPERATIONS AS A COMMISSION INDENT BUSINESS.
1933VICTOR AGOSTINI JOINS AND AGOSTINI BROTHERS PARTNERSHIP IS FORMED. IN 1941 ANOTHER BROTHER, FRANK, JOINS THE FIRM.
1943AGOSTINI BROTHERS BECOMES A LIMITED LIABILITY COMPANY.
1950AGOSTINI BROTHERS TRANSITIONS FROM A COMMISSION INDENT BUSINESS TO A DISTRIBUTION COMPANY WITH THE ADDITION OF MAJOR PHARMACEUTICAL, FOOD AND HARDWARE PRODUCTS.
1965INTERIOR CONTRACTING SERVICES ARE ADDED AS A NEW BUSINESS.
1970AGOS MANUFACTURING ESTABLISHED TO MANUFACTURE FLUORESCENT LIGHT FIXTURES AND INCANDESCENT LIGHT BULBS (ASSETS DIVESTED IN 2009).
1982AGOSTINI BROTHERS CHANGES ITS NAME TO AGOSTINI’S LIMITED AND BECOMES A PUBLIC COMPANY LISTED ON THE TRINIDAD AND TOBAGO STOCK EXCHANGE.
1984HILTI W.L. YEARWOOD IS ACQUIRED, LATER TO BECOME AGOSTINI’S FASTENING SYSTEMS (NOW A DIVISION OF AGOSTINI MARKETING).
1986AGOSTINI INDUSTRIES LIMITED IS ESTAB-LISHED TO MANUFACTURE DIAPERS AND FEMI-NINE NAPKINS (ASSETS DIVESTED IN 2004).
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Caribbean Distribution Partners Limited
1993GORDON GRANT TRADING, A DISTRIBUTION COMPANY SPECIALISING IN PHARMACEUTICAL DISTRIBUTION, IS ACQUIRED. AGOSTINI MARKET-
ING’S PHARMACEUTICAL LINES ARE MERGED INTO THIS COMPANY, WHICH IS RENAMED AGOSTINI PHARMACEUTICAL LIMITED.
1995AGOSTINI’S ACQUIRES A MAJORITY SHAREHOLDING IN ROSCO SALES LIMITED,
AN OILFIELD SUPPLY COMPANY FOUNDED IN 1950.
2000AGOSTINI INDUSTRIES: THE GROUP EXPANDS INTO LOW-COST HOUSING AND TOWNHOUSE CONSTRUCTION, AND
CONSTRUCTS 30 TOWNHOUSES AND OVER 300 LOWCOST SINGLE FAMILY HOMES (ASSETS DIVESTED IN 2010).
2000PETROAVANCE TRINIDAD LIMITED, AN OILFIELD SUPPLY COMPANY, IS ACQUIRED AND MERGED WITH ROSCO SALES TO
BECOME ROSCO PETROAVANCE LIMITED.
2008HAND ARNOLD TRINIDAD LIMITED, A LARGE DIVERSIFIED CONSUMER PRODUCTS DISTRIBU-
TOR ESTABLISHED IN 1920, IS ACQUIRED. IN JULY 2015, IT BECOMES PART OF CARIBBEAN DISTRIBUTION PARTNERS LIMITED.
2010VICTOR E. MOUTTET LIMITED ACQUIRES A CONTROLLING INTEREST IN AGOSTINI’S
LIMITED WITH ITS SALE OF SMITH ROBERTSON & CO. LIMITED, A MAJOR PHARMACEUTICAL DISTRIBUTOR FOUNDED IN 1894, AND THE ACQUISITION
OF SUPERPHARM LIMITED, A MAJOR RETAIL PHARMACY CHAIN, WHICH BEGAN OPERATIONS IN 2005.
2011IN JULY 2011, AGOSTINI PHARMACEUTICAL IS AMALGAMATED INTO
SMITH ROBERTSON & COMPANY LIMITED.
2012AGOSTINI’S LIMITED RE-BRANDED
“EVERY BUSINESS A BENCHMARK”
2015CARIBBEAN DISTRIBUTION PARTNERS LTD.
JOINT VENTURE WITH GODDARD ENTERPRISES
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Smith Robertson & Company Limited
J. Cumming & Co. was established in Trinidad in the 1830’s. In 1894 when two Scotsmen, Adam Smith and William Robertson, decided to form a partnership. Mr. Robertson had been employed by J. Cumming & Co and purchased the company and changed its name to Smith Robertson. In 1929 the company was registered as a limited liability company. In the early years Smith Robertson was in the indent business and represented many lines from Canada, the USA and insurance coverage from London. It also offered Champagne and Brandy from France.
In 1929 Mr. Eddie Barcant became a director of the company and would later buy out the owners of the day and bring in his two sons, David and Geoffrey.
Over the years, many agencies were added in the pharmaceutical and personal care areas.
In 1938 Wyeth, previously American Home Products and more recently purchased by Pfizer, was their first pharmaceutical line. In 1956 the Revlon line of Cosmetics and Toiletries joined their offerings. Other early Pharma lines carried by the company were Ayerst, ICI, Smith Kline & French and Lederle.
In the mid 1980’s, Geigy (now Novartis), Medimpex, Beiersdorf (Nivea), ICI (which became Zeneca then AstraZeneca) and Abbott were added.
In 1998, when Smith Robertson was bought by Victor E.
C.E. Mouttet - ChairmanR.A. Farah - CEO/DirectorI. Maharaj - DirectorM. Stagg - DirectorN.R. Ramjohn - Finance Director/SecretaryA.J. Agostini - Non-Exec Director
Mouttet Limited, all of the pharmaceutical lines handled by their distribution company, VEMCO Limited were transferred into Smith Robertson and it became the largest distributor of pharmaceuticals in Trinidad and Tobago. VEMCO had itself been in the pharmaceutical business for several years and in the 1990’s had managed such agencies as Aventis (now Sanofi Aventis), Pharmacia & Upjohn (since bought over by Pfzier) and Carlilse Laboratories. After the merger, new lines were acquired such as Bayer Schering, Glaxo Smith Kline, Merck Sharp & Dohme and Johnson & Johnson.
Agostini’s had also operated a Pharmaceutical division for more than fifty years, and had spun it off into a focused Pharmaceutical distribution company ten years earlier. It had also acquired and merged into it Hand Arnold Pharmaceutical that had represented Pfizer among other lines. Smith Robertson was acquired by Agostini’s in August 2010 and shortly thereafter Agostini Pharmaceutical Limited, which was then distributing Pharmaceutical lines for over sixty years, such as Roche, Wyeth, Eli lilly and Ciba (now Novartis) was absorbed into Smith Robertson and Company Limited.
Companies 100% owned by Agostini’s:
Trinidad & Tobago
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Companies 100% owned by Agostini’s (cont'd):
Agostini Marketing
Agostini Marketing started as the trading arm of Agostini's Limited. Its roots go back to the company's beginning in 1925, when Johnnie Agostini, whose forefathers came from Corsica in 1794, began a commission indent business. The early lines that Johnnie Agostini handled were men's socks, flour, Soya beans and pickled meats. In 1933 he was joined by his brother Albert Victor Agostini and a partnership was registered as Agostini Brothers.
Eight years later, their youngest brother, Frank "Sonny" Agostini joined the firm and in 1943 Agostini Brothers became a limited liability company. Nearly forty years after, in 1982, the company became a publicly listed company quoted on the Trinidad and Tobago Stock Exchange. At that time the "Brothers" was dropped from the name and the company became know as "Agostini's Limited".
During the last ninety years, the company has been involved in many aspects of business here in Trinidad. In 1933 an Insurance Division was formed and later in 1938 when George Farah joined the company, the division was expanded to handle all classes of Insurance. Later this division would be divested. In the late 1930's the company diversified from an indent type of business into the distribution arena. The early products included "Carlings" beer, "Arrow" shirts and "Standard" brand condensed milk.
In the 1950's, the Company continued adding to the list of products it distributed, with the addition of
A.J. Agostini - ChairmanA.B. Pashley - CEO / DirectorC.G. Bernard - DirectorR.A. Rodriguez - DirectorG.M. Agostini - Non-Exec DirectorT.K. Austin - Non-Exec DirectorR.A. Farah - Non-Exec Director
pharmaceutical lines from Hoffman La Roche, Wyeth Ayerst and Ciba Geigy. Later, Eli Lilly, A. H. Robins, Sanofi Aventis, Leo Pharma and Bayer would be added. The pharmaceutical division is now part of Smith Robertson.
In the 1960's our hardware section grew with the addition of plywood and a range of carpets, floorings, partitions and Armstrong flooring and ceilings. Interior contracting services became a natural addition to our offerings around this same time and continues to be a major part of the company's service offering.
In 1984 the Company acquired Hilti W. L. Yearwood Limited, a company that exclusively marketed the industrial range of Hilti products. This company now operates as the Abfast division of Agostini Marketing and now also markets Explosives, Sig and Ruger small arms and a range of ammunition.
In 1993 the company began its printery supplies division, offering a wide range of paper, imaging products and signage supplies.
Over the past few years the company has further expanded its distribution business with the addition of several hardware lines, Fursys demountable partitions and entered the retail arena with three decorative lighting stores that dual as retail Pratt & Lambert paint outlets.
Trinidad & Tobago
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SuperPharm Limited
Retail pharmacy and convenience store
The year was 2005, and the very first SuperPharm opened in Westmoorings.
The story of SuperPharm starts with the desire by enterprising local entrepreneurs to push the industry forward, and to do that in a simple but revolutionary manner put the needs of customers first. This meant being available and open when it is convenient for our customers, as opposed to when it's convenient for us.
The initial investors, went through a lengthy and detailed process with US-based consultants in the areas of store design, layout, brand strategy and product selection. Consultation brought up many questions. The main one was, what should SuperPharm be to customers? As the process continued everyone came to understand that to be valuable to a community, the stores had to be about convenience.
SuperPharm was designed to take that focus to a whole new level in Trinidad. Extended opening hours weren't enough, the stores would also be open on holidays, and on those days the hours would not be limited. SuperPharm is open until 11 pm, 7 days a week, 364 days a year. Only closing on Christmas Day.
Locations were carefully selected to ensure that they were convenient for the communities in which they operated. Parking was given priority.
C.E. Mouttet - ChairmanG. Maharaj - Managing DirectorM. Gonsalves Suite - DirectorJ.M.Aboud - Non-Exec DirectorA.J.Agostini - Non-Exec DirectorL.M. Mackenzie - Non-Exec DirectorJ.J.Rahael - Non-Exec DirectorN. M. Fung - CFO / Company Secretary
Another important aspect of convenience was putting together a large variety of products, to be much more than a pharmacy. The comparison of SuperPharm to big box US-based pharmacies like Walgreens and CVS is not unfounded, the similarity is by deliberate design.
SuperPharm Westmoorings had an impact on everyone who walked through the doors on opening day, and also on everyone who discovered the final aspect of convenience, the drive-thru window.
The Agostini Group was happy to acquire SuperPharm in 2010 and to continue building the brand by adding stores in several additional locations.
Today we have eight stores strategically located in Westmoorings, Valsayn, Chaguanas, Maraval, Gulf View, Trincity, Marabella and Diego Martin. Our ninth store is currently under construction in Mausica and scheduled to be opened at the end of 2016.
Many people can’t remember what they did before Superpharm came into their area, transforming the way they shopped and contributing to their well being.
Additional stores are in the process of being planned as we know there are many other communities that would welcome a well stocked and convenient pharmacy and convenience store in their neighbourhood.
Trinidad & Tobago
Companies 100% owned by Agostini’s (cont'd):
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Rosco Petroavance Limited
Rosco Petroavance Limited (RPL), formerly English Drilling Equipment Company Limited (Edeco), was founded by Mr. Elgen Scott on 21 April 1951. Mr. Scott realised the potential of forming a business around importation & distribution of oilfield equipment and associated supplies. Edeco was very successful and grew rapidly to become a leading supplier, representing many quality manufacturers. Years later Edeco was sold and the company’s name was changed to Rosco Sales Limited.
In 1995 Rosco Sales Limited was purchased by Agostini’s Ltd [80%] together with Mr. Walter Bernard [20%] and Rosco became a subsidiary of the Agostini’s. Always looking to expand, Rosco acquired Petroavance Trinidad Limited in 2000. In 2009 both companies were merged, and the Company’s name was changed to Rosco Petroavance Limited.
Over the years, Rosco Petroavance Ltd has been able to grow and diversify into other sectors, doubling their sales over the last five years, while maintaining their dedication to excellent customer service and support. To match the range of diverse product offerings they market and service, they changed the operating structure of the business as they
A.J. Agostini - ChairmanWalter Bernard - Deputy ChairmanWayne Bernard - CEO/DirectorJ.P. Rostant - DirectorC.G. Bernard - Non-Exec DirectorR.A. Rodriguez - Non-Exec DirectorV. Balroop - CFO/Company Secretary
recognised that each product category required specialised personnel, equipment and management. They currently operate under six divisions, managed by individuals with long experience in their fields. These divisions are: Oil Well [Harbison Fischer, National Oilwell Varco, Stren, Echometer], Rig Spares [Oil States, Rexroth, Braden Paccar, Martin Sprocket], Valves [Forum Energy, PBV, DSI, Balon, Quadrant, Mueller, GE], Hydraulics [Effer Cranes, Eaton Hydraulics, OMFB, Spx Powerteam, Char Lynn, Jurop, Permco], Safety [Capital Safety, DBI/SALA, protector, Mecanix, Dickies, Amot, Charlwyn, Roda Deco] and Service.
All their products are sold through sole distributorship channels. Rosco Petroavance Ltd has the capacity and capabilities to continue to be a major player in the Oil & Gas, Petrochemical, Process, Construction and Marine Industries in which they presently operate. In 2016 they will launch their seventh division, Mobil Lubricants.
With dedication to quality, as shown by their recent re-certification from STOW, Rosco has become a company known for its quality employees supporting quality products and quality service.
Trinidad & Tobago
Companies 92% owned by Agostini’s:
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for GrowthIn July 2015, Agostini’s Limited formed an alliance with Goddard Enterprises Limited to form a jointly-owned company, Caribbean Distribution Partners Limited.Into this company were transferred the two groups’ fast-moving consumer goods companies.
& =Caribbean Distribution Partners Limited
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CARIBBEAN DISTRIBUTION PARTNERS LIMITED
Partnering for Growth in the Region.
Our group, together with the Goddard Enterprises Ltd group of Barbados, entered into a partnership arrange-ment in July 2015, in order to use our combined strengths in FMCG towards creating a powerful distribution net-work in the Caribbean region.
As a result we have transferred the six FMCG distribution companies in the two groups into a 50/50 owned joint venture company named Caribbean Distribution Partners Limited [CDP].
The six companies:-
1. Hand Arnold Trinidad Limited, a 95 year-old Trinidad-based distribution company.
2. Hanschell Inniss Limited, which has been operating in Barbados for the past 131 years.
Caribbean Distribution Partners Limited(a 50/50 JV between Agostini’s Limited and Goddard Enterprises Limited)
Caribbean Distribution Partners Limited
C.E. Mouttet - ChairmanA.J. Agostini - DirectorA. Ali - DirectorC. A. Herbert - DirectorW. P. Putnam - DirectorR. Rajkumarsingh - DirectorT.D. Shuffler - CEO
3. Coreas Distribution Limited of St. Vincent, which is over 170 years old.
4. Peter & Company Ltd, a 131 year-old distribution company in St. Lucia.
5. Independence Agencies Limited, a 42 year-old Gre-nadian distribution company. CDP presently owns a 55.12% stake in this company.
6. Desinco Limited, a Guyanese distribution company with its roots formed in 1980. CDP presently owns a 40% stake in this company.
We expect that with this focus and strong distribution network, our group owned brands and those that we represent on behalf of our international partners, will see growth in the coming years, that will further position us to be the partner of choice, in the Caribbean region.
Trinidad & Tobago
Barbados
Guyana
Grenada
St Vincent
St Lucia
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HAND ARNOLD TRINIDAD LIMITED
Hand Arnold was founded in 1920 by two pioneering Canadians, John Hand and his friend Arnold then operat-ing out of Bermuda. They started as commission agents with Canadian products which included Heinz, Red Rose Salmon and Harvest Queen and Five Roses Flours from ‘The Lake of the Woods Milling Co.’ in Quebec.
Another early product was Klim powdered milk which was invented by the Canada Milk Company with whom Hand Arnold traded. In 1928. Bordens bought the Klim Brand which was later sold to Nestles.
Other products carried by the company also included Portland Cement, Kings Beer from Canada, Salt fish, Salt beef, Pig tail, Onions, Potatoes, Cheese, Butter, New Zea-land meat, Harvest Queen flour and Cigarettes from Brit-ish American Tobacco Company. Selling Life Insurance for Sun Life of Canada was also a line of business at that time.
By 1945 Messrs. Hand and Arnold had died, and their widows sold the branches to their respective managers. Arthur Hale, the manager in Trinidad, bought the Trini-dad branch and the new company was locally registered as Hand Arnold (Trinidad) Limited (HAL). Osmond Hale joined his father in the company in 1946 and his brother Peter came on board in 1960. Later Osmond’s son John Hale, became Managing Director.
By 1962 products sold in Pharmacies such as Plough Cop-pertone and the Jergens range were added. In 1967 Hand Arnold was relocated to Wrightson Road. In 1970 HAL
was computerised. The company ventured into cosmetic manufacturing in the early 1970’s after the negative list was introduced when they manufactured Jergens and Brylcreem under license. In the 1980’s a larger 70,000 sq ft warehouse facility was built in El Socorro. In 1990 the company faced its darkest period when during the at-tempted coup its warehouse was looted and plundered to the tune of $12m. A huge amount in those days. Had it not been for the tremendous support given by the company’s many suppliers who extended terms of up to a year to allow the company time to rebuild, it may not have survived at that time.
In 1992 the company moved into their newly constructed office building in their warehouse compound and in 1994 acquired Alfred Telfer and Company, a Pharmaceutical dis-tribution company marketing Pfizer and other products.
The company started selling Housewares in 1994, opened the Wines & Spirits department in 1997, added Kelloggs cereals in 1998, started with the high volume bulk New Zealand cheese category in 2002 and added the Anchor brand of cheese and butter in 2007. They actually were the largest local toy distributor and re-exporter for the period 1997 to 2005.
The Agostini’s group acquired the company in 2008 and brought it into the Caribbean Distribution Partners joint venture in July 2015.
A.J. Agostini - ChairmanS.A. Gunness-Balkissoon - CEO/DirectorS.K. Malzar - Finance Director/Company SecretaryS.J. Montano - DirectorA.Ali - Non Exec DirectorL.M. Mackenzie - Non-Exec DirectorR. Rajkumarsingh - Non-Exec DirectorT. D. Shuffler - Non Exec Director
100% owned by Caribbean Distribution Partners (a 50/50 JV between Agostini’s Limited and Goddard Enterprises Limited) (continued)
Trinidad & Tobago
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PETER & COMPANY LIMITED
124 Years of Service
In 1879 William Peter established a private coaling com-pany to provide mineral coal for merchant ships plying the Caribbean and South American waters. The venture flourished under his dynamic direction. By the turn of the century, Peter & Company was the “leading coal mer-chant in the West Indies”. William Peter, died in 1933, leav-ing the Company to his two sons Gregor and Allan. With the replacement of coal with oil as fuel for the shipping industry, the company was inevitably sailing into the dol-drums. William Peter’s great granddaughter Lilia together with her husband William Eaton struggled to maintain the business. Fortunately, Lilia’s friendship with Jeanette Goddard, a niece of the then Managing Director of the well known Barbados firm, would provide for the survival of Peter & Co. Ltd., when in 1961 of J. N Goddard & Sons of Barbados acquired majority shares in the company.
In January 2015, Peter & Company purchased ANSA McAl’s 1/3 shareholding stake in Bryden & Partners (St. Lucia) Ltd., a sister food & beverage company under the M&C Group of Companies banner, which is also owned by Goddard Enterprises Ltd. (GEL). The remaining shares in Brydens were purchased by Peter & Company (PCL) in June 2015 from M&C Ltd and the company divested its interests in all its non"food & beverage" operations and properties to focus on it fast moving consumer goods division.
In July 2015, Caribbean Distribution Partners Ltd. (a joint venture between Agostini Ltd. and GEL), purchased 100% of the shares of Peter & Company Ltd. and the company merged its Brydens and PCL food & beverage operations into a single legal entity trading as Peter & Company Dis-tribution Ltd.
T. D. Shuffler - ChairmanR. L. Leonard - CEO / DirectorA. J. Agostini - DirectorA. Ali - Non Exec DirectorC. O. Boxill - CFO / Company Secretary
100% owned by Caribbean Distribution Partners (a 50/50 JV between Agostini’s Limited and Goddard Enterprises Limited)
St. Lucia
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HANSCHELL INNISS LIMITED
Hanschell & Company was founded in 1884 by Mr. Valdemar Hanschell. He was of Danish descent and came to Barbados from the Virgin Islands, continuing his trade in ship brokerage and eventually adding ship chandlery to his services. Cockspur Rum was also founded in 1884 as a Hanschell brand and with this addition, the company traded successfully into the twentieth century led by his sons.
During the 1930’s Mr. G. A Larsen, then Attorney to the company and also from Denmark, joined the business and the company changed its name to Hanschell, Larsen & Co. Ltd. The company continued through most of the early part of the century focused on ship chandlery and branching out into the local liquor market with Cockspur and Best Matured Rums as well as imported spirits.
The company Hanschell Inniss Limited as we know it today was formed in 1970 through the merging of J. H. Inniss & Son Ltd. and Hanschell Larsen & Co. Ltd.. J. H. Inniss & Son Ltd was the importing arm of a merchant company, which developed its agency business as a result of being appointed as the agents for world renown brands such as Mars and Kellogg’s. The combined company Hanschell Inniss Limited continued its operations in ship chandlery while expanding its market share in servicing the hotel sector and well as selling FMCG products to the retail sector.
In 1973 Goddard’s agreed to buy out the main shareholders in Hanschell Inniss and combined it with an
existing Goddard subsidiary which already represented several food and spirits lines. Investment in what was then an ultra-modern facility at the current location at Kensington allowed the company to expand further and this included the birth of the EVE brand of hamburgers and hot dogs from its own meat processing plant (which would later become Hipac Limited) and later the launch of the Farmers Choice brand as well. Further growth was derived through the acquisition of Atkinson & Wolfe, a leading distributor of meats and fish and supplier company to the hospitality trade. Simeon Hunte & Son Ltd. with a range of agencies complementary to the Hanschell brands was also acquired.
In 1992 a joint venture company with International Distillers & Vintners (IDV), part of the Grand Metropolitan Group of the UK was formed, ID Caribbean (Distribution) Limited was formed to handle the distribution and marketing of all IDV brands and the Hanschell Inniss brands of rum and locally produced spirits throughout the Caribbean. ID Caribbean was subsequently merged with Hanschell Inniss Limited resulting in a Wines & Spirits division being formed in each of the distribution companies in the Goddard’s group.
Today Hanschell Inniss is a leading FMCG distributor in Barbados and as of July 2015, became one of the companies in the Caribbean Distribution Partners joint venture.
100% owned by Caribbean Distribution Partners (a 50/50 JV between Agostini’s Limited and Goddard Enterprises Limited) (continued)
T. D. Shuffler - ChairmanA.J. Agostini - Non Exec DirectorA. Ali - Non Exec DirectorR. Rajkumarsingh - Non Exec DirectorT. Greaves - CFO
Barbados
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100% owned by Caribbean Distribution Partners (a 50/50 JV between Agostini’s Limited and Goddard Enterprises Limited)
COREA’S DISTRIBUTION LIMITED
The history of Coreas Distribution Ltd, which was separat-ed from Coreas Hazells Inc. in July 2015, to become part of the Goddard’s and Agostini’s joint venture, Caribbean Dis-tribution Partners Ltd, is a complex one as it has evolved from the amalgamation of several companies over the past 170 years.
Its earliest roots go back to Hazells Limited which was established in St. Vincent in 1845 and is the oldest reg-istered company in St. Vincent, with wholesale food and liquor being two of its departments that are relevant to the company today. This company was acquired by God-dard’s in 1981.
Before that, in 1962, Goddard Enterprises Limited ac-quired United Traders Limited, a privately owned com-pany which traded in hardware (Hardware Department), food (Supermarket), motor vehicles (Automotive Depart-ment) and a Department Store.
In 1963 Goddard’s purchased another privately owned company called Corea and Co Limited with similar trad-ing practices to the above and included other activities.
Later, in 1968, another private company was purchased – Gerry Palmer Limited. In 1973, H.D. Dear Ltd – a company that held lands at Cane Hall and several agencies includ-
ing B.A.T (British American Tobacco) – was also purchased.
In 1985, Goddard acquired 53.59% of the shares in W.B. Hutchinson & Co (St. Vincent) Limited and in 1990 all the remaining shares were acquired. WBH had a Food Distri-bution Department among others.
In February 2002, Coreas Trading Limited took over the trading activities of W.B. Hutchinson (St. V) Ltd. In June 2002, Corea’s Trading Ltd and Hazells Ltd amalgamated under the name – Coreas Hazells Inc. In July 2003, Coreas Hazells Inc and Goddard Enterprises (ST. V) Ltd amalgam-ated under the name – Coreas Hazells Inc.
Coreas Distribution Limited
T. D. Shuffler - ChairmanJ. J. Forde - CEO / DirectorA. J. Agostini - Non Exec DirectorW. P. Putnam - Non Exec DirectorR. Rajkumarsingh - Non Exec DirectorC. D. James - CFO / Company Secretary
Main Office / Warehouse
Secondary Warehouse
St. Vincent
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INDEPENDENCE AGENCIES LIMITED
Independence Agencies Limited was established in October 1973 by C.K. Ralph Sylvester. The company consisted of C.K. Sylvester as Managing Director, his son Ken, and Richard Smith who operated a sales van.
Some of the first suppliers that the Company represented were Akafa, who supplied DANO powdered milk, British American Tobacco, Becks and Orangeboom beer from Holland, Mc Callum’s whisky from the UK and matches from Swedish Match. The company also imported rice, flour and sugar in bulk from Canada, USA and Guyana respectively.
By 1985, the company relocated to a larger location with more warehouse space and chill room facilities to allow for storage of bigger brands like Anchor cheese and butter from New Zealand and Alaska condensed milk from Holland. In 1988, the Empire cinema building was purchased and renovated to be the new location of the Head Office and warehouse. Brian Sylvester, a younger son of the founder joined the company then as a new addition to the management team.
In 1994 another building was purchased in Grand Anse, which was renovated and CK’s Super Valu Cash and Carry was opened the following year. By the end of 1995 the company purchased another portion of land on the Maurice Bishop Highway and constructed a warehouse building.
In 2000, the company was approached by Goddard’s Enterprises of Barbados. The shareholders at that time agreed to sell 51% of the shares to Goddard’s.
In September 2004, the Head Office in St. George’s was destroyed by Hurricane Ivan and the entire operation had to be relocated into the C.K.’s Super Valu Building. Within two years a new Head Office was opened on the Maurice Bishop Highway. Today, Independence Agencies is one of the leading distributors in Grenada with one of the widest ranges of world-renowned brands.
Goddard’s had acquired another 4% taking their holding to 55.12% by the time IAL was brought into the Caribbean Distribution Partners joint venture in July 2015.
55.12% owned by Caribbean Distribution Partners (a 50/50 JV between Agostini’s Limited and Goddard Enterprises Limited) (continued)
T. D. Shuffler - ChairmanK.P. Sylvester - CEO / DirectorC. B. Sylvester - DirectorA. J. Agostini - Non Exec DirectorR. Rajkumarsingh - Non Exec DirectorK.A. Joseph - CFO / Company Secretary
Grenada
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DESINCO TRADING LIMITED
By 1980. consumer goods had become increasingly scarce and virtually unavailable in Guyana. With the country at a crossroads, severe constrains and restriction on imports were imposed by the government of the day.
Frank DeAbreu (a life insurance salesman) garnered together his meagre resources and began “suitcase trading” in small quantities of items that were in short supply, such as cricket balls and Jamaican Ambi and Lander products.
Six years later, as consumer demand grew for better quality products, DeAbreu began importing from Lever Brothers West Indies Limited, Nabisco Incorporated and Sterling Drugs Limited. He imported such products as Breeze detergent, Dot toilet cleaner, Royal icing sugar, Royal gelatin, Fresco drink mix, Panadol and several others.
40% owned by Caribbean Distribution Partners (a 50/50 JV between Agostini’s Limited and Goddard Enterprises Limited)
By 1990, DeAbreu’s investment capital became severely strained, which resulted in him teaming up with Bhagwan Singh to form DeSinco Trading Limited (i.e. a partnership of DeAbreu & Singh). The following year the partnership ended and DeAbreu acquired sole ownership.
By 1993, Desinco had four employees and was well on the way to realizsing the company’s dream and vision of “Being the best distributor of quality consumer’s goods in Guyana”.
Desinco continued to grow and maintain strong brand presence and in January 2015 welcomed Agostini’s Ltd as their new partner, selling them a 40% stake in the business.
In July 2015, Desinco Limited became part of the Caribbean Distribution Partners joint venture.
DeSinco
F. D. DeAbreu - ChairmanD. P. DeAbreu - DirectorA. P. DeAbreu - DirectorA.J. Agostini - Non Exec DirectorC. E. Mouttet - Non Exec DirectorR. Rajkumarsingh - Non Exec DirectorG. T. DeLisle - CFO/ Company Secretary
Guyana
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Pharma-ceutical
Per-sonal Care
Food-stuff
House-hold Beer Wines Spirits To-
baccoIndus-
trialOil-field
Hard-ware
Con-tract-
ing
Nutri-tionals
• • •
• • • • • • • •
• • •• •
• • •
• • • • • •Coreas Distribution Limited • • • • • • • • •
• • • • • • • •
• • • • • • •DeSinco • •
Overview of Product Categories of our Companies
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Boardof Directors
Christian MouttetNon-Executive DirectorCEO / Director of Victor E. Mouttet LtdChairman of Prestige Holdings Ltd Director since 2010Chairman of the Corporate Gover-nance and Nomination Committee and Member of the Human Resources & Compensation Committee
Anthony J. AgostiniManaging Director of Agostini’s LtdDirector of Caribbean Finance Company LtdDirector since 1990
Joseph EsauChairman of Agostini’s LtdDirector of Prestige Holdings Ltd, Grace Kennedy Ltd and UWI Arthur Lok Jack Graduate School of BusinessDirector since 2004Member of the Human Resourc-es & Compensation Committee and Corporate Governance and Nomination Committee
Gregor NassiefNon-Executive Independent DirectorCEO of Cerca TechnologyDirector/Owner of Secret Bay (Dominica)Executive Chairman of Fort Young Hotel (Dominica)President of the Dominica Hotel & Tourism AssociationDirector since 2012
Barry A. DavisNon-Executive Indepen-dent DirectorFinancial Controller of Atlantic LNG Company of Trinidad & TobagoDirector since 2007Chairman of the Audit & Risk Committee and Member of the Corporate Governance and Nomina-tion Committee
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E. Gillian Warner-HudsonNon-Executive Indepen-dent DirectorManagement ConsultantDirector since 2009Member of the Human Resources & Compensa-tion Committee and Audit & Risk Committee
Reyaz W. Ahamad Non-Executive Director Chairman of Caribbean Finance Company Ltd Director of Southern Sales & Service Co Ltd and Trinidad and Tobago Chamber of Industry and CommerceDirector since 1996Committees: Chairman of Human Resources & Com-pensation Committee
Rajesh RajkumarsinghChief Financial Officer & Company Secretary of Agostini’s LtdDirector of First Citizens Bank Ltd.Company Secretary since 2014
Lisa M. MackenzieNon-Executive DirectorFinance Director of Access & Security Solutions Ltd.Director of Scotiabank Trinidad & Tobago Ltd and Scotialife Trinidad & Tobago LtdDirector since 2004
Amalia L. MaharajNon-Executive Independent DirectorPartner of Pollonais, Blanc, De la Bastide & JacelonDirector of Heroes Founda-tionDirector since 2011Member of the Audit & Risk Committee
Roger A. FarahNon-Executive Director CEO/Director of Smith Rob-ertson & Company LtdDirector of Vemco LtdDirector since 2010
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22Board ReportThe board of the company had four quarterly board meetings, one special board meeting to discuss the formation of Caribbean Distribution Partners Ltd and a strategic review / Plans and Budget meeting.
The average number of attendees at board meetings were 9.8 out of 10.
Board Committee Mandates & CommitteesCorporate Governance & Nomination Committee
The Committee makes appropriate recommenda-tions to the board based on the following:-
To monitor best practices for governance worldwide and review the Company’s governance practices to ensure they continue to exemplify appropriately high standards of corporate governance.
To recommend to the Board for consideration and adoption :
• The membership and mandates of Board Committees.
• The size and composition of the Board.
• Suitable candidates for nomination as Non- Executive Directors.
• Appointments to the Boards of Subsidiary, Affiliate and Associate Companies.
• The communication process between the Board and Management.
• Approval of the appointments of Executives to the Boards of companies outside the Agostini’s Limited Group.
To establish/review policies and procedures with respect to transactions between the Company, its subsidiaries and affiliates and Related Parties, Executive Officers and Directors.
To establish/monitor an appropriate Code of Conduct for the Company, its Executives, Managers and Employees and consider and deal with all matters of an ethical nature involving Executives and Non-Executive Directors.
To review as required and at least every two (2) years, the mandates and composition of Board committees.
To review the performance of Directors at least every two (2) years, by no later than August 31 of the review year.
To establish/monitor an appropriate procedure governing the trading in the Company’s securities by Directors and Officers.
To address any matter of Corporate Governance as delegated by the Board from time to time and to report to the Board on same.
Reporting of Committee Resolutions
The Committee shall report its resolutions by way of recommendations to the full Board for consideration and adoption at the next meeting of the Board following such meeting of the Committee.
This committee met twice during the year.
Corporate Governance & Nomination Committee
Christian Mouttet (Chairman)Joseph EsauBarry Davis
CorporateGovernance
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23Audit & Risk Committee
This Committee is responsible for :-
Financial Reporting
To review, and challenge where necessary, the actions and judgments of management, in relation to the Company’s financial statements, operating and financial review, interim reports, preliminary announcements and related formal statements before submission to, and approval by, the Board, and before clearance by auditors. Particular attention should be paid to:
• Critical accounting policies and practices, the consistency of their application and any changes in them.
• Decisions requiring a significant element of judgement.
• The extent to which the financial statements are affected by any unusual transactions in the year and how they are disclosed.
• The clarity of disclosures.
• Significant adjustments resulting from the audit.
• The going concern assumption.
• Compliance with accounting standards.
• Compliance with stock exchange and other legal requirements.
• The review of the annual financial statements of the pension funds and tri-annual actuarial valuations.
• To consider other topics, as defined by the Board.
Internal Audit
To monitor and review the effectiveness of the Company’s Internal Audit function in the context of the Company’s overall risk management system.
To approve the appointment of the external provider or head of internal audit.
To consider and approve the scope of the internal audit and ensure it has adequate resources and appropriate access to information to enable it to perform its function effectively and in accordance with the relevant professional standards. The Committee shall also ensure the function has adequate standing and is free from management or other restrictions.
To review and assess the annual internal audit plan.
To review promptly all reports on the Company from the internal auditor.
To review and monitor management’s responsiveness to the findings and recommendations of the internal auditor.
External Audit
To oversee the Company’s relations with the external auditor.
To consider, and make recommendations on the appointment, reappointment and removal of the external auditor.
To approve the terms of engagement and the remuneration to be paid to the external auditor in respect of audit services provided.
To assess the qualification, expertise and resources, effectiveness and independence of the external auditors annually. Steps to consider include;
The Company is in compliance with the Trinidad & Tobago Corporate
Governance Code.
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Seeking reassurance that the auditors and their staff have no family, financial, employment, investment or business relationship with the company (other than in the normal course of business).
Seeking from the Audit firm, on an annual basis, information about policies and processes for maintaining independence and monitoring compliance with relevant requirements.
Monitoring the external audit firm’s compliance with applicable ethical guidance.
To discuss with the external auditor, before the audit commences, the annual audit plan including the nature and scope of the audit and appropriate levels of materiality.
To review with the external auditors, the findings of their work, including any major issues that arose during the course of the audit and have subsequently been resolved and those issues that have been left unresolved; key accounting and audit judgements, levels of errors identified during the audit, obtaining explanations from management and, where necessary the external auditors, as to why certain errors might remain unadjusted;
To assess, at the end of the audit cycle, the effectiveness of the audit process by:
Reviewing whether the auditor has met the agreed audit plan and understanding the reasons for any changes, including changes in perceived audit risks and the work undertaken by the external auditors to address those risks.
Consideration of the robustness and perceptiveness of the auditors in their handling of the key accounting and audit judgements identified and in responding to questions from the audit committee, and in their commentary, where appropriate, on the systems of internal control.
Obtaining feedback about the conduct of the audit from key people involved.
To review and monitor the content of the external auditor’s management letter, in order to assess whether it is based on a good understanding of the company’s business and establish whether recommendations have been acted upon and, if not, the reasons why they have not been acted upon;
To develop and recommend to the board the company’s policy in relation to the provision of non-audit services by
the auditor and ensure that the provision of such services does not impair the external auditor’s independence or objectivity.
Internal Control
To review the effectiveness of the Company’s procedures for whistleblowing and for detecting fraud;
To review management’s reports of the effectiveness of the systems for internal financial control and financial reporting;
To review the statement in the annual report and accounts on the company’s internal controls and risk management framework;
To monitor the integrity of the company’s internal financial controls;
To assess the effectiveness of the systems established by management to identify, manage and monitor both financial and non financial risks,
Risk
To consider any matters relating to the identification, assessment, monitoring and management of risks associated with the operations of the Group, that it determines to be appropriate and any other matters referred to it by the Board.
To consider, and make recommendations to the Board in connection with, the compliance by the Group with its Risk Appetite Statement.
To report to the Board on any material changes to the risk profile of the Group.
To monitor and refer to the Board any instances involving material breaches or potential breaches of the Group’s Risk Appetite Statement.
To review the annual insurance coverage and ensure all insurable risks are adequately covered.
The Audit & Risk Committee met four times during the year.
Audit & Risk Committee
Barry Davis (Chairman)Gillian Warner Hudson
Amalia Maharaj
Corporate Governance (continued)
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Human Resources, Compensationand Stock Options Committee
This Committee is responsible for all matters relating to the compensation policies of the Group. It reviews, approves or recommends to the Board of Directors suitable Compensation Policies, the compensation structure and programmes, and Stock Option grants to Senior Management.
The Committee’s primary responsibilities are as follows:-
To review and approve (if previously delegated by the Board) or recommend to the Board of Directors, for adoption, as appropriate, all Human Resource and Compensation Policies of the Agostini’s Limited Group.
To review and recommend to the Board for approval, the compensation structure and incentive programmes for the Group Managing Director and other Executives. The Group Managing Director may also consult with the Committee regarding the compensation structure and programmes for Managers, whose compensation will be determined by the Group Managing Director, consistent with the guidelines set by the Committee.
To propose, within the guidelines set out in the Company’s compensation structure, for approval for the Board, annual Stock Option/ESOP grants under the Company’s Long Term Incentive Plan, and Annual Bonus and other Incentive Based awards to Executives and other qualifying employees.
To review the compensation paid to Non-Executive Directors and recommend appropriate adjustments from time to time.
To review and approve management succession plans for Executive Officers.
To review with the Group Managing Director and to recommend to the Board, appointments of all officers at or above the level of General Manager throughout the Agostini’s Limited Group.
To monitor the Executive Medical Examination Policy and process, including the approval of the physician.
To address any matters of Human Resources or Compensation as delegated by the Board from time to time and to report to the Board on same.
Reporting of Committee Resolutions
The Committee shall report its resolutions by way of recommendations to the full Board for consideration and adoption at the next meeting of the Board following such meeting of the Committee.
This Committee met once during the year.
HR, Compensation & Stock Options Committee
Reyaz Ahamad (Chairman)
Joseph Esau
Christian Mouttet
Barry Davis
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Industrial and Construction
Agostini Marketing, our building products and contracting services business, achieved record results.
Rosco Petroavance, our oilfield, industrial and hydraulic products business, had a very challenging year, and recorded substantially lower profit due to the steep fall in oil and gas prices that affected their main customer base. They have recently completed a new and expanded office and warehouse facility, and will be launching the ExxonMobil lubricants product line in January 2016; we expect this to support the currently depressed energy segment of the business.
Fast Moving Consumer Goods [FMCG]
Last July we entered into a joint venture with Goddard Enterprises Ltd of Barbados, forming Caribbean Distribution Partners Ltd [CDP], which now holds the FMCG businesses of both groups.
Hand Arnold Trinidad Limited, Hanschell Inniss Limited of Barbados and Peter & Company Limited of St Lucia all had a challenging year, and performed below expectations. Coreas Distribution Limited of St Vincent, Independence Agencies Limited of Grenada [55.12%] and Desinco Limited of Guyana [40%], recorded good results.
CDP will be investing heavily in infrastructure and systems to modernize the operations and to accommodate new lines that the synergies of the two Groups will deliver, and we are positive about the future of this JV.
CONSOLIDATED RESULTSAND FINANCIAL POSITION
Group sales and profit attributable to shareholders for the year ended September 30, 2015 amounted to $ 1.71 billion and $ 80.6 million, compared with $1.36 billion and $79.9 million in the previous year, respectively. Earnings per share was $1.37 compared with $1.36 in 2014. Included in these results are $9.3m in non-recurring costs associated with the HDC arbitration, refinancing penalties and expenses related to our investment in the region, all previously reported on in previous quarters.
Our year-end debt to equity ratio remains strong at 23:77 after funding an additional $90 million investment in the Joint Venture with Goddard Enterprises Limited.
OPERATIONS REVIEW AND SEGMENT ANALYSIS
Pharmaceutical & Personal Care
Smith Robertson, our Pharmaceutical and Personal Care distribution Company, again produced strong results, and continues to be a significant contributor to the Group’s performance.
SuperPharm, with eight locations, also had an excellent year that saw record results in sales and profit. Our planned Mausica store, which is part of a property being developed by the landowner, has been progressing very slowly but we are hoping for a late 2016 opening.
Chairman’sRemarks
JOSEPH P. ESAU
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0.2
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0.4
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0.6
Year2011 2012 2013 2014 2015
0.440.42
0.55
0.46
0.56
Our new investments will provide great opportunities for growth over the medium term.
OUTLOOK
Our FMCG initiative resulted in expansion into four additional markets in the Eastern Caribbean and Guyana, although the exceptional related costs had a negative effect on consolidated profit margin.
While we expect some slowdown in the Trinidad & Tobago economy, we are in a strong financial position, and our new investments will provide great opportunities for growth over the medium term.
DIVIDENDS
Your Board has approved a final dividend of 34 cents per share which brings the total dividend for the year to 56 cents, compared with 55 cents in 2014. This dividend will be paid on February 1, 2016 to shareholders on the register of members on January 6, 2016. The Company’s register of members will be closed on January 7 and 8, 2016.
ACKNOWLEDGEMENTS
We thank our employees for their hard work and dedication over the past year, and welcome our many new colleagues from the region who are now part of our family. We are grateful to our many customers and suppliers who have supported us in the past year, and I thank my fellow Directors for their guidance and committed service.
Joseph P. Esau
ChairmanNovember 27, 2015
Dividends per Share (TT$)Share Price at Year End (TT$)
0
5
10
15
20
Year2011 2012 2013 2014 2015
15.37
12.57
17.2517.60 18.00
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FINANCIAL HIGHLIGHTS 2015 2014 % Increase $’000 $’000 Gross Sales 1,811,788 1,410,639 28.44 Sales to Third Parties 1,706,617 1,359,383 25.54 Operating Profit 124,273 123,696 0.47 Profit before Tax 113,839 107,145 6.25 Profit for the Year 82,175 80,546 2.02 Profit attritutable to Shareholders 80,576 79,932 0.81 Stock Units In Issue ('000) 58,704 58,704 - Earnings per Share $1.37 $1.36 0.74 Total Dividends 32,874 32,287 1.82 Total Assets 1,513,617 955,373 58.43 Stockholder's Equity 747,358 555,305 34.59
Management Discussion
& Analysis
ANTHONY AGOSTINI
Agostini’s expands regionally in its 90th anniversary year.
The group’s 90th year of operation in 2015 was a trans-formational one. On January 1, 2015 we acquired a 40% shareholding in Desinco Limited in Guyana, our first in-vestment outside of Trinidad and Tobago in the Fast-Mov-ing Consumer Goods (FMCG) area. This was followed by our acquisition of Facey Trading Limited in Barbados in February. During this period we were also in discussions with Goddard Enterprises Limited, a Barbados-based con-glomerate, to pool our FMCG resources in the region. This arrangement was concluded on July 1, 2015, when we entered into a 50/50 joint venture with Goddard’s, form-ing Caribbean Distribution Partners Limited (CDP). We transferred our holdings in Hand Arnold Trinidad Limited of Trinidad and Tobago, Desinco Limited of Guyana and Facey Trading Limited of Barbados into CDP and God-dard’s transferred their holdings in Hanschell Inniss Lim-
ited of Barbados, Peter & Company Limited of St. Lucia, Coreas Distribution Limited of St. Vincent, all of which they owned 100%, and also their 55.12% holding in In-dependence Agencies Limited of Grenada into the joint venture.
In August we closed Facey Trading and moved their significant lines into Hanschell Inniss. This platform across six Caribbean territories has provided us with an excellent opportunity to leverage our group’s own brands, those owned by Goddard Enterprises and other imported brands, where we could offer our unique marketing and distribution expertise and a wider range of international brands. The first international addition to our distribution network has been the Campbell’s line, which covers Campbell’s soups, V8 juices, Pepperidge Farm cookies and Prego.
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The sales of the group grew by 25% to $1.7 billion and profit before taxation also grew by 6% to $113 million. This resulted in our profit after tax being just above the prior year’s at $80.6 million. Contributing factors to prof-its being close to the prior year’s were higher tax rates in the region, penalties paid on our debt restructuring, which were not allowable for tax purposes, one-off legal and other expenses related to our investment in our re-gional joint venture and one-off legal and arbitration fees incurred in our matter with the Housing Development Corporation (HDC). The decision on the latter is expected in the near future. We have fully provided for the mon-ies owed to us and for the expected legal and arbitration fees.
PHARMACEUTICAL AND PERSONAL CARE DISTRIBUTION
Our pharmaceutical distribution company, Smith Robert-son, recorded another strong performance in 2015. This subsidiary continues to be the leading supplier of both prescription and over-the counter (OTC) pharmaceuticals to the government and the private sectors. In addition to Pharmaceuticals, the company also has a significant port-folio of Personal Care Brands, for which the company re-ceived awards during the past year from two major Health & Beauty Care Suppliers in recognition of its performance and distribution of their products. Smith Robertson con-tinues to serve market needs at a superior level through the provision of quality products within an efficient dis-tribution framework.
RETAIL
SuperPharm opened its eighth big box outlet in Diego Martin in November 2014 and has been well received by the residents of the area. This additional outlet assisted in the achievement of another record year for sales and profit. The building of our store at Mausica, Arima, which is being constructed by the property owner, continues to face setbacks. We believe progress will be made in 2016 and look forward to the opening in late 2016. We con-tinue to look for suitable sites to expand our footprint in areas we do not currently serve.
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0
500
1,000
1,500
2,000
Year2011 2012 2013 2014 2015
1,2941,2561,3591,313
1,707
Turnover (TT$ million)
0
30
60
90
120
150
Year2011 2012 2013 2014 2015
99101
123
104
124
Operating Profit (TT$ million)
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MD&A (continued)
FAST MOVING CONSUMER GOODS (FMCG)
With our joint venture company CDP, we expect that our learnings and synergies in the FMCG sector, together with the transfer of the distribution of the two group brands into the various companies, will allow for growth and success going forward.
The subsidiaries of CDP are:-
Hand Arnold Trinidad Limited -100%
Hand Arnold had a challenging year with commodity prices falling and margins being squeezed as a result. With pricing now stabilised and the Goddard lines of Bop and Beep being distributed by Hand Arnold from January 2016, we can expect much improved results in the year ahead.
Hanschell Inniss Limited - 100%
Hanschell Inniss had a difficult year as they struggled with the implementation of a new IT platform and a sluggish Barbados economy. With the new lines we added from the Facey Trading acquisition and the transfer of the Swiss lines from January 2016, we can expect a quick turn-around. A new distribution facility to cater for Hanschell's expanded business is under consideration.
Peter & Company Limited - 100%
The amalgamation of Bryden & Partners with Peter & Company is nearing completion. The expanded offices and warehousing facility at Cul de Sac should be com-pleted by the company's third quarter. The full benefits of this merger will be more evident when this is completed. We can therefore expect better results from this company in 2016.
Coreas Distribution Limited - 100%
Coreas had a good year but suffered a setback when their "Food Mart" in the heart of downtown Kingstown was de-stroyed by fire in August 2015. Rebuilding at the same site is about to commence. An expanded distribution facility at Diamond is being planned.
Independence Agencies Limited - 55.12%
Independence Agencies had a good year in spite of the challenges facing the Grenadian economy. An expansion to their warehouse facility will commence in early 2016.
Desinco Limited - 40%
Desinco had an excellent nine months and substantially expanded its product offering during the year. With sev-eral additional lines coming on stream in early 2016, we can expect their growth to continue.
Agostini Marketing had a record year in 2015, driven by a wide number of interior contracting contracts and by sales of building materials being more robust than in the recent past.
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TEN YEAR FINANCIAL REVIEW Revised Revised Revised Revised Revised 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000Group Turnover 1,706,617 1,359,383 1,312,703 1,293,887 1,255,743 856,702 719,765 547,410 449,296 384,740 Profit Before Taxation 113,839 107,145 87,156 90,242 87,434 57,354 52,339 46,063 37,685 29,347 Profit for the Year 82,175 80,546 62,580 65,217 61,523 40,371 36,373 33,855 27,977 21,992 Net Profit Atrtributable to Agostini's Limited Shareholders 80,576 79,932 61,946 64,770 61,275 24,780 791 30,201 27,779 21,818 Dividend Amount 32,874 32,287 26,984 25,811 24,611 10,241 1,453 11,899 11,833 9,407 Times covered 2.45 2.48 2.30 2.51 2.49 2.4 - 2.5 2.4 2.3 Issued Stock Units ('000) 58,704 58,704 58,704 58,662 58,608 58,583 29,057 27,029 26,897 26,887 Stockholder's Equity 587,093 554,058 494,513 446,964 402,773 358,933 216,992 210,008 182,775 169,429 Dividend per Stock Unit 56¢ 55¢ 46¢ 44¢ 42¢ 20¢ 5¢ 42¢ 44¢ 35¢ Earnings per Stock Unit 137.2¢ 136.2¢ 105.5¢ 110.5¢ 104.9¢ 74.7¢ 2.7¢ 111.9¢ 103.3¢ 81.3¢ Net Assets 993,563 698,792 660,025 561,494 485,668 443,646 300,592 298,802 216,554 197,878 Notes: 1 The 2012 and 2013 figures have been adjusted in accordance with IAS 19 Pension Benefits.2 The 2008 and 2009 figures have been adjusted in accordance with IFRS 5 Non current assets held for sale and discontinued operations.3 The stockholders equity figure for 2007 has been adjusted to reflect the adoption of IAS 12 p61 (a).
INFORMATION BY SEGMENT Third Party Turnover Operating Profit 2015 2014 2015 2014 $’000 $’000 $’000 $’000Pharmaceutical and Personal Care 905,325 853,134 99,346 92,498Fast Moving Consumer Goods 608,602 338,595 20,621 23,507 Industrial, Construction & Holdings 192,690 167,654 4,306 7,691
1,706,617 1,359,383 124,273 123,696 Group Assets Employees Employed at Year End 2015 2014 2015 2014 $’000 $’000Pharmaceutical and Personal Care 487,722 465,535 623 561Fast Moving Consumer Goods 678,091 229,132 1,067 223 Industrial, Construction & Holdings 347,804 260,708 200 184
1,513,617 955,375 1,890 968
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MD&A (continued)
INDUSTRIAL & CONSTRUCTION PRODUCTS & SERVICESCONSTRUCTION
Agostini Marketing had a record year in 2015. This was driven by a wide number of interior contracting contracts and by sales of building materials being more robust than in the recent past.
ENERGY & INDUSTRIAL PRODUCTS & SERVICES
Rosco Petroavance’s performance suffered as they serve the oil and gas sector, which was depressed by low en-ergy prices. Their profit fell short of prior year as a result. Construction of the company’s new office and warehouse building has just been completed and is providing much needed additional space for storage and service activities. Rosco has been successful in securing the ExxonMobil lu-bricant distributorship and will launch the range in 2016. This should be a significant addition to their business in the years ahead.
PROPERTY RATIONALISATIONDuring the year we purchased the Kimberly Clark proper-ty on Chootoo Road. SuperPharm's office and warehouse will be moving there in the second quarter 2016. Surplus warehouse space has been rented.
Our Nelson Street property is for rent and sale. We pres-ently have 30% rented and another 30% to be finalised shortly, with the final available area attracting some inter-est.
CORPORATE SOCIAL RESPONSIBILITYDuring the year, the group donated to numerous chari-ties and worthy causes as a means of giving back to those less fortunate in our community. We have registered a Foundation and await its approval by the tax authorities, so that we can put it into full operation.
Anthony Agostini
Managing DirectorDecember 4, 2015
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Your Directors have pleasure in presenting their report for the year ended September 30, 2015.
Financial Results $’000
Income for the year before taxation 113,839
Less taxation (31,664)
Profit for the year 82,175
Less: Attributable to minority interest (1,599)
Net income for the year after taxation 80,576 Dividends - interim (12,914)
- final (19,960)
Profit retained for the year 47,702
Dividend
Based on the Group’s results, the Directors have approved a final dividend of 34¢, resulting in a total dividend of 56¢ for the year.
Directors
The Directors retiring by rotation under the bye laws, Mr. Anthony Agostini, Mr. Reyaz Ahamad, Ms. Gillian Warner Hud-son and Mr. Gregor Nassief, being eligible, offer themselves for re-election.
Auditors
The Auditors, Ernst & Young, retire and being eligible, offer themselves for reappointment.
The Directors are satisfied that the audited Financial Statements published in this Report comply with applicable finan-cial reporting standards, and present fairly in all material respects, the financial affairs of the Group.
By Order of the Board
R. RajkumarsinghSecretaryDecember 4, 2015
Reportof the Directors
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Secretary and Registered Office:R. Rajkumarsingh
18 Victoria Avenue
Port of Spain
Registrars:RBC Trust (Trinidad and Tobago) Limited
8th Floor, 55 Independence Square
Port of Spain
Attorneys-at-Law:Pollonais, Blanc, De la Bastide & Jacelon
17 Pembroke Street
Port of Spain
Auditors: Ernst & Young
5&7 Sweet Briar Road
St. Clair
CorporateInformation
Bankers: Scotiabank Trinidad & Tobago Limited
ScotiaCentre
Corner Park & Richmond Streets
Port of Spain
Republic Bank Limited
59 Independence Square
Port of Spain
First Citizens Bank Limited
9 Queen’s Park East
Port of Spain
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To the Shareholders of Agostini’s Limited
Report on the consolidated financial statements
We have audited the accompanying consolidated financial statements of Agostini’s Limited and its subsidiaries (the Group) which comprise the consolidated statement of financial position as of 30 September 2015 and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and con-solidated statement of cash flows for the year then ended and a summary of significant accounting policies and other explanatory information.
Management’s responsibility for the financial statements
Management is responsible for the preparation and the fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
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 consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assess-ments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated 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 appro-priateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects the financial position of the Group as of 30 September 2015, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.
Port of SpainTRINIDADNovember 27, 2015
Independent Auditor’sReport
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Consolidated Statementof Financial Position
2015 2014 Notes $’000 $’000
ASSETSNon-current assets Property, plant and equipment 5 379,012 247,985 Investment property 6 64,694 57,259 Investment in associate 2a 12,942 - Intangible asset 7 125,125 78,017 Retirement benefit assets 8 19,667 25,783 Deferred tax asset 14 14,459 14,376
615,899 423,420Current assets Inventories 9 414,415 279,113 Construction contract work-in-progress 10 58 275 Taxation recoverable 4,497 2,952 Trade and other receivables 11 341,413 218,079 Cash at bank and in hand 20 137,335 31,534
897,718 531,953
Total assets 1,513,617 955,373
EQUITYCapital and reserves Stated capital 12 187,404 187,404 Capital reserve 2,652 2,652 Revaluation reserve 28,422 28,422 Retained earnings 368,615 335,580
587,093 554,058 Non-controlling interests 160,265 1,247
Total equity 747,358 555,305
AS AT SEPTEMBER 30, 2015
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Consolidated Statement of Financial Position (continued)
2015 2014 Notes $’000 $’000
AS AT SEPTEMBER 30, 2015
LIABILITIESNon-current liabilities Borrowings 13 221,547 129,089 Retirement benefit liability 8 1,609 – Deferred tax liability 14 23,049 14,398
246,205 143,487Current liabilities Trade and other payables 15 372,529 200,116 Taxation payable 3,634 5,294 Borrowings 13 143,891 51,171
520,054 256,581
Total liabilities 766,259 400,068
Total equity and liabilities 1,513,617 955,373
The accompanying notes form an integral part of these financial statements.
On November 27, 2015 the Board of Directors of Agostini’s Limited authorised these financial statements for issue.
_________________________________ Director _________________________________ Director
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ConsolidatedIncome Statement
2015 2014 Notes $’000 $’000
Turnover 1,706,617 1,359,383
Cost of sales (1,314,052) (1,035,534)
Gross profit 392,565 323,849
Other operating income 31,887 28,080
424,452 351,929
Expenses Other operating (176,425) (132,518) Administration (89,375) (60,661) Marketing and distribution (34,379) (35,054)
(300,179) (228,233)
Operating profit 124,273 123,696Gain on revaluation of investment property 6 - 32Finance costs - net 17 (12,577) (16,583)Share of profit in associate 29 2,143 -
Profit before taxation 113,839 107,145
Taxation 18 (31,664) (26,599)
Profit for the year 82,175 80,546
Attributable to: Owners of the parent 80,576 79,932 Non-controlling interests 1,599 614
82,175 80,546Earnings per share for profit attributable to shareholders $ $ - Basic 19 1.37 1.36
- Diluted 19 1.37 1.36
The accompanying notes form an integral part of these financial statements.
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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Consolidated Statementof Comprehensive Income
2015 2014 $’000 $’000
Profit for the year 82,175 80,546
Other comprehensive income not to be reclassified to profit or loss in subsequent period:
(Losses)/gain on defined benefit plans (11,238) 10,485Income tax effect 2,684 (2,621)
(8,554) 7,864Revaluation loss of land and buildings (Note 5) - (100)Income tax effect (Note 14) - 25
Net other comprehensive income not to be reclassified to profit or loss in subsequent periods - (75)
Other comprehensive (loss)/income for the year, net of tax (8,554) 7,789
Total comprehensive income for the year, net of tax 73,621 88,335
Attributable to:Owners of the parent 74,992 87,721Non-controlling interests (1,371) 614
73,621 88,335
The accompanying notes form an integral part of these financial statements.
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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Consolidated Statementof Changes in Equity
Attributable to equity holders of the parent
Re- Non Stated Capital valuation Retained controlling capital reserve reserve earnings Total interests Total Notes $’000 $’000 $’000 $’000 $’000 $’000 $’000
Year ended 30 September 2015
Balance at 1 October 2014 187,404 2,652 28,422 335,580 554,058 1,247 555,305Other changes in the composition of the Group – – – (9,670) (9,670) 160,583 150,913Profit for the year – – – 80,576 80,576 1,599 82,175Other comprehensive loss – – – (5,584) (5,584) (2,970) (8,554)
Total comprehensive income – – – 65,322 65,322 160,459 224,534Dividend paid – 2015 (55¢ per share) 26 – – – (32,287) (32,287) (194) (32,481)
Balance at 30 September 2015 187,404 2,652 28,422 368,615 587,093 160,265 747,358
Year ended 30 September 2014
Balance at 1 October 2013 187,404 2,652 28,497 275,960 494,513 1,069 495,582Profit for the year – – – 79,932 79,932 614 80,546Other comprehensive income – – (75) 7,864 7,789 – 7,789
Total comprehensive income – – (75) 87,796 87,721 614 88,335Dividend paid – 2014 (48¢ per share) 26 – – – (28,176) (28,176) (436) (28,612)
Balance at 30 September 2014 187,404 2,652 28,422 335,580 554,058 1,247 555,305
The accompanying notes form an integral part of these financial statements.
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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Consolidated Statementof Cash Flows
2015 2014 Notes $’000 $’000Operating activitiesProfit before taxation 113,839 107,145Adjustments for:Depreciation of property, plant and equipment 5 19,128 18,546Amortisation of intangible assets 7 1,148 1,058Gain on sale of plant and equipment (562) (7)Share of profit of associate 29 (2,143) –Net retirement benefit expense 8 1,817 483Gain on revaluation of investment property 6 – (32)Property, plant and equipment write off – 1,567
Operating profit before changes in working capital 133,227 128,760Changes in working capitalDecrease/(increase) in inventories 11,703 (33,145)Decrease/(increase) in work-in-progress 217 (193)Decrease/(increase) in trade and other receivables 76,099 (31,330)(Decrease)/increase in trade and other payables (45,703) 39,123
Net cash flows from operations 175,543 103,215Taxation paid (24,343) (22,997)
Net cash flows from operating activities 151,200 80,218
Investing activitiesPurchase of property, plant and equipment 5 (62,019) (22,654)Purchase of investment property 6 (7,435) –Proceeds from sale of plant and equipment 685 130Purchase of intangible assets 7 (2,000) (51)Purchase of subsidiaries (75,799) –Investment in associate 29 (11,656) –
Net cash flows used in investing activities (158,224) (22,575)
Financing activitiesNet proceeds/(repayment) of loans 96,502 (23,040)Dividends paid 26 (32,287) (28,176)Dividends paid to minority interests (195) (436)
Net cash flows from/(used in) financing activities 64,020 (51,652)
Cash increase during the year 56,996 5,991
Cash and cash equivalents, at 1 October (1,433) (7,424)
Cash and cash equivalents, at 30 September 20 55,563 (1,433)
The accompanying notes form an integral part of these financial statements.
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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Notes to theConsolidated Financial Statements
1. General informationThe Company is a limited liability company, incorporated and domiciled in the Republic of Trinidad and Tobago and the address of its registered office is 18 Victoria Avenue, Port of Spain. The Group is principally engaged in trading and distribution and interior building contracting.
The shares of the Parent Company are listed on the Trinidad and Tobago Stock Exchange. The majority shareholder is Victor E. Mouttet Limited (VEML), which owns 50.3% of the shares.
2. Summary of significant accounting policiesThe 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.
(a) Basis of preparation
The consolidated financial statements of the Group are prepared under the historical cost convention as modified by the revaluation of the land and buildings, investment property and financial investments (Notes 2(e), 2(f ) and 2 (k)). These consolidated financial statements are expressed in Trinidad and Tobago dollars.
The consolidated financial statements provide comparative information in respect of the previous period.
i) Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial Re-porting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
ii) Principles of consolidation
The consolidated financial statements of the Group include the accounts of the parent and its subsidiary companies. All intra-group balances, transactions, and income and expenses have been eliminated in full.
Non-controlling interests represent the portion of profit or loss and net assets not held by the Group and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from parent shareholders’ equity.
iii) Changes in accounting policies and disclosures
a) New accounting policies adopted
The accounting policies adopted are consistent with those of the previous financial year except that the Group has adopted the following new and amended IFRS and IFRIC (International Financial Reporting Interpretations Committee) interpretations as of 1 October 2014:
• IAS 19 Employee Benefits (Amendment)• IFRIC 21 Levies • Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) • IAS 32 Offsetting Financial Assets and Financial Liabilities – Amendments to IAS 32 • IAS 39 Novation of Derivatives and Continuation of Hedge Accounting – Amendments to IAS 39
Amendments to IAS 19 Employee Benefits
These amendments require consideration of contributions from employees or third parties when ac-counting for defined benefit plans. IAS 19 requires such contributions that are linked to service to be attributed to periods of service as a negative benefit. The amendments clarify that, if the amount of the contributions is independent of the number of years of service, recognition of such contributions as a reduction in the service cost in the period in which the service is rendered is permitted, instead of al-locating the contributions to the periods of service. These amendments had no impact on the Group’s consolidated financial statements.
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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2. Summary of significant accounting policies (continued)(a) Basis of preparation (continued)
iii) Changes in accounting policies and disclosures (continued)
a) New accounting policies adopted (continued)
IFRIC 21, ‘Levies’
IFRIC 21 is applicable to all levies other than outflows that are within the scope of other standards and fines or other penalties for breaches of legislation. Levies are outflows of resources embodying econom-ic benefits imposed by government on entities in accordance with legislation. The interpretation clari-fies that an entity recognises a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is accrued progressively only if the activity that triggers payment occurs over a period of time, in accordance with the relevant legislation. The application of this IFRIC did not have any impact on the Group’s financial statements.
Amendments to IFRS 10, IFRS 12 and IAS 27 – Investment Entities
The investment entities amendments apply to investments in subsidiaries, joint ventures and associ-ates held by a reporting entity that meets the definition of an investment entity. As the Group is not an investment entity, these amendments have no impact on the Group’s financial statements.
Amendments to IAS 32 – Offsetting Financial Assets and Financial Liabilities
The amendments to IAS 32 clarify the meaning of “currently has a legally enforceable right to set-off” and the application of the IAS 32 offsetting criteria to settlement system, which apply gross settlement mechanisms that are not simultaneous. The Group re-assessed all assets and liabilities which are offset and which can potentially be offset and has confirmed that the treatment of all such assets and liabili-ties are in compliance with the amended standard. These amendments therefore had no impact on the Group’s consolidated financial statements.
Amendments to IAS 39 – Novation of Derivatives and Continuation of Hedge Accounting
The amendments provide an exception to the requirement to discontinue hedge accounting in certain circumstances in which there is a change in counterparty to a hedging instrument in order to achieve clearing for that instrument. These amendments are not applicable to the Group because the Group currently has no derivative or hedging relationships.
Annual Improvements to IFRSs 2010-2012 Cycle – Published December 2013
Certain limited amendments, which primarily consist of clarifications to existing guidance, were made to the following standards:
• IFRS 2, ‘Share-based Payment’• IFRS 3, ‘Business Combinations’• IFRS 8, ‘Operating Segments’• IFRS 13, ‘Fair Value Measurement’• IAS 16, ‘Property, Plant and Equipment’• IAS 24, ‘Related Party Disclosures’• IAS 38, ‘Intangible Assets’
These improvements are effective for annual periods beginning on or after 1 July 2014 and had no im-pact on the consolidated financial statements.
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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2. Summary of significant accounting policies (continued)(a) Basis of preparation (continued)
iii) Changes in accounting policies and disclosures (continued)
a) New accounting policies adopted (continued)
Annual Improvements to IFRSs 2011-2013 Cycle – Published December 2013
Certain limited amendments, which primarily consist of clarifications to existing guidance, were made to the following standards:
• IFRS 1, ‘First-time Adoption of International Financial Reporting Standards’• IFRS 3, ‘Business Combinations’• IFRS 13, ‘Fair Value Measurement’• IAS 40, ‘Investment Property’
These improvements were effective for annual periods beginning on or after 1 July 2014 and had no impact on the consolidated financial statements.
b) New accounting policies not adopted
The Group has not adopted early the following new and revised IFRS’s and IFRIC interpretations that have been issued but are not yet effective or not relevant to the Group’s operations:
• IFRS 14, ‘Regulatory Deferral Accounts’ - Effective 1 January 2016• Amendments to IFRS 11 – Accounting for Acquisition of Interests in Joint Operations – Effective 1
January 2016• Amendments to IAS 16 and IAS 38 – Clarification of Acceptable Methods of Depreciation and Am-
ortisation – Effective 1 January 2016• IFRS 15, ‘Revenue from Contracts with Customers’ – Effective 1 January 2017. • Amendments to IFRS 10, IFRS 12 and IAS 28 – Investment Entities: Applying the Consolidation Ex-
ception – Effective 1 January 2016• Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture – Effective 1 January 2016• Amendments to IAS 1 – Disclosure Initiative – Effective 1 January 2016• Amendments to IAS 16 and IAS 41 – Agriculture: Bearer Plants – Effective 1 January 2016The Group is currently assessing the potential impact of these new standards and interpretations and will adopt them when they are effective.
Certain limited amendments, which primarily consist of clarifications to existing guidance, were made to the following standards and are not expected to have a material impact on the consolidated financial statements and are effective for annual periods beginning on or after 1 January 2016:
• IFRS 5, ‘Non-current Assets Held for Sale and Discontinued Operations’• IFRS 7, ‘Financial Instruments: Disclosures’• IAS 19, ‘Employee Benefits’• IAS 34, ‘Interim Financial Reporting’
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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2. Summary of significant accounting policies (continued)
(b) Consolidation
i) Subsidiaries
Subsidiaries, which are those companies in which the Group, directly or indirectly, has an interest of more than one half of the voting rights or otherwise has power to govern the financial and operating policies are consolidated. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.
All significant inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated; unrealised losses are also eliminated unless the cost cannot be recovered. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured at 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 ini-tially at their fair values at the acquisition date, irrespective of the extent of any non-controlling 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 intangibles and 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 income statement.
ii) Transactions and minority interests
The Group applies a policy of treating transactions with non-controlling interests as transactions with parties external to the Group.
A listing of the Group’s subsidiaries is set out in Note 22.
(c) Segment reporting
An operating segment is a group of assets, liabilities and operations which are included in the measures that are used by the chief operating decision maker.
(d) Foreign currency translation
i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consoli-dated financial statements are presented in Trinidad and Tobago dollars, which is the Group’s functional and presentation currency.
ii) 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 denomi-nated in foreign currencies, are recognised in the consolidated income statement.
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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2. Summary of significant accounting policies (continued)(d) Foreign currency translation (continued)
iii) Group companies
On consolidation the assets and liabilities of foreign operations are translated into Trinidad and Tobago dol-lars at the rate of exchange prevailing at the reporting date and their consolidated income statements are translated at the average rate for the financial period. The exchange differences arising on translation for consolidation are recognised in other comprehensive income.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the rate of exchange at the reporting date.
(e) Property, plant and equipment
Freehold properties comprise mainly warehouses, retail outlets and offices occupied by the Group and are shown at fair value, based on valuations by external independent appraisers, less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. All other property, plant and equip-ment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attribut-able 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 income statement during the financial period in which they are incurred.
Increases in the carrying amount arising on revaluation of land and buildings are credited to the revaluation reserve included in the equity section of the consolidated statement of financial position. Decreases that offset previous increases of the same asset are charged against revaluation reserve directly in equity; all other decreases are charged to the consolidated income statement.
The freehold buildings are depreciated on a straight line basis at 1.5% - 2% per annum on the valuation. Lease-hold improvements are amortised over the lives of the leases which include options to renew for further terms ranging from 6 years to 10 years which the Group intend to exercise. Land and capital work-in-progress are not depreciated. Depreciation is provided on plant and other assets on the straight line basis at rates as follows:
Machinery and equipment - 10% - 33 1/3% per annum
Motor vehicles - 12 1/2% - 25% per annum
Furniture and office equipment - 10% - 25% per annum
The estimated useful lives of property, plant and equipment is reviewed and adjusted if appropriate, at each financial year end.
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 amounts. These are included in the consolidated income statement. When revalued assets are sold, the amounts included in the revaluation surplus account are transferred to retained earnings.
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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2. Summary of significant accounting policies (continued)(f) Investment property
Investment property principally comprising freehold land and buildings are held for long-term rental yields and are not occupied by the Group. Investment properties are carried at fair value, representing the open market value determined annually by independent professional valuers.
Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. Investment properties are not subject to depreciation. Changes in fair value are recorded in the consolidated income statement.
If an investment property becomes owner - occupied, it is reclassified as property, plant and equipment, and its fair value at the date of reclassification becomes its cost for subsequent accounting purposes.
If an item of property, plant and equipment becomes an investment property because its use has changed, any difference arising between the carrying amount and the fair value of this item at the date of transfer is recog-nised in equity as a revaluation of property, plant and equipment. However, if a fair value gain reverses a previ-ous impairment loss, the gain is recognised in the consolidated income statement. Upon the disposal of such investment property, any surplus previously recorded in the revaluation surplus account is transferred to retained earnings. The transfer is not made through the consolidated income statement.
(g) Intangible asset
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisition of sub-sidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associ-ates and is tested for impairment as part of the overall balance. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made of those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.
Software
Software assets which have been acquired directly are recorded initially at cost. On acquisition the useful life of the asset is estimated and the cost amortised over its life and tested for impairment when there is evidence of same. The current estimated useful life of the software asset is three years.
The amortisation period and the amortisation method for these intangible assets are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on these intangible assets is recognised in the consolidated income statement in the expense category that is consistent with the function of the intangible assets.
Intangible assets
The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Fol-lowing initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumu-lated impairment losses.
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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2. Summary of significant accounting policies (continued)(g) Intangible asset (continued)
Intangible assets (continued)Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment when-ever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisa-tion method for an intangible asset with a finite useful life are reviewed at least at the end of each
reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit or loss in the expense category that is consistent with the function of the intangible assets.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised.
(h) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position, only where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously.
(i) Inventories
Inventories are stated at the lower of cost and net realisable value, cost being landed value determined on the weighted average basis. The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct costs and related production expenses. Net realisable value is the estimate of the selling price in the ordinary course of business, less the cost of completion and selling expenses.
(j) Construction contracts
A construction contract is a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and functions or their ultimate purpose or use.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable those costs will be recoverable. Contract costs are rec-ognised when incurred.
When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised by using the ‘percentage of completion method’. The stage of completion is determined by internal valuations. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
Costs incurred in the year in connection with future activity on a contract are excluded and shown as contract work-in-progress. The aggregate of the costs incurred and the profit/(loss) recognised on each contract is com-pared against the progress billings up to the year end. Where costs incurred and recognised profits (less recog-nised losses) exceed progress billings, the balance is shown as due from customers on construction contracts, under receivables and prepayments. Where progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance is shown as due to customers on construction contracts, under trade and other payables.
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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2. Summary of significant accounting policies (continued)(k) Financial assets
Initial recognition and measurement
The Group’s financial assets include cash and bank, trade and other receivables and available-for-sale investment. The Group determines the classification of its financial assets at initial recognition. All financial assets are recog-nised initially at fair value.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and at banks, deposits held on call with banks, bank overdrafts and short-term borrowings. Bank overdrafts and short-term borrowings are included within borrowings in cur-rent liabilities in the consolidated statement of financial position.
Available-for-sale financial investments
Available for sale financial investments are securities intended to be held for an indefinite period of time, but may be sold in response to needs for liquidity or changes in interest rates, exchange rates, or equity prices. After initial recognition, available for sale financial assets are measured at fair value, based on quoted market prices.
Unrealised gains and losses are reported within equity until the investment is derecognised or the investment is determined to be impaired, net of deferred tax. On derecognition or impairment, the cumulative gain or loss previously reported in equity is transferred to the consolidated statement of comprehensive income.
Trade and other receivables
Trade receivables, which generally have 30-90 day terms, are recognised at original invoice amount less an al-lowance for any uncollectible amounts. An estimate for doubtful debts is established when there is objective evidence that the amount will not be collected according to the original terms of the invoice. When a trade receivable is uncollectible, it is written off against the allowance accounts for trade receivables.
Impairment of financial assets
The Group assesses at each reporting date whether there is any objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. ‘Significant’ is to be evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below it origi-nal cost. Where there is evidence of impairment, the cumulative loss-measured as the difference between the acquisition cost and the consolidated value, less any impairment loss on that investment previously recognised in the consolidated statement of comprehensive income is removed from other comprehensive income and recognised in the consolidated statement of comprehensive income.
In relation to trade receivables the carrying amount of the receivable is reduced through use of an allowance account when there is doubt about the collectability of the amounts due under the original terms of the invoice. Impaired debts are derecognised when they are assessed as uncollectible.
Notes to the Consolidated Financial Statements (continued)
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2. Summary of significant accounting policies (continued)(l) Financial liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs. The Group’s financial liabilities include accounts payable and accruals and are rec-ognised initially at fair value.
Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:
Loans and borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate (EIR) method. Gains and losses are recognised in the consolidated income state-ment when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortisation is included in finance cost in the consolidated statement of comprehensive income.
Trade and other payables
Liabilities for trade and other accounts payable which are normally settled on 30 day terms are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group.
De-recognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the consolidated income statement.
(m) Stated capital
Shares are classified as equity. Incremental costs directly attributable to the issue of shares are shown in equity as a deduction from the proceeds.
(n) Current and deferred income taxes
The tax expense for the period comprises current and deferred tax. Tax is recognised in the consolidated income statement, except to the extent that it relates to items recognised directly in equity.
The current income tax assets and liabilities for the current and prior periods are measured at the amount ex-pected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the consolidated statement of financial position date.
Deferred income tax is provided using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is de-termined using tax rates and tax laws that have been enacted or substantially enacted by the consolidated state-
Notes to the Consolidated Financial Statements (continued)
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2. Summary of significant accounting policies (continued)(n) Current and deferred income taxes (continued)
ment of financial position date and are expected to apply when the related income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets relating to carry forward of unused tax losses are recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised.
(o) Employee benefits
Pension
Retirement benefits for Group’s employees are provided by various defined benefit plans. These plans are funded by contributions from the Group and qualified employees. Payments are made to pension trusts, which are finan-cially separate from the Group, in accordance with periodic calculations by actuaries.
For the Hand Arnold Trinidad Limited and Agostini’s Limited defined benefit plans, the pension accounting costs are assessed using the projected unit credit method. Under this method, the cost of providing pensions is charged to the consolidated income statement so as to spread the regular cost over the service lives of employ-ees in accordance with the advice of independent actuaries who carry out a full valuation of the plans every three years. The pension obligation is measured as the present value of the estimated future cash outflows. All actuarial gains and losses to be recognised are spread forward over the average remaining service lives of employees.
The employees of Smith Robertson & Company Limited are members of the Victor E. Mouttet Limited defined benefit plan, the assets of which are held in separate trustee administered funds. The pension plan is funded by payments from employees and by the Company taking account of the recommendations of independent quali-fied actuaries.
The Company’s contributions are included in the employee benefit expense of these consolidated financial state-ments. Any assets and liabilities in relation to this defined benefit plan in accordance with International Account-ing Standard 19 - Employee Benefits are recorded by Victor E. Mouttet Limited.
Hanschell Inniss Limited and Peter & Company Limited participate in a defined benefit and defined contribution plan respectively operated by Goddard Enterprises Limited for the Group employees under segregated fund policies with Sagicor Life Inc. The schemes are funded through payments from the employees and the Group determined by periodic actuarial calculations.
Independence Agencies Limited operates a defined contribution plan which is administered by a registered insurance company. Independence Agencies Limited pays fixed contributions in the fund and has no legal or constructive obligation to pay further contributions. The contributions are recorded as an expense in the consoli-dated income statement.
Share-based compensation
The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services received in exchange for the grant of options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each consolidated statement of financial posi-tion date, the entity revises its estimate of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the consolidated income statement, with a corresponding adjustment to equity.
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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2. Summary of significant accounting policies (continued)(o) Employee benefits (continued)
Share-based compensation (continued)The proceeds received, net of any directly attributable transaction costs, are credited to share capital, when the options are exercised.
Profit-sharing bonus plans
The Group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the Parent’s shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obliga-tion.
(p) Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.
(q) Revenue recognition
Revenue comprises the fair 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 value-added tax, returns, rebates and discounts and after eliminating sales within the Group. Revenue is recognised as follows:
i) Sales of goods-wholesale
Sales of goods are recognised when a Group entity has delivered products to the customer; the customer has accepted the products and collectability of the related receivables is reasonably assured.
ii) Sales of goods-retail
Sales of goods are recognised when a Group entity sells a product to the customer. Retail sales are usually by cash or by credit card. The recorded revenue includes credit card fees payable for the transaction. Such fees are included in finance costs.
iii) Rental income
Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms and is included in revenue in the consolidated income statement due to its oper-ating nature.
iv) Contract income
Revenue on fixed priced contracts is recognised by reference to the value of contract work executed.
v) Other income
All other income is recognised on the accrual basis.
(r) Dividends
Dividend distribution to the Parent’s shareholders is recognised as a liability in the Group’s financial statements in the period in which the dividends are approved by the Board of Directors.
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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2. Summary of significant accounting policies (continued)
(s) 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 are charged to the consolidated income statement on a straight-line basis over the period of the lease.
The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a substantial portion of the economic life of the commercial property, that it retains all the significant risks and rewards of ownership of these properties and accounts for contracts as operating leases.
Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of own-ership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the estimated present value of the underlying lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the liability balance outstanding. The corresponding rental obliga-tions, net of finance charges, are included in borrowings. The interest element of the finance cost is charged to the consolidated income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset or the lease term.
(t) Operating lease commitments - Group as lessor
The Group has entered into vehicle and equipment leases. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a substantial portion of the economic life of the commercial property, that it retains all the significant risks and rewards of ownership of these assets and accounts for the contracts as operating leases.
(u) Borrowing Costs
Borrowing costs directly attributable to the acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the loan. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds and are amortised in accordance with the term of the loan.
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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3. Financial risk management
(a) Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and cash flow interest rate risk), credit risk and liquidity risk. Risk is managed through a process of ongoing identification, mea-surement and monitoring. The process of risk management is critical to the Group’s continuing profitability and each individual company within the Group is accountable for the risk exposures relating to their responsibilities.
The Board of Directors is responsible for the overall risk management approach and for approving the risk strate-gies and principles. Day to day adherence to risk principles is carried out by the Executive Management of the Group. Head office employs a Treasury function, which is responsible for managing the assets, liabilities and the overall financial structure of the Group. The Treasury function is also responsible for the funding and liquidity risk of the Group.
i) Market risk
a) Currency risk
Currency risk is the risk that the value of a recognised asset or liability will fluctuate due to changes in for-eign exchange rates. Such exposure arises from sales or purchases in a currency other than the Group’s functional currency and net investments in foreign operations. The Group’s primary exposure is primarily with respect to the US dollar. Management monitors its exposure to foreign currency fluctuations and employs appropriate strategies to mitigate any potential losses.
At 30 September 2015, if the TT dollar had weakened/strengthened by 5% against the US dollar with all other variables held constant, post tax profit for the year would have been $7.2 million (2014: $4.1 million) lower/higher, mainly as a result of foreign exchange losses/gains on translation of US dollar-denominated trade payables and receivables.
This calculation is with the exception of Hanschell Inniss Limited and Facey Trading Limited, our Barba-dos entities. There is a fixed exchange rate between the Barbados dollar and the United States dollar therefore there is no significant exposure to foreign exchange risk.
b) Cash flow and fair value interest rate risk
As the Group has no significant variable rate interest-bearing assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates.
Borrowings issued at variable rates expose the Group to cash flow interest-rate risk. The Group manages its interest rate exposure by maintaining a significant percentage of the long-term borrowings in fixed rate instruments.
The Group has calculated the impact on profit and loss of a change in interest rates of 100 basis points, based on the average variable borrowings for the financial year. Based on these calculations, the impact would be an increase or decrease of $573,693 (2014: $389,409).
ii) Credit risk
The Group takes on exposure to credit risk, which is the potential for loss due to a debtor’s failure to pay amounts when due. Credit risk arises from cash and outstanding receivables. Impairment provisions are es-tablished for losses that have been incurred at the consolidated statement of financial position date.
The Group trades only with recognised, credit worthy third parties, who are subject to credit verification procedures, which take into account their financial position and past experience. Individual risk limits are set based on internal ratings. Exposure to credit risk is further managed through regular analysis of the ability of debtors to settle their outstanding balances.
Cash is deposited with reputable financial institutions.
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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3. Financial risk management (continued)
(a) Financial risk factors (continued)
iii) Liquidity risk
Liquidity risk is the risk that the Group will be unable to meet its payment obligations when they fall due under normal and stress circumstances. The Group manages its liquidity risk by monitoring its projected inflows and outflows from operations. Where possible the Group utilises surplus internal funds to finance its operations and ongoing projects. The Group also utilises available credit facilities such as loans, overdrafts and other financial options where required.
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the re-maining period at the consolidated statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
Less than Greater than2015 1 year 1 to 2 years 2 to 5 years 5 years Total $’000 $’000 $’000 $’000 $’000
Bank overdraft 43,368 43,368Borrowings 175,424 40,170 122,262 202,074 539,930Trade and other payables 372,527 – – – 372,527
591,319 40,170 122,262 202,074 955,825
2014
Bank overdraft 17,551 – – – 17,551Borrowings 71,852 23,696 56,357 68,018 219,923Trade and other payables 200,116 – – – 200,116
289,519 23,696 56,357 68,018 437,590
(b) Capital risk management
The Group’s objective when managing capital is 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 healthy capital ratios.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to share-holders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Group monitors capital on the basis of the gearing ratio, which is calculated as total borrowings, both cur-rent and non-current, less cash divided by shareholders equity. The gearing ratio at 30 September 2015 is 38.85% (2014: 26.84).
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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3. Financial risk management (continued)(c) Fair value estimation
The carrying amount of short-term financial assets and liabilities comprising cash equivalents, accounts receiv-able, available-for-sale financial assets, accounts payable and accrued liabilities are a reasonable estimate of their fair values because of the short maturity of these instruments.
The fair value of the long-term portion of the fixed rate financing as at 30 September 2015 is estimated to be $221.5 million (2014: $87.9 million) as compared to its carrying value of $221.5 million (2014: $72.5 million).
4. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, includ-ing 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 defi-nition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below:
i) Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the ‘value in use’ of the cash generating units to which the goodwill is allocated. Estimating a value in use amount requires management to make an estimate of the expected future cash flows from the cash generating units and also to choose a suitable discount rate in order to calculate the present value of those cash flows.
ii) Revenue recognition
The Group uses the percentage-of-completion method in accounting for its construction contracts. Use of the percentage-of-completion method requires the Group to estimate the services performed to date as a propor-tion of the total value of the contract. Where actual results differ from these estimates the profit or loss earned will be affected.
iii) Revaluation of property, plant and equipment and investment properties
The Group carries its investment properties at fair value, with changes in fair value being recognised in the con-solidated income statement. In addition, it measures land and buildings at revalued amounts with changes in fair value being recognised in equity. The Group engaged an independent valuation specialist who used the open market value basis to determine the fair value as at 30 September 2015 per owner occupied properties for a subsidiary, Superpharm Limited. Management performed an internal assessment of the investment properties of the Group as at 30 September 2015.
iv) Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transac-tions requires determining the most appropriate valuation model, which is dependent on the terms and condi-tions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 12.
Notes to the Consolidated Financial Statements (continued)
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4. Critical accounting estimates and judgements (continued)
v) Deferred tax assets
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
vi) Pension benefits
The cost of defined benefit pension plans and the present value of the pension obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and its long term nature, a defined benefit obligation is highly sensi-tive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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5. Property, plant and equipment
Furniture Land, and Machinery Capital buildings and office Motor and work in improvements equipment vehicles equipment progress Total $’000 $’000 $’000 $’000 $’000 $’000
Year ended 30 September 2015Opening net book amount 209,250 20,752 7,451 1,747 8,785 247,985Additions 49,095 6,714 4,060 1,171 979 62,019Disposals (18) (36) (68) - - (122)Transfers 8,159 459 - - (8,618) -Transfer to intangible assets (Note 7) - - - - (21) (21)Changes in composition of the Group 66,406 14,827 7,046 88,279Depreciation charge (6,961) (7,133) (4,402) (632) - (19,128)
Closing net book amount 325,931 35,583 14,087 2,286 1,125 379,012
At 30 September 2015Cost or valuation 365,775 79,593 33,932 7,529 1,125 487,954Accumulated depreciation (39,844) (44,010) (19,845) (5,243) - (108,942)
Net book amount 325,931 35,583 14,087 2,286 1,125 379,012
Year ended 30 September 2014Opening net book amount 212,521 23,499 7,007 1,821 3,373 248,221Revaluation (100) – – – – (100)Additions 5,651 4,135 3,567 663 8,638 22,654Disposals (678) (693) (40) (14) – (1,425)Transfers 2,613 613 – – (3,226) –Transfers to investment property (Note 7) (12,028) – – – – (12,028)Transfers from investment property (Note 7) 9,209 – – – – 9,209Depreciation charge (7,938) (6,802) (3,083) (723) – (18,546)
Closing net book amount 209,250 20,752 7,451 1,747 8,785 247,985
At 30 September 2014Cost or valuation 242,131 57,632 24,459 6,358 8,785 339,365Accumulated depreciation (32,881) (36,880) (17,008) (4,611) – (91,380)
Net book amount 209,250 20,752 7,451 1,747 8,785 247,985
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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5. Property, plant and equipment (continued)
An independent professional valuation was conducted on the leasehold and freehold properties as at 30 September 2013 by Linden Scott & Associates Limited and Brent Augustus at $226,950,000 owned by one of the subsidiaries, Su-perpharm Limited. Owner occupied properties of one of the Group’s subsidiaries Superpharm Limited was revalued at $24,000,000 in September 2014 by Brent Augustus. The Directors are satisfied that the carrying value of the remaining properties in the current period is representative of its fair value.
Depreciation expense of $19,127,874. (2014: $18,546,623) has been charged in expenses.
Lease rentals amounting to $2,817,177 (2014: $784,907) relating to the lease of property, are included in the consoli-dated income statement.
If land and buildings were stated on the historical cost basis, the amounts would be as follows:
2015 2014 $’000 $’000
Cost 200,850 105,313Accumulated depreciation (22,642) (19,930)
Net book amount 178,208 85,383
6. Investment property 2015 2014 $’000 $’000
Beginning of year 57,259 54,408Transfers from property, plant and equipment (Note 5) - 12,028Transfers to property, plant and equipment (Note 5) - (9,209)Revaluation gain - 32Additions 7,435 –
End of year 64,694 57,259
Investment property was valued by Linden Scott & Associates Limited and Raymond and Pierre, professional valuators in September 2013 at $54,407,551 on the open market value basis. Management valued the investment properties in September 2015 at $64,693,764 on the open market value basis.
The following amounts have been recognised in the consolidated statement of comprehensive income:
2015 2014 $’000 $’000
Gain on revaluation of investment property - 32Rental income 6,192 5,015Direct operating expenses 1,309 1,056
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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7. Intangible asset
Customer Relationships, Brands, Goodwill Trade Names Software TotalAs at 30 September 2013 $’000 $’000 $’000
Cost 76,995 – 1,694 78,689Additions – – 2,418 2,418Accumulated amortisation (856) – (1,209) (2,065)
Net book amount 76,139 – 2,903 79,042
As at 30 September 2014
Cost 76,995 – 4,112 81,107Additions – – 51 51Accelerated write off – – (18) (18)Accumulated amortisation (856) – (2,267) (3,123)
Net book amount 76,139 – 1,878 78,017
As at 30 September 2015
Cost 76,995 – 4,163 81,158Transfer from property, plant and equiment (Note 5) – – 21 21Additions 32,826 13,409 2,000 48,235Accelerated write off – – (18) (18)Accumulated amortisation (856) (335) (3,080) (4,271)
Net book amount 108,965 13,074 3,086 125,125
Goodwill arising through business combinations was generated by acquisition of Petrovance Trinidad Limited in 2000, Hand Arnold (Holdings) Limited, the Construction Chemical division of Interchem in 2008, SuperPharm Limited in 2010 and 50% of Caribbean Distribution Partners Limited in 2015 in exchange for the following entities:i) Hanschell Inniss Limitedii) Independence Agencies Limitediii) Coreas Distribution Limitediv) Peter & Co. Limited
Impairment test for goodwill
In accordance with IFRS 3: Business Combinations, goodwill acquired through business combinations has been al-located to the Group’s cash generating units that are expected to benefit from the synergies of the combination. Im-pairment is determined by assessing the recoverable amount of the Cash Generating Units (CGU) to which goodwill relates. The recoverable amount of a CGU is based on value in use calculations. These calculations use pre-tax cash flow projections based on financial budgets for the next year and assuming growth rates as stated below. The key assumptions used for value-in-use calculations are a discount rate of 10.11% - 15.16% (2014: 9.08%) and a growth rate of 1.5% (2014: 1% - 2%). With regard to the assessment of value-in-use of the CGU’s, management believes that no reasonably possible change in any of the above assumptions would cause the carrying values of the CGU’s to materi-ally exceed its recoverable amount.
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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8. Employee benefit asset Defined benefit pension plan
2015 2014 $’000 $’000
Changes in present value of defined benefit obligationDefined benefit obligation at start of year 153,822 157,836Changes in the composition of the Group 63,284 -Interest cost 10,735 5,770Current service cost – employer’s portion 5,632 3,574Employee additional voluntary contributions 3,383 2,438Actuarial gains (7,607) (9,128)Benefits paid (10,472) (6,668)
Defined benefit obligation at end of year 218,777 153,822
Change in fair value of plan assetsPlan assets at start of year 179,605 173,618Changes in the composition of the Group 64,189 -Transfer of assets (42) -Administration expense (847) -Expected return on plan assets 8,149 6,429Actuarial gain (11,511) 1,356Employee additional voluntary contributions 4,983 2,438Benefits paid (10,491) (6,668)Company contributions 2,800 2,432
Plan assets at end of year 236,835 179,605
Amounts recognised in the consolidated statement of financial positionPresent value of pension obligations (218,777) (153,822)Fair value of plan assets 236,835 179,605
Net benefit asset 18,058 25,783
Represented by:Retirement benefit asset 19,667 25,783Retirement benefit liability (1,609) –
18,058 25,783
Amount recognised in the consolidated income statementCurrent service cost 5,633 3,574Interest on obligation 3,590 (658)Administration cost 297 -Expected return on plan assets - (10,491)Past service cost (4,650) 6
Net pension expense/(income) recognised during the year 4,870 (7,569)
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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8. Employee benefit asset (continued) Defined benefit pension plan 2015 2014 $’000 $’000
Movements in the net asset recognised in the consolidated statement of financial positionNet asset at 1 October 25,783 15,781Changes in the composition of the Group 911Net pension income/(expense) recognised in the consolidated income statement (113) 7,569Employer contributions (8,523) 2,433
Net asset at 30 September 18,058 25,783
The major categories of plan assets as a percentage of total plan assets are as follows:Mortgages 11% 19%Gov’t securities 38% 31%Local equities 38% 30%Foreign assets 6% 15%Short-term 7% 5%
Principal actuarial assumptions at the consolidated statement of financial position date 2015 2014Discount rate 5%-7.75% 4%Salary escalation 3%-6.75% 3%Expected return on plan assets 4.5%-7.75% 3%Future pension increases (current retirees only) 1%-3.75% 1.67%
A quantitative sensitivity analysis for significant assumptions as at 30 September is as shown below.
Assumptions Discount rate Future salary 1% increase 1% decrease 1% increase 1% decrease $’000 $’000 $’000 $’000For Agostini’s Limited and Hand Arnold Trinidad Limited:2015Impact on the defined benefit obligation (11,764) 15,547 3,520 (2,620)2014Impact on the defined benefit obligation (12,289) 15,846 4,062 (3,084) For Hanschell Inniss Limited: 1% increase 1% decrease 0.5% increase 0.5% decrease2015Impact on the defined benefit obligation (27,561) 24,036 23,747 (21,764)
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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9. Inventories 2015 2014 $’000 $’000
Finished goods 361,636 244,479Raw materials 325 260Provision for obsolescence (6,594) (4,714)
355,367 240,025Goods in transit 58,767 38,819Work-in-progress 281 269
414,415 279,113
The cost of inventories recognised as an expense and included in cost of sales amounted to $1,052,636,525 (2014: $1,084,256,321).
10. Construction contract work-in-progress 2015 2014 $’000 $’000
Contract costs incurred in the year 44,922 3,094Contract expenses recognised in the year (44,864) (2,819)
58 275Contract costs incurred and recognised profits (less losses) to date 3,319 6,542
Amounts due from customers for construction contracts are shown in Note 11.
11. Trade and other receivables 2015 2014 $’000 $’000
Trade receivables 300,746 204,826Less: Provision for impairment of receivables (27,601) (8,231)
Trade receivables - net 273,145 196,595Prepayments 16,161 6,219Other receivables 35,474 7,861Receivables from directors 97 102Receivables from GEL group (Note 23) 1,641 -Receivables from VEML group (Note 23) 1,535 408
328,053 211,185
Amounts due from customers for construction contracts 13,569 8,060Less: Provision for impairment of customers for construction contracts (209) (1,166)
13,360 6,894
341,413 218,079
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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11. Trade and other receivables (continued)As at 30 September 2015, trade receivables at a value of $27,810,048 (2014: $9,396,217) were impaired and fully pro-vided for. Movements in the provision for impairment of trade receivables were as follows:
2015 2014 $’000 $’000
Balance at 1 October 9,397 9,004Charge for the year 29,773 4,072Amounts written off (9,312) (1,390)Amounts recovered (2,048) (2,289)
Balance at 30 September 27,810 9,397
The creation and usage of provision for impaired receivables net of bad debts recovered have been included in ‘mar-keting and distribution costs’ in the consolidated income statement. .
As at 30 September 2015 and 2014, the ageing analysis of trade receivables is as follows:
Neither Past due Past due past due but not but not nor impaired impaired impaired 30-90 days over 90 days Total $’000 $’000 $’000 $’000
2015 140,746 95,068 37,331 273,1452014 125,765 60,477 10,353 196,595
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security.
12. Stated capital 2015 2014 $’000 $’000
AuthorisedAn unlimited number of ordinary shares of no par value
Issued and fully paid58,704,219. (2014: 58,704,219) ordinary shares of no par value 187,404 187,404
Share Number of Stated option shares capital plan Total ’000 $’000 $’000 $’000
As at 30 September 2015 58,704 185,884 1,520 187,404
As at 30 September 2014 58,704 185,884 1,520 187,404
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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12. Stated capital (continued) Executive share option plan
At an Extraordinary General Meeting held on 31 July 1998, a special resolution was passed to establish a Share Option Plan for the benefit of executives of the company and its subsidiaries. One million ordinary shares in the capital stock of the company have been reserved for the purpose of the plan.
2015 2014 $’000 $’000
The current status of options to date is as follows:
Total shares allocated to the plan 676 1,000Issued pursuant to exercise of options - (324)
Remaining shares allocated to plan in respect of which options have not been granted 676 676
13. Borrowings 2015 2014 $’000 $’000
Currenti) Bankers’ acceptances (Note 20) 38,404 15,416ii) Bank overdraft (Note 20) 43,368 17,551iii) Bank borrowings 42,119 6,126iv) Loan from parent company 20,000 -v) Fixed rate bonds 1997-2015 - 3,677vii) Fixed rate bonds 2012-2022 - 8,401
143,891 51,171
Non-currentviii) Bank borrowings 221,547 -ix) Fixed rate bonds 2012-2022 - 72,462
221,547 129,089
Total borrowings 365,438 180,260
i) Bankers’ acceptances are unsecured. Interest rates on these borrowings are 2.1% - 2.65% (2014: 3.25% - 4.50% per annum).
ii) Debenture over the fixed and floating assets of the Group stamped to cover $9,800,000 ranking pari passu with FirstCaribbean International Banking & Financial Corporation Limited (FCIB) registered debenture stamped to cover $33,692,000, Royal Bank Limited debenture stamped cover $50,000,000, and First Citizens Bank Limited registered debenture stamped to cover $50,000,000. The charge is substantial to those created in favour of the mortgage loan facilities. Certain subsidiaries’ bank borrowings and bank overdrafts are secured by guarantees stamped to cover $38,800,000. The bank overdrafts incur interest at the rate of Nil% (2014: 6.50%) per annum.
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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13 . Borrowings (continued) ii) Debenture over the fixed and floating assets of the Group stamped to cover $50,000,000 ranking pari passu
with Republic Bank Limited. Certain subsidiaries’ bank borrowings and bank overdrafts are secured by guar-antees stamped to cover $50,800,000. The bank overdrafts incur interest at the rate of 3.25% - 6.50% (2014: Nil%) per annum.
iii) & vii) Bank borrowings include the following loans:
A subsidiary loan of $5,437,631 (2014: $5,437,631) was repaid via a refinancing arrangement, with Scotia-bank Trinidad and Tobago Limited. The loan was secured by Registered First Demand Debenture over the fixed and floating assets of the Company, stamped collateral and mortgage over two real estate properties located at Bergerac Trace, Maraval and LP#83 and LP#85 Trincity Central Road Trincity, stamped collateral to cover $19,265,000.
- A subsidiary’s loan of $57,316,201 was repaid via a refinancing agreement with Scotiabank Trinidad and To-bago Limited. This loan was secured by a first mortgage debenture over the fixed and floating assets of the Company stamped to cover $65,000,000. The principal amount of this loan was $65,000,000 repayable by quarterly instalments of $1,830,513 over a period of 15 years with interest at a rate of 7.5% per annum fixed over the first five years.
- On October 2nd 2015, the Group entered into a refinancing arrangement with Scotiabank Trinidad and Tobago Limited to refinance all term debts and the Fixed Rate Bonds issued by RBC Trust Limited, Republic Bank Limited and First Citizens Trust Services Limited.
This loan of $157,250,000 is secured by a first mortgage debenture over the fixed and floating assets of the Group, stamped to cover $275,000,000. The principal amount of the loan was $170,000,000 repayable via 28 equal principal payments of $4,250,000 plus interest. A bullet payment of the remaining balance of $51,000,000 will be due at maturity or subject to refinancing for a further 3 years at the bank’s option.
- A loan of $60,000,000 which is secured by a second debenture over the fixed and floating assets of Agostini’s Limited ranking pari passu with Scotiabank Trinidad and Tobago Limited and a specific first demand legal mortgage over additional real estate assets. This loan is repayable in monthly instalments of $658,615 over a period of 10 years with a fixed interest rate of 5.75%.
- A subsidiary loan of $7,055,314 secured by a guarantee from Goddard Enterprises Limited. The principal outstanding is due and payable on January 5th 2017.
- A subsidiary short term loan of $1,279.364 from Sagicor Life Inc bearing an interest of 5%. This loan is unse-cured and will mature on December 31 2015.
- A subsidiary’s loan of $19,943,340 secured by an unlimited guarantee from Goddard Enterprises Limited. This loan is repayable by monthly instalments of $98,923 over a period of 6 years at an interest rate of 5.5%.
v) The fixed rate bonds 1997 - 2015 were constituted and secured by a Trust Deed between the Group and RBC Trust Limited incorporating a debenture over Agostini’s Limited fixed and floating assets stamped to a value of $33,691,970 ranking pari passu with other borrowings as noted in (ii) above. Interest was payable semi-annually in arrears at a fixed rate of 12% per annum.
These bonds were guaranteed by a Standby Letter of Credit established with FCIB to cover the full principal sum of $33,691,970 and was fully repaid.
vi) & viii) The fixed rate bonds 2012 – 2022 in the names of Agostini’s Limited and Hand Arnold Trinidad Limited were constituted and secured by a Trust deed between the Group and First Citizens Trustee Services Limited in-corporating a debenture over Agostini’s Limited and Hand Arnold Trinidad Limited fixed and floating assets stamped to a value of $50,000,000 each ranking pari passu with other borrowings as noted in (ii) previously. Payments are amortised quarterly over 10 years at a fixed rate of 8%. This was fully repaid.
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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13. Borrowings (continued) Maturity of non-current borrowings (excluding finance lease liabilities):
2015 2014 $’000 $’000
Between 1 and 2 years 37,353 18,113Between 2 and 5 years 76,771 50,702Over 5 years 107,423 60,274
221,547 129,089
14. Deferred income taxThe movement on the deferred tax account is as follows:
Accumulated Fair Retirement tax value benefit Tax Intangible depreciation gains obligation losses assets Total $’000 $’000 $’000 $’000 $’000 $’000
As at 1 October 2014 4,680 2,298 6,473 (13,429) – 22
Charge to consolidated income statement 6,453 – (629) 3,566 – 9,390Changes in the composition of the Group 1,074 – 1,510 (4,687) – (2,103)Charge to consolidated OCI – – (2,684) – – (2,684)Prior year adjustment (28) – – 535 – 507Charge to equity – – – – 3,458 3,458
As at 30 September 2015 12,179 2,298 4,670 (14,015) 3,458 8,590
As at 1 October 2013 (restated) 6,255 2,141 3,948 (18,457) – (6,113)Charge to consolidated income statement (430) 182 (96) 5,028 – 4,684Charge to consolidated OCI – – 2,621 – – 2,621Prior year adjustment (1,145) – – – – (1,145)Charge to equity – (25) – – – (25)
As at 30 September 2014 4,680 2,298 6,473 (13,429) – 22
2015 2014 $’000 $’000
Deferred tax liability 23,049 14,398Deferred tax asset (14,459) (14,376)
8,590 22
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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14. Deferred income tax (continued)Tax losses of Hanschell Inniss Limited which are available for set off against future taxable income for corporation tax purposes are as follows:
Income year Amount brought Amount Amount carried Expiry forward Incurred utilised forward date $’000 $’000 $’000 $’000
2008 847 – – 847 20172009 7,013 – – 7,013 20182010 1,804 – – 1,804 20192015 – 3,555 – 3,555 2024
9,664 3,555 – 13,219
These losses are as computed by the Company in its corporation tax returns and have as yet neither been confirmed nor disputed by the Commissioner of Inland Revenue.
Tax losses of Facey’s Trading Limited which are available for set off against future taxable income for corporation tax purposes are as follows:
Income year Amount brought Amount Amount carried Expiry forward Incurred utilised forward date $’000 $’000 $’000 $’000
2006 2,305 – (2,305) – 20152007 3,149 – – 3,149 20162008 1,299 – – 1,299 20172009 390 – – 390 20182010 1,831 – – 1,831 20192011 5,681 – – 5,681 20202012 2,543 – – 2,543 20212013 762 – – 762 20222015 – 3,388 – 3,388 2024
17,960 3,388 (2,305) 19,043
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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15. Trade and other payables 2015 2014 $’000 $’000
Trade payables 205,052 162,932Accrued expenses 44,785 28,221Amounts due to contractors 1,384 263Other payables 18,604 8,318Payables to GEL Group (Note 23) 101,933 -Payables to VEML Group (Note 23) 771 382
372,529 200,116
Terms and conditions of the above financial liabilities:• Trade payables are non-interest bearing and are normally settled on 60 day terms.• Other payables are non-interest bearing and have an average term of six months.• For terms and conditions with related parties, refer to Note 23.
16. Expenses by nature 2015 2014 $’000 $’000
Depreciation and amortisation (Notes 5 and 6) 20,276 19,604Employee benefit expense (Note 21) 158,455 123,077Changes in inventories of finished goods and work-in-progress 154,286 64,810Raw materials and consumables 171,611 970,746Transportation 7,442 8,657Advertising costs 9,812 16,685Net creation of provision for impaired receivables 6,741 1,181Directors fees 1,301 1,114Operating lease payments 1,556 785Other expenses 82,750 57,168
Total cost of goods sold, other operating, administration, and marketing and distribution expenses 1,614,231 1,263,767
17. Finance costs - net 2015 2014 $’000 $’000
Interest income (149) (76)Interest expense - bank borrowings 12,726 16,659
12,577 16,583
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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18. Taxation 2015 2014 $’000 $’000
Current tax 18,934 20,842Deferred tax (Note 14) 9,390 4,684Green fund levy 1,600 1,506Business levy 929 1,032Prior years adjustment 811 (1,465)
31,664 26,599
The tax on profit before tax differs from the theoretical amount that would arise using the basic rate of tax as follows:
Profit before taxation from continuing operations 113,839 107,145
Tax calculated at 25% 28,460 26,786Expenses not deductible for tax purposes 2,467 371Income not subject to tax (2,611) (35)Other 8 (1,596)Prior years adjustment 811 (1,465)Green fund levy 1,600 1,506Business levy 929 1,032
31,664 26,599
Subsidiary companies have tax losses of approximately $59 million (2014: $53 million) available for set off against future profits.
19. Earnings per shareBasic
Basic earnings per share is calculated by dividing the profit attributable to shareholders of the Parent by the weighted average number of ordinary shares in issue during the year.
2015 2014Profit attributable to shareholders of the Parent ($’000) 80,576 79,932Weighted average number of ordinary shares in issue (’000) 58,677 58,677Basic earnings per share ($ per share) $1.37 $1.36
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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19. Earnings per share (continued)Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Parent has one category of dilutive potential ordinary shares which is share options granted to executives of the company and its subsidiary companies.
For the share options, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Parent’s shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.
2015 2014 $’000 $’000
Weighted average number of ordinary shares in issue 58,677 58,677
Weighted average number of ordinary shares for diluted earnings per share 58,677 58,677
Diluted earnings per share ($ per share) $1.37 $1.36
20. Cash and cash equivalents 2015 2014 $’000 $’000
Cash at bank and in hand 137,335 31,534Bank overdraft (Note 13) (43,368) (17,551)Bankers’ acceptances (Note 13) (38,404) (15,416)
55,563 (1,433)
21. Employee benefit expense 2015 2014 $’000 $’000
Wages and salaries 124,663 100,863National insurance 8,397 6,194Other benefits 16,799 11,739Pension costs 5,034 3,879Termination costs 3,563 402
158,456 123,077
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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22. Subsidiaries and associate2015 2014
Subsidiaries Principal activities Country of incorporation
Percentage of equity
held
Percentage of equity
held
Smith Robertson & Company Limited
Wholesale distribution of pharmaceutical and personal care items
Trinidad & Tobago 100% 100%
SuperPharm Limited Sale of pharmaceutical and convenience items
Trinidad & Tobago 100% 100%
Agostini MarketingSuppliers of building ma-terials and construction services
Trinidad & Tobago 100% 100%
Rosco Petroavance LimitedMarketing of equipment and services to Petroleum related companies
Trinidad & Tobago 92% 92%
Ponderosa Pine Consultancy Limited Rental of properties Trinidad & Tobago 100% –
Caribbean Distribution Partners Limited Holding company Trinidad & Tobago 50% _
Hand Arnold Trinidad LimitedWholesale distribution of food, beverage and grocery products
Trinidad & Tobago 50% 100%
Hanschell Innis LimitedWholesale distribution of food, beverage and grocery products
Barbados 50% –
Peter and Company LimitedWholesale distribution of food, beverage and grocery products
St. Lucia 50% –
Coreas Distribution LimitedWholesale distribution of food, beverage and grocery products
St. Vincent 50% –
Independence Agencies LimitedWholesale distribution of food, beverage and grocery products
Grenada 27.56% –
Desinco LimitedWholesale distribution of food, beverage and grocery products
Guyana 20% –
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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23. Related party transactionsThe total amount of transactions that have been entered into with related parties are as follows:
2015 2014 $’000 $’000
i) Amounts due by related parties Victor E. Mouttet Limited Group (Note 11) 1,535 408 Goddard Enterprises Limited Group (Note 11) 1,641 –
3,176 408ii) Amounts due to related parties Victor E. Mouttet Limited Group (Note 15) 771 382 Goddard Enterprises Limited Group (Note 15) 101,933 –
102,704 382iii) Transactions with related parties: Sales and services to related companies 8,094 611
Purchases and services from related companies 46,339 2,316
iv) Compensation of key management personnel: Salaries and other short-term employee benefits 29,609 20,344
v) Related party transactions: Note 22 provides the information about the Group’s structure including the details of the subsidiaries and the
holding company.
Terms and conditions of transactions with related parties
The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year- end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 30 September 2015, the Group has not recorded any impairment of receivables relating to amounts owed by related parties (2014: $ Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
24. Commitmentsa) Operating lease commitments – Group as lessee
The Group has entered into commercial leases on certain properties. These leases have an average life of be-tween one to fifteen years, with renewal options included in the contracts. There are no restrictions placed upon the Group entering into these leases.
Future minimum rentals payable under non-cancellable operating leases as at 30 September are as follows:
2015 2014 $’000 $’000
Within one year 15,949 18,523After one year but not more than five years 60,077 74,633More than five years 45,470 66,351
121,496 159,507
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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24. Commitments (continued)b) Operating lease commitments – Group as lessor
The Group has entered into commercial leases on its investment property portfolio consisting of the Group’s surplus office buildings. These non-cancellable leases have remaining terms of between one to five years. All leases include a clause to enable upward revision of the rental charge every three years according to prevailing market conditions.
Future minimum rentals payable under non-cancellable operating leases as at 30 September are as follows:
2015 2014 $’000 $’000
Within one year 8,759 2,116After one year but not more than five years 34,090 6,348
42,849 8,464
25. Contingencies 2015 2014 $’000 $’000
(i) Customs bonds 8,849 12,983
(ii) Bank guarantees 400 1,500
(iii) Litigation On 14 September, 2012, Agostini’s Limited commenced arbitration proceedings against the Trinidad and Tobago
Housing Development Corporation (HDC) to recover outstanding sums due inclusive of variation cost amount-ing to approximately $26.7 million. In response to this action, on 5 August, 2014, the HDC issued a counterclaim against Agostini’s Limited. Based on advice received, the Directors are of the view that this counterclaim is with-out basis, and no provision was made in these financial statements for such counterclaim.
26. DividendsThe dividends paid in 2015 and 2014 were $32,287,403 ($0.55 per share) and $28,176,040 ($0.48 per share) respectively.
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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27. Segment informationReporting format – Business segments
Pharmaceutical & Fast Moving Industrial, Construction Personal Care Consumer Goods and Holdings Total
2015 2014 2015 2014 2015 2014 2015 2014 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000Revenue External Sales 905,325 853,134 608,602 338,595 192,690 167,654 1,706,617 1,359,383 Inter Segment Sales 49,212 45,490 55,273 5,158 686 608 105,171 51,256
Total revenue 954,537 898,624 663,875 343,753 193,376 168,262 1,811,788 1,410,639 Result Operating profit 99,346 92,498 20,621 23,507 4,306 7,691 124,273 123,696 Gain on revalution - - - - - 32 - 32 Share of profit of an associate - - 2,143 - - - 2,143 -Finance costs - net (4,584) (8,137) (4,917) (5,091) (3,076) (3,355) (12,577) (16,583)
Profit before taxation 94,762 84,361 17,847 18,416 1,230 4,368 113,839 107,145 Taxation (25,308) (19,092) (755) (2,139) (5,601) (5,368) (31,664) (26,599)
Group profit carried forward 69,454 65,269 17,092 16,277 (4,371) (1,000) 82,175 80,546 Non-controlling interests (1,599) (614)Net profit attributable to shareholders 80,576 79,932 Consolidated total assets Segment assets 487,722 465,535 678,091 229,132 347,804 260,708 1,513,617 955,375 Consolidated total liabilities Segment liabilities 188,199 216,155 257,292 123,229 320,768 60,684 766,259 400,068 Other information Capital expenditure 12,362 12,174 6,227 2,130 43,429 8,350 62,019 22,654 Depreciation and amortisation 12,516 13,240 4,419 2,665 3,341 3,699 20,276 19,604
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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28. Business combinationIn January 2015, Agostini’s Limited acquired 100% of the share capital known as Caribbean Distribution Partners Lim-ited (“CDP”). CDP is a holding company incorporated in the Republic of Trinidad and Tobago. In January 2015, CDP ac-quired 40% of the share capital in an entity in Guyana known as Desinco Limited and in February 2015, CDP acquired 100% of the share capital of an entity in Barbados known as Facey Trading Limited.
Based on an agreement between Agostini’s Limited, Goddard Enterprises Limited (a listed company in Barbados) (“GEL”) and CDP, effective 1 July 2015 CDP acquired the following companies which were previously owned by GEL:
- Hanschell Inniss Limited (100%) - Coreas Distribution Limited (100%)- Peter & Co. Limited (100%)- Independence Agencies Limited (55.12%)
Agostini’s Limited also transferred 100% of its investment in one of its subsidiaries known as Hand Arnold Trinidad Limited to CDP.
In exchange, GEL received 50% of the share capital of CDP and cash of US$11.6 million. Agostini’s Limited was assessed as having control of CDP in accordance with IFRS 10 Consolidated Financial Statements which resulted in Agostini’s Limited consolidating CDP’s financial results to year ended 30 September 2015.
The consolidation of CDP into Agostini’s Limited was accounted for as a business combination using the following methods:
- Acquisition method of accounting for the entities transferred by GEL as at 1 July 2015 in accordance with IFRS “Business Combination”. The net identifiable assets for each entity acquired was re-measured at fair value on the acquisition date and recorded by Agostini’s Limited in conjunction with goodwill arising from the business com-bination.
- Pooling of interest method of accounting for Hand Arnold Trinidad Limited as at 1 July 2015 as a common control business combination. Agostini’s Limited maintains control of Hand Arnold Trinidad Limited and at the acquisi-tion date the assets and liabilities of the entity are reflected at their carrying amounts, consequently, no goodwill is recognized as a result of the combination and the income statements reflect the results of the entity for the full year, irrespective of when the combination took place.
- The provisional fair values of the entities transferred by GEL into CDP are as follows: Fair value ($’000)
Property, plant and equipment 76,645 Investments 6 Pension asset 2,880 Deferred tax assets 2,538
Total non-current assets 82,069
Inventories 131,609 Trade and other receivables 98,818 Related party receivable 80,141Other current assets 10,407 Cash and cash equivalents 6,849
Total current assets 327,824
Total identifiable assets acquired 409,893
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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Fair value ($’000)Bank overdraft 4,789Borrowings 13,506 Trade and other payables 53,548 Loan from parent 23,671 Related party payables 131,825Current tax payable 287Other current liabilities 140
Total current liabilities 227,766
Borrowings 13,277Deferred tax liability 15,830
Total non-current liabilities 29,107
Total identifiable liabilities assumed 256,873
Net identifiable assets acquired 153,020
- The fair values disclosed are provisional as at 30 September 2015 due to the complexity of the acquisition and the close proximity to the year end. The assessment of the fair values of the acquired assets and liabilities is still being finalised and as a result the final fair values may differ from the provisional amounts recognized at 30 September 2015. The review of the fair value of the assets and liabilities acquired will be completed within 12 months of the acquisition date.
- Goodwill and intangible assets were determined at the end of the measurement period as follows:
At the acquisition date ($’000)
Consideration paid for acquired assets 122,745 Fair value of net identifiable assets acquired (50%) (76,510)
Goodwill and intangible assets 46,235
The goodwill and intangible assets value recognised as at 30 September 2015 is as follows: ($’000)
Goodwill 32,826 Intangible assets 13,409
Total 46,235
Intangible assets are made up of customer relationships ($3,427,000), brands ($2,305,000) and trade names ($7,677,000). Each intangible asset has a useful life of 10 years from 1 July 2015.
28. Business combination (continued)
Notes to the Consolidated Financial Statements (continued)
FOR THE YEAR ENDED SEPTEMBER 30, 2015
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29. Investment in associateThe Group has a 40% interest in Desinco Limited, a company involved in the fast moving consumer goods sector in Guyana. 50% of this interest is attributable to the non-controlling share. The Group’s interest in Desinco Limited is accounted for using the equity method in the consolidated financial statements. The following table illustrates the summarized financial information of the Group’s share of profit in Desinco Limited for the nine month period ended 30 September 2015:
2015 ($’000)
Revenue 38,956Cost of sales (29,505)
Gross profit 9,451
Other operating expense (796)Administration (2,548)Marketing and distribution (721)
(4,065)
Operating profit 5,386Finance cost (28)Profit before tax 5,358Taxation (2,591)
Profit for the year 2,767
Total comprehensive income for the year 2,767Group’s share of profit for the year:40% of profit before tax 2,143
The carrying value of the investment as at 30 September 2015 is as follows: Cash consideration of investment 11,656Share of profit 1,286
Carrying value of investment 12,942
The associate had no contingent liabilities or capital commitments as at 30 September 2015.
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Overview of Product Categories of our Companies
Director/Senior Officer Shareholding30/9/2015
Connected Party
J. M. Aboud 0 1,189,994
A. J. Agostini 588,114 158,571
G. M. Agostini 1,371,000
R. W. Ahamad 0 9,460,187
C. G. Bernard 95,847
W. A. Bernard 19,000
B. A. Davis 396
J. P. Esau 10,000
R. A. Farah 10,000
S. A. Gunness-Balkissoon 10,000
L. M. Mackenzie 36,800 15,324
A. Maharaj 0
I. Maharaj Badrie 33,900
S. J. Montano 21,000
C. E. Mouttet 0 29,526,008
A. B. Pashley 23,200
R. Rajkumarsingh 28,230
N. R. Ramjohn 10,000
R. A. Rodriguez 162,600
M. Stagg 10,000
E. G. Warner Hudson 0 A.J.Agostini and G. M. Agostini each inherited 70,656 additional shares during the period between 30th September 2015 and the date this report went to the printers on 5th December 2015. No other changes in the above interests were made during this period.
10 Largest ShareholdersShareholder Shareholding
30/9/2015Connected Party
Victor E. Mouttet Limited 29,526,008 C. E. Mouttet
Universal/Proteus Limited 9,460,187 R. W. Ahamad
Home Mortgage Bank Limited 5,951,940
Home Construction Limited 3,490,030
Geoffrey Agostini 1,371,000
Pelican Investments Limited 1,189,994 J. M. Aboud
T&T Unit Trust Corporation 1,224,451
First Citizens Trust & Asset Management 812,016
Anthony & Valerie Agostini 746,685
Mega Insurance 600,000
Directors’ & Senior Officers’ Interest
AN
NU
AL
RE
PO
RT
20
15
80
HonouringLong Service
30 year awardees. From left to right: Roger Rodriguez, Norris Sheppard, Richard Boothman, Curtis Tinto and Jason Palmer.
35 year awardees. From left to right: Una Ryan, Andrew Lively and Alexandra Salandy
Companyof the Year
Receiving the Company of the Year award are the Directors of Agostini Marketing: Chris Bernard - Director Contracting; Andrew Pashley - CEO/ Director; Anthony Agostini, Group Managing Director; and Roger Rodriguez - Director Abfast Division.
Proxy FormRepublic of Trinidad & TobagoThe Companies Act, 1995(Section 143 (1) )
NAME OF COMPANY: Agostini’s Limited Company No: A-5907 (A)
PARTICULARS OF MEETING:Seventy-second Annual Meeting of the Shareholders of the Company to be held at the Marriott Hotel, Invaders Bay, Port of Spain on Monday, January 25, 2016 at 9:30 a.m.
of Name (capital letters) Address (capital letters) I/We, being a shareholder (s) of Agostini’s Limited, hereby appoint Mr. Joseph Esau or failing him, Mr. Anthony Agostini, Directors of the Company or
of Name (capital letters) Address (capital letters)
as my/our proxy to vote for me/us on my/our behalf on the Resolutions to be proposed at the meeting and at any adjournment thereof in the same manner, to the same extent and with the same powers as if the undersigned were present or such adjournment or adjournments thereof.
Signed this day of 2015 Signature of Shareholder(s) Please indicate with a tick in the appropriated box below how you wish your proxy to vote on the Resolutions referred to. If no such indication is given, the proxy will exercise his/her discretion as to how he/she votes or whether he/she abstains from voting.
RESOLUTIONS FOR AGAINST
1. To receive the Financial Statements for the year ended September 30, 2015 and reports of the Directors and Auditors thereon
2. To re-elect the following Directors:
i. Mr. Anthony Agostini
ii. Mr. Reyaz Ahamad
iii. Ms. Gillian Warner Hudson
iv. Mr. Gregor Nassief
3. To appoint the company’s Auditors, and to authorise the Directors to fix their remuneration.
NOTES:
1) If it is desired to appoint a proxy other than the named Directors, the necessary deletions must be made and initialed and the name inserted in the space provided.
2) In the case of joint holders, the signature of any holder is sufficient but the names of all joint holders should be stated.
3) If the appointer is a Corporation, this form must be under its Common Seal or under the name of an officer of the Corporation duly authorised in this behalf.
4) To be valid, the proxy form must be completed signed and deposited with the Secretary, Agostini’s Limited, #18 Victoria Avenue, Port-of-Spain at least 48 hours before the time appointed for holding the meeting or adjourned meeting.
ManagementProxy Circular
Republic of Trinidad & Tobago
The Companies Act, 1995
(Section 144)
1. NAME OF COMPANY:
Agostini’s Limited Company No. A-5907 (A)
2. PARTICULARS OF MEETING:
Seventy-Second Annual Meeting of the Shareholders of the Company to be held at the Marriott Hotel, Invaders Bay, Port of Spain on Monday, January 25, 2016 at 9:30 a.m.
3. SOLICITATION:
It is intended to vote the Proxy hereby solicited by the Management of the Company (unless the Shareholder directs otherwise) in favour of all resolutions specified in the Proxy Form sent to the Shareholders with this Circular and in the absence of a specific direction, in the discretion of the Proxy Holder in respect of any other resolution.
4. ANY DIRECTOR’S STATEMENT SUBMITTED PURSUANT TO SECTION 76 (2):
No statement has been received from any Director pursuant to Section 76 (2) of the Companies Act, 1995.
5. ANY AUDITOR’S STATEMENT SUBMITTED PURSUANT TO SECTION 171 (I):
No statement has been received from the Auditors of the Company pursuant to Section 171 (I) of the Companies Act, 1995.
6. ANY SHAREHOLDER’S PROPOSAL SUBMITTED PURSUANT TO SECTIONS 116 (a) AND 117 (2):
No proposal has been received from any Shareholder pursuant to Sections 116 (a) and 117 (2) of the Companies Act 1995.
DATE NAME AND TITLE SIGNATURE
Rajesh Rajkumarsingh December 4, 2015 Secretary Agostini’s Limited
Design and Layout: Paria Publishing Co. Ltd.Photographs of Directors: Alice Besson
Printing: Caribbean Print Technologies Ltd.
This Annual Report is printed on matte art paper, available from Agostini Marketing.
Registered Office: 18 Victoria Avenue,
P.O. Box 191, Port of Spain, Trinidad, West Indies
Phone: (868) 623-4871Fax: (868) 623-1966
www.agostinislimited.com