agostini's limited annual report 2012
TRANSCRIPT
A G O S T I N I ’ S L I M I T E D A N N U A L R E P O R T 2 0 1 2
Registered Office: 18 Victoria Avenue, Port of Spain, Trinidad, West IndiesTelephone: (868) 623-4871 Fax: (868) 623-1966Email: [email protected] Website: www.agostinislimited.com
Agostini Cover finalised.indd 1 12/12/12 3:56 PM
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A n n u A l R e p o R t 2 0 1 2
In this special year, 2012, Agostini’s limited throws “hats in the air”, celebrating 50 years of Independence with our fellow citizens of trinidad and tobago.
our roots in this country run deep, and our dedication to our stakeholders is strong. We are committed to the future of trinidad and tobago, and work to make meaningful contributions to the lives of our customers, shareholders, employees and other stakeholders.
Agostini’s roots extend far back in this country’s history with many of our subsidiaries originating prior to the date of Independence. Smith Robertson was established in 1894, Hand Arnold in 1920 and Agostini Marketing in 1925. Rosco petroavance commenced operations in 1963 and Superpharm in 2004.
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Cover:
the “Hats in the Air” concept was designed by Michelle Aboud for the 50th Anniversary of Independence of trinidad and tobago. It depicts the act of throwing one’s hat in the air as a celebration of a significant event. the concept was used as the centrepiece of the 50th Anniversary decorations in the lobby of the BHp Billiton building at Invaders Bay, where 50 black, red and white hats were randomly suspended from the ceiling. It is reproduced in this report with the kind permission of Michelle Aboud.
Hats in tHe air! CelebratingTrinidad and Tobago’s50 years of Independence
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History of the Agostini’s limited Group 4
Subsidiaries percentage ownership 6
notice of Meeting 8
Board of Directors 10
Board Committee Mandates & Activities 12
Chairman’s Remarks 14
Management Discussion & Analysis 16
ten-Year Financial Review 22
Report of the Directors 23
Independent Auditors’ Report 25
Consolidated Statement of Financial position 26
Consolidated Income Statement 27
Consolidated Statement of Comprehensive Income 28
Consolidated Statement of Changes In equity 29
Consolidated Statement of Cash Flows 30
notes to the Consolidated Financial Statements 31
Directors’ & Senior officers’ Interest & 10 largest Shareholders 67
Subsidiary Boards 68
our Group’s products:-
Smith Robertson & Company limited 69
Hand Arnold trinidad limited 69
Agostini Marketing 71
Rosco petroavance limited 73
Superpharm limited 74
Company of the Year 75
Corporate Information 76
Management proxy Circular/proxy Form insert
All F IGuReS In tHIS RepoRt ARe quoteD In tt$. tHe exCHAnGe RAte WAS uS$1.00=tt$6.4395 AS At SepteMBeR 30, 2012.
C o n t e n t S
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Marketing
H I S t o R Y o F t H e A G o S t I n I ’ S l I M I t e D G R o u p
1925
Johnnie Agostini begins operations as a Commission indent business.
1933
Victor Agostini joins and Agostini Brothers partnership is formed.
In 1941 another brother, Frank joined the Firm.
1965
Interior contracting services are added as a new business.
1943
Agostini Brothers becomes a limited liability company.
1950s
Agostini Brothers transitions from a Commission indent business to a distribution company with the addition of major pharmaceutical, food and hardware products.
1970
Agos Manufacturing established to manufacture fluorescent light fixtures and incandescent light bulbs (assets divested in 2009).
1982
Agostini Brothers changes its name to Agostini’s limited and becomes a public company listed on the trinidad and tobago Stock exchange.
Its trading arm, selling Grocery, personal Care, pharmaceutical products and Building Materials, is eventually called Agostini Marketing.
1986
Agostini Industries limited is established to manu-facture diapers and feminine napkins (assets divested in 2004).
1984
Hilti W.l. Yearwood is acquired, later to become Agostini’s Fastening Systems (now a division of Agostini Marketing).
1993
Gordon Grant trading, a distribution company specialising in pharmaceuti-cal distribution, is acquired. Agostini Marketing’s pharmaceuti-cal lines are merged into this com-pany, which is renamed Agostini phar-maceutical limited.
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2007
Agostini’s acquires a majority interest in Mobern lighting in Maryland, uSA, as a sister operation to Agos Manufacturing (assets divested in 2010).
2000
through Agostini Industries, the group expands into low-cost housing and townhouse construction, and constructs 30 townhouses and over 300 low-cost single family homes (assets divested in 2010).
2008
Hand Arnold trinidad limited, a large diversified consumer products distributor, established in 1920, is acquired.
1995
Agostini’s acquires a majority shareholding in Rosco Sales limited, an oilfield supply company founded in 1950.
2010
Victor 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 Superpharm limited, a major retail pharmacy chain, in exchange for 30M new shares in Agostini’s limited.
2011
In July 2011, Agostini pharmaceutical is amalgamated into Smith Robertson & Company limited.
2012
In July 2012, Hand Arnold launches its dairy brand “Moo!” in trinidad and tobago
2000
petroavance trinidad limited, an oilfield supply company, is acquired and merged with Rosco Sales to become Rosco petroavance limited.
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SuperPharm Ltd.100% owned
Retail pharmacy
S u B S I D I A R I e S p e R C e n t A G e o W n e R S H I p
Agostini Marketing100% owned
Suppliers of building materials, contracting services, medical and printery supplies
Rosco Petroavance Ltd. 92% owned
Suppliers of industrial, hydraulic, and oilfield products and services
Smith Robertson & Co. Ltd. 100% owned
Distributors of pharmaceutical and personal care products
Hand Arnold Trinidad Ltd.100% owned
Distributors of grocery, food and beverage products
Marketing
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“the construction sector is a cyclical one, and has been declining for the last four years. Having said that, we continue to be the interior contractor of choice for many international and local companies. In the last year, we have successfully completed projects for RBC Royal Bank, pCS nitrogen and the Government, in the new parliament building. our continued focus on quality interior finishes, for which our company has become known over the last 47 years, remains the foundation of our business and the platform for our success, in both up and down cycles.”
Andrew PashleyCEO, Agostini Marketing
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n o t I C e o F M e e t I n G
Notice is hereby given that the Seventieth Annual Shareholders’ Meeting of Agostini’s Limited will be held at #4 Nelson Street, Port-of-Spain on Monday, January 28, 2013 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, 2012 and the Reports of the Directors and Auditors thereon.
2. to elect the following Director appointed during the year:
Mr. Gregor nassief
3. to re-elect the following Directors retiring by rotation:
Mr. Anthony Agostini
Mr. Reyaz Ahamad
Ms. Gillian Warner Hudson
4. to appoint Auditors and to authorise the Directors to fix their remuneration.
5. to transact any other ordinary business of the company.
By order of the Board
l. M. Mackenzie
Secretary
December 10, 2012
Documents available for inspection
no Service Contracts have been entered into between the Company and any of the Directors.
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“over the last two years, the Hand Arnold executive have executed a comprehensive exercise to reinvent and reposition the company in the Food, Beverage and Grocery industry. We have emerged from that process with a highly skilled and motivated team of professionals and a range of world class, international and local brands, to better serve and meet the growing demands of our retail customers and consumers for high quality and convenient products.”
Sharon Gunness-BalkissoonCEO, Hand Arnold Trinidad Ltd.
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B o A R D o F D I R e C t o R S
Christian E. Mouttet
Ceo / Director of
Victor e. Mouttet ltd
Chairman of prestige
Holdings ltd
Director of Republic
Bank ltd
Director since 2010
Committees:
Chairman of
the Corporate
Governance
and nomination
Committee and
Member of the
Human Resources,
Compensation
and Stock options
Committee.
P. Terrence Rajnauth
Former Ceo/
Director of Agostini
pharmaceutical ltd,
Director since 1984
Anthony J. Agostini
Managing Director
of Agostini’s ltd
Director of
Caribbean Finance
Company ltd
Director since 1990
Joseph P. Esau
Chairman of
Caribbean
Communications
network ltd
Director of prestige
Holdings ltd, Grace
Kennedy ltd and
Arthur lok Jack
Graduate School of
Business.
Director since 2004
Committees:
Member of the
Human Resources,
Compensation
and Stock options
Committee and
Corporate
Governance
and nomination
Committee
Amalia L. Maharaj
partner of pollonais,
Blanc, De la Bastide
& Jacelon.
Director since 2011
Committees:
Member of the
Audit & Risk
Committee
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E. Gillian Warner-Hudson
Management
Consultant
Director since 2009
Committees:
Member of the
Human Resources,
Compensation and
Stock options
Committee and
Audit & Risk
Committee
Roger A. Farah
Ceo/Director of
Smith Robertson &
Company ltd
Director of Vemco
ltd
Director since 2010
Gregor NassiefCeo/Director of
tecsys latin America
Inc. (Florida, uSA),
Director of Secret
Bay Development
ltd (Dominica),
Fort Young Hotel
(Dominica) and
Springfield trading
(Dominica).
Director since 2012
Barry A. Davis
Financial Controller
of Atlantic lnG of
trinidad & tobago.
Director since 2007
Committees:
Chairman of
the Audit & Risk
Committee
and member of
the Corporate
Governance
and nomination
Committee
Lisa M. Mackenzie
Finance and
Administrative
Director of
Agostini’s ltd
Company Secretary
since 1997
Director since 2004
Reyaz W. Ahamad
Chairman of WABC
(103 FM) ltd and
Caribbean Finance
Company ltd
Director of Southern
Sales & Service Co
ltd, Automobile
Sales ltd and Best
Auto ltd.
Director since 1996
Committees:
Chairman of
Human Resources,
Compensation and
Stock options
Committee
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AuDIt & RISK CoMMIttee
this committee is responsible for monitoring and reporting on the integrity of the Company’s systems, procedures and processes to manage enterprise and finance risk and compliance with legal and regulatory requirements and policies.
the Committee is directly responsible for the nomination, compensation and oversight of the public accounting firm engaged to prepare and issue an audit report on the financial statements of the Company.
the Committee plays a key role in monitoring the component parts of the audit process and ensures that there is independent communication and information flow between the Committee and both the internal and external auditors.
the Audit & Risk Committee met six times during the year.
HuMAn ReSouRCeS, CoMpenSAtIon AnD 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.
this Committee met once during the year.
CoRpoRAte GoVeRnAnCe AnD noMInAtIon CoMMIttee
this committee monitors best practice for governance, reviews the Group’s governance procedures to ensure that it continues to exemplify high standards of corporate governance and makes appropriate recommendations to the Board. Its mandate includes, inter alia:
- establishing, monitoring and reviewing policies and procedures relative to transactions between the Company, its subsidiaries and affiliates, executive officers and Directors;
- Reviewing the performance of Directors;
- Reviewing composition and mandates of Board Committees;
- establishing and monitoring a Code of Conduct for the Company, dealing with all matters of an ethical nature involving executive and non-executive Directors;
- Recommending Board appointments;
- Reviewing the Company’s succession plans;
- Reviewing the scope of reports to shareholders.
the Corporate Governance and nomination Committee met twice during the year.
B o A R D C o M M I t t e e M A n D A t e S & A C t I V I t I e S
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“At Smith Robertson, our 250 dedicated professionals distribute over 3,500 pharmaceutical and health and beauty products to our more than 2,000 customers. With our state of the art Distribution Centre and Warehouse Management System, we deliver daily to 400 customers, 98% of them within 24 hours of receipt of their order. With the drive for improved health care being a key objective of our Government, Smith Robertson is well placed to continue to play a significant role in achieving this goal.”
Roger FarahCEO, Smith Roberston & Co. Ltd.
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C H A I R M A n ’ S R e M A R K S
Year ended September 30, 2012
ConSolIDAteD ReSultS AnD F InAnCIAl ConDItIon
Group sales and profit amounted to $1.29 billion and $65 million, compared with $1.26 billion and $62 million, respectively, in the previous year. profit attributable to shareholders was $65 million compared with $61 million, and earnings per share was $1.11 compared with $1.05 in 2011.
the group ended the year with a debt to equity ratio of 19:81 compared with 29:71 in 2011. this very strong financial condition positions us to capture further expansion opportunities.
opeRAtIonS ReVIeW AnD SeGMent ReSultS
Pharmaceutical & Personal Care Distribution
Smith Robertson & Company limited, our pharmaceutical and personal Care Distribution business, with its new state of the art Warehouse Management System settling down and beginning to deliver internal efficiencies and improved customer service, met its sales and profitability expectations.
Joseph P. Esau
tHe FInAnCIAl ReSultS FoR FISCAl 2012 WeRe poSIt IVe In tHe Con-text oF tHe DeBIl ItAtInG eFFeCtS oF tHe StAte oF eMeRGenCY AnD CuRFeW In ouR FIRSt quARteR, AnD A GeneRAllY StAGnAteD eConoMY tHRouGH tHe YeAR.
this was achieved largely as a result of the structural changes implemented over the last two years when we focused on achieving the benefits of the Group’s transformation process, including the realignment of our businesses into cohesive units.
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DIVIDenDS
Your board has approved a final dividend of 26 cents per share, which will bring the total dividend payable for 2012 to 44 cents, compared with 42 cents in 2011. this final dividend will be paid on February 4, 2013 to shareholders whose names appear on the register of members on January 9, 2013. the Company’s share register will be closed on January 10 and 11, 2013.
BoARD oF DIReCtoRS
We welcome to the Board Mr. Gregor nassief. Mr nassief is president and Ceo of tecsys latin America, with offices in Miami, Bogota, Santiago, panama City and Caracas. He was born in, and is resident in Dominica, West Indies, and is owner/director of Secret Bay, an ecotourism resort hotel located in the north coast of that island. We are sure that his regional knowledge and experience will be a valuable addition to our board’s deliberations.
We also recognise the outstanding contribution that Mr. terrence Rajnauth has made to our Group over the past 35 years. terrence was Ceo of Agostini pharmaceuticals, where he led the Company’s development into a substantial business unit until his retirement last year. He will be stepping down from the parent board after our annual shareholders meeting in January 2013. We take this opportunity to thank terrence for his many years of stellar contributions to the Group, and wish him the best of health and fulfillment in his retirement.
ACKnoWleDGeMentS
We acknowledge the tremendous support of our longstanding customers, suppliers, shareholders and employees during these times of challenge and change. I also thank my fellow directors for their dedicated service during the past year.
Joseph P. Esau november 28, 2012
our Superpharm chain of six retail pharmacies was affected by the State of emergency and Curfew that lasted for much of the first quarter, but has steadily recovered since that time. operating profit was substantially in accordance with the business plan. We closed our underperforming outlet at oneWoodbrook place, opened a “big box” unit in trincity in november 2011, and expect to open our seventh outlet in Marabella in February 2013.
Food, Construction-Related & Other Trading
Hand Arnold, our consolidated Food, Beverage and Grocery product distribution business, experienced the effects of the weak macro economic environment and fell short of plan. this business is also in the process of adding higher margin company owned branded products to its portfolio of world class brands. During the year, the “Moo!” range of milk products, and “Zapp” range of insecticides and repellents were launched, and the results so far, have exceeded our expectations.
our Building products and Services businesses, operating under Agostini Marketing, have continued to face the challenges of the depressed construction sector, but have nonetheless achieved good sales and profitability growth, primarily from major office refurbishment projects.
our energy and Industrial products & Services business, Rosco petrovance, delivered another year of record sales and profits. this was achieved by greater focus on existing customers and product lines, while expanding into new areas within its industry.
the execution of the Group’s property rationalisation plans continued with the relocation of several of our operations, and we expect this process to be completed during the current fiscal year.
outlooK
Based on the several rationalization, efficiency, and expansion initiatives, we are positive about the ensuing year.
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M A n A G e M e n t D I S C u S S I o n & A n A l Y S I S
Year ended September 30, 2012
FInAnCIAl HIGHlIGHtS2012
$’000’s2011
$’000’s% Increase/(Decrease)
Gross Sales 1,339,261 1,296,313 3.31
Sales to third parties 1,293,887 1,255,743 3.04
operating profit 99,065 99,941 (0.88)
profit before tax 90,242 87,434 3.21
Profit for the Year 65,217 61,523 6.00
Profit attributable to Shareholders 64,770 61,275 5.70
Stock Units In Issue ('000) 58,662 58,608 0.09
Earnings per Share $1.11 $1.05 5.71
ReVenue GReW BY 180% on ContInueD opeRAtIonS ($’000)
opeRAtInG pRoFIt InCReASeD BY 50% on ContInueD opeRAtIonS ($’000)
AS AGoStInI’S l IMIteD BeGInS ItS eIGHtY eIGHtH YeAR oF opeRAtIon, one oF tHe oBJeCtIVeS IS to ContInue to pRoSpeR In An eVeR CHAnGInG enVIRonMent. tHIS Re-quIReS tHe MAnAGeMent AnD tHe BoARD to poSIt Ion tHe CoMpAnY FoR GRoWtH AnD FInAnCIAl StABIl ItY In tHe lonG teRM, WHIle ContInuInG to DelIVeR ConSIStent RetuRnS to ouR SHAReHolDeRS.
over the period 2009 and 2010, Agostini’s made a bold move by divesting our interests in manufacturing and heavy construction, refocused on our core business of trading, and acquired Smith Robertson & Co limited and Superpharm limited.
these actions have formed the foundation which has resulted in growth, financial strength, and an exciting platform for the future.
over the past three years, and despite the lacklustre economic environment, we are happy to report the following:
2012 1,293,887
2011 1,255,743
2010 856,702
2009 719,765
2012 99,065
2011 99,941
2010 65,315
2009 65,999
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InFoRMAtIon BY SeGMent Third Party Turnover Operating Profit
2012$’000’s
2011$’000’s
2012$’000’s
2011$’000’s
pharmaceutical and personal Care Distribution 785,776 749,447 71,487 70,331
Food, Construction Related and other trading 508,111 506,296 27,578 29,610
totAl 1,293,887 1,255,743 99,065 99,941
Group Assets Employed Employees at Year End
2012$’000’s
2011$’000’s 2012 2011
pharmaceutical and personal Care Distribution 357,984 392,840 599 519
Food, Construction Related and other trading 481,464 40,152 428 457
totAl 839,448 832,992 1,027 976
SHARe pRICe RoSe BY 105% ($)
DIVIDenDS pAID to SHAReHolDeRS $61 MILLION ($ peR SHARe)
leVeRAGe (DeBt AS A % oF equItY) ReDuCeD BY 70% (%)
RetuRn on InVeSteD CApItAl InCReASeD BY 6% (%)
30-Sep-12 15.37
30-Sep-11 12.57
30-Sep-10 9.80
30-Sep-09 7.50
2012 0.44
2011 0.42
2010 0.20
2009 0.05
2012 22.79
2011 39.86
2010 39.29
2009 75.42
2012 14.19
2011 12.98
2010 9.85
2009 13.43
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M A n A G e M e n t D I S C u S S I o n & A n A l Y S I S ( C o n t I n u e D )
Year ended September 30, 2012
SeGMent ReSultS
pHARMACeutICAl AnD peRSonAl CARe
DISTRIBUTION
our pharmaceutical and personal care distribution business, Smith Robertson, had a good year, with increases in both sales and profit surpassing their financial targets. the Company completed implementation of an advanced Warehouse Management System, which brought a superior level of operational efficiency and customer experience, including same day order and delivery.
As the largest pharmaceutical distributor in the country, this subsidiary remains focused on refining and improving processes to manage costs, while providing our suppliers and customers with a superior service, and increased penetration and expansion in the personal Care sector.
RETAIL
Superpharm continued on its growth path and achieved good operating results. this business was most affected by the state of emergency and curfew in the first quarter due to reduced operating hours in that period. During the year we closed the smaller stores at one Woodbrook place and tunapuna, both of which resulted in one off costs which negatively impacted profitability. these stores were not considered viable and their closure allows greater focus on development of the “big box” format outlets.
our newest store, located at trincity, opened in november 2011 and has steadily grown into one of our key contributors. We expect to open another store in Marabella in early 2013, and are in advanced negotiations for two other properties on which we expect to start construction in the current financial year.
Gulf View,San Fernando
Marabella(to open in 2013)
MaravalValsayn
Price Plaza,Chaguanas
Trincity
Westmoorings
SuperPharm Locations in Trinidad
In october 2012, Superpharm replaced its enterprise Re-source planning software application with a specialised retail software based on the Microsoft Dynamics nAV platform. the benefits of the new application include end-to-end integration of the system from purchasing, to warehouse and inventory management, to the front of store point of sale management system. the package is geared to better support Superpharm’s multi-store re-tail format by improving speed, flexibility and accuracy at the point of sale and will give management the ability to efficiently provide customers with exciting promotions and offers.
FooD, ConStRuCtIon RelAteD & otHeR tRADInG
FOOD, BEVERAGE & GROCERY DISTRIBUTION
Hand Arnold’s sales were flat compared with the prior year. this was due to changes in our product portfolio, including the loss of the distribution of KlIM, the strategic decision to exit the wines and spirits business, as advised
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last year, and replacing several of our low margin products with higher margin brands with greater opportunity for growth and line expansion. Management has also spent time re-aligning a number of processes to improve decision making, reduce costs, increase speed to market, and ultimately improve the service to our customers. the business is now refocused on Food, Beverage and Grocery products, and is well positioned for growth in the coming year. the successful launches of our own “Moo!” milk and “Zapp” aerosol insecticide brands, will be followed in the coming months by several other new offerings, which we expect will be similarly positive.
CONSTRUCTION PRODUCTS & SERVICES
Agostini Marketing experienced another year of depressed construction activity in trinidad &tobago, but still managed to exceed both prior year and target revenue and profits. there were few new major projects in the country, with one exception being the “Big Ben” RBC job at london Street, port of Spain, where we were awarded considerable internal outfitting works, and which we completed on time and on budget. our Agostini Interiors retail stores at Duncan Street and Ariapita Avenue were merged into a new and larger outlet at Wrightson Road, port of Spain, which has allowed us to provide a better product offering and customer experience.
Having only received partial payment over the past three years on the monies owed to us by the Housing Development Corporation on the Wellington Road, Debe housing project, we commenced Arbitration proceedings against the Corporation in September 2012. We are confident of a successful outcome to this action, and hope to bring the matter to a close in a reasonable time.
ENERGY & INDUSTRIAL PRODUCTS & SERVICES
Rosco petroavance had another record year of sales and profit, and exceeded their targets, despite the ups and downs of the energy sector. We consolidated several new
agencies into the company’s operations and the new lines, have contributed to the healthy results.
pRopeRtY RAtIonAlISAtIon
Hand Arnold will move into new offices, at their warehouse compound in el Socorro, in early 2013. this facility will provide an environment for better coordination of the supply chain, warehousing, distribution and administrative functions, resulting in improved efficiency and customer service.
Smith Robertson vacated their rented property in St James in november 2012, and moved into a group owned facility at Ariapita Avenue, port of Spain, which provided them more space and better customer parking.
In the third quarter we expect to vacate the rest of our Company’s old head office and trading location in port of Spain, with Agostini Marketing’s move to the el Socorro property (the combined and redeveloped Agostini’s and Hand Arnold distribution centres). this will allow us to maximise commercialisation of the nelson Street property, comprising 55,000 sq. ft. of floor space.
STRATEGIC INTENT
In 2012, the Group adopted an approach in each business unit, striving for innovation and improvement in every aspect of our businesses. In 2013 we reaffirm our motto “every Business a Benchmark” and focus our strategies on continuing improvement in the four platforms of Financial Strength, employee excellence, Innovation, and exceeding Customer expectations.
FINANCIAL STRENGTH
the Management remains committed to the creation of shareholder value.
During the 2012 financial year, 8% fixed rate bonds with a 10 year term were successfully issued by Agostini’s
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limited and Hand Arnold trinidad limited, for a total of $100 million. the proceeds were used to refinance short term debt. In August 2013 we will repay the $50 million bond issued in 2008.
Both of these actions will significantly reduce the group’s interest cost and redound to improved operating profits available to shareholders, as well as to increase the Group’s capacity for expansion.
EMPLOYEE ExCELLENCE
our focus is on hiring, retaining and building a staff of excellent people who believe in our mandate and are excited by our future. the current labour market is extremely competitive, and we continue to review our policies for recruitment, training, motivation, and compensation to ensure we are positioned to benefit from a strong team.
INNOVATION
the Management of each business unit has been mandated to focus on innovation in all aspects of the business. the plans for the current year include new products and line extensions, and matching distribution methods to meet the needs of our customers. In May, the group’s executive management team was exposed to a workshop facilitated by the Arthur lok Jack Graduate School of Business, to build innovative capacity and enhance business development in the Group.
ExCEEDING CUSTOMER ExPECTATIONS
We expect a number of the initiatives, introduced in 2012 and continuing in to 2013, to result in improved
service levels. the new software platforms, processes and locations, as well as innovations planned for 2013 are expected to result in improved customer experiences throughout the Group.
AuDIt AnD RISK CoMMIttee
During the year the purview of the audit committee was extended to substantive areas of enterprise risk management throughout the Group. the main aspects covered relate to the identification, assessment, monitoring and management of risks associated with the operations, and related guidelines of risk appetite.
InteRnAl AuDIt
For many years the group had outsourced its internal audit service. the Board, on the recommendation of the Corporate Governance & nomination Committee, and based on the size and profile of the group, agreed to the establishment of an in-house internal audit resource. We are in the process of appointing a head of internal audit and expect the department to be fully established during the current year.
CoRpoRAte SoCIAl ReSponSIBIl ItY
Management is working on the incorporation of the Agostini Foundation, which would focus on the support of certain health and education nGos, and the Group continued to contribute to numerous charities during the past year.
M A n A G e M e n t D I S C u S S I o n & A n A l Y S I S ( C o n t I n u e D )
Year ended September 30, 2012
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“Superpharm pioneered the large format pharmacy/convenience store concept in trinidad & tobago, seven years ago. today we operate six stores with our seventh store opening in Marabella in February 2013. We also have two additional units in the planning phase. We see significant growth opportunities in expanding further as we seek to bring the Superpharm experience of convenience, variety, product innovation and affordability, to customers throughout the country.”
David SobrianCEO, SuperPharm Ltd.
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2012$’000
2011$’000
2010$’000
2009$’000
2008$’000
2007$’000
2006$’000
2005$’000
2004$’000
2003$’000
Group turnover 1,293,887 1,255,743 856,702 719,765 547,410 449,296 384,740 322,661 261,371 231,626
profit Before taxation 90,242 87,434 57,354 52,339 46,063 37,685 29,347 31,867 18,980 17,278
profit for the Year 65,217 61,523 40,371 36,373 33,855 27,977 21,992 24,517 13,482 12,740
net profit Attributable
to Agostini's limited
Shareholders
64,770 61,275 24,780 791 30,201 27,779 21,818 24,404 5,003 9,375
Dividend Amount 25,811 24,611 10,241 1,453 11,899 11,833 9,407 8,858 2,416 4,025
times covered 2.51 2.49 2.4 - 2.5 2.4 2.3 2.8 2.1 2.3
Issued Stock units ('000) 58,662 58,608 58,583 29,057 27,029 26,897 26,887 26,843 26,843 26,843
Stockholder's equity 446,964 402,773 358,933 216,992 210,008 182,775 169,429 151,848 115,949 113,593
Dividend per Stock unit 44¢ 42¢ 20¢ 5¢ 42¢ 44¢ 35¢ 33¢ 9¢ 15¢
earnings per Stock unit 110.5¢ 104.9¢ 74.7¢ 2.7¢ 111.9¢ 103.3¢ 81.3¢ 90.9¢ 18.6¢ 34.9¢
net Assets 561,494 485,668 443,646 300,592 298,802 216,554 197,878 177,418 135,294 142,286
Notes:
1 the 2003, 2008 and 2009 figures have been adjusted in accordance with IFRS 5 non current assets held for sale and discontinued operations.
2 the 2005 figures have been adjusted to reflect adoption of IFRS 2 Share Based payments.
3 the stockholders equity figure for 2007 has been adjusted to reflect the adoption of IAS 12 p61 (a).
t e n - Y e A R F I n A n C I A l R e V I e W
2003 – 2012
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R e p o R t o F t H e D I R e C t o R S
Your Directors have pleasure in presenting their report for the year ended September 30, 2012.
Financial Results $’000
Income for the year before taxation 90,242
less taxation (25,025)
profit for the Year 65,217
less: Attributable to Minority Interest (447)
net Income for the year after taxation 64,770
Dividends - Interim (10,559)
- Final (15,252)
profit Retained for the year 38,959
other Movements on Reserves -
Retained earnings brought forward 180,064
Retained earnings carried forward 219,023
Dividend
Based on the Group’s results, the directors have approved a final dividend of 26¢, resulting in a total dividend of 44¢ for the year.
Directors
the Director appointed during the year, Mr. Gregor nassief, being eligible, offers himself for election.
the Directors retiring by rotation under the bye laws, Mr. Anthony Agostini, Mr. Reyaz Ahamad and Mrs. Gillian Warner-Hudson, being eligible, offer themselves for re-election.
Auditors
the Auditors, ernst & Young, retire and being eligible, offer themselves for reappointment.
By order of the Board
l. M. MackenzieSecretaryDecember 10, 2012
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“the energy sector remains the driving force behind trinidad and tobago’s economy and over the last 62 years, Rosco petroavance has become an integral part of this vital industry, providing products and services to a wide range of local and international customers. Since becoming part of the Agostini’s group, we have seen our growth accelerate and looking ahead, we continue to see great opportunities to serve our customers and to grow our business.”
Wayne BernardCEO, Rosco Petroavance Ltd.
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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 2012 and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes.
Management’s responsibility for the financial statements
Management is responsible for the preparation and 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.
Auditors’ 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 assessments, 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 appropriateness 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 2012, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards.
Port of SpainTrinidad November 28, 2012
I N d e P e N d e N T A u d I T O R S ’ R e P O R T
TO The ShARehOLdeRS OF AGOSTINI’S L IMITed
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C O N S O L I d A T e d S T A T e M e N T O F F I N A N C I A L P O S I T I O NFor the year ended September 30, 2012
Notes 2012 2011 $’000 $’000
ASSETSNon-current assets
Property, plant and equipment 5 178,778 172,184Investment property 6 15,025 8,200Intangible asset 7 77,263 77,316Retirement benefit assets 8 7,138 7,058deferred tax asset 14 18,763 19,681
296,967 284,439Current assets
Inventories 9 244,798 313,143Construction contract work-in-progress 10 209 2,840Trade and other receivables 11 212,652 212,751Taxation recoverable 4,623 4,787Cash at bank and in hand 20 80,199 15,032
542,481 548,553
Total assets 839,448 832,992
EQUITYCapital and reserves
Stated capital 12 187,012 186,532Capital reserve 2,652 2,652Revaluation reserve 23,025 17,701Retained earnings 234,275 195,888
446,964 402,773Non-controlling interests 845 913
Total equity 447,809 403,686
LIABILITIESNon-current liabilities
Borrowings 13 105,508 74,826deferred tax liability 14 8,177 7,156
113,685 81,982Current liabilities
Trade and other payables 15 188,583 236,921Taxation payable 12,641 9,281Borrowings 13 76,730 101,122
277,954 347,324
Total liabilities 391,639 429,306
Total equity and liabilities 839,448 832,992
The accompanying notes form an integral part of these financial statements. On November 28, 2012, the Board of directors of Agostini’s Limited authorised these financial statements for issue.
_________________________________ director _________________________________ director
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C O N S O L I d A T e d I N C O M e S T A T e M e N TFor the year ended September 30, 2012
Notes 2012 2011 $’000 $’000
Turnover 1,293,887 1,255,743
Cost of sales (996,653) (969,147)
Gross profit 297,234 286,596
Other operating income 17,049 15,163
314,283 301,759
Expenses
Other operating (113,471) (120,330)
Administration (69,536) (52,876)
Marketing and distribution (32,211) (28,612)
(215,218) (201,818)
Operating profit 99,065 99,941
Gain on revaluation of investment property 771 –
Finance costs - net 17 (9,594) (12,507)
Profit before taxation 90,242 87,434
Taxation 18 (25,025) (25,911)
Profit for the year 65,217 61,523
Attributable to:
Owners of the parent 64,770 61,275
Non-controlling interests 447 248
65,217 61,523
Earnings per share for profit attributable to shareholders:
- Basic 19 1.11 1.05
- diluted 19 1.10 1.04
The accompanying notes form an integral part of these financial statements.
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C O N S O L I d A T e d S T A T e M e N T O F C O M P R e h e N S I V e I N C O M eFor the year ended September 30, 2012
Notes 2012 2011 $’000 $’000
Profit for the year 65,217 61,523
Other comprehensive income:Revaluation of land and buildings 6,024 (210)Income tax effect (700) 52
Other comprehensive income for the year, net of tax 5,324 (158)
Total comprehensive income for the year, net of tax 70,541 61,365
Attributable to:Owners of the parent 70,094 61,118Non-controlling interests 447 247
70,541 61,365
The accompanying notes form an integral part of these financial statements.
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C O N S O L I d A T e d S T A T e M e N T O F C h A N G e S I N e Q u I T YFor the year ended September 30, 2012
Attributable to equity holders of the parent Non- Stated Capital Revaluation Retained controlling capital reserve reserve earnings Total interests Total Notes $’000 $’000 $’000 $’000 $’000 $’000 $’000
Year ended 30 September 2012Balance at 1 October 2011 186,532 2,652 17,701 195,888 402,773 913 403,686
Profit for the year – – – 64,770 64,770 447 65,217
Other comprehensive income – – 5,324 – 5,324 – 5,324
Total comprehensive income – – 5,324 64,770 70,094 447 70,541
dividend paid – 2012 (45¢ per share) 26 – – – (26,383) (26,383) (515) (26,898)
executive share option:- Shares issued 12 480 – – – 480 – 480
Balance at 30 September 2012 187,012 2,652 23,025 234,275 446,964 845 447,809
Year ended 30 September 2011
Balance at 1 October 2010 186,235 2,652 17,858 152,188 358,933 666 359,599
Profit for the year – – – 61,275 61,275 248 61,523
Other comprehensive income – – (157) – (157) (1) (158)
Total comprehensive income – – (157) 61,275 61,118 247 61,365
dividend paid – 2011 (30¢ per share) 26 – – – (17,575) (17,575) – (17,575)
executive share option:- Value of services provided 12 45 – – – 45 – 45- Shares issued 12 252 – – – 252 – 252
Balance at 30 September 2011 186,532 2,652 17,701 195,888 402,773 913 403,686
The accompanying notes form an integral part of these financial statements.
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C O N S O L I d A T e d S T A T e M e N T O F C A S h F L O W SFor the year ended September 30, 2012
Notes 2012 2011 $’000 $’000
Operating activities Profit before taxation 90,242 87,434 Adjustments for: depreciation of property, plant and equipment 5 15,865 13,183 Amortisation of intangible assets 464 107 Gain on sale of plant and equipment 18 (433) Share option value of services provided 12 – 45 Revaluation of investments – (46) Net retirement benefit expense 8 (80) (374) Gain on revaluation of investment property (771) – Loss on revaluation of property 71 –
Operating profit before changes in working capital 105,809 99,916
Changes in working capital decrease/(increase) in inventories 68,345 (70,390) decrease/(increase) in work-in-progress 2,631 (2,683) decrease in trade and other receivables 99 12,753 (Increase)/decrease in trade and other payables (48,338) 8,410
Cash flows from operating activities 128,546 48,006 Taxation paid (20,262) (20,911)
Net cash flows from operating activities 108,284 27,095
Investing activities Purchase of property, plant and equipment 5 (25,384) (29,971) Proceeds from sale of investments – 561 Proceeds from sale of plant and equipment 2,806 1,285 Purchase of intangible assets (411) (1,282)
Net cash flows used in investing activities (22,989) (29,407)
Financing activities Share issue 12 480 252 Net proceeds on loans 48,751 1,685 dividends paid 26 (26,383) (17,575) dividends paid to minority interests (515) –
Net cash flows from/(used in) financing activities 22,333 (15,638)
Cash increase/(decrease) during the year 107,628 (17,950)
Cash and cash equivalents, at 1 October (39,029) (21,079)
Cash and cash equivalents, at 30 September 20 68,599 (39,029)
The accompanying notes form an integral part of these financial statements.
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1. General information
The Company is a limited liability company, incorporated 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, which owns 50.4% of the shares.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
(a) Basis of preparation
The consolidated financial statements of the Group are prepared under the historical cost convention.
i) Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting 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 2011:
• IAS24RelatedPartyDisclosures(amendment)effective1January2011
• IAS32FinancialInstruments:Presentation(amendment)effective1February2010
• IFRIC14PrepaymentsofaMinimumFundingRequirement(amendment)effective1January2011
• ImprovementstoIFRSs(May2010)
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T SFor the year ended September 30, 2012
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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)
The adoption of the standards or interpretations are described below:
IAS 24 Related Party Transactions (Amendment)
The IASB issued an amendment to IAS 24 that clarifies the definitions of a related party. The new definitions emphasize a symmetrical view of related party relationships and clarified the circumstances in which persons and key management personnel affect related party relationships of an entity. In addition, this amendment introduces an exemption from the general related party disclosure requirements for transactions with government and entities that are controlled, jointly or significantly influenced by the same government as the reporting entity. The adoption of the amendment did not have any impact on the financial position or performance of the Group.
IAS 32 Financial Instruments: Presentation (Amendment)
The IASB issued an amendment that alters the definition of a financial liability in IAS 32 to enable entities to classify rights issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are given pro rata to all of the existing owners of the same class of an entity’s non-derivative equity instruments, to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. The amendment has had no effect on the financial position or performance of the Group.
IFRIC 14 Prepayments of a Minimum Funding Requirement (Amendment)
The amendment removes an unintended consequence when an entity is subject to minimum funding requirements and makes an entity payment of contributions to cover such requirements. The amendment permits a prepayment of future service cost by the entity to be recognised as a pension asset. The amendment of the interpretation has no effect on the financial position or performance of the Group.
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:
• IAS1PresentationofItemsofOtherComprehensiveIncome–AmendmentstoIAS1–Effective1July2012
• IAS12IncomeTaxes(Amendment)–DeferredTaxes:RecoveryofUnderlyingAssets–Effective1January2012
• IAS19-EmployeeBenefits(Revised)-Effective1January2013
• IAS27-SeparateFinancialStatements-Effectiveforperiodsbeginningonorafter1January2013
• IAS28-InvestmentsinAssociatesandJointVentures-Effective1January2013
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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2. Summary of significant accounting policies (continued)
(a) Basis of preparation (continued)
iii) Changes in accounting policies and disclosures (continued)
b) New accounting policies not adopted (continued)
• IFRS1First-timeAdoptionof InternationalFinancialReportingStandards(Amendment)–Severe HyperinflationandRemovalofFixedDatesforFirst-timeAdopters-Effective1July2011
• IFRS7FinancialInstruments:Disclosures(Amendment)-Effective1July2011
• IFRS9FinancialInstruments:ClassificationandMeasurementeffective1January2013
• IFRS10ConsolidatedFinancialStatements-Effective1January2013
• IFRS11JointArrangements-Effective1January2013
• IFRS12DisclosureofInterestsinOtherEntities-Effective1January2013
• IFRS13FairValueMeasurement-Effective1January2013
Improvements to IFRSs (issued in May 2010)
The IASB issued its third omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. The amendments listed below are not considered to have a reasonable possible impact on the Group or are not relevant to the Group’s operations:
• IFRS3BusinessCombinations
• IFRS7FinancialInstruments:Disclosures
• IAS1PresentationofFinancialStatements
• IAS27ConsolidatedandSeparateFinancialStatements
• IAS34InterimFinancialStatement
• IFRIC13CustomerLoyaltyProgrammes
• IFRIC19ExtinguishingFinancialLiabilitieswithEquityInstruments
The Group has not adopted the following new and revised IFRSs that have been issued as these standards do not apply to the activities of the Group:
IFRS 1 - First-time Adoption of International Financial Reporting Standards - Additional exemptions for First-timeAdopters(Amendments)(effective1January2010)
IFRS 1 - First-time Adoption of International Financial Reporting Standards - Limited exemption from ComparativeIFRS7DisclosuresforFirst-timeAdopters(effective1July2010)
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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2. Summary of significant accounting policies (continued)
(a) Basis of preparation (continued)
iii) Changes in accounting policies and disclosures (continued)
c) Standards issued but not yet effective
The following is a list of standards and interpretations issued that are not yet effective up to the date of issuance of the Group’s financial statements. The Group reasonably expects these standards and interpretations to be applicable at a future date and intends to adopt those standards and interpretations when they become effective.
IAS 1 Financial Statement Presentation – Presentation of Items of Other Comprehensive Income
The amendments to IAS 1 change the grouping of items presented in OCI. Items that could be reclassified (or ‘recycled’) to profit or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified. The amendment affects presentation only and has no impact on the Group’s financial position or performance. The amendmentbecomeseffectiveforannualperiodsbeginningonorafter1July2012.
IAS 12 Income Taxes – Recovery of Underlying Assets
The amendment clarified the determination of deferred tax on investment property measured at fair value. The amendment introduces a rebuttable presumption that deferred tax on investment property measured using the fair value model in IAS 40 should be determined on the basis that its carrying amount will be recovered through sale. Furthermore, it introduces the requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in IAS 16 always be measured on a sale basis of the asset. The amendment becomes effective for annual periods beginning on or after1January2012.
IAS 19 Employee Benefits (Amendment)
The IASB has issued numerous amendments to IAS 19. These range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifications and re-wording. The amendment becomes effective for annual periods beginning on or after1January2013.
IAS 27 Separate Financial Statements (as revised in 2011)
As a consequence of the new IFRS 10 and IFRS 12, what remains of IAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements. The Group does not present separate financial statements. The amendment becomes effective for annual periods beginningonorafter1January2013.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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2. Summary of significant accounting policies (continued)
(a) Basis of preparation (continued)
iii) Changes in accounting policies and disclosures (continued)
c) Standards issued but not yet effective (continued)
IFRS 9 Financial Instruments: Classification and Measurement
IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standardiseffectiveforannualperiodsbeginningonorafter1January2013.Insubsequentphases,the IASB will address hedge accounting and impairment of financial assets. The completion of this project is expected over the course of 2011 or the first half of 2012. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but will potentially have no impact on classification and measurements of financial liabilities. The Group will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.
IFRS 10 Consolidated Financial Statements
IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC-12 Consolidation - Special Purpose entities.
IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in IAS 27.
Thisstandardbecomeseffectiveforannualperiodsbeginningonorafter1January2013.
IFRS 11 Joint Arrangements
IFRS11replacesIAS31InterestsinJointVenturesandSIC-13Jointly-controlledEntities-Non-monetaryContributionsbyVenturers.IFRS11removestheoptiontoaccountforjointlycontrolledentities(JCEs)usingproportionateconsolidation. Instead,JCEsthatmeetthedefinitionofa jointventuremustbeaccounted for using the equity method.
The application of this new standard will not impact the financial position of the Group. This standard becomeseffectiveforannualperiodsbeginningonorafter1January2013.
IFRS 12 Disclosure of Involvement with Other Entities
IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities.
A number of new disclosures are also required. This standard becomes effective for annual periods beginningonorafter1January2013.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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2. Summary of significant accounting policies (continued)
(a) Basis of preparation (continued)
iii) Changes in accounting policies and disclosures (continued)
c) Standards issued but not yet effective (continued)
IFRS 13 Fair Value Measurement
IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The Group is currently assessing the impact that this standard will have on the financial position and performance. This standard becomeseffectiveforannualperiodsbeginningonorafter1January2013.
(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 initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the consolidated income statement.
ii) Transactions and minority interests
The Group applies a policy of treating transactions with minority 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.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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2. Summary of significant accounting policies (continued)
(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 consolidated 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 denominated in foreign currencies, are recognised in the consolidated income statement.
(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 annual 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 equipment are stated at historical cost less depreciation. historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the consolidated 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. Leasehold 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 annumMotor vehicles - 25% per annumFurniture 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.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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2. Summary of significant accounting policies (continued)
(e) Property, plant and equipment (continued)
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.
(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 recognised in equity as a revaluation of property, plant and equipment. however, if a fair value gain reverses a previous 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 subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates 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.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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2. Summary of significant accounting policies (continued)
(g) Intangible asset (continued)
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 3 years.
(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 recognised 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 compared against the progress billings up to the year end. Where costs incurred and recognised profits (less recognised 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.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
4 0
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2. Summary of significant accounting policies (continued)
(k) Trade receivables
Trade receivables are carried at original invoice amount less provision made for impairment of these receivables. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and significant deterioration in the payment pattern of the customer are considered indicators that the trade receivable is impaired. The carrying amount of the receivable is reduced through an allowance account and the amount of the loss is recognised in the consolidated income statement within “Marketing and distribution expenses”. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against “Marketing and distribution expenses”.
(l) Available-for-sale financial assets
Available-for-sale financial assets include equity and debt securities. equity investments classified as available-for sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss.
After initial measurement, available-for-sale financial assets are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or determined to be impaired, at which time the cumulative loss is recognised in the consolidated income statement in finance costs and removed from the available-for-sale reserve.
(m) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and at banks, deposits held at call with banks, bank overdrafts and short-term borrowings. Bank overdrafts and short-term borrowings are included within borrowings in current liabilities on the consolidated statement of financial position.
(n) 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.
(o) Trade payables
Trade payables which are normally settled on 30-90 day credit terms, are carried at cost, which is the fair value of the consideration to be paid in the future for goods received.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
4 1
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2. Summary of significant accounting policies (continued)
(p) Borrowings
Borrowings are recognised initially at the proceeds received. Borrowings are subsequently stated at amortised costs; any difference between the proceeds and the redemption value is recognised in the consolidated income statement over the period of borrowing, using the effective interest rate method. Borrowing costs are recognised as an expense in the period in which they are incurred.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the consolidated statement of financial position date.
(q) 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 expected 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 determined using tax rates and tax laws that have been enacted or substantially enacted by the consolidated statement 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.
(r) Employee benefits
Pension
Retirement benefits for Group’s employees, with the exception of the employees of hand Arnold Trinidad Limited, SuperPharm Limited and Smith Robertson & Company Limited, are provided by a defined contribution plan. Retirement benefits for the employees of hand Arnold Trinidad Limited and its subsidiaries are provided for by a defined benefit plan. These plans are funded by contributions from the Group and qualified employees. Payments are made to a pension trust, which is financially separate from the Group, in accordance with periodic calculations by actuaries.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
4 2
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2. Summary of significant accounting policies (continued)
(r) Employee benefits (continued)
Pension (continued)
For the hand Arnold Trinidad Limited defined benefit plan, 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 employees 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 qualified actuaries.
The Company’s contributions are included in the employee benefit expense of these financial statements. Any assets and liabilities in relation to this defined benefit plan in accordance with International Accounting Standard 19 - employee Benefits are recorded by the Victor e. Mouttet Limited.
For the defined contribution plan, the Group pays contributions to a trustee on a mandatory basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee benefit expense when they are due.
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 position 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.
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 obligation.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
4 3
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2. Summary of significant accounting policies (continued)
(s) 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.
(t) 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 collectibility 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) Other income
All other income is recognised on the accrual basis.
(u) 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.
(v) 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.
Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership 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 obligations, 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.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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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, measurement 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 strategies 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 foreign 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 2012, 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 $3.3 million (2011: $2.3 million) lower/higher, mainly as a result of foreign exchange losses/gains on translation of uS dollar-denominated trade payables and receivables.
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 $530,788 (2011: $848,057).
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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3. Financial risk management (continued)
(a) Financial risk factors (continued)
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 established 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.
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 remaining 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 than 1 year 1 to 2 years 2 to 5 years 5 years Total $’000 $’000 $’000 $’000 $’000
2012Bank overdraft – – – – –Borrowings 77,079 19,552 45,450 59,023 201,104Trade and other payables 188,583 – – – 188,583
265,662 19,552 45,450 59,023 389,687
2011Bank overdraft 27,005 – – – 27,005Borrowings 116,231 61,326 18,581 – 196,138Trade and other payables 236,921 – – – 236,921
380,157 61,326 18,581 – 460,064
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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3. Financial risk management (continued)
(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 shareholders, 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 current and non-current, less cash divided by shareholders equity. The gearing ratio at 30 September 2012 is 19:81 (2011: 29:71).
(c) Fair value estimation
The carrying amount of short-term financial assets and liabilities comprising cash equivalents, accounts receivable, 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 2012 is estimated to be $123.4 million (2011: $74.2 million) as compared to its carrying value of $96.9 million (2011: $66.9 million).
4. Critical accounting estimates and judgements
estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, 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 proportion of the total value of the contract. Where actual results differ from these estimates the profit or loss earned will be affected.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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4. Critical accounting estimates and judgements (continued)
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 consolidated 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 2012.
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 transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions 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.
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 sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
vii) Comparative balances
Where necessary, comparative figures have been reclassified to conform with changes in presentation in the current year. In particular they relate to amounts disclosed for cost of sales, other operating income, marketing and distribution costs, administrative expense, other operating expense, finance costs and all related notes disclosures. This has no impact on both the statement of financial position and the net profit for the year.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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4. Critical accounting estimates and judgements (continued)
vii) Comparative balances (continued)
2011 $’000Increase in cost of sales 3,998decrease in other operating income (531)Increase in marketing and distribution costs 5,903Increase in administrative expense 7,145decrease in other operating expense (14,495)decrease in finance costs (2,020)Net impact of reclassifications on statement of comprehensive income –
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 2012
Opening net book amount 129,997 21,399 6,922 742 13,124 172,184Revaluation surplus 6,024 – – – – 6,024Revaluation deficit (71) – – – – (71)Additions 6,568 5,196 2,265 347 11,008 25,384disposals (2,345) (194) (179) (106) – (2,824)Transfers 12,602 (684) – 826 (12,744) –Transfer to investment property (6,054) – – – – (6,054)depreciation charge (6,171) (5,962) (3,082) (650) – (15,865)
Closing net book amount 140,550 19,755 5,926 1,159 11,388 178,778
At 30 September 2012Cost or valuation 166,209 57,374 19,316 4,831 11,388 259,889Accumulated depreciation (25,659) (37,619) (13,390) (3,672) – (80,340)
Net book amount 140,550 19,755 5,926 1,159 11,388 178,778
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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5. Property, plant and equipment (continued)
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 2011
Opening net book amount 128,777 18,462 6,010 670 2,540 156,459Revaluation (210) – – – – (210)Additions 5,828 8,742 4,438 379 10,584 29,971disposals (19) (384) (445) (5) – (853)depreciation charge (4,379) (5,421) (3,081) (302) – (13,183)
Closing net book amount 129,997 21,399 6,922 742 13,124 172,184
At 30 September 2011Cost or valuation 152,842 59,163 18,117 3,189 13,124 246,435Accumulated depreciation (22,845) (37,764) (11,195) (2,447) – (74,251)
Net book amount 129,997 21,399 6,922 742 13,124 172,184
At 30 September 2010Cost or valuation 130,993 49,804 17,713 3,296 2,540 204,346Accumulated depreciation (2,216) (31,342) (11,703) (2,626) – (47,887)
Net book amount 128,777 18,462 6,010 670 2,540 156,459
Leasehold and freehold properties were valued by Linden Scott & Associates Limited and Brent Augustus professional valuators in September 2012 at $112,796,000 (2011: $95,250,000) on the open market value basis. The revaluation surplus net of applicable deferred income taxes was credited to the revaluation reserve in shareholders’ equity. Included in thisamount is landpurchased inTrincity inJune2010 for theconstructionofa retailoutlet.Buildingimprovements are not included in the valuations.
depreciation expense of $15,865,037 (2011:$13,183,811) has been charged in expenses.
Lease rentals amounting to $13,533,149 (2011:$15,949,366) relating to the lease of property, are included in the consolidated income statement.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
5 0
A n n u A l R e p o R t 2 0 1 2
5. Property, plant and equipment (continued)
If land and buildings were stated on the historical cost basis, the amounts would be as follows:
2012 2011 $’000 $’000
Cost 79,764 88,001Accumulated depreciation (17,101) (16,021)
Net book amount 62,663 71,980
6. Investment property
2012 2011 $’000 $’000
Beginning of year 8,200 8,200Transferred from property, plant and equipment 6,054 –Revaluation 771 –
end of year 15,025 8,200
Investment property was valued by Linden Scott & Associates Limited, professional valuators in September 2012 at $15,025,000 (2011: $8,200,000) on the open market value basis.
The following amounts have been recognised in the consolidated statement of comprehensive income:
Gain on revaluation of investment property 771 –Rental income 904 999direct operating expenses 289 153
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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7. Intangible asset
Goodwill Software Total $’000 $’000 $’000
As at 30 September 2010
Cost 76,995 – 76,995Accumulated amortisation (856) – (856)
Net book amount 76,139 – 76,139
As at 30 September 2010
Opening net book amount 55,252 – 55,252Acquisition of SuperPharm Limited 20,887 – 20,887
Net book amount 76,139 – 76,139
As at 30 September 2011
Cost 76,995 – 76,995Additions – 1,283 1,283Accumulated amortisation (856) (106) (962)
Net book amount 76,139 1,177 77,316
As at 30 September 2012
Cost 76,995 1,177 78,172Additions – 411 411Accumulated amortisation (856) (106) (1,320)
Net book amount 76,139 1,124 77,263
Goodwill arising through business combinations was generated by acquisition of Petrovance Trinidad Limited in 2000, hand Arnold (holdings) Limited and the Construction Chemical division of Interchem in 2008 and SuperPharm Limited in 2010.
Impairment test for goodwill
In accordance with IFRS 3: Business Combinations, goodwill acquired through business combinations has been allocated to the Group’s cash generating units that are expected to benefit from the synergies of the combination. Impairment 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 15% and a growth rate of 1%. 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 materially exceed its recoverable amount.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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8. Employee benefit asset
Defined benefit pension plan 2012 2011 $’000 $’000
Changes in present value of defined benefit obligationdefined benefit obligation at start of year 58,937 65,860Interest cost 3,879 3,744Current service cost – employer’s portion 1,037 1,239employee additional voluntary contributions 317 665Past service cost 144 98Actuarial gains/(losses) 10,919 (5,453)Benefits paid (4,884) (7,216)
defined benefit obligation at end of year 70,349 58,937
Change in fair value of plan assetsPlan assets at start of year 68,509 67,063expected return on plan assets 4,199 4,067Actuarial gain 2,374 2,542employee additional voluntary contributions 317 665Benefits paid (4,884) (7,216)Company contributions 941 1,388
Plan assets at end of year 71,456 68,509
Amounts recognised in the consolidated statement of financial positionPresent value of pension obligations (70,349) (58,937)Fair value of plan assets 71,456 68,509
Benefit surplus 1,107 9,572unrecognised actuarial gains/(losses) 6,031 (2,514)
Benefit asset 7,138 7,058
Amount recognised in the consolidated income statementCurrent service cost 1,037 1,239Interest on obligation 3,879 3,744expected return on plan assets (4,199) (4,067)Past service cost 144 98
Net pension expense recognised during the year 861 1,014
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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8. Employee benefit asset (continued)
Defined benefit pension plan 2012 2011 $’000 $’000
Movements in the net asset recognised in the consolidated statement of financial positionNet asset at 1 October 7,058 6,684Net expense recognised in the consolidated income statement (861) (1,014)employer contributions 941 1,388
Net asset at 30 September 7,138 7,058
The composition of plan assets is as follows:Mortgages 311 396Govt securities 28,976 22,447Company securities – 6,475Local equities 26,265 22,420Foreign assets 13,204 11,790Short-term 2,700 4,981
Total 71,456 68,509
Principal actuarial assumptions at the consolidated statement of financial position date 2012 2011discount rate 4% 6%Salary escalation 3% 4.5%expected return on plan assets 4% 6%Future pension increases 0% 0%
Amounts for the current and previous two (2) periods are as follows: 2012 2011 2010 $’000 $’000 $’000
defined benefit obligation (70,349) (58,937) (65,860)
Plan assets 71,456 68,509 67,063
Surplus 1,107 9,572 1,203experience adjustments on plan liabilities 10,919 (5,453) 4,675experience adjustments on plan assets 2,374 2,542 (1,023)
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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9. Inventories
2012 2011 $’000 $’000
Finished goods 198,341 248,538Raw materials 252 –Provision for obsolescence (3,158) (770)
195,435 247,768Goods in transit 49,103 65,164Work-in-progress 46 62Consumable spares 214 149
244,798 313,143
Finished goods include $2,405,857 for 1 apartment unsold at year end (2011: $4,998,076 for 2 apartments unsold).
The cost of inventories recognised as an expense and included in cost of sales amounted to $1,051,706,422 (2011: $1,023,615,569).
10. Construction contract work-in-progress
2012 2011 $’000 $’000
Contract costs incurred in the year 26,685 27,774Contract expenses recognised in the year (26,476) (24,934)
209 2,840
Contract costs incurred and recognised profits (less losses) to date 37,858 39,051
Amounts due from customers for construction contracts are shown in Note 11.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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11. Trade and other receivables
2012 2011 $’000 $’000
Trade receivables 183,766 172,106Less: Provision for impairment of receivables (6,987) (7,681)
Trade receivables - net 176,779 164,425Prepayments 5,326 6,387Other receivables 14,259 13,338Receivables from directors 21 329Receivables from VeML group 408 179
196,793 184,658
Amounts due from customers for construction contracts 16,891 29,411Less: Provision for impairment of customers for construction contracts (1,032) (1,318)
15,859 28,093
212,652 212,751
As at 30 September 2012, trade receivables at a value of $8,019,259 (2011: $8,999,490) were impaired and fully provided for. Movements in the provision for impairment of trade receivables were as follows:
2012 2011 $’000 $’000
Balance at 1 October 8,999 8,772Charge for the year 2,515 4,596Amounts written off (2,441) (2,840)Amounts recovered (1,054) (1,529)
Balance at 30 September 8,019 8,999
The creation and usage of provision for impaired receivables net of bad debts recovered have been included in ‘marketing and distribution costs’ in the consolidated income statement.
As at 30 September 2012 and 2011, 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
2012 124,122 43,215 9,442 176,7792011 97,668 46,594 20,163 164,425The 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.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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12. Stated capital
2012 2011 $’000 $’000
AuthorisedAn unlimited number of ordinary shares of no par valueIssued and fully paid58,662,249 (2011: 58,608,549) ordinary shares of nopar value 187,012 186,532
Share Number of Share option shares capital plan Total ’000 $’000 $’000 $’000
As at 1 October 2011 58,608 185,884 648 186,532executive share option plan- shares issued 54 480 – 480
As at 30 September 2012 58,662 186,364 648 187,012
As at 1 October 2010 58,583 185,632 603 186,235executive share option plan- shares issued 25 252 – 252- value of services provided – – 45 45
As at 30 September 2011 58,608 185,884 648 186,532
Executive share option plan
AtanExtraordinaryGeneralMeetingheldon31July1998,aspecial resolutionwaspassedtoestablishaShareOption 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.
2012 2011 $’000 $’000
The current status of options to date is as follows:
Total shares allocated to the plan 1,000 1,000Issued pursuant to exercise of options (282) (228)Outstanding options (63) (120)Remaining shares allocated to plan in respect of which options have not been granted 655 652
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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12. Stated capital (continued)
The movement in the number of share options outstanding for the year is as follows:
2012 2012 2011 2011 Weighted Weighted average average exercise Options exercise Options price $ ’000 price $ ’000
At beginning of year 9.07 120 9.24 153exercised 8.93 (54) 10.00 (25)Lapsed 9.28 (3) 9.28 (8)Issued – – – –
At end of year 9.18 63 9.07 120
The exercise price of the granted options is equal to the market price of the shares on the date of the grant. Options are exercisable starting three years from the grant date up to the fifth anniversary of the date of grant. The Group has no legal or constructive obligation to repurchase or settle the options in cash.
On 27 March 2008, ninety thousand options were granted to directors and employees with an exercise price set at the market share price on that date of $10.00 per share.
On 20 February 2009, ninety-eight thousand options were granted to directors and employees with an exercise price set at the market share price on that date of $8.55 per share.
Share options outstanding at the end of the year have the following lapse dates and exercise prices.
Lapse date Exercise price Shares 2012 2011
26 March 2013 10.00 27,300 43,20019 February 2014 8.55 35,300 76,500
In accordance with the Business Combination Agreement with Victor e. Mouttet Limited no further options will be issued under this plan.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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13. Borrowings
2012 2011 $’000 $’000
Current
i) Bankers’ acceptances (Note 20) 11,600 27,056ii) Bank overdraft (Note 20) – 27,005iii) Bank borrowings 2,967 40,496iv) Fixed rate bonds 1997-2015 4,993 5,365v) Loan from parent company – 1,200vi) Fixed rate bonds 2008-2013 50,000 –vii) Fixed rate bonds 2012-2022 7,170 –
76,730 101,122
Non-current
viii) Fixed rate bonds 1997-2015 8,299 13,291ix) Fixed rate bonds 2008-2013 – 50,000x) Bank borrowings 8,585 11,535xi) Fixed rate bonds 2012-2022 88,624 –
105,508 74,826
Total borrowings 182,238 175,948
i) Bankers’ acceptances are unsecured. Interest rates on these borrowings are 3.85% (2011: 3.85% to 8.0% 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, RBC Royal Bank (T&T) Limited registered debenture stamped to 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 overdraft are secured by guarantees stamped to cover $38,800,000. The bank overdrafts incur interest at the rate of 6.75% (2011: 6.75% to 8.0%) per annum.
iii) & x) Bank borrowings include the following loans:
- A short-term loan of $Nil (2011: $55,881,37) which is secured by a registered loan agreement stamped to cover $100,000,000 ranking pari passu with other borrowings as noted in (ii) above and incurs interest at the rate of 7.00% per annum (2011: 7.00%). This loan was repaid in full during the year.
- A subsidiary’s loan of $11,552,344 (2011: $14,092,798) which is 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.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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13. Borrowings (continued)
v) A short-term loan was granted by the Parent Company, Victor e. Mouttet Limited to assist with working capital requirements. The loan is unsecured with an interest rate of 5.00%. This loan was repaid during the year.
iv) & viii) The fixed rate bonds 1997 - 2015 are 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 is payable semi-annually in arrears at a fixed rate of 12% per annum.
These bonds are guaranteed by a Standby Letter of Credit established with FCIB to cover the full principal sum of $33,691,970.
vi & ix) The fixed rate bond 2008 - 2013 is 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 $50,000,000 ranking pari passu with other borrowings as noted in (ii) previously. Interest is payable quarterly in arrears at a fixed rate of 9.25% per annum.
vii & xi) The fixed rate bonds 2012 – 2022 in the names of Agostini’s Limited and hand Arnold Trinidad Limited are constituted and secured by a Trust deed between the Group and First Citizens Trustee Services Limited incorporating 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%.
Maturity of non-current borrowings (excluding finance lease liabilities):
2012 2011 $’000 $’000
Between 1 and 2 years 15,535 57,972Between 2 and 5 years 36,443 16,854Over 5 years 53,530 –
105,508 74,826
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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14. Deferred income tax
The movement on the deferred tax account is as follows:
Accumulated Fair Retirement tax value benefit Tax depreciation gains obligation losses Total $’000 $’000 $’000 $’000 $’000
As at 1 October 2011 4,677 916 1,764 (19,882) (12,525)
Charge to consolidated income statement 250 – 20 982 1,252Prior year adjustment (358) – – 345 (13)Charge to equity – 700 – – 700
As at 30 September 2012 4,569 1,616 1,784 (18,555) (10,586)
As at 1 October 2010 5,073 968 1,671 (23,893) (16,181)
Charge to consolidated income statement 419 – 93 3,001 3,513Prior year adjustment (815) (45) – 1,010 150discontinued operations Charge to equity – (7) – – (7)
As at 30 September 2011 4,677 916 1,764 (19,882) (12,525)
2012 2011 $’000 $’000
deferred tax liability 8,177 7,156deferred tax asset (18,763) (19,681)
(10,586) (12,525)
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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15. Trade and other payables
2012 2011 $’000 $’000
Trade payables 162,420 185,651Accrued expenses 20,228 41,237Amounts due to contractors 19 4,939Other payables 5,430 5,094Payables to VeML Group 486 –
188,583 236,921
16. Expenses by nature
2012 2011 $’000 $’000
depreciation and amortisation (Notes 5 and 7) 16,223 13,289employee benefit expense (Note 21) 104,321 110,361Changes in inventories of finished goods and work-in-progress (3,094) 115,760Raw materials and consumables 1,000,221 850,336Transportation 8,948 5,338Advertising costs 10,378 9,200Net creation of provision for impaired receivables 1,539 2,908Investment property maintenance expenses – 955directors fees 819 665Operating lease payments 9,549 16,701Other expenses 62,967 45,452
Total cost of goods sold, other operating, administration, and marketing and distribution expenses 1,211,871 1,170,965
17. Finance costs - net
2012 2011 $’000 $’000
Interest income (54) (483)Net foreign exchange gains (7,483) (3,195)Interest expense- bank borrowings 17,131 16,027- finance leases – 158
9,594 12,507
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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18. Taxation
2012 2011 $’000 $’000
Current tax 22,682 20,156deferred tax (Note 14) 1,252 3,513Green fund levy 1,458 1,343Prior years adjustment (367) 899
25,025 25,911
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 90,242 87,434
Tax calculated at 25% 22,561 21,858expenses not deductible for tax purposes 430 1,158Allowance not subjected to tax 81 –Income not subject to tax (175) (216)Other timing differences 505 192Prior years adjustment (555) 899Green fund levy 1,458 1,343Business levy 720 677
25,025 25,911
Subsidiary companies have tax losses of approximately $74 million (2011: $79 million) available for set off against future profits.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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19. Earnings per share
Basic
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.
2012 2011 $’000 $’000
Profit attributable to shareholders of the Parent ($’000) 64,770 61,275
Weighted average number of ordinary shares in issue (’000) 58,626 58,583
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.
2012 2011 $’000 $’000
Weighted average number of ordinary shares in issue 58,626 58,583Adjustment for – share options 63 120
Weighted average number of ordinary shares for diluted earnings per share 58,689 58,703
20. Cash and cash equivalents
2012 2011 $’000 $’000
Cash at bank and in hand 80,199 15,032Bank overdraft (Note 13) – (27,005)Bankers’ acceptances (Note 13) (11,600) (27,056)
68,599 (39,029)
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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21. Employee benefit expense
2012 2011 $’000 $’000
Wages and salaries 91,400 96,882National insurance 4,896 4,985Other benefits 4,441 3,460Pension costs - deferred benefit plan 2,400 1,636Pension costs - defined contribution plan 861 2,210Termination costs 323 1,143Share options granted to directors and employees – 45
104,321 110,361
22. Subsidiaries
2012 2011 Percentage Percentage of equity held of equity held
hand Arnold Trinidad Limited 100% 100%Rosco Petroavance Limited 92% 92%SuperPharm Limited 100% 100%Smith Robertson & Company Limited 100% 100%Fastening & Building Systems Limited 100% 100%
On1July2011,AgostiniPharamceuticalLimitedwasamalgamatedwithSmithRobertson&CompanyLimited.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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23. Related party transactions
The total amount of transactions that have been entered into with related parties are as follows:
2012 2011 $’000 $’000
i) Amounts due by related parties 408 179
ii) Amounts due to related parties 486 143
iii) Transactions with related parties:
Sales to related companies 104 125
Purchases from related companies 8,413 4,685
iv) Compensation of key management personnel: Salaries and other short-term employee benefits 22,572 24,474 Share-based payments – 45 Termination benefits – 207
22,572 24,726
24. Contingencies
2012 2011 $’000 $’000
Customs bonds 13,356 21,000Bank guarantees 1,500 30,775
25. Capital commitments
The Group has entered into a construction contract in the amount of $4.7 million (2011: $2.9 million).
26. Dividends
The dividends paid in 2012 and 2011 were $26,383,513 ($0.45 per share) and $17,575,005 ($0.30 per share) respectively.
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
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24. Segment information
Reporting format – Business segments
Pharmaceutical & Food, Construction Personal Care Distribution Related & Other Trading Total 2012 2011 2012 2011 2012 2011 $’000 $’000 $’000 $’000 $’000 $’000
Revenueexternal sales 785,776 749,447 508,111 506,296 1,293,887 1,255,743Inter segment sales 38,519 34,272 6,855 6,298 45,374 40,570
Total revenue 824,295 783,719 514,966 512,594 1,339,261 1,296,313
ResultOperating profit 71,487 70,331 27,578 29,610 99,065 99,941Gain on revaluation – – 771 – 771 –Finance costs - net 2,268 (2,188) (11,862) (10,319) (9,594) (12,507)
Profit before taxation 73,755 68,143 16,487 19,291 90,242 87,434Taxation (19,351) (18,486) (5,674) (7,425) (25,025) (25,911)
Group profit 54,404 49,657 10,813 11,866 65,217 61,523
Non-controlling interests (447) (248)
Net profit attributable to shareholders 64,770 61,275
Consolidated total assetsSegment assets 357,984 507,020 481,464 325,972 839,448 832,992
Consolidated total liabilitiesSegment liabilities 145,546 179,205 246,092 250,101 391,638 429,306
Other informationCapital expenditure 11,806 23,580 13,578 6,391 25,384 29,971depreciation 10,860 7,974 5,005 5,209 15,865 13,183
N O T e S T O T h e C O N S O L I d A T e d F I N A N C I A L S T A T e M e N T S ( C O N T I N u e d )For the year ended September 30, 2012
1. Directors, senior officers & connecteD Party interest
Director/Senior Officer Shareholding Connected Party 30/9/2012
J. M. aboud 0 1,189,994 Pelican investments Limitedr. W. ahamad 0 6,054,937 Universal investments Limited 3,405,250 Proteus Limited a. J. agostini 557,614 158,571 V.M. agostini G. M. agostini 1,370,000c. G. Bernard 111,904 W. a. Bernard 10,000 B. a. Davis 396 J. P. esau 0 r. a. farah 10,000 s. a. Gunness-Balkissoon 10,000L. M. Mackenzie 36,800 15,324 a.P. Mackenziea. Maharaj 0 i. Maharaj Badrie 33,900 c. e. Mouttet 0 29,526,008 Victor e. Mouttet Limiteds. J. Montano 15,000 s. H. Moruf 5,000 a. B. Pashley 23,200 P. t. rajnauth 323,127 n. r. ramjohn 10,000r. a. rodriguez 162,600 M. stagg 10,000e. G. Warner Hudson 0 there has been no change in these interests occurring between the end of the company’s year end and the date of publication, December 10, 2012.
2. 10 LarGest sHareHoLDers
Victor e. Mouttet Limited 29,526,008Universal/Proteus Limited 9,460,187Home Mortgage Bank Limited 5,951,940Home construction Limited 3,490,030Geoffrey agostini 1,370,000Pelican investments Limited 1,189,994anthony & Valerie agostini 716,185first citizens trust & asset Management 607,937Demerara Life 600,000Mega insurance 600,000
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D i r e c t o r s ’ & s e n i o r o f f i c e r s ’ i n t e r e s t & 1 0 L a r G e s t s H a r e H o L D e r s
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AGOSTINI MARKETING
a.J. agostini – chairman
a.B. Pashley – ceo / Director
c.G. Bernard – Director
r.a. rodriguez – Director
G.M. agostini – non-exec Director
t.K. austin - non-exec Director
r.a. farah - non-exec Director
s.H. Moruf – non-exec Director
s U B s i D i a r y B o a r D s
SUPERPHARM LTD
c.e.Mouttet – chairman
D.a.sobrian – Managing Director
c.anderson – Director
P.D.Gomez – finance Director/secretary
s.t.Pariag – Director
J.M.aboud - non-exec Director
L.M.Mackenzie - non-exec Director
J.J.rahael - non-exec Director
HAND ARNOLD TRINIDAD LTD
a.J. agostini – chairman
s.a. Gunness-Balkissoon – ceo/ Director
s.K. Malzar – finance Director/secretary
s.J. Montano –Director
L.M. Mackenzie - non-exec Director
P.t. rajnauth - non-exec Director
SMITH ROBERTSON & COMPANY LTD
c.e. Mouttet – chairman
r.a. farah – ceo/Director
i. Maharaj - Director
M. stagg – Director
n.r. ramjohn – finance Director / secretary
a.J. agostini – non-exec Director
ROSCO PETROAVANCE LTD
a.J. agostini – chairman
Walter Bernard – Deputy chairman
Wayne Bernard – ceo/Director
K.J. rahaman – Director
c.G. Bernard - non-exec Director
r.a. rodriguez - non-exec Director
V.Balroop – secretary
Marketing
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sMitH roBertson & coMPany LiMiteD
trinidad’s leading pharmaceutical and personal care distribution company for the past 118 years. Distributors of products supplied by:
abbott Laboratoriesafrican sea coconutastraZenecaBeiersdorfBausch & LombBayer HealthcareBellscarlislecsL Behringeli Lillye.t. BrowneGlaxosmithKline
Halewood chemicals Humphrey’sinternational cosmetics LtdJohnson & JohnsonKao Brands companyLeo PharmaMartindaleMedimpexMerck sharpe & DohmeMore Pharma novartisorion sales Ltd.
P. a. Benjamin LtdPfizer (Pharma & consumer)Prestige Brandsrevlonrochesanofi aventissara Leesmith & nephewUnileverValeant PharmaceuticalsViforW. f. youngWyeth nutrition (formerly Pfizer)
o U r G r o U P ’ s P r o D U c t s
HanD arnoLD triniDaD LiMiteD
one of trinidad’s leading distribution companies for the past 92 years.Products include:-
Beveragesclayton’s Kola tonicHenkell sparkling WinesHeinz Baby JuicesHeinz tomato JuiceKick energy DrinkLuozade energy DrinksMoo! UHt, evaporated and condensed Milksribena Health Drinkssoy fresh soy MilkZephyrhills spring Water
Foodstuffanchor Butter anchor cheesesBake n’ fry shorteningBakers choice Puff PastriesBella Boca cookiesBelgian Butters Biscuitscampfire Marshmallowschesdale cheese slicescremora non Dairy creamercrisco oils
Dean’s shortbreadDillon candiesDuncan Hines cake Mixeggo Pancake syrupeggo Wafflesfive roses flourGolden Brand MargarineGuylian chocolatesJif Peanut ButterJolly rancher confectioneryHershey’s chocolatesHeinz Baby foods, condiments, Pickles, tomato Ketchup & Vinegar
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HanD arnoLD triniDaD LiMiteD (continUeD)
o U r G r o U P ’ s P r o D U c t s ( c o n t i n U e D )
Honig PastaHungry Jack Pancake Mix & syrupsH.P. sauceKashi cerealsKeebler cookiesKelloggs cerealsLiberty orchards confectioneryLindt chocolatesMainland cheeseMarandi nougatMentos confectioneryMorning star Vegetarian PattiesMurray cookiesnew Zealand cheddar cheesePedigree Dog foodPop tartsrichport tuna , sardines & Mackerelrichport Vegetable oilrondeletti Wafersronzoni Pasta & saucessmuckers Jams, Jellies & toppingstabasco sauceVlasic Dill PicklesWhiskas cat foodyellow Bird Margarine
Household Items1st Date Bath soaparmor all car care Productsclorox Bleachclorox cleanersconnoisseurs Jewellery cleanerDouble Duty Garbage Bagsformula 409fresh step scoop cat Litter
Glad cling WrapGlad food storage Bags & containersGlad force flex Garbage BagsGrab ‘n’ Go Garbage BagsJ-Bloc toilet DeodorizersKingsford charcoalKlene BleachKrystal candlesLestoil Heavy Duty cleanerLiquid PlumrMaster Wrap foil ozon Laundry Detergentsozon Disinfectants, cream cleaners & toilet Bowl cleanersPine-sol DisinfectantPoett Deodorizing cleanersrevive instant starchspectrum aerosol insecticidesoft ‘n’Pretty Paper Productss.o.s spongesstP car care Productssun Dish Dishwashing Liquidsylvania compact fluorescent and incandescent Bulbstilex Bathroom cleanerstisU Paper Productstom smith christmas crackersUltra soft fabric softenersViking Garbage BagsWhite cloud Paper ProductsZapp aerosol insecticide& coils
Housewares & Kitchen Accessoriesanchor Hocking Glass, serve & storage Warearrow Plastics
as seen on tV ProductsBobble Water filter Productscalp crystalchef Design cookwareculinaire small appliances & Kitchen Gadgetsfire King Bake WareGladware containers & ovenwareHandi foil Homz ironing BoardsJudge cookware & Gadgetsninja Kitchen Productsoneida flatwareProgressive Kitchen GadgetssHarK steam products & Vacuumssonoma Dinnerwarestellar flatwaresterilite food containers, Kitchen accessories & storageUnitsthemo flasks & Lunch Kitsthermo soft coolerstoastess small appliancesWilton Bakeware & cake icing accessories
Hygiene & Personal CareBaby LoveBaby Wipescheekies Disposable DiapersHanitizer Hand sanitizerHomedics Massage, relaxation & Wellness ProductsLibresse feminine napkinsstatestrong Body sprays & air fresheners
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o U r G r o U P ’ s P r o D U c t s ( c o n t i n U e D )
aGostini MarKetinG
Distributors for the past 87 years of a wide range of products and services.
RETAIL - Agostini InteriorsSpecialty Retail- Lighting, Fans, Paintarmstrong Vinyl flooringDesigners fountainDecorative Light fixturesDolan Designsfeit energy saving bulbsflexi-click Vinyl flooringHarris -troweltexHunter -ceiling fansH & c concrete stainsKrylon -spray PaintsLumicentroMinwax-Wood stainsProgress LightingPratt and Lambert -Paintsrubberset Painting toolsterra - Laminate flooring.sherwin Williams- Paints
BUILDING & FASTENING SYSTEMSAgostini Building & Fastening Systems division specialises in the sale of Hilti Tools and Fastening Systems, Building and Interior Completion Products, Construction Chemicals, Small Arms and Explosives. Their major products being:-
HILTIDrillscombihammersDemolition toolscordless Battery systemsabrasive Grinding & cutting systemsBitschiselsconstruction chemicalsDiamond coring & cutting systems
Mechanical & chemical anchoring systemsPowder actuated fastening systemsscrew fastening systemsinstallation strut, Bracket and Pipe Hanger systemsMetal Decking fastening systemsLaser Measuring systemsfire stopping systemsoffshore installation systemsspecialty offshore Decking systems
ARMSTRONGacoustical, clean room, Metal and specialty ceiling systems
ATK ALLIANT TECH SYSTEMScci - Blazer ammunitionfederal - ammunition outers - Gunslick Gun care Productsspeer - Gold Dot ammunition speer ® Lawman ammunition
AQUAFINcementatious Waterproofing Productscrystalline Waterproofing Productsrepair Mortars
BIG WIPESindustrial cleaning Wipes
BLACKHAWKtactical GearapparelHolsters, Belts, Pouches
MERCERrubber, sports and specialty flooring
CARLISLE COATINGS & WATERPROOFINGconcrete Waterproofing systemsconcrete Deck coatingsWaterproofing MembranesBentonite clay Waterproofing systemsecostar roofing tiles roof Garden systems
CROSSFIREsafety eyewear
DE SANTISaccessoriesBeltsHolsters
EUCLID CHEMICAL COMPANYconcrete curing compoundsconcrete sealersconcrete admixtures
FOBUSHolsters
FORTA CORPORATIONsynthetic fibre for concrete reinforcement
GLOCKsemi - automatic Pistols & accessories
GREENSTREAKPVc, Hydrophilic and rubber Waterstops, formliners
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aGostini MarKetinG (continUeD)
o U r G r o U P ’ s P r o D U c t s ( c o n t i n U e D )
H & Ksemi-automatic Pistolssemi-automatic rifles
HATSANair riflesshotgunsPellets
HITEC/MAGNUMUniform footwearsafety footwear
ITW RESIN TECHNOLOGYDecorative epoxy floor coatingschockfast epoxy Groutschemical resistant coatingsanti slip coatingsescoweld epoxy Grouts
LASERMAXLaser sighting Devices
LATICRETEspecialty setting Materials for tile and stone
LEATHERMANMulti-toolsKnivesPruners
MONADNOCKexpandable BatonsPolice equipment
MOSSBERGshotguns
ORICA EXPORTBlast Design & consultative servicesexplosives
OWAacoustical ceiling systems
PANELFOLDacoustical folding Partitions and Doors
POINT BLANKBody armourBullet Proof Vests
RUGERsemi - automatic Pistols riflesshotgunsrevolvers
TATEaccess flooring and Underfloor services
UNITED STATES GYPSUM - USGGypsum Board and Drywall accessories
WOOD PRODUCTSMouldingsMDfPlywood
SIKAconcrete repair Motarsstructural epoxiesGroutsJoint sealantsconcrete admixturesBonding agentsepoxy floor systemschemical anchorsstructural strengthening systems
STRIKE HOLDcleans, Lubricates & Protects
SPYDERCOfixed & folding Blade KnivesKnife sharpeners
THE J. D. RUSSELL COBitumin impregnated fibreboardJoint filler Material
VICTORINOX-SWISS ARMYPocket KnivesWatchesPocket toolsKitchen and Professional Knives
W. R. MEADOWSform release agentsJoint sealantsJoint filler Materialconcrete curing compoundschemical Densifiersconcrete sealerschemical anchors
ZIPPOLighters and Pens
MEDICALagfa -Medical Xray film & chemicals and Processorsagfa – Drystar Printers, computed radiography & Direct radiography X-ray solutionsBraun int’l - Medical equipment & suppliescontinental Metal-Healthcare equipmenteMs Physio - Physiotherapy equipmentHacker instruments - Lab equipment
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aGostini MarKetinG (continUeD)
o U r G r o U P ’ s P r o D U c t s ( c o n t i n U e D )
Huntleigh Healthcare-Medical equipmentMedicon – surgical instruments, equipment & accessoriesspencer- eMs equipment
NON DESTRUCTIVE TESTINGagfa/Ge -industrial Xray film, chemicals and ProcessorsKrautkramer-Ultrasonic instrumentsMagnaflux chemicals
PRINTINGagfa Graphics arts film & chemicalsagfa ozasol-Printing Platesarets-inksBaseline-Pre Press suppliescoroplastfuji-ctP Plates Komatex-PVc sheetsKomalu-composite aluminium sheetsMacDermid-flexographic Printing Plates
BAIRDPump & rod accessoriesrelief Valves and regulatorssafety tools
BALONBall Valvescheck Valvesneedle Valves
BECKERactuators and controls
BRONCOequipment suppliesoil Drilling and Production
CHAR-LYNNHydraulic Motors
rosco PetroaVance LiMiteD
rosco Petroavance Limited is an oilfield and Hydraulic equipment and supplies company, which has served those industries for 62 years. their major products include:-
CHALWYN/AMOTDiesel engine safety shutdown systemsspark arrestors
DBI/SALAconfined space equipmentfall Protection expertsfall Protection systems HarnessesLanyards
DSIGate ValvesGlobe Valvesswing check Valves
EATONHydraulic Pumps Motors and components
ECHOMETERfluid Level testingWell testing equipment
EFFERHydraulic articulated cranes
FREIDRICH LEUTERTPumping Well Dynamometers
HARBISON FISCHERsub surface sucker rodsPumps and accessories
HERCULES HYDRAULICSHydraulic seals and “o” rings
HYDRADYNE HYDRAULICScommercial intech Hydrauliccomponents and spares
Printing Paper - art, Bond, Bristol, Board and ncrstar-flex-Banner Materialtrelleborg-Printing Blankets
CONSTRUCTIONInterior fit-out and speciality construction - ceiling systems - floor finishes - fire and sound rated assemblies - Partitioning systems
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o U r G r o U P ’ s P r o D U c t s ( c o n t i n U e D )
rosco PetroaVance LiMiteD (continUeD)
MARTIN INCsheaves, sprockets, Drive couplings
OIL STATESoffshore cranes, Parts & serviceMarine Pipeline servicesoffshore construction equipmentoilfield elastomers
OTECOGate/Pressure relief ValvesPressure Gaugesrig Hardware
OMFBeuropean iso and Uni standardsHydraulic Pumps, Motors and MobileHydraulic accessoriestruck Power take offs
PACCAR WINCH DIVISIONBraden, carco and Gearmatic Hydraulic Winches and Hoists
PBV-USABall Valves (floating,trunnion)check Valves
RAM GEARPumping Unit spares for all leading brands
R & M ENERGY SYSTEMSHercules: Pumping accessoriesMoyno: Progressive cavity Pumps
SHANDONG KERUI PETROLEUM & EQUIPMENT LTDcasingPumping Well componentsoil Well Pumping Unitssucker rodstubing 2 3/8-4 ½
SMITH FLOW CONTROLValve interlocksMechanical safety and control
SPX POWER TEAMHigh Pressure Hydraulic tools and special service equipment for the construction oilfield, automotive and Manufacturing industries
STRENGas separator Productssand control
VARIOUS MANUFACTURERSPumping Well componentsrod string componentsrod coupling sucker rods
VICKERSHydraulic Pumps, Motors and flow control components
superPharm Limited was incorporated in 2004, specifically with the goal of developing a chain of modern big box drug and convenience stores in trinidad & tobago. in 2005 the company opened its first outlet in Westmoorings. the stores’ modern format provides customers with a drive thru window, photo processing, cosmetics counter, general merchandise and a full convenience assortment, including chilled and frozen novelties and food.
the superPharm Pharmacy chain’s six locations (Westmoorings, Maraval, Valsayn, Gulf View, chaguanas and trincity, with its seventh, Marabella, soon to be opened) cater to the consumer’s health, wellness, personal care needs and more, featuring modern, spacious and convenient locations with extended opening hours, including sundays and Public Holidays. shopping at superPharm is truly a rewarding experience.
superPharm “everything you go to a pharmacy for – and more.”
sUPerPHarM LiMiteD
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c o M P a n y o f t H e y e a r
Agostini’s Limited congratulates the management and staff of Rosco Petroavance Limited on capturing the “2012 Company of the Year” title bestowed by the Group. In this picture are: Walter Bernard (Deputy Chairman, Rosco Petroavance), Anthony Agostini (Managing Director, Agostini’s Limited), Wayne Bernard (CEO, Rosco Petroavance) and Jean-Paul Rostant (Operations Manager, Rosco Petroavance).
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Secretary and Registered Office:
L.M. Mackenzie18 Victoria avenuePort of spain
Registrars:
rBc trust (trinidad and tobago) Limited8th floor, 55 independence squarePort of spain
Attorneys-at-Law:
Pollonais, Blanc, De la Bastide & Jacelon17 Pembroke streetPort of spain
Auditors:
ernst & young5&7 sweet Briar roadst. clair
Bankers:
republic Bank Limited59 independence squarePort of spain
first citizens Bank Limited9 Queen’s Park eastPort of spain
Photographs of Directors and ceos: alice BessonDesign and Layout: Paria Publishing co. Ltd.Printing: caribbean Print technologies Ltd.
c o r P o r a t e i n f o r M a t i o n
Republic of Trinidad & TobagoThe Companies Act, 1995(Section 143 (1) )
NAME OF COMPANY: Agostini’s Limited Company No: A-5907 (A)
PARTICULARS OF MEETING:Seventieth Annual Meeting of the Shareholders of the Company to be held at #4 Nelson Street, Port-of-Spain on Monday January 28, 2013 at 9:30 am.
__________________________________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 ___________________________________________________________________________________________________
Name (capital letters)
of ______________________________________________________________________________________________________________________
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 _____________________ 2013 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, 2012 and reports of the Directors and Auditors thereon.
2. To elect the following Director appointed during the year
(i) Mr. Gregor Nassief
3. To re-appoint the following Directors returning by rotation
(i) Mr. Anthony Agostini
(ii) Mr. Reyaz Ahamad
(iii) Mrs. Gillian Warner Hudson
4. To re-appoint the Company’s Auditors, Ernst & Young, 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.
P R o x Y F o R M
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:
Seventieth Annual Meeting of the Shareholders of the Company to be held at #4 Nelson Street, Port-of-Spain on Monday January 28, 2013 at 9:30 am.
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
Lisa M. Mackenzie
December 10, 2012 Secretary
Agostini’s Limited
M A N A g E M E N T P R o x Y C I R C u L A R
A G O S T I N I ’ S L I M I T E D A N N U A L R E P O R T 2 0 1 2
Registered Office: 18 Victoria Avenue, Port of Spain, Trinidad, West IndiesTelephone: (868) 623-4871 Fax: (868) 623-1966Email: [email protected] Website: www.agostinislimited.com
Agostini Cover finalised.indd 1 12/12/12 3:56 PM