2012 annual report vsh united

2012 ANNUAL REPORT VSH UNITED

N.V. Verenigde Surinaamse Holdingmij.-United Suriname Holding CompanyEstablished in Paramaribo, Surinamewww.vshunited.com

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CONTENTS

Supervisory Board of Directors and Management Management of the SubsidiariesSurinameReport of the Supervisory Board of DirectorsSalient FiguresReport of the Managing DirectorIndependent Auditor’s ReportIncome Statement for the year ended 31 December 2012Balance Sheet at 31 December 2012 before appropriation of profitConsolidated Income Statement for the year ended 31 December 2012Consolidated Balance Sheet at 31 December 2012 before appropriation of profitConsolidated Statement of Changes in Equity for the year ended 31 December 2012Consolidated Cash Flow Statement for the year ended 31 December 2012Notes to the Consolidated Financial Statements

567

8-1011

13-1921222324252627

29-44

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Supervisory Board of Directors and Management N.V. Verenigde Surinaamse Holdingmij.-United Suriname Holding CompanyEstablished in Paramaribo, Surinamewww.vshunited.com

Supervisory Board of Directors R. Khodadin (Chairman), D. Halfhide, (Vice Chairman), A. Kluijver, R. Hahn, R. Elias.

ManagementJ. Healy Jr., Managing DirectorM. Ramsundersingh, Assistant Managing Director/ Legal and HRM AffairsP. Brahim, Assistant Managing Director Finance and ICT

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IndustryN.V. VSH-Staalmij.-United Suriname Steel CompanyW. Martoredjo, Managing Director

N.V. VSH FoodsK. Wong Fong Sang, Managing Director

N.V. Consolidated Industries CorporationW. van Meegdenburg, Managing DirectorK. Healy, Deputy Managing Director

Management of the Subsidiaries

Shipping N.V. VSH Shipping N.V. VSH Transport N.V. VSH LogisticsP. Healy, Managing Director

VSH-UNITED (USA) L.L.C. Miami, United States of America P. Healy, Managing DirectorJ. Liong A San, Operations Manager

Trading N.V. VSH TradingJ. Healy Jr., Acting Managing DirectorR. Mac Donald, Assistant Managing Director

Real EstateN.V. VSH Real Estate J.Healy Jr., Acting Managing Director

Investment N.V. VSH InvestmentJ. Healy Jr., Managing Director

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Suriname

Suriname is a country of 163,270 square kilometers situated on the northeast shoulder of South America and home of the VSH Group. While a Babylonian profusion of some seven languages are in everyday use, the official language is Dutch. The population of some 530,300 souls is one of the most polyglot in the world and includes indigenous Indians, African descendents, Hindustanis, Javanese, Chinese, Lebanese, Jews and Europeans. Recent arrivals include Brazilians and so called new Chinese. Almost half of the population is concentrated in and around the capital city of Paramaribo.

Suriname has a strong democratic tradition dating back some 145 years. Legislative powers are in the hands of the National Assembly composed of 51 members elected by popular vote for a period of five years. The President is the Head of Government and is elected for five years by a two thirds majority vote in the National Assembly or by a common majority vote in the United Peoples Assembly comprised of national, regional and municipal representatives. The Council of Ministers chaired by the Vice President consists of 17 member ministers and exercises the highest executive and administrative power.

Mining is the backbone of the economy. Bauxite is mined and processed into alumina, an intermediate product for the production of aluminum. Gold is mined in large medium and small scale operations and provides employment to hinterland communities and migrant workers from Brazil.

Crude oil production and refining contributes significantly to the fuel requirements of industry and electric power generation. Energy requirements are further complemented by a hydro-electric dam located 90 km south of Paramaribo.

Rice, bananas, shrimp, fish and timber comprise the other traditional export products.

Suriname is the proud guardian of one of the largest expanses of pristine tropical rainforests in the world. The Central Suriname Nature Reserve (1.6 million hectares) is the largest of 15 protected areas encompassing 12% of the total land surface of the country.

Since its establishment in 1958 the VSH Group has grown steadily and is well positioned to participate in the further development of this young nation.

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Report of the Supervisory Board of Directors

To: The Shareholders

We hereby present our report on the activities of the Supervisory Board of Directors in 2012.

The Supervisory Board of Directors performed its duties in accordance with Suriname Law, the Company’s bylaws and Corporate Governance Code. We advised management on relevant issues and monitored management performance in relation to goals set. Management of the Holding and the subsidiaries regularly informed us, both verbally and in writing, on material aspects of the business, major events, investments and transactions. We were kept abreast of results and the financial position, risks and risk management.

Consultation and decision makingThe Supervisory Board of Directors held regular monthly meetings, 12 in total. The board members regularly attended the board meetings. The subjects discussed in the meetings included the financial position and results, human resource development, Company strategy, Company policy, business plans, health, safety and environment, investments, management succession and appointments. In the board meeting held on 16 august 2012 management presented the appraisals of the subsidiaries over the first half of 2012 and the financial statements over the half year 2012. In the board meeting held on 11 October 2012 the Corporate Governance Code was amended to include a new article 11 dealing with the Code of Conduct. In the board meeting held on 8 November 2012 management presented the operational plans for 2013 and the board approved capital expenditures for 2013. A special board meeting was convened on 6 December 2012 to discuss and approve the purchase of strategic real estate. Management remuneration was evaluated and approved in the board meeting held on 13 December 2012. In a board meeting held on 17 January 2013 management presented the Internal Audit Plan for the year 2013 and special attention was given to the succession of Mr. J. Healy Jr.. In the board meeting held on 14 February 2013 management presented the appraisals of the subsidiaries over the full year 2012. In a meeting held on 9 May 2013 the Supervisory Board of Directors and the external auditor discussed the auditors' findings regarding the audit of the financial statement 2012 and the management letter 2012.

Corporate GovernanceThe Supervisory Board of Directors adopted the VSH Code of Conduct on 11 October 2012. The Code of Conduct derives from article 11 of the Corporate Governance Code. The Code of Conduct is a further development of our Core Values and is a guideline for behavior both personally and in dealings with employees, customers, suppliers, service providers and contractors. It indicates what is expected from our employees.

Performance of the Supervisory Board of Directors In a special meeting held on 13 December 2012 the Supervisory Board of Directors evaluated their performance. Based upon individual appraisals by the members the performance was found to be good. The Supervisory Board of Directors identified areas of attention in the coming period including disaster recovery, ICT, succession plans of the subsidiaries and HSEQ reporting.

Management performance and Executive Performance PayOn 13 December 2012 the Supervisory Board of Directors evaluated the overall performance of the Managing Director of United Suriname Holding Company and found the performance to be good. Specific areas of attention were discussed with the Managing Director including his succession.

Performance of the Managing Director of United Suriname Holding Company is measured against a yearly minimum target of 10% Return on Capital Employed. Based on the realized profit before tax of 15% Return on Capital Employed the Managing Director will receive a short-term bonus of SRD 121,368.

Performance of the Managing Director of the VSH Shipping Group is measured against a yearly minimum target of 70% return on Capital Employed. Based on the realized profit before tax of 77% Return on Capital Employed the Managing Director will receive a short-term bonus of SRD 93,274.

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Performance of the Managing Director of VSH Foods is measured against a yearly minimum target of 20% return on Capital Employed. Based on the realized profit before tax of 24% Return on Capital Employed the Managing Director received a short-term bonus of SRD 25,513.

Management changes and appointmentsMr. J. Healy Jr., Managing Director of United Suriname Holding Company will retire on 1 July 2013 after having served the Company for 40 years.To fill this position the Supervisory Board of Directors recommends the appointment of: - Mr. P. Healy as Managing Director, CEO and - Mrs. M. Ramsundersingh as Managing Director, Chief Legal & HR, Deputy CEO, effective 1 July 2013 in the Annual Meeting of Shareholders to be held on 24 May 2013.

The Supervisory Board of Directors approved the following appointments:- Effective 1 July 2012 Mr. R. Mac Donald, Assistant Managing Director of NV VSH Trading;- Effective 1 July 2012 Mrs. K. Healy, Assistant Managing Director of NV CIC;- Effective 1 July 2013 Mr. P. Healy, Managing Director NV VSH Real Estate;- Effective 1 July 2013 Mrs. M. Ramsundersingh, Acting Managing Director of NV VSH Trading;- Effective 1 July 2013 Mr. P. Brahim, Managing Director NV VSH Investment;- Effective 1 July 2013 Mrs. H. Lie Wah Hing, Assistant Managing Director of NV VSH Real Estate.

Supervisory Board of Directors changes and appointmentsUnder article 7.20 of the bylaws all directors retired in the Annual Meeting of Shareholders on 8 June 2012. All five members, Mr. R. Khodadin, Mrs. D. Halfhide, Mr. A. Kluijver, Mr. R. Hahn and Mr. R. Elias were re-elected as members of the Supervisory Board of Directors.

Being eligible, the members Mr. R. Khodadin, Mrs. D. Halfhide, Mr. A. Kluijver, Mr. R. Hahn and Mr. R. Elias offer themselves forre-election in the Annual Meeting of Shareholders to be held on 24 May 2013.The Supervisory Board of Directors recommends that the members mentioned be re-elected.

To fill the vacancy left by Mr. P. Healy who resigned from the Supervisory Board of Directors effective 1 September 2011 the Supervisory Board of Directors recommends the appointment of Mr. J. Healy Jr. in the Annual Meeting of Shareholders to be held on 24 May 2013, effective 1 July 2013.

Dividend Policy and Interim DividendThe policy of the Company is to pay a dividend in the order of 30% to 35% of the net profit from continuing operations after deduction of unrealized profit from subsidiaries and associate company. This allows the Company to finance most of its working capital through own means. Subject to unforeseen developments the Supervisory Board of Directors has approved the payment of interim dividend for the year 2013 as follows:- 1st quarter interim dividend payable 15 June 2013; SRD 0.10 per share- 2nd quarter interim dividend payable 15 August 2013; SRD 0.10 per share- 3rd quarter interim dividend payable 15 November 2013; SRD 0.10 per share- 4th quarter interim dividend payable 15 February 2014; SRD 0.10 per share

Financial Statements and Division of ProfitManagement submitted the financial statements to the Supervisory Board of Directors on 9 May 2013. These financial statements can be found on pages 22 to 44 of this annual report. The independent external auditor, Lutchman & Co, audited the financial statements. Their report can be found on page 21.The net profit attributable to the Shareholders of the Company amounted to SRD 16,431,570.We endorse the adoption of the financial statements 2012, as presented.

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Over 2012 four quarterly interim dividends, each amounting to SRD 0.10 per share, were paid for a total of SRD 0.40 per share. The Supervisory Board of Directors endorses the recommendation of the Management to pay a cash dividend for the year 2012 of SRD 1.50 per share. If approved total dividend will amount to SRD 2,979,507 and the balance of the net profit amounting to SRD 13,452,063 will be added to the retained earnings.

Remuneration of the Supervisory Board of DirectorsThe remuneration of the Supervisory Board of Directors amounts to SRD 76,000 per year and was last adjusted on 1 July 2012. The Supervisory Board of Directors endorses the recommendation of the management to increase the remuneration of the Supervisory Board of Directors to SRD 91,200 per year effective 1 July 2013.

AppreciationThe Supervisory Board of Directors is grateful for the contribution made by management and by all the employees of the Company to the results of 2012.

Paramaribo, 9 May 2013

The Supervisory Board of DirectorsR. Khodadin, ChairmanD. Halfhide, Vice ChairmanA. KluijverR. EliasR. Hahn

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Salient Figures

in SRD

Consolidated

RevenueProfit from continuing operationsOther incomeNet profit to ShareholdersCashflow Working capital¹Shareholders' equity¹Paid-in capital

Per share of SRD 0.01

Cash dividendIntrinsic value¹Market value¹After appropriation of profit

USD Rate

Year average Per end of the year

2008

20,574,5343,852,4651,763,6473,691,9295,379,98012,121,15155,317,595

18,050

0.6531.6022.00

2.802.80

2009

36,082,7163,802,413

15,321,6969,794,995

12,607,62532,581,46772,926,602

18,050

0.8040.4022.00

2.802.80

2010

48,822,62312,164,2665,099,149

11,431,83915,510,66933,124,06585,865,012

18,058

1.2647.5527.00

3.273.40

2011

57,633,79014,278,1166,383,60615,416,12920,221,74635,925,880

104,459,12118,058

1.9257.8530.00

3.383.35

2012

57,599,75012,878,475

9,188,42416,431,57021,898,84335,846,142

123,162,72419,863

1.5062.0037.50

3.353.35

Note: Grey area not adjusted for acounting policy changes with respect to income and valuation of CIC and Assuria.

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Report of the Managing Director

IntroductionSince its inception in 1958 as a trading company VSH United has become one of the most diversified groups in Suriname. Its major activities include shipping, trading, manufacturing, real estate development and management. Through associated companies VSH United is involved in the insurance and hotel business. VSH United GroupAs expected Group results for 2012 were less than the previous year due to incidental service income in the shipping segment derived from logistical support to offshore oil drilling programs in 2011.Despite lower income our core shipping business improved. Industry improved as well buoyed by good results in the food segment, while the detergent and steel segments performed below expectations. Trading posted better results in 2012.

In the Annual General Meeting of Shareholders held on 08 June 2012 the financial statements 2011 and a dividend of SRD 3,468,869 (2010: SRD 2,275,260) or SRD 1.92 (2010: SRD 1.26) per share were approved.

As part of the continuing improvement in Governance a Code of Conduct was adopted on 11 October 2012. The Code of Conduct is a requirement under article 11 of the Corporate Governance Code and is a further elaboration of our Core Values. It is a guide of personal conduct and a guide of conduct towards co-workers, customers, suppliers, service providers and contractors. It states what can be expected of us.

The business environmentWorld economic growth in 2012 was driven by emerging and developing economies while the developed economies notably in Europe stagnated. In the United States a massive stimulus program underpinned a bumpy economic recovery. Haiti, Dominican Republic and Suriname led the region in economic performance. Haiti attained a GDP growth rate of 4.5% in 2012 while the Dominican Republic and Suriname each posted a rate of 4.0%. In Suriname economic growth was driven by stable but relatively high prices for mineral exports and investment in infrastructure, housing and the State Oil Refinery Expansion Project. Following the devaluation of the Suriname dollar in January 2011 the currency remained stable at a SRD 3.35 to the US dollar. Inflation declined to 4.3% (2011: 15.2%). A positive trade balance continued to boost international reserves which surpassed the one billion US dollar mark at the end of 2012 and are sufficient to cover more than 5 months of imports. In April 2013 Standards & Poor’s affirmed Suriname's rating at BB-/B' and revised the outlook from stable to positive. Gold production amounted to 382,000 ounces (2011: 385,000 ounces) at Rosebel Goldmines. The average gold price in 2012 amounted to USD 1,669 (2011: USD 1,572) per ounce. Gold exports derived from medium and small scale goldmines but excluding Rosebel Goldmines totaled 20,935 kg. Oil production amounted to 16,220 barrels (2011: 16,380 barrels) per day on average while the price per barrel averaged USD 103.77 (2011: USD 99.69). Construction on the State Oil Refinery Expansion commenced in February 2012 and completion is expected in September 2014.Alumina production amounted to 1,202,805 ton (2011: 1,421,464 ton). The so called Successor Mines supply the bauxite ore for the alumina plant at Paranam, which has reduced output until long term bauxite supplies have been secured from a new mine at Nassau in eastern Suriname.

Visitor arrivals in the leisure and business categories increased by 9.8% to 137,981 persons (2011: 125,703 persons). Suriname is heavily dependent on visitors from Europe notably the Netherlands. Improved airline connections from the region and the United States to Suriname provide opportunities to open new markets in the America’s.

Financial overviewA decline in profit from continuing operations in 2012 reflects a decline in Shipping and Real Estate income which was offset by improved results in Trading, in Foods and in the performance of the associate company Assuria.

The Group’s net profit from continuing operations amounted to SRD 12,878,475 (2011: SRD 14,278,116). Total revenue amounted to SRD 57,599,750 (2011: SRD 57,633,790) and operating expense increased by 3.1% to SRD 44,721,275 (2011: SRD 43,355,674). This marginal increase in operating expenses is caused by a decline in provisions of SRD 1.5 million and an increase in personnel expenses by SRD 2.7 million.

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Other income includes our share of profit in associate company Assuria, investment income and extraordinary items. Other income, including investment income amounted to SRD 9,188,424 (2011: SRD 6,383,606).

Profit before tax amounted to SRD 22,066,899 (2011: SRD 20,661,722).Net profit for the year amounted to SRD 17,521,019 (2011: SRD 15,664,353).

Segment performance and reportingThe results reflect a decline in performance at the real estate and shipping companies. In Industry VSH Foods attained a good result, CIC missed their targets and VSH Steel performed below expectations.

ShippingThe segment includes activities from VSH Shipping, VSH Transport, VSH-United (USA) L.L.C. and VSH Logistics. The Group’s shipping companies represent liner services from ports in Latin America, the Caribbean, North America, the Far East and Europe. Shipping services include consolidation, stevedoring, port terminal operations, warehousing, project logistic support, customs brokerage and trucking. The Shipping segment also provides ticketing and cargo sales services to airlines operating to and from Suriname. The table below gives an overview of vessels and cargo handled.

Shipping income declined by 13.2% to SRD 17,020,695 (2011: SRD 19,598,963). The segment operating result amounted to SRD 9,780,245 (2011: SRD 12,799,583) a decline of 23.6%. As expected income declined following an increase of 66% in 2011 due to logistics services provided to two offshore oil drilling programs. Cargo and vessels handled increased. Consolidated cargo volume handled by VSH-United (USA) L.L.C. grew by 4.0% to 344,867 cubic feet (2011: 331,509 cubic feet).

Services operated by Seaboard Marine, Eukor Car Carriers, Intermarine, Seatrade and AFS-Atlantic Feeder Service contributed to increased cargo volumes and income. Agency and custom brokerage services to the offshore oil industry as well as increased passenger volume on Insel Air also contributed to income.

In 2012 a total of SRD 2.3 million was invested in port equipment and agency/cargo management software development. Offshore oil exploration activity came to an end in the first quarter of 2012. Off/near shore seismic work continued in 2012/2013 and currently a total of 6 foreign oil companies have signed offshore exploration agreements with State Oil Suriname for various blocks off shore. Prospects for further cargo growth in 2013 are good.

Vessels handled Cargo handled Containers (Full teus) Incoming Outgoing

Bulk Cargo (metric tons)Incoming Outgoing

General Cargo (revenue tons)Incoming Outgoing

235

6,2311,193

113,416621,286

82,6311,701

255

6,5761,414

108,651550,819

80,882830

260

7,7472,478

125,301653,847

82,5541,423

274

10,8912,952

184,654443,487

101,464792

Year 2009201020112012

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TradingN.V. VSH Trading is distributor for Canon office equipment and holds an important share of the market for copiers, fax machines, printers and scanners. As distributor for Red Wing and Worx the Company supplies major industries with quality footwear for the workplace. A full line of Personal Protective Equipment compliments the assortment available to customers.

Trading operating income is stated after deduction of cost of goods sold. Operating income increased by 6.7% to SRD 3,681,464 (2011: SRD 3,450,209). Segment operating result increased by 19.8% to SRD 1,385,366 (2011: SRD 1,156,773). For the second consecutive year the company received the Best overall Service Department Award from Canon Latin America Inc. In April 2013 construction commenced on a new showroom and warehouse at our current location at Van 't Hogerhuysstraat. State of the art digital foot diagnostic equipment has been installed to provide our customers with optimum shoe fit and posture support.In line with a growing economy and investment in the mining sector we expect sales to increase in 2013.

FoodThe Food segment is related to activities of N.V. VSH Foods (56.01%), which includes the production and distribution of margarine, butter and shortening. Operating income is stated after deduction of cost of packaging and raw materials. Segment operating income increased by 13.8% to SRD 9,323,775 (2011: SRD 8,193,653). Segment operating result increased to SRD 2,540,172 (2011: SRD 1,837,171). Sales revenue increased by 2.6% to SRD 18,558,659 (2011: SRD 18,090,307). Sales volume increased marginally to 1,372 metric ton (2011: 1,353 metric ton). Gross margin increased to 48.5% (2011: 43.9%) which is fundamental to the improved results. The company participated in the 2012 IDEAS Energy Innovation Contest for the Caribbean and was chosen as one of the winners based on a project to convert used or waste fats to biodiesel. To finance the project a grant of USD 200,000 was awarded. The biodiesel plant is expected to be in operation at the end of 2014. Growth in this segment will come from export sales growth in existing and new markets. Relatively stable prices for edible oil raw material prices are expected in the coming period which combined with increased export volumes should improve results in 2013.

DetergentsN.V. Consolidated Industries Corporation (43.87%) manufactures a wide range of industrial and household detergents and plastic packaging material. The Company’s products command an important share of the local and regional markets. Operating income is reported after deduction of cost of packaging and raw materials. Segment income increased by 5.9% to SRD 20,302,929(2011: SRD 19,163,772). Segment operating result amounted to SRD 1,930,551 (2011: SRD 2,087,367). A provision to cover liabilities for medical expenses following retirement reduced results. Powder detergent volume increased to 2,906 metric ton (2011: 2,521 metric ton) as a result of higher demand in our major export markets. Liquid detergent volume increased to 4,075 metric ton (2011: 3,877 metric ton). Bleach production at our new facility performed as expected without major interruptions. In December 2012 an order was placed for equipment to expand the Bleach production capacity to 1,000 metric tons per annum. This equipment meanwhile is installed and in production. In the first quarter of 2013 several new and renewed products were introduced to the market. These include powder detergent, dishwashing liquid, fabric softeners and liquid laundry detergents. With these new products we will re-enforce our position in the local market and expand exports. Improved operating results are expected in 2013.

SteelN.V VSH Steel produces prefabricated steel structures and supplies the construction industry in Suriname and in the Caribbean. Operating income is reported after deduction of cost of raw materials. Operating income increased marginally to SRD 6,183,334 (2011: SRD 6,056,050). Segment operating result declined to SRD 650,583 (2011: SRD 849,762). Production volume decreased to 891 metric ton (2011: 1,184 metric ton). Productivity achieved was 24.7 man-hours per ton (2011: 24.9 man-hours per ton). Gross margin improved to 51% (2011: 46%). New software has been put into use at the Engineering department (Tekla Structures) and Project Management (LIEMAR Software) for better efficiency and improved process-flow and productivity.Prospects for sufficient work during 2013 are promising. Production volume is expected to rise above 1,200 metric ton and operating results should improve accordingly.

Real EstateN.V. VSH Real Estate owns, develops and manages real estate objects for use by the Group or for rent to external tenants. This segment also includes the historic apartment building at Waterkant owned by VSH Trading. Real Estate income declined to

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SRD 2,067,711 (2011: SRD 2,261,144) due to lower occupancy. Segment operating result decreased to SRD 62,009 (2011: SRD 728,363) due to lower occupancy and increased maintenance and depreciation expense. The new customs warehouse adjacent to the Port and used by VSH Transport for container de-consolidation activities has met expectations and the office space on the first floor has been rented. In October 2012 the company purchased 5.3 ha land at Paranam and in February 2013 the company purchased another parcel of land of 15 ha near Paranam along the Suriname River. These purchases are based on a policy to secure strategic properties for long term development of the businesses of the VSH United Group.

Associate CompanyAssuria N.V. (24.63%) is the largest insurance company in Suriname offering a broad range of life, casualty and health insurance products in Suriname and since March 2012 in neighbouring Guyana. Assuria holds a 49% share position in De Surinaamsche Bank N.V., the largest retail bank in Suriname. The Company’s share in the equity of Assuria amounted to SRD 60,138,489 (2011: SRD 50,048,227). The price for an Assuria share on the last trading session in 2012 at the Suriname Stock Exchange amounted to SRD 78.00 (2011: SRD 46.00). The Company’s share in the net profit of Assuria amounted to SRD 8,513,532 (2011: SRD 6,141,022). During the year an amount of SRD 2,290,425 (2011: SRD 1,805,941) was received in cash dividend.

InvestmentsInvestments include the Company’s strategic investment in N.V. Hotelmaatschappij Torarica, the subsidiary N.V. VSH Investment and other investments in local production companies and financial institutions. Investment income amounted to SRD 695,046 (2011: SRD 608,998). At year end investment assets stood at SRD 13,472,167 (2011: SRD 12,267,140).

Strategic InvestmentN.V. Hotelmaatschappij Torarica (12.30%) operates three hotels in prime locations along the Suriname River. The Royal Torarica is a 109 room luxury hotel located next to Torarica a 132 room first class hotel and casino in the entertainment centre of Paramaribo. Up the road a short walk from Torarica is a fine 122 room no frills hotel called Eco Resort Inn. These hotels provide state of the art accommodation to mainly business visitors and tourists.

Investment Subsidiary N.V. VSH Investment operates as broker on the Suriname Stock Exchange. The Suriname Stock Exchange meets every other week and 12 stocks are listed. The Index increased by 46% to 7,901 in 2012 (2011: 5,396).

Proposed dividendProfit attributable to the Shareholders of the Company amounted to SRD 16,431,570 (2011: SRD 15,416,129). Quarterly interim dividend amounted to SRD 794,535 or SRD 0.40 per share. Management proposes a final cash dividend of SRD 2,184,972 or SRD 1.10 per share. Total dividend then amounts to SRD 2,979,507. Management further recommends that the remaining profit amounting to SRD 13,452,063 be transferred to the retained earnings. Should the proposed dividend be approved, Shareholders' equity will increase from SRD 104,459,121 at the beginning of the year to SRD 123,162,724 at the end of the year.

Share price At the end of the year the price for shares of the Company amounted to SRD 37.50 per share (2011: SRD 30.00 per share).

Financial conditionThe consolidated cash flow statement illustrates that there was a decrease in cash and cash equivalents at year end of SRD 13,807,798 (2011: SRD 14,179,841). In 2012 operating activities generated SRD 13,673,326 in cash and cash equivalents. Investments in financial and fixed assets amounted to SRD 16,284,464 (2011: SRD 10,845,293) and were financed with own means and borrowings.

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Assets and capital structure

Investments financed by own means amounted to SRD 16,284,464 (2011: SRD 9,103,293).

LegalA fraud case involving the Assistant Managing Director Finance at the subsidiary N.V. Consolidated Industries Corporation (CIC) was uncovered by the external accountant. The person involved was dismissed on 23 April 2012. The case was subsequently reported to the police. Financial damages uncovered in the period 2009 to March 2012 amount to an estimated SRD 1.2 million and have been provided for in the accounts of 2011 and 2012. Action has been taken by the management of CIC to recover the financial damages.

Personnel and organizationAt the end of the year the Group employed 333 persons (2011: 324 persons). Management consists of 5 Managing Directors,4 Assistant Managing Directors and 25 specialized staff members.

The Company encourages individual development through financial assistance and career development through specialized training. Training during the year included: First Aid refreshment courses, financial courses, Internal Audit courses, facility management, product quality, project management, sales & marketing techniques, HSEQ. Senior staff members attended several one day seminars organized by the FHR Lim A Po Institute for Social Studies in the fields of Leadership and Management.

Bonuses and salary adjustments are based on performance evaluation. Bonuses paid for the year amounted to SRD 2,657,134 (2011: SRD 2,459,998). A medical insurance plan provides medical services to employees and their families. Employees contribute 4% and the management 6% of gross wages to the medical plan.

The VSH Pension Fund is incorporated in a separate legal entity which is governed by a board consisting of four members of whom the Chairman and Secretary are appointed by the VSH Management and two other members elected by the participants. At the end of the year there were 158 active pension fund members, 29 persons with deferred pension, 14 pensioners, 3 widows and 4 orphans receiving pension. Pension liabilities at 31 December 2012 amounted to SRD 16,896,802 (2011: SRD 14,521,206). Total equity of the fund amounted to SRD 29,747,726 (2011: SRD 22,892,077). Pension benefits for 123 CIC employees are insured. There are 30 pensioners and 3 persons with disability pension.

Personnel activities On 4 August 2012, 337 persons including family members attended the annual family day event at Cola Creek. On 21 December 2012, a Christmas dinner was held in a local restaurant; 230 persons attended including spouses. At the dinner employees celebrating 10, 15, 20, 30 and 35 years of service were honored. We honored Mr. R. Paltan who retired on 1 January 2013 after having served the Company for 29 years. On 25 August, employees and family members of CIC attended the annual family day event at Kraka. To promote a healthy lifestyle regular medical checkups were done and a health seminar was organized on 10 August 2012. A pilot group of 15 employees committed themselves to a healthy lifestyle for six months under supervision of a dietician.

Community activitiesThe VSH Community Fund is incorporated in a separate legal entity which is governed by a board consisting of three VSH Management members. The Foundation supports sustainable community projects in education, environment and healthcare. Some examples of projects supported are mentioned below.

The Foundation has two permanent projects: the daily bread project for the children’s home “Zout der Aarde” and Villa Zapakara Kinder museum.

Equity and debtThe Group's capital structure is as follows: Interest-bearing loans and borrowingsCash and short-term depositsTotal equityTotal net capital employed

2012 6,060,188

(13,807,798)141,495,451133,747,841

2011 7,322,512

(14,179,841)122,805,181115,947,852

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The Foundation donated to the Medical Mission for Primary Health Care two sun frost laboratory refrigerators for the safe storage of laboratory samples and medication at the Health Care centers in the interior of Suriname. The refrigerators are installed at the Health Care centers Nieuw Jacobkondre and Cottica.

The Foundation donated for the renovation of Fatima Oord home for the elderly.The Foundation donated the first prize for the Spelling Bee project of the Kiwanis Club and a prize for the VOS Student Excellence Award 2012.

During the year and especially during religious holidays donations are made to church and community organizations to give comfort to the elderly and the disadvantaged.

OutlookNegotiations between the Suriname Government and major gold mining companies have led to an agreement with IAM Gold for expansion of the activities and with Newmont for the establishment of a new mine in the Nassau area in eastern Suriname. The agreement with Newmont requires some amendment following discussions in parliament. The agreement with IAM Gold includes extension of the mineral agreement to 2042, an energy price of USD 0.11 per kilo watt hour and a participating interest by the Government of up to 30%. These agreements together with the ongoing construction of the State Oil refinery will sustain economic growth. Inflation in March 2013 on a year to year basis dropped to 1.3%. In our 55th year the VSH United Group is expected to perform in line with the positive developments in Suriname. In our industrial companies the focus will be on export while the shipping group will complete its automation upgrade. The Trading Company will move into a new showroom and warehouse location at the same address.

AppreciationWe thank the members of the Supervisory Directors of Board for their valuable advice and support during the year. The VSH United team has once again proven their mettle by completing a successful year. We thank our customers and suppliers for their loyalty and support.

Paramaribo, 9 May 2013

Managing DirectorJ. Healy Jr.

21

Independent Auditor’s Report

To: The Shareholders, Supervisory Board of Directors and Management ofN.V. Verenigde Surinaamse Holdingmij.-United Suriname Holding CompanyParamaribo

Report on the financial statementsWe have audited the accompanying financial statements 2012 of N.V. Verenigde Surinaamse Holdingmij.- /United Suriname Holding Company, in Paramaribo, which comprise the consolidated and company balance sheet at 31 December 2012, the consolidated and company income statement, the consolidated cash flow statement and the consolidated statement of changes in equity for the year then ended and the notes, comprising a summary of the accounting policies and other explanatory information.

Management’s responsibilityManagement is responsible for the preparation and fair presentation of these financial statements, in accordance with generally accepted accounting principles. Furthermore management is responsible for such internal control as it determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion with respect to the financial statementsIn our opinion, the financial statements give a true and fair view of the financial position of N.V. Verenigde Surinaamse Holdingmij.- United Suriname Holding Company at 31 December 2012 and of its result and its cash flows for the year then ended in accordance with generally accepted accounting principles.

Paramaribo, 9 May 2013Lutchman & Co, Accountants

Represented and signed byDrs. M.R.A. Lutchman RA, chartered accountant

22

Income Statementfor the year ended 31 December 2012

8,606,752 6,141,022

593,827 116,450

15,458,051

15,458,051 41,922

15,416,129

577,844 2,889,219

1,806 11,947,260 15,416,129

7,096,6048,513,532

663,228247,197

16,520,561

16,520,56188,991

16,431,570

794,535 2,184,972

- 13,452,063 16,431,570

777

20112012note

Income fromSubsidiariesShare of profit in AsssociateInvestmentsOther

ProfitProfit before taxIncome taxNet profit

Interim dividendFinal dividendStock dividendSurplus

Division of Profit

Paramaribo, 9 May 2013Supervisory Board of DirectorsR. Khodadin, ChairmanD. Halfhide, Vice ChairmanR. HahnA. KluijverR. Elias

Paramaribo, 9 May 2013Managing Director

James J. Healy Jr.

SRDSRD

23

Balance Sheet at 31 December 2012Before appropriation of profit

ASSETS

EQUITY AND LIABILITIES

20112012

Non-current assets

Property, plant and equipmentFinancial assetsSubsidiary interestInvestment in AssociateTotal non-current assets

Current assetsSubsidiary receivablesTrade and other receivablesCash and cash equivalentsTotal current assets

Total assets

EquityIssued capitalCapital in excess of par valueRetained earningsResult for the yearRevaluation reservesTotal equity

LiabilitiesNon-current liabilitiesProvision Deferred taxTotal non-current liabilities

Current liabilitiesSubsidiary payablesTrade and other payablesTotal current liabilities

Total equity and liabilities

SRDSRD

435,577

11,778,266 46,430,118 50,048,227

108,692,188

1,978,043 2,508,636

12,022,476 16,509,155

125,201,343

18,058 240,425

33,152,547 15,416,129

58,522,987 107,350,146

411,884 4,697,248 5,109,132

11,628,720 1,113,345

12,742,065

125,201,343

272,441

12,761,688 52,955,437 60,138,489

126,128,055

6,057,580 2,800,167

10,003,269 18,861,016

144,989,071

19,863240,425

44,636,83116,431,57064,019,007

125,347,696

-

5,051,2805,051,280

13,369,5591,220,536

14,590,095

144,989,071



James J. Healy Jr.

24

Consolidated Income Statementfor the year ended 31 December 2012

20112012note

RevenueTradingIndustryShippingReal estateOther

CostsPersonnel expensesAdministrative expensesInterestDepreciationProvisions

Profit from continuing operations

Other IncomeShare of profit in AssociateInvestmentsExtraordinary expenses

ProfitProfit before taxIncome taxNet profit

Attributable to:Non-controlling interestsEquity holders of the Parent Company

Weighted average number of sharesEarnings per share

3,884,168 31,549,238 19,180,135 1,143,194 1,877,055

57,633,790

17,861,144

17,303,334 638,021

4,805,617 2,747,558

43,355,674

14,278,116

6,141,022 608,392

(365,808) 6,383,606

20,661,7224,997,369

15,664,353

248,22415,416,129

1,805,7628.54

4,745,39833,606,60516,481,747

1,110,5501,655,450

57,599,750

20,519,18116,961,596

530,7605,467,2731,242,465

44,721,275

12,878,475

8,513,532674,892

- 9,188,424

22,066,8994,545,88017,521,019

1,089,44916,431,570

1,896,0508.67

4

4

84

10

4

5

66



James J. Healy Jr.

SRDSRD

25

Consolidated Balance Sheet at 31 December 2012Before appropriation of profit

ASSETS

EQUITY AND LIABILITIES

20112012note

89

10

11125

13

14

14

14

15175

185

1617

Non-current assetsProperty, plant and equipmentFinancial assetsInvestment in associateTotal non-current assets

Current assetsInventoriesTrade and other receivablesCurrent tax receivablesCash and cash equivalentsTotal current assets

Total assets

EquityIssued capitalCapital in excess of par valueRetained earningsResults for the yearRevaluation reservesEquity attributable to equity holders of the Parent CompanyNon-controlling interestsTotal equity

LiabilitiesNon-current liabilitiesLong-term borrowingsLong-term provisionsDeferred taxTotal non-current liabilities

Current liabilitiesTrade and other payablesCurrent tax payableShort-term borrowingsShort-term provisionsTotal current liabilities

Total equity and liabilities

SRDSRD 46,085,88112,267,140

50,048,227108,401,248

24,960,033 28,975,894

- 14,179,841 68,115,768

176,517,016

18,058240,425

33,152,54715,416,129

58,522,987107,350,14615,455,035

122,805,181

4,507,7556,013,207

14,048,48824,569,450

23,679,588 2,184,649 2,814,757

463,391 29,142,385

176,517,016

51,359,54513,472,16760,138,489

124,970,201

27,321,623 27,821,280

- 13,807,798 68,950,701

193,920,902

19,863240,425

44,636,83116,431,57064,019,007

125,347,69616,147,755

141,495,451

3,739,6435,743,378

12,443,84321,926,864

26,338,518 1,251,767 2,320,545

587,757 30,498,587

193,920,902



James J. Healy Jr.

26

Consolidated Statement of Changes in Equityfor the year ended 31 December 2012

in SRDShare

CapitalCapital in excess of par value

Retained earnings

Revaluation reserve

Total Non-Controlling

Interest

Total

Equity at 1 January 2011

Shares issued

Profit after tax

Profit distributions

Revaluation

Realized revaluation

Correction previous year

Unclaimed dividend

Equity at 31 December 2011

before appropriation of profit

Appropriation of profit

Dividend


after appropriation of profit

Shares issued

Profit after tax

Profit distributions

Revaluation

Realized revaluation

Correction previous years

Unclaimed dividend


before appropriation of profit

Appropriation of profit

Proposed dividend


after appropriation of profit

18,058

-

-

-

-

-

-

-

18,058

-

18,058

1,805

-

-

-

-

-

-

19,863

-

19,863

240,425

-

-

-

-

-

-

-

240,425

-

240,425

-

-

-

-

-

-

-

240,425

-

240,425

33,933,303

-

15,416,129

(863,158)

-

134,980

(52,578)

-

48,568,676

(2,891,025)

45,677,651

-

16,431,570

(1,188,496)

-

136,439

11,237

-

61,068,401

(2,184,972)

58,883,429

51,673,226

-

-

-

6,984,741

(134,980)

-

-

58,522,987

-

58,522,987

-

-

-

5,632,459

(136,439)

-

-

64,019,007

-

64,019,007

85,865,012

-

15,416,129

(863,158)

6,984,741

-

(52,578)

-

107,350,146

(2,891,025)

104,459,121

1,805

16,431,570

(1,188,496)

5,632,459

-

11,237

-

125,347,696

(2,184,972)

123,162,724

15,579,915

-

248,224

(425,514)

50,952

-

-

1,458

15,455,035

(156,478)

15,298,557

-

1,089,449

(301,537)

61,286

-

-

-

16,147,755

(420,999)

15,726,756

101,444,927

-

15,664,353

(1,288,672)

7,035,693

-

(52,578)

1,458

122,805,181

(3,047,503)

119,757,678

1,805

17,521,019

(1,490,033)

5,693,745

-

11,237

-

141,495,451

(2,605,971)

138,889,480



James J. Healy Jr.

27

Consolidated Cash Flow Statementfor the year ended 31 December 2012

2012 SRD

Operating activities:Profit before taxAdjusted for:-Depreciation-Unrealized share of profit associate-Revaluation results-Correction previous years-Loss on exchange-Investment income -Interest expense-Provisions Cash flow from operations before changes in working capital Changes in working capital:-Change in inventories-Change in trade and other receivables-Change in trade and other payables-Adjustments regarding receivables-Adjustments regarding provisionsCash generated from operations

Claims paidPaid interestPaid income taxCash flow from operating activities

Investing activities:Purchase of property, plant & equipmentDisposal of property, plant & equipmentPurchase of non-current financial assetsSale of non-current financial assetsDividends receivedCash flow from investing activities

Financing activities:Proceeds and repayments of loansPension provisionsRedundancy paymentsDividend paidCash flow from financing activities

Net cash flow for the yearCash and cash equivalents at 1 January Cash and cash equivalents at 31 December

22,066,899

5,467,273 (8,513,532)

(278,903) 12,572

- (674,892) 530,760

1,242,465 19,852,642

(2,361,590) 1,154,614

2,658,930 614,680

(165,009) 21,754,267

(33,039) (530,760)

(7,517,142) 13,673,326

(16,087,919) 5,346,982

(196,545) 8,580

2,965,317 (7,963,585)

(1,262,324) (673,207) (516,671)

(3,629,582) (6,081,784)

(372,043) 14,179,841 13,807,798



James J. Healy Jr.

29

■ 1.) Information on the reporting entity

N.V. Verenigde Surinaamse Holdingmij.-/United Suriname Holding Company, is a company domiciled in Suriname. The address of the Company’s registered office is Van ‘t Hogerhuysstraat 9-11 Paramaribo. The consolidated financial statements of the Company at and for the year ended 31 December 2012 comprise the Company, its subsidiaries and its associate (together referred to as the Group).

The subsidiaries are: 1. N.V. VSH Shipping 2. N.V. VSH Transport 3. N.V. VSH Trading 4. N.V. VSH Staalmij 5. N.V. VSH Real Estate 6. N.V. VSH Investment 7. VSH Marketing Company Ltd. 8. N.V. VSH Logistics (formerly N.V. Uniblue Shipping) 9. VSH-UNITED (USA) L.L.C.10. N.V. VSH Foods (56.01%)11. N.V. Consolidated Industries Corporation (CIC) (43.87%)

The associate is:1. Assuria N.V. (24.63%)

The VSH United Group is involved in: shipping, logistics, transport, port operating, steel fabrication, manufacturing of butter, margarine and shortening, manufacturing of household cleaning products and packaging material, trading, insurance, real estate and investment.

■ 2.) Basis of preparation

2.1) Statement of compliance The consolidated financial statements have been prepared in accordance with generally accepted accounting principles. The Company adopts several IFRS standards as described in note 2.5.

The financial statements have been prepared by the management of the Company and authorized for issue by the Supervisory Board of Directors on 9 May 2013, and will be submitted for approval to the Annual General Meeting of Shareholders on 24 May 2013.

2.2) Basis of MeasurementSpecific basis of measurement are: Property and plant are valued at costs adjusted for hyperinflation. Equipment is valued at cost and financial assets at fair value. Other assets and liabilities are stated at face value using the historical cost method.The methods used to measure fair value are described further in note 2.6.

2.3) Functional and presentation currencyThese consolidated financial statements are presented in Suriname Dollars (SRD), which is the Company’s functional currency. All financial information presented in SRD has been rounded to the nearest dollar.

2.4) Use of estimates and judgmentsThe preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods if affected.

Notes to the Consolidated Financial Statements

30


In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amount recognized in the financial statements are described in note 17.

■ 2.5) Application of IFRS standards

Certain provisions from the following IFRS standards were applied to these financial statements:IAS 1: Presentation of Financial Statements IAS 7: Statement of Cash FlowsIAS 16: Property, Plant and EquipmentIAS 17: LeasesIAS 18: RevenueIAS 19: Employee BenefitsIAS 24: Related Party DisclosuresIAS 27: Separate Financial StatementsIAS 28: Investments in Associates and Joint VenturesIAS 29: Financial Reporting in Hyperinflationary EconomiesIAS 33: Earnings per Share 2.6) Summary of significant accounting policiesThe consolidated financial statements include the financial statements of N.V. Verenigde Surinaamse Holdingmij -/ United Suriname Holding Company, its subsidiaries and its associate at 31 December 2012.

SubsidiariesSubsidiaries are those companies over which the Company has control, defined as the power to govern the financial and operating policies so as to obtain benefits from their activities. Subsidiaries are fully consolidated and the financial statements of the subsidiaries are prepared for the same reporting year as the parent Company. All balances, transactions, income and expenses between Group companies are eliminated. Non controlling interests represent the portion of profit and net assets not held by the Group and are at presented separately in the income statement and within equity in the consolidated balance sheet.CIC is consolidated as subsidiary within the Group. Under IFRS 10 and IAS 27 it can clearly be demonstrated that “control” exists over CIC by virtue of:1. The share position of 43.87% in CIC.2. The share position of 12.70% in CIC owned by Assuria Beleggingsmaatschappij N.V., a subsidiary of Assuria. The Company has significant influence (IAS 28) over Assuria by virtue of VSH’s 24.63% share position in Assuria and holds two of the six positions on the Assuria Supervisory Board of Directors including the Chair.3. The Company and Assuria hold three of the five positions on the Supervisory Board of Directors of CIC.4. The attendance at the CIC Annual General Meeting of Shareholders does not rise above 85.00%. In the years 2002 to 2012 the attendance was between 56.42% and 75.24%.5. There has been no instance in recent years, in any case not since 1986, where CIC Shareholders have voted against proposals of the Company.

AssociateWithin the framework of IAS 28 associates are those companies over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. The investment in an associate is initially recognized at cost and the carrying amount is increased or decreased to recognize the Company’s share of the profit or loss of the associate after the date of acquisition. The Company’s share in the profit or loss of the associate is recognized in the Company’s income statement. Dividend received reduces the carrying amount of the investment. Adjustments to the carrying amount may also be necessary for changes in the Company’s proportional interest in the associate arising from changes in the revaluation of property, plant, equipment and other assets.As of 2010 Assuria is presented as an associate.Under IAS 28.6 the Company meets the requirement of significant influence by virtue of:1. The share position of 24.63% in Assuria.2. The Company holds two out of six positions on the Assuria Supervisory Board of Directors including the Chair.

31

Foreign currency transactionsTransactions in foreign currencies are translated to the functional currency of the Group at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currency at the balance sheet date are translated to the functional currency at the exchange rate at that date. Exchange differences arising are charged or credited to the income statement.

The exchange rates used for the US Dollar and the EURO per 31 December are:

in SRD 2012 2011 USD 3.35 3.35 EURO 4.42 4.37

Foreign operationsThe assets and liabilities of foreign operations on consolidation are translated to the SRD at the exchange rates at the balance sheet date. The revenue’s and expenses of foreign operations are translated to the Suriname Dollar at the exchange rates at the date of the transactions. The Company’s shares in foreign operations are valued at the exchange rates at balance sheet date.

Property, plant and equipment (PP&E)Land is carried at cost adjusted for hyperinflation. Land improvements and buildings are carried at cost adjusted for hyperinflation less accumulated depreciation. All other property, plant and equipment are carried at costs less accumulated depreciation.Depreciation is calculated using the straight-line method to write off the costs of individual assets to their residual values over their estimated useful lives as follows:

Buildings 20 - 40 yearsLand improvements 5 - 10 yearsMachinery and equipment 5 - 10 yearsOther assets 3 - 5 years When a major repair or maintenance is performed, its cost is recognized in the carrying amount of the property, plant and equipment as a replacement, if the recognition criteria are satisfied. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the net disposal proceeds and the carrying amount of the asset, and is recognized in the income statement. There are no assets held under financial leases, and assets held under operating leases and not recognized in the Group’s balance sheet.

Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Financial AssetsFinancial assets consist mostly of shares in companies that are not subsidiaries or associates, and term deposits. The shares are measured at their fair value, which is the closing price of the last trading session in December 2012 of the stock exchange where the shares are listed.

InventoriesInventories are stated at cost, less a provision for the reduced marketability of inventories if applicable. Cost is calculated using the last in first out method. Costs comprise direct materials and all costs incurred to bring inventories to their present location and condition net of discounts, rebates and bonuses.

Finished products and work in progressFinished products and work in progress are valued based on the raw and packaging materials used.

Trade and other receivablesTrade and other receivables are stated at nominal value less an allowance for uncollectible amounts, if there is objective evidence that the Group will not be able to collect the receivable. Trade receivables do not carry interest.


32

Cash and cash equivalentsCash and cash equivalents in the balance sheet comprise cash in banks and cash on hand.

Bank debtInterest bearing bank debt is recorded at the fair value of the consideration received net of transaction costs. After the initial recognition interest bearing loans are subsequently measured at amortized cost using the effective interest method.

ProvisionsProvisions are recognized for actual (legal or constructive) obligations, existing at balance sheet date and arising from past events, for which it is probable that an outflow economic benefits will be required to settle the obligation. Some of the Company’s subsidiaries provide warranties on products sold. Provisions are made for the estimated costs arising under these warranties upon the date of sale of the relevant products.

Trade and other payablesTrade and other payables are stated at nominal value. Trade payables do not carry interest.

Employee benefitsThe Group employees participate in a defined benefit pension plan. Some of the pensions are insured while other employees participate in a pension fund foundation which is a separate legal entity.

The Group’s contribution is recorded under personnel expenses in the income statement.

The Group, except for CIC, has no obligations for long term employee benefits. CIC has the obligation to pay medical benefits to pensioners. A provision based on actuarial calculations is recognized for long term employee benefit obligations.

Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term benefits if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

RevenueRevenue from the sale of products in the ordinary course of business is measured at the fair value of the consideration received or receivable, net of turnover and sales taxes, customer discounts and other sales related discounts. Revenue from the sale of products is recognized in the income statement when the amount of revenue can be measured reliably, the significant risk and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of products can be estimated reliably, and there is no continuing management involvement with the products. Revenue from services rendered is recognized in proportion to the stage of completion of the transaction at the balance sheet date. Revenue from operating leases is recognized on a straight-line basis over the term of the relevant lease.Interest income is recognized when received.

Other revenue comprises of gains on exchange, income from previous years, gain on revaluation of inventories, transfer fees, broker provisions, proceeds from sales of empty drums, proceeds from promo activities and fees for consulting and other services.

Other incomeOther income comprises of the Company’s share in the profit or loss of the associate, dividend payments received from financial assets and extraordinary items.

Expenses

Borrowing costsAll borrowing costs are recognized as an expense when incurred.

Operating lease paymentsPayments made under operating leases are recognized in the income statement on a straight-line basis over the term of the lease.


33

Income taxTaxes on income are accrued in the same period as the revenues and expenses to which they relate. Current tax receivables and payables for the current and prior periods are measured at the amount expected to be recovered from or paid to the Tax Authorities. The tax rates and the tax laws used are those that are enacted or substantively enacted at balance sheet date. Deferred taxes are recorded, using the balance sheet method, for temporary differences between the carrying amounts of assets and liabilities for commercial purposes and the amounts used for taxation purposes. Deferred tax is measured using the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted at balance sheet date. A liability for deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reviewed at each balance sheet date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Earnings per shareEarnings per share is calculated by dividing the profit or loss attributable to ordinary Shareholders of the Company by the weighted average number of ordinary shares outstanding for the period.

Segment reportingA segment is a distinguishable component of the Group that is a separate legal entity or a group of separate legal entities, which are subject to risks and rewards that are different from those of other segments.

■ 3.) Segment results

Operating result of the segment is reported before distribution of costs of the Company and income taxes.

The shipping segment comprises shipping activities of the following subsidiaries:VSH ShippingVSH TransportVSH LogisticsVSH-United (USA)

The trading segment comprises of trading activities of the following subsidiary:VSH Trading

The food segment comprises of food production and distribution of the following subsidiary:VSH Foods

The detergent segment comprises of production and distribution of detergents and packaging material by the following subsidiary:CIC

The steel segment comprises steel fabrication of the following subsidiary:United Suriname Steel Company

The real estate segment comprises real estate rental and service income of the following subsidiaries:VSH Real EstateVSH Trading

Other income, assets and liabilities not included in segment reporting are related to the subsidiary VSH Investment, the associate Assuria, the strategic investment Torarica and other shares held in local companies.


34

IncomeInter-segment income

Associate IncomeInvestment IncomeSegment operating income

Reportable segment resultsUnallocated amounts:- Litigation settlement paid- Related to fraud- Provision for medical- Provision for pension

Operating results

Assets

Liabilities

Investments

Depreciation

Employees per segment

19,599 -

- -

19,599

12,800

- - - -

12,800

25,760

13,705

2,552

369

45

3,450 -

- -

3,450

1,157

- - - -

1,157

5,588

1,406

49

75

18

8,194 -

- -

8,194

1,837

(366) - - -

1,471

11,554

3,695

648

579

57

19,164 -

- -

19,164

2,088

- (914)

- (1,652)

(478)

44,467

23,796

3,326

2,765

123

X SRD 1,000

17,021 -

- -

17,021

9,780

- - - -

9,780

26,894

11,309

4,492

556

48

3,681 -

- -

3,681

1,385

- - - -

1,385

7,926

2,865

131

105

19

9,324 -

- -

9,324

2,540

- - - -

2,540

13,869

5,234

1,386

589

60

20,303 -

- -

20,303

1,931

- (33)

(1,430) 549

1,017

42,320

21,592

1,308

3,007

124

Shipping2012 2011

Trading2012 2011

Food2012 2011

Detergents2012 2011

Business Reporting


35

3,514 (1,253)

- -

2,261

728

- - - -

728

7,216

1,374

1,922

447

11

6,056 -

- -

6,056

850

- - - -

850

14,637

6,715

1,606

419

53

144 (25)

6,141 609

6,869

4,134

- - - -

4,134

67,295

3,021

742

152

17

- (1,209)

- -

(1,209)

-

- - - -

-

-

-

-

-

-

- -

6,141 609

64,384

23,594

(366) (914)

- (1,652)

20,662

176,517

53,712

10,845

4,806

324

3,202 (1,134)

- -

2,068

62

- - - -

62

11,717

5,615

6,542

482

10

6,183 -

- -

6,183

651

- - - -

651

15,285

6,145

2,187

524

56

361 (114)

8,514 695

9,456

6,632

- - - -

6,632

75,910

(335)

238

204

16

- (1,248)

- -

(1,248)

-

- - - -

-

-

-

-

-

-

- -

8,514 695

66,788

22,981

- (33)

(1,430) 549

22,067

193,921

52,425

16,284

5,467

333

Real Estate2012 2011

Steel2012 2011

Other2012 2011

Elimination2012 2011

Consolidation2012 2011


36

in SRDGains on exchangeIncome from previous yearsGain on revaluation of inventoriesOtherTotal other revenue

2012 41,253

156,579 149,041

1,308,577 1,655,450

2011 56,560

362,607 35,064

1,422,824 1,877,055

in SRDSalaries and wagesBonusesMedical Contribution to pension planTrainingOther personnel expensesTotal personnel expenses

2012 13,179,505

2,657,134 1,916,607

828,066 487,066

1,450,803 20,519,181

2011 11,810,848 2,459,998 1,343,704

872,882 310,485

1,063,227 17,861,144

in SRDUncollectable receivablesReduced marketability of inventoriesFraudProduct warranty and liabilityDeferred maintenancePensionMedicalRedundancyTotal provisions

2012 328,502

- 32,889 (41,961)42,502

(549,341)1,429,874

- 1,242,465

2011 120,234 (91,609)

1,199,287 (388,411)(115,782)

1,651,386 -

372,453 2,747,558


■ 4.) Other revenue, personnel costs, provisions, pensions and extraordinary expenses

Other revenue

Personnel expenses

Provisions

37

Pensions For the employees of the Group, that have joined the pension fund, the Group contributes 12% of the base salary to the pension fund and the employees own contribution is 5%. The Group's pension expenses in 2012 amounted to SRD 619,315 (2011: SRD 566,808) and are recognized under personnel expenses.

The plan maintained by the foundation is a defined benefit plan, with a maximum benefit of 70% of the following ceilings:Personnel SRD 50,000Staff SRD 125,000Management SRD 200,000

Pension liabilities of the foundation as of 31 December 2012* amounted to SRD 16,896,802 (2011: SRD 14,521,206) and the total equity amounted to SRD 29,747,726 (2011: SRD 22,892,077).* Unaudited

Employees of CIC that have joined its Company’s pension plan contribute 6% of the base salary. The balance of the actuarial calculated pension premiums is contributed by CIC. The pension expenses for CIC in 2012 amounted to SRD 208,751 (2011: SRD 306,074) and are recognized under personnel expenses. CIC has made a commitment to improve pensions subject to an agreement with the union to eliminate future medical benefits for retired personnel.

Extraordinary expensesIn 2012 no extraordinary expenses were incurred (2011: SRD 365,808).

■ 5.) Income tax and deferred tax liabilities

Income taxIn 2009 the Tax Authorities have corrected several income tax 2007 filings which would imply an additional tax payable over 2007 of SRD 3,374,290.The income tax corrections concern the following companies:- VSH Shipping- VSH Trading - VSH Real Estate- VSH Transport- VSH Logistics

In 2012 the Tax Authorities have corrected the income tax 2009 filing for VSH Steel which would imply an additional tax payable over 2009 of SRD 140,259.An objection has been filed with the Tax Authorities as we believe that there is no basis for these corrections.

The income tax obligations for 2012 are specified as follows:

* Excluding eventual statutory interest on the amounts to be paid following a decision of the Tax Authorities on the submitted objections.


in SRDDue at 1 JanuaryPaid during the yearDue over the yearCorrection previous yearPP&E replacement reserveRestructuring provisionDeferred tax assetInventory adjustmentsRelease revaluation land and buildingsAccelerated depreciation Due at 31 December*

2012 2,184,649 (7,517,142)4,545,880

1,335 614,790

- -

1,266,590 114,475

41,190 1,251,767

2011 (97,712)

(3,879,078)4,997,369

10,562 628,553 460,065

(5,413)(88,287)113,656 44,934

2,184,649

38

Deferred tax liabilitiesThese are tax liabilities arising from the differences between valuation for commercial and for taxation purposes. In 2002, 2003, 2004 and 2005 requests for the application “accelerated depreciation” according to the investment code 2001 were submitted by VSH Foods to the Ministry of Finance for part of the investments made in PP&E from 2002 to 2005. In the financial statements it is assumed that part of the requests will be granted. This assumption is based on the approvals and rejections received from the Ministry of Finance. As a result of the application of the “Iron Inventory” valuation method in some of the subsidiaries the inventory has been written up this year based on the actual situation. A tax rate of 36% is used for the determination of this liability.

■ 6.) Earnings per share

All shares of the Company are ordinary shares with a par value of SRD 0.01. The calculation of earnings per share at 31 December 2012 was based on the profit attributable to ordinary Shareholders of the Company of SRD 16,431,569 (2011: SRD 15,416,129) and a weighted average number of ordinary shares outstanding during the year ended at 31 December 2012 of 1,896,050 (2011: 1,805,762).

■ 7.) Dividends paid and proposed

The following dividends were declared and paid by the Company.

in SRDBalance at 1 JanuaryRevaluation of non current financial assetsRevaluation of subsidiary interestInventory adjustmentsRelease revaluation land and buildingsPP&E replacement reserveCorrection previous yearDeferred tax assetsRestructuring provisionRelease accelerated depreciationBalance at 31 December

2012 14,048,488

432,400 -

(1,266,590)(114,475)(614,790)

- - -

(41,190)12,443,843

2011 14,893,742

278,691 29,922 88,287

(113,656)(628,553)

(359)5,413

(460,065)(44,934)

14,048,488

Weighted average number of sharesEarnings per share in SRD

2012 1,896,050

8.67

2011 1,805,762

8.54


in SRDFourth quarter interim dividend previous year SRD 0.08 per share (2010: SRD 0.08)Final cash dividend previous year SRD 1.60 per share (2010: SRD 0.94)First quarter interim dividend SRD 0.10 per share (2011: SRD 0.08)Second quarter interim dividend SRD 0.10 per share (2011: SRD 0.08)Third quarter interim dividend SRD 0.10 per share (2011: SRD 0.08) Stock dividend 0 shares (2011: 180,576 shares)

After the balance sheet date 2012:Declared and paid by the companyFourth quarter interim dividend SRD 0.10 per share

The Management proposed the following final dividend:Cash dividend SRD 1.50 per share

2011 144,461

1,697,416 144,461 144,461 144,461

2,275,260 1,805

2012 144,461

2,889,219 198,634 198,634 198,634

3,629,582 -

198,633

2,184,972

39

■ 8.) Property, plant and equipment

Changes in property, plant and equipment are as follows:

* Disposal include transfers of investments in progress to the respective asset categories.

The property, plant and equipment are insured against fire up to USD 35,876,434 (SRD 120,186,054).

■ 9.) Financial assets

Non-current financial assets comprise of shares in other companies and term deposits. The shares are measured at their fair value, which is the closing price of the last trading session of the stock exchange where the shares are listed in December 2012.

*) The Assuria shares are held by VSH Foods and VSH Investment

in SRD

Book value 1 January 2011 InvestmentDepreciationDisposal*Book value 31 December 2011 Movements 2012:InvestmentDepreciationDisposal*Book value 31 December 2012

Consists of:Current ValueAccumulated DepreciationBook value 31 December 2012

41,692,128

10,577,393 4,805,617

(1,378,023)46,085,881

16,087,919 5,467,273

(5,346,982)51,359,545

83,657,084 32,297,539 51,359,545

24,953,522

1,527,199 1,148,372

- 25,332,349

6,381,007 1,137,468

- 30,575,888

41,406,546 10,830,658 30,575,888

11,061,816

3,823,482 2,099,020

- 12,786,278

4,817,026 2,689,939

- 14,913,365

26,924,134 12,010,769 14,913,365

4,108,422

1,773,629 1,558,225

- 4,323,826

1,769,373 1,639,866

- 4,453,333

13,909,445 9,456,112

4,453,333

1,568,368

3,453,083 -

(1,378,023)3,643,428

3,120,513 -

(5,346,982)1,416,959

1,416,959 -

1,416,959

Total PropertyMachinery and

EquipmentFurniture and

FixtureInvestments in

progress


Funds

Assuria*N.V. Hotelmaatschappij ToraricaSurinaamse Brouwerij N.V.De Surinaamsche Bank N.V. Self Reliance N.V.Hakrinbank N.V.Royal Bank of ScotlandTotal sharesOtherTotal financial assets

4,100 163,020

1,287 5,576

13,885 -

2,967

78.00 70.00

735.00 96.75 18.00

295.00 1.40

319,800 11,411,400

945,945 539,478 249,930

- 4,168

13,470,721 1,446

13,472,167

188,600 11,003,850

508,365 395,896 152,735 13,500

3,112 12,266,058

1,082 12,267,140

Number of Shares

Price per shareValue in SRD

2012Value in SRD

2011Value in SRD

40

in SRDBalance at 1 JanuaryCompany’s share of profitProfit distributionAdjustments revaluation reserveBalance at 31 December

2012 50,048,227

8,513,532 (3,299,065)4,875,795

60,138,489

2011 39,651,696

6,141,022 (2,413,211)6,668,720

50,048,227

in SRDRaw materials and packagingGoods for saleFinished goodsSupplies and spare partsGoods in transitProvision for reduced marketabilityTotal inventories

2012 12,782,347

5,631,308 1,191,805 2,058,830 5,927,377 (270,044)

27,321,623

2011 12,976,608

4,870,765 1,849,691 1,782,643 3,806,656 (326,330)

24,960,033


in SRDTrade receivablesAdvance to personnelPrepayments and depositsInsuranceWork in progressTo settle import dutyOther receivables Total trade and other receivables

2012 21,784,746

283,277 1,658,876

43,130 724,100 29,554

3,297,597 27,821,280

2011 23,794,777

969,663 1,500,919

272,424 840,936

54,199 1,542,976

28,975,894

■ 10.) Investment in associate

Changes in carrying amount of assiociate

■ 11.) Inventories

In 2012 no addition/release was considered necessary for the provision for reduced marketability of goods (2011: SRD 91,609).The inventories are insured against fire up to USD 6,733,500 (SRD 22,557,225).

■ 12.) Trade and other receivables

At 31 December 2012 trade receivables are shown net of an allowance for uncollectible amounts of SRD 443,271 (2011: SRD 530,426). The impairment loss recognized in the current year was SRD 328,502 (2011: SRD 120,234). At 31 December 2012 advance to personnel is shown net of a provision for fraud at CIC of SRD 1,232,176 (2011: SRD 1,199,287).

41

■ 13.) Cash and cash equivalents

Cash and cash equivalents comprise of cash at banks, cash on hand and short term deposits.

■ 14.) Issued capital, capital in excess of par value, reserves

At 31 December 2012 the issued share capital comprised of 1,986,338 shares (2011: 1,805,762 shares). The shares have a par value of SRD 0.01. All issued shares are fully paid.

Capital in excess of par valueThe capital in excess of par value relates to the difference between the nominal value and the price of shares issued in 2010, 2007 and 2006.

Revaluation reserveThis reserve has arisen from the revaluation of property and financial assets less deferred taxes and yearly realized depreciation from the revaluation of PP&E. The yearly realized transfer of the revaluation reserve of the property is based on the difference between the commercial depreciation and fiscal depreciation. Also booked to the revaluation reserve are changes in the Company’s share in the equity of the associate which are not recognized in the associate’s profit and loss.

Retained earningsIn 2012 the interim dividend of SRD 794,535 (2011: SRD 577,844) over the year has been charged to retained earnings. Also charged to retained earnings is the Company’s share of profit distributed to management by associate company Assuria. In 2012 this amounted to SRD 393,961 (2011: SRD 285,314). The total amount of profit distribution for 2012 amounted to SRD 1,188,496(2011: SRD 863,158).

■ 15.) Long-term borrowings Long-term borrowing comprises of several secured loans for the Company and its subsidiaries.

In 2006 a loan of USD 345,000 was issued on behalf of the United Suriname Steel Company to finance the purchase of a CNC driven drilling and saw machine. The term of the loan was five years with a balloon payment in 2011. The balloon portion of the loan was refinanced in 2011 for an additional five years. The fixed rate is 8.5% per annum. Monthly payments amount to USD 2,875.

in SRDDenominated in SRDDenominated in US DollarsDenominated in EUROTotal cash and cash equivalents

2012 3,787,338 8,570,786 1,449,674

13,807,798

2011 3,212,967 8,600,550 2,366,324 14,179,841

in SRDIssued capital at 1 JanuaryIssued capital at 31 December

2012 18,058 19,863

2011 18,058 18,058


in SRDVSH SteelConsolidated Industries CorporationTotal long-term borrowings

2012 394,881

3,344,762 3,739,643

2011 510,456

3,997,299 4,507,755

42

Loans CIC comprise of three long term arrangements with financial institutions:- In 2006 a loan of USD 275,000 was issued on behalf of CIC. The term of the loan is 10 years with a fixed interest rate of 8.5% per annum. Monthly payments including interest amount to USD 3,410.- In 2007 an investment facility of USD 1,050,000 was issued on behalf of CIC. The term of the loan is 7 years with a fixed interest rate of 8.25% (as from August 2011) per annum. Monthly payments amount to USD 5,850 with a bullet payment at the end of the term.- In 2011 a loan of USD 520,000 was issued on behalf of CIC. The term of the loan is 5 years with a fixed interest rate of 8% per annum. Monthly payments including interest amount to USD 10,544 and the balance at 31 December 2011 was USD 498,626.

The securities for the above mentioned loans:- Mortgage and or Notarial power of attorney to establish a mortgage on land and buildings.

■ 16.) Short-term borrowings

Short-term borrowing comprises of the short term (< 12 months) portion of the long term loans and of the following secured bank overdraft facilities:- On 19 June 2008, VSH Foods obtained an overdraft facility with a maximum of USD 250,000 to finance working capital requirements on an ongoing basis. This facility was not used during the year. The fixed rate is 9% per annum.- On 17 February 2010, CIC obtained an overdraft facility with a maximum of USD 600,000 to finance working capital requirements on an ongoing basis. The balance at year end amounted to USD 490,229 (2011: USD 608,332). The fixed rate is 8.25% per annum.- On 19 December 2006, CIC obtained an overdraft facility with a maximum of SRD 100,000 to finance working capital requirements on an ongoing basis. The fixed rate is 11% per annum. This facility was not used during the year.

The securities given to the bank are:- Pledged securities.- Fiduciary assignment of inventories.- Fiduciary assignment of machinery and equipment.- Mortgage on land and buildings.

■ 17.) Provisions and commitments

Provisions

Product warranty and liabilityThe warranty provision represents management’s best estimate of the Group’s liability under warranties granted for its products, based on past experience and industry averages for defective products.

in SRDProduct warranty and liabilityDeferred maintenancePensionLong term medical obligationRedundancyTotal provisions

Short term provisions < 12 monthsLong term provisions > 12 months

2012 510,397 116,875

2,397,150 3,269,781

36,932 6,331,135

587,7575,743,378

2011 389,015

74,375 3,619,698 1,839,907

553,603 6,476,598

463,3916,013,207


in SRDVSH Steel VSH FoodsCICTotal product warranty and liability

2012 91,948

145,620 272,829 510,397

2011 161,903 142,034 85,078

389,015

43

in SRDDue within one yearBetween one and five yearsLater the five yearsTotal

2012 3,222,877

27,803,20814,625,66745,651,752

2011 3,106,5409,365,810

16,643,00029,115,350

in SRDVSH Transport

2012 116,875

2011 74,375

in SRDCIC

2012 2,397,150

2011 3,619,698


in SRDTrade payables Other taxes payable Employee benefits Received deposit & advanced Dividend & tax payables Other payables Total trade and other payables before profit distributionProposed dividend Total trade and other payables after profit distribution

2011 14,905,419

1,218,119 911,865

4,125,766 283,532

2,234,887 23,679,588

3,047,503 26,727,091

2012 16,364,179

1,380,217 952,069

4,677,195 364,591

2,600,267 26,338,518 2,605,971

28,944,489

Deferred maintenanceThis provision represents management’s estimate of deferred maintenance on property and buildings.

PensionThis item represents a provision with regards to the intention of management to increase existing pension policies.

Long term medical obligationCIC has the obligation to pay medical expenses for pensioners for which a provision amounting to SRD 3,269,781 (2011: SRD 1,839,907) is considered necessary.

RedundancyRedundancy represents a provision for a CIC employee no longer active.

Commitments

Operating leasesAt balance sheet date the total commitment for future lease payments under non-cancelable operating leases amounts to:

Non-cancelable operating lease payments represent rentals payable by the Group for use of vehicles, computer hardware and port terminal lease commenced on 1 April 2010 for a period of 15 years.

VSH Community Fund

This non-profit foundation was established on 22 August 2008 to finance and coordinate community projects on behalf of the Group. The fund is financed by contributions of 1.5% of the profit before tax on a final monthly basis from the operating companies. In 2012 a total amount of SRD 222,030 (2011: SRD 292,070) was contributed by the companies.

■ 18.) Trade and other payables

44

■ 19.) Related party disclosure

Supervisory Board of DirectorsThe remuneration of the Supervisory Board of Directors is approved by the Shareholders' Meeting. In 2012 the total remuneration amounted to SRD 65,600 (2011: SRD 62,400).

Management The remuneration of key management personnel of the Group is determined by the Supervisory Board of Directors. The remuneration consists of a fixed monthly salary and a bonus of which a significant part is based on the Executive Performance Scheme.

Based on the Executive Performance Scheme for 2012 a bonus of SRD 240,155 (2011: SRD 113,639) has been approved by the Supervisory Board of Directors. This amount is payable in 2013 and has not been recognized in the balance sheet at 31 December 2012.

Services Financial- and IT services are provided by the Company to VSH Foods, VSH USA and CIC. The amount billed in 2012 amounted to SRD 182,252 (2011: SRD 23,640).


2012 annual report vsh united

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