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1forward focused
Our VisiOn statement
Neal & Massy: A Force for Good
The Most Responsible and Profitable
Investment Holding/Management
Company in the Caribbean Basin
This we know.
This we believe.
To this we commit.
2 2012
MIAMI
JAMAICA
3forward focused
UK
BARBADOS
TRINIDAD & TOBAGO
GUYANA
INTEGRATED RETAIL BUSINESS UNIT
RETAIL LINE of BUSINESS
DISTRIBuTION LINe OF BuSINeSS
CONSuMeR FINANCe LINe OF BuSINeSS
AuTOMOTIve & INDuSTRIAL equIPMeNT BuSINeSS uNIT
eNeRGy & INDuSTRIAL GASeS BuSINeSS uNIT
INSuRANCe BuSINeSS uNIT
ITC BuSINeSS uNIT
OTHeR INveSTMeNTS
ANTIGuA
ST LuCIA
4 2012
5forward focused
RePORTS
Corporate Information 6
Notice of Annual Meeting 7
Chairman’s Report 8
Chief Executive officer’s Report 12
Chief financial officer’s Report 18
Executive Committee 22
Segment Review 24
Board of Directors 53
Directors’ Report 58
Management Proxy Circular 61
FINANCIALS
Statement of Management’sResponsibility 62
Independent Auditor’s Report 63 Consolidated Statement of financial Position 64
Consolidated Income Statement 66
Consolidated Statement of Comprehensive Income 68
Consolidated Statement of Changes in Equity 69
Consolidated Statement of Cash flows 70 Notes to the Summary Consolidated financial Statements 72
TABLE OF CONTENTS
6 2012
COrpOrate infOrmatiOn nOtiCe Of annuaL meeting
DIRECToRS
Mr. Arthur Lok Jack, Chairman
Mr. E. Gervase Warner, President and Group CEO
Dr. Rolph Balgobin
Mr. Robert Bermudez
Mr. Earl Boodasingh
Mr. Geoffrey Cave
Sir Allan Fields
Mr. Patrick Hylton
Mr. G. Anthony King
Mr. William Lucie-Smith
Mrs. Paula Rajkumarsingh
Mr. Gary Voss
Mr. Brian Young
CoRPoRATE SECRETARy
Ms. Wendy Kerry
ASSISTANT CoRPoRATE SECRETARy
Mrs. Camille Mascall
REGISTERED offICE
63 Park Street
Port of Spain
Trinidad, West Indies
Telephone: (868) 625-3426
Facsimile: (868) 627-9061
Email: [email protected]
Website: www.neal-and-massy.com
REGISTRAR AND TRANSfER offICE
63 Park Street
Port of Spain
AUDIToRS
PricewaterhouseCoopers
11-13 Victoria Avenue
Port of Spain
PRINCIPAL BANKERS
RBC Royal Bank
19-21 Park Street
Port of Spain
Trinidad and Tobago, West Indies
first Caribbean International Bank
74 Long Circular Road
Maraval
Trinidad and Tobago, West Indies
AUDIT CoMMITTEE
Mr. William Lucie-Smith, Chairman
Dr. Rolph Balgobin
Mr. Robert Bermudez
Mr. Brian Young
GovERNANCE & CoMPENSATIoN CoMMITTEE
Mr. Arthur Lok Jack, Chairman
Dr. Rolph Balgobin
Mr. Robert Bermudez
Mr. Geoffrey Cave
Sir Allan Fields
7forward focused
nOtiCe Of annuaL meeting
TO ALL SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Eighty-Ninth Annual Meeting of Shareholders of Neal & Massy Holdings Limited (“the Company”) will
be held at the Belmont Salon, Hilton Trinidad, Lady Young Road, Port of Spain, Trinidad on Friday February 1, 2013 at 10:00 a.m. for the
following purposes:
1 To receive and consider the Report of the Directors and the Audited Financial Statements for the financial year ended September 30,
2012 together with the Report of the Auditors thereon, and to note the final dividend.
2 To elect Directors for specified terms and (if thought fit) to pass the following Resolutions:
a THAT, the Directors to be elected be elected en bloc;
b THAT, in accordance with the requirements of paragraph 4.4.1 and 4.4.2 of By-Law No. 1 of the Company, Messrs. Arthur Lok Jack,
William Lucie-Smith, Rolph Balgobin and David O’Brien be and are hereby elected Directors of the Company to hold office until the
close of the third Annual Meeting of the Shareholders of the Company following this election;
c THAT, in accordance with the requirements of paragraph 4.4.1 and 4.4.2 of By-Law No. 1 of the Company, Messrs. E. Gervase
Warner and G. Anthony King be and are hereby elected Directors of the Company to hold office until the close of the next Annual
Meeting of the Shareholders of the Company following this election.
3 To appoint Auditors and authorise the Directors to fix their remuneration and expenses for the ensuing year.
By Order of the Board
WENDy KERRy
Corporate Secretary
December 20, 2012
NoTES
1 No service contracts were entered into between the Company and any of its Directors.
2 A Member of the Company entitled to attend and vote at the above Meeting is entitled to appoint a proxy to attend and vote in his
or her stead. Such proxy need not also be a Member of the Company. Where a proxy is appointed by a Corporate Member, the form
of proxy should be executed under seal or signed by its Attorney.
3 Corporate Members are entitled to attend and vote by a duly authorised representative who need not himself be a member. Such
appointment must be by Resolution of the Board of Directors of the Corporate Member.
4 Attached is a Proxy Form which must be completed, signed and then deposited with the Secretary of the Company, at the Company’s
Registered Office, 63 Park Street, Port of Spain, no less than 48 hours before the time fixed for holding the Meeting.
8 2012
The Neal & Massy Group of Companies has rebounded from the
difficult year in 2011 reporting a record setting $802 million in Profit
Before Tax (PBT). With Revenue growth of 7.6 percent, the Group’s
Earnings Per Share (EPS) from Continuing Operations increased by
23 percent to $5.13. After Discontinued Operations, the overall EPS
was $4.87, which is almost five times the overall EPS from 2011,
as the charges associated with the Almond Resort Inc. assets were
not repeated in 2012.
These results reflect the strength and resilience of the Group. The
difficulties encountered after acquiring the BS&T group of companies
and the impact of the financial and economic crises which began
in the Caribbean in 2009, are almost completely behind us. The
Group’s Executives now have more time to focus on the strategic
growth plans for Neal & Massy.
While the economies in which the Group operates continue
to mostly struggle, diversity of the Group has helped to secure
growth in difficult times. The Group was ably assisted by growth in
the Automotive & Industrial Equipment and the Integrated Retail
Business Units in Trinidad, the group of companies in Guyana and
by the turnaround of the performance of the Insurance operations.
In Trinidad and Tobago, the economy contracted by 3.6 percent
and the energy sector, the mainstay of the economy, contracted by
7.3 percent. However, bpTT’s announcement in November 2012 of its
gas find in its off-shore Savonette field, provides a source of optimism
for the supply and availability of natural gas and signals anticipated
improvement in the performance of the sector. The petroleum
sector continues to dominate our output, recording a 46.8 percent
contribution to GDP. Non-energy output decreased by 0.7 percent,
with the construction component decreasing by 3.7 percent.
Neal & Massy is seeking to deepen its involvement in the
downstream sector through its participation in the recently
announced multi-national Consortium to engineer, construct and
operate a natural gas-based integrated chemical complex in La Brea.
Gervase Warner in his CEO’s report will further describe this project,
its phases and potential for creating additional growth opportunities
for the Group through the introduction of new manufacturing
sectors to Trinidad and Tobago.
CHairman’s repOrt
CHAIRMAN
ARTHuR LOK JACK
Chairman
9forward focused
Our businesses in Barbados continue to grapple with the effects of
a protracted period of economic stagnation. The Barbados economy
grew by 0.2 percent for the first nine months in 2012. Not since
2007 has the Barbados economy grown by more than 1 percent.
Tourism, the sector on which Barbados is most reliant, experienced
another year of weak performance and tourism value-added for
the first three quarters of 2012 is estimated to have declined by
3.7 percent. The 12-month rate of inflation stood at 7.8 percent
as at the end of July, a decline of 2 percent from the prior period.
The growth rate in food prices stood at 3.1 percent, a decline of
0.6 percent from the prior period. Though a small decline, this is a
hopeful sign for our retail business in Barbados.
In Guyana, real GDP growth of 2.8 percent was reported for the
first half of 2012, and is projected to be 3.8 percent for the full
calendar year. Mining and quarrying, one of the leading growth
sectors in recent years, experienced a 16.4 percent growth rate for
the first six months of 2012. Once again our Guyana results were
correlated to the positive economic growth. Through the strong
management of the Executive Team in Guyana, the organisation has
consistently delivered double digit growth for the Company. Inflation
stood at 1.8 percent for the year ending June 2012, with food prices
registering an increase of 4.5 percent. This is encouraging for our
plans to extend our Retail Lines of Business in Guyana in the short
to medium term.
The Jamaican economy continues to stagnate. GDP growth
for the first two quarters of 2012 was weak, recording -0.1
percent to -0.2 percent respectively. Since January 2011 when the
agreement with the IMF stalled over the payment of back wages to
public sector workers, the IMF has curtailed disbursements to the
Government of Jamaica (GOJ). Other multilateral institutions; i.e.,
World Bank, IADB and the European Union have also followed the
IMF in curtailing disbursements to the GOJ, leaving the GOJ with
little capital to spend on much needed infrastructure, health and
education investments. Without these investments to stimulate
activity, the Jamaica economy has continued to reflect the impact
of weak domestic demand. The unemployment rate is expected
to reach a record high of over 13 percent, with inflation at around
6.9 percent. Our businesses in Jamaica, which operate in the
distribution, industrial gases and information, technology and
communication sectors, continue to remain prudent, committed
to maintaining and improving cost efficiencies to stay competitive
in Jamaica’s tight economy. Despite its discouraging economic
outlook, the tourism sector grew with stop-over visitors growing
by approximately 10 percent in the first nine months of the year.
The hotel and restaurant sector also grew by 0.8 percent in the
first quarter and by 3.8 percent in the second quarter of 2012. The
Group continues to embark on new investments in Jamaica. This
year, through our subsidiary Illuminat (Jamaica) Limited, we finalised
an agreement with CRIF to form a joint-venture credit bureau. The
business will be hinged on a new data centre which will provide
credit reports to at least 60 percent of annual credit applicants. In
2012, Gas Products Limited also made a major capital investment
to expand LPG storage capacity at its import terminal in Montego
Bay.
With the exception of Guyana and Suriname, predictions for
the coming year for the Caricom countries remain cautious and
the performance of these countries over the past year continues
to reinforce our need to seek opportunities outside our traditional
Caribbean home markets. The Group has become quite dominant
in the sectors in which it participates in the major Caricom countries
and to support its growth objectives, the Group will need to expand
its operations beyond its traditional territories. In the last year
the Group’s management dedicated some time to exploring and
examining opportunities in Latin and Central America as well as
West Africa. The Group has now narrowed its focus to a few select
countries for market entry.
In closing, I would like to thank Gervase Warner, President
and Group CEO and his team of Executives for their astute and
practical leadership. They have piloted the Group through a
difficult economic period and through the requisite restructuring
to assure the continued strength of the Group’s core operations.
The Executive Team has created a bold vision that is being fully
embraced throughout the organization; i.e., to be A force for Good
– the Most Responsible and Profitable Investment Holding/
CHAIRMAN
10 2012
Management Company in the Caribbean Basin. The Executive
Team is also well underway towards implementing the strategies
that were created to fulfill on this vision.
I would also like to thank the Board for their partnership over
the past year. I especially wish to thank Sir Allan Fields who retired
from the Company’s Board of Directors on November 6, 2012. Sir
Allan is a highly recognised and accomplished citizen of Barbados
and was first appointed to the Board of Neal & Massy Holdings in
1998. Sir Allan has served the Company for many years and on
behalf of the Board of Directors, I would like to thank him for his
numerous, valuable contributions. I would also like to thank Brian
Young and Geoffrey Cave who are also retiring from the Company’s
Board of Directors effective December 31, 2012 and February 1,
2013 respectively. Mr. Young has served on the Board since 1995
and had been the Board’s longest serving member. Mr. Young was
asked to stay on the Board for an additional four years after reaching
his 70th birthday in recognition of his critical roles as the Chairman
of the Company’s Audit Committee and as the Chairman of the
Company’s joint venture with Cool Corporation Ltd.; Cool Petroleum
Ltd. (CPL) in Jamaica. The Company’s minority stake in CPL was sold
in 2012 and William Lucie-Smith has taken over the chairmanship
of the Audit Committee from Mr. Young. Geoffrey Cave, who is the
Chairman of the Cave Shepherd group of companies, joined the
Neal & Massy Board in February 2009 following the acquisition of
BS&T. Mr. Cave has provided excellent counsel and assistance to the
Company’s Barbados operations and also served as a Director on
United Insurance Company Limited’s Board. On behalf of the entire
Board of Directors, I wish all three gentlemen well in their respective
endeavours ahead.
The Board also, in this past year, welcomed the addition of two
new directors – Gary Voss and Patrick Hylton. Gary Voss, a citizen
of Trinidad and Tobago, is currently the Non-Executive Chairman of
Unilever Caribbean Limited. He joined Lever Brothers West Indies
Limited in 1982 as Technical Director, and was appointed Chairman
and Managing Director in 1987. He retired from Unilever in 2001.
His early career was spent with the (then) Texaco Pointe-a-Pierre
refinery, the Caribbean Industrial Research Institute (CARIRI) and the
Iron and Steel Company of Trinidad and Tobago (ISCOTT). He is also
a director of RBC Finance Holdings and several of its subsidiaries.
Patrick Hylton, a citizen of Jamaica, is the Group Managing Director
of National Commercial Bank Jamaica Limited (NCB), Jamaica’s
largest commercial bank. He first received public recognition when
the Government appointed him to a leading role in the rehabilitation
of the Jamaican financial sector during the late 1990s.
I wish to also announce the appointments of David O’Brien and
Richard P. Young to the Board. Mr. O’Brien’s appointment will be
effective from January 1, 2013 and Mr. Young’s appointment was
made effective on December 20, 2012. Mr. O’Brien is currently a
Senior Vice President of the Neal & Massy Group and the Executive
Chairman of the Group’s Automotive & Industrial Equipment
Business Unit. In this capacity, he is the Chairman of a number of
companies in this Business Unit, including Neal & Massy Automotive
Limited, Tracmac Engineering Limited and Automotive Components
Limited. He held a number of senior positions at Sagicor Life
Incorporated, before joining Neal & Massy in 2005. Richard P. Young
is a Chartered Accountant and a well-respected member of Trinidad
and Tobago’s business and banking communities. In 2012, he retired
as the Managing Director of Scotiabank Trinidad and Tobago Limited
and its wholly owned subsidiaries, after serving in that post for 15
years. Prior to joining Scotiabank, he was a Chartered Accountant at
Price Waterhouse for 18 years and a Managing Director at the then
NEM (West Indies) Insurance Limited. It is my pleasure to welcome
Mr. O’Brien and Mr. Young to the Board.
My gratitude, as always, goes out to our customers for their
continued trust and loyalty and all the employees of Neal & Massy
who dedicate themselves everyday to delivering value and supporting
the growth and longevity of the Group.
CHairman’s repOrt
11forward focused
neW appOintments tO tHe BOard Of direCtOrs OVer tHe past Year
PATRICK HylTon Jamaican Citizen
PATRICK P. HyLToN is the Group Managing Director of National Commercial Bank
Jamaica Limited (NCB), Jamaica’s largest commercial bank. He first received public
recognition when the Government appointed him to a leading role in the rehabilitation
of the Jamaican financial sector during the late 1990s.
GARy Voss Trinidad & Tobago Citizen
GARy voSS is currently the Non-Executive Chairman of Unilever Caribbean Limited.
He joined Lever Brothers West Indies Limited in 1982 as Technical Director, and was
appointed Chairman and Managing Director in 1987. He retired from Unilever in
2001. His early career was spent with the (then) Texaco Pointe-a-Pierre refinery, the
Caribbean Industrial Research Institute (CARIRI) and the Iron and Steel Company of
Trinidad and Tobago (ISCOTT). He is also a director of RBC Finance Holdings and
several of its subsidiaries.
DAVID o’BRIEn Trinidad & Tobago Citizen
DAvID o’BRIEN is currently a Senior Vice President of the Neal & Massy Group and
the Executive Chairman of the Group’s Automotive & Industrial Equipment Business
Unit. In this capacity, he is the Chairman of a number of companies in this Business
Unit, including Neal & Massy Automotive Limited, Tracmac Engineering Limited and
Automotive Components Limited. He held a number of senior positions at Sagicor
Life Incorporated, before joining Neal & Massy in 2005. Mr. O’Brien’s appointment
will be effective from January 1, 2013.
RICHARD P. yoUnG Trinidad & Tobago Citizen
RICHARD P. yoUNG is a Chartered Accountant and a well-respected member of
Trinidad and Tobago’s business and banking communities. In 2012, he retired as the
Managing Director of Scotiabank Trinidad and Tobago Limited and its wholly owned
subsidiaries, after serving in that post for 15 years. Prior to joining Scotiabank, he was
a chartered accountant at Price Waterhouse for 18 years and a Managing Director at
the then NEM (West Indies) Insurance Limited. Mr. Young’s appointment was made
effective on December 20, 2012.
12 2012
CHIEF EXECUTIVE OFFICERCHief eXeCutiVe OffiCer’s repOrt
RECAP of 2012
The Neal & Massy Group of Companies continued to perform
strongly throughout 2012. The Group’s Profit Before Tax (PBT) from
Continuing Operations grew by 25.4 percent from $640 million
to $802 million, a record high for the Group. The improvement
was primarily driven by the growth in the Automotive & Industrial
Equipment Business Unit and the Guyana Group and by the non-
recurrence of one-off expenses and charges, which were incurred
in 2011. The Group also demonstrated healthy Third Party Revenue
growth of 7.6 percent in 2012, growing from $8.5 billion in 2011 to
exceed $9.1 billion in 2012. Earnings Per Share (EPS) from Continuing
Operations of $5.13 was also 23 percent above EPS from Continuing
Operations in 2011. Substantially reduced losses from Discontinued
Operations resulted in an overall EPS of $4.87, almost five times the
Overall EPS of $1.02 reported in 2011.
The Group is approaching the end of its restructuring arising from
the BS&T acquisition and the fallout of the 2009 global economic
recession. While the sale of the remaining Almond hotels has not
happened as quickly as we would have hoped, we are happy to
report that Almond Beach Club was sold to Elite Island Resorts in
July 2012 and meaningful progress is being made on the sale of
the remaining Casuarina and Beach Village properties. In 2012, the
decision was taken to close the Almond Beach Village hotel and all
costs associated with the closure were booked. The operating losses
going forward until the eventual sale of the remaining properties,
have therefore been minimized.
In 2011, the Group incurred a number of one-off charges against
property revaluations in Barbados, for provisions within the insurance
business related to exiting the international inward reinsurance
business, consulting services for the strategy engagement with
McKinsey & Company and for pension and other head office
adjustments. None of these charges or expenses were repeated
in 2012 and assisted in the overall profitability improvement from
Continuing Operations.
e. GeRvASe WARNeR
Pesident and Group
Chief Executive
officer
13forward focused
CHIEF EXECUTIVE OFFICER The Group has emerged from the economic and financial crises
of 2009 with a strategy for future growth and with a strong balance
sheet and a resilient group of core companies to fuel that growth.
Cash Flow from operating activities increased from $522 million to
$698 million and the Group’s Cash position increased from $1.1
billion to $1.3 billion.
STRATEGIC oUTLooK
Strategic Initiatives
All Business Units in the Group are forward focused on the growth
objectives and force for Good vision of the Group. Significant
progress was made against the Group’s strategic plan in 2012:
• TheintroductionoftheGroupCustomerServiceManagement
System has worked very well for Hi-Lo and Neal & Massy
Automotive Ltd. Both companies have improved their customer
service measures significantly, resulting in increased supermarket
transactions and new vehicle sales.
• ThestrengthoftheGroup’span-Caribbeandistributionnetwork
was reflected in new lines from principals coming over to Neal
& Massy. In addition, the Group acquired the Valrico brand
of contract manufactured, high quality food products for
distribution throughout the region.
• Plansfornewretailformatscontinuedandtheopeningofthe
expanded Hi-Lo supermarket in north-west Trinidad provided an
indication of the new look for new store locations coming in
South and Central Trinidad, Guyana and in south-east, Barbados.
• We also increased our shareholding in the St. Lucia-based
supermarket chain, Gablewoods Supermart Limited to expand
our retail operations in the region.
• TheAutomotive&IndustrialEquipmentBusinessUnitlaunched
the National and Alamo car rental business with locations in
Trinidad and Tobago. Rollout to other Caribbean islands is
underway.
• UnitedInsurancehasexitedtheunprofitableinwardre-insurance
business and has renewed its focus on its core Caribbean
markets.
• ThePrimeMinisteroftheRepublicofTrinidadandTobagorecently
announced the Government’s approval of a Methanol to Di-
Methyl Ether (DME) project for the energy sector in Trinidad and
Tobago, which is a joint venture between Mitsubishi Corporation,
Mitsubishi Gas Chemical Company Inc. of Japan, Neal & Massy
and Texas-based Integrated Chemicals Company Limited. The
first stage of the project is projected to produce 750,000 MT
per year of Methanol and 100,000 MT per year of DME. It is
estimated that for the first stage, 100MMSCFD of natural gas
will be consumed in the production of the Methanol and DME.
The production of DME could be used as a blending stock for
LPG and as a replacement for diesel, and can therefore help to
ease the Government’s subsidy removal on these products. Phase
two of the project will produce Mono Ethylene Glycol (MEG)
from Syngas and/or Ethane extraction. MEG could be used to
develop additional downstream manufacturing operations, such
as Automotive coolants, Polyester fibre and PET resin. Initial
investments are projected to be approximately USD$850 million
and will generate approximately 180 permanent jobs but peak
employment during construction could be as high as 3,000.
Additional phases of the project also include the production
of Acetic Acid and Acrylonitrile, which could lead to further
downstream industries in plastics manufacturing.
• TheInformationTechnologyandCommunications(ITC)Group
made further strides in the managed services area with a major
contract being negotiated, which will be the largest ATM
managed services contract ever awarded in Jamaica. The Business
Unit also launched the leading credit bureau service in Jamaica
in conjunction with its joint venture partner, CRIF.
• The growth of theGuyana group continues to outpace the
growth in the economy. Improvements in efficiency and
investments in expanding and modernizing the plant for all
Guyana companies is allowing the Group to add new products
and services to its portfolio and fuelling growth.
14 2012
Leadership Strengthening
After the Group’s Corporate and Business Unit strategy development
exercise was completed, we recognized that the key constraint
to implementation success was having sufficient and appropriate
leadership within the Group. A number of gaps were identified and
we have made excellent progress in recruiting and reorganizing our
leadership team to successfully execute the growth strategy. Some
of the important developments for the year were:
• NishaDass,theAssociatePrincipalfromMcKinsey&Company
who led the McKinsey strategy engagement with Neal & Massy,
was recruited to the position of Group Chief Strategy Officer
to lead and support the continuous review of our strategic
plans and support major business development projects and
acquisitions.
• CurtisTobalhasagreedtojointheGroupinJanuary2013to
take over the role of the CEO of General Finance Corporation
Limited and will also hold the title of Chairman Designate for
the Consumer Finance Business Unit. Curtis has significant
experience in Consumer Finance and will play an important role
in the evolution of the Integrated Retail business model.
• Jorrell Best also joined theGroup in 2012 as the Business
Development Manager for the Consumer Finance Line of
Business. Jorrell is a returning resident whose last position before
joining the Group was Associate Director at UBS Investment Bank
in New York.
• AaronSuitealso joinedthe IntegratedRetailBusinessUnit in
the 2012 financial year as the Business Excellence Manager.
Aaron spent 18 years with Nestle in various positions in Finance,
Business Excellence, Project Management and Logistics. He is
also another returning resident, last stationed in Nestle’s Canada
operations.
• Richard Barrowwas recruited as CEO of HDHopwood in
Jamaica. Richard is an experienced executive with an extensive
career in distribution that spans over 30 years. Prior to joining
the company, he held the position of CEO (Consumer Division)
at Facey Commodity Company Limited, a conglomerate with a
presence in 30 countries.
• FrereDelmaswhohasservedastheExecutiveChairmanofNeal
& Massy’s Retail Line of Business for the last four years has been
appointed as Neal & Massy Barbados Country Manager, effective
from January 2013. He replaces Anthony King as the most Senior
Executive in the Group in Barbados. In addition to the boards
he currently chairs, he will also assume the chairmanship for a
number of other Barbados-based companies, namely Roberts
Manufacturing Co. Ltd, Seawell Air Services and Booth Steamship
Co. (Barbados) Ltd. and will serve as a director on the boards of
key subsidiaries in Barbados. Frere will continue to serve as the
Integrated Retail Country Manager in Barbados, which includes
oversight for the Group’s retail interests in St. Lucia.
• EvertonBrowne,whoservedastheHumanResourceManager
for Barbados will expand his role to provide more executive
support to the Country Manager, providing oversight for public
relations and communications activities. In his new role as Chief
Administrative Officer (CAO), effective from January 2013, he
will be responsible for corporate governance and ethics policies
administration and will continue to have direct responsibility for
human resources and all its related areas.
•ThomasPantin,whohasservedastheExecutiveChairmanof
the Consumer Finance Line of Business, has been appointed as
the Executive Chairman of the Retail Line of Business – taking
over from Frere Delmas. Thomas worked closely with Frere over
the last year in the Integrated Retail Business Unit and a smooth
transition between the two is already underway.
vISIoN AND vALUES
The Neal & Massy Vision underpins all our forward focused thinking
and behaviours:
A force for Good: The Most Responsible and Profitable
Investment Holding/Management Company in the Caribbean
Basin.
Our growth initiatives are grounded in our values, which help us
demonstrate the behaviours necessary to accomplish our objectives.
Our values are embodied in our guiding principles: Integrity, Care,
Confidence and Growth:
CHief eXeCutiVe OffiCer’s repOrt
15forward focused
integrity
care
confidence
growth
INTEGRITy is the cornerstone of the foundation on which our values are built. It is
the reason that Neal & Massy continues to be the partner of choice, dependable and
protective of the interests of all of our stakeholders. All our employees are encouraged
and expected to act with the highest ethical standards that will merit the continued trust
and confidence of our customers, business partners, suppliers, colleagues, shareholders
and our communities.
We CARE. We believe in building long term relationships with our employees and
customers. We believe we have a duty to have our employees return to their homes safely
after work. We are committed to building future generations of professionals and leaders
and invest heavily in the training and development of our executives and staff. Through
the work of The Neal & Massy Foundation and our individual subsidiary companies in all
territories in which we operate, we continue to provide financial and other support to
worthy causes to assist the less fortunate through education, development programs,
arts and culture, sport and religion.
With almost 90 years of committed presence and experience through different peaks
and troughs, our Group has become a well-respected conglomerate wherever we do
business. Our diversity gives us the resilience to rebound after difficult times and our sound
investment and good operational management has helped us to demonstrate consistent
growth in shareholder returns over time. Our financial strength and experience gives us
the CoNfIDENCE to pursue new ventures and strategies to keep reinventing the Group
to stay abreast of changing times.
GRoWTH is a mandate from our Shareholders, to which this Group is committed. Our
financial position provides a solid base for growth as we expand beyond our traditional
geographies and within our existing industries. We have invested in a strategic plan, which
charts the course for growth over the next four years. We are investing in the recruitment
and development of executives and talented individuals to provide the organizational
capacity to achieve our growth objectives. The introduction of Shareholder Value Added
(SVA) as the key financial performance metric for executives has sharpened the focus on both
income statement and balance sheet management for growth. SVA is a measure of value
creation that subtracts the Cost of Capital tied up in the Assets of a business from the Net
Operating Profit After Tax. The Group’s Executive Performance Incentive Program requires
a minimum growth in SVA which aligns Executives’ interests with those of Shareholders.
16 2012
CHief eXeCutiVe OffiCer’s repOrt
HEALTH, SAfETy, SECURITy AND THE ENvIRoNMENT (HSSE)
PERfoRMANCE
Our journey to overall HSSE performance improvement continued
throughout the year. Once again we recorded year on year
improvement in our Key Performance Indicators, particularly in the
areas of internal audits and workplace inspections, where there has
been an approximate 20 percent increase. Of note is the increased
level of participation from Chairmen and CEOs in these exercises. The
Energy & Industrial Gases Business Unit continues to lead the way on
this journey, having not recorded a Lost Time Incident (LTI) for the
year with Neal & Massy Wood Group (10 million man hours since
its last LTI), Neal & Massy Energy Resources Limited (1 million man
hours since its last LTI) and Industrial Gases Limited (500,000 man
hours since its last LTI) having achieved significant milestones along
the way. Additionally a number of non-energy companies achieved
Safe to Work (STOW) certification, an advanced safety management
system, initiated and administered by the Energy Chamber.
On November 27, 2012 a Gas Pro tanker wagon, contracted
to an external party to transport Liquefied Petroleum Gas (LPG),
was involved in a tragic accident, in which a female pedestrian
was fatally injured. The incident occurred on the Chalky Hill Main
Road, en route to Kingston from Port Maria Jamaica. I wish to add
my deepest sympathies to the family and friends of the deceased
to those already expressed by the entire Gas Pro organisation.
The circumstances surrounding the incident are being thoroughly
investigated by an independent investigation team and local police,
with full cooperation from Gas Pro. Based on findings from the
investigations, Gas Pro will make any necessary changes to ensure
that this calamity is not repeated. Prior to this incident, Gas Pro
maintained an incident-free safety record for the past six years.
The company has been recognized as a leader in safety in the LPG
industry for three consecutive years. Gas Pro has already initiated
enhancements to its contractor management processes to gain
clearer insights into maintenance and training of its contractors’
equipment and staff.
General HSSE training and the conducting of internal audits were
intensified in Guyana, Barbados and Jamaica with the expectation
that these territories will become fully compliant with the Group’s
HSSE Management System during 2013.
CoRPoRATE SoCIAL RESPoNSIBILITy PERfoRMANCE
2012 was a meaningful year for the Neal & Massy Group, in terms of
making a positive difference in the communities in which we operate.
We continued our flagship programmes, such as the Boys To Men
programme, which has been focused on developing leadership skills
in young men. We also sponsored key projects including the Arrive
Alive Safety Programme, to increase road safety awareness, and
the Rainbow Cup Triathlon, to promote health and wellness. Our
companies in Barbados, Guyana and Jamaica also maintained their
sustainable, community development contributions in a number of
social spheres including sport, education and culture.
A full report on Neal & Massy’s Corporate Social Responsibility
activities is included in the Annual Report package.
CLoSING REMARKS
2012 was an excellent year for the Group. A new record was set for
the Group’s PBT from its Continuing Operations, as all Business Units
are well on their way towards implementing the Strategic Plan that
was created in 2011. The Group has become increasingly focused
on people, as it appreciates that our employees, managers and
executives are the key competitive advantage we enjoy that allows us
to be innovative and to deliver excellent customer service. To this end,
the Group continues to invest in executive development and training
for Graduates and Middle Management. We continue to improve
our Middle Management and Graduate Trainee programmes and will
introduce a MBA in Retail and Distribution in conjunction with the
Arthur Lok Jack Graduate School of Business in 2013. Furthermore,
a 360 Feedback process has been rolled out to all Senior Executives
and CEOs of our major subsidiaries to complement our Group-wide
performance appraisal and development planning process.
I wish to thank and acknowledge our over 9,000 employees
across the region. You are the key to the success of our companies.
Without your initiative, passion and dedication to serving customers
and clients, we could not be as successful as we are. We will continue
to strive to create a working environment that motivates and inspires
you to be the best “you”. We value your ideas and input and want
to make sure you are given opportunities to develop as a person
and as a professional while working with the Neal & Massy Group
of Companies.
17forward focused
I also wish to thank all our customers and clients for your continued
business with the Group. Our Customer Service Improvement efforts
should be reaching you. We are investing in processes, people and
plant to continuously improve our service to you and we value
your consistent feedback. You have our commitment to continue
to strive to meet and surpass your expectations. Customer Service
transformation is a difficult undertaking but we are putting in a
systematic process to achieve our objective. Please give us feedback
on our web site at www.neal-and-massy.com.
I also wish to thank and acknowledge the best group of executives
anyone could have the privilege of serving. The Neal & Massy Group
has an excellent cadre of leaders across our functions, Business
Units and territories. I wish to acknowledge their commitment and
leadership, which produce the success that the Group enjoys. I
welcome Nisha Dass and Curtis Tobal to our Executive Committee
and congratulate Frere Delmas and Everton Browne on their new
leadership roles in Barbados.
I am grateful to our Board of Directors, led by our Chairman,
Arthur Lok Jack, for their guidance and support. I especially thank
our three departing Directors: Brian Young, Geoffrey Cave and Sir
Allan Fields for support and partnership throughout their tenures
on the Neal & Massy Board. I welcome our new members to the
Board: Gary Voss, Patrick Hylton, Richard Young and David O’Brien,
our most recent Executive Director, replacing G. Anthony King who
has retired.
I must thank Anthony (Tony) King for his career and service to
the Neal & Massy Group of Companies. Tony spent 28 years of his
career with the Neal & Massy Group. Prior to his departure from
Neal & Massy in October 2004 to take up the appointment of Chief
Executive Officer of the Barbados Shipping & Trading Company
Limited (BS&T), he chaired Neal & Massy’s Eastern Caribbean Group
of Companies. After the take-over of BS&T in 2008 by Neal &
Massy, Tony became a Group Executive Vice President at the Neal
& Massy Group but also remained as BS&T’s CEO, co-ordinating the
integration of BS&T’s operations into the Group. With that process
substantially complete, he retired as an Executive of the Group during
2012. Tony continues to serve on the Neal & Massy Holdings Board,
now as a Non-Executive Director. I thank him for his partnership in
the integration process and his contributions to the leadership team
over the last four years.
I wish to especially thank our Shareholders for the faith and
confidence that you continue to demonstrate. We appreciate the
need to generate growth and a superior return on your capital. Rest
assured we continue to operate with your interest at the forefront
of our concerns, as we remain forward focused on the new vision
and strategy for the Group.
18 2012
CHIEF FINANCIAL OFFICERCHief finanCiaL OffiCer’s repOrt
PAuLA RAJKuMARSINGH
Executive vice President &
Chief financial officer
Financial Highlights
• GroupThirdPartyRevenueincreased7.6%from$8.5billionto
$9.1 billion
• ProfitBeforeTax(PBT)increasedby25.4%,from$640million
in 2011 to $802 million in 2012
• The losses fromDiscontinuedOperationswere $50million,
compared to $474 million in 2011
• EarningsPerShare(EPS)fromContinuingOperationswas$5.13,
compared to $4.17 in 2011.
• TotalEPSincreasedfrom$1.02to$4.87
• GroupDebtremainedat$1.4billion
• GroupCashincreasedby16%to$1.3billion
• Debt toShareholders’EquityRatio improved, from47.1% in
2011to43%in2012
• CurrentRatiocontinuedtoimproved,from1.49in2011to1.50
in 2012
Results overview
We continue to face a challenging economic environment in the
Caribbean. In Trinidad & Tobago the falling energy sector revenues
and the stagnant construction sector have negatively impacted our
business environment. The economies of Barbados and Jamaica also
continue to grapple with the effects of recession and stagnation in
the US and UK economies on which both islands are dependant
for tourism and remittance inflows. Consumers remained cautious
and discretionary spending declined in most territories in which we
operate. Despite this, Neal & Massy’s diversity has allowed us to
balance difficult years in one geography or industry, with successful
growth in others. In 2012 the PBT from Continuing Operations
crossed the $800 million mark, increasing to $802 million, 25.4
percent ahead of last year. Revenue from Continuing Operations
increased by 7.6 percent from $8.5 billion to $9.1 billion, and the
EPS from Continuing Operations increased by 23 percent from
$4.17 to $5.13.
This achievement resulted from an improvement in Business
Unit performance and non-recurrence of some of the previous
year’s expenses. In 2011, the Group incurred a number of one-off
19forward focused
CHIEF FINANCIAL OFFICERcharges including investment property write downs in Barbados,
and consulting costs for the strategy engagement exercise. None
of these expenses were repeated in 2012 and this assisted in the
overall profitability improvement from Continuing Operations.
Particluarly pleasing was the continuing excellent performance
in our operating companies in Guyana and in the Automotive &
Industrial Equipment Business Unit in Trinidad. The turnaround
of United Insurance has also contributed to the significant
growth. The Insurance operations struggled with soft market
conditions, changing regulations and closure of its International
business. However, there was an improvement in the underwriting
performance for the Caribbean operations, while the closure of
the international business impacted the results with losses of $61.2
million in 2012 versus $25 million in losses in 2011.
The Integrated Retail Business Unit closed the year with solid
trading results throughout the region, recording operating profits
of $271 million (exclusive of Guyana companies), compared to
$266 million in the previous year. The Information Technology and
Communications Business Unit also performed commendably, with
a 4 percent growth (excluding Guyana companies), in Operating
Profits in 2012.
The Other Investments Portfolio, with Operating Assets of
$1.5 billion, includes our investment properties in Trinidad and
Barbados and the Robert’s Manufacturing plant. The improvement
in the results in this portfolio, was mainly attributable to a good
performance by Roberts Manufacturing, as well as the non-
recurrence of one-off investment properties write-offs made in 2011.
Head office and other expenses decreased by $17 million, from
$165 million to $148 million in 2012.
The Chart below shows a comparison of the 2011 versus 2012
results and the Business Units’ impact on those results.
271
176
103 802
145
95054
26
102
73
(148)
(165)in 2011
Integrated Automotive Insurance Energy & ITC Guyana other Associates Sub-total Head office 2012 Retail & Industrial Industrial Group Investments Costs & PBT Equipment Gases Adjustments
Integrated Consumer Portfolio
Strategic InvestmentPortfolio
Guyana Group,Non-Strategic
Investments & Associates
2%
18%
0.2%4%
12%
52%34% 18% 10%
25%
212%
INCReASe 2011-2012 By %Expressed in Millions of Trinidad and Tobago dollars
20 2012
CHief finanCiaL OffiCer’s repOrt
Interest costs have fallen by 4 percent to $46 million. The interest
rate environment remained low throughout the year.
The taxation charge for the Group increased to $258 million,
compared to $195 million in 2011, and the effective tax rate
increased from 31 percent to 32 percent. The Tax charge from our
Associate Companies increased from $14 million to $43 million. In
addition, increased profits generated in the higher tax jurisdictions
of Guyana and Jamaica accounted for part of the increase in the
taxation charge.
The business environment remains challenging, but the Group
has a conservative business model which prudently manages risk
and we expect our performance to continue to improve in 2013.
STATEMENT of fINANCIAL PoSITIoN
The strength of the Statement of Financial Position was maintained
during the year, as evidenced by improvements in all key liquidity
ratios. Total Assets closed at $8.5 billion, an increase from $8.2
billion. Assets in our Continuing Operations are valued at $7.9 billion
and the assets of the disposal group classified as ‘Held for Sale’ are
valued at $591 million. The classification of the Hotel assets as ‘Held
for Sale’ remained, as two out of the four hotel properties remained
unsold at the year end. The Cash held in the Group increased 16
percent to $1.3 billion while our debt was $1.5 billion, 73 percent
of which is medium to long term debt.
Our Net Assets after non-controlling interest per Share was $35.01
as at end of financial year, compared to $31.20 in 2011 and our
leverage improved from 47.1 percent to 43 percent.
7,47
1*
731*
8,04
5*
730*
8,49
7
640
7,96
9
715
9,14
6
802
2008 20082009 20092011 20112010 20102012 2012
10000
8000
6000
4000
2000
0
900
800
700
600
500
400
300
200
100
0
REv
ENU
E TT
$M
PRo
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BEf
oR
E TA
X T
T$M
Increase 2011-2012
8%Increase 2011-2012
25%
FIVE YEAR REVIEW
* Restated for Continuing Operations * Restated for Continuing Operations
21forward focused
Our investing activities utilized $302 million in cash during 2012,
compared to $279 million in 2011. There were no new acquisitions
for the last two years and the major capital expenditure was
concentrated in the Integrated Retail Business Unit. The Integrated
Retail Business Unit invested in the purchase of its own regional
brand, Valrico, expanded its warehousing capacity in Trinidad and
Tobago and started the refurbishment of several of its supermarkets
in Trinidad and Tobago.
Our financial activities utilised $213 million in cash in 2012
compared to $182 million in 2011. There was an increase in
dividends paid to non-controlling interest.
The Group has adequate financial resources to support its
anticipated short and long-term capital obligations.
INTERNAL CoNTRoL AND ASSURANCE
The Group maintains an independent Internal Audit function with
a Group-wide mandate to monitor and provide assurance to the
Board’s Audit Committee and ultimately to the Board of Directors as
to the effectiveness of the internal controls systems. The department
is also mandated to regularly report its findings to the Board, via
the Audit Committee. The annual Internal Audit Plan, which is also
approved by the Board, applies a risk -based methodology to ensure
that the Group’s key risks are appropriately and regularly reviewed. In
addition, as part of the annual operating cycle, each business is also
required to review and report on legal liabilities, financial controls,
HSSE issues, business risks and post-implementation reviews are
done on all major capital investment expenditure.
1.40
27.6
4
1.40
28.6
4
1.29
31.2
0
1.26
31.0
9
1.50
35.0
1
2008 20082009 20092011 20112010 20102012 2012
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0
40
35
30
25
20
15
10
5
0DIv
IDEN
DS
PER
SH
AR
E TT
$.¢.
NET
ASS
ETS
PER
SH
AR
E TT
$.¢.
Increase 2011-2012
16%Increase 2011-2012
12%
FIVE YEAR REVIEW
22 2012
EXECUTIVE MANAGEMENT
eXeCutiVe COmmittee
Left to right: David Affonso, Group Senior Vice President & Executive Chairman, Distribution Line of Business; Earl
Boodasingh, Group Executive Vice President & Executive Chairman, Integrated Retail Business Unit; frere Delmas,
Group Senior Vice President & Executive Chairman, Retail Line of Business; Thomas Pantin, Group Senior Vice President
& Executive Chairman, Consumer Finance Line of Business; Angela Hamel-Smith, Group Human Resources Manager;
Gervase Warner, President & Group Chief Executive Officer; fenwick Reid, Group Senior Vice President & Executive
Chairman, ITC Business Unit; Linford Carrabon, Group Senior Vice President & Executive Chairman, Energy & Industrial
Gases Business Unit; Deo Persaud, Chief Executive Officer, Neal & Massy Guyana Group; Judith Bowen, Group Senior
Vice President & Senior Legal Counsel; Paula Rajkumarsingh, Group Executive Vice President & Chief Financial Officer;
David o’Brien, Group Senior Vice President & Executive Chairman, Automotive & Industrial Equipment Business Unit;
Wendy Kerry, Corporate Secretary & Legal Advisor
23forward focused
EXECUTIVE MANAGEMENT
24 2012
autOmOtiVe & industriaL equipment Business unit
Neal & Massy Automotive Ltd.
Tracmac engineering Limited
Pres-T-Con Group
Automotive Components Limited
Best Auto Limited
Tobago Services Limited
Master Serv Limited
City Motors (1986) Limited
DAvID O’BRIeN Group Senior vice President & Executive Chairman
1,53
9 164
24
1,91
3
195
25
2011 2011 20112012 2012 2012
2000
1500
1000
500
0
200
150
100
50
0
30
20
10
0
REv
ENU
E TT
$M
PRo
fIT
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oR
E TA
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T$M
*Ro
NA
%(PAT/AvERAGENETASSETS)
inCrease 2011-2012
24%inCrease 2011-2012
19%* rOna (return On net assets)
25forward focused
NEAL & MASSy AUToMoTIvE LTD. (NMAL) continued to pursue
further improvements in Customer Service at our three branches in
Trinidad, and Tobago Services Limited in the sister isle. “first on
CUstomer Service” (foCUS), our customer service philosophy was
developed and implemented with participation from every employee.
We introduced this year our new Customer Service vision statement,
“Driving you to love life”, as well as the “Men in White” - a team
of highly trained technicians who greet and analyse problems which
customers bring to our Morvant location. These new initiatives are
already positively impacting the overall customer experience and
the quality of the outcome.
Our National Car Rental and Alamo Rent-A-Car franchise was
successfully launched in April. Within the six months of opening
we have received hundreds of reservations. We are also pursuing
expansion of these brands in several other countries and will be
opening five additional locations in 2013.
Tracmac is proud to have hosted PACDA 2012, the annual
conference of the Pan American Caterpillar Dealers Association
in Trinidad. This conference brought together senior Caterpillar
executives and dealer principals of all the Caterpillar dealerships in
South and Central America as well as the Caribbean. The conference
blended strategic business sessions with a social aspect, where
Trinidad & Tobago was showcased in all its glory. In all aspects, it
was a great success for our Group and our country.
The Automotive & Industrial Equipment Business Unit continues
to support the communities in which we operate. Neal & Massy
Calendonia AIA Pro League Football Club had a highly successful
year; Tracmac’s CSR Team continues to give time and funding to
the children of the Jaya Lakshmi Home; and NMAL is helping to
renovate the basketball/small goal court in Mon Repos, Morvant.
In 2012 the Business Unit achieved growth in revenue and
profitability, 24 percent and 19 percent respectively. The Business
Unit also managed to reduce debt and interest costs. Working capital
has improved and our balance sheet is strong.
At Neal & Massy Automotive Ltd. (NMAL), the Hyundai Elantra,
Hyundai Tucson and Nissan Navara models played an important
role in our sales success. Awards were received from Hyundai for
Most Improved Market Share Growth in the Latin American region.
Nissan also grew its market share despite being the leader. Improving
customer service continues to be our major priority. Further
showroom and customer service facility improvements are planned
for 2013. The parts department exhibited record revenue levels
in 2012, as our customer service initiatives have led to increased
throughput in our service department and a greater propensity for
purchasing genuine parts from NMAL. Recently a new feature of
our phone system, called Customer Touch was activated. This will
allow automated text, email and voice messages to be sent updating
customers about their vehicle that is being serviced. The long-term
lease rental fleet also grew by approximately 10 percent.
Tracmac Engineering Limited’s (Tracmac) revenue increased
by 43 percent due to infrastructure projects in construction which
started in 2012. The margins on these sales are lower than usual in
the current competitive market. Tracmac also improved its working
capital margins significantly in 2012. In 2012, Tracmac also initiated
the implementation of the Group’s Customer Service Management
System. We have formed a strategic alliance with Louisiana
Machinery and we seconded from them a Senior Executive in After
Sales to lend support to our local operations for at least one year.
The Pres-T-Con Group (Pres-T-Con, Rabco and Pres-T-
Con Equipment) managed to marginally improve its financial
performance in 2012. Many construction projects, which were
scheduled to be on-stream this year, have been deferred. At this
time however, Pres-T-Con has several contracts in hand as many
projects have resumed. We are expecting that 2013 will show
greater improvement.
Automotive Components Limited (ACL) suffered some
reductions in profitability for 2012. ACL achieved marginal sales
growth in the local market due to competition from imported
batteries, however declining sales in the export markets negatively
impacted our expected results. Our plans for 2013 are to recover our
market share in both the local and export markets with an increase
in our sales force and additional retail presence.
Best Auto Limited has been focused on making Customer
Service improvement a top priority. The consistent supply of its most
popular models continues to be an area of concern but the Jetta
has grown in popularity in the market, with a moderate increase in
sales and positive customer reviews. The profitability of Best Auto
has improved as expected.
DAvID O’BRIeN Group Senior vice President & Executive Chairman
26 2012
Tobago Services Limited (TSL) continues to improve in financial
performance and remains the market leader in Tobago. We have
completed renovations of our facilities which will be opened during
December 2012. Sale of Caterpillar parts and Castrol lubricants
continue to contribute to the overall success of TSL.
Master Serv Limited (Master Serv) has improved overall sales
and profitability. Our aftermarket parts offering continues to be a
success. Marketing strategies developed by ACL are expected to
contribute to the battery and tyre sales in 2013.
City Motors (1986) Limited (City Motors) is now fully focused
on maintenance and repairs and we have been able to do so
profitably. Pricing of Peugeot cars remains an area of concern for
our local market.
A review on the performance of Associated Industries Limited
(AINLIM) discussed on page 47 of this report, together with the
other companies in the Guyana group.
autOmOtiVe & industriaL equipment Business unit
In october 2012, Tracmac Engineering hosted the annual conference
of the Pan American Caterpillar Dealers Association (PACDA). Through
the PACDA Conference, Tracmac positioned itself as an established,
solid partner of Caterpillar, created business opportunities, locally and
abroad, through networking with other dealers and major players in
their respective construction sectors and showcased Trinidad and Tobago
as a vibrant and diverse place to do business. from left to right in photo:
Ed Goodrich - vice President of Cat financial; William J. Rohner - vice
President with responsibility for the Electric Power Division; Stuart L.
Levenick – Group President Customer & Dealer Support; Mary Bell - vice
President for the Building Construction Products Division
27forward focused
energY & industriaL gases Business unit
Industrial Gases Limited
Trintogas Carbonics Limited
NM Petrochemicals Services Limited
Gas Products Limited
Caribbean Industrial Gases unlimited
Neal & Massy energy Limited
Neal & Massy Wood Group
Neal & Massy energy Services Limited
NM Insertech (Caribbean) Limited
NM Supply Chain Integrators Limited
Neal & Massy energy Resources Limited
LINFORD CARRABON Group Senior vice President & Executive Chairman
758
202 34
790
211
27
2011 2011 20112012 2012 2012
800
600
400
200
0
250
200
150
100
50
0
40
30
20
10
0
REv
ENU
E TT
$M
PRo
fIT
BEf
oR
E TA
X T
T$M
*Ro
NA
%(PAT/AvERAGENETASSETS)
inCrease 2011-2012
4%inCrease 2011-2012
5%* rOna (return On net assets)
28 2012
THE ENERGy AND INDUSTRIAL GASES BUSINESS UNIT performed
reasonably well, particularly when, taking into account the relatively
low level of new activity in the oil, gas and petrochemical sectors.
The Business Unit continues to be a leader in HSSE performance
with a number of significant milestones once again being achieved
in member companies. Business Development activities continued
to be given priority, and investment decisions with respect to two
major projects are expected to be taken in the 2013 financial year.
Industrial Gases Limited (IGL) had another successful year,
despite the continued general slowdown in the economy, which
negatively impacted the demand for some of its products. A long-
term contract for the supply of nitrogen was signed with Petrotrin.
During this year, the drive intensified to become customer-focused,
to increase export business, and to pursue new business applications.
Trintogas Carbonics Limited (TGCL) also had a successful year
as a result of increased product demand.
NM Petrochemicals Services Limited (NMPSL) had an excellent
year, exceeding budgeted expectations as a result of planned and
unplanned catalyst change-outs at several methanol and ammonia
plants in Point Lisas.
Gas Products Limited (GPL) produced favourable operating
and financial results despite the prevailing weak macro-economic
conditions. During the year, significant progress was made in
The top 10 subcontractor companies, who contributed to the achievement
of Neal & Massy Wood Group’s 10 million man hours milestone were
officially recognized at the company’s end of year celebration on December
1, 2012, in a formal safety award ceremony.
implementing the Customer Service Management System, and key
talent-development programmes were executed. In an effort to extract
greater value from the procurement chain, a major capital investment
was made to expand storage capacity. Further growth was realized in
the volume shipped to the Non-Cooking Applications (NCA) segment.
The company had another excellent safety performance within its
operations in the 2012 financial year. However, in November 2012 a
Gas Pro tanker wagon, contracted to an external party to transport
Liquefied Petroleum Gas (LPG), was involved in a tragic accident, in
which a female pedestrian was fatally injured. The incident is being
thoroughly investigated and based on findings from the investigations,
Gas Pro will make any necessary changes to ensure that this does not
happen again.
Caribbean Industrial Gases (CIG) successfully completed a
major plant overhaul during the second quarter. The plant, however,
operated below capacity for the rest of the financial year as the
client’s plant experienced technical problems. The plant is expected
to return to full production early in the 2013 financial year.
Neal & Massy Wood Group Limited (NMWG) continued to be
recognised by its clients for excellent safety performance. This year,
the company achieved over 10 million man-hours without a Lost-
Time Incident, and obtained Safe To Work (STOW) re-certification,
after having been the first company to achieve such certification
energY & industriaL gases Business unit
29forward focused
two years ago. Financial performance was above expectations. The
company recently signed a new contract for the maintenance of
bpTT’s onshore and offshore assets. Having grown its construction
management scope, the company is now able to perform all activities
associated with brown-field modifications and maintenance.
Neal & Massy Energy Services Limited (NMESL) experienced
another difficult year, particularly in the Services side of the business
where a number of projects proved to be challenging. The products
area showed a recovery from previous years, reflective of planned
and unplanned plant shutdowns that occured throughout the year
and the need to change out equipment during those shutdowns.
NMESL was successful in obtaining STOW certification, an industry
standard for Health and Safety management. NMESL and NMICL
collectively crossed the threshold of 3.5 million man-hours worked
without the occurrence of a Lost-Time incident.
NM Insertech (Caribbean) Limited (NMICL) had a successful
year in spite of a lack of projects coming from the energy industry.
A large number of plant turnarounds during the year provided
opportunities for the supply of technical labour. Technical Sales also
had breakthroughs into areas of instrumentation for replacement
of old equipment on petrochemicals plants. NMICL was successful
in obtaining STOW certification. NMICL was involved, as one of a
number of pilot companies, with the Energy Industry Competency
Development Initiative, to implement the certification of technical
skills for its workforce.
NM Supply Chain Integrators (NMSCI) had a disappointing year.
The company was unable to attract new clients for its purchasing
and warehouse management services. Additionally, an accounting
adjustment resulted in the company posting a small loss.
Neal & Massy Energy Resources Limited (NMERL) had a very
successful year as the company benefitted from favourable oil prices.
Effective cost management continued as the company sought to
streamline its activities, resulting in delivery of a positive net profit for
the year. During the year, a milestone of one million man-hours was
achieved without a Lost-Time Incident. This, in fact, represents more
than ten years of injury-free operations. The high-risk, low-production,
Point Fortin Lease was successfully sold and the enhanced oil recovery
project in Moruga is well on the way, and is expected to yield positive
results in about one year.
A review on the performance of Demerara Oxygen Company Ltd.
(DOCOL) is discussed on page 47 of this report together with the
other companies in the Guyana group.
30 2012
integrated retaiL Business unit
eARL BOODASINGH Group Executive vice President & Executive Chairman
4,83
5
303
18
5,11
5 312
19
2011 2011 20112012 2012 2012
6000
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4000
3000
2000
1000
0
400
300
200
100
0
20
15
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5
0
REv
ENU
E TT
$M
PRo
fIT
BEf
oR
E TA
X T
T$M
*Ro
NA
%(PAT/AvERAGENETASSETS)
inCrease 2011-2012
6%inCrease 2011-2012
3%* rOna (return On net assets)
31forward focused
In the 2011 Annual Report, our President and Group CEO announced
the formation of the Integrated Retail Business Unit (BU). This Unit
coalesced our traditionally strong retail and distribution companies
with our rapidly developing consumer finance portfolio.
To execute its mandate, a flexible matrix organisation structure
has been adopted. This involved the establishment of a Corporate
Shared Services Unit, which brought more focus on critical areas
such as strategy, business excellence, procurement, information
technology, and real estate.
Although still in the early stages of the integration process, this
BU was able to develop and deliver a plan for success, spanning
several geographies and industries, which will be the foundation for
a formidable business model, certain to significantly contribute to
the Neal & Massy’s five-year growth aspirations. An overview of the
2012 performance of the three Lines of Business within the BU has
been provided in the subsequent sections by the respective Executive
Chairmen responsible for Retailing, Distribution and Logistics, and
Consumer Finance.
on Wednesday September 12, 2012 the newly refurbished, Hi-Lo Maraval
store was re-opened for business. Improvements to the store include
increased retail floor space; an expanded bakery; the installation of ultra
modern dry display pods for produce; a rebranded and colour coded
alcohol aisle; polished concrete flooring and a new light weight, energy
efficient insulated ceiling system, which will help to reduce energy costs.
32 2012
THE RETAIL LINE of BUSINESS currently operates over 40 stores in
four southern Caribbean markets—Trinidad and Tobago, Barbados,
St Lucia and St Vincent. Consistent with the Integrated Retail
strategy, the retail arm of Dacosta Mannings, our home specialist
operation in Barbados, was carved out and integrated into the
Retail Line of Business (LOB). As such the Retail LOB now extends
beyond food retail. This move has set the stage for more integrated
thinking among food, non-food and consumer finance, and will be
the springboard for future expansion of a new business model in
our core markets, and beyond.
The spin-off effect of a prolonged global economic slowdown
continues to hamper traditional retail formats. Our businesses have
not escaped the effects of this phenomenon. Although most of our
banners continue to maintain leading positions in their respective
markets, weak consumer demand continues to constrain top-line
growth.
Despite this, our business in Trinidad and Tobago performed
extremely well, and we expect this momentum to continue into
2013. In Barbados however, where economic activity has been
depressed and competition intensifying, the results have not been
as favourable. Our associate interest in the Eastern Caribbean,
Gablewoods Supermart Ltd., surpassed budgeted expectations in St
Lucia, but is facing some challenges in St Vincent, where we recently
expanded.
In general, the Retail Line of Business performed satisfactorily for
the year, posting modest year-on-year growth in revenue and profit.
We continue to focus on implementing the five-year strategic plan
developed in 2011 and this coming year will involve greater focus
on an integrated model which will not only transform our business
for sustainable growth, but also add greater value for our customers.
New site development in core markets, and regional expansion
within CARICOM remain important strategic themes within the BU.
Thus, we will continue to aggressively pursue these opportunities in
order to achieve our five-year aspiration.
TDL Retail (Hi-Lo food Stores, LB’s, and food Master) had
another successful year, experiencing commendable growth in both
sales and customer traffic. The past year saw continued focus on our
customers, through the further roll-out of Neal & Massy’s Customer
Service Management System.
Through our store modernisation programme, we continue
to offer customers a more exciting and pleasurable shopping
experience. The new Maraval store has delivered exactly that. After
the inconvenience of being closed for eight weeks, our customers
responded positively and were overwhelmingly impressed by the
new store experience.
Fiscal 2012 also saw renewed efforts in marketing and
promotional activity, which offered significant value to our customers
who responded positively to the various initiatives. We intend to
FReRe DeLMAS Group Senior vice President & Executive Chairman
integrated retaiL: retaiL Line Of Business
Hi-Lo Food Stores
Super Centre Limited
Sunset Crest Holdings Limited
DacostaMannings Retail Limited
Gablewoods Supermart Limited
33forward focused
continue creating excitement from our various value propositions
well into the foreseeable future, and hope in the coming year to
break ground for our first super combination store format in Trinidad
and Tobago.
The two Alternative Format stores, LB’s and food Master, have
been rebranded under the new banner “Diskomart”. Both stores
were closed for two days to facilitate the rebranding exercise, and
we have adjusted the variety and aligned the offering to cater to
value-seeking consumer segments.
Super Centre Limited (Super Centre) achieved moderate
results, despite the challenging economic conditions in the Barbados
market. Super Centre remains the market leader in the food
retail industry, but has come under increasing competition from
discounters, as consumers have become more price conscious in
the weakened economy. The company was unable to achieve the
anticipated top-line growth. Projected gross profit and net income
consequently fell short. During the year, a strategic decision was
taken to amalgamate the operations of Peronne Manufacturing
into Super Centre, implementation of which was completed at the
end of June 2012. One-off costs associated with the consolidation
further eroded profits for Super Centre, but the amalgamation will
produce savings for Super Centre in the future.
As mentioned last year, Super Centre established a new
centralised produce facility, which resulted in a major collaboration
with the cruise ship industry. Sales to this sector continue to be
extremely buoyant, and it is expected that, by comparison with
2012, the 2013 tourist season will be more fruitful for the company.
Stronger sales growth and greater expense control are key elements
of the 2013 Operating Plan. We will continue to price aggressively
in core categories to increase customer traffic, and to encourage
spending by providing greater value, particularly on the perimeter
(i.e. fresh food offerings). At the same time, the optimisation of
operating procedures is on the way to improve management of
operational cost, and to increase productivity with a more efficient
business model. The redevelopment of Sunset Crest is now in the
design phase, and we have a signed agreement to purchase land
at Kendal Hill to develop a new super combination store model.
Knights Pharmacies (Knights), the retail pharmacy unit of Super
Centre, performed creditably despite the sales decline occasioned
by a change in Government policy with regard to the Barbados
Drug Service. The Knights Health Advantage Club continues to be
promoted, and it is notably an important strategic pillar of growth
for Knights, by offering its patients value-added health care services.
The club now has approximately 1,700 members and several more
are expected to join in the coming financial year.
DacostaMannings Retail Limited (DMR) was split out of
Dacosta Mannings Inc. in 2012. The retail business was incorporated
into its own entity DMR, the distribution business lines were
incorporated into another entity – Dacosta Distribution Limited and
real estate properties remained with Dacosta Mannings Inc., which
was eventually amalgamated with SP Musson. DMR realised some
revenue growth over the past year due to the introduction of new
ranges of furniture and consumer electronics, as well as a new
consumer credit vehicle (Max Credit), which drew an encouraging
response from our customers. However, these gains were eroded
primarily by the increased costs related to the discontinuation of
hardware inventory, and one-off finance costs related to the original
Dacosta Mannings Inc. split, officially completed early in the financial
year.
A transformative business plan for further integration into the
Retail LOB has been put in place and is expected to bear fruit in the
coming financial year.
Gablewoods Supermart Limited (Associate Company) is the
parent of the operating company Consolidated Foods Limited (CFL),
which currently has nine supermarkets (Super J’s) and one warehouse
club (Mega J) in St Lucia, as well as two supermarkets (Super J) and
one Save-A-Lot franchise discounter in St Vincent. CFL in St Lucia
continues to show strong growth in sales and profits, but has been
experiencing some challenges with the operations in St Vincent.
CFL is looking forward to another year of growth in 2013, and the
company will continue to add Shareholder Value to the Group in
the Eastern Caribbean.
34 2012
In 2012, THE DISTRIBUTIoN & LoGISTICS LINE of BUSINESS
had a successful year, in which significant progress was made
toward laying a foundation for future growth. The alignment of
the companies along a “vertical” line of business has facilitated the
identification and transfer of best practices between companies. The
alignment has also accelerated the pace at which we can realise
synergies, as we build a truly regional organisation. In furtherance
of this objective, we have revisited and modified our commercial
and go-to-market structures as necessary to ensure that all major
growth initiatives are adequately resourced.
Despite a slowdown in the Trinidad and Tobago economy,
Marketing & Distribution (M&D) exceeded both its revenue and
its profit targets. The Pharmaceutical division, in particular, with a
new focus on the health care segments of the industry, delivered
exceptional sales growth. The Food and General Merchandise
division also performed creditably and, continuing on its path toward
building critical mass, acquired some new agencies, including Pine
Hill Dairy’s portfolio.
In preparation for future expansion, M&D acquired a five-acre
property, formerly owned by Consolidated Appliances Limited,
which is strategically located on the same industrial estate in Macoya
as M&D’s main complex. The property, comprising 126,000 square
feet of warehouse space and an office block, has been completely
refurbished and outfitted. It will eventually house all the company’s
dry warehousing as well as the marketing and sales offices for
the Geddes Grant operations. M&D also piloted an automated
replenishment system, which is expected to improve efficiency
and cost in serving larger retail customers. During the year, M&D
was once again recognised for excellence by several international
suppliers. It continues to build strong, committed relationships with
its principals and its customers.
In Barbados, SBI Distribution Inc. (SBI) has started its journey
towards ISO certification. We have established an alternate
distribution operation in Dacosta Distribution, which will work in
tandem with SBI Distribution to grow the Group’s business there. SBI
showed strong revenue growth over the previous year mainly due
to the expansion of the range of Pine Hill Dairy products, which the
company now co-distributes. A significant improvement in working
capital management and double-digit growth in the company’s
down-trade performance were also realised, as management moved
to contain cost, while simultaneously extracting any additional
growth. In the end, however, these efforts proved insufficient
to offset competitive margin pressure, which together with
increased sales of lower-margin commodities, resulted in company
performance marginally below that of the previous year.
integrated retaiL: distriButiOn Line Of Business
DAvID AFFONSO Group Senior vice President & Executive Chairman
Marketing & Distribution
SBI Distribution Inc.
Dacosta Distribution Limited
Knights Limited (Rainbow Paper Products)
NMH Trading & Distribution (Jamaica) Limited
Windsor Laboratories Limited
Neal & Massy Inc.
Melville Shipping Limited
Huggins Shipping & Customs Brokerage Limited
Booth Steamship Company (Barbados) Limited
35forward focused
Dacosta Distribution Limited (DDL) had a satisfactory year.
The Auto & Industrial division performed creditably despite sales
being affected by reduction in customer demand and in construction
activity, and by the collapse of the sugar industry in Barbados.
Toward the end of the year, the company secured the agency for
Turbo Batteries from Automotive Components Limited in Trinidad
and Tobago. The first shipment is expected to arrive early in the
new financial year. The Texgas division transitioned smoothly to
Rubigas, and completed significant upgrades to its filling plant and
cylinder fleet. The Shipping division had an improved year overall
with gains in the first half of the year. The second half saw huge
declines in volumes, which translated into much reduced income
from commissions.
During the year, work was done to establish an alternative food
and general merchandise distribution business in DDL. This operation
commenced business in October 2012. A nucleus of smaller brands
currently represented by SBI has been placed under this new banner.
Several suppliers have expressed an interest in having their brand
represented within the new operation. This division will provide
the avenue to further expand its distribution business in Barbados,
and to solidify its reputation as the partner of choice for principals
seeking representation for their brands on the island.
Knights Limited’s (trading as Rainbow Paper Products) results
improved slightly over the previous year, despite stiff competition
from international suppliers of popular brands of tissue paper
products. The food packaging division of this business had another
good year.
Our Jamaica operations NMH Trading & Distribution (Jamaica)
Limited (HD Hopwood) showed significant improvement in the
second half of the year, as a new and more experienced management
team, appointed in the second half of the year, has refocused the
company and set it on an aggressive path toward growth. The
company achieved ISO 9001:2008 certification in July, and secured
a number of new significant agencies toward the end of the year,
developments that will serve to position it favourably for the year
ahead. HD Hopwood’s results were negatively impacted by the slow
economy in Jamaica and uncertainty surrounding the stalled IMF
agreement, which resulted in an overall contraction in spending.
As with many other Caribbean territories, this trend is expected to
continue, as consumers adjust spending habits because of reduced
disposable income.
The operations of Windsor Laboratories were closed at the
end of the financial year, as its major principal, KAO Brands, opted
to supply Caribbean markets from its overseas plants, rather than
continue manufacturing a limited product range in Jamaica. With
the loss of this business, the Windsor operation was no longer viable,
and the decision was taken to close it. HD Hopwood has, however,
retained representation in Jamaica for an expanded range of Jergens
products.
Operating out of Miami, Florida, Neal & Massy Inc. (NMI)
enjoyed further growth during the financial year. Key to this was the
acquisition of the Valrico brand in May 2012, as well as a substantial
increase in sales of Sharp electronics. The acquisition of Valrico has
furthered NMI’s strategic expansion of its customer base and the
markets it serves throughout the region. The company doubled its
customer base during the year, and is now doing business in almost
every market in the Caribbean region.
Melville Shipping Limited (MSL) has responded positively
to the challenges and evolving changes in the global and local
shipping industry. The company achieved its financial targets and
has sustained growth in key sectors, while expanding its range of
services. MSL has also maintained its ISO 9001:2008 certification.
It continues to improve on customer service, thereby maintaining
its industry-leading position.
Huggins Shipping & Customs Brokerage Limited (Huggins),
in another successful year, again exceeded its financial targets. ISO
9001:2008 standards have also been maintained in keeping with the
company’s strong customer and quality management focus. During
the year The Customs & Excise Asycuda World was introduced,
bringing with it improved efficiencies that positively impacted our
customer base, but also changes which will, no doubt, require the
company to reinvent itself in years to come. Huggins continues to
work on expanding the range of services offered to customers, to
sustain growth, as well as to defend its position as the total logistics
provider of choice in Trinidad and Tobago.
Booth Steamship Company (Barbados) Limited (Booth
Steamship) experienced some challenges this year arising from over
capacity in the industry and lower volumes into Barbados, fuelled by
integrated retaiL: distriButiOn Line Of Business
36 2012
integrated retaiL: distriButiOn Line Of Business
fierce price-based competition among shipping lines. Despite this,
the company was able to grow its business and improve its share of
the inbound business into the island. Booth Steamship continues
to expose its staff to various forms of training, so that it can stay
abreast of changes in the industry, and thus remain relevant to its
principals and its growing customer base.
A review on the performance of Trading & Distribution Inc. in
Guyana is discussed on page 47 of this report, together with the
other companies in the Guyana group.
Marketing & Distribution acquired a five-acre property this year at the
Macoya estate. The new property adds 126,000 square feet to M&D’s
warehousing capacity, and has been completely refurbished and outfitted.
It will eventually house all the company’s dry warehousing as well as the
marketing and sales offices for the Geddes Grant operations.
37forward focused
THE CoNSUMER fINANCE LINE of BUSINESS was formalised
following completion of the Group’s five-year strategic plan in
October 2011. The focus for the year was to build a more cohesive
unit, together with a robust platform on which to grow our
portfolio of finance products. Specific focus and attention are
being placed on our revolving credit portfolio in Barbados, where
we have a significant penetration. Consumer finance, including
loyalty programmes, is the linchpin for the Integrated Retail Business
Unit. We continue to develop our capabilities that will enhance the
offering to both our existing and growing customer base.
General finance Corporation Limited (GfC), our financial
services company in Trinidad and Tobago, experienced a marginal
increase in new business volumes following four years of steady
decline. To address the challenge of a shrinking loan portfolio, GFC
sought to increase the penetration of financing motor vehicles sold
by Neal & Massy Automotive Ltd., an effort which began to bear
fruit, particularly in the latter half of 2012.
Our cost of funds continues to reduce in line with market
conditions. The company’s prudent approach to funding
requirements resulted in a further reduction of the Fixed Deposit
portfolio, and consequently interest costs. The level of delinquency,
trending lower than industry standards, improved over last year.
We wish to remember and pay tribute to Vishnu Tewari, a long-
standing Chief Executive Officer of GFC, who passed away suddenly
in June 2012. Vishnu’s leadership was an integral part of GFC’s
turnaround and success.
N&M Remittance Services Limited (NMRSL), which operates
the MoneyGram money transfer service in Trinidad and Tobago,
continued to experience increases in transaction volumes compared
to the previous year. This growth was achieved despite a slowdown
in the US economy, the main source market for remittances.
In fiscal 2012, NMRSL was awarded the “Top Send Agent
2011” by MoneyGram International, in recognition of its excellent
achievement and outstanding business growth. Operating expenses
have been maintained at the previous year’s levels, and this has also
contributed to improved results. A strategic marketing plan has
been implemented to drive growth in the upcoming year, and we
are proud to mention that over the past six months, the number of
operating agents has increased by about 50 percent.
Magna Rewards Inc. (Magna) is our loyalty services company
operating a coalition programme in six countries, with 1.35 million
customers within the Caribbean. Magna once again performed
above expectations on a consolidated basis. The largest growth
market for 2012 was in Jamaica, due to strong organic growth
THOMAS PANTIN Group Senior vice President & Executive Chairman
General Finance Corporation Limited
N&M Remittance Services Limited
Magna Rewards Inc
Medicard Limited
integrated retaiL: COnsumer finanCe Line Of Business
38 2012
N&M Remittance Services Limited increased the size of its network with
the addition of a MoneyGram branch at the newly-launched Diskomart
in Arouca. The new branch will tap into a new market segment at the
high-traffic location in Arouca.
by its largest customers as well as the addition of new partners
entering the programme. The Trinidad and Tobago operations
grew substantially over the previous year due to additional loyalty
processing opportunities set up early in the year. Barbados continues
to show moderate growth in a mature loyalty market, particularly
where, the retail sector has experienced anaemic growth.
During the year, a decision was taken to exit the Magna Eastern
Caribbean markets where sufficient critical mass does not exist to
sustain our businesses. However, there are still some residual points
to be awarded to Magna cardholders, and we expect to fully exit
by the end of fiscal 2013.
Medicard Limited (Medicard) is the issuer of a combination
discount card offering both medical and retail discounts from
merchants within Trinidad and Tobago. The company performed
creditably for the year and enjoyed steady growth in its Discount
Provider Network, featuring 260 merchants nationwide with a
cardholder base of approximately 63,000 members. In 2012,
Medicard has maintained its major corporate partnerships and
secured a new partnership agreement with Sagicor General. To
sustain growth and build on its existing product to ensure the
company’s continued success, management has actively pursued
various measures for card conversion.
A review on the performance of NM Services Limited in Guyana
is discussed on page 47 of this report, together with the other
companies in the Guyana group.
integrated retaiL: COnsumer finanCe Line Of Business insuranCe Business unit
39forward focused
united Insurance Company Limited
insuranCe Business unit
288
(24)
(8)
260 26
4
2011 2011 20112012 2012 2012
300
200
100
0
30
20
10
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-20
-30
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deCrease 2011-2012
10%inCrease 2011-2012
208%* rOna (return On net assets)
e. GeRvASe WARNeR President, Group Chief Executive officer and Executive Chairman
40 2012
UNITED INSURANCE CoMPANy LIMITED’s (United) financial
performance improved significantly in 2012 mainly due to the
performance of its Caribbean Direct Insurance business. The absence
of any catastrophes for the year (compared to 2011, when the
organization was impacted by claims from three hurricanes) and
the improved loss experienced in the Motor and Accident lines
of business propelled a reversal of fortunes in Caribbean Direct
business.
In 2012, the Board of Directors of United made the decision
to discontinue the organisation’s involvement in the international
Inward Reinsurance line of business, to allow United to focus on
increasing its ability to deliver sustainable, profitable growth from
the Caribbean Direct business. United is in the process of run-off
from all sources of the inward business. The losses in that portfolio
and the one-off extraordinary expenses associated with terminating
contracts and closing operations led to a significant loss in this area of
the business in 2012. Nonetheless, United contributed a respectable
$26.4 million in Operating Profit to the Group’s bottom line.
Despite incurring a loss in 2011, United successfully re-affirmed its
AM Best A- (Excellent) rating in July 2012 for the eighth consecutive
year. Re-affirmation was largely based on the financial strength of
its parent company, the decision to exit the Inward Reinsurance
United Insurance improved its accessibility to its customer base by adding
a branch on the West Coast of Barbados. The new location is more
convenient for customers on the West Coast, who can now use the branch’s
videoconferencing technology to “meet” with underwriters at its Lower
Broad Street office. Clients can receive sound advice, arrange new policies,
pay their premiums, request quotes and submit claims without having to
travel to the company’s Bridgetown office.
business and its ability to secure high quality reinsurance support
for its Caribbean Direct insurance book.
United’s management team continued to focus on intimately
understanding its business across the Region and on implementing
actions tabled from a detailed review of its Caribbean Direct business,
including: (1) Creation of a standardized model for managing the
governance and performance of branches and agencies; (2) Review
of marketing and channel management initiatives; (3) Development
of an appropriate business model for our operations in Curacao;
and (4) Development of specific growth strategies for key markets
including the introduction of products and channels which not
only meet our customers’ needs, but which also inspire and amaze
them. The introduction of an insurance Kiosk at the Sunset Crest
Mall in Barbados which, using video conferencing technology to
allow customers to do business directly with the Head Office in
Bridgetown, is only the beginning.
While the company is pleased with the turnaround in its
financial performance, it recognises that there is still a need for
improvement to take its performance to a new level. Towards this
end, the company is improving its internal business processes and
pursuing increased use of technology. The company has substantially
completed the implementation of new General Ledger Accounting
insuranCe Business unit
41forward focused
software and has now developed a Request for Proposal for a new
Insurance Administration Software. United will also increase its
marketing activities to improve its understanding of its existing and
potential clients and to establish more meaningful connections with
its customers, agents and brokers.
The company has also taken substantial steps to improve its
governance, with the re-introduction of an Audit and Compliance
Committee and the appointment of an Internal Auditor and a
Compliance Officer. The company also formed a Re-insurance
Committee to provide oversight to this critical area of risk for the
company. These two new committees, along with the Investment
Committee have strengthened the oversight of the company’s
activities and will put the company in a strong position to meet the
challenges associated with increased regulation.
United will continue to support the communities in which it
operates. 2013 will see the company continue its support of sports
through funding provided to Under 19 Cricket in the OECS, Golf,
Horse-Racing and Tennis in Barbados, Sailing in Grenada and Baseball
in the Bahamas, just to name a few. An increased focus on the
support of charitable organizations and their causes throughout the
region will also be one of the key objectives of its corporate social
responsibility plan.
42 2012
infOrmatiOn teCHnOLOgY & COmmuniCatiOns Business unit
Illuminat (Trinidad & Tobago) Limited
Pereira & Company Limited
Three Sixty Communications Limited
Illuminat (Barbados) Limited
Illuminat (Jamaica) Limited
Illuminat (Antigua) Limited
FeNWICK ReID Group Senior vice President & Executive Chairman
572
75
29
551 79 30
2011 2011 20112012 2012 2012
600
500
400
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4%inCrease 2011-2012
5%* rOna (return On net assets)
43forward focused
THE INfoRMATIoN TECHNoLoGy & CoMMUNICATIoNS
(ITC) BUSINESS UNIT closed its financial year exceeding its prior
year budgeted Profit Before Tax (PBT), Shareholder Value Added
(SVA), and Free Cash Flow (FCF) targets. This was achieved despite
continued challenges in the Eastern Caribbean and Jamaican
economies.
The ITC Business Unit is focused on achieving its long-term
growth ambitions through the development of a number of new
services-related initiatives in the Caribbean. The Unit is also exploring
potential acquisition targets, in Latin America that are providers
of Imaging and Printing (IPS) and Information Technology and
Communications (ITC) solutions. One of the ITC Business Unit’s
newest initiatives is the establishment of a Credit Bureau in Jamaica
(CNM-CAL), a joint venture with CRIF, a leading provider of credit
solutions and services.
The ITC Business Unit has also made strides in its efforts to
improve its Health, Safety, Security and Environmental (HSSE)
standards in the region. Barbados and Jamaica operations made
advances in implementing their HSSE Management Systems. The
companies in Trinidad and Tobago are continuing to meet their
HSSE targets. All the Trinidad and Tobago companies are now Safe
To Work (STOW)-certified. Illuminat (Trinidad & Tobago) achieved
a one-year certification, and Pereira & Company Limited and 360
Communications Limited achieved two-year certification.
Illuminat (Trinidad & Tobago) Limited (ITTL), despite significant
reductions in Government spending, exceeded its budgeted Profit,
SVA and FCF targets, and previous year’s performance. This was
achieved through the company’s continued focus on growing its
recurrent revenue base and on delivering to customers a diverse
mix of transactional, managed and professional services.
The company also made strides in improving its service quality,
and was recently awarded “Service Provider of the Year” by the
Trinidad and Tobago Coalition of Services Industries (TTCSI). The ITTL
project management services unit has also been approved by the
global standards-setting body, PMI (Project Management Institute),
as a Global Registered Education Provider. In the coming year, ITTL
will continue to focus on delivering more transaction-based and
recurring-revenue services, as well as delivering new cloud-based
services in areas where it is currently strong. In addition, it will
continue to develop its footprint for communications services across
the Caribbean.
Pereira & Company Limited (Pereira) exceeded its budgeted
Profit, SVA ad FCF targets, based on creditable performances of the
Image and Print business and strong performance in its Office Interior
business. Despite significant reductions in construction opportunities,
the Company met its target through stringent expense management.
The company continues to exceed its customer satisfaction
targets, and to improve its quality assurance programme metrics.
The company was also named Client of the Year in the medium
company category by Leadership Management International Inc
(LMI), an international leadership development group.
In the coming year, Pereira will continue to focus on its managed
print service portfolio, while expanding its Ricoh business across the
Caribbean and into selected Latin American countries, through the
establishment of new operations and acquisitions.
Three Sixty Communications Limited (Three Sixty) exceeded
its budgetary targets in all key financial metrics and significantly
improved over its previous year performance. During fiscal 2012,
Three Sixty further expanded its international and domestic fibre optic
network to meet growing demands for high-capacity bandwidth
from the enterprise, government and telecommunications carrier
segments. The company’s strong top-line growth was significantly
fuelled by increased international voice traffic. In the upcoming
year, Three Sixty will continue to be strategically positioned as a
communications partner, providing 100 percent, all optical, fibre
to the building solutions.
Illuminat Barbados and Eastern Caribbean (Illuminat
Barbados and EC) did not achieve its budgeted operational profit
targets, due mainly to limited availability of major Government
projects in Barbados and Antigua, territories both facing challenging
economic conditions. Despite the challenges, however, the Illuminat
Barbados operation achieved its SVA target mainly through effective
working capital and expense management. The continued shift of
the business to a greater proportion of transactional and professional
FeNWICK ReID Group Senior vice President & Executive Chairman
44 2012
services has also aided in mitigating the effects of the slowdown in
major strategic deals.
Illuminat Jamaica Limited (Illuminat Jamaica) showed growth
over the previous year but did not achieve its budgeted target mainly
due to deferred major projects in the Government sector. Other areas
of business, namely its IPS and Technical Support Services, mitigated
some of the shortfalls resulting from these deferred projects. Like the
other ITC companies, Illuminat Jamaica has made good progress in
shifting its model to delivering a greater proportion of transaction
and recurring-revenue services. It is currently working on major
managed services opportunities. In the new year, it is expected that
these managed services opportunities, will play a greater part in the
organization’s achievement of its budget and growth targets.
A review on the performance of CCS (Guyana) Ltd. and NM Security
Solutions Inc. is discussed on page 47 of this report, together with
the other companies in the Guyana group.
Pereira & Company Limited was awarded Safe To Work (SToW) Certification
by the SToW Project office of the Energy Chamber, after a stringent audit
and assessment of the Company’s HSE policies, management systems and
implementation. one remarkable highlight of Pereira’s Certification was
that the company scored high enough to merit a two-year certification,
instead of the one-year certification, typically awarded to first-time
applicants. In photo from left to right: Karen Abraham, HSE Coordinator,
Periera; Makonnen McQueen, HSE Coordinator, NM ITC Group; Anna
Henderson, CEo, Pereira and Gail figaro, HSE Manager, NM ITC Group.
infOrmatiOn teCHnOLOgY & COmmuniCatiOns Business unit
45forward focused
OtHer inVestments
505
83
7
517
126
10
2011 2011 20112012 2012 2012
600
500
400
300
200
100
0
150
100
50
0
10
5
0
REv
ENU
E TT
$M
PRo
fIT
BEf
oR
E TA
X T
T$M
*Ro
NA
%(PAT/AvERAGENETASSETS)
inCrease 2011-2012
2%inCrease 2011-2012
52%* rOna (return On net assets)
oTHER INvESTMENTS
Despite a slow-down in the Real Estate and Property Management
Industry, Nealco Properties Limited (NPL) exceeded its budgeted
revenue through concerted efforts on customer retention and
through the provision of brokerage services to customers who
required services outside of NPL’s portfolio. Assisted by rigorous
cost management initiatives, the company surpassed both its
profit and Shareholder Value Added goals. In the new Financial
Year, Management will execute similar strategies and techniques
to continue to improve its performance.
Nealco Real Estate Limited (NREL) continues to be profitable
despite a slow-down in sales in the real estate market. The company
continues to pursue new property management clients and to
improve on its service to its existing customer base.
SP Musson Son & Company Limited (SP Musson) enjoyed
a more profitable year, when compared to the prior year’s
performance. It should be noted that two unusual, one-off
transactions were responsible for the improved results: the sale of
land to the Barbados Government and the amalgamation of the
property holding entity, Dacosta Mannings Inc. The company also
benefited from land sales at Aerowoods Development in St. Philip,
but the core rental business did not perform as expected given the
recent trend of businesses relocating outside of Bridgetown. The
redevelopment of the Autodome in Warrens offers SP Musson the
potential for revenue growth in the near to medium term.
Roberts Manufacturing Company Limited (50.5 percent)
produces vegetable oils and margarines while its joint venture
subsidiaries of Pinnacle Feeds Ltd and VitaPet Ltd, manufacture
animal feeds and dog chow respectively. Profits for the year improved
through a mixture of cost controls and revenue improvement. While
the economic recession continued to affect many of the territories
in which the companies’ products are sold, sales of certain products
grew in Trinidad. The drought experienced by the USA mid-west
brought significant increases in the cost of soybeans and corn, which
46 2012
are essential raw materials in the production of all the products within
the portfolio. Management was able to cushion these through its
purchasing methods together with the consistent application of
standard formulations and pricing so as to generally achieve stability
in margins. New products are planned for certain market segments
which show room for growth while the company continues to pursue
the means to retain or improve market share for existing products.
BCB Communications Incorporated (BCB) (51 percent), the
in-house advertising agency for our Barbados companies and Banks
Holdings Limited, recorded a net profit 4 percent higher than the
prior year. For this period BCB managed its expenses carefully
and realised a 9 percent reduction versus prior year. These savings
were due to a decrease in employment expenses and prudent
management of other expenses throughout the year. The overall
performance was hampered by the economic slowdown in Barbados,
which resulted in reduced advertising spends and encouraged BCB to
look for new marketing options such as new media communication
platforms.
Banks Holdings Limited, (BHL) (20 percent) is the holding
company for the group of businesses in Barbados involved with
beverage production (namely beer, soft drinks, juices and milk) with
investments in the Coca Cola bottler in The Bahamas, Banks beer in
Guyana and a citrus producer in Belize. The performance of BHL was
led by its associated companies, specifically Banks DIH in Guyana and
Citrus Products of Belize Limited. In the case of Banks DIH, strong
economic growth in Guyana has led to significant volume increases
and these have generated record profits for that company. A good
crop and robust commodity pricing resulted in a strong performance
of Citrus Products of Belize while other associates also recorded
improved results in line with expectations.
Unfortunately the recessionary environment in Barbados
continued to limit sales across all product lines and there was no
meaningful growth recorded across the brands. While not yet
operating at optimum levels, the new brewery has nevertheless
brought several operational savings and profitability in that operation
was in line with expectations and ahead of the previous year.
Signia financial Group Incorporated (20 percent) experienced
a difficult year. 2012 was a challenging financial year in Barbados,
for the finance and banking sector, with high liquidity and high
delinquencies in an environment of increased unemployment.
Additionally, new Central Bank regulations restricted the spreads
and earnings in foreign exchange trading. Net interest income
improved marginally, but with higher loan provisions and reduced
trading income, profitability was notably lower for the period under
review.
Seawell Air Services Limited (SAS) provides ground handling
services to several of the major airlines serving Barbados such as
British Airways and Caribbean Airlines. The Company’s revenue
increased only marginally for the year under review but management
achieved a decrease in overall costs year on year resulting in a modest
profit on operations. Unfortunately the withdrawal of Redjet in the
first quarter of 2012 notably impacted revenue and profitability for
the financial year.
Caribbean Airport Services Limited (CAS) (49 percent), which
provides ground handling services at the V.C. Bird International
Airport in Antigua, faced similar challenges to those of SAS. The
company will produce a small profit for its financial year ending
December 2012, following the addition of LIAT’s cargo handling
business and the contract to handle Westjet during the year.
Based in Montreal, Canada, Medina foods Incorporated (30
percent) provides consultancy services and food safety audit services
to food processors and producers with food safety assurance
programmes. A key area of its business is the audit of airline caterers
worldwide on behalf of many major airlines through its Barbados
subsidiary Medina International, which is an International Business
Company. Medina’s results grew reasonably for the year under new
arrangements with the airlines.
OtHer inVestments
47forward focused
tHe guYana grOup
Trading & Distribution Inc.
Associated Industries Limited
CCS Guyana Limited
Demerara Oxygen Company Limited
NM Security Solutions Inc.
NM Services Limited
DeO PeRSAuD Chief Executive officer, Neal & Massy Guyana Group
THE GUyANA GRoUP once again recorded double-digit growth
in the past year, with all operating companies contributing to the
positive results. The economic outlook for Guyana in 2013 suggests
there is opportunity for continued organic growth from the current
business portfolio. However, management will also focus its efforts
on the development of new business opportunities. While each
of the subsidiaries of the Guyana Group has integrated into the
industry segments portfolios that Neal & Massy has reorganized
itself around, the group of companies continues to be managed as
a unit by a strong leadership team in Guyana sharing industry best
practices with the rest of the Group. The Group will continue to
focus on recruiting, leadership development and succession planning
in Guyana to sustain the excellent performance that this group of
companies has established over the last 10 years.
Trading & Distribution Inc. (TDI) recorded satisfactory results
as it continues to focus on its Distribution Excellence Initiative which
yielded improvements in distribution coverage and route expansion.
To facilitate future growth and expansion, the company plans to
establish new distribution and office facilities, construction of which
will commence in 2013.
Associated Industries Limited (AINLIM) had another year of
strong performance. The Capital Goods segment of our business
benefited from investments made in the rice and gold mining
sectors, which remained buoyant due to attractive world market
prices for these commodities. We have expanded our distribution
business by establishing new routes and have seen steady growth
in this segment. The Customer Service Initiative and investment in
our after-sales services within the dealership business are the main
priorities in the year ahead.
CCS Guyana Limited (CCS) had a successful year driven by
growth in its enterprise management systems business, success in
Government tenders, and improved sales for its business products
portfolio. In the New Year, the company will focus on offering new
solutions in a number of industries, and will progress initiatives in
customer service and employee engagement.
Demerara oxygen Company Limited (DoCoL) continued to
expand its distribution network with the activation of new dealers
throughout the country. During the year, the company also embarked
on a number of capital projects, which will lead to significant
improvement in plant capacity and efficiency for LPG and industrial
gases, and enhance the safety profile of the entire facility.
NM Security Solutions Inc. (NMSS) produced good growth
in its guarding and cash divisions. Good progress continues to be
made on training for the security officers, aimed at bringing more
value for its customers.
48 2012
This year, the Demerara oxygen Company Limited (DoCoL), rebranded
its LPG product to ‘Rubigas,’ replacing the Texgas brand. The rebrand
resulted from the acquisition of the Texaco operations in the Eastern
Caribbean by Rubis. DoCoL also recently increased its bulk LPG storage
capacity by 75 percent and has actively started streamlining its operations
to widen its dealer networks, reduce customer waiting times and improve
its delivery to customers in Guyana.
NM Services Limited (NMSL) launched SurePay bills payment
service during the latter part of the year. The loss of the CMA-CGM
shipping agency in January 2012, along with a decrease in the money
transfer business, impacted the business negatively. The company
continues to look for opportunities to develop additional service-
related businesses, and to focus on enlarging its share of market
for the current service offerings.
tHe guYana grOup
49forward focused
regiOnaL perfOrmanCe
4,48
8
522
43
5,02
6
576
34
2011 2011 20112012 2012 2012
6000
5000
4000
3000
2000
1000
0
600
500
400
300
200
100
0
50
40
30
20
10
0
REv
ENU
E TT
$M
PRo
fIT
BEf
oR
E TA
X T
T$M
*Ro
NA
%(PAT/AvERAGENETASSETS)
inCrease 2011-2012
12%inCrease 2011-2012
10%* rOna (return On net assets)
e. GeRvASe WARNeR President & Group Chief Executive officer, Neal & Massy Group
50 2012
2,64
9
126
5
2,68
1
217 11
2011 2011 20112012 2012 2012
3000
2000
1000
0
250
200
150
100
50
0
12
10
8
6
4
2
0
REv
ENU
E TT
$M
PRo
fIT
BEf
oR
E TA
X T
T$M
*Ro
NA
%(PAT/AvERAGENETASSETS)
inCrease 2011-2012
1%inCrease 2011-2012
73%
FReRe DeLMAS Country Manager, Neal & Massy Barbados
* rOna (return On net assets)
regiOnaL perfOrmanCe
51forward focused
687
92
34
766
103
30
2011 2011 20112012 2012 2012
800
600
400
200
0
125
100
75
50
25
0
40
30
20
10
0
REv
ENU
E TT
$M
PRo
fIT
BEf
oR
E TA
X T
T$M
*Ro
NA
%(PAT/AvERAGENETASSETS)
inCrease 2011-2012
11%inCrease 2011-2012
12%
DeO PeRSAuD Chief Executive officer, Neal & Massy Guyana Group
* rOna (return On net assets)
52 2012
CHRISTIAN MAINGOT Chairman, Gas Products Limited
659 58
16
663
49
13
2011 2011 20112012 2012 2012
700
600
500
400
300
200
100
0
60
50
40
30
20
10
0
20
15
10
5
0
REv
ENU
E TT
$M
PRo
fIT
BEf
oR
E TA
X T
T$M
*Ro
NA
%(PAT/AvERAGENETASSETS)
inCrease 2011-2012
1%deCrease 2011-2012
16%* rOna (return On net assets)
regiOnaL perfOrmanCe
53forward focused
BOard Of direCtOrs
ARTHUR loK JACK Chairman Trinidad & Tobago Citizen
In 1998, ARTHUR LOK JACK was elected to the Board of Neal & Massy Holdings
Limited and was appointed Chairman in June 2004. He is also the Executive Chairman
of the Associated Brands Group of Companies, Chairman of Guardian Holdings
Limited and serves on the boards of many other Caribbean companies. In 2001,
he was awarded the title of Master Entrepreneur from Ernst & Young and in 2002,
he was bestowed an Honorary Doctorate of Laws and recognized as a Caribbean
Luminary by the University of the West Indies. Mr. Lok Jack is also a recipient of the
prestigious Chaconia Medal (Gold) for his contribution to business development in
Trinidad and Tobago. In 2004 he was inducted into Queen’s Royal College (Alma
Mater) Hall of Honour and in November 2009, he was inducted into the Trinidad &
Tobago Chamber of Industry and Commerce’s Business Hall of Fame.
E. GERVAsE WARnER President & Group CEo Trinidad & Tobago Citizen
E. GERVASE WARNER is the President and Group CEO of the Neal & Massy Group of
Companies. Prior to his appointment in 2009, he served as the Executive Chairman
of the Group’s Energy & Industrial Gases Business Unit.
Mr. Warner holds an MBA from the Harvard Graduate School of Business and
BSE Degrees in Electrical Engineering and Computer Science Engineering from the
University of Pennsylvania.
Prior to joining the Neal & Massy Group, Mr. Warner was a partner with the
international management consulting firm, McKinsey & Company Inc., where he last
led the firm’s client services in the Caribbean region. He has extensive experience
in the petroleum, financial and ITC sectors and currently serves on the Trinidad and
Tobago Board of Citigroup Merchant Bank Limited and the Arthur Lok Jack Graduate
School of Business. Mr. Warner has over 20 years of international experience working
in the USA, Latin America and the Caribbean.
DR. RolPH BAlGoBIn Trinidad & Tobago Citizen
DR. ROLPH BALGOBIN is the Executive Chairman of Quicksilver Convenience Ltd.,
Deputy Chairman of EIL Holdings and a director of several other companies and
charities. He is an Independent Senator in the Parliament of The Republic of Trinidad
and Tobago and a Faculty Member of the Arthur Lok Jack Graduate School of Business.
He holds business degrees from the University of the West Indies, the University
of Manchester and the University of Cambridge, as well as an ACCA Diploma in
Corporate Governance. He currently researches and has published books, newspaper
columns and scholarly papers in the fields of competitiveness, corporate governance
and corporate turnaround.
54 2012
RoBERT BERmUDEz Trinidad & Tobago Citizen
ROBERT BERMUDEz is the Chairman of the Bermudez Group of Companies. He is
also associated with several other corporate bodies in and out of Trinidad and Tobago.
EARl BooDAsInGH Trinidad & Tobago Citizen
EARL BOODASINGH is an Executive Vice President and heads the Group’s Integrated
Retail Business Unit which includes the Retail, Distribution and Consumer Finance
lines of business (LOB).
Mr. Boodasingh joined the Neal & Massy Group in 1981 and has held many senior
positions across the Group throughout his tenure. His career within the group began
at Neal & Massy Industries Limited as a Cost and Management Accountant. He went
on to hold the positions of Financial Comptroller and Financial Director for a number
of companies and major divisions, including the Marketing & Distribution Division and
the Hi-Lo Food Stores Division. He later served as CEO for both divisions, consecutively.
In 2002, he was appointed as the Transition Manger for H.D Hopwood & Company
Limited in Jamaica.
In 2005, Mr. Boodasingh was appointed as the Executive Chairman of the Neal &
Massy Automotive & Industrial Equipment Business Unit.
GEoffREy CAVE Barbados Citizen
GEOFFREY CAVE is the Chairman of the Board of Directors of Cave Shepherd & Co.
Limited – a Barbados-based corporation with subsidiary and associate companies
located across the region.
Mr. Cave joined Cave Shepherd, which was a family-run business at the time, in
1963 and was later appointed as the company’s Managing Director, then elected as
its Chairman. He has enjoyed a distinguished career in business, serving as Director
and Chairman of several leading private and public organizations in Barbados.
In the year 2000, Mr. Cave was awarded the Barbados Centennial Honour.
Following that, he was appointed Commander of the Most Excellent Order of the
British Empire in the Queen’s New Years’ Honour List in 2003, and in October 2007
the University of the West Indies conferred on him an Honorary Degree of Doctor
of Laws (LLD). More recently, in October 2009, he was appointed an Independent
Senator by the Governor General of Barbados.
BOard Of direCtOrs
55forward focused
PATRICK HylTon Trinidad & Tobago Citizen
PATRICK HYLTON is the Group Managing Director of the National Commercial
Bank Jamaica Limited (NCB), Jamaica’s largest Commercial Bank. He received public
recognition when the Government appointed him to a leading role in the rehabilitation
of the Jamaican financial sector during the mid 1990s. His wealth of experience in
the financial services industry propelled him to the position of Managing Director of
the Financial Sector Adjustment Company (FINSAC). He performed in this role for
five years, and in 2002 joined NCB as Deputy Group Managing Director. In 2004, Mr
Hylton was appointed Group Managing Director of NCB and has led the organisation
to achieve record growth in profitability. Mr. Hylton is an Honours Graduate in Business
Administration and an Associate of the Chartered Institute of Bankers (ACIB), London.
He is a Past President of the Jamaica Bankers Association and, he is the Chairman of
Harmonisation Limited and sits on several boards, including the Caribbean Information
and Credit Rating Services (CariCRIS). In 2002, Mr Hylton was awarded the Order of
Distinction, Commander Class by the Prime Minister and Governor General of Jamaica.
G. AnTHony KInG Barbados Citizen
G. ANTHONY KING’s business career spans some 37 years, 28 of which have been
spent with the Neal & Massy Group. Prior to his departure from Neal & Massy in
October 2004 to take up the appointment of Chief Executive Officer of the Barbados
Shipping & Trading Company Limited (BS&T), he chaired Neal & Massy’s Eastern
Caribbean Group of Companies. After the take-over of BS&T in 2008 by Neal & Massy,
Mr King became a Group Executive Vice President of the Neal & Massy Group but
also remained as BS&T’s CEO, co-ordinating the integration of BS&T’s operations into
the Group. With that process substantially complete, he retired as an Executive of
the Group during 2012. Mr King continues to serve on the Neal & Massy Holdings
Board, now as a Non-Executive Director.
Mr. King is also a Director of other publicly traded companies in Barbados such as
Banks Holdings Limited, Almond Resorts Inc and Republic Bank (Barbados) Ltd and
is a Director of various private companies.
sIR AllAn fIElDs Barbados Citizen
SIR ALLAN FIELDS joined the Neal & Massy board in 1998 to 2008, and was reappointed
in 2009. He was the Chairman of the Barbados Shipping & Trading Co. Ltd. (BS&T).
Formally trained in Mechanical Engineering, he has served as Managing Director of
Lucas Industries Barbados’s operations, BS&T and Banks (Barbados) Breweries Ltd.
Sir Allan serves on many boards in Barbados, including the Barbados National
Insurance Corporation, First Caribbean International Bank, and the Barbados
Employers Confederation.
He is also Past President of the Private Sector Organization and Chairman of
Banks Holdings Limited, Barbados Dairy Industries Ltd, Cable & Wireless (Barbados)
Ltd. and the Commonwealth Business Association. He was Barbados’ non-resident
Ambassador to the Peoples Republic of China from 2003 to 2008 and served as an
Independent Senator in the Barbados Parliament.
56 2012
BOard Of direCtOrs
PAUlA RAJKUmARsInGH Trinidad & Tobago Citizen
PAULA RAJKUMARSINGH is a Corporate Financial Executive, with over 12 years of
experience at a senior management level, and the Group’s Chief Financial Officer.
She is currently a Director on the Parent Board of CIBC First Caribbean International
Bank in Barbados and CIBC First Caribbean International Bank in Trinidad and Tobago.
She also serves as a director for the St Joseph Convent Cluny Board of Management.
She previously served on the boards of the Sugar Manufacturing Company as well
as a private Equity Fund.
GARy Voss Trinidad & Tobago Citizen
GARY VOSS is currently the Non-Executive Chairman of Unilever Caribbean Limited.
He joined Lever Brothers West Indies Limited in 1982 as Technical Director, and was
appointed Chairman and Managing Director in 1987. He retired from Unilever in
2001. His early career was spent with the (then) Texaco Pointe-a-Pierre refinery, the
Caribbean Industrial Research Institute (CARIRI) and the Iron and Steel Company of
Trinidad and Tobago (ISCOTT). Mr Voss’ previous posts include Superintendent, Direct
Reduction, ISCOTT; Head of Engineering, CARIRI, as well as President of the Trinidad
and Tobago Manufacturers Association (TTMA) and President of the Caribbean
Association of Industry and Commerce. He is also a director of RBC Finance Holdings
and several of its subsidiaries. Mr Voss is a Chemical Engineer by profession and holds
a B.Sc. Degree (Honours) from Birmingham University in the UK.
William lucie-Smith Trinidad & Tobago Citizen
WILLIAM LUCIE-SMITH is a Chartered Accountant by profession and a former Senior
Partner of PricewaterhouseCoopers (Trinidad) where he headed its Corporate Finance
and Recoveries practice. Mr. Lucie-Smith has accumulated extensive experience in
mergers and acquisitions, taxation and valuations and holds an MA degree from
Oxford University in Philosophy, Politics and Economics. He currently serves as a
Non-Executive Director on a number of boards including Republic Bank and Sagicor
Financial Corporation.
57forward focused
BOard Of direCtOrs
BRIAn yoUnG Jamaican Citizen
BRIAN YOUNG is the Chairman of the Neal & Massy Group (Jamaica) Limited and a
member of the Audit Committee of Neal & Massy Holdings Limited.
A former Senior Partner of PricewaterhouseCoopers (Jamaica), Mr. Young has held
his position on the Board of Neal & Massy Holdings Limited for the past 16 years.
He is highly experienced in the areas of corporate finance, mergers and acquisitions,
insolvency and management information systems, with 45 years of management
consultancy experience.
Mr. Young is currently on the boards of Trinidad Cement Limited, Caribbean Cement
Company Limited, Bermudez Holdings Limited, Trade Winds Citrus Limited and has
served on many Jamaican Government teams.
58 2012
The Directors have pleasure in submitting their Report and the Audited Financial Statements for the financial year ended September 30, 2012.
PRINCIPAL ACTIvITIES
The main activity is that of a Holding Company.
financial results for the year $’000
Profit attributable to Shareholders 470,809
Dividends paid (131,220)
Profit retained for the year 339,589
Other movements on revenue reserves (19)
Balance brought forward 2,368,374
Retained earnings at end of year 2,707,944
DIvIDENDS
The Directors declared a final dividend of $1.05 cents per share, making a total dividend of $1.50 per share for the financial year. The final
dividend will be paid on or after January 18, 2013 to shareholders whose names appear on the Register of Members of the Company at
the close of business on January 2, 2013.
DIRECToRS
Pursuant to paragraph 4.4.1 and 4.4.2 of By-Law No. 1 of the Company Messrs. Arthur Lok Jack, William Lucie-Smith, Rolph Balgobin
and David O’Brien retire from the Board by rotation and being eligible offer themselves for re-election until the close of the third Annual
Meeting following this appointment.
Pursuant to paragraph 4.4.1 and 4.4.2 of By-Law No.1 of the Company, Messrs. E. Gervase Warner and G. Anthony King retire from the
Board by rotation and being eligible offer themselves for re-election until the close of the next Annual Meeting following this appointment.
DIRECToRS’, SENIoR offICERS’ & CoNNECTED PERSoNS’ INTERESTS
These should be read as part of this report.
AUDIToRS
The Auditors, PricewaterhouseCoopers, retire and being eligible offer themselves for re-appointment.
By Order of the Board
WENDy KERRy
Corporate Secretary
December 20, 2012
direCtOrs’ repOrt
59forward focused
DIRECToRS’, SENIoR offICERS’ & CoNNECTED PERSoNS’ INTERESTS
Set out below are the Directors, Senior Officers and their Connected Persons with interests in the shares of Neal & Massy Holdings Limited
and the holders of the ten (10) largest blocks of shares in the Company as at September 30, 2012.
Directors and Senior Officers Shareholding Connected Persons Shareholdings
Rolph Balgobin 6,500 Nil
Robert Bermudez 14,820 13,029
Earl Boodasingh 195,790 Nil
Geoffrey Cave Nil Nil
Allan Fields 1,000 Nil
Patrick Hylton Nil Nil
Gerald Anthony King 75,000 Nil
Arthur Lok Jack Nil 103,680
William Lucie-Smith Nil 22,897
Paula Rajkumarsingh 117,420 Nil
Gary Voss Nil Nil
Elliot Gervase Warner 99,327 Nil
Brian Young Nil Nil
David Affonso 7,401 Nil
Judith Bowen 28,349 Nil
Linford Carrabon 182,288 Nil
Frere Delmas 752 Nil
Angela Hamel-Smith 60,491 Nil
Christian Maingot 4,605 Nil
David O’Brien 33,454 Nil
Thomas Pantin 26,379 Nil
Doodnauth Persaud 27,531 Nil
Fenwick Reid 47,715 Nil
Wendy Kerry 284 Nil
DIRECToR’S NoN-BENEfICIAL INTEREST
Paula Rajkumarsingh, a Director (together with Curtis Lee Poy) holds a non-beneficial interest in 1,309,801 shares as a co-trustee of the
Neal & Massy Group Profit Sharing Plan.
60 2012
direCtOrs’ repOrt
HoLDERS of THE TEN (10) LARGEST BLoCKS of SHARES
Name of Registered Shareholder Number of Shares
National Insurance Board Limited 19,801,051
RBTT Trust Limited 8,643,163
RBTT Nominee Services Limited 9,205,981
Republic Bank Limited 7,564,105
First Citizens Trust & Asset Management Limited 5,325,212
Trinidad & Tobago Unit Trust Corporation 5,068,198
Trintrust Limited 3,416,794
Sagicor (Equity) Fund 1,959,858
Guardian Life of the Caribbean Limited 1,622,582
Paula Rajkumarsingh & Curtis Lee Poy 1,309,801
NoTES
Note 1
National Insurance Board Limited holds a substantial interest in the issued share capital of the Company. A substantial interest means one-
tenth or more of the issued share capital of the Company.
Note 2
There have been no changes to the Substantial Interests occurring between the end of the Company’s financial year and one month prior
to the date of the Notice convening the Annual Meeting. The following changes took place in the Interest of Directors and Senior Officers
between the end of Company’s financial year and one month prior to the date of the Notice convening the Annual Meeting; (i) Mr. Earl
Boodasingh sold 3,853 Ordinary Shares in the Company, on October 16, 2012 and 9,095 Ordinary Shares in the Company, on October 17,
2012; (ii) Mr. David O’Brien purchased 20,422 Ordinary Shares in the Company on October 17, 2012; (iii) Sir Allan Fields retired from the
Board of Directors of the Company on November 6, 2012, (iv) Mr Richard Young was appointed to the Board of Directors on December
20, 2012, and (v) Mr. David O’Brien was appointed to the Board of Directors, effective January 1, 2013.
Note 3
There were no beneficial interests attached to any shares in the names of the Directors in the Company’s subsidiary companies such shares
being held by the Directors as nominees of the Company or its subsidiaries.
Note 4
At no time during, or at the end of the financial year, where any material contracts, or proposed material contracts, granted by the
Company or any of its subsidiary companies to any Director or proposed Director of the Company.
management prOXY CirCuLar
61forward focused
management prOXY CirCuLar
REPUBLIC of TRINIDAD AND ToBAGo
THE CoMPANIES ACT, CH. 81:01
[SECTIoN 144]
1 Name of Company: NEAL & MASSY HOLDINGS LIMITED
Company No. N-20(C)
2 Particulars of Meeting
Eighty-Ninth Annual Meeting of Shareholders of the above named Company to be held at the Belmont Salon, Hilton Trinidad, Lady
Young Road, Port of Spain, Trinidad at 10:00 a.m. on Friday February 1, 2013.
3 Solicitation
It is intended to vote the Proxy solicited hereby (unless the shareholder directs otherwise) in favour of all resolutions specified therein.
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, Ch. 81:01.
5 Any Auditor’s statement submitted pursuant to Section 171(1)
No statement has been received from the Auditors of the Company pursuant to Section 171(1) of the Companies Act, Ch. 81:01.
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, Ch. 81:01.
DATE NAME AND TITLE SIGNATURE
December 20, 2012 WENDy KERRy
Corporate Secretary
62 2012
The accompanying Summary Consolidated Financial Statements of Neal & Massy Holdings Limited and its subsidiaries (the Group) were
prepared by Management, who is responsible for the integrity and fairness of the information presented. Management acknowledges
responsibility for the preparation of the Consolidated Financial Statements annually and for establishing and maintaining an adequate
internal control structure and procedures for financial reporting and safeguarding the assets of the Group.
It is management’s responsibility to apply the appropriate accounting policies and make accounting estimates that are reasonable.
Management is responsible for ensuring that the consolidated financial statements presented are a fair and true presentation of the state
of affairs of the Group which includes ensuring that the information from which the consolidated statements are derived are designed
and properly monitored in a manner which would allow accurate information to be provided. In addition, management is responsible for
ensuring that the information presented is free from material misstatement whether due to fraud or error.
Management accepts responsibility for the Annual Consolidated Financial Statements from which these Summary Consolidated Financial
Statements were derived as well as the responsibility for the maintenance of the accounting records and internal controls which form the
basis of the consolidated financial statements. The Summary Consolidated Financial Statements of Neal & Massy Holdings Limited and
its subsidiaries are prepared in accordance with International Financial Reporting Standards and appropriate accounting policies have been
established and applied in a manner which give a true and fair view of the Group’s financial affairs and operating results.
In addition, it is noteworthy to mention that nothing has come to the attention of Management to indicate that the Group will not remain
a going concern for the next twelve months from the date of this statement.
E. GERvASE WARNER PAULA RAJKUMARSINGHChief Executive Officer Chief Financial Officer
December 21, 2012 December 21, 2012
statement Of management’s respOnsiBiLitY
63forward focused
independent auditOr’s repOrt
64 2012
ASSETS
Non-current assets
Property, plant and equipment 1,665,945 1,537,515
Investment properties 325,101 325,849
Goodwill 145,284 157,419
Other intangible assets 51,005 40,793
Investments in associates and joint ventures 406,765 405,378
Financial assets 414,275 439,673
Deferred income tax assets 61,980 68,039
Instalment credit and other loans 135,293 130,235
Retirement benefit asset 258,651 231,968
3,464,299 3,336,869
Current assets
Inventories 1,252,189 1,286,772
Instalment credit and other loans 110,800 114,590
Trade and other receivables 1,612,092 1,567,421
Financial assets at fair value through profit or loss 114,844 77,806
Cash and cash equivalents 1,304,737 1,123,142
4,394,662 4,169,731
Assets of disposal group classified as held for sale 590,743 703,658
4,985,405 4,873,389
Total assets 8,449,704 8,210,258
EQUITy
Capital and reserves attributable to equity holders
of the Company
Share capital 554,488 540,181
Retained earnings 2,707,944 2,368,374
Other reserves 122,875 99,268
3,385,307 3,007,823
Non-controlling interests 135,761 219,062
Total equity 3,521,068 3,226,885
2012 2011 $ $
COnsOLidated statement Of finanCiaL pOsitiOn
As at September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
65forward focused
LIABILITIES
Non-current liabilities
Borrowings 1,064,746 1,169,794
Deferred income tax liabilities 128,390 115,224
Customers’ deposits - 141
Retirement benefit obligation 104,685 83,981
Provisions for other liabilities and charges 210,049 243,822
1,507,870 1,612,962
Current liabilities
Trade and other payables 1,452,610 1,453,636
Liabilities on insurance contracts 795,407 832,473
Customers’ deposits 206,122 215,305
Current income tax liabilities 83,484 57,714
Borrowings 391,230 248,061
2,928,853 2,807,189
Liabilities of disposal group classified as held for sale 491,913 563,222
3,420,766 3,370,411
Total liabilities 4,928,636 4,983,373
Total equity and liabilities 8,449,704 8,210,258
On December 20, 2012, the Board of Directors of Neal & Massy Holdings Limited authorised these consolidated financial statements for
issue.
E.G. WARNER A. LoK JACK PAULA RAJKUMARSINGHDirector Director Director
2012 2011 $ $
66 2012
2012 2011 $ $
Continuing operations:
Revenue 9,146,488 8,497,341
Operating profit before finance costs 793,781 646,878
Finance costs – net (46,107) (47,806)
Share of profit of associates and joint ventures 54,175 40,578
Profit before income tax 801,849 639,650
Income tax expense (257,862) (195,294)
Profit for the year from continuing operations 543,987 444,356
Discontinued operations:
Loss for the year from discontinued operations (49,875) (473,828)
Profit/(loss) for the year 494,112 (29,472)
Owners of the parent:
Profit for the year from continuing operations 495,990 402,970
Loss for the year from discontinued operations (25,181) (304,849)
Profit attributable to owners of the parent 470,809 98,121
Non-controlling interests:
Profit for the year from continuing operations 47,997 41,386
Loss for the year from discontinued operations (24,694) (168,979)
Profit/(loss) attributable to non-controlling interests 23,303 (127,593)
COnsOLidated inCOme statement
For the year ended September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
67forward focused
COnsOLidated inCOme statement
2012 2011 $ $
Earnings per share from continuing and discontinued operations
attributable to the owners of the parent during
the year (expressed in TT$ per share)
Basic earnings/(loss) per share
- from continuing operations 5.13 4.17
- from discontinued operations (0.26) (3.15)
4.87 1.02
Diluted earnings/(loss) per share
- from continuing operations 5.13 4.17
- from discontinued operations (0.26) (3.15)
4.87 1.02
Dividends per share 1.50 1.29
Dividends paid per share 1.31 1.29
68 2012
2012 2011 $ $
Profit/(loss) for the year 494,112 (29,472)
Other comprehensive income:
Available for sale financial assets (3,220) (39)
Actuarial (losses)/gains on defined benefit pension plans (4,563) 23,431
Currency translation differences (8,694) 10,700
Other comprehensive (loss)/income for the year (16,477) 34,092
Total comprehensive income for the year 477,635 4,620
Attributable to:
Owners of the parent 454,604 129,526
Non-controlling interests 23,031 (124,906)
Total comprehensive income for the year 477,635 4,620
COnsOLidated statement Of COmpreHensiVe inCOme
For the year ended September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
69forward focused
Share Other Retained Capital Reserves earnings Total $ $ $ $
Balance at October 1, 2010 538,220 82,639 2 ,376,037 2,996,896
Currency translation differences – 8,013 – 8,013
Other reserve movements – 8,616 1,136 9,752
Net profit not recognised in
Consolidated Income Statement – – 22,272 22,272
Profit attributable to Shareholders – – 98,121 98,121
Employee share option plan
value of employee services 85 – – 85
Issue of shares under stock
option plan 1,876 – – 1,876
Transactions with owners:
Dividends paid – – (129,192) (129,192)
Balance at September 30, 2011 540,181 99,268 2,368,374 3,007,823
Balance at October 1, 2011 540,181 99,268 2,368,374 3,007,823
Currency translation differences – (8,442) – (8,442)
Purchase of minority – (2,670) – (2,670)
Other reserve movements – 34,719 4,544 39,263
Net loss not recognised in
Consolidated Income Statement – – (4,563) (4,563)
Profit attributable to Shareholders – – 470,809 470,809
Issue of shares under stock
option plan 14,307 – – 14,307
Transactions with owners:
Dividends paid – – (131,220) (131,220)
Balance at September 30, 2012 554,488 122,875 2,707,944 3,385,307
COnsOLidated statement Of CHanges in equitY
For the year ended September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
70 2012
2012 2011 $ $
Cash flows from operating activities
Operating profit before income tax 747,674 599,072
Operating loss from discontinued operations before tax (49,875) (53,422)
Adjustments for:
Dividends received from associated companies 7,876 24,256
Depreciation and impairment of property, plant and equipment,
investment property and held for sale assets 222,379 237,092
Impairment of goodwill 12,135 11,037
Amortisation of other intangible assets 2,581 69
Gain on sale of property, plant and equipment and investment property (41,453) (33,018)
Increase in provision for installment credit and other loans 1,874 3,374
Decrease in market value of investments 12,998 2,243
Employee share option scheme provision – 85
Employee retirement and other benefits (1,590) 5,460
Earnings before interest, tax, depreciation and amortisation 914,599 796,248
Other movements – 10,445
Changes in working capital:
Decrease/(increase) in inventories 43,753 (224,540)
Increase in trade and other receivables (685) (44,004)
(Increase)/decrease in installment credit and other loans (1,268) 27,922
(Decrease)/increase in trade and other payables (77,263) 196,615
Decrease in customers’ deposits (9,324) (70,689)
Cash generated from operations 869,812 691,997
Taxation paid (171,706) (170,459)
Net cash provided by operating activities 698,106 521,538
Cash flows from investing activities
Proceeds from sale of property, plant and equipment,
investment property and held for sale assets 80,633 78,679
Proceeds from sale of other investments 27,861 31,782
Additions to property, plant and equipment,
investment property and held for sale assets (374,444) (238,224)
Net increase in other investments, other intangibles, non-controlling interests
and investments in associated companies and joint ventures (35,613) (151,130)
Net cash used in investing activities (301,563) (278,893)
COnsOLidated statement Of CasH fLOWs
For the year ended September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
71forward focused
2012 2011 $ $
Cash flows from financing activities
Proceeds from borrowings 161,790 63,455
Repayments of borrowings (209,928) (81,384)
Proceeds from issue of shares 14,307 1,876
Dividends paid to Company’s shareholders (131,220) (129,192)
Dividends paid to non-controlling interests (47,472) (36,712)
Net cash used in financing activities (212,523) (181,957)
Net increase in cash, cash equivalents 184,020 60,688
Cash, cash equivalents and bank overdrafts
at beginning of the year 1,110,972 1,046,599
Effects of exchange rate changes on cash
and bank overdrafts (1,345) 3,685
Cash, cash equivalents and bank overdrafts
at the end of the year 1,293,647 1,110,972
Cash and short term funds 1,316,490 1,131,500
Bank overdrafts and other short term borrowings (22,843) (20,528)
1,293,647 1,110,972
Cash and short term funds
Continuing operations 1,304,737 1,123,142
Transfered to disposal group classified as held for sale 11,753 8,358
1,316,490 1,131,500
72 2012
1 GENERAL INfoRMATIoN
Neal & Massy Holdings Limited (the ‘Company’), was incorporated in the Republic of Trinidad and Tobago in 1923. The address of
its registered office is 63 Park Street, Port of Spain, Trinidad. The Company and its subsidiaries, (together, the Group) are engaged in
trading, manufacturing, service industries and finance in Trinidad and Tobago and the wider Caribbean region. The Company has a
primary listing on the Trinidad and Tobago Stock Exchange. These consolidated financial statements were authorised for issue by the
Board of Directors on December 20, 2012.
2 BASIS of PREPARATIoN
The summary Consolidated Financial Statements have been prepared by presenting the Consolidated Statement of Financial Position,
Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Changes in Equity and Cash Flows exactly
as presented in the full set of Consolidated Financial Statements which were prepared in accordance with International Financial
Reporting Standards for the year ended September 30, 2012. The Consolidated Financial Statements have been prepared under the
historical cost convention as modified by the revaluation of available-for-sale financial assets, financial assets and financial liabilities
(including derivative instruments) at fair value through profit or loss. The summary Consolidated Financial Statements do not include
the accounting policies and the notes that are contained in the full audited Consolidated Financial Statements. The accounting
policies have been consistently applied to all the years presented.
3 DISPoSAL GRoUP CLASSIfIED AS HELD foR SALE
For 2012, the results and financial position of the following subsidiaries are presented as discontinued operations or held for sale:
Almond Resorts Inc
Casuarina Holdings Inc
4 SEGMENT INfoRMATIoN
The Chief Operating Decision Maker (CODM) is the Chief Executive Officer (CEO). Management has determined the operating
segments based on the reports reviewed by the CEO and the Board of Neal & Massy Holdings Limited.
The CEO and the Board considers the business from both a geographic and business unit perspective. Geographically, management
considers the performance of operating companies in Trinidad and Tobago, Barbados, Guyana and Jamaica.
For the financial year 2012, the operating companies within the Group have been restructured. These changes resulted in a change
in the operating segments from 2011.
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
73forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
4 SEGMENT INfoRMATIoN (continued)
At September 30, 2012, the Group is organised into six main business segments:
1 Automotive and Industrial Equipment;
2 Energy and Industrial Gases;
3 Integrated Retail;
4 Insurance;
5 Information Technology and Communications (ITC);
6 Other Investments
The CEO and the Board assesses the performance of the operating segments based on a measure of profit before tax, profit after tax
and asset utilisation.
Automotive and Industrial Equipment
This segment derives its revenue mainly from the sale of new and used vehicles, spare parts and industrial equipment and also
includes the manufacturing and sale of pre-stressed concrete products and the installation of deep foundations.
Energy and Industrial Gases
This segment derives its revenue from the sale of gas and the provision of electrical, instrumentation and construction services for
offshore platforms. Revenue is also generated from the supply of technical resources, valve services and technical equipment to the
energy-based industries in Trinidad and Tobago and the region.
Integrated Retail
This segment derives its revenue mainly from the sale of retail foods, general merchandise and distribution and logistics operations.
It also includes a financing company that accepts deposits for fixed terms and grants instalment credit secured on specific equipment
and goods, mortgage loans and undertakes insurance premium financing and leasing.
Insurance
This segment includes our insurance company, called United Insurance Company Limited. The Company acts as a primary insurer
for property, motor, liability and marine risk within the Caribbean region.
ITC
This segment derives its revenue mainly from the sale and rental of technology-based solutions, office interiors and the provision of
long-distance communications.
other Investments
This segment earns revenue from property management and other services.
74 2012
4 SE
GM
ENT
INfo
RM
ATI
oN
(con
tinue
d)
The
Gro
up’s
retir
emen
t be
nefit
ass
ets
are
deem
ed u
nallo
cate
d an
d ar
e no
t co
nsid
ered
to
be s
egm
ent
asse
ts b
ut r
athe
r ar
e m
anag
ed b
y he
ad o
ffice
. The
am
ount
is
incl
uded
in t
he “
Hea
d O
ffice
and
Oth
er A
djus
tmen
ts”
segm
ent.
The
segm
ent
resu
lts f
or t
he y
ear
ende
d Se
ptem
ber
30, 2
012
as f
ollo
ws:
A
uto
mo
tive
En
erg
y an
d
Hea
d o
ffice
an
d In
du
stri
al
Inte
gra
ted
Ind
ust
rial
oth
er
and
oth
er
Equ
ipm
ent
Ret
ail
Insu
ran
ce
Gas
es
ITC
In
vest
men
ts
Ad
just
men
ts
Tota
l
$ $
$ $
$
$ $
$
Co
nti
nu
ing
op
erat
ion
s:
Gro
up R
even
ue
2,
007,
388
5,
462,
698
26
0,35
2
798,
828
58
7,85
7
609,
426
1,
695
9,
728,
244
Inte
r-se
gmen
t re
venu
e
(9
3,94
1)
(347
,243
) –
(9
,134
) (3
6,94
6)
(92,
797)
(1
,695
) (5
81,7
56)
Third
par
ty r
even
ue
1,
913,
447
5,
115,
455
26
0,35
2
789,
694
55
0,91
1
516,
629
–
9,
146,
488
Ope
ratin
g pr
ofit/
(loss
)
se
gmen
t re
sult
20
6,77
1
321,
878
(5
,437
) 17
4,49
9
80,1
53
119,
107
(1
03,1
90)
793,
781
Fina
nce
cost
s –
Net
(12,
512)
(1
5,92
7)
31,8
14
456
(5
10)
(4,5
47)
(44,
881)
(4
6,10
7)
194,
259
30
5,95
1
26,3
77
174,
955
79
,643
11
4,56
0
(148
,071
) 7
47,6
74
Shar
e of
res
ults
of
asso
ciat
es
an
d jo
int
vent
ures
bef
ore
tax
1,
083
5,
882
–
36
,317
(4
43)
11,3
36
–
5
4,17
5
Pro
fit/
(lo
ss)
bef
ore
inco
me
tax
195,
342
31
1,83
3
26,3
77
211,
272
79
,200
12
5,89
6
(148
,071
)
801
,849
Taxa
tion
(5
5,66
8)
(69,
479)
(8
,163
) (8
8,69
5)
(21,
943)
(2
2,19
6)
8,28
2
(2
57,8
62)
Pro
fit/
(lo
ss)
for
the
year
139,
674
24
2,35
4
18,2
14
122,
577
57
,257
10
3,70
0
(1
39,7
89)
5
43,9
87
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
75forward focused
4 SE
GM
ENT
INfo
RM
ATI
oN
(con
tinue
d)
The
seg
men
t as
sets
and
liab
ilitie
s at
Sep
tem
ber
30, 2
012
and
capi
tal e
xpen
ditu
re f
or t
he y
ear
then
end
ed a
re a
s fo
llow
s:
A
uto
mo
tive
En
erg
y an
d
Hea
d o
ffice
and
Ind
ust
rial
In
teg
rate
d
In
du
stri
al
o
ther
an
d o
ther
H
eld
fo
r
Equ
ipm
ent
Ret
ail
Insu
ran
ce
Gas
es
ITC
In
vest
men
ts
Ad
just
men
ts
Sub
-to
tal
Sale
To
tal
$
$ $
$
$ $
$ $
$ $
Tota
l ass
ets
1,04
2,28
4 2
,267
,346
1,
338,
147
688,
239
368,
109
1,45
7,05
1 69
7,78
5 7,
858,
961
590,
743
8,4
49,7
04
Ass
ocia
tes
and
jo
int
vent
ures
5,62
1 39
,627
29
1 11
3,49
6 2,
386
245,
344
– 40
6,76
5 –
406,
765
Tota
l lia
bilit
ies
4
85,7
01
1,01
9,60
8 94
7,92
8 23
2,00
7 19
5,33
1 32
7,07
9 1,
229,
069
4,43
6,72
3 49
1,91
3 4,
928,
636
Cap
ital e
xpen
ditu
re
1
53,6
45
135,
213
5,51
6 32
,593
26
,020
13
,564
1,
570
368,
121
6,32
3 37
4,44
4
Oth
er s
egm
ent
item
s in
clud
ed in
the
con
solid
ated
inco
me
stat
emen
t ar
e as
fol
low
s:
Dep
reci
atio
n an
d
im
pairm
ent
74,
941
51,6
86
6,69
0 2
2,31
2 28
,430
15
,948
2,
544
202
,551
19
,828
22
2,37
9
Impa
irmen
t of
goo
dwill
10
,603
1,
431
101
– –
–
– 12
,135
–
12
,135
nOtes tO tHe summarY COnsOLidated finanCiaL statements
76 2012
4 SE
GM
ENT
INfo
RM
ATI
oN
(con
tinue
d)
Th
e se
gmen
t re
sults
for
the
yea
r en
ded
Sept
embe
r 30
, 201
1 ar
e as
fol
low
s:
A
uto
mo
tive
En
erg
y an
d
Hea
d o
ffice
an
d In
du
stri
al
Inte
gra
ted
Ind
ust
rial
oth
er
and
oth
er
Equ
ipm
ent
Ret
ail
Insu
ran
ce
Gas
es
ITC
In
vest
men
ts
Ad
just
men
ts
Tota
l
$ $
$ $
$
$ $
$
Co
nti
nu
ing
op
erat
ion
s:
Gro
up R
even
ue
1,62
4,42
6
5,1
63,8
71
2
88,2
13
765
,537
597,
530
5
82,4
49
1,
696
9,02
3,72
2
Inte
r-se
gmen
t re
venu
e
(85,
248)
(329
,355
) -
(7,0
49)
(
25,1
45)
(7
7,88
8)
(1,6
96)
(5
26,3
81)
Third
par
ty r
even
ue
1,53
9,17
8
4,8
34,5
16
2
88,2
13
758
,488
572,
385
5
04,5
61
-
8
,497
,341
Ope
ratin
g pr
ofit/
(loss
)
se
gmen
t re
sult
172,
540
308
,750
(5
4,66
7)
170
,794
76,
055
86,
091
(112
,685
)
646
,878
Fina
nce
cost
s –
Net
(9,1
40)
(12,
164)
3
1,07
1
(245
)
(779
)
(4
,578
)
(5
1,97
1)
(47,
806)
163,
400
296,
586
(23,
596)
17
0,54
9 75
,276
81
,513
(1
64,6
56)
5
99,0
72
Shar
e of
res
ults
of
asso
ciat
es a
nd
jo
int
vent
ures
bef
ore
tax
85
1 6,
778
- 31
,377
-
1,57
2 -
40,5
78
Profi
t/(lo
ss) b
efor
e in
com
e ta
x
164,
251
303
,364
(2
3,59
6)
201
,926
75,
276
83,
085
(164
,656
)
639
,650
Taxa
tion
(4
6,45
6)
(
69,9
43)
(8,
172)
(
56,9
58)
(1
6,64
7)
(1
6,06
8)
18,9
50
(1
95,2
94)
Profi
t/(lo
ss) f
or t
he y
ear
117,
795
233
,421
(3
1,76
8)
144
,968
58,
629
67,
017
(145
,706
)
444
,356
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
77forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements4
SEG
MEN
T IN
foR
MA
TIo
N (c
ontin
ued)
T
he s
egm
ent
asse
ts a
nd li
abili
ties
at S
epte
mbe
r 30
, 201
1 an
d ca
pita
l exp
endi
ture
for
the
yea
r th
en e
nded
are
as
follo
ws:
A
uto
mo
tive
En
erg
y an
d
Hea
d o
ffice
an
d In
du
stri
al
Inte
gra
ted
Ind
ust
rial
oth
er
and
oth
er
Hel
d f
or
Eq
uip
men
t R
etai
l In
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nce
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ases
IT
C
Inve
stm
ents
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stm
ents
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b-t
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l Sa
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l
$ $
$ $
$
$ $
$ $
$
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l ass
ets
1,00
3,58
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311,
680
1,41
3,49
2 64
4,53
8 38
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,334
,429
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8,76
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600
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258
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,845
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8,79
2 96
2,90
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ital e
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95,1
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the
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me
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emen
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8
,431
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431
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-
870
-
11,0
37
-
11,0
37
78 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
4 SE
GM
ENT
INfo
RM
ATI
oN
(con
tinue
d)
Inte
r-se
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ansf
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inve
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prop
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up’s
six
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fou
r m
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gh t
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a re
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al b
asis
.
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n op
erat
ions
occ
ur in
the
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e co
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. Th
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tal A
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2 20
11
2012
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2012
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nti
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per
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337
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082
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340
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2,68
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66
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436
125
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3,
327,
871
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7
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159
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074
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916
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275
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aica
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,788
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4
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25
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85
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944
13
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815
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08
715
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d O
ffice
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(148
,677
)
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,752
) –
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146,
488
8
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80
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9
6
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600
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sfer
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ified
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59
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88
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23
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68
59
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03,6
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6,32
3 10
,768
Tota
l
8,
449,
704
8,21
0,25
8 37
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4 23
8,22
4
79forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
4 SE
GM
ENT
INfo
RM
ATI
oN
(con
tinue
d)
Inte
r-se
gmen
t tr
ansf
ers
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rans
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ital e
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re c
ompr
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hel
d fo
r sa
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sset
s.
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up’s
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are
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ven
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asis
.
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n op
erat
ions
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ur in
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hom
e co
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. Th
e ar
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2 20
11
2012
20
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2012
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$
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Co
nti
nu
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per
atio
ns:
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idad
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ago
5,02
6,00
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501
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314
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212,
337
277,
082
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340
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ados
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3
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436
125
,575
3,
327,
871
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23
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854
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38
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ana
7
66,1
77
687,
378
103,
159
92,
074
392,
916
330,
275
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152
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8
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aica
662
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659
,167
4
8,61
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7,70
8 39
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56,7
82
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25
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85
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er
10,
944
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815
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08
715
Hea
d O
ffice
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6
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600
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456
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sfer
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sal g
rou
p c
lass
ified
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hel
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070
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ados
59
0,74
3 7
02,5
88
6,3
23
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68
59
0,74
3 7
03,6
58
6,32
3 10
,768
Tota
l
8,
449,
704
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0,25
8 37
4,44
4 23
8,22
4
80 2012
81forward focused
82 2012
83forward focused
84 2012
1 GENERAL INfoRMATIoN
Neal & Massy Holdings Limited (the ‘Company’), was incorporated in the Republic of Trinidad and Tobago in 1923. The address of
its registered office is 63 Park Street, Port of Spain, Trinidad. The Company and its subsidiaries, (together, the Group) is engaged in
trading, manufacturing, service industries and finance in Trinidad and Tobago and the wider Caribbean region. The Company has a
primary listing on the Trinidad and Tobago Stock Exchange. These consolidated financial statements were authorised for issue by the
Board of Directors on December 18 2012.
The principal subsidiaries are as follows:
Percentage Country of equity capital Incorporation held
Automotive & Industrial Equipment
Neal&MassyAutomotiveLtd TrinidadandTobago 100%
CityMotors(1986)Limited TrinidadandTobago 100%
TracmacEngineeringLimited TrinidadandTobago 100%
AutomotiveComponentsLimited TrinidadandTobago 100%
TobagoServicesLimited TrinidadandTobago 100%
MasterServLimited TrinidadandTobago 100%
AssociatedIndustriesLimited Guyana 100%
Pres-T-ConLimited TrinidadandTobago 84.2%
Energy & Industrial Gases
Neal&MassyEnergyLimited TrinidadandTobago 100%
Neal&MassyEnergyServicesLimited TrinidadandTobago 100%
Neal&MassyEnergyResourcesLimited TrinidadandTobago 100%
NMInsertech(Caribbean)Limited TrinidadandTobago 100%
Neal&MassySupplyChainIntegratorsLimited TrinidadandTobago 51%
IndustrialGasesLimited TrinidadandTobago 57.3%
TrintogasCarbonicsLimited TrinidadandTobago 100%
NMPetrochemicalsServicesLimited TrinidadandTobago 100%
GasProductsLimited Jamaica 100%
DemeraraOxygenCompanyLimited Guyana 92.9%
Integrated Retail
TradingandDistributionLimited TrinidadandTobago 100%
HiloFoodStoresDivision TrinidadandTobago 100%
ArveeFoodMasterLimited TrinidadandTobago 100%
AthabascaLimited TrinidadandTobago 100%
SuperCentreLimited Barbados 100%
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
85forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
1 GENERAL INfoRMATIoN (continued)
The principal subsidiaries are as follows: (continued)
Percentage Country of equity capital Incorporation held
Integrated Retail (continued)
Marketing&DistributionDivision TrinidadandTobago 100%
HugginsShipping&CustomsBrokerageLimited TrinidadandTobago 100%
MelvilleShippingLimited TrinidadandTobago 100%
NMHTrading&Distribution(Jamaica)Limited Jamaica 100%
Trading&DistributionInc Guyana 92.9%
TridentForwardingServicesInc Barbados 100%
SBIDistributionInc Barbados 100%
DacostaDistributionLimited Barbados 100%
DacostaManningsRetailLimited Barbados 100%
BoothSteamshipCompany(B’dos)Limited Barbados 100%
CargoHandlersLimited Barbados 100%
Retail&DistributionInternationalInc St.Lucia 100%
KnightsLimited Barbados 99.9%
N&MRemittanceServicesLimited TrinidadandTobago 100%
GeneralFinanceCorporationLimited TrinidadandTobago 100%
MagnaRewardsInc Barbados 90%
MagnaRewards(Jamaica)Limited Jamaica 51.3%
MagnaRewards(StLucia)Limited StLucia 51.3%
MagnaRewards(Trinidad)Limited TrinidadandTobago 51.3%
MagnaRewardsCaribbeanInc Barbados51.3%
Tourism / Hospitality
AlmondResortsInc Barbados 52%
CasuarinaHoldingsInc(Note2.2) Barbados 49.9%
Information Technology & Communications and other Services
IlluminatTrinidad&TobagoLimited TrinidadandTobago 100%
Illuminat(Antigua)Limited Antigua 100%
Illuminat(Barbados)Limited Barbados 100%
Illuminat(Jamaica)Limited Jamaica 100%
86 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
1 GENERAL INfoRMATIoN (continued)
The principal subsidiaries are as follows: (continued)
Percentage Country of equity capital Incorporation held
Information Technology & Communications and other Services (continued)
CCSGuyanaLimited Guyana 92.9%
ThreeSixtyCommunicationsLimited TrinidadandTobago 75%
NealcoDatalinkLimited TrinidadandTobago 100%
Pereira&CompanyLimited TrinidadandTobago 100%
NMSecuritySolutionsInc Guyana 92.9%
UnitedInsuranceCompanyLimited Barbados 100%
NealcoRealEstateLimited TrinidadandTobago 100%
NealcoPropertiesLimited TrinidadandTobago 100%
PELEnterprisesLimited Barbados 100%
Neal&Massy(Barbados)Limited Barbados 100%
TheInterregionalReinsuranceCoLimited CaymanIslands 100%
S.P.MussonSon&CompanyLimited Barbados 100%
SunsetCrestHoldingsInc Barbados 100%
WarrensRealtyInc Barbados 100%
RobertsManufacturingLimited Barbados 50.5%
T.GeddesGrant(Barbados)Limited Barbados 100%
NMServicesLimited Guyana 92.9%
SeawellAirServicesLimited Barbados 100%
BCBCommunicationsInc Barbados 51%
Head office
Neal&MassyLimited TrinidadandTobago 100%
TheBarbadosShipping&TradingCo.Limited Barbados 100%
Neal&MassyGuyanaLimited Guyana 92.9%
87forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
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.
2.1 Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) and IFRIC interpretations. The consolidated financial statements have been prepared under the historical cost convention
as modified by the revaluation of available-for-sale financial assets, financial assets and financial liabilities (including derivative
instruments) at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated
financial statements are disclosed in Note 4.
(a) Standards, amendments and interpretations adopted by the Group
The Group has adopted the following new and amended standards and interpretations as of 1 October 2011:
Amendments to IFRS 7, ‘Financial instruments: Disclosures’ on transfers of assets (effective 1 July 2011). These
amendments arise from the IASB’s review of off- balance-sheet activities. The amendments will promote transparency
in the reporting of transfer transactions and improve users’ understanding of the risk exposures relating to transfers of
financial assets and the effect of those risk on an entity’s financial position, particularly those involving securitisation
of financial assets.
Annual improvements to IFRSs 2010 (effective 1 January 2011). This set of amendments includes changed to six standards
and one IFRIC:
IFRS 1, ‘First time adoption’.
IFRS 3, ‘Business combinations’.
IFRS 7, ‘Financial instruments; Disclosures’.
IAS 1, ‘Presentation of financial statements’.
IAS 27, ‘Separate financial statement’.
IAS 34, ‘Interim financial reporting’.
IFRIC 13,’Customer loyalty programmes’.
Amendment to IFRIC 14, ‘Prepayments of a minimum funding requirement’ (effective 1 January 2011). This amendment
will have a limited impact, as it applies only to entities that are required to make minimum funding contributions to a
defined benefit pension plan. It removes an unintended consequence of IFRIC 14, ‘IAS 19 – The limit on a defined benefit
asset, minimum funding requirements and their interaction’, relating to voluntary pension pre-payments when there
is a minimum funding requirement.
88 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.1 Basis of preparation (continued)
(b) Standards, amendments and interpretations effective for the year but not relevant:
IAS 24 (revised), ‘Related party disclosures’ (effective 1 January 2011). This revised standard removes the requirement
for government related entities to disclose details of all transactions with the government and other government-related
entities and it clarifies and simplifies the definition of a related party.
Amendments of IFRS 1, ‘First time adoption’ on fixed dates and hyperinflation (effective 1 July 2011). These amendments
include two changes to IFRS 1, First-time adoption of IFRS’. The first replaces references to a fixed date of 1 January 2004
with ‘the date of transition of IFRSs’, thus eliminating the need for entities adopting IFRSs for the first time to restate
derecognition transactions that occurred before the date of transition to IFRSs. The second amendment provides guidance
on how and entity should resume presenting financial statements in accordance with IFRSs after a period when the entity
was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation.
(c) Standards, amendments and interpretations that are not yet effective for the financial year beginning 1 october
2011 and not early adopted by the Group. The impact of the following standards has not yet been evaluated:
Amendment to IAS 12 ‘Income taxes’ on deferred tax( effective for periods beginning on or after 1 January, 2012). IAS
12, ‘Income taxes’, currently requires an entity to measure the deferred tax relating to an asset depending on whether the
entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess
whether recovery will be through use or through sale when the asset is measured using the fair value model in
IAS 40, ‘ Investment property’. This amendment therefore introduces an exception to the existing principle for the
measurement of deferred tax assets or liabilities arising on investment property measured at fair value. As a result
of the amendments, SIC-21, ‘Income taxes – recovery of revalued non-depreciable assets’, will no longer apply
to investment properties carried at fair value. The amendments also incorporate into IAS 12 the remaining guidance
previously contained in SIC-21, which is withdrawn.
Amendment to IAS 1,‘Financial statement presentation’ regarding other comprehensive Income (effective from periods
beginning on or after 1 July, 2012). The main change resulting from these amendments is a requirement for entities to
group items presented in other comprehensive income (OCI) on the basis of whether they are potentially reclassifiable
to profit or loss subsequently (reclassification adjustments). The amendments do not address which items are
presented in OCI.
IFRS 9, ‘Financial instruments’ − classification and measurement (effective from periods beginning on or after 1 January,
2015). This standard on classification and measurement of financial assets and financial liabilities will replace IAS 39,
‘Financial instruments: Recognition and measurement’. IFRS 9 has two measurement categories: amortised cost and fair
value. All equity instruments are measured at fair value. A debt instrument is measured at amortised cost only if the
entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. For liabilities,
the standard retains most of the IAS 39 requirements. These include amortised - cost accounting for most
89forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.1 Basis of preparation (continued)
(c) Standards, amendments and interpretations that are not yet effective for the financial year beginning 1 october
2011 and not early adopted by the Group. The impact of the following standards has not yet been evaluated:
(continued)
financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value
option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other
comprehensive income rather than the income statement, unless this creates an accounting mismatch. This change will
mainly affect financial institutions.
IFRS 10, ‘Consolidated financial statements’ (effective from periods beginning on or after 1 January, 2012). This standard
builds on existing principles by identifying the concept of control as the determining factor in whether an
entity should be included within the consolidated financial statements. The standard provides additional guidance
to assist in determining control where this is difficult to assess.
IFRS 11, ‘Joint arrangements’ (effective from periods on or after 1 January, 2013). This standard provides for a more
realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal
form. There are two types of joint arrangement: joint operations and joint ventures. Joint operations arise where a joint
operator has rights to the assets and obligations relating to the arrangement and hence accounts for its interest
in assets, liabilities, revenue and expenses. joint ventures arise where the joint operator has rights to the net assets
of the arrangement and hence equity accounts for its interest. Proportional consolidation of joint ventures is
no longer allowed.
IFRS 12, ‘Disclosures of interests in other entities’ (effective from periods beginning on or after 1 January, 2013).
This standard includes the disclosure requirements for all forms of interests in other entities, including joint
arrangements, associates, special purpose vehicles and other off – balance-
sheet vehicles.
Amendments to IFRS 10, 11 and 12 on transition guidance (effective from periods beginning on or after 1 January,
2013). These amendments also provide additional transition relief in IFRSs 10, 11 and 12, limiting the requirement
to provide adjusted comparative information toonly the preceding comparative period. For disclosures related to
unconsolidated structured entities, the amendments will remove the requirement to present comparative information
for periods before IFRS 12 is first applied.
IFRS 13, ‘Fair value measurement’ (effective from periods beginning on or after 1 January, 2013). This standard aims to
improve consistency and reduce complexity by providing a precise definition of fair value and a single source of
fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are
90 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.1 Basis of preparation (continued)
(c) Standards, amendments and interpretations that are not yet effective for the financial year beginning 1 october
2011 and not early adopted by the Group. The impact of the following standards has not yet been evaluated:
(continued)
largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance
on how it should be applied where its use is already required or permitted by other standards within IFRS or US GAAP.
IAS 27 (revised 2011). ‘Separate financial statements’ (effective from periods beginning on or after 1 January, 2013).
This standard includes th on separate financial statements that are left after the control provisions of provisions IAS 27
have been included in the new IFRS 10.
IAS 28 (revised 2011). ‘Associates and joint ventures (effective from periods beginning on or after 1 January, 2013).
This standard includes the requirements for joint ventures, as well as associates, to be equity accounted following the
issue of IFRS 11.
Amendment to IFRS 7, ‘Financial instruments: Disclosures’, on offsetting financial assets and financial liabilities. This
amendment reflects the joint IASB and FASB requirements to enhance current offsetting disclosures. These new disclosures
are intended to facilitate comparison between those entities that prepare IFRS financial statements and those that prepare
US GAAP financial statements.
Amendment to IAS 32, ‘Financial instruments: Presentation’, on offsetting financial assets and financial liabilities (effective
from periods beginning on or after 1 January, 2013). This amendment updates the application guidance in IAS 32,
‘Financial instruments: Presentation’, to clarify some of the requirements for offsetting financial assets and financial
liabilities on the balance sheet.
Amendment to IFRS 1, ‘First time adoption’, on government loans (effective from periods beginning on or after 1 January,
2013). This amendment addresses how a first-time adopter would account for a government loan with a below-market rate
of interest when transitioning to IFRS. It also adds an exception to the retrospective application of IFRS, which provides
the same relief to first-time adopters granted to existing preparers of IFRS financial statements when the requirement
was incorporated into IAS 20 in 2008.
91forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.2 Consolidation
(a) Subsidiaries
Subsidiaries are all entities over which the Group has power to govern the financial and operating policies generally
accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when assessing whether the Group controls another
entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-
consolidated from the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the
equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair
values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in
the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.
Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration
arising from contingent consideration amendments. Cost also includes direct attributable costs of investment.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the
identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary
acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive
income.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
AlthoughtheGrouphasonlya49.9%effectiveownershipinterestinacompany,thisentityistreatedasasubsidiary,
as the Group is able to govern the financial and operating policies of the company by virtue of an agreement with the
other investors.
(b) Transactions with non-controlling interests
The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For
purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired
of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling
interests are also recorded in equity.
When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to
its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount
for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In
addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as
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September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.2 Consolidation (continued)
(b) Transactions with non-controlling interests (continued)
if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in
other comprehensive income are reclassified to profit or loss.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of
the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.
(c) Associates and Joint ventures
Associates are all entities over which the Group has significant influence but not control, generally accompanying a
shareholdingofbetween20%and50%ofthevotingrights.Investmentsinassociatesareaccountedforusingtheequity
method of accounting and are initially recognised at cost. The Group’s investment in associates includes goodwill (net of
any accumulated impairment loss) identified on acquisition.
The Group’s share of its associates’ post acquisition profits or losses is recognised in the consolidated income statement,
and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition
movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate
equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise
further losses, unless it has incurred obligations or made payments on behalf of the associate. Joint ventures are also
accounted for using the equity method. The Group discontinues the use of the equity method from the date on which it
ceases to have joint control over, or have significant influence in, a jointly controlled entity.
Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent
of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of
an impairment of the asset transferred. Accounting policies of associates and joint ventures have been changed where
necessary to ensure consistency with the policies adopted by the Group.
Dilution gains and losses arising in investments in associates are recognised in the consolidated income statement.
2.3 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-
maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Chief Executive Officer who makes strategic decisions.
2.4 foreign currency translation
(a) 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 presentation currency.
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2.4 foreign currency translation (continued)
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in the consolidated income statement.
Translation differences on non-monetary financial assets and liabilities, such as equities held at fair value through profit
or loss are recognised as part of the fair value gain or loss. Translation differences on non-monetary items such as equities
classified as available-for-sale financial assets are included in other reserves in equity.
Translation differences on debt securities and other monetary financial assets measured at fair value are included in
foreign exchange gains and losses.
(c) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation currency are translated into the presentation currency as
follows:
i) assets and liabilities for each statement of financial position presented are translated at the closing rate at the date
of that statement of financial position;
ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not
a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the transactions); and
iii) all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations,
and of borrowings and other currency instruments designated as hedges of such investments, are taken to other
comprehensive income. When a foreign operation is sold, exchange differences that were recorded in equity are
recognised in the consolidated income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities
of the foreign entity and translated at the closing rate.
2.5 Property, plant and equipment
Property, plant and equipment including land and buildings 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. The carrying amount of the replaced part is de-recognised. All other repairs and maintenance are charged to
the consolidated income statement during the financial period in which they are incurred.
94 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.5 Property, plant and equipment (continued)
Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised during the period of
time that is required to complete and prepare the asset for its intended use. Other borrowing costs are expensed.
Land is not depreciated.
Depreciation is provided on the straight-line basis at rates estimated to write-off the cost of each asset over its expected useful
life. In the case of motor vehicles, depreciation is based on cost less an estimated residual value. The estimated useful lives of
assets are reviewed periodically, taking account of commercial and technological obsolescence as well as normal wear and tear,
and depreciation rates are adjusted if appropriate.
Current rates of depreciation are:
Freeholdproperty - 2%
Leaseholdpropertyandimprovements - 2%to20%
Plantandequipment - 5%to33.3%
Rentalassets - 25%
Furnitureandfixtures - 10%to25%
Motorvehicles - 10%to25%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position
date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are included in the
consolidated income statement.
2.6 Investment property
Investment property, principally comprising freehold office buildings, is held for long-term rental yields and is not occupied by
the Group.
Investment properties are stated at amortised cost. Transaction costs are included on initial measurement. The fair values
of investment properties are disclosed in Note 7. These are assessed using internationally accepted valuation methods, such
as taking comparable properties as a guide to current market prices or by applying the discounted cash flow method. Like
property, plant and equipment, investment properties are depreciated using the straight-line method.
Thecurrentrateofdepreciationis2%.
Investment and development properties are owned or leased by the Group and held for long-term rental income and capital
appreciation and exclude properties occupied by the Group.
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2.6 Investment property (continued)
Investment properties cease recognition as investment property either when they have been disposed of or when they are
permanently withdrawn from use and no future economic benefit is expected from their disposal. Gains or losses arising from
the retirement or disposal of investment property shall be determined as the difference between the net disposal proceeds and
the carrying amount of the asset and shall be recognised in the consolidated income statement in the period of the retirement
or disposal.
2.7 Intangible assets
a) 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 represents the goodwill acquired on
acquisition of subsidiaries. Goodwill on acquisition of associates is included in ‘Investments in Associates’. 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 to those
cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in
which the goodwill arose. Neal & Massy Holdings Limited allocates goodwill to each business segment in each country in
which it operates (Note 8).
b) Computer Software
Costs associated with the maintenance of existing computer software programmes are expensed as incurred. Development
costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the
Group are recognised as intangible assets when the following criteria are met:
• itistechnicallyfeasibletocompletethesoftwareproductsothatitwillbeavailableforuse;
• managementintendstocompletethesoftwareproductanduseorsellit;
• thereisanabilitytouseorsellthesoftwareproduct;
• itcanbedemonstratedhowthesoftwareproductwillgenerateprobablefutureeconomicbenefits;
• adequate technical, financial and other resources to complete the development and to use or sell the software
product are available; and
• theexpenditureattributabletothesoftwareproductduringitsdevelopmentcanbereliablymeasured.
Directly attributable costs that are capitalised as part of the software product include the software development
employee costs and an appropriate portion of relevant overheads.
96 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.7 Intangible assets (continued)
b) Computer Software (continued)
Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development
costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Computer software development costs recognised as assets are amortised over their estimated useful lives, which do
not exceed three years.
c) Brands
Brands acquired in a business combination are recognised at fair value at the acquisition date, and are being amortised
over seven to twenty years.
2.8 Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal
of the impairment at each reporting date.
2.9 Non-current assets (or disposal groups) held for sale
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered
principally through a sale transaction and the sale is considered highly probable. They are stated at the lower of carrying amount
and fair value less costs to sell if their carrying amount is to be recovered principally through a sale transaction rather than
through continuing use and the sale is considered highly probable.
2.10 financial assets
Classification
The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity and available-for-sale. The classification depends on the purpose for which the financial assets
were acquired. Management determines the classification of its financial assets at initial recognition.
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2.10 financial assets (continued)
a) financial assets at fair value through profit or loss
This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or
loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short
term or if so designated by management. Derivatives are also categorised as held for trading unless they are designated
as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be
realised within 12 months of the statement of financial position date.
b) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They are included in current assets, except for maturities greater than 12 months after the statement of
financial position date. These are classified as non-current assets. Loans and receivables are classified as ‘trade and other
receivables’ and ‘instalment credit and other loans’ in the consolidated statement of financial position.
Instalment credit and other loans are stated at principal outstanding net of unearned finance charges and specific
allowance for loan losses.
Interest from instalment credit is recognised as it accrues on the amortised rate of the reducing balance amount at
the annual percentage rate. Interest earned on other forms of financing is calculated as is appropriate to individual
transactions.
c) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of
the other categories. They are included in non-current assets unless management intends to dispose of the investment
within 12 months of the statement of financial position date.
d) Held-to-maturity financial assets
Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed
maturities that the Group’s management has the positive intention and ability to hold to maturity. Held-to-maturity
financial assets are included in non-current assets.
e) Recognition and measurement
Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to
purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not
carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised
at fair value and transaction costs are expensed in the consolidated income statement.
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nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.10 financial assets (continued)
e) Recognition and measurement (continued)
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair
value. Unlisted equity securities for which fair values cannot be reliably measured have been recognised at cost less
impairment. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective
interest method.
Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have
been transferred and the Group has transferred substantially all risks and rewards of ownership.
Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category
are presented in the income statement within ‘other (losses)/gains – net’ in the period in which they arise. Dividend
income from financial assets at fair value through profit or loss is recognised in the income statement as part of other
income when the Group’s right to receive payments is established.
Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognised in
other comprehensive income.
When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised
in equity are included in the consolidated income statement as ‘gains and losses from investment securities’. Interest
on available-for-sale securities calculated using the effective interest method is recognised in the consolidated income
statement. Dividends on available-for-sale equity instruments are recognised in the consolidated income statement when
the Group’s right to receive payments is established.
f) Impairment of financial assets
Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or
group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are
incurred only if there is objective evidence of impairment, as a result of one or more events that occurred after the initial
recognition of the asset (a ‘loss event’), and that loss event (or events) has an impact on the estimated future cash flows
of the financial asset or group of financial assets that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
• significantfinancialdifficultyoftheissuerorobligor;
• abreachofcontract,suchasadefaultordelinquencyininterestorprincipalpayments;
• theGroup,foreconomicorlegalreasonsrelatingtotheborrower’sfinancialdifficulty,grantingtotheborrowera
concession that the lender would not otherwise consider;
• itbecomesprobablethattheborrowerwillenterbankruptcyorotherfinancialreorganisation;
• thedisappearanceofanactivemarketforthatfinancialassetbecauseoffinancialdifficulties;or
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2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.10 financial assets (continued)
f) Impairment of financial assets (continued)
• observabledataindicatingthatthereisameasurabledecreaseintheestimatedfuturecashflowsfromaportfolioof
financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the
individual financial assets in the portfolio, including:
(i) adverse changes in the payment status of borrowers in the portfolio; and
(ii) national or local economic conditions that correlate with defaults on the assets in the portfolio.
The Group first assesses whether objective evidence of impairment exists.
For the loans and receivables category, the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been
incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and
the amount of the loss is recognised in the consolidated income statement. If a loan or held-to-maturity investment has a
variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined
under the contract. The Group may measure impairment on the basis of an instrument’s fair value using an observable
market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively
to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the
reversal of the previously recognised impairment loss is recognised in the consolidated income statement.
Assets classified as available for sale
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a
group of financial assets is impaired. For debt securities, the Group uses the criteria referred to in (c) above. In the case of
equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below
its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the
cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment
loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the separate
consolidated income statement. Impairment losses recognised in the separate consolidated income statement on equity
instruments are not reversed through the separate consolidated income statement. If, in a subsequent period, the fair
value of a debt instrument classified as available for sale increases and the increase can be objectively related to an
event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the
consolidated income statement.
Impairment testing of trade receivables is described in note 2.12.
100 2012
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September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.11 Inventories
Inventories are stated at the lower of cost or net realisable value. Cost is determined using the first-in, first-out (‘FIFO’) or the
weighted average cost method. The cost of finished goods and work in progress comprise raw materials, direct labour, other
direct costs and related production overheads, but excludes interest expense. Net realisable value is the estimate of the selling
price in the ordinary course of business, less the costs of completion and selling expenses.
2.12 Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method, less provision for impairment.
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course
of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are
classified as current assets. If not, they are presented as non-current assets.
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 or financial reorganisation, and default or delinquency in payments are
considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s
carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of
the provision is recognised in the consolidated income statement within ‘selling, general and administrative expenses’.
2.13 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with
banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the
consolidated statement of financial position, bank overdrafts are shown within borrowings in current liabilities.
2.14 Share capital and reserves
Ordinary shares with discretionary dividends are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Where any Group company purchases the company’s equity share capital (treasury shares), the consideration paid, including
any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company’s equity
holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration
received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity
attributable to the company’s equity holders.
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2.15 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method.
2.16 Insurance
(i) Insurance and reinsurance contracts
Insurance and reinsurance contracts are defined as those containing significant insurance risk at the inception of the
contract, or those where at the inception of the contract there is a scenario with commercial substance where the level
of insurance risk may be significant. The significance of insurance risk is dependent on both the probability of an insured
event and the magnitude of its potential effect. Once a contract has been classified as an insurance contract, it remains
an insurance contract for the remainder of its lifetime, even if the insurance risk reduces significantly during the period.
In the normal course of business, the Group seeks to reduce the losses to which it is exposed that may cause
unfavourable underwriting results by re-insuring a certain level of risk with reinsurance companies. Reinsurance premiums
are accounted for on a basis consistent with that used in accounting for the original policies issued and the terms of the
reinsurance contracts. The Group may receive a ceding commission in connection with ceded reinsurance, which is earned
as incurred.
Reinsurance contracts ceded do not relieve the Group from its obligations to policyholders. The Group remains liable to
its policyholders for the portion re-insured, to the extent that the reinsurers do not meet the obligations assumed under
the reinsurance agreements.
(ii) Amounts receivable from reinsurance companies
Included in accounts receivable on the statement of financial position, are amounts receivable from reinsurance companies,
which consist primarily of amounts due in respect of ceded insurance liabilities. Recoverable amounts are estimated in
a manner consistent with the outstanding claims reserve or settled claims associated with the re-insured policies and in
accordance with the relevant reinsurance contract.
If amounts receivable from reinsurance companies are impaired, the Group reduces the carrying amount accordingly
and recognises an impairment loss in the consolidated income statement. A reinsurance asset is impaired if there is
objective evidence that the Group may not receive all, or part, of the amounts due to it under the terms of the reinsurance
contract.
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September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.17 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at
amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the
consolidated income statement over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the statement of financial position date.
2.18 Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to
the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement
of financial position date in the countries where the Group’s subsidiaries, associates and joint ventures operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulations are subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax
is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined
using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are
expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates and joint
ventures, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that
the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances
on a net basis.
The principal temporary differences arise from depreciation on property, plant and equipment, retirement benefits and tax
losses carried forward. Deferred tax assets relating to the carrying forward of unused tax losses are recognised to the extent
that it is probable that future taxable profit will be earned against which the unused tax losses can be utilised.
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2.19 Employee benefits
(a) Pension obligations
Group companies operate various pension plans. The majority of the Trinidad and Tobago resident employees are members
of either the Neal & Massy Group Pension Fund Plan, the Retirement Income Security Plan or the T. Geddes Grant Limited
Pension Fund Plan.
The Neal & Massy Group Pension Fund Plan, contributions to which were frozen on 31 January 1990, is a defined
contribution plan whose assets are held separately from those of the Group in an independently administered fund. The
most recent actuarial valuation, at 31 March 2011, revealed that the plan is adequately funded. There are certain benefits
payable by the Neal & Massy Group Pension Fund Plan which fall within the scope of IAS 19 (revised) – Employee Benefits.
The Retirement Income Security Plan incorporates an employee stock ownership plan which is funded by contributions
made by the employer, and is funded by the employees. Contributions to the Plan are accounted for on the accrual basis
and the assets are held separately from those of the Group in independently administered funds.
T. Geddes Grant Limited Pension Fund Plan is a defined contribution plan whose assets are held separately from those of
the Group in an independently administered fund. Contributions to the plan are accounted for on the accrual basis and
are reviewed by independent actuaries on the basis of triennial valuations.
The majority of the employees of the overseas companies participate in either defined contribution or defined benefit
pension plans which are separate from the Trinidad and Tobago plans.
A defined benefit plan is a pension plan that defines an amount of pension benefit to be provided, usually as a function
of one or more factors such as age, years of service or compensation. A defined contribution plan is a pension plan under
which the Group pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligations
to pay further contributions if the fund does not hold sufficient assets to pay all employees benefits relating to employee
service in the current and prior periods.
The asset and liability recognised in the consolidated statement of financial position in respect of defined benefit
pension plans is the present value of the defined benefit obligation at the statement of financial position date less the fair
value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected
unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future
cash outflows using interest rates of government bonds that are denominated in the currency in which the benefits will
be paid, and that have terms to maturity approximating to the terms of the related pension obligation.
Actuarial gains and losses arising from experience adjustments, changes in actuarial assumptions and amendments to
pension plans are charged or credited to equity in other comprehensive income in the period in which they arise.
Past-service costs are recognised immediately in income, unless the changes to the pension plan are conditional on the
employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are
amortised on a straight-line basis over the vesting period.
104 2012
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Expressed in Thousands of Trinidad and Tobago dollars
2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.19 Employee benefits
(a) Pension obligations (continued)
For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans
on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions
have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions
are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
(b) other post-employment obligations
Certain Group companies provide post-retirement healthcare benefits to their retirees. The entitlement to these benefits is
usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service
period. The expected costs of these benefits are accrued over the period of employment using the same accounting
methodology as used for defined benefit pension plans. Actuarial gains and losses arising from experience adjustments,
and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in
which it arises. These obligations are valued annually by independent qualified actuaries.
(c) Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or
whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination
benefits when it is demonstrably committed to a termination when the entity has a detailed formal plan to terminate the
employment of current employees without possibility of withdrawal. In the case of an offer made to encourage voluntary
redundancy, the termination benefits are measured based on the number of employees expected to accept the offer.
Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.
(d) Bonus plans
A liability for employee benefits in the form of bonus plans is recognised in other provisions when there is no realistic
alternative but to settle the liability and at least one of the following conditions are met:
• thereisaformalplanandtheamountstobepaidaredeterminedbeforethetimeofissuingthefinancialstatements;
or
• pastpracticehascreatedavalidexpectationbyemployeesthattheywillreceiveabonus/profitsharingandtheamount
can be determined before the time of issuing the financial statements.
Liabilities for bonus plans are expected to be settled within 12 months and are measured at the amounts expected to be
paid when they are settled.
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2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.20 Share-based payments
The Group operates an equity-settled, share-based compensation plan, under which the entity receives services from employees
as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for
the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair
value of the options granted:
• includinganymarketperformanceconditions(forexample,anentity’sshareprice);
• excludingtheimpactofanyserviceandnon-marketperformancevestingconditions(forexample,profitability,salesgrowth
targets and remaining an employee of the entity over a specified time period); and
• includingtheimpactofanynon-vestingconditions(forexample,therequirementforemployeestosave).
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total
expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be
satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest
based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.
When the options are exercised, the company issues new shares. The proceeds received net of any directly attributable
transaction costs are credited to share capital.
The grant by the company of options over its equity instruments to the employees of subsidiary undertakings in the Group
is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date
fair value, is recognised over the vesting period as an increase to investment.
2.21 Provisions
Provisions for dismantlement costs, restructuring costs, legal claims and all other provisions are recognised when: the Group
has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources
will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future
operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined
by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to
any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a
pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The
increase in the provision due to passage of time is recognised as interest expense.
106 2012
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September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.22 Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary
course of the Group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating
sales within the Group. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable
that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group’s activities
as described below. The Group bases its estimates on historical results, taking into consideration the type of customer, the type
of transaction and the specifics of each arrangement.
(a) Sale of goods – wholesale
The Group manufactures and sells a range of products in the wholesale market. Sales of goods are recognised
when a Group entity has delivered products to the wholesaler, the wholesaler has full discretion over the channel and
price to sell the products, and there is no unfulfilled obligation that could affect the wholesaler’s acceptance of the
products. Delivery does not occur until the products have been shipped to the specified location, the risks of obsolescence
and loss have been transferred to the wholesaler, and either the wholesaler has accepted the products in accordance
with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for
acceptance have been satisfied.
Sales are recorded based on the price specified in the sales contracts, net of the estimated volume discounts and
returns at the time of sale. Accumulated experience is used to estimate and provide for the discounts and returns. The
volume discounts are assessed based on anticipated annual purchases. No element of financing is deemed present as the
sales are made with credit terms as specified for entities within the Group, which is consistent with the market practice.
(b) Sale of goods – retail
The Group operates retail outlets for selling a range of products. Sales of goods are recognised when a Group entity sells
a product to the customer. Retail sales are usually in cash or by credit card.
It is the Group’s policy to sell its products to the retail customer with a right to return within a stipulated number of
days as required by the entities in the Group. Accumulated experience is used to estimate and provide for such returns at
the time of sale.
(c) Sale of services
The Group is engaged in providing a number of services. These services are provided on a time and material basis or as a
fixed-price contract, with contract terms generally ranging from less than one year to three years.
Revenue from time and material contracts, typically from delivering design services, is recognised under the percentage-
of-completion method. Revenue is generally recognised at the contractual rates. For time contracts, the stage of completion
is measured on the basis of labour hours delivered as a percentage of total hours to be delivered. For material contracts,
the stage of completion is measured on the basis of direct expenses incurred as a percentage of the total expenses to be
incurred.
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2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.22 Revenue recognition (continued)
(c) Sale of services (continued)
Revenue from fixed-price contracts for delivering design services is also recognised under the percentage-of-completion
method. Revenue is generally recognised based on the services performed to date as a percentage of the total services to
be performed.
Revenue from fixed-price contracts is generally recognised in the period the services are provided, using a straight-line
basis over the term of the contract.
If circumstances arise that may change the original estimates of revenues, costs or extent of progress toward completion,
estimates are revised. These revisions may result in increases or decreases in estimated revenues or costs and are reflected
in income in the period in which the circumstances that give rise to the revision become known by management.
(d) Rental income
Rental income from investment property leased out under an operating lease is recognised in the income statement on a
straight-line basis over the lease term.
Contingent rents, such as turnover rents, rent reviews and indexation, are recorded as income in the periods in which
they are earned. Rent reviews are recognised when such reviews have been agreed with tenants.
(e) Interest income
Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Group
reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original
effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on
impaired loans and receivables is recognised using the original effective interest rate.
(f) Dividend income
Dividend income is recognised when the shareholder’s right to receive payment is established.
2.23 Leases
Group is the lessee
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated
income statement on a straight-line basis over the period of the lease.
The Group leases certain property, plant and equipment. Leases of property, plant and equipment where, the Group has
substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the lease’s
commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance
108 2012
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September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
2 SUMMARy of SIGNIfICANT ACCoUNTING PoLICIES (continued)
2.23 Leases (continued)
Group is the lessee (continued)
charges, are included in other long-term payables. The interest element of the finance cost is charged to the 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 is depreciated over the shorter of the useful life of
the asset and the lease term.
Group is the lessor
When assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable. The
difference between the gross receivable and the present value of the receivable is recognised as unearned finance income.
Lease income is recognised over the term of the lease using the net investment method, which reflects a constant periodic rate
of return. Assets leased out under operating leases are included in property, plant and equipment in the statement of financial
position. They are depreciated over their expected useful lives on a basis consistent with similarly owned property, plant and
equipment. Rental income (net of any incentives given to lessees) is recognised on a pattern reflecting a constant periodic rate
of return on the lessor’s net investment.
2.24 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period
in which the dividends are approved by the Company’s directors.
3 fINANCIAL RISK MANAGEMENT
3.1 financial risk factors
The Group’s activities expose it to a variety of financial risks. The Group’s aim therefore is to achieve an appropriate balance
between risk and return and minimise potentially adverse effects on the Group’s financial performance. This is achieved by the
analysis, evaluation, acceptance and management of the Group’s risk exposure.
The Board of Directors is ultimately responsible for the establishment and oversight of the Group’s risk management
framework. The main financial risks of the Group relate to the availability of funds to meet business needs, the risk of default by
counterparties to financial transactions, and fluctuations in interest and foreign exchange rates. The treasury function manages
the financial risks that arise in relation to underlying business needs and operates within clear policies and stringent parameters.
The function does not operate as a profit centre and the undertaking of speculative transactions is not permitted.
The Group’s principal financial liabilities comprise bank loans, operating overdrafts and trade payables, which are used to
finance Group operations. There are various financial assets such as trade receivables, investments, loans receivable, cash and
short term deposits which emanate from its operations. The main risks arising from the Group’s financial instruments are credit
risk, liquidity risk, foreign currency risk and interest rate risk.
The following contains information relative to the Group’s exposure to each of the above risks, including quantitative
disclosures.
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3 fINANCIAL RISK MANAGEMENT (continued)
3.1 financial risk factors (continued)
(a) Market risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures.
Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in
foreign operations.
(i) Currency risk
The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to
the US dollar. The Group manages its foreign exchange risk by ensuring that the net exposure in foreign assets and
liabilities is kept to an acceptable level by monitoring currency positions as well as holding foreign currency balances.
The values of debt, investments and other financial liabilities, denominated in currencies other than the functional
currency of the entities holding them, are subject to exchange rate movements. The foreign exchange positions at
30 September 2012 relate mainly to USD loans. The single largest USD loan as at year end amounted to US$35,000
(2011: US$35,000). A 2% change in USD rates would lead to a TT$4,494 2011: TT$4,494) loss/gain in the
consolidated income statement.
(ii) Interest rate risk
The Group’s exposure to changes in market interest rates relates primarily to the long term debt obligations, with
floating interest rates. The exposure to interest rate risk on cash held on deposit is not significant.
At theendedof2012, interest rateswerefixedonapproximately72%of theborrowings (2011:69%).The
impact on the consolidated income statement to a 50 basis points change in floating interest rates is $2,024 in 2012
and $2,177 in 2011.
(iii) Price risk
The Group is exposed to equity securities price risk because of investments held by the Group and classified on the
consolidated statement of financial position as available-for-sale. The Group is not exposed to commodity price risk.
To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification
of the portfolio is done in accordance with the limits set by the Group.
(b) Credit risk
The Group is exposed to credit risk, which is the risk that may arise from its customers, clients and counterparties failing
to discharge their contractual obligations. The credit exposures arise primarily from the Group’s receivables on sales,
investments and cash held on deposit at various financial institutions.
The Group has no significant concentrations of credit risk and trades mainly with recognised, creditworthy third parties.
It is the Group’s policy that all customers trading on credit terms are subject to credit verification procedures. These
procedures are elements of a structured credit control system and include an analysis of each customer’s creditworthiness
and the establishment of limits before credit terms are set. In addition, receivable balances are monitored on an ongoing
110 2012
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September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
3 fINANCIAL RISK MANAGEMENT (continued)
3.1 financial risk factors (continued)
(b) Credit risk (continued)
basis with the result that the Group’s exposure to bad debts is not significant. The maximum exposure is the carrying
amount as disclosed in note 3.1(c).
With respect to credit risk arising from the other financial assets of the Group, namely cash and cash equivalents
and available-for-sale financial investments, the Group’s exposure to credit risk arises principally from default of the
counterparty.
(c) Liquidity risk
Liquidity risk is the risk which may arise if the Group is unable to meet the obligations associated with its financial liabilities
when they fall due.
The Group’s liquidity risk management process is measured and monitored by senior management. This process
includes monitoring current cash flows on a frequent basis, assessing the expected cash inflows as well as ensuring that
the Group has adequate committed lines of credit to meet its obligations.
The following is an analysis of the undiscounted contractual cash flows payable under financial liabilities. Undiscounted
cash flows will differ from both the carrying values and the fair values.
Maturity analysis of financial liabilities
More than Contractual Carrying < 1 year 1 – 5 yrs 5 yrs cash flows amount $ $ $ $ $
2012
Financial Liabilities:
Bank overdraft and other
short term borrowings 4,038 - - 4,038 4,038
Other borrowings 453,220 820,575 477,904 1,751,699 1,451,938
Customers’ deposits 209,716 - - 209,716 206,122
Trade payables 665,438 - - 665,438 665,438
Liabilities on insurance contract 795,407 - - 795,407 795,407
Subtotal 2,127,819 820,575 477,904 3,426,298 3,122,943
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3 fINANCIAL RISK MANAGEMENT (continued)
3.1 financial risk factors (continued)
(c) Liquidity risk (continued) More than Contractual Carrying < 1 year 1 – 5 yrs 5 yrs cash flows amount $ $ $ $ $
2011
Financial Liabilities:
Bank overdrafts and other
short term borrowings 4,616 - - 4,616 4,616
Other borrowings 322,885 994,188 565,766 1,882,839 1,413,239
Customers’ deposits 222,597 151 - 222,748 215,446
Trade payables 656,527 - - 656,527 656,527
Liabilities on insurance contracts 832,473 - - 832,473 832,473
Total 2,039,098 994,339 565,766 3,599,203 3,122,301
3.2 Capital Risk Management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the
cost of capital.
In order to maintain or adjust the capital structure, the Group may vary 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. The ratio is calculated as net debt divided by total capital.
Net debt is calculated as total borrowings (current and non-current borrowings) less cash and cash equivalents. Total capital is
calculated as total equity as shown in the consolidated statement of financial position plus net debt.
112 2012
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September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
3 fINANCIAL RISK MANAGEMENT (continued)
3.2 Capital Risk Management (continued)
2012 2011 $ $
Total borrowings (Note 23) 1,455,976 1,417,855
Less: Cash and cash equivalents (Note 19) (1,304,737) (1,123,142)
Net debt 151,239 294,713
Total equity 3,521,068 3,226,885
Total capital 3,672,307 3,521,598
Gearingratio 4% 8%
3.3 fair value estimation
The Group uses the following hierarchy for determining and disclosing the fair value of financial assets and liabilities recorded
at fair value in the consolidated financial statements based upon the level of judgement associated with the inputs used to
measure their fair value. The hierarchical levels, from lowest to highest based on the amount of subjectivity associated with the
inputs to fair valuation of these assets and liabilities are as follows:
Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. The
types of assets carried at level 1 fair value are equity and debt securities listed in active markets.
Level 2 – Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or
indirectly. These inputs are derived principally from or corroborated by observable market data by correlation or other means at
the measurement date and for the duration of the instruments’ anticipated life.
The assets generally included in this fair value hierarchy are time deposits, foreign exchange and interest rate derivatives
and certain investment funds. Foreign exchange derivatives and interest rate derivatives are valued using corroborated market
data. The liabilities generally included in this fair value hierarchy consist of foreign exchange derivatives and options on equity
securities.
Level 3 – Inputs that are unobservable for the asset or liability for which there are no active markets to determine a price. These
financial instruments are held at cost being the fair value of the consideration paid for the acquisition of the investments, and
are regularly assessed for impairment.
The fair value of financial instruments traded in active markets is based on quoted market prices at the statement of financial
position date. The quoted market price used for financial assets held by the Group is the current bid price.
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3 fINANCIAL RISK MANAGEMENT (continued)
3.3 fair value estimation (continued)
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques.
The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each statement
of financial position date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt. Other
techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.
The nominal value less impairment provision of trade receivables and payables are assumed to approximate their fair values.
The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the
current market interest rate that is available to the Group for similar financial instruments.
The following table presents the Group’s assets and liabilities that are measured at fair value at 30 September 2012:
Level 1 Level 2 Level 3 Total $ $ $ $
Assets
Financial Assets at fair value through profit or loss
- Trading securities 114,844 - - 114,844
Available-for-sale financial assets
- Equity Securities 14,589 - 499 15,088
- Debt securities 4,713 - - 4,713
134,146 - 499 134,645
The following table presents the Group’s assets and liabilities that are measured at fair value at 30 September 2011:
Level 1 Level 2 Level 3 Total $ $ $ $
Assets
Financial Assets at fair value through profit or loss
- Trading securities 77,806 - - 77,806
Available-for-sale financial assets
- Equity Securities 17,704 - 503 18,207
- Debt securities 4,818 - - 4,818
100,328 - 503 100,831
114 2012
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September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
4 CRITICAL ACCoUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances.
4.1 Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom 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 discussed below.
(a) Estimated impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated
in Note 2.7. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations.
These calculations require the use of estimates (Note 8).
(b) Income taxes
The Group is subject to income taxes in several jurisdictions. Significant judgement is required in determining the provision
for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain
during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates
of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that
were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such
determination is made.
c) fair value of financial instruments
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques.
The Group uses its judgement to select a variety of methods and make assumptions that are mainly based on market
conditions existing at each statement of financial position date. The Group uses discounted cash flow analyses for various
available-for-sale financial assets that were not traded in active markets.
(d) Revenue recognition
The Group uses the percentage-of-completion method in accounting for its sales of services. Use of the percentage-of-
completion method requires the Group to estimate the services performed to date as a proportion of the total services to
be performed.
(e) Pension benefits
The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis
using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the
discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.
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4 CRITICAL ACCoUNTING ESTIMATES AND JUDGEMENTS (continued)
4.1 Critical accounting estimates and assumptions (continued)
(e) Pension benefits (continued)
The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to
determine the present value of estimated future cash outflows expected to be required to settle the pension obligations.
In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that
are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the
terms of the related pension obligation.
Other key assumptions for pension obligations are based in part on current market conditions. Additional information
is disclosed in Note 16.
(f) Liabilities on insurance contracts
Outstanding claims consist of estimates of the ultimate cost of claims incurred that have not been settled at the statement
of financial position date, whether reported or not, together with related claims handling costs. Significant delays may
be experienced in the notification and settlement of certain types of general insurance claims, such as general liability
business.
Estimates are calculated using methods and assumptions considered to be appropriate to the circumstances of the
Company and the business undertaken. This provision, while believed to be adequate to cover the ultimate cost of losses
incurred, may ultimately be settled for a different amount. It is continually reviewed and any adjustments are recorded in
operations in the period in which they are determined.
(g) Assets held for sale
Assets held for sale are measured at the lower of their carrying values and fair value less costs to sell.
The estimates of fair values less costs to sell requires the use of estimates.
4.2 Critical judgements in applying the entity’s accounting policies
Impairment of available-for-sale equity investments
The Group follows the guidance of IAS 39 to determine when an available-for-sale equity investment is impaired. This
determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the
duration and extent to which the fair value of an investment is less than its cost; and the financial health of and short term
business outlook for the investee, including factors such as industry and sector performance, changes in technology and
operational and financing cash flow.
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September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
5 SEGMENT INfoRMATIoN
The Chief Operating Decision Maker (CODM) is the Chief Executive Officer (CEO). Management has determined the operating
segments based on the reports reviewed by the CEO and the Board of Neal & Massy Holdings Limited.
The CEO and the Board considers the business from both a geographic and business unit perspective. Geographically, management
considers the performance of operating companies in Trinidad and Tobago, Barbados, Guyana and Jamaica.
For the financial year 2012, the operating companies within the Group have been restructured. These changes resulted in a change
in the operating segments from 2011.
At 30 September 2012, the Group is organised into six main business segments:
1) Automotive and Industrial Equipment;
2) Energy and Industrial Gases;
3) Integrated Retail;
4) Insurance;
5) Information Technology and Communications (ITC);
6) Other Investments
The CEO and the Board assesses the performance of the operating segments based on a measure of profit before tax, profit after tax
and asset utilization.
Automotive and Industrial Equipment
This segment derives its revenue mainly from the sale of new and used vehicles, spare parts and industrial equipment and also includes
the manufacturing and sale of pre-stressed concrete products and the installation of deep foundations.
Energy and Industrial Gases
This segment derives its revenue from the sale of gas and the provision of electrical, instrumentation and construction services for
offshore platforms. Revenue is also generated from the supply of technical resources, valve services and technical equipment to the
energy-based industries in Trinidad and Tobago and the region.
Integrated Retail
This segment derives its revenue mainly from the sale of retail and wholesale foods, general merchandise and distribution and logistics
operations. It also includes a financing company that accepts deposits for fixed terms and grants of instalment credit secured on
specific equipment and goods mortgage loans and undertakes insurance premium financing and leasing.
Insurance
This segment includes our insurance company, called United Insurance Company Limited. The Company acts as a primary insurer
for property, motor, liability and marine risk within the Caribbean region.
ITC
This segment derives its revenue mainly from the sale and rental of technology-based solutions, office interiors and the provision of
long-distance communications.
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5 SEGMENT INfoRMATIoN (continued)
other Investments
This segment earns revenue from consultancy, property management and other services.
Head office and other
The head office and other segment includes companies which provide management, advisory and several support services to relevant
subsidiaries across the Group.
The Group’s retirement benefit assets are deemed unallocated and are not considered to be segment assets but rather are managed
by Head Office. The amount is included in the ‘Head Office and Other’ segment.
The segment results for the year ended 30 September 2012 are as follows:
118 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
5 SE
GM
ENT
INfo
RM
ATI
oN
(con
tinue
d)
The
Gro
up’s
retir
emen
t be
nefit
ass
ets
are
deem
ed u
nallo
cate
d an
d ar
e no
t co
nsid
ered
to
be s
egm
ent
asse
ts b
ut r
athe
r ar
e m
anag
ed b
y he
ad o
ffice
. The
am
ount
is
incl
uded
in t
he “
Oth
er”
segm
ent.
The
segm
ent
resu
lts f
or t
he y
ear
ende
d 30
Sep
tem
ber
2012
as
follo
ws:
A
uto
mo
tive
En
erg
y an
d
and
Ind
ust
rial
In
teg
rate
d
In
du
stri
al
o
ther
H
ead
offi
ce
Equ
ipm
ent
Ret
ail
Insu
ran
ce
Gas
es
ITC
In
vest
men
ts
and
oth
er
Tota
l
$ $
$ $
$
$ $
$
Co
nti
nu
ing
op
erat
ion
s
Gro
up R
even
ue
2,
007,
388
5,
462,
698
26
0,35
2
798,
828
58
7,85
7
609,
426
1,
695
9,
728,
244
Inte
r-se
gmen
t re
venu
e
(9
3,94
1)
(347
,243
) –
(9
,134
) (3
6,94
6)
(92,
797)
(1
,695
) (5
81,7
56)
Third
par
ty r
even
ue
1,
913,
447
5,
115,
455
26
0,35
2
789,
694
55
0,91
1
516,
629
–
9,
146,
488
Ope
ratin
g pr
ofit/
(loss
)
se
gmen
t re
sult
20
6,77
1
321,
878
(5
,437
) 17
4,49
9
80,1
53
119,
107
(1
03,1
90)
793,
781
Fina
nce
cost
s –
Net
(12,
512)
(1
5,92
7)
31,8
14
456
(5
10)
(4,5
47)
(44,
881)
(4
6,10
7)
194,
259
30
5,95
1
26,3
77
174,
955
79
,643
11
4,56
0
(148
,071
) 7
47,6
74
Shar
e of
res
ults
of
asso
ciat
es
an
d jo
int
vent
ures
bef
ore
tax
1,
083
5,
882
–
36
,317
(4
43)
11,3
36
–
5
4,17
5
Pro
fit/
(lo
ss)
bef
ore
inco
me
tax
195,
342
31
1,83
3
26,3
77
211,
272
79
,200
12
5,89
6
(148
,071
)
801
,849
Taxa
tion
(5
5,66
8)
(69,
479)
(8
,163
) (8
8,69
5)
(21,
943)
(2
2,19
6)
8,28
2
(2
57,8
62)
Pro
fit/
(lo
ss)
for
the
year
139,
674
24
2,35
4
18,2
14
122,
577
57
,257
10
3,70
0
(1
39,7
89)
5
43,9
87
119forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements5
SEG
MEN
T IN
foR
MA
TIo
N (c
ontin
ued)
The
seg
men
t as
sets
and
liab
ilitie
s at
30
Sept
embe
r 20
12 a
nd c
apita
l exp
endi
ture
for
the
yea
r th
en e
nded
are
as
follo
ws:
A
uto
mo
tive
En
erg
y an
d
an
d In
du
stri
al
Inte
gra
ted
Ind
ust
rial
oth
er
Hea
d o
ffice
H
eld
fo
r
Equ
ipm
ent
Ret
ail
Insu
ran
ce
Gas
es
ITC
In
vest
men
ts
and
oth
er
Sub
-to
tal
Sale
To
tal
$
$ $
$
$ $
$ $
$ $
Tota
l ass
ets
1,04
2,28
4 2
,267
,346
1,
338,
147
688,
239
368,
071
1,45
7,05
1 69
7,78
5 7,
858,
923
590,
781
8
,449
,704
Ass
ocia
tes
and
jo
int
vent
ures
5,62
1
3
9,62
7
291
113,
496
2,38
6 24
5,34
4 –
406,
765
– 40
6,76
5
Tota
l lia
bilit
ies
4
85,7
01
1,01
9,60
8 94
7,92
8 23
2,00
7 19
5,29
0 32
7,07
9 1,
229,
069
4,43
6,68
2 49
1,95
4 4,
928,
636
Cap
ital e
xpen
ditu
re
1
53,6
45
135,
213
5,51
6 32
,593
26
,020
13
,564
1,
570
368,
121
6,32
3 37
4,44
4
Oth
er s
egm
ent
item
s in
clud
ed in
the
con
solid
ated
inco
me
stat
emen
t ar
e as
fol
low
s:
Dep
reci
atio
n an
d
im
pairm
ent
74,
941
51,6
86
6,69
0 2
2,31
2 28
,430
15
,948
2,
544
202
,551
19
,828
22
2,37
9
Impa
irmen
t of
goo
dwill
10
,603
1,
431
101
– –
–
– 12
,135
–
12
,135
120 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
5 SE
GM
ENT
INfo
RM
ATI
oN
(con
tinue
d)
Th
e se
gmen
t re
sults
for
the
yea
r en
ded
30 S
epte
mbe
r 20
11 a
re a
s fo
llow
s:
A
uto
mo
tive
En
erg
y an
d
and
Ind
ust
rial
In
teg
rate
d
In
du
stri
al
o
ther
H
ead
offi
ce
Equ
ipm
ent
Ret
ail
Insu
ran
ce
Gas
es
ITC
In
vest
men
ts
and
oth
er
Tota
l
$ $
$ $
$
$ $
$
Gro
up R
even
ue
1,62
4,42
6
5,1
63,8
71
2
88,2
13
765
,537
597,
530
5
82,4
49
1,
696
9,02
3,72
2
Inte
r-se
gmen
t re
venu
e
(85,
248)
(329
,355
)
(7
,049
)
(25,
145)
(77,
888)
(1
,696
)
(526
,381
)
Third
par
ty r
even
ue
1,53
9,17
8
4,8
34,5
16
2
88,2
13
758
,488
572,
385
5
04,5
61
-
8
,497
,341
Ope
ratin
g pr
ofit/
(loss
)
se
gmen
t re
sult
172,
540
308
,750
(5
4,66
7)
170
,794
76,
055
86,
091
(112
,685
)
646
,878
Fina
nce
cost
s –
Net
(9,1
40)
(12,
164)
3
1,07
1
(245
)
(779
)
(4
,578
)
(5
1,97
1)
(47,
806)
163,
400
296,
586
(23,
596)
17
0,54
9 75
,276
81
,513
(1
64,6
56)
5
99,0
72
Shar
e of
res
ults
of
asso
ciat
es a
nd
jo
int
vent
ures
bef
ore
tax
85
1
6,7
78
-
31,3
77
-
1,5
72
-
40
,578
Profi
t/(lo
ss) b
efor
e in
com
e ta
x
164,
251
303
,364
(2
3,59
6)
201
,926
75,
276
83,
085
(164
,656
)
639
,650
Taxa
tion
(4
6,45
6)
(
69,9
43)
(8,
172)
(
56,9
58)
(1
6,64
7)
(1
6,06
8)
18,9
50
(1
95,2
94)
Profi
t/(lo
ss) f
or t
he y
ear
117,
795
233
,421
(3
1,76
8)
144
,968
58,
629
67,
017
(145
,706
)
444
,356
121forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements5
SEG
MEN
T IN
foR
MA
TIo
N (c
ontin
ued)
T
he s
egm
ent
asse
ts a
nd li
abili
ties
at 3
0 Se
ptem
ber
2011
and
cap
ital e
xpen
ditu
re f
or t
he y
ear
then
end
ed a
re a
s fo
llow
s:
A
uto
mo
tive
En
erg
y an
d
an
d In
du
stri
al
Inte
gra
ted
Ind
ust
rial
oth
er
Hea
d o
ffice
H
eld
fo
r
Equ
ipm
ent
Ret
ail
Insu
ran
ce
Gas
es
ITC
In
vest
men
ts
and
oth
er
Sub
-to
tal
Sale
To
tal
$
$ $
$
$ $
$ $
$ $
Tota
l ass
ets
1,00
3,58
3 2,
311,
680
1,41
3,49
2 64
4,53
8 38
0,11
7 1
,334
,429
41
8,76
0 7,
506,
599
703,
659
8,
210,
258
Ass
ocia
tes
and
jo
int
vent
ures
4
,845
37
,644
29
1 11
5,10
6 -
24
7,49
2 -
40
5,37
8 -
40
5,37
8
Tota
l lia
bilit
ies
452,
069
1,02
8,79
2 96
2,90
0 18
2,47
7 17
5,76
3 31
6,73
4 1,
301,
416
4,42
0,15
1 5
63,2
22
4,98
3,37
3
Cap
ital e
xpen
ditu
re
95,1
43
56,3
98
2,74
0 36
,553
26
,093
7,
581
2,9
47
227,
455
10,7
69
238,
224
Oth
er s
egm
ent
item
s in
clud
ed in
the
con
solid
ated
inco
me
stat
emen
t ar
e as
fol
low
s:
Dep
reci
atio
n an
d
im
pairm
ent
67,5
18
56,4
36
4,18
1 19
,022
2
8,25
3 34
,415
3,
196
213,
021
24,0
71
237,
092
Impa
irmen
t of
goo
dwill
8
,431
1,
431
199
106
-
870
-
11,0
37
-
11,0
37
122 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
5 SE
GM
ENT
INfo
RM
ATI
oN
(con
tinue
d)
Inte
r-se
gmen
t tr
ansf
ers
or t
rans
actio
ns a
re e
nter
ed in
to u
nder
the
nor
mal
com
mer
cial
ter
ms
and
cond
ition
s th
at w
ould
als
o be
ava
ilabl
e to
thi
rd p
artie
s.
Cap
ital e
xpen
ditu
re c
ompr
ises
add
ition
s to
pro
pert
y, p
lant
and
equ
ipm
ent
and
inve
stm
ent
prop
erty
(Not
es 6
and
7).
The
Gro
up’s
five
busi
ness
seg
men
ts o
pera
te in
fou
r m
ain
geog
raph
ical
are
as, e
ven
thou
gh t
hey
are
man
aged
on
a re
gion
al b
asis
.
The
mai
n op
erat
ions
occ
ur in
the
hom
e co
untr
y of
the
Com
pany
. Th
e ar
eas
of o
pera
tion
are
prin
cipa
lly t
radi
ng, m
anuf
actu
ring,
ser
vice
indu
strie
s an
d fin
ance
Th
ird
par
ty r
even
ue
Pro
fit
Bef
ore
Tax
To
tal A
sset
s C
apit
al E
xpen
dit
ure
20
12
2
011
201
2 20
11
2012
20
11
2012
20
11
$
$
$
$ $
$
$ $
Co
nti
nu
ing
o
per
atio
ns
Trin
idad
and
Tob
ago
5,02
6,00
6 4,
488,
117
575,
501
522,
314
3,51
8,10
8 3,
212,
337
277,
082
163,
340
Barb
ados
2,68
0,57
3
2,6
49,0
66
217,
436
125
,575
3,
327,
871
3,4
28,2
23
43,
854
42,0
38
Guy
ana
7
66,1
77
687,
378
103,
159
92,
074
392,
916
330,
275
21,
152
8,87
8
Jam
aica
662
,788
659
,167
4
8,61
5 5
7,70
8 39
1,42
9 3
56,7
82
25,7
25
12,4
85
Oth
er
10,
944
13
,613
5,
815
7,73
1 22
8,59
9 17
8,98
2 3
08
715
Hea
d O
ffice
and
Oth
er
– –
(148
,677
)
(165
,752
) –
– –
–
9,
146,
488
8
,497
,341
80
1,84
9
6
39,6
50
7,85
8,92
3 7,
506,
599
368,
121
227,
456
Tran
sfer
red
to
dis
po
sal g
rou
p c
lass
ified
as
hel
d f
or
sale
To
tal A
sset
s C
apit
al E
xpen
dit
ure
20
12
2011
20
12
2011
$
$
$ $
Trin
idad
and
Tob
ago
38
1,
070
– –
Barb
ados
59
0,74
3 7
02,5
89
6,3
23
10,7
68
59
0,78
1 7
03,6
59
6,32
3 10
,768
Tota
l
8,
449,
704
8,21
0,25
8 37
4,44
4 23
8,22
4
123forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
5 SE
GM
ENT
INfo
RM
ATI
oN
(con
tinue
d)
Inte
r-se
gmen
t tr
ansf
ers
or t
rans
actio
ns a
re e
nter
ed in
to u
nder
the
nor
mal
com
mer
cial
ter
ms
and
cond
ition
s th
at w
ould
als
o be
ava
ilabl
e to
thi
rd p
artie
s.
Cap
ital e
xpen
ditu
re c
ompr
ises
add
ition
s to
pro
pert
y, p
lant
and
equ
ipm
ent
and
inve
stm
ent
prop
erty
(Not
es 6
and
7).
The
Gro
up’s
five
busi
ness
seg
men
ts o
pera
te in
fou
r m
ain
geog
raph
ical
are
as, e
ven
thou
gh t
hey
are
man
aged
on
a re
gion
al b
asis
.
The
mai
n op
erat
ions
occ
ur in
the
hom
e co
untr
y of
the
Com
pany
. Th
e ar
eas
of o
pera
tion
are
prin
cipa
lly t
radi
ng, m
anuf
actu
ring,
ser
vice
indu
strie
s an
d fin
ance
Th
ird
par
ty r
even
ue
Pro
fit
Bef
ore
Tax
To
tal A
sset
s C
apit
al E
xpen
dit
ure
20
12
2
011
201
2 20
11
2012
20
11
2012
20
11
$
$
$
$ $
$
$ $
Co
nti
nu
ing
o
per
atio
ns
Trin
idad
and
Tob
ago
5,02
6,00
6 4,
488,
117
575,
501
522,
314
3,51
8,10
8 3,
212,
337
277,
082
163,
340
Barb
ados
2,68
0,57
3
2,6
49,0
66
217,
436
125
,575
3,
327,
871
3,4
28,2
23
43,
854
42,0
38
Guy
ana
7
66,1
77
687,
378
103,
159
92,
074
392,
916
330,
275
21,
152
8,87
8
Jam
aica
662
,788
659
,167
4
8,61
5 5
7,70
8 39
1,42
9 3
56,7
82
25,7
25
12,4
85
Oth
er
10,
944
13
,613
5,
815
7,73
1 22
8,59
9 17
8,98
2 3
08
715
Hea
d O
ffice
and
Oth
er
– –
(148
,677
)
(165
,752
) –
– –
–
9,
146,
488
8
,497
,341
80
1,84
9
6
39,6
50
7,85
8,92
3 7,
506,
599
368,
121
227,
456
Tran
sfer
red
to
dis
po
sal g
rou
p c
lass
ified
as
hel
d f
or
sale
To
tal A
sset
s C
apit
al E
xpen
dit
ure
20
12
2011
20
12
2011
$
$
$ $
Trin
idad
and
Tob
ago
38
1,
070
– –
Barb
ados
59
0,74
3 7
02,5
89
6,3
23
10,7
68
59
0,78
1 7
03,6
59
6,32
3 10
,768
Tota
l
8,
449,
704
8,21
0,25
8 37
4,44
4 23
8,22
4
6 P
Ro
PER
Ty, P
LAN
T A
ND
EQ
UIP
MEN
T
A
t 30
Sep
tem
ber
2010
Leas
eho
ld
furn
itu
re
free
ho
ld
pro
per
ty a
nd
Pl
ant
and
and
M
oto
r C
apit
al w
ork
Pr
op
erty
im
pro
vem
ents
eq
uip
men
t R
enta
l ass
ets
fixt
ure
s v
ehic
le
in p
rog
ress
To
tal
$
$ $
$ $
$ $
$
Cos
t 1,
861,
294
16
6,60
6 1,
033,
144
3
48,5
04
245
,644
14
9,77
0
27
,026
3
,831
,988
Acc
umul
ated
dep
reci
atio
n (8
7,52
4)
(76,
762)
(752
,075
)
(1
67,7
30)
(185
,787
)
(9
4,87
6)
-
(
1,36
4,75
4)
Net
boo
k am
ount
1,
773,
770
89,8
44
281,
069
1
80,7
74
5
9,85
7
54,
894
27,0
26
2,4
67,2
34
yea
r En
ded
30
Sep
tem
ber
201
1
Ope
ning
net
boo
k am
ount
1,
773,
770
89,8
44
281,
069
1
80,7
74
5
9,85
7
54,
894
27,0
26
2,4
67,2
34
Add
ition
s 16
,639
8,
924
7
2,74
1
100
,658
8,4
94
24,
146
6,5
04
2
38,1
06
Dis
posa
ls a
nd a
djus
tmen
ts
(27,
420)
(8
2)
(
878)
(2
7,50
4)
(8
2)
(3,
890)
(3
20)
(6
0,17
6)
Tran
slat
ion
adju
stm
ents
14
,849
12
9
757
(5
59)
282
23
1
40
15,
729
Tran
sfer
s fr
om C
apita
l Wor
k in
Pro
gres
s
-
Pro
pert
y pl
ant
and
equi
pmen
t -
60
15,
060
-
816
25
1
(16
,187
)
-
Tran
sfer
s fr
om C
apita
l Wor
k in
Pro
gres
s
-
Inve
stm
ent
prop
erty
-
- -
- -
-
(3,1
06)
(3,1
06)
Dep
reci
atio
n ch
arge
(2
3,40
2)
(5,4
18)
(72,
063)
(7
2,76
2)
(2
1,56
7)
(19,
027)
-
(
214,
239)
Clo
sing
net
boo
k am
ount
incl
udin
g
di
scon
tinue
d op
erat
ions
1,
754,
436
93,4
57
296,
686
1
80,6
07
4
7,80
0
56,
605
13,9
57
2,4
43,5
48
Tran
sfer
red
to d
ispo
sal g
roup
cl
assi
fied
as h
eld
for
sale
(8
69,2
71)
-
(14,
114)
-
(2
0,78
6)
(1,
862)
-
(
906,
033)
Clo
sing
net
boo
k am
ount
88
5,16
5 93
,457
28
2,57
2
180
,607
27,
014
5
4,74
3
13
,957
1
,537
,515
At
30 S
epte
mb
er 2
011
C
ost
968,
015
175,
244
1
,032
,120
3
70,0
39
158
,197
15
0,03
8
13
,957
2
,867
,610
Acc
umul
ated
dep
reci
atio
n (8
2,85
0)
(81,
787)
(749
,548
)
(1
89,4
32)
(131
,183
)
(9
5,29
5)
-
(
1,33
0,09
5)
Net
boo
k am
ount
88
5,16
5 93
,457
28
2,57
2
180
,607
27,
014
5
4,74
3
13
,957
1
,537
,515
124 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
6 P
Ro
PER
Ty, P
LAN
T A
ND
EQ
UIP
MEN
T IN
CLU
DED
IN C
oN
TIN
UIN
G o
PER
ATI
oN
S (c
ontin
ued)
Leas
eho
ld
furn
itu
re
free
ho
ld
pro
per
ty a
nd
Pl
ant
and
and
M
oto
r C
apit
al w
ork
Pr
op
erty
im
pro
vem
ents
eq
uip
men
t R
enta
l ass
ets
fixt
ure
s v
ehic
le
in p
rog
ress
To
tal
$
$ $
$ $
$ $
$
yea
r en
ded
30
Sep
tem
ber
201
2
Ope
ning
net
boo
k am
ount
88
5,16
5 93
,457
28
2,57
2
180
,607
27,
014
5
4,74
3
13
,957
1
,537
,515
Add
ition
s 68
,080
3,
209
6
0,45
8
156
,869
11,
455
2
3,79
0
43
,957
367
,818
Dis
posa
ls a
nd a
djus
tmen
ts
381
(1
79)
4,15
5
(3
3,35
8)
(3
4)
(4,
246)
-
(33,
281)
Tran
slat
ion
adju
stm
ents
(1
,570
) (7
)
(2,4
28)
(85
)
(29)
(9
9)
(52
)
(4
,270
)
Tran
sfer
s fr
om C
apita
l Wor
k in
Pro
gres
s
-
Prop
erty
Pla
nt a
nd E
quip
men
t 14
5
-
172
-
361
-
(678
)
-
Tran
sfer
s fr
om C
apita
l Wor
k in
Pro
gres
s
-
Inve
stm
ent
Prop
erty
-
- -
- -
-
(2,3
71)
(2,3
71)
Dep
reci
atio
n ch
arge
(1
3,56
9)
(6,4
51)
(68,
663)
(8
1,96
2)
(1
0,98
9)
(17,
832)
-
(
199,
466)
Clo
sing
net
boo
k am
ount
93
8,63
2 90
,029
27
6,26
6
222
,071
27,
778
5
6,35
6
54
,813
1
,665
,945
At
30 S
epte
mb
er 2
012
Cos
t 1,
034,
523
178,
103
1
,066
,771
4
22,8
22
161
,771
15
8,49
8
54
,813
3
,077
,301
Acc
umul
ated
dep
reci
atio
n (9
5,89
1)
(88,
074)
(790
,505
)
(2
00,7
51)
(133
,993
)
(10
2,14
2)
-
(
1,41
1,35
6)
Net
boo
k am
ount
93
8,63
2 90
,029
27
6,26
6
222
,071
27,
778
5
6,35
6
54
,813
1
,665
,945
The
net
book
am
ount
of
prop
erty
, pla
nt a
nd e
quip
men
t in
clud
es $
602
(201
1: $
297)
in r
espe
ct o
f m
otor
veh
icle
s he
ld u
nder
fina
nce
leas
es.
Dep
reci
atio
n ex
pens
e of
$12
1,02
2 (2
011:
$11
8,76
7) h
as b
een
char
ged
in c
ost
of g
oods
sol
d an
d $9
8,27
2 (2
011:
$95
,472
) in
‘se
lling
, ge
nera
l and
adm
inis
trat
ion
expe
nses
’
(Not
e 28
).
125forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
7 INvESTMENT PRoPERTIES
2012 2011
$ $
At 1 October
Cost 366,905 364,836
Accumulated depreciation and impairment (41,804) (38,987)
Net book amount 325,101 325,849
Opening net book amount 325,849 351,875
Adjustment to opening balance and other adjustments 1,773 239
Translation adjustments - 2,556
Additions from subsequent expenditure recognised as an asset 303 118
Depreciation (3,085) (6,105)
Impairment charge - (16,748)
Transfers from capital work in progress 2,371 (9,192)
Net book amount 325,101 325,849
The fair value of the investment properties amounted to $454,383 (2011: $463,360) as valued by an independent, professionally
qualified valuer taking into consideration current replacement costs, land tax valuations and other valuation techniques.
The property rental income earned by the Group during the year from its investment properties, amounted to $31,883 (2011:
$29,613). Direct operating expenses arising on the investment properties which generated revenue during the year amounted to
$11,470 (2011: $11,660).
Direct operating expenses arising on the investment properties which did not generate revenue during the year amounted to $253
(2011: $270).
Depreciation and impairment expense have been charged in ‘selling, general and administration expenses’. (Note 28).
126 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
8 GooDWILL 2012 2011
$ $
At 30 September
Cost 213,197 213,197
Accumulated impairment (67,913) (55,778)
Net book amount 145,284 157,419
Year ended 30 September
Opening net book amount 157,419 168,003
Translation adjustments - 453
Impairment charge (Note 28) (12,135) (11,037)
Closing net book amount 145,284 157,419
Goodwill is allocated to the Group’s cash-generating units (‘CGUs’) identified according to country of operation and business segment.
A segment-level summary of the goodwill allocation is presented below.
2012 2011
$ $
Trinidad Trinidad
and Tobago Overseas and Tobago Overseas
Automotive and Industrial Equipment 11,665 - 22,267 -
Energy and Industrial Gases 31,817 2,485 31,817 2,485
Integrated Retail 9,421 46,963 10,852 46,963
Insurance - 39,662 - 39,764
Other Investments - 3,271 - 3,271
Total 52,903 92,381 64,936 92,483
The recoverable amount of cash generating units is determined based on value-in-use calculations. These calculations use pre-tax
cash flow projections based on financial budgets approved by management covering a five-year period.
127forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
8 GooDWILL (continued)
Key assumptions used for value-in-use calculations:
2012 2011
Growth Rate¹ Discount Rate² Growth Rate¹ Discount Rate²
Automotive and
IndustrialEquipment 0%-3% 12.6% 0%-3% 11.2%-11.9%
EnergyandIndustrialGases 2%-11% 11.10%-14.4% 1.0% 11.7%-12.9%
IntegratedRetail 0%-4% 8.2%-10.2% 1.3%-3.0% 8.2%-10.2%
OtherInvestments 0% 8.2% 0%-4% 8.2%
Insurance 0%-5% 9.5% 0%-5% 9.5%
¹ Weighted average growth rate used to extrapolate cash flows beyond the budget period
² Pre-tax discount rate applied to the cash flow projections
These assumptions have been used for the analysis of each CGU within the business segment. Management determined the budgeted
gross margin based on past performance and its expectations for the market development. The weighted average growth rates used
are consistent with the forecasts included in industry reports. The discount rates used are pre-tax and reflect specific risk relating to
the relevant segments.
9 oTHER INTANGIBLE ASSETS
Intangibles represent brands and have been recognised at fair value at the acquisition date and are measured at carrying values less
accumulated amortisation and impairment. No impairment has been recorded during the years presented.
2012 2011
$ $
At 30 September
Cost 40,862 35,070
Additions 12,793 5,792
Accumulated amortisation (2,650) (69)
Net book amount 51,005 40,793
128 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
10 INvESTMENTS IN ASSoCIATES AND JoINT vENTURES
2012 2011
$ $
Investment and advances 286,174 293,240
Share of post acquisition reserves 120,591 112,138
406,765 405,378
Balance at beginning of year 405,378 453,282
Additional investments 2,829 15,951
Share of results before tax 54,175 40,578
Share of tax (43,187) (13,807)
Dividends received (7,876) (24,256)
Exchange differences (53) 3,826
Transferred to disposal group held for sale (Note 35) - (31,160)
Other (4,501) (39,036)
Balance at end of year 406,765 405,378
The share of results before tax includes $766 in 2012 (2011 : $766) representing the impairment charge for goodwill in respect
of acquisition of associates. Investments in associates at 30 September 2012 include goodwill of $7,855 (2011:$8,621), net of
accumulated impairment of $6,894 (2010:$6,128).
The principal associate is Banks Holdings Limited which is listed and incorporated in Barbados
2012 2011
$ $
Investments and advances 190,345 190,347
Share of post acquisition losses (8,932) (8,633)
181,413 181,714
129forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
10 INvESTMENTS IN ASSoCIATES AND JoINT vENTURES (continued)
The market value of shares in Banks Holdings Limited as at 30 September is $126,674 (2011: $160,876).
The Group’s share of the associates and joint ventures assets, liabilities, revenues and net profit after tax is as follows:
2012 2011
$ $
Assets 937,052 864,472
Liabilities 507,645 462,222
Revenues 926,600 942,916
Net profit after tax 10,988 26,771
The Group has investments in associates whose year ends are not coterminous with 30 September. These are principally:
Country Reporting of Incorporation year End
Banks Holdings Limited Barbados 31 August
Neal & Massy Wood Group Limited Trinidad and Tobago 31 December
G4S Holdings Trinidad Limited Trinidad and Tobago 31 December
G4S Security Services (Barbados) Limited Barbados 31 December
CMA CGM Trinidad Limited Trinidad and Tobago 31 December
11 CREDIT QUALITy of fINANCIAL ASSETS
Credit quality – investments
Sub-
Low Standard Standard
Risk Risk Risk Impaired Total
$ $ $ $ $
Investments
2012 310,085 218,236 799 (1) 529,119
2011 342,255 151,298 23,926 - 517,479
130 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
11 CREDIT QUALITy of fINANCIAL ASSETS (continued)
Credit quality – other financial assets
Past Due Provision fully but not for Performing Impaired Impaired Impairment Total $ $ $ $ $
2012
Instalment credit and other loans 231,860 13,205 8,738 (7,710) 246,093
Trade receivables
- continuing operations 435,413 344,287 99,243 (100,047) 778,896
667,273 357,492 107,981 (107,757) 1,024,989
Past Due Provision fully but not for Performing Impaired Impaired Impairment Total
$ $ $ $ $
2011
Instalment credit and other loans 217,242 26,287 8,404 (7,108) 244,825
Trade receivables
– continuing operations 566,433 248,566 119,984 (122,753) 812,230
783,675 274,853 128,388 (129,861) 1,057,055
The credit quality of other investments has been analysed into the following categories:
Low Risk These comprise Sovereign Debt Investments where there has been no history of default.
Standard These investments are current and have been serviced in accordance with the terms and conditions of the underlying
agreements.
Sub-Standard These investments are either greater than 90 days in arrears but are not considered to be impaired or have been
restructured in the past year.
Impaired These investments are non-performing.
131forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
12 fINANCIAL ASSETS
2012 2011
$ $
Held to maturity 356,466 372,143
Loans and receivables 38,008 44,505
Available for sale 19,801 23,025
414,275 439,673
Fair value through profit or loss (Note 13) 114,844 77,806
529,119 517,479
a) Financial assets – Held to maturity and loans and receivables
Held to Loans and
maturity receivables Total
$ $ $
2012
Beginning of the year 372,143 44,505 416,648
Exchange differences - - -
Amortisation (9,706) 700 (9,006)
Additions 11,877 - 11,877
Disposals (15,569) (7,197) (22,766)
Other (2,279) - (2,279)
End of the year 356,466 38,008 394,474
2011
Beginning of the year 316,645 47,456 364,101
Exchange differences 2,987 448 3,435
Amortisation (69) - (69)
Additions 76,241 - 76,241
Disposals (23,661) (3,399) (27,060)
End of the year 372,143 44,505 416,648
The fair value of held to maturity financial assets and loans and receivables approximate their carrying amounts.
132 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
12 fINANCIAL ASSETS (continued)
b) financial assets – Available-for-sale investments
2012 2011
$ $
Beginning of the year 23,025 25,311
Exchange differences - 233
Change in market value/impairment charge (1) (1,607)
Additions - -
Disposals (3) (745)
Net gains transferred from equity to other comprehensive income (3,220) (39)
Transferred to disposal group classified as held for sale (Note 35) - (128)
19,801 23,025
Available for sale investments include the following:
Continuing operations
Bonds and treasury bills 4,713 4,818
Quoted securities 14,589 17,704
Unquoted securities 499 503
19,801 23,025
Available for sale investments are denominated in the following currencies:
Continuing operations
Trinidad & Tobago dollars 337 352
Barbados dollars 13,803 17,017
United Sates dollars 5,512 5,507
Other 149 149
19,801 23,025
The maximum exposure to credit risk at the reporting date is the carrying value of the debt securities classified as available for sale.
133forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
13 fINANCIAL ASSETS AT fAIR vALUE THRoUGH PRofIT oR LoSS
2012 2011
$ $
Beginning of the year 77,806 77,963
Exchange differences - 732
Change in market value/impairment charge (361) (567)
Additions 8,114 3,655
Disposals - (3,977)
Other 29,285 -
114,844 77,806
14 DEfERRED INCoME TAX
Deferredincometaxesarecalculatedinfull,ontemporarydifferencesundertheliabilitymethodusingaprincipaltaxrateof25%
(2011:25%).
The movement in the deferred income tax account is as follows:
2012 2011
$ $
Deferred income tax liabilities
Balance at beginning of year 115,224 99,909
Charge for the year 10,211 14,435
Exchange adjustment (442) 60
Other movements 3,397 4,920
Transferred to disposal group classified as held for sale (Note 35) - (4,100)
Balance at end of year 128,390 115,224
134 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
14 DEfERRED INCoME TAX (continued)
Deferred income tax liabilities (continued)
The movement in the deferred tax liabilities during the year ended 30 September 2012 is as follows:
Charge to Consolidated
Income Statement Other
30.09.11 (Note 31) Movements 30.09.12
$ $ $ $
Accelerated depreciation 59,767 5,945 213 65,925
Pension plan surplus 56,791 3,794 2,422 63,007
Other (1,334) 472 320 (542)
115,224 10,211 2,955 128,390
The movement in the deferred tax liabilities during the year ended 30 September 2011 is as follows:
Charge/(Credit) to Transferred to
Consolidated disposal group
Income Statement Other classified as held
30.09.10 (Note 31) Movements for sale 30.09.11
$ $ $ $ $
Accelerated depreciation 47,516 11,896 4,455 (4,100) 59,767
Pension plan surplus 50,644 4,742 1,405 - 56,791
Other 1,749 (2,203) (880) - (1,334)
99,909 14,435 4,980 (4,100) 115,224
Deferred income tax liabilities
The movement in the deferred tax assets during the year ended 30 September 2012 is as follows:
2012 2011
$ $
Balance at beginning of year 68,039 85,331
Charge for the year (3,233) (10,302)
Other movements (2,826) 19
Transferred to disposal group classified as held for sale (Note 35) - (7,009)
Balance at end of year 61,980 68,039
135forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
14 DEfERRED INCoME TAX (continued)
Deferred income tax assets (continued)
The movement in the deferred tax assets during the year ended 30 September 2012 is as follows:
Charge to Consolidated
Income Statement Other
30.09.11 (Note 31) Movements 30.09.12
$ $ $ $
Accelerated depreciation 21,158 816 833 22,807
Tax losses carried forward 19,995 (4,481) (4,351) 11,163
Other 26,886 432 692 28,010
68,039 (3,233) (2,826) 61,980
The movement in the deferred tax assets during the year ended 30 September 2011 is as follows:
Charge/(Credit) to Transferred to
Consolidated disposal group
Income Statement Other classified as held
30.09.10 (Note 31) Movements for sale 30.09.11
$ $ $ $ $
Accelerated depreciation 45,590 (26) (17,397) (7,009) 21,158
Tax losses carried forward 32,888 (16,187) 3,294 - 19,995
Other 6,853 5,911 14,122 - 26,886
85,331 (10,302) 19 (7,009) 68,039
Deferred income tax assets are recognised for tax losses carry-forward to the extent that the realisation of the related tax benefit
through the future taxable profits is probable.
136 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
15 INSTALMENT CREDIT AND oTHER LoANS
These represent the instalment credit and other loans granted mainly by General Finance Corporation Limited.
2012 2011
$ $
Amounts due within one year 118,510 121,698
Between two and five years 128,981 125,912
Over five years 6,312 4,323
253,803 251,933
Provision for losses (7,710) (7,108)
246,093 244,825
Due within one year (110,800) (114,590)
135,293 130,235
15.1 Sectoral analysis of instalment credit and other loans
2012 2011
$ $
Consumer 102,884 101,713
Manufacturing 8,217 9,045
Distribution 28,631 28,159
Construction 30,032 31,644
Transport 31,127 31,829
Agriculture 1,132 1,398
Petroleum 886 1,032
Residential mortgages 36 373
Other 43,148 39,632
246,093 244,825
137forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
15 INSTALMENT CREDIT AND oTHER LoANS (continued)
15.2 Provision for losses
2012 2011
$ $
Balance at beginning of year 7,108 5,898
Charge for the year 1,874 3,374
Amount written off net of recoveries (1,272) (2,164)
Balance at end of year 7,710 7,108
The maximum exposure to credit risk at the reporting date is the carrying value of the instalment credit and other loans. The
Group holds $279,305 (2011: $256,009) of collateral as security.
16 RETIREMENT BENEfIT ASSETS 2012 2011
$ $
Neal & Massy Group Pension Fund Plan 226,611 198,561
Overseas plans – Other 32,040 33,407
258,651 231,968
The pension plans were valued by an independent actuary using the projected unit credit method.
Neal & Massy Group Pension fund Plan
The amounts recognised in the statement of financial position are as follows:
2012 2011
$ $
Fair value of plan assets 1,420,661 1,343,676
Present value of obligation (1,042,565) (944,234)
378,096 399,442
Unutilisable asset (151,485) (200,881)
Asset in the statement of financial position 226,611 198,561
138 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
16 RETIREMENT BENEfIT ASSETS (continued) 2012 2011
$ $
The movement in the defined benefit obligation over the year is as follows:
Opening present value of defined benefit obligation 944,234 908,593
Current service cost 16,869 16,093
Interest cost 70,876 67,243
Actuarial losses/ (gains) on obligation 50,731 (7,568)
Benefits paid (40,145) (40,127)
Closing present value of defined benefit obligation at 30 September 1,042,565 944,234
The movement in the fair value of plan assets for the year is as follows:
Opening fair value of plan assets 1,343,676 1,207,711
Expected return on plan assets 103,904 93,231
Actuarial gains on plan assets 13,199 82,855
Employer contributions 27 6
Benefits paid (40,145) (40,127)
Closing fair value of plan assets at 30 September 1,420,661 1,343,676
The amounts recognised in the consolidated income statement are as follows:
Current service cost 16,869 16,093
Interest cost 70,876 67,243
Expected return on plan assets (103,904) (93,231)
Total included in other income (16,159) (9,895)
Actuarial losses/(gains) recognised in comprehensive income before tax 37,532 (90,423)
Cumulative actuarial gains recognised in the statement
of other comprehensive income before tax (193,372) (230,904)
Actual return on plan assets 117,103 176,086
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16 RETIREMENT BENEfIT ASSETS (continued)
Movement in the asset recognised in the statement of financial position:
2012 2011
$ $
Asset at beginning of year 198,561 189,471
Net pension income 16,159 9,895
Actuarial gains/(losses) 11,864 (811)
Contributions paid 27 6
Asset at end of year 226,611 198,561
The principal actuarial assumptions used were:
Per annum Per annum
Discountrate 5.0% 7.5%
Futuresalaryincreases 5.0% 7.0%
Expectedreturnonplanassets 5.35% 7.85%
Futurepensionincreases–postretirement 3.5% 5.0%
The assumption with regard to the expected return on plan assets has been developed with reference to the average portfolio rate
expected to be earned by the Fund on the underlying asset mix over the lifetime of the obligations net of allowances for investment
expenses.
Assumptions regarding future mortality experience are set based on advice from published statistics and experience in each territory.
16 RETIREMENT BENEfIT ASSETS (continued)
Plan assets are comprised as follows:
2012 2011
LocalEquities/MutualFunds 37% 33%
LocalBonds/Mortgages 21% 24%
Foreigninvestments 28% 30%
Deferredannuities/insurancepolicy 5% 6%
Shorttermsecurities/Cash/Accruedincome 9% 7%
The average life expectancy in years of a pensioner retiring at age 60 is as follows:
2012 2011
Male 82 82
Female 86 86
140 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
16 RETIREMENT BENEfIT ASSETS (continued)
2012 2011 2010 2009 2008
$ $ $ $ $
Plan assets 1,420,661 1,343,676 1,207,711 1,121,556 1,106,472
Defined benefit obligation (1,042,565) (944,234) (908,593) (878,909) (781,301)
Surplus 378,096 399,442 299,118 242,647 325,171
Experience adjustments
on plan liabilities (8,252) (7,568) (10,934) (13,317) (18,576)
Experience adjustments
on plan assets 13,199 82,855 27,349 (44,974) 16,942
Overseas plans – Other
The amounts recognised in the statement of financial position are as follows:
2012 2011
$ $
Fair value of plan assets 195,285 192,069
Present value of the defined benefit obligation (118,456) (113,591)
76,829 78,478
Unrecognised asset (44,789) (45,071)
Asset recognised in the statement of financial position 32,040 33,407
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16 RETIREMENT BENEfIT ASSETS (continued)
The movement in the defined benefit obligation over the year is as follows:
2012 2011
$ $
Opening present value of defined benefit obligation 113,591 104,354
Current service cost 2,576 2,552
Interest cost 8,365 8,921
Plan participant contributions 2,691 3,659
Actuarial losses on obligation 7,783 658
Past service cost - vested benefits 664 -
Past service cost - non-vested benefits 267 -
Liabilities extinguished on settlement/cutailment (9,781) -
Exchange differences on foreign plans (1,170) 684
Benefits paid (6,530) (7,237)
Closing present value of defined benefit obligation 118,456 113,591
overseas plans – other
The movement in the fair value of plan assets for the year is as follows:
2012 2011
$ $
Opening fair value of plan assets 192,069 172,407
Expected return on plan assets 14,132 14,545
Actuarial gains on plan assets 4,593 5,437
Assets disbursed on settlement (11,181) -
Exchange differences on foreign plans (2,214) 1,031
Employer contributions 1,725 2,227
Plan participant contributions 2,691 3,659
Benefits paid (6,530) (7,237)
Closing fair value of plan assets at 30 September 95,285 192,069
142 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
16 RETIREMENT BENEfIT ASSETS (continued)
The amounts recognised in the consolidated income statement are as follows:
2012 2011
$ $
Current service cost 2,576 2,552
Interest cost 8,365 8,921
Expected return on plan assets (14,132) (14,545)
Past service benefit - vested benefits 664 -
Past service cost - non-vested benefits 267 -
Loss on curtailments and settlements 1,401 -
Total included in other income (859) (3,072)
Actual return on plan assets 18,725 19,982
Movement in the asset recognised in the consolidated statement of financial position:
Asset at beginning of year 33,407 24,428
Increase/(decrease) in recognisable asset 283 (1,447)
(Loss)/gain recognised in retained earnings (3,190) 4,779
Net pension income 854 3,072
Contributions paid 1,730 2,227
Exchange adjustment (1,044) 348
Asset at end of year 32,040 33,407
Overseas plans – Other
Actuarial (losses)/gains recognised in the comprehensive income before tax (3,190) 4,779
Cumulative actuarial losses recognised in the statement of
other comprehensive income before tax 283 (1,441)
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16 RETIREMENT BENEfIT ASSETS (continued)
The principal actuarial assumptions used were:
Per annum Per annum
Discountrate 6%-10% 7%-10.5%
Expectedreturnonplanassets 6%-9% 7%-9%
Futuresalaryincreases 4%-7% 4%-7%
FutureNISincreases 3%-4% 3%-4%
Futurepensionincreases 0%-5% 0%-5%
Futurebonuses 0%-1% 0%-1%
The assumption with regard to the expected return on plan assets has been developed with reference to the average portfolio rate
expected to be earned by the Fund on the underlying asset mix over the lifetime of the obligations net of allowances for investment
expenses.
Assumptions regarding future mortality experience are set based on advice from published statistics and experience in each territory.
Overseas plans - BS&T
The amounts recognised in the statement of financial position are as follows:
2012 2011
$ $
Fair value of plan assets 468,827 468,881
Present value of the defined benefit obligation (481,744) (473,803)
Liability in the statement of financial position (12,917) (4,922)
The movement in the defined benefit obligation over the year is as follows:
Opening present value of defined benefit obligation 473,803 455,690
Current service cost 8,746 8,392
Interest cost 37,198 31,562
Actuarial losses/ (gains) on obligation (5,845) 393
Past service cost – vested benefits - 4,001
Liabilities extinguished on settlement/curtailment - (1,322)
Exchange differences on foreign plans 25 4,385
Benefits paid (32,182) (29,298)
Closing present value of defined benefit obligation at 30 September 481,745 473,803
144 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
16 RETIREMENT BENEfIT ASSETS (continued)
The movement in the fair value of plan assets for the year is as follows:
2012 2011
$ $
Opening fair value of plan assets 468,881 431,733
Expected return on plan assets 36,866 34,241
Actuarial (losses)/gains on plan assets (23,730) 8,780
Exchange differences on foreign plans - 4,279
Employer contributions 18,992 19,146
Benefits paid (32,182) (29,298)
Closing fair value of plan assets at 30 September 468,827 468,881
The amounts recognised in the consolidated income statement are as follows:
Current service cost 8,746 8,392
Interest cost 37,198 31,561
Expected return on plan assets (36,866) (34,241)
Past service cost - vested benefits - 4,001
Gains on curtailments and settlements - (1,322)
Expense recognised in the income statement 9,078 8,391
Actual return on plan assets 13,136 43,021
Overseas plans - BS&T
The liability recognised in the consolidated statement of financial position
is included in provisions for other liabilities and charges:
Liability at beginning of year (4,922) (23,957)
(Expense)/income recognised in other comprehensive income (17,884) 8,387
Net pension expense (9,078) (8,392)
Contributions paid 18,992 19,146
Exchange adjustment (25) (106)
Liability at end of year (12,917) (4,922)
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16 RETIREMENT BENEfIT ASSETS (continued)
The principal actuarial assumptions used were:
Per annum Per annum
Discountrates 7.75% 8%
Expectedreturnonplanassets 7.75% 8%
Futuresalaryincreases 5.75% 6%
FutureNISincreases 3.50% 3.5%
Futurepensionincreases-pastservice 0.75% 1.00%
Futurepensionincreases-futureservice 0.75% 2.00%
Assumptions regarding future mortality experience were obtained from published statistics and experience in each territory.
The average life expectancy in years of a pensioner retiring at age 60 is as follows:
Male 82 82
Female 86 86
Plan assets are comprised as follows:
2012 2011
Cashandcashequivalents 11% 12%
Bonds 10% 9%
Mortgageloans 2% 2%
Realestate 16% 14%
Equities 57% 57%
Other 4% 6%
146 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
17 INvENToRIES
2012 2011
$ $
Finished goods and goods for resale 950,068 933,546
Goods in transit 176,721 222,686
Raw materials and consumables 79,089 100,045
Work in progress 46,311 30,495
1,252,189 1,286,772
The cost of inventories recognised as expense and included in ‘cost of sales’ amounted to $6,672 (2011: $5,695).
18 TRADE AND oTHER RECEIvABLES
2012 2011
$ $
Trade receivables 860,642 916,017
Receivables with related parties 18,301 18,966
Less: provision for impairment of receivables (100,047) (122,753)
Trade receivables - net 778,896 812,230
Other debtors and prepayments 838,047 759,346
Less: provision for impairment (4,851) (4,155)
Other debtors and prepayments – net 833,196 755,191
1,612,092 1,567,421
Given the short-term nature of the trade and other receivables, the fair value approximates the carrying amount of these assets. There
is no concentration of credit risk with respect to trade receivables, as the Group has a large number of customers, regionally dispersed.
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18 TRADE AND oTHER RECEIvABLES (continued)
Aging analysis – financial assets
Past Due But Not Impaired < 30 days 31 – 60 days 61 – 90 days >90 days Total $ $ $ $ $
2012
Trade receivables
- continuing operations 121,034 109,093 56,106 58,054 344,287
< 1 year 1- 2 years 2- 3 years Total
Instalment credit and other loans 2,641 4,560 6,004 13,205
< 30 days 31 – 60 days 61 – 90 days >90 days Total $ $ $ $ $
2011
Trade receivables
- continuing operations 27,968 117,848 44,016 58,734 248,566
< 1 year 1- 2 years 2- 3 years Total
Instalment credit and other loans 26,069 218 - 26,287
Provision for Impairment
Written Unused opening Provision for off during provisions Closing Balance Impairment the year reversed balance $ $ $ $ $
2012
Instalment credit and other
loans 7,108 1,873 (1,271) - 7,710
Trade receivables 122,753 12,951 (26,520) (9,137) 100,047
Other debtors and
prepayments 4,155 913 (217) - 4,851
134,016 15,737 (28,008) (9,137) 112,608
148 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
18 TRADE AND oTHER RECEIvABLES (continued)
Provision for Impairment
Written Unused opening Provision for off during provisions Closing Balance Impairment the year reversed balance
$ $ $ $ $
2011
Instalment credit and other
loans 5,898 3,375 (2,165) - - 7,108
Trade receivables 134,737
31,116 (8,037) (10,132)
(24,931) 122,753
Other debtors and
prepayments 3,165
1,085 (95)
- - 4,155
143,800
35,576 (10,297) (10,132)
(24,931) 134,016
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable
mentioned above.
The carrying amounts of the Group’s trade and other receivables are reported in the following currencies:
2012 2011
$ $
Trinidad and Tobago dollars 562,402 523,677
Barbados dollars 841,593 847,440
Jamaican dollars 109,938 105,636
Guyanese dollars 93,493 84,405
Other 4,666 6,263
1,612,092 1,567,421
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19 Cash And Cash Equivalents 2012 2011
$ $
Cash at bank and in hand 804,303
715,562
Short-term bank deposits 512,187
415,938
1,316,490 1,131,500
Transferred to disposal group classified as held for sale (Note 35)
Cash at bank and in hand
(11,753)
(8,358)
Group Total 1,304,737
1,123,142
150 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
Theeffectiveinterestrateonshort-termbankdepositswas1%(2011:1%).Thesedepositshaveanaveragematurityof90days.
Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement:
Continuing Operations 2012
2011
$ $
Cash and cash equivalents 1,304,737
1,123,142
Bank overdrafts
(4,038)
(4,616)
Cash, net of bank overdrafts 1,300,699
1,118,526
19 Cash And Cash Equivalents (continued)
Transferred to disposal group classified as held for sale (Note 35)
151forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
2012 2011
$ $
Cash and cash equivalents 11,753
8,358
Bank overdrafts (18,805)
(15,912)
Group Total
Cash and cash equivalents 1,316,490
1,131,500
Bank overdrafts (22,843)
(20,528)
Cash, net of bank overdrafts 1,293,647 1,110,972
20 Share Capital
Number Of Shares Ordinary Shares
Total
# $ $
At 30 September 2010 96,595 538,220
538,220
Employee share option scheme
- value of services provided - 85
85
Share option exercised 54 1,876
1,876
At 30 September 2011 96,649 540,181
540,181
At 30 September 2011 96,649 540,181
540,181
Share option exercised 353 13,063
13,063
Shares to be issued 33 1,244
1,244
152 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
At 30 September 2012 97,035 554,488
554,488
The total authorised number of ordinary shares is unlimited with no par value. All issued shares are fully
paid.
20 Share Capital (continued)
Share options
Effective 1 October 2004, the Parent company introduced an executive share option plan. Share options will be granted to individuals
employed by the Parent company or its subsidiaries in a senior capacity including directors holding any executive office with the
company or any of its subsidiaries. Options are granted at the average market price of the shares in the calendar month prior to the
beginning of the applicable performance period and are exercisable at that price. Options are exercisable beginning three years from
the date of grant and have a contractual option term of three years. When the options are exercised, the proceeds received net of any
transaction costs are credited to share capital.
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
2012 2011
000’s 000’s
Options Options
At 1 October 1,754 1,808
Forfeited (52) -
Exercised (353) (54)
To be issued (33) -
At 30 September 1,316 1,754
Share options outstanding at the end of the year have the following expiry date and exercise prices:
Expiry date – 30 September Exercise Options
Price $ 2012 2011
2011 $ 49.39 -
483
2012 $ 37.03 -
386
2013 $ 47.52 416
442
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2014 $ 58.33 417
443
833 1,754
The fair value of options granted during 2011 determined using the Binomial valuation model was $0.58. The significant inputs into the
model were share price of $49.00 at the grant date, exercise price shown above, standard deviation of expected share price returns
of6%,optionlifedisclosedabove,andannualrisk-freeinterestrateof5.5%,andexpectedvolatility6%.Nooptionsweregranted
in 2012.
21 Dividends Per Share
2012 2011
$ $
Interim paid – 45 cents per share (2011 – 43 cents) 45,085 43,064
Final paid – 86 cents per share (2011 – 86 cents) 86,135 86,128
131,220 129,192
On 20 December, 2012 the Board of Directors of Neal & Massy Holdings Limited declared a final dividend per share of 105 cents, bringing
the total dividends per share for the financial year ended 30 September, 2012 to $1.50 (2011 - $1.29).
22 Non-controlling interests 2012 2011
$ $
Balance at beginning of year 219,062 453,016
Disposals (3,190) (49,491)
Share of net profit of subsidiaries 23,303 18,551
Minority share of impairment provision - (146,144)
Dividends paid (47,472) (36,712)
154 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
Other movements (55,942) (20,158)
Balance at end of year 135,761 219,062
23 Borrowings
2012 2011
$ $
Continuing Operations
Fixed interest mortgage loans 64,625 70,076
Other secured advances 737,679 317,019
Unsecured advances 649,634 1,026,144
Bank overdrafts and other short term borrowings
4,038 4,616
Total borrowings 1,455,976 1,417,855
Less short term borrowings (391,230) (248,061)
Medium and long term borrowings 1,064,746 1,169,794
23 Borrowings (continued)
Short term borrowings comprise:
2012 2011
Continuing operations $ $
Bank overdrafts and other short term borrowings 4,038
4,616
Current loan instalments 387,192
243,445
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nOtes tO tHe summarY COnsOLidated finanCiaL statements
391,230
248,061
Transferred to disposal group classified as held for sale (Note 35)
Bank overdrafts and other short term borrowings 18,805
15,912
Current loan instalments 378,212
464,990
397,017
480,902
Total
Bank overdrafts and other short term borrowings 22,843
20,528
Current loan instalments 765,404
708,435
788,247
728,963
Total borrowings include secured liabilities of $737,679 (2011: 387,095). Secured liabilities for discontinued operations amounted to
$378,331 (2011:$465,505). Bank borrowings are secured by the land and buildings of the Group (Note 6).
The exposure of the Group’s borrowings to interest rate changes and the contractual repricing dates at the statement of financial position
dates are as follows:
2012 2011
Continuing operations $ $
6 months or less
4,038 4,616
6-12 months 387,192 243,445
1-5 years 695,070 790,784
Over 5 years 369,676 379,010
1,455,976 1,417,855
156 2012
nOtes tO tHe summarY COnsOLidated finanCiaL statements
September 30, 2012
Expressed in Thousands of Trinidad and Tobago dollars
157forward focused
nOtes tO tHe summarY COnsOLidated finanCiaL statements
158 2012