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1 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
2 3 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
4 5 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
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.
Our Vision Statement
6 7 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
In 2010, the Group’s Executive Committee reflected on our Vision Statement. After contemplating who we are and what we stand
for, we then asked: “What is our vision for the future of the Neal & Massy Group of Companies?”
Intrinsic to Neal & Massy’s long-term success has been the legacy of a tremendous history in the Caribbean business community
founded on our commitment to integrity and our greatest asset: an incredible pool of human resources, imbued with our
unshakeable core values. However, now more than ever, we dare not be complacent about our accomplishments or assume that
the past assures our future. Continuous self-examination and a focus on reinventing ourselves must remain paramount if we are
to remain relevant to an ever-changing context.
The environments in which we operate continue to manifest socio-economic and political challenges; and each day we learn
about how crime, corruption and greed threaten to undermine our very societal fabric. At the same time, as individuals, we are
increasingly awakening to our hunger for work that is meaningful, that supports a purpose greater than ourselves. In this time
in which we live, our fellow employees, our community at large and indeed our neighbouring countries need more inspiring and
powerful examples of corporate good.
It is against this background that we are excited to share with you the new vision to which the Neal & Massy Group of
Companies aspires.
Neal & Massy: A Force for Good
The Most Responsible and Profitable
Investment Holding / Management Company in the Caribbean Basin
This short statement holds great meaning, which we wish to share with our many stakeholders. Who we are has not changed.
Our core values remain the same. This vision emphasises these values and serves as a beacon for how we strive to operate as a
Group of Companies.
The Group has always been an exemplar for its values of integrity and ethical business practices, care for its customers and
employees, its commitment to grow and deliver superior value for its shareholders and, being a responsible citizen, protecting and
giving back to the environment and communities in which it operates.
Our vision for the future of the Group holds strong those fundamental values and directs us towards growth as a Group of
Companies with managed investments throughout the Caribbean Basin, including non-English speaking countries which border
the Caribbean Sea. When comparing us to a peer group, which would include companies from across the Caribbean & Central
American region, the Neal & Massy Group’s vision is to be the most responsible and profitable company.
Within the next few years, Neal & Massy will be taking bold and innovative actions to drive profitability and growth. To succeed,
we must continue to display the principles of good management and leadership, which have always supported our success. We
will grow to be the most profitable Group of Companies in the region and we will do so responsibly, based on our shared Vision,
core Values and a management model that has proven successful across diverse industries and many cultures while operating in
relatively small, fragmented markets. In so doing, Neal & Massy will be the employer and partner of choice–bar none.
Our continued profitability and growth will be the oxygen that fuels the flames of the Force for Good, rendering this vision the
source of our distinctive competitive advantage. It is our conviction that no matter where Neal & Massy operates in the world –
people will sense our passion for and unwavering commitment to this vision to serve some greater good or higher purpose and will
want to be associated with it. We acknowledge the many great things that have occurred throughout Neal & Massy’s rich past…
and we declare that the future will be even better!
This we know. This we believe. To this we commit.
left to right seated:
Judith Bowen, Senior Vice President & Senior Legal Counsel; Gervase Warner, President & Group Chief Executive Officer;
Paula Rajkumarsingh, Executive Vice President & Chief Financial Officer; Earl Boodasingh, Executive Vice President & Executive Chairman,
Food Group: Food/Consumer Distribution & Logistics and Food Retailing
left to right standing:
Linford Carrabon, Senior Vice President & Executive Chairman, Energy & Industrial Gases Business Unit;
Deo Persaud, Executive Chairman Neal & Massy Guyana Group; Angela Hamel-Smith, Group Human Resources Manager;
Frere Delmas, Senior Vice President & Executive Chairman, Food Retailing Business Unit;
David O’Brien, Senior Vice President & Executive Chairman, Automotive & Industrial Equipment Business Unit;
G. Anthony King, Executive Vice President & Executive Chairman, Financial, Property & Other Business Unit;
Keith Thomas, Senior Vice President & Executive Chairman, Information, Technology & Communications/Other Services Business Unit
missing:
Ralph Taylor, President & Managing Director, Almond Resorts Inc.
Executive Committee
Introducing Our New Vision Statement
8 9 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
MIAMI
UK
BARBADOS
TRINIDAD & TOBAGO
JAMAICA
GUYANA
AUTOMOTIve & INDUSTRIAl eqUIpMeNT
eNeRGY & INDUSTRIAl GASeS
FOOD GROUp
TOURISM/HOSpITAlITY
FINANCIAl, pROpeRTY & OTHeR
INFORMATION TeCHNOlOGY & COMMUNICATIONS/ OTHeR SeRvICeS
ANTIGUA
ST lUCIA
BAHAMAS
10 11 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Table of Contents
Reports
Corporate Information 12
Notice of Meeting 13
Chairman’s Report 14
Chief Executive Officer’s Report 16
Chief Financial Officer’s Report 20
Segment Review 24
Board of Directors 42
Directors’ Report 46
Management Proxy Circular 49
Financials
Independent Auditor’s Report 1
Consolidated Statement of Financial Position 2
Consolidated Income Statement 4
Consolidated Statement
of Comprehensive Income 6
Consolidated Statement of Changes in Equity 7
Consolidated Statement of Cash Flow 8
Notes to the Consolidated
Financial Statements 10
12 13 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Directors
A. Lok Jack, Chairman
E.G. Warner, President & Group CEO
R. Balgobin
R. Bermudez
E. Boodasingh
G. Cave
A.C. Fields
G.A. King
W.P. Lucie-Smith
Paula Rajkumarsingh
B.W. Young
Secretary
Althea E. Thompson
Assistant Secretary
Camille Mascall
Registered Office
63 Park Street
P.O. Box 544
Port of Spain
Trinidad and Tobago, West Indies
Telephone: (868) 625-3426
Facsimile: (868) 627-9061
E-Mail: nmh@neal-and-massy.com
Website: www.neal-and-massy.com
Corporate Information
Registrar and Transfer Office
A.E. Thompson
63 Park Street
Port of Spain
Auditors
PricewaterhouseCoopers
11-13 Victoria Avenue
Port of Spain
Group Principal Bankers
Citibank (Trinidad & Tobago) Limited
12 Queen’s Park East
Port of Spain
First Caribbean International Bank
(Trinidad & Tobago) Limited
74 Long Circular Road
Maraval
First Citizens Bank Limited
9 Queen’s Park East
Port of Spain
RBTT Bank Limited
55 Independence Square
Port of Spain
Republic Bank Limited
11-17 Park Street
Port of Spain
Scotiabank Trinidad & Tobago Limited
Scotia Centre
56-58 Richmond Street
Port of Spain
CO
RPO
RA
TE IN
FOR
MA
TIO
NN
OTIC
E OF M
EETING
TO ALL SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Eighty-Seventh 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 18th February
2011 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 30th
September, 2010 together with the Report of the Auditors thereon, and to note the final dividend.
2 To elect Directors.
3 To appoint Auditors and authorise the Directors to fix their remuneration and expenses for the ensuing year.
The text of the proposed resolution in relation to Item 2 is set out below as Schedule A.
BY ORDER OF THE BOARD
Althea E. Thompson
Company Secretary
14th December 2010
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.
3 Attached is a Proxy Form which must be completed, signed and then deposited with the Secretary of the Company not less
than 48 hours before the time fixed for holding the Meeting.
SCHEDuLE A
Text of Proposed Resolution to be considered at the Annual Meeting of Shareholders of Neal & Massy Holdings Limited (the
“Company”) to be held on Friday 18th February, 2011.
Ordinary Resolution
Resolved:-
1 “THAT, in accordance with the requirements of paragraph 4.6.1 of By-Law No. 1 of the Company, Mr. Robert Bermudez be
and is hereby elected a Director of the Company to hold office until the close of the third Annual Meeting of the Shareholders
of the Company following this election”
2 “THAT, in accordance with the requirements of paragraph 4.8 of By-Law No. 1 of the Company, Mr. Brian Young who attained
the age of seventy two years be and is hereby elected a Director of the Company to hold office until the close of the next
Annual Meeting of the Shareholders of the Company following this election”
Notice of Meeting
14 15 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Arthur Lok JackChairman
Group Third Party Revenue remained flat at $8.3 billion (2009: $8.3 billion).
Profits After Tax decreased from $484 million to $306 million, resulting in the
total EPS declining by $1.40 or 31%. This significant decline in EPS was, in the
main, attributed to losses from Almond Resorts, together with one-time write-
offs pertaining to the discontinuation of Bahamas Supermarkets Limited and
Warrens Motors (in Barbados), which together constituted a loss of $1.95 per
share. The Board of Directors has declared a final dividend of 86 cents per share,
which when added to the 40 cents interim dividend, will make up a total dividend
for the current year of $1.26 (2009: $1.40), which reflects a 40% Payout of EPS
versus 31% in 2009.
Regional economic recovery remains fragile on account of weak external
demand and improvement prospects of regional economies remain closely linked
to the speed and intensity of the economic recovery in the US and Europe. For
the most part, Caribbean economies either contracted or experienced lower rates
of growth in 2010; and the sharp decline in tourism continues to hurt regional
tourism-dependent economies including Barbados and the Bahamas. Recovery
has been further hindered by a number of consequential factors, including reduced
foreign direct investment flows and increasing unemployment rates.
Moderate improvement in the tourism industry in Barbados, the mainstay of its
economy, is expected for 2011 following on the 3% increase in stay-over tourist
arrivals in 2010. The country faces continuing challenges from high public debt,
increasing unemployment and unsustainable government deficits. New fiscal
measures to increase government revenue will continue to put strain on consumer
and business spending.
Growth in the Trinidad and Tobago economy slowed because of the marked
reduction in activity in the construction and energy sectors, however nascent
recovery is visible in these sectors, for 2011, and Neal & Massy is well-positioned to
identify and seize opportunities. Commodity price improvements signal a greater
Chairman’s Report
level of activity in the petrochemical sector, when compared to
the last two years and a greater level of interest in the upstream
industry show promise for a rebound in the energy sector. In the
construction sector, stagnation is anticipated to continue until
mid-2011, with signs of an upturn in the latter part of the year.
In May 2010, General Elections were called and the government
changed hands with the People’s Partnership as the ruling party.
In their national budget presentation a fiscal deficit of 5.5% was
predicted for 2010/11.
While growth in Jamaica has also slowed and the fiscal
measures required for the IMF support are onerous, the economy
has stabilized. Interest rates have fallen below 10%, the currency
has appreciated slightly and inflation has also been contained.
On a positive note, fuelled by strong commodity prices and
increased gold and oil exploration, Guyana’s economy continued
to improve in 2010; and once again our operations in Guyana
have performed superbly.
The economic slowdown currently being experienced is not
the first time that the Group’s resilience has been tested. The
corporate culture of the Neal & Massy Group was built from
and out of hardship and a commitment to the value of prudent
financial management. It was in the “depression-era” year of
1932 when Harry Neal and Charles Massy decided to form a
partnership to combine the strengths of their respective service
and sales businesses out of which came the Neal & Massy Group
which owns 70 subsidiary companies across the region 78 years
later. In October this year we commemorated the Group’s
history and released the publication of a hard-cover collection
of narratives from past leaders, including Sidney Knox, George
Phillips, Jesus Pazos and Bernard Dulal-Whiteway reflecting
the pillars which made the Group successful throughout each
era – such as customer service excellence, financial prudence,
mentorship and consensus building, executing tough decisions
with integrity, engendering individual responsibility, sustainable
growth, succession planning and increasing shareholder value.
Consistent with these values the Group’s executive is
continuing to focus on growth opportunities and to invest in
the expansion of existing businesses, for example, Industrial
Gases Limited will start construction of a new CO2 plant in the
upcoming year. Having taken necessary decisions to shed loss-
making investments in Bahamas Supermarkets and Warrens
Motors, 2011 will therefore be a year of transformation for
the Group, as the positive effects of difficult decisions and
restructuring initiatives get reflected in forthcoming results.
The strength of the Statement of Financial Position of our
diversified Group, coupled with a conservative approach to doing
business, and an ability to focus on what’s important leaves us
well positioned to take advantage of any upturn in the markets
in which we operate.
2010 is the Group’s first year under the leadership of Gervase
Warner, who was appointed CEO following the passing of
Bernard Dulal-Whiteway. I would like to commend Gervase and
his team of Executives for their astute and practical leadership
and take this opportunity to also extend my gratitude to the
Board for their guidance and leadership. As always, my gratitude
goes out to the employees of Neal and Massy who work hard
every day to ensure that the Group continues to grow and
develop.
CH
AIR
MA
N’S R
EPOR
T
16 17 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
E. Gervase WarnerPresident &
Group Chief Executive Officer
financial years, and in the last quarter of 2010, the Neal & Massy
Board took the decision to dispose of these investments. Attempts
to turn around these companies proved unsuccessful as important
structural disadvantages were too significant to overcome. The
Group took the decision to exit these investments in order to
curtail future losses. Operating Losses and discontinuation costs,
incurred in the sale of Bahamas Supermarkets and Warrens
Motors, reduced the Group’s EPS by $1.22.
The Group has also cut costs and initiated restructuring
efforts at other operations. The overhead costs and manpower
levels at Pres-T-Con were substantially cut, and cost reduction
and restructuring efforts are well underway at Almond Resorts.
ARI’s management contract with the Smugglers Cove hotel in
St Lucia was terminated effective December 15, 2010, putting
an end to ongoing credit risk and allowing us to better focus
on improving the results of the Almond Morgan Bay hotel, also
in St Lucia. As part of the restructuring effort at Almond, the
ARI Board will explore all options for restructuring and turning
around the performance of the hotel group, including property
improvements and deploying a team to assist with Revenue
production and operations improvements to the hotels.
These Operating Losses and the provision for doubtful debts
from Pres-T-Con, Cool Petroleum and Almond Resorts had a
further negative impact on the Group’s results by reducing its
EPS by more than $0.87.
Despite these challenges, the Group remains strong. The
disciplined management of working capital continued from
2009 into 2010, as Inventories and Receivables remained
unchanged. As a result, Cash, however, grew 19%, from $958
million to $1.14 billion, while the Group’s Debt to Equity ratio
was reduced.
Looking to the future
Earlier in this Annual Report, we introduced our new Vision
Statement:
The Neal & Massy Group: A Force for Good – the
Most Responsible and Profitable Investment Holding/
Management Company in the Caribbean Basin.
Consistent with this vision, throughout the 2011 financial
year the Group will continue to review non-productive and/or
Recap of 2010
2010 was a tumultuous year in which the economic recession that plagued many
Caribbean countries impacted on the Neal & Massy Group. It was also an important
transition year, as the Group implemented many initiatives to clean up exposures
to risks and unprofitable operations. As a result, we enter the 2011 Financial Year
well poised to resume profitable growth.
In our previous Annual Report we explained the difficulties faced by the Group
in 2009 and the “significant turnaround efforts being undertaken at Dacosta
Mannings Inc (DMI), Almond Resorts Inc (ARI) and Bahamas Supermarkets Limited
(BSL).” (2009 Annual Report) The turnaround of DMI was successful and the
company contributed positively to 2010 Earnings. However, we did not anticipate
the depth of the economic recession and increasing competitive intensity in Food
Retailing in the Bahamas, which overcame the Group’s efforts to turn around
BSL. We were also disappointed by the extended decline in tourism revenues,
with increased operational losses in the ARI hotels, which were exacerbated by
providing against receivables due under an ARI management contract from a hotel
in St Lucia.
The snap election that was called in Trinidad and Tobago, with its ensuing period
of uncertainty and economic contraction, has prolonged the downturn in the
local construction industry, to the detriment of Pres-T-Con. Our results were also
adversely affected by provisions for sums owing to NM Insertech for significant
work on the World GTL plant construction, which have gone unpaid. This occurred
after Petrotrin acquired the financing Bond for the project from Credit Suisse, and
put World GTL Trinidad and Tobago into receivership.
The Group has responded to these developments with great urgency. We initiated
and, at the time of preparing this report, have completed divestment of some
operations which have been negatively impacting the Group. Both Warrens Motors
and Bahamas Supermarkets have incurred continued losses over the last several
non-strategic assets for productive deployment or divestment
as it focuses its efforts on Growth. To this end, a new Senior
Vice President has been recruited. Thomas Pantin, who was
most recently the Group CEO for The Office Authority Limited
and before that the Regional Director/CEO for Courts Trinidad,
Barbados and Guyana, will join the Group as the SVP of Special
Projects and Growth.
The Group has several exciting prospects for growth which
it is pursuing and evaluating, including potential acquisitions
and investments in the Energy Sector, further expansion of
the Hi-Lo and Supercentre supermarkets, opportunities in the
growing Guyanese economy and potentially with a Group in the
Dominican Republic.
In 2011, we have launched five management initiatives, which
we will continue to emphasise throughout the Group:
Growth
Customer Service
Re-focus on Shareholder Value Added
Efficiency Improvements
Corporate and Business Unit Strategy
Growth: Despite the challenging economic conditions in Jamaica,
Barbados and Trinidad and Tobago, the Group has identified
opportunities for growth. Some are more immediate while others
will take a few years to come to fruition. Each Business Unit has
been given a growth mandate and is exploring opportunities
locally and internationally. In addition, we have initiated an
international expansion effort at the corporate centre and will be
visiting Latin and Central American countries in 2011 to explore
and develop investment opportunities.
Customer Service: The Group embarked upon a Customer Service
Improvement initiative in 2010. Sharon Jemmott was transferred
from Neal & Massy Wood Group to become the Corporate
Customer Service Manager and spearhead the initiative across
the Group. The executive leadership teams at Hi-Lo and Neal
& Massy Automotive have enrolled in pilot programmes to
implement the new Customer Service Management System,
which was developed internally during the 2010 financial year.
Chief Executive Officer’s Report
CEO
’S REPO
RT
18 19 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Recap of 2010
2010 was a tumultuous year in which the economic recession
that plagued many Caribbean countries impacted on the Neal
& Massy Group. It was also an important transition year, as the
Group implemented many initiatives to clean up exposures to
risks and unprofitable operations. As a result, we enter the 2011
Financial Year well poised to resume profitable growth.
In our previous Annual Report we explained the difficulties
faced by the Group in 2009 and the “significant turnaround
efforts being undertaken at Dacosta Mannings Inc (DMI), Almond
Resorts Inc (ARI) and Bahamas Supermarkets Limited (BSL).”
(2009 Annual Report) The turnaround of DMI was successful and
the company contributed positively to 2010 Earnings. However,
we did not anticipate the depth of the economic recession and
increasing competitive intensity in Food Retailing in the Bahamas,
which overcame the Group’s efforts to turn around BSL. We were
also disappointed by the extended decline in tourism revenues,
with increased operational losses in the ARI hotels, which were
exacerbated by providing against receivables due under an ARI
management contract from a hotel in St Lucia.
The snap election that was called in Trinidad and Tobago, with
its ensuing period of uncertainty and economic contraction, has
prolonged the downturn in the local construction industry, to the
detriment of Pres-T-Con. Our results were also adversely affected
by provisions for sums owing to NM Insertech for significant work
on the World GTL plant construction, which have gone unpaid.
This occurred after Petrotrin acquired the financing Bond for
the project from Credit Suisse, and put World GTL Trinidad and
Tobago into receivership.
The Group has responded to these developments with great
urgency. We initiated and, at the time of preparing this report,
have completed divestment of some operations which have
been negatively impacting the Group. Both Warrens Motors
and Bahamas Supermarkets have incurred continued losses over
the last several financial years, and in the last quarter of 2010,
the Neal & Massy Board took the decision to dispose of these
investments. Attempts to turn around these companies proved
unsuccessful as important structural disadvantages were too
significant to overcome. The Group took the decision to exit
these investments in order to curtail future losses. Operating
Losses and discontinuation costs, incurred in the sale of Bahamas
Supermarkets and Warrens Motors, reduced the Group’s EPS by
$1.22.
The Group has also cut costs and initiated restructuring
efforts at other operations. The overhead costs and manpower
levels at Pres-T-Con were substantially cut, and cost reduction
and restructuring efforts are well underway at Almond Resorts.
ARI’s management contract with the Smugglers Cove hotel in
St Lucia was terminated effective December 15, 2010, putting
an end to ongoing credit risk and allowing us to better focus
on improving the results of the Almond Morgan Bay hotel, also
in St Lucia. As part of the restructuring effort at Almond, the
ARI Board will explore all options for restructuring and turning
around the performance of the hotel group, including property
improvements and deploying a team to assist with Revenue
production and operations improvements to the hotels.
These Operating Losses and the provision for doubtful debts
from Pres-T-Con, Cool Petroleum and Almond Resorts had a
further negative impact on the Group’s results by reducing its
EPS by more than $0.87.
Despite these challenges, the Group remains strong. The
disciplined management of working capital continued from
2009 into 2010, as Inventories and Receivables remained
unchanged. As a result, Cash, however, grew 19%, from $958
million to $1.14 billion, while the Group’s Debt to Equity ratio
was reduced.
Looking to the future
Earlier in this Annual Report, we introduced our new Vision
Statement:
The Neal & Massy Group: A Force for Good – the
Most Responsible and Profitable Investment Holding/
Management Company in the Caribbean Basin.
Consistent with this vision, throughout the 2011 financial
year the Group will continue to review non-productive and/or
non-strategic assets for productive deployment or divestment
as it focuses its efforts on Growth. To this end, a new Senior
Vice President has been recruited. Thomas Pantin, who was
most recently the Group CEO for The Office Authority Limited
and before that the Regional Director/CEO for Courts Trinidad,
Barbados and Guyana, will join the Group as the SVP of Special
Projects and Growth.
The Group has several exciting prospects for growth which
Chief Executive Officer’s Report
CEO
’S R
EPO
RT
Five Management Initiatives
Growth
Explore Growth opportunities
locally and internationally
Corporate and Business unit Strategy/Development
Develop strategy to fulfil our vision,
train internal resources and plan for the future
Customer Service
Re-Focus on SVA
Efficiency Improvements
Enhance Customer Service
across the Group
Measure strength of the Group’s earnings
after its cost of all Capital
Focus on efficiency and productivity
20 21 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
With the acquisition of BS&T, the Group inherited some
under-performing companies, including Bahamas Supermarkets,
Warren Motors, Dacosta Mannings and Almond Resorts. Major
turnaround efforts continued throughout 2010 for these
companies, and Dacosta Mannings contributed positively to the
Group’s profits.
Closure costs for Warrens Motors and Bahamas Supermarkets
and further impairment losses on the operating assets resulted
in a $30 million operating loss in Warren Motors Inc, compared
to $14 million loss in the previous period. The net asset value of
Bahamas Supermarket Ltd at the end of the last financial year
was $27 million; in first quarter of this financial year the Group
invested a further $52.2 million by way of a cash injection of $35
million and a guarantee given to Royal Bank of Canada for $17.2
million, for a Bahamas Supermarkets Loan. On 10 November,
2010, the holding company in which the Group had invested, sold
its investment in Bahamas Supermarkets Ltd for $1.00 and Neal
& Massy wrote off the value of its investment at the financial year
ended 2010. The Cool Petroleum Ltd investment was also written
off, as this company is seeking another cash equity partner.
In the Automotive & Industrial Equipment Business Unit, Pres-T-
Con was the hardest hit by the contraction of the construction
Impact of the loss-making Companies
Profit before Tax $ EPS $ EPS $
2010 2009 2010 2009
Total Group 487,831 658,967 3.13 4.53
-26% -31%
Discontinued operations
Warrens Motors Inc. (30,062) (13,760) (0.31) (0.15)
Bahamas Supermarkets Ltd. (87,818) (19,515) (0.91) (0.20)
(117,880) (33,275) (1.22) (0.35)
Continuing operations reported in 2010 605,711 692,242 4.35 4.88
Year on Year changes % -13% -11%
Other loss-making Companies
Pres-T-Con (12,530) 16,080 (0.06) 0.09
Cool Petroleum Ltd. (7,280) (11,569) (0.08) (0.12)
Almond Resorts Inc. (102,040) (26,164) (0.73) (0.14)
(121,850) (21,653) (0.87) (0.17)
727,561 713,895 5.22 5.05
Year on Year changes % 2% 3%
Paula RajkumarsinghExecutive Vice President &
Chief Financial Officer
Financial Review
Highlights
• GroupThirdPartyRevenueremainedflatat$8.3billion
• ProfitBeforeTaxdeclinedby12.5%,from$692millionin2009to$606
million in 2010
• ProfitAfterTaxdeclinedby18%,from$517millionto$424million
• Thelossesfromdiscontinuedoperationswere$118million.
• EarningsPerSharefromcontinuingoperationswas$4.35–10.9%lower
than in 2009 when EPS was $4.88
• GroupDebtdeclinedby$197millionto$1,978million
• GroupCashincreasedfrom$958millionto$1,138million.
• DebttoEquityRatioimproved,from79%in2009to66%in2010
• CurrentRatioalsoimproved,from1.25in2009to1.28in2010
Profit and Loss
The Group revenue from continuing operations remained at $8.3 billion
while the Profit Before Tax (PBT) declined by 12.5%, and EPS from continuing
operations declined by 10.9%. The delay in the turnaround of some of the
troubled companies in the Group has significantly impacted the results for
2010. The Group had five loss-making companies in 2010, two of which are
shown in the held for sale category (Discontinued Operations) at the end of
September 2010. The Board approved the disposal of Warrens Motors Inc. and
Bahamas Supermarkets Ltd. in the last quarter of 2010, and both disposals will
be completed in the new financial year. Other loss-making companies included
Pres-T-Con, Cool Petroleum Ltd. and Almond Resorts. The impact of these
companies is shown in the table on the following page.
Chief Financial Officer’s Report
CFO
’S REPO
RT
22 23 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Revenue by Operating Country (%)
58.7 50.751.6
2008 2009 2010
100 %
23.8 34.734.1
9.3 7.0
7.2 7.06.7
1.0
=$7.7B =$8.3B =$8.3B
0.20.6
7.4
Segment Information
Financial Review
Highlights
• GroupThirdPartyRevenueremainedflatat$8.3billion
• ProfitBeforeTaxdeclinedby12.5%,from$692millionin
2009 to $606 million in 2010
• ProfitAfterTaxdeclinedby18%,from$517millionto
$424 million
• Thelossesfromdiscontinuedoperationswere$118
million.
• EarningsPerSharefromcontinuingoperationswas$4.35
– 10.9% lower than in 2009 when EPS was $4.88
• GroupDebtdeclinedby$197millionto$1,978million
• GroupCashincreasedfrom$958millionto$1,138million.
• DebttoEquityRatioimproved,from79%in2009to66%
in 2010
• CurrentRatioalsoimproved,from1.25in2009to1.28in
2010
Profit and Loss
The Group revenue from continuing operations remained at $8.3
billion while the Profit Before Tax (PBT) declined by 12.5%, and
EPS from continuing operations declined by 10.9%. The delay in
the turnaround of some of the troubled companies in the Group
has significantly impacted the results for 2010. The Group had
five loss-making companies in 2010, two of which are shown
in the held for sale category (Discontinued Operations) at the
end of September 2010. The Board approved the disposal of
Warrens Motors Inc. and Bahamas Supermarkets Ltd. in the last
quarter of 2010, and both disposals will be completed in the new
financial year. Other loss-making companies included Pres-T-Con,
Cool Petroleum Ltd. and Almond Resorts. The impact of these
companies is shown in the table on the following page.
With the acquisition of BS&T, the Group inherited some
under-performing companies, including Bahamas Supermarkets,
Warren Motors, Dacosta Mannings and Almond Resorts. Major
turnaround efforts continued throughout 2010 for these
companies, and Dacosta Mannings contributed positively to the
Group’s profits.
Closure costs for Warrens Motors and Bahamas Supermarkets
and further impairment losses on the operating assets resulted
in a $30 million operating loss in Warren Motors Inc, compared
to $14 million loss in the previous period. The net asset value of
Bahamas Supermarket Ltd at the end of the last financial year
was $27 million; in first quarter of this financial year the Group
invested a further $52.2 million by way of a cash injection of $35
million and a guarantee given to Royal Bank of Canada for $17.2
million, for a Bahamas Supermarkets Loan. On 10 November,
2010, the holding company in which the Group had invested, sold
its investment in Bahamas Supermarkets Ltd for $1.00 and Neal
& Massy wrote off the value of its investment at the financial year
ended 2010. The Cool Petroleum Ltd investment was also written
off, as this company is seeking another cash equity partner.
In the Automotive & Industrial Equipment Business Unit, Pres-
T-Con was the hardest hit by the contraction of the construction
industry in Trinidad and Tobago. This company underwent
significant restructuring in the earlier part of this year and it
is expected to not record any further losses in 2011. Efforts to
turnaround Almond Resorts are continuing but were impacted
by the downturn in UK, US and European economies, which
contributed to the decline in the Tourism sector in Barbados and
St Lucia. Losses for the year included a provision for amounts
receivable from Smugglers Cove and other impairments, as well
as additional expenses in relation to maintenance and energy
costs.
The prevailing economic environment throughout the region
continued to adversely impact the rest of the Group, resulting in a
marked slowdown in business activity. Key operating companies
such as United Insurance, Hi-Lo Food Stores and Neal & Massy
Automotive Ltd, had marginal growth revenues. Good growth
was seen in both our Finance & Property and Food Group
Business Units. While economic conditions in Jamaica were
particularly difficult, our Jamaican subsidiaries have continued to
generate good profits. Guyana is the only economy that showed
growth in 2010, and this was reflected in the strong operating
performance of our Guyana-based subsidiaries.
Group-wide cost reduction initiatives helped the Automotive &
Industrial Equipment, Information Technology & Communications,
Chief Financial Officer’s Report
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Guyana
Jamaica
Barbados
Trinidad & Tobago
24 25 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
that customer service is a critical, differentiating, success factor
and will continue its efforts to deliver continually improving
performance in its “Drive to Customer Service Excellence”. A
continued focus on cost and inventory management resulted
in a marginal increased profit, despite a decline in vehicle sale
revenue.
City Motors (1986) Limited continued to be adversely
affected by uncompetitive new-vehicle pricing from the supplier–
Peugeot—but was able to remain profitable by offering product
support to the vehicles in operation, coupled with prudent
expense control.
Tobago Services Limited suffered a major decline in revenue
as a consequence of the slow-down in economic activity in
Tobago, yet managed to maintain its profitability through the
addition of the Caterpillar spare parts line and rigorous control
of operating expenses.
Master Serv has managed to maintain its overall sales
levels but has suffered from reduced margins caused by price
competition affecting “after-market” parts and battery sales.
Activities at the service centres have also been reduced as
customers are servicing at wider intervals.
Best Auto has improved profitability from last year and
continues to hold a respectable position in the market for
European cars. Improvement in the service facilities has also met
with positive feedback from our customers.
2010 was particularly challenging for Automotive
Components Limited (ACL), with an increase in competing
products on the local market. Competitive pricing and other
strategies were implemented to maintain market share. ACL also
faced challenges in the export arena, as markets in the CARICOM
region were particularly hard hit by the ongoing global crisis.
ACL was able to maintain sales revenue at a level slightly
above the previous year, while achieving growth in profit. Special
emphasis was also placed on improved management of HSSE
and human resources.
Tracmac Engineering Limited performed creditably,
considering the continued decline in the construction sector
over the year. The diversified business operations within the
Company secured compensatory increases in specific sectors for
the downfall in other areas. 2010 was the first full year as the
dealer for International Truck, and the sales and general response
have been more than satisfactory. The Company also reduced its
operating cost and inventory levels and improved its cash flow.
Tracmac was successful in obtaining ISO 9001:2008 certification,
a major step toward achieving excellence in operational efficiency
and overall customer service.
The Pres-T-Con Group (Pres-T-Con, Rabco Construction and
Pres-T-Con Equipment) continued to be affected by the global
recession, as well as changes in Government and the stagnation
of the construction industry. Similarly, there has been little activity
in petrochemical and infrastructure developmental projects.
In spite of substantial retrenchment (labourers and staff)
adjustments and implementation of various cost savings and
reduction of expenditure measures, Pres-T-Con Group incurred
losses in 2010. The Government has signalled its intention to
accelerate the implementation of its Public Sector Investment
Programme (PSIP) Budget with the initiation of the super-
highway project to Point Fortin in the immediate future. It is
reasonable to expect that tenders would not be realised until
the second or third quarter of the 2011 Financial Year.
Pres-T-Con Group continues to maintain its position as the
leading manufacturer of pre-stressed concrete products and
deep foundations installation contractor in Trinidad and Tobago
and throughout the Caribbean. The Company will continue to
aggressively pursue new projects, both locally and regionally,
and is closely managing its expenditure and reviewing methods
for improving safety and efficiency.
David O’BrienSenior Vice President &
Executive Chairman
Automotive & Industrial Equipment Business Unit
In 2010, the Automotive & Industrial Equipment Business Unit continued to
be affected by stagnant economic activity impacting mainly construction and
industrial equipment sales. However, our market share for new vehicles has
improved, while the overall market has declined. In many areas, new products
were introduced that yielded great market success; they were Husquvarna
Outdoor Power Equipment, Power Master Maintenance Free and Power Master
Platinum batteries. The market has also been excited by new vehicle models such
as the Hyundai Tuscon, Sonata, Subaru Legacy and Nissan’s luxury crossover,
the Murano.
In Automotive, customer service initiatives and service facility improvements
have proven to be successful, and these will be areas of continued focus. Tracmac
Engineering and Neal & Massy Automotive joined Automotive Components
Limited in gaining ISO: 9001 – 2008 certification.
Hyundai was a major sponsor in the FIFA 2010 U17 Women’s World Cup.
Support of our neighbouring football team, Caledonia AIA, continues.
Overall, operating asset levels have been maintained while operating cost-
containment initiatives continued. The Business Unit is well prepared at this time
for growth opportunities, both locally and regionally.
Neal & Massy Automotive Limited maintained its market leadership in what
was a significantly reduced market for new cars. Nissan continued its position
as the number one brand in the country and steady Hyundai sales positioned
the brand in fourth place. Sales were impacted by a low supply of high demand
vehicles, such as the Hyundai Tucson and the Nissan Qashqai. One of our
objectives for the upcoming year will be to expand our lines.
Within the context of contracting market conditions, management continued
its focus on delivering improved customer service. In this regard, customer areas
in the Morvant and Port of Spain service departments were upgraded, processes
were redesigned and ISO certification achieved. Management is keenly aware
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26 27 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
large machinery items. The Services area experienced a large
downturn in opportunities. The integration process for NMESL
and NM Insertech (Caribbean) Limited was completed, and is
already producing cost synergies.
Neal & Massy Energy Resources Limited (NMERL), the
production operation arm of Neal & Massy Energy Limited, had
a very successful year. Oil sales to Petrotrin and realised oil prices
were both above budget. Effective cost management continues
as the Company recovered from the low oil price environment of
the previous year, thus resulting in NMERL delivering a positive net
profit for the year. The Company embarked on a number of Quality
and HSSE initiatives, including continuing improvements toward
full compliance with OSHA requirements, as well as measuring,
monitoring and reducing the Company’s carbon footprint so as
to reduce the impact of operations on the environment.
NMERL also has held discussions to provide input in the
planning of the new fiscal regime for the petroleum industry,
and is near to completion on finalising the terms and conditions
for the renewal of the Moruga West Joint-Venture licence. The
Company’s growth initiatives are focused on the implementation
of an Enhanced Oil Recovery project in the next year.
NM Supply Chain Integrators Limited continued to focus
on providing best-in-class services to its clients, while maintaining
a Zero Lost Time Incident record. The Company performed well
in spite of the low growth in the energy sector. Strategies to
expand outside of the energy-based industries and throughout
the region are being explored for the upcoming year.
Industrial Gases Limited experienced a disappointing year
because of low demand for all product types, inconsistent supply
of product and unplanned plant maintenance. The issue of
the long-term reliability of oxygen, nitrogen and argon will be
resolved with the proposed start-up of a relocated Air Separation
Plant by our joint venture partner, Air Liquide, in the first quarter
of 2011. In addition, the production capacity and reliability
of high quality, food-grade carbon dioxide supplies will be
significantly increased with the commissioning of a refurbished
plant in the second quarter of 2011.
Trintogas Carbonics Limited had a very successful year,
principally because it supplemented the shortfall in IGL’s carbon
dioxide supplies.
Caribbean Industrial Gases Limited (CIG) continues to
perform well, exceeding contractual obligations for plant
reliability, product volumes and quality. However, an unplanned
major mechanical equipment overhaul negatively affected the
Company’s overall profitability.
NM Petrochemicals Services Limited again exceeded
budgeted expectations, due mainly to planned catalyst change
outs at the ammonia and methanol process plants. However,
methanol sales were significantly reduced because of the general
decline in the manufacturing and services sectors.
Gas Products Limited (GPL) enjoyed another year of strong
operational and financial performance. Despite a difficult
Jamaican economy, GPL exceeded its earnings and SVA targets.
For a third consecutive year, GPL was recognised as the industry
leader in safety practices. Continued progress was made in
expanding the customer base for non-cooking applications and
this segment now accounts for 4% of total volume. Significant
cash was generated and this satisfied the full capital expenditure
requirement and maintained the accelerated debt re-payment
schedule. Several key initiatives were undertaken during the year
to build a high performance culture in GPL.
Linford CarrabonSenior Vice President &
Executive Chairman
Energy & Industrial Gases Business Unit
2010 presented a major challenge for most of the companies in the Business Unit
as reduced activity in the upstream and downstream energy sectors continued,
following on the trend that began in 2009. A challenging environment, however,
did not hamper the Business Unit’s strong HSSE performance, with a number of
individual companies reaching significant safety milestones during the year.
Clients in the oil, gas and petrochemical sectors continued essential
maintenance activities and the companies in the Business Unit did not experience
significant growth in new business. Nonetheless, the E&IG Business Unit is well-
poised to capitalise on the expected upsurge in the regional energy sector.
Neal & Massy Wood Group (NMWG) continued servicing its major clients;
bpTT’s Strategic Outsourcing Contract Agreement (SOCA), BGT&T’s Engineering
Contract and Methanex Trinidad Limited’s maintenance contract. NMWG met its
performance expectations, despite the tough conditions of the energy market.
The Company’s HSSE achievements in the year included the completion of 5
million man-hours without a Lost Time Incident and being the first Company to
achieve the Energy Chamber’s Safe to Work (STOW) certification. NMWG also
received ISO 9000 certification in 2010.
NM Insertech (Caribbean) Ltd had difficult year, overall, with a downturn in
projects and significant reduction in valve service work. One of the Company’s
significant successes was the ongoing Electrical and Instrumentation construction
work for a refinery project and the building of an air separation unit. The
financial performance was seriously affected by the receivership of the World
GTL Trinidad and Tobago gas-to-liquids plant. NM Insertech continues to be a
significant supplier of specialised technical resources and technical equipment
for the energy-based industries in Trinidad and Tobago and the region.
Neal & Massy Energy Services Limited (NMESL) also experienced a
challenging year because of the reduced capital spend of the customer base in
the energy industries. The Products area saw some delays in the purchase of
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28 29 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
H.D. Hopwood Limited again had a very successful year in
Jamaica, despite challenging economic conditions. Recognising
the impact of the drastic slow-down in the economy, greater
emphasis was placed on cost control and efficiency improvements
throughout the Company’s operations.
During the year, the Company opened a new distribution
warehouse in Montego Bay and strengthened the van sales
operations. Both actions were part of an overall strategy of
moving closer to the consumer. The Company also continued
with a number of initiatives to promote employee engagement
and build leadership competencies.
Melville Shipping Limited (MSL) adapted well to the
prevailing economic conditions and leveraged its understanding
of the key success factors of the shipping industry to drive
growth. This resulted in the achievement of a creditable financial
performance. As MSL seeks to build on its expertise and expand
its range of services, the Company forges ahead maintaining its
position as an industry leader and improving its reputation within
the industry for customer service excellence.
Huggins Shipping & Customs Brokerage Limited mirrored
the financial performance of the previous year despite a very
difficult period with fewer projects being executed locally. The
management team continues to explore new business models in
an effort to respond to the changed economic environment, so
that the Company maintains its position as the preferred customs
brokerage provider in the energy sector, and is positioned for
growth in 2011.
Booth Steamship improved its results considerably over the
prior year because of an increase in the overall volume of cargo
handled by the Company and excellent control of expenses.
In this financial year, Neal & Massy Incorporated and
BS&T International Development LC were merged into one
operational Business Unit. There were some one-off restructuring
costs but the combined entity will now focus on procurement
and distribution, and serve as a marketing office for food and
food-related products, electronics and industrial parts. This
Company now stands poised as a growth engine within the
Food Group.
Earl BoodasinghExecutive Vice President &
Executive Chairman
Food Group: Food/Consumer Distribution & Logisticsand Food Retailing
The Food/Consumer Distribution and Logistics Business Unit operates in Trinidad
and Tobago, Barbados and Jamaica. Despite the continuous GDP contraction of
these three economies during the financial year, it is satisfying to report that the
team was able to exceed their budgeted targets and prior year performance.
Working closely with our international and local suppliers we were able to
deliver value to our retailers and institutional customers by critically analysing
the changing needs of the embattled Caribbean consumer and implementing
solutions that work.
Marketing & Distribution (M&D) was able to deliver growth, despite the
slow-down of the Trinidad and Tobago economy, as noted above.
M&D’s integrated Quality and HSSE management systems continue to be
subject to rigid audit programmes, increased inspections and ongoing training.
The Company will be implementing a comprehensive Customer Service
Management system in the new financial year.
M&D’s management team remains focused on the evolution of our business
model to drive efficiencies, improve execution and ensure relevance in a changing
marketplace. For 2010, the Company was recognised as “Distributor of the Year”
by both Procter & Gamble and ConAgra Foods.
SBI Distribution Incorporated (SBI) again delivered a strong performance
during the year under review. Sales volumes were not achieved due to the
prevailing economic recession in Barbados; however, tight control of expenses,
receivables and inventory ensured that budgeted targets were achieved. A major
achievement during the year was the amalgamation of the Agro Chemicals
business in February. Agro Chemicals is a profitable business and a positive
contribution is expected for 2011, in spite of the challenges facing the agricultural
industry. In addition, SBI strengthened its management team by hiring senior
personnel in the areas of Pharmaceutical, Down Trade, Human Resources and
Business Analysis.
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30 31 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Super Centre Limited, our chain of seven supermarkets and
convenience stores in Barbados, delivered earnings ahead of
the previous year and exceeded expectations. These gains were
made primarily in the last quarter of the financial year through an
increase in tourists visiting the island during the June to August
vacation period.
To offer greater value to customers, an Every Day Low Price
marketing strategy was deployed with success through a greater
focus on direct importation, lower prices for larger quantity
packs and special offers supported by local distributors across
the supply chain.
In 2011, support for local Barbadian agriculture will be
greatly enhanced through the creation of a Centralised Produce
Procurement Facility which will allow for greater expansion in the
provision of quality fresh fruit and vegetables, from both local
and regional sources. This facility can also supply other buyers
such as cruise ships and hotels.
Super Centre is seeking planning permission to modernise the
Sunset Crest store, including additional parking and storage,
and plans are being developed for new store models in strategic
locations across the island.
Knights Pharmacies (a division of Super Centre) had a
successful year but is seeking new ways to diversify its services so
as to empower patients to better manage their health between
visits to their doctors. The division is also formulating a more
efficient system for dispensing prescription drugs.
Peronne Manufacturing, our meat processing operation
met expectations for the year but achieved this through a
reduction in overhead expenses. Product margins were lower
than expected, especially in the second half of the financial year
because of increases in both raw materials and utilities. In 2011,
Peronne will further target the food service and retail sectors,
while expanding its range of processed meats.
Gablewoods Supermart Limited (Associate Company),
through its operating subsidiary Consolidated Foods, was able
to increase its revenue meaningfully in the year, despite the
recessionary circumstances in St Lucia. The strategy to expand
sales through its “warehouse store” concept contributed to
this gain, while higher tourist arrivals also played a role in
augmenting sales. A new competitor opened in October 2010,
but initial indications are that the Company’s product-sourcing
and pricing, together with its experience and strong team will
allow it to effectively compete and grow.
Frere DelmasSenior Vice President &
Executive Chairman
Food Retailing
Trinidad and Tobago and Barbados continue to face their respective challenges
due to negative effects of the global recessionary environment. Despite these
circumstances, Food Retailing increased its annual sales. The strategic decision to
focus on cost containment and enhancing the gross profit margin through various
initiatives yielded positive results, with an improvement in operating profit.
The outlook for the Food Retailing is positive, given the expectations of
incremental economic recovery globally and regionally in the coming years. Our
strategic plans, both short- and long-term, involve modernisation of existing
stores and the expansion of our current retail footprint. Also, we will be prudent
in our approach to selecting acquisition/investment opportunities in new markets
and business models to drive future growth.
TDL Retail (Hi-Lo Food Stores, LB’s and FoodMasters) had a relatively
successful year and achieved a marginal improvement in both its revenue and
profitability, despite increased competition for the limited available customer
spend. Encouragingly, in the latter half of the year, transaction/customer count
showed a steady and sustained improvement as the Every Day Low Price (GO
LO) marketing campaign, introduced to reduce the cost of the average basket
of goods, found favour with the chain’s customers.
Hi-Lo enrolled as one of the two companies in a Neal & Massy corporate
initiative to improve customer service across the Group. Significant progress has
been made in identifying gaps in Hi-Lo’s operations against the customer service
management system that was created for the Group. Making use of feedback
from customers and staff, Hi-Lo embarked on a comprehensive programme to
improve customer service. The effects of this initiative will be seen in the coming
years.
The upgrading of stores continued during the year with the refurbishment
of the Diego Martin and Ridgewood Arima stores, which was well-received by
customers.
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32 33 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
G. Anthony KingExecutive Vice President &
Executive Chairman
Financial, Property & Other
united Insurance Company Limited, which is based in Barbados, provides
primary insurance cover in 13 territories as well as inward re-insurance for certain
international markets. The southern Caribbean region was again spared the impact
of a major catastrophe in 2010; however sizable claims occurred in the inward
re-insurance programme, such as the earthquake in Chile and wind storms in
Europe, which detracted from achieving higher underwriting profits. The prevailing
economic conditions have continued to fuel a very competitive environment with
limited growth in written premium. The investment portfolio improved over the
2008/2009 year and contributed meaningfully to the year’s results, even though
net results were lower than the previous year.
Despite the very competitive environment, United has continued to raise its
brand awareness in the regional marketplace, with emphasis on its reputation
for service and security. This has been reinforced by once again being awarded
A.M. Best’s “A- Excellent” rating. This rating is the highest for a Caribbean-centric
Insurer. While in excess of 60% of premium revenue is earned beyond the shores
of Barbados, the Company continues to seek ways to diversify its portfolio.
General Finance Corporation Limited (GFC), the Group’s financing business
in Trinidad, recorded improved profits over 2009 despite a decline in the volume of
new business. In anticipation of a reduction in revenue, measures were successfully
implemented to substantially reduce the Fixed Deposit portfolio and the associated
cost of funds to the Company, while containing operating expenses at 2009 levels.
Loan impairment losses net of recoveries did, however, increase, as certain recovery
action being taken will not be realised until the coming year.
Neal & Massy Remittance Services Limited, operating in the Trinidad and
Tobago market, experienced an increase in the number of transactions over 2009,
although of reduced value. Accordingly, there was a decrease in the value of
foreign currency available for trading. Despite this, however, profits were in line
with expectations given the prevailing economic conditions.
Magna Rewards Inc (and subsidiaries) is a loyalty services
Company operating in seven Caricom countries with 1.35
million customers, and providing services to 130 retail partners.
Albeit below the year before, Magna’s results across the region
reflected a good performance despite the slowdown in consumer
spending at its retail partners, while still showing growth in
profitability in Trinidad and Jamaica.
The Company’s loyalty processing services, which extend to
loyalty schemes in addition to the Magna card, have continued to
expand with our largest customers, and this growth is expected
to continue in 2011. The Company expects to derive other areas
of growth from expanding our database capabilities and utilising
this data to generate new revenue streams.
The Company also owns MediCard Ltd in Trinidad, which
also performed creditably, and is working towards introducing
MediCard in Barbados.
S.P. Musson, our primary property-related business in
Barbados, recorded profits in excess of budget this year and last
year due to sales of a higher number of house lots at three of
its developments. Occupancy levels of its tenanted properties
remained high, although rent increases are not generally
achievable in the current economic climate. The Company’s real
estate arm, Musson Realty, continues to grow slowly in a very
competitive market.
Nealco Properties Limited, our primary property management
business in Trinidad, grew its trading profit over the previous year
despite a shortfall in its budgeted revenue. However, this was
adversely affected by the impairment of an investment property
which is to be disposed of in the coming year and the decline
of net profits.
The revenue shortfall was due to the continued flat rental
market and somewhat reduced intra-group income. Nonetheless,
the Company placed major emphasis on its customer service
strategies aimed at maintaining an occupancy level above 90%,
and instituted cost containment measures within its budgeted
objectives. Emphasis was also placed on maintenance and
upgrades with significant HSSE content.
The Company will continue to focus principally on its activity
as a commercial landlord and on the development one of its
investment properties for the year ahead.
Nealco Real Estate Limited (NREL) continues to maintain
its reputation as the leader in the Trinidad real estate market,
expanding its client base and building market share. The
Company closed the year with revenue and earnings above the
previous year and ahead of expectations.
The Company’s newly designed website at www.
nealcorealestate.com was recently launched, and it offers
online listings, including photographs, and listings from other
brokers as well as valuable real estate advice and information.
NREL’s experience, integrity and professionalism in the real estate
market augurs well for continued performance in an extremely
competitive market.
Roberts Manufacturing Co. Limited, a Barbados-based
manufacturer and exporter to the region of margarines and
cooking oil, produced improved results for the year under review
as a result of lower commodity input costs and reduced expenses.
Improved production planning with analysis of future contracts
for raw material purchasing and production efficiencies continue
to show benefits. Unfortunately, in the latter half of the year
higher costs in water and energy impacted on the savings gained
in production. The extended period permitting the removal of
the Common External Tariff in Trinidad and the OECS markets
on soybean oil, has again this year impacted export sales of
that product. For the year ahead, the Company will continue to
identify ways of reducing controllable costs and to balance the
higher costs of raw materials and other production inputs with
product pricing and promotion through its distributors.
Dacosta Mannings Inc in Barbados comprises two main
divisions. One is the retailing of consumer goods such as
furniture, appliances and household hardware and the other
is the distribution of automotive supplies, lubricants, bulk fuels
and LPG; it is also a shipping agency.
After a number of changes to the business in the prior year,
such as discontinuing the sale of lumber supplies, rationalisation
of certain retail outlets and the consolidation of the Company’s
warehousing, results for the year under review were much
improved over the prior year.
For the coming year, a number of additional improvements are
to be made to the retail operations, including its procurement and
inventory processes, as well as supplementary cost avoidance
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34 35 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
united Insurance Company Limited, which is based in
Barbados, provides primary insurance cover in 13 territories as
well as inward re-insurance for certain international markets.
The southern Caribbean region was again spared the impact of
a major catastrophe in 2010; however sizable claims occurred in
the inward re-insurance programme, such as the earthquake in
Chile and wind storms in Europe, which detracted from achieving
higher underwriting profits. The prevailing economic conditions
have continued to fuel a very competitive environment with
limited growth in written premium. The investment portfolio
improved over the 2008/2009 year and contributed meaningfully
to the year’s results, even though net results were lower than
the previous year.
Despite the very competitive environment, United has
continued to raise its brand awareness in the regional
marketplace, with emphasis on its reputation for service and
security. This has been reinforced by once again being awarded
A.M. Best’s “A- Excellent” rating. This rating is the highest for
a Caribbean-centric Insurer. While in excess of 60% of premium
revenue is earned beyond the shores of Barbados, the Company
continues to seek ways to diversify its portfolio.
General Finance Corporation Limited (GFC), the Group’s
financing business in Trinidad, recorded improved profits
over 2009 despite a decline in the volume of new business.
In anticipation of a reduction in revenue, measures were
successfully implemented to substantially reduce the Fixed
Deposit portfolio and the associated cost of funds to the
Company, while containing operating expenses at 2009 levels.
Loan impairment losses net of recoveries did, however, increase,
as certain recovery action being taken will not be realised until
the coming year.
Neal & Massy Remittance Services Limited, operating in
the Trinidad and Tobago market, experienced an increase in the
number of transactions over 2009, although of reduced value.
Accordingly, there was a decrease in the value of foreign currency
available for trading. Despite this, however, profits were in line
with expectations given the prevailing economic conditions.
Magna Rewards Inc (and subsidiaries) is a loyalty services
Company operating in seven Caricom countries with 1.35
million customers, and providing services to 130 retail partners.
Ralph TaylorPresident & Managing Director
Almond Resorts Inc.
Tourism / Hospitality
The fiscal year ended 30 September, 2010 continued to reflect the challenges
faced by the hotel industry worldwide. The performance of Almond Resorts
Incorporated was affected by the economic climate, reduced rates and a lack
of improvement in occupancy levels. Declines in our major source market, the
United Kingdom, were offset by significant increases in our business from the
USA and Canada.
The Company fell short of its forecast, which anticipated recovery in the
economies of our source markets, improved consumer confidence and increased
demand for travel. There have been increased losses from the prior period,
particularly at Almond Beach Village, where the much needed and anticipated
refurbishment did not materialise.
Losses for the year include provision for amounts receivable from Smugglers
Cove and reflect Revenue reduction and increases in maintenance and energy
costs. Losses in prior period were buffered by other income from Tourism Industry
Relief Fund (TIRF), which the Government of Barbados created to assist the hotel
industry, and interest refunds of $2.5 million from the Bank.
Refurbishment plans for the Almond Beach Village property have been
completed and funding has been secured. These improvements will be
implemented throughout the year, taking hotel operations into consideration. In
2011, major initiatives will also be undertaken to improve Revenue production
and Operations performance at the hotels. Together with the Government’s
support for tourism and market diversification, we expect a slow but improved
turnaround of the Almond performance, the benefits of which will take some
months to materialise but should be fully reflected in 2012 results.
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36 37 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Enterprise Content Management solutions enabled an increase
in the Company’s market share in the Eastern Caribbean region.
Additionally, further market penetration was attained in most
sectors through the delivery of new technologies in tandem with
some key partners including HP, Oracle, Avaya and Smart. Bill
presentment and payment service Surepay, which launched an
on-line version in the latter part of the year, was also pivotal to
the overall performance of the Company.
ILLuMINAT (Jamaica) Limited delivered growth in profit and
surpassed its budgeted SVA and FCF, despite having to adjust
its planned strategies subsequent to the Government’s debt
exchange programme and other measures that reduced product
sales to all targeted sectors. A greater focus on professional
services to banking and other adversely affected sectors delivered
a 60% increase in services revenues. Notable solution sales
during the year were three major managed services projects, two
significant mobility solution implementations and a Government
education project. These achievements were buoyed by the
efforts to improve services delivery and responsiveness, resulting
in excess of 85% of quarterly survey respondents giving excellent
ratings to its services teams. The coming year will see a similar
approach to the market coupled with the launch of two niche
offerings in identified growth segments.
Nealco Datalink Limited had a challenging year, given
the downturn in its target market, the US. The Company did,
however, obtain a pilot, extra-regional, call centre contract in
a growing segment of the industry, and will pursue further
penetration of this and other niche, growth segments through
partnerships in the coming year.
The performance of Three Sixty Communications in fiscal
2010 was hampered in the first half of the year by volatility
in the inbound international voice market and significant
lags in intervention by the regulatory authority. The Company
rebounded in the second half with strong performances and
growth in its data services segment. The achievement of major
milestones including a domestic voice concession from the
telecoms authority, a domestic interconnection agreement with
TSTT and a nationwide pole-sharing agreement with T&TEC;
which will position the Company for future growth and its
emergence as a multiple service telecommunications provider.
Keith ThomasSenior Vice President &
Executive Chairman
Information Technology & Communications/Other Services
The N&M ITC businesses closed the year achieving its budgeted profit and
delivering strong, above-budget SVA and FCF contributions. Its year-on-year
profit was marginally down, following its doubling of profits over the prior three
years.
Despite a significant contraction in Government spending, Illuminat (T&T) Limited
exceeded its budgeted profit, SVA and FCF mainly due to a strong recurring revenue
base and a diverse services portfolio. Notable revenue-earning successes during the
year were projects executed in the energy, retail and health sectors. The Company
also saw improvements in its client service ratings and its project management (PM)
practice received the distinction of being the only Caribbean Company recognised
in an international publication on PM practice. In the coming year the Company will
focus on protecting and growing its recurring and professional services revenue bases,
continued improvement of its customer delivery and satisfaction, the introduction
of niche offerings in its domestic market and extra-regional, geographic expansion
through one of its well-honed solution offerings.
Pereira & Company Limited continued to execute on its geographic
diversification strategy, delivering profit and SVA growth. Regional growth was
achieved through the extension of the Diebold Service Contract to the Eastern
Caribbean and the launch of the OCE brand in Jamaica. The Company also
continued to receive outstanding service rating feedback from its clients and
partners and, during the year, rolled out its quality assurance programme, meeting
its quality target of 90%. In the coming year the Ricoh brand will be launched
in Jamaica and Barbados, while the growing Office Interiors division is expected
to see further growth, mainly from its Haworth line of systems furniture.
Illuminat Barbados and Eastern Caribbean also performed well,
notwithstanding major project postponements and challenges with the economies
in the various territories. Significant achievements in the financial sector with
NCR Self Service systems and in the Government and Commercial sectors with
SEGM
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38 39 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
contributed to the positive results of the Company. Raising the
bar in the two areas of aftermarket service and customer service
will be the strategic initiatives for the Company in 2011.
NM Security Solutions Incorporated (NMSS) fulfilled on its
promise and recorded excellent growth in the year. Guarding
Services’ strong performance is likely to continue in 2011, and
there are encouraging signals for improved performances in
Cash Services.
The continued improvement of NM Services Limited (NMSL)
in the remittance, shipping and hire purchase business arising
from equipment financing, has enabled the Company to achieve
very satisfactory results.
SEGM
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EVIEW
Deo PersaudExecutive Chairman
Neal & Massy Guyana Group
Guyana Group
The Guyana Group achieved its financial targets for the fiscal year on account
of solid performances of all the subsidiaries. The Group continued to manage
its corporate services centrally and this allowed us to focus on efficiency
improvements in key areas of our business.
Demerara Oxygen Company Limited (DOCOL) continued to execute on
its LPG strategic plan with particular emphasis on distribution and exhibition
excellence. Bulk storage for LPG was improved with the addition of a 30,000-gallon
tank on our premises. During the year the electrical system was redesigned and
replaced; and a new electrical generator was ordered. The Company continued
to strengthen its HSSE culture by way of internal and external audits and risk
assessments. Safety first, customer growth and improved efficiency continue to
be the key drivers for the business.
Associated Industries Limited (Ainlim) achieved another year of strong
performance. The capital goods segment of our business benefited from
investments made in the gold mining sector which was fuelled by the high price of
gold on the world market. Strategically we have expanded our product offerings
which we expect would be the catalyst for continued growth. In addition, we
have embarked on a Customer Relationship Management (CRM) initiative to
further enhance the level of service offered to our customers.
Trading & Distribution Incorporated (TDI) recorded satisfactory earnings
growth during the year through improved operational efficiencies and good
growth in its major consumer food lines. Consumer demand is still in a recovery
mode and this may persist for some time. In the meantime, the Company will
focus on improving its distribution coverage through all channel types and be
better able to manage in-trade distribution of its product range
CCS Guyana Limited (CCS) continued to build its capacity in the Electronic
Security business and executed some significant contracts during the year. Good
performances in the Communication and Security Division and the CCS Store
40 41 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
The Guyana Group achieved its financial targets for the fiscal
year on account of solid performances of all the subsidiaries.
The Group continued to manage its corporate services centrally
and this allowed us to focus on efficiency improvements in key
areas of our business.
Demerara Oxygen Company Limited (DOCOL) continued
to execute on its LPG strategic plan with particular emphasis
on distribution and exhibition excellence. Bulk storage for LPG
was improved with the addition of a 30,000-gallon tank on our
premises. During the year the electrical system was redesigned
and replaced; and a new electrical generator was ordered. The
Company continued to strengthen its HSSE culture by way of
internal and external audits and risk assessments. Safety first,
customer growth and improved efficiency continue to be the
key drivers for the business.
Associated Industries Limited (Ainlim) achieved another
year of strong performance. The capital goods segment of our
business benefited from investments made in the gold mining
sector which was fuelled by the high price of gold on the world
market. Strategically we have expanded our product offerings
which we expect would be the catalyst for continued growth.
In addition, we have embarked on a Customer Relationship
Management (CRM) initiative to further enhance the level of
service offered to our customers.
Trading & Distribution Incorporated (TDI) recorded
satisfactory earnings growth during the year through improved
operational efficiencies and good growth in its major consumer
food lines. Consumer demand is still in a recovery mode and this
may persist for some time. In the meantime, the Company will
focus on improving its distribution coverage through all channel
types and be better able to manage in-trade distribution of its
product range
CCS Guyana Limited (CCS) continued to build its capacity
in the Electronic Security business and executed some
significant contracts during the year. Good performances in
the Communication and Security Division and the CCS Store
contributed to the positive results of the Company. Raising the
bar in the two areas of aftermarket service and customer service
will be the strategic initiatives for the Company in 2011.
NM Security Solutions Incorporated (NMSS) fulfilled on its
promise and recorded excellent growth in the year. Guarding
Services’ strong performance is likely to continue in 2011, and
there are encouraging signals for improved performances in
Cash Services.
The continued improvement of NM Services Limited (NMSL)
in the remittance, shipping and hire purchase business arising
from equipment financing, has enabled the Company to achieve
very satisfactory results.
Associate Companies
Banks Holdings Limited (BHL) recorded reduced consolidated
profits for the year ended 31 August, 2010 as against the
previous year. This result is mainly due to two factors: continued
low crop and commodity pricing related to its citrus business in
Belize and the one-off, exceptional charges incurred by Pine Hill
Dairy for major changes in its plant and equipment. Otherwise,
the local Banks Brewery and Barbados Bottling Company, with
its carbonated beverages, had reasonably strong performances
given the economic environment within which they operated.
The overseas associates, apart from Belize, recorded improved
results.
During the year BHL completed negotiations for the purchase,
installation and commissioning of a new state-of-the-art brewery
to be located on Company-owned lands in the Newton area of
Christ Church. This facility includes packaging lines for both glass
and cans, and places Barbados as perhaps the sole facility in the
Caribbean capable of packaging beverages in paper, plastic,
glass or cans. Construction of the buildings to house the new
plant began subsequent to the year-end after obtaining all the
regulatory approvals. Commercial production is planned for the
third quarter of calendar year 2011.
Signia Financial Group Incorporated in Barbados performed
well in 2010, with increased profits over 2009. The loan portfolio
increased by over 20%, with the largest growing sector being
Commercial. Loan portfolio growth drove higher interest income.
The Company’s bad debt write-offs and delinquency ratios
continue to be well managed.
Foreign Exchange trading was flat, with a decline in the supply
of foreign currency in the market, together with the narrowing
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Segment Review
of spreads because of increased competition. Brokerage fees
from equity trading continued to decline as trading volumes
continued to be low.
Caribbean Airport Services Limited (CAS) is a 49% Seawell
Air Services Ltd, 51% LIAT joint venture which provides ground
handling services at Antigua’s International Airport. Its services
are similar to those provided by Seawell in Barbados. For the
period under review, CAS reported increased revenue and
net income over the previous year which had itself reflected
a marked improvement given the Company’s earlier years of
a break-even position. By demonstrating improved service the
Company expects to capture additional business in the coming
year, which will further improve financial performance.
Medina Foods Incorporated of Montreal, Canada,
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 a
Barbados international business company, Medina International.
Medina’s results have grown favourably in recent years and
returned to growth this year after lower airline activity caused
a reduction in profits in 2009.
Tower Hill Merchants PLC, based in the UK, is a supplier of
various commodity goods primarily to the Caribbean, with sugar
being the main commodity. Despite restricted global availability
of certain key food ingredients, the Company successfully
consolidated on the previous year’s growth in profitability and
delivered another strong trading performance. The outlook
for 2011 promises to be highly competitive as difficult market
conditions, particularly in the sugar markets, are indicated, but
the Company is expected to fare reasonably well given its strong
base of customers and supplier relationships.
The Trinidad and Tobago operations of Group 4 Securicor (G4S)
performed on target led by excellent results in the manned services
division. In Barbados, the business continued to face contracting
market conditions with a resulting focus by management on cost
and efficiencies. The branch in Grenada performed satisfactorily,
whilst St Lucia’s results continue to be marginal.
Health, Safety, Security and the Environment (HSSE)
HSSE continued to be an area of great focus for the Group,
with major emphasis on the deepening of HSSE processes and
procedures.
Efforts were made to improve the HSSE audit function and
a number of auditing training and workshop sessions were
conducted in November and December of 2009. Attendees
included all HSSE personnel and other relevant employees from
across subsidiary companies. Audit findings suggested that there
were HSSE issues to be addressed in some of the companies and
corrective actions have since been initiated. A further review
of the reports in many cases indicated that further orientation
for auditors is necessary. To this end, additional training and
workshops will be provided in 2011, prior to starting a new
round of audits.
A major area of concern within the Group has been the
management of incidents, from recognition and response
through to investigation and corrective actions. This was clearly
evident from the increase in the Days Away From Work Case
(DAFWC) figure over the previous year. Assessment of the
case management process showed that there was need for
skills development in this area. Training in this competency
was delivered early in the year. This training, combined with
increasing accountability through a requirement for reporting of
all incidents with investigation reports where applicable, resulted
in a marked reduction in DAFWCs.
A programme has been initiated in which HSSE managers will
convene monthly meetings, similar to those held in Trinidad, as
well as quarterly meetings, which the Group HSSE manager will
attend. The roll-out of this plan started in Barbados in October
2010. A similar session was held in Guyana in November 2010,
and the same will be done for Jamaica in 2011.
The group HSSE Steering Committee was revamped, with
Linford Carrabon, Executive Chairman, Energy & Industrial Gases
Business Unit, as Chairman. The committee comprises member
CEOs from across the Group in Trinidad and Tobago and also
includes the HSSE Manager for Neal & Massy Wood Group.
Customer Service Initiative
Neal & Massy believes that excellence in customer service is
essential to the long-term success of the Company. This is one
SEGM
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42 43 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
1 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 voted Master
Entrepreneur of the year and in 2002, he was awarded 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.
2 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 Administration 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 & 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.
Board of Directors
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3 Dr. Rolph Balgobin
Trinidad and Tobago Citizen
Dr. Rolph Balgobin is the Chairman of Quicksilver
Convenience Ltd. and a director of several companies and
charities. He is an Independent Senator in the Parliament
of The Republic of Trinidad and Tobago and holds business
degrees from the University of the West Indies, the University
of Manchester and the University of Cambridge.
4 Robert Bermudez
Trinidad and 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.
5 Earl Boodasingh
Trinidad and Tobago Citizen
Earl Boodasingh is an Executive Vice President and Executive
Chairman of Neal & Massy’s Food Group.
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
2003 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. In 2007, he assumed the position
of Executive Chairman of the Group’s Retail, Distribution &
Logistics Business Unit.
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44 45 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
6 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 Chairman.
He has enjoyed a distinguished career in business, serving as
Director and Chairman of several leading private and public
organizations in Barbados.
In 2000, Mr. Cave was awarded the Barbados Centennial
Honour and the Caribbean Master Entrepreneur Award
the following year. In the Queen’s New Years’ Honour’s
List in 2003, he was appointed Commander of the Most
Excellent Order of the British Empire 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.
7 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, the Barbados Employers Confederation
and the YMCA.
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.
8 G. Anthony King
Barbados Citizen
G. Anthony King has been the Group Chief Executive Officer
of the Barbados Shipping & Trading Company Limited
(BS&T) since October 1, 2004. He is a Group Executive
Vice President and Chairman of the Financial, Property and
Other Business Unit of the Neal & Massy Group.
Mr. King is also a Director of other publicly traded
companies in Barbados such as Banks Holdings Limited,
Almond Resorts Inc. and the Barbados National Bank.
His business career spans almost 35 years, 23 of which
were spent with the Neal & Massy Group. Prior to his
departure to take up the BS&T appointment, he led Neal &
Massy’s Eastern Caribbean Group of Companies.
He has been associated with various private sector
organisations, as a Past President of the Barbados Chamber
of Commerce & Industry, as well as a Director of the
Caribbean Association of Industry and Commerce (CAIC).
He continues to participate in the community as a Trustee
of the Barbados Youth Business Trust, the Chairman of
the Tourism Development Corporation in Barbados and a
Director of the Barbados Private Sector Association.
9 William Lucie-Smith
Trinidad and 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.
Board of Directors
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10 Paula Rajkumarsingh
Trinidad and Tobago Citizen
Paula Rajkumarsingh is a Corporate Financial Executive, with
over 10 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 First Caribbean International
Bank in Barbados and First Caribbean International Bank
in Trinidad & Tobago. She is also a Director of a private
Equity Fund (DevCap) and served on the board of Sugar
Manufacturing Company for four years.
11 Brian Young
Jamaica Citizen
Mr. Young is the Chairman of Neal & Massy Group (Jamaica)
Limited, Cool Petroleum Limited, an associate company of
Neal & Massy Holdings Limited and Chairman 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 15 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 Jamaica Limited and has
served on many Jamaican Government teams.
46 47 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Set out below are the Directors, Senior Officers and their connected persons with interests in the shares of Neal & Massy Holdings
Limited, a Director’s non-beneficial interest in shares and the holders of the ten (10) largest blocks of shares in the Company as at
30 September 2010.
Directors and Senior Officers Shareholding Connected Persons Shareholdings
Rolph Balgobin 5,000 1,500
Robert Bermudez 14,820 13,029
Earl Boodasingh 147,384 Nil
Geoffrey Cave Nil Nil
Allan Fields 1,000 Nil
Gerald Anthony King 75,000 Nil
Arthur Lok Jack Nil 100,981
William Lucie-Smith Nil 17,897
Paula Rajkumarsingh 106,902 Nil
Elliot Gervase Warner 42,262 Nil
Brian Young Nil Nil
Judith Bowen 26,513 Nil
Linford Carrabon 178,627 Nil
Frere Delmas 752 Nil
Angela Hamel-Smith 57,081 Nil
Christian Maingot 4,605 Nil
David O’Brien 21,632 Nil
Doodnauth Persaud 9,519 Nil
Keith Thomas 58,922 Nil
Althea Thompson Nil Nil
Director’s Non-Beneficial Interest
Paula Rajkumarsingh, a Director (together with Curtis Lee Poy) holds a non-beneficial interest in 1,357,846 shares as a co-trustee
of the Neal & Massy Group Profit Sharing Plan.
Directors’, Senior Officers’ and Connected Persons’ Interests
DIR
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The Directors have pleasure in submitting their Report and the Audited Financial Statements for the financial year ended 30th
September 2010
Principal activities
The main activity is that of a Holding Company.
Financial results for the year $000’s
Profit attributable to shareholders 301,365
Dividends paid (139,835)
Profit retained for the year 161,530
Other movements on revenue reserves 51,799
Balance brought forward 2,162,708
Retained earnings at end of year 2,376,037
Dividends
The Directors declared a final dividend of 86 cents per share, making a total dividend of $1.26 per share for the financial year. The
final dividend will be paid on 17th January 2011 to shareholders whose names appear on the Register of members of the Company
at the close of business on 30th December 2010.
Directors
Pursuant to paragraph 4.6.1 of By-Law No. 1 of the Company Mr. Robert Bermudez retires from the Board by rotation and being
eligible offers himself for re-election until the close of the third Annual Meeting following this appointment.
Pursuant to paragraph 4.8 of By-Law No. 1 of the Company, Mr. Brian Young having attained the age of seventy two years and
being eligible offers himself 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
Althea E. Thompson
Company Secretary
14th December 2010
Directors’ Report
48 49 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Set out below are the Directors, Senior Officers and their connected persons with interests in the shares of Neal & Massy Holdings
Limited, a Director’s non-beneficial interest in shares and the holders of the ten (10) largest blocks of shares in the Company as at
30 September 2010.
Directors and Senior Officers Shareholding Connected Persons Shareholdings
Rolph Balgobin 5,000 1,500
Robert Bermudez 14,820 13,029
Earl Boodasingh 147,384 Nil
Geoffrey Cave Nil Nil
Allan Fields 1,000 Nil
Gerald Anthony King 75,000 Nil
Arthur Lok Jack Nil 100,981
William Lucie-Smith Nil 17,897
Paula Rajkumarsingh 106,902 Nil
Elliot Gervase Warner 42,262 Nil
Brian Young Nil Nil
Judith Bowen 26,513 Nil
Linford Carrabon 178,627 Nil
Frere Delmas 752 Nil
Angela Hamel-Smith 57,081 Nil
Christian Maingot 4,605 Nil
David O’Brien 21,632 Nil
Doodnauth Persaud 9,519 Nil
Keith Thomas 58,922 Nil
Althea Thompson Nil Nil
Director’s Non-Beneficial Interest
Paula Rajkumarsingh, a Director (together with Curtis Lee Poy) holds a non-beneficial interest in 1,357,846 shares as a co-trustee
of the Neal & Massy Group Profit Sharing Plan.
Holders of the ten (10) largest blocks of Shares
Name of Registered Shareholder Number of Shares
National Insurance Board 19,681,662
RBTT Trust Limited 8,762,164
RBTT Nominee Services Limited 8,517,301
Republic Bank Limited 7,371,923
Trinidad & Tobago Unit Trust Corporation 5,822,298
DIR
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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-Seventh 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 18th February, 2011.
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
14th December 2010 Althea E. Thompson
Company Secretary
Directors Report
MA
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50 1 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Independent Auditor’s Report
To the Shareholders of Neal & Massy Holdings Limited
Report on the consolidated financial statements
We have audited the accompanying consolidated financial statements of Neal & Massy Holdings Limited and its subsidiaries (the
‘Group’) which comprise the consolidated statement of financial position as of 30 September 2010 and the consolidated income
statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes.
Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control
relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due
to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in
the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit
in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of
the Group as of 30 September 2010, and of its financial performance and its cash flows for the year then ended in accordance
with International Financial Reporting Standards.
PricewaterhouseCoopers
Port of Spain, Trinidad, West Indies
17 December 2010
Au
DITO
R’S R
EPOR
T
2 3 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Notes 2010 2009
$ $
ASSETS
Non-current assets
Property, plant and equipment 6 2,819,108 2,892,044
Goodwill 7 168,003 170,698
Other intangible assets 8 35,070 35,070
Investments in associated companies and joint ventures 9 453,282 512,723
Long term investments 11 389,412 393,996
Deferred income tax assets 12 85,331 76,009
Installment credit and other loans 13 142,642 173,810
Retirement benefit assets 14 213,899 203,900
4,306,747 4,458,250
Current assets
Inventories 15 1,053,753 1,080,355
Installment credit and other loans 13 130,105 137,845
Trade and other receivables 16 1,591,343 1,553,804
Financial assets at fair value through profit or loss 11 77,963 106,278
Cash and cash equivalents 17 1,137,935 957,933
3,991,099 3,836,215
Assets of disposal group classified as held for sale 33 13,584 –
4,004,683 3,836,215
Total assets 8,311,430 8,294,465
EQuITY
Capital and reserves attributable to equity holders of the Company
Share capital 18 538,220 522,154
Retained earnings 2,376,037 2,162,708
Other reserves 82,639 66,813
2,996,896 2,751,675
Non-controlling interests 20 453,016 478,073
Total equity 3,449,912 3,229,748
Notes 2010 2009
$ $
LIABILITIES
Non-current liabilities
Borrowings 21 1,319,159 1,547,134
Deferred income tax liabilities 12 99,909 96,316
Customers’ deposits 22 166 296
Provisions for other liabilities and charges 23 313,360 347,177
1,732,594 1,990,923
Current liabilities
Trade and other payables 24 1,387,316 1,421,858
Liabilities on insurance contracts 25 725,134 617,494
Customers’ deposits 22 285,969 342,813
Current income tax liabilities 71,425 63,406
Borrowings 21 659,080 628,223
3,128,924 3,073,794
Total liabilities 4,861,518 5,064,717
Total equity and liabilities 8,311,430 8,294,465
The notes on pages 10 to 96 are an integral part of these consolidated financial statements.
On 14 December 2010, the Board of Directors of Neal & Massy Holdings Limited authorised these consolidated financial statements
for issue.
Director Director
E.G. Warner A. Lok Jack
Consolidated Statement of Financial Position
FINA
NC
IAL PIO
SITION
As at 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
FIN
AN
CIA
L PO
SITI
ON
4 5 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Notes 2010 2009
$ $
Continuing Operations
Revenue 5 8,262,960 8,338,470
Operating profit before finance costs 26 671,990 758,533
Finance costs - net 28 (76,978) (101,974)
Share of profit of associated companies and joint ventures 9 10,699 35,683
Profit before income tax 605,711 692,242
Income tax expense 29 (181,765) (175,386)
Profit for the year from continuing operations 423,946 516,856
Discontinued operations
Loss for the year from discontinued operations 33 (117,880) (33,275)
Profit for the year 306,066 483,581
Profit attributable to:
Equity holders of the Company 301,365 435,412
Non-controlling interests 4,701 48,169
306,066 483,581
Notes 2010 2009
$ $
Earnings per share from continuing and discontinued operations attributable to
the equity holders of the Company during the year (expressed in TT$ per share)
Basic earnings per share
- from continuing operations 30 4.35 4.88
- from discontinued operations 30 (1.22) (0.35)
3.13 4.53
Diluted earnings per share
- from continuing operations 30 4.35 4.88
- from discontinued operations 30 (1.22) (0.35)
3.13 4.53
Dividends per share 19 1.26 1.40
Dividends paid per share 19 1.40 1.40
The notes on pages 10 to 96 are an integral part of these consolidated financial statements.
Consolidated Income Statement
INC
OM
E STATEM
ENT
For the year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
INC
OM
E ST
ATE
MEN
T
6 7 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Notes 2010 2009
$ $
Profit for the year 306,066 483,581
Other comprehensive income:
Available for sale financial assets 11 1,705 (7,860)
Actuarial gains/(losses) on defined benefit pension plans 14 48,129 (102,111)
Currency translation differences 19,511 (20,289)
Other movements 4,193 (3,959)
Other comprehensive income / (loss) for the year 73,538 (134,219)
Total comprehensive income for the year 379,604 349,362
Attributable to:
Equity holders of the company 372,526 307,443
Non-controlling interests 7,078 41,919
Total comprehensive income for the year 379,604 349,362
The notes on pages 10 to 96 are an integral part of these consolidated financial statements.
Share Other Retained
Note Capital Reserves Earnings Total
$ $ $ $
Balance at 1 October 2008 512,573 100,870 1,957,274 2,570,717
Currency translation differences – (24,041) – (24,041)
Other reserve movements – (10,016) 9,022 (994)
Net loss not recognised in
consolidated income statement – – (99,613) (99,613)
Profit attributable to shareholders – – 435,412 435,412
Employee share option plan
- value of employee services 2,543 – – 2,543
Issue of shares under stock
- option plan 6,200 – – 6,200
Issue of shares for the
acquisition of BS&T 838 – – 838
Dividends paid – – (139,387) (139,387)
Balance at 30 September 2009 522,154 66,813 2,162,708 2,751,675
Balance at 1 October 2009 522,154 66,813 2,162,708 2,751,675
Currency translation differences – 18,593 – 18,593
Other reserve movements – (2,767) 1,236 (1,531)
Net profit not recognised in
consolidated income statement – – 50,563 50,563
Profit attributable to shareholders – – 301,365 301,365
Employee share option plan
- value of employee services 18 250 – – 250
Issue of shares under stock
- option plan 18 15,816 – – 15,816
Dividends paid (139,835) (139,835)
Balance at 30 September 2010 538,220 82,639 2,376,037 2,996,896
The notes on pages 10 to 96 are an integral part of these consolidated financial statements.
Consolidated Statement of Changes in EquityConsolidated Statement of Comprehensive Income
CH
AN
GES IN
EQu
ITYC
OM
PREH
ENSI
VE
INC
OM
E
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
8 9 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Notes 2010 2009
$ $
Cash flows from operating activities
Operating profit before finance costs 671,990 758,533
Operating loss from discontinued operations before finance costs 33 (29,756) (8,062)
Adjustments for:
Dividends received from associated companies 9 22,408 32,617
Depreciation 6 217,443 218,932
Impairment of goodwill 7 2,846 3,699
Gain on sale of property, plant and equipment (33,739) (14,854)
Increase in provision for installment credit and other loans 13 2,400 2,472
Decrease in market value of investments 11 1,771 3,714
Employee share option scheme provision 18 250 2,543
Employee retirement and other benefits 1,469 1,175
Earnings before interest, tax, depreciation and amortisation 857,082 1,000,769
Provisions and other movements (3,986) 2,060
Changes in working capital:
Decrease in inventories 17,163 227,659
(Increase)/decrease in trade and other receivables (27,016) 142,046
Decrease/(increase) in installment credit and other loans 38,908 (11,231)
Increase/(decrease) in trade and other payables 68,662 (85,077)
Decrease in customers’ deposits 22 (56,974) (6,898)
Cash generated from operations 893,839 1,269,328
Finance costs 28 (77,283) (107,672)
Taxation paid (162,855) (174,613)
Net cash provided by operating activities 653,701 987,043
Notes 2010 2009
$ $
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 107,144 61,342
Proceeds from sale of other investments 11 58,932 12,132
Purchase of property, plant and equipment 6 (223,201) (247,068)
Net increase in other investments and investments in
associated companies and joint ventures (24,216) (109,994)
Investing activities – Bahamas Supermarkets Ltd (35,768) –
Net cash used in investing activities (117,109) (283,588)
Cash flows from financing activities
Net (decrease)/increase in medium and long term borrowings (256,243) 16,603
Issue of shares 15,816 7,038
Dividends paid to shareholders 19 (139,835) (139,387)
Dividends paid to minorities 20 (32,449) (26,191)
Net cash used in financing activities (412,711) (141,937)
Net increase in cash, cash equivalents 123,881 561,518
Cash, cash equivalents and bank overdrafts at beginning of the year 920,300 362,632
Effects of exchange rate changes on cash and bank overdrafts 2,418 (3,850)
Cash, cash equivalents and bank overdrafts at the end of the year 1,046,599 920,300
Cash and short term funds 17 1,137,935 957,933
Bank overdrafts and other short term borrowings 21 (91,336) (37,633)
1,046,599 920,300
The notes on pages 10 to 96 are an integral part of these consolidated financial statements.
Consolidated Statement of Cash Flows
CA
SH FLO
WS
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
CA
SH F
LOW
S
10 11 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
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 Group is engaged in trading, manufacturing, service
industries and finance in Trinidad and Tobago, the wider Caribbean region and the United States of America. 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 14 December 2010.
The principal subsidiaries are as follows:
Percentage
Country of of equity
incorporation capital held
Automotive & Industrial Equipment
Neal & Massy Automotive Limited Trinidad and Tobago 100%
City Motors (1986) Limited Trinidad and Tobago 100%
Tracmac Engineering Limited Trinidad and Tobago 100%
Automotive Components Limited Trinidad and Tobago 100%
Tobago Services Limited Trinidad and Tobago 100%
Master Serv Limited Trinidad and Tobago 100%
Associated Industries Limited Guyana 100%
Warren Motors Inc Barbados 100%
Energy & Industrial Gases
Neal & Massy Energy Limited Trinidad and Tobago 100%
Neal & Massy Energy Services Limited Trinidad and Tobago 100%
Neal & Massy Energy Resources Limited Trinidad and Tobago 100%
NM Insertech (Caribbean) Ltd Trinidad and Tobago 100%
Insertech (Aruba) N.V. Aruba 100%
Neal & Massy Supply Chain Integrators Trinidad and Tobago 51%
Industrial Gases Limited Trinidad and Tobago 57.3%
Trintogas Carbonics Limited Trinidad and Tobago 100%
NM Petrochemicals Services Limited Trinidad and Tobago 100%
Gas Products Limited Jamaica 100%
Demerara Oxygen Company Limited Guyana 92.9%
1 General information (continued)
The principal subsidiaries are as follows: (continued)
Percentage
Country of of equity
incorporation capital held
Food Retailing
Trading and Distribution Limited Trinidad and Tobago 100%
Hi-Lo Food Stores Division Trinidad and Tobago 100%
Arvee Food Master Limited Trinidad and Tobago 100%
Athabasca Limited Trinidad and Tobago 100%
Super Centre Barbados 100%
Peronne Manufacturing Barbados 100%
Food/Consumer Distribution and Logistics
Marketing & Distribution Division Trinidad and Tobago 100%
Huggins Shipping and Customs Brokerage Limited Trinidad and Tobago 100%
Melville Shipping Limited Trinidad and Tobago 100%
Neal & Massy Inc USA 100%
HD Hopwood & Company Limited Jamaica 100%
T. Geddes Grant (Barbados) Limited Barbados 100%
Trading & Distribution Inc Guyana 92.9%
NM Services Limited Guyana 92.9%
Neal & Massy Guyana Limited Guyana 92.9%
Trident Forwarding Barbados 100%
SBI Distribution Barbados 100%
Agro Chemicals Barbados 100%
Roberts Manufacturing Barbados 100%
Booth Steamship Barbados 100%
Cargo Handlers Barbados 100%
Retail & Distribution International St. Lucia 100%
BS&T International Inc Barbados 100%
Knights Limited Barbados 99.7%
Notes to the Consolidated Financial Statements
NO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
NO
TES
12 13 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
1 General information (continued)
The principal subsidiaries are as follows: (continued)
Percentage
Country of of equity
incorporation capital held
Tourism / Hospitality
Almond Resorts Inc Barbados 51%
Casuarina Holdings Barbados 49.4%
Information Technology and Communications and Other
Illuminat Trinidad and Tobago Limited Trinidad and Tobago 100%
Illuminat (Antigua) Limited Antigua 100%
Illuminat (Barbados) Limited Barbados 100%
Illuminat (Jamaica) Limited Jamaica 100%
CCS Guyana Limited Guyana 92.9%
Three Sixty Communications Limited Trinidad and Tobago 75%
Nealco Datalink Limited Trinidad and Tobago 100%
Pereira & Company Limited Trinidad and Tobago 100%
NM Security Solutions Guyana 92.9%
Seawell Air Services Barbados 100%
BCB Communications Barbados 51%
Dacosta Manning Inc Barbados 100%
Financial, Property and Other
NM Remittance Services Limited Trinidad and Tobago 100%
General Finance Corporation Limited Trinidad and Tobago 100%
United Insurance Company Limited Barbados 100%
Magna Rewards Inc Barbados 90%
Magna Rewards (Jamaica) Inc Jamaica 51.3%
Magna Rewards (St Lucia) Inc St Lucia 51.3%
Magna Rewards (Trinidad) Inc Trinidad and Tobago 51.3%
Magna Rewards Caribbean Inc Barbados 51.3%
1 General information (continued)
The principal subsidiaries are as follows: (continued)
Percentage
Country of of equity
incorporation capital held
Financial, Property and Other (continued)
Nealco Real Estate Limited Trinidad and Tobago 100%
Arrow Developers Limited Barbados 100%
Nealco Properties Limited Trinidad and Tobago 100%
Pres-T-Con Limited Trinidad and Tobago 63.1%
PEL Enterprises Barbados 100%
Neal & Massy (Barbados) Limited Barbados 100%
Inter Regional Reinsurance Co Limited Cayman 100%
The Auto Dome Barbados 100%
SP Mussons Son & Co Limited Barbados 100%
Sunset Crest Holdings Barbados 100%
Wimcal Limited Barbados 100%
Warrens Realty Barbados 100%
Other
Neal & Massy Limited Trinidad and Tobago 100%
Barbados Shipping & Trading Co. Limited Barbados 97.2%
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”) 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.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
14 15 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
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) New and amended standards adopted by the Group
The Group has adopted the following new and amended IFRS as of 1 October 2009:
• IAS1(Revised).‘Presentationoffinancialstatements’–effective1January2009.
The revised standard prohibits the presentation of items of income and expenses (that is,‘non-owner changes
in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented
separately from owner changes in equity in a statement of comprehensive income. As a result the Group
presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-
owner changes in equity are presented in the consolidated statement of comprehensive income. Comparative
information has been re-presented so that it is in conformity with the revised standard. As the change in
accounting policy only impacts presentation aspects, there is no impact on earnings per share.
• IAS1(Amendment),‘Presentationoffinancialstatements’(effectivefrom1January2009).
The amendment is part of the IASB’s annual improvements project published in May 2008. The amendment
clarifies that some rather than all financial assets and liabilities classified as held for trading in accordance with
IAS 39, ‘Financial instruments: Recognition and measurement’ are examples of current assets and liabilities
respectively. The Group applied the IAS 39 (Amendment) from 1 October 2009.
• IFRS2(Amendment),‘Share-basedpayment’(effective1January2009).
This deals with vesting conditions and cancellations. It clarifies that vesting conditions are service conditions
and performance conditions only. Other features of a share-based payment are not vesting conditions. These
features would need to be included in the grant date fair value for transactions with employees and others
providing similar services; they would not impact the number of awards expected to vest or valuation thereof
subsequent to grant date. All cancellations, whether by the entity or by other parties, should receive the same
accounting treatment. The Group has adopted IFRS 2 (amendment) from 1 October 2009. The amendment
does not have a material impact on the Group‘s financial statements.
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
(a) New and amended standards adopted by the Group (continued)
• IFRS7(Amendment),‘Financialinstruments–Disclosures’(effective1January2009).
The amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular,
the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy.
As the change in accounting policy only results in additional disclosures, there is no impact on earnings per
share.
• IFRS8replacesIAS14,‘Segmentreporting’,andalignssegmentreportingwiththerequirementsoftheUS
standard SFAS 131, ‘Disclosures about segments of an enterprise and related information’. The new standard
requires a ‘management approach’, under which segment information is presented on the same basis as
that used for internal reporting purposes. In addition, the segments are reported in a manner that is more
consistent with the internal reporting provided to the chief operating decision-maker. It did not have a material
impact on the Group’s consolidated financial statements.
• IAS19(Amendment),‘Employeebenefits’(effectivefrom1January2009).
The amendment is part of the IASB’s annual improvements project published in May 2008:
– The amendment clarifies that a plan amendment that results in a change to the extent of which benefit
promises are affected by future salary increases is a curtailment, while an amendment that changes
benefits attributable to past service gives rise to a negative past service cost if it results in a reduction in
the present value of the defined benefit obligation.
– The definition of return on plan assets has been amended to state that plan administration costs are
deducted in the calculation of return on plan assets only to the extent that such costs have been excluded
from measurement of the defined benefit obligation.
– The distinction between short term and long term employee benefits will be based on whether benefits
are due to be settled within or after 12 months of employee service being rendered.
– IAS 37, ‘Provisions, contingent liabilities and contingent assets, requires contingent liabilities to be disclosed,
not recognised. IAS 19 has been amended to be consistent.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
16 17 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
(a) New and amended standards adopted by the Group (continued)
The Group applied IAS 19 (Amendment) from 1 October 2009.
• IAS27(Revised),‘Consolidatedandseparatefinancialstatements’,(effectivefrom1July2009).
The revised standard requires the effects of all transactions with non-controlling interests to be recorded in
equity if there is no change in control and these transactions will no longer result in goodwill or gains and
losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is
re-measured to fair value, and a gain or loss is recognised in profit or loss. The Group applied IAS 27 (Revised)
from 1 October 2009.
• IAS 28 (Amendment), ‘Investments in associates’ (and consequential amendments to IAS 32, ‘Financial
Instruments: Presentation’, and IFRS 7, ‘Financial instruments: Disclosures’) (effective from 1 January 2009).
The amendment is part of the IASB’s annual improvements project published in May 2008. An investment
in associate is treated as a single asset for the purposes of impairment testing. Any impairment loss is not
allocated to specific assets included within the investment, for example, goodwill. Reversals of impairment
are recorded as an adjustment to the investment balance to the extent that the recoverable amount of the
associate increases. The Group applied IAS 28 (Amendment) to impairment tests related to investments in
subsidiaries and any related impairment losses from 1 October 2009.
• IAS39(Amendment),‘Financialinstruments:Recognitionandmeasurement’(effectivefrom1January2009).
The amendment is part of the IASB’s annual improvements project published in May 2008. The definition of
financial asset or financial liability at fair value through profit or loss as it relates to items that are held for
trading is also amended. This clarifies that a financial asset or liability that is part of a portfolio of financial
instruments managed together with evidence of an actual recent pattern of short-term profit making is included
in such a portfolio on initial recognition. The Group applied the IAS 39 (Amendment) from 1 October 2009.
It did not have an impact on the Group’s consolidated income statement.
• IAS36(Amendment),‘Impairmentofassets’(effectivefrom1January2009).
The amendment is part of the IASB’s annual improvements project published in May 2008. Where fair value
less costs to sell is calculated on the basis of discounted cash flows, disclosures equivalent to those for value-
in-use calculations should be made. The Group applied the IAS 36 (Amendment) and provided the required
disclosure where applicable for impairment tests from 1 October 2009.
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
(b) Standards, amendments and interpretations effective in 2009 but not relevant
The following interpretations and amendments to existing standards have been published and are mandatory for
the Group’s accounting periods beginning on or after 1 January 2009 or later periods but are not relevant for the
Group’s operations:
• IFRS3(Revised),‘Businesscombinations’(effectivefrom1July2009).
• IAS20(Amendment),‘Accountingforgovernmentgrantsanddisclosureofgovernmentassistance’(effective
from 1 January 2009).
• IAS 31 (Amendment), ‘Interests in joint ventures’ (and consequential amendments to IAS 32 and IFRS 7)
(effective from 1 January 2009).
• IAS29(Amendment),‘Financialreportinginhyperinflationaryeconomies’(effectivefrom1January2009).
• IAS32(Amendment),‘Financialinstruments:Presentation’,andIAS1(Amendment),‘Presentationoffinancial
statements’ – ‘Puttable financial instruments and obligations arising on liquidation’ (effective from 1 January
2009).
• IAS41(Amendment),‘Agriculture’(effectivefrom1January2009).
The amendment is part of the IASB’s annual improvements project published in May 2008.
• IFRIC18,‘Transferstoassetsfromcustomers’(effective1July2009).
(c) Standards, amendments and interpretations that are not yet effective and have not been early adopted
by the Group:
The following standards, amendments and interpretations to existing standards have been published and are
mandatory for the Group’s accounting periods beginning on or after 1 January 2009 or later periods.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
18 19 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
(c) Standards, amendments and interpretations that are not yet effective and have not been early adopted
by the Group: (continued)
• IFRS2(Amendment),‘Groupcash-settledshare-basedpaymenttransactions’(effectivefrom1January2010).
In addition to incorporating IFRIC 8, ‘Scope of IFRS 2’, and IFRIC 11, ‘IFRS 2 – Group and treasury share
transactions’, the amendments expand on the guidance in IFRIC 11 to address the classification of Group
arrangements that were not covered by the interpretation. The new guidance is not expected to have a
material impact on the Group’s financial statements. The Group will apply IFRS 2 (amendments) from 1
October 2010.
• IFRS5(Amendment),‘Measurementofnon-currentassets(ordisposalgroups)classifiedasheld-for-sale’.
The amendment is part of the IASB’s annual improvements project published in April 2009. The amendment
provides clarification that IFRS 5 specifies the disclosures required in respect of non-current assets (or disposal
groups) classified as held for sale or discontinued operations. It also clarifies that the general requirement
of IAS 1 still apply, particularly paragraph 15 (to achieve a fair presentation) and paragraph 125 (sources of
estimation uncertainty) of IAS 1. The Group will apply IFRS 5 (amendment) from 1 January 2010. It is not
expected to have a material impact on the Group’s financial statements.
• IFRS8,‘OperatingSegments’(effective1January2010),
Minor textual amendment to the standard and amendment to the basis for conclusions, to clarify that an
entity is required to disclose a measure of segment assets only if that measure is regularly reported to the
chief operating decision-maker. The amended guidance is not expected to have a material impact on the
Group’s financial statements.
• IFRS9,‘FinancialInstruments’(effective1January2013).
This is the first part of a new standard on classification and measurement of financial assets that will replace IAS
39. IFRS 9 has two measurement categories: amortised cost and fair value. All equity instruments are measured
at fair value. A debt instrument is at amortised cost only if the entity is holding it to collect contractual cash
flows and the cash flows represent principal and interest. Otherwise it is at fair value through profit or loss.
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
(c) Standards, amendments and interpretations that are not yet effective and have not been early adopted
by the Group: (continued)
• IAS1(Amendment),‘Presentationoffinancialstatements’.
The amendment is part of the IASB’s annual improvements project published in April 2009. The amendment
provides clarification that the potential settlement of a liability by the issue of equity is not relevant to its
classification as current or non-current. By amending the definition of current liability, the amendment permits
a liability to be classified as non-current (provided that the entity has an unconditional right to defer settlement
by transfer of cash or other assets for at least 12 months after the accounting period) notwithstanding the
fact that the entity could be required by the counterparty to settle in shares at any time. The Group will
apply IAS 1 (amendment) from 1 October 2010. It is not expected to have a material impact on the Group’s
financial statements.
• IAS7,‘Statementofcashflows’(effective1January2010).
Amendment to require that only expenditures that result in a recognised asset in the statement of financial
position can be classified as investing activities. The Group will apply IAS 7 (amendment) from 1 October 2010.
• IAS17,‘Leases’(effective1January2010).
Deletion of specific guidance regarding classification of leases of land, so as to eliminate inconsistency with
the general guidance on lease classification. As a result, leases of land should be classified as either finance or
operating, using the general principles of IAS 17. It is not expected to have a material impact on the Group’s
financial statements.
• IAS24(Revised),‘RelatedPartyDisclosures’(effective1January2010).
This amendment removes the requirement for government-related entities to disclose details of all transactions with
the government and other government-related entities. It clarifies and simplifies the definition of a related party.
• IAS32(Amendment),‘Financialinstruments:Presentation’(effectivefrom1February2010).
The amendment addresses the accounting for rights issues (rights, options or warrants) that are denominated
in a currency other than the functional currency of the issuer. Prior to the amendment, such rights issues
were accounted for as derivative liabilities. The amendment states that, if such rights are issued pro-rata to an
entity’s existing shareholders for a fixed amount of any currency, they should be classified as equity, regardless
of the currency in which the exercise price is denominated.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
20 21 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
(c) Standards, amendments and interpretations that are not yet effective and have not been early adopted
by the Group: (continued)
• IAS36,‘ImpairmentofAssets’(effective1January2010).
Amendment to clarify that the largest cash-generating unit (or group of units) to which goodwill should be
allocated for the purposes of impairment testing is an operating segment as defined by paragraph 5 of IFRS
8, ‘Operating segments’ (that is, before the aggregation of segments with similar economic characteristics
permitted by paragraph 12 of IFRS 8). The Group will apply the amendment from 1 October 2010.
• IAS38(Amendment),‘IntangibleAssets’(effective1January2010).
The amendment is part of the IASB’s annual improvements project published in April 2009. The Group will
apply IAS 38 (amendment) from the date IFRS 3 (revised) is adopted. The amendment clarifies guidance in
measuring the fair value of an intangible asset acquired in a business combination and it permits the grouping
of intangible assets as a single asset if each asset has similar useful economic lives. The amendment will not
result in a material impact on the Group’s Financial Statements.
• IAS39,‘FinancialInstruments:RecognitionandMeasurement’(effective1January2010).
It is not expected to have a material impact on the Group’s financial statements.
• IFRIC19,‘Extinguishingfinancialliabilitieswithequityinstruments’(effective1July2010).
This interpretation clarifies the accounting when an entity renegotiates the terms of its debt with the result
that the liability is extinguished through the borrower issuing its own equity instruments to the lender. A gain
or loss is recognised in the income statement based on the fair value of the equity instruments compared to
the carrying amount of the debt.
• IFRIC14,‘Prepaymentsofaminimumfundingrequirement’(effective1January2011).
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
related to voluntary pension prepayments when there is a minimum funding requirement.
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 purchase method of accounting to account for the acquisition of subsidiaries. The cost of
an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at
the acquisition date, irrespective of the extent of any non-controlling interest . The excess of the cost of acquisition
over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost
of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised in
the consolidated income statement.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unless cost cannot be recovered unrealised losses are also eliminated and considered an impairment
indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Although the Group has only a 49.4% effective ownership interest in a company, this entity is treated as a
subsidiary, 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 applies a policy of treating transactions with non-controlling interests as transactions with parties
external to the Group. Disposals to non-controlling interests result in gains and losses for the Group that are
recorded in the consolidated income statement. Purchases from non-controlling interests result in goodwill, being
the difference between any consideration paid and the relevant share acquired of the carrying value of net assets
of the subsidiary.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
22 23 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
2 Summary of significant accounting policies (continued)
2.2 Consolidation (continued)
(c) Associates and Joint Ventures
Associates are all entities over which the Group has significant influence but not control, generally accompanying
a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using
the equity 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.
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 Board of Neal & Massy Holdings Limited and Executive Committee
that 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 Company’s functional and Group’s
presentation currency.
2 Summary of significant accounting policies (continued)
2.4 Foreign currency translation (continued)
(b) Transactions and balances
Foreign currency transactions are translated into the functional and presentation 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.
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.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
24 25 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
2 Summary of significant accounting policies (continued)
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.
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:
Freehold and leasehold properties - 2% to 20%
Plant and equipment - 5% to 33.3%
Furniture, fixtures and motor vehicles - 10% to 25%
Rental assets - 25%
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.
Investment property, principally comprising freehold office buildings, is held for long-term rental yields and is not
occupied by the Group. Investment property is carried at historical cost.
2 Summary of significant accounting policies (continued)
2.6 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 company at the date of acquisition. Goodwill represents the
goodwill acquired on acquisition of subsidiaries. Goodwill on acquisition of associates is included in “Investments
in associated companies and joint ventures”. 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 7).
(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;
• itcanbedemonstratedhowthesoftwareproductwillgenerateprobablefutureeconomicbenefits;
• adequatetechnical,financialandotherresourcestocompletethedevelopmentandtouseorsellthesoftware
product are available.
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.
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 does not exceed three years.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
26 27 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
2 Summary of significant accounting policies (continued)
2.7 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 losses 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.
2.8 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.
(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 installment credit and other loans’ in the consolidated statement of financial position.
(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.
2 Summary of significant accounting policies (continued)
2.8 Financial assets (continued)
(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. 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.
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.
Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-
for-sale are analysed between translation differences resulting from changes in amortised cost of the security and
other changes in the carrying amount of the security. The translation differences are recognised in the consolidated
income statement, and other changes in carrying amount are recognised in equity. Changes in the fair value of
monetary securities classified as available-for-sale and non-monetary securities classified as available-for-sale are
recognised in equity.
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.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
28 29 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
2 Summary of significant accounting policies (continued)
2.8 Financial assets (continued)
(e) Recognition and measurement (continued)
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active
(and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use
of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted
cash flow analysis, applicable price/earnings or price/cash flow ratios refined to reflect the specific circumstances
of the issuer and option pricing models making maximum use of market inputs and relying as little as possible on
entity-specific inputs.
The Group assesses at each statement of financial position date whether there is objective evidence that a
financial asset or a group of financial assets is impaired. In the case of equity securities classified as available-for-
sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator
that the securities 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 the income statement – is removed from equity and recognised in
the consolidated income statement. Impairment losses recognised in the consolidated income statement on equity
instruments are not reversed through the consolidated income statement. Impairment testing of trade receivables
is described in Note 2.10.
2.9 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.
2.10 Trade receivables
Trade receivables are recognised at fair value less provision for impairment. A provision for impairment of trade receivables
is established when there is objective evidence that the Group will not be able to collect all amounts due according
to the original terms of receivables. 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 Summary of significant accounting policies (continued)
2.11 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments
and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the consolidated statement
of financial position.
2.12 Share capital
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 shares, the consideration paid including any attributable
incremental external costs net of income taxes is deducted from total shareholders’ equity as treasury shares until
they are cancelled. Where such shares are subsequently sold or re-issued, any consideration received is included in
shareholders’ equity.
2.13 Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest rate method.
2.14 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.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
30 31 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
2 Summary of significant accounting policies (continued)
2.14 Insurance (continued)
(i) Insurance and reinsurance contracts (continued)
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.
2.15 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 Summary of significant accounting policies (continued)
2.16 Current and deferred income tax
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 is provided on temporary differences arising on investments in subsidiaries and associates,
except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that
the temporary difference will not reverse in the foreseeable future.
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 carry forward of unused tax losses are recognised to the
extent that it is probable that future taxable profit will be earned against the unused tax losses which can be utilised.
2.17 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 2008, 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 a deferred annuity savings plan which 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.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
32 33 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
2 Summary of significant accounting policies (continued)
2.17 Employee benefits (continued)
(a) Pension obligations (continued)
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 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 and past service costs. 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 securities 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 liability.
Actuarial gains and losses arising from experience adjustments, changes in actuarial assumptions and
amendments to pension plans are charged or credited to retained earnings immediately.
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.
(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 recognised immediately in retained earnings.
These obligations are valued annually by independent qualified actuaries.
2 Summary of significant accounting policies (continued)
2.17 Employee benefits (continued)
(c) Share-based compensation
The Group operates an equity-settled, share-based compensation plan. The fair value of the employee services
received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed
over the vesting period is determined by reference to the fair value of the options granted, excluding the impact
of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting
conditions are included in assumptions about the number of options that are expected to become exercisable. At
each statement of financial position date, the entity revises its estimates of the number of options that are expected
to become exercisable. It recognises the impact of the revision of original estimates, if any, in the consolidated
income statement, with a corresponding adjustment to equity. The proceeds received net of any directly attributable
transaction costs are credited to share capital when the options are exercised.
(d) 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 either: terminating the employment of current employees
according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result
of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the statement
of financial position date are discounted to present value.
(e) 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:
• thereisaformalplanandtheamountstobepaidaredeterminedbeforethetimeofissuingthefinancial
statements; or
• pastpracticehascreatedavalidexpectationbyemployeesthattheywillreceiveabonus/profitsharingand
the amount 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.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
34 35 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
2 Summary of significant accounting policies (continued)
2.18 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.
2.19 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.
(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.
2 Summary of significant accounting policies (continued)
2.19 Revenue recognition (continued)
(b) Sale of goods – retail
The Group operates a 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.
(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.
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) 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 loan and receivables is recognised using the original effective interest rate.
(e) Dividend income is recognised when the shareholder’s right to receive payment is established.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
36 37 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
2 Summary of significant accounting policies (continued)
2.20 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.
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
similar owned property, plant and equipment. Rental income (net of any incentives given to lessees) is recognised on
a straight-line basis over the lease term.
2.21 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 Board of Directors.
2.22 Installment credit and other loans
Installment credit and other loans are stated at principal outstanding net of unearned finance charges and specific
allowance for loan losses. An allowance for loan impairment is established if there is objective evidence that the Group
will not be able to collect all amounts due according to the original contractual terms of loans.
The amount of the provision is the difference between the carrying amount and the recoverable amount, being the
present value of expected cash flows, including amounts recoverable from guarantees and collateral, discounted at the
original effective interest rate of loans.
If the amount of the impairment subsequently decreases due to an event occurring after the write-down, the release
of the provision is credited as a reduction of the provision for loan losses.
Interest from installment 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.
2 Summary of significant accounting policies (continued)
2.23 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 a 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.
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 center 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.
(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.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
38 39 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(a) Market risk (continued)
(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 2010 relate mainly to USD loans. The single largest USD loan as at year
end amounted to US$91,000 (2009: US$ 101,000). A 2% change in USD rates would lead to a TT$11,605
(2009: TT$12,851) loss 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 the end of 2010, interest rates were fixed on approximately 50% of the borrowings (2009: 42%). The
impact on the consolidated income statement to a 50 basis points change in floating interest rates is $7,718
in 2010 and $6,191 in 2009.
(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.
(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
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(b) Credit risk (continued)
customer’s creditworthiness and the establishments of limits before credit terms are set. In addition, receivable
balances are monitored on an ongoing 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.
Following is an analysis of the undiscounted contractual cash flows payable under financial liabilities.
Undiscounted cash flows will differ from the carrying amounts.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
40 41 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
3 Financial risk management (continued)
3.1 Financial risk factors (continued)
(c) Liquidity risk (continued)
Maturity analysis of financial liabilities
More than Contractual Carrying
2010 < 1 year 1- 5 years 5 yrs cash flows amount
Financial Liabilities:
Bank overdraft and other
short term borrowings 91,336 – – 91,336 91,336
Other borrowings 662,126 1,288,789 453,517 2,404,432 1,886,903
Customers’ deposits 291,581 191 – 291,772 286,135
Trade payables 633,104 – – 633,104 633,104
Liabilities on insurance contract 725,134 – – 725,134 725,134
Total 2,403,281 1,288,980 453,517 4,145,778 3,622,612
More than Contractual Carrying
2009 < 1 year 1- 5 years 5 yrs cash flows amount
Financial Liabilities:
Bank overdraft and other
short term borrowings 37,633 – – 37,633 37,633
Other borrowings 664,114 1,409,566 385,166 2,458,846 2,137,724
Customers’ deposits 360,927 335 – 361,262 343,109
Trade payables 677,272 – – 677,272 677,272
Liabilities on insurance contract 617,494 – – 617,494 617,494
Total 2,357,440 1,409,901 385,166 4,152,507 3,813,232
3 Financial risk management (continued)
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.
2010 2009
$ $
Total borrowings (Note 21) 1,978,239 2,175,357
Less: Cash & Cash Equivalents (Note 17) (1,137,935) (957,933)
Net debt 840,304 1,217,424
Total equity 3,449,912 3,229,748
Total capital 4,290,216 4,447,172
Gearing ratio 20% 27%
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.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
42 43 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
3 Financial risk management (continued)
3.3 Fair value estimation (continued)
Level 2 – (continued)
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.
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.
3 Financial risk management (continued)
3.3 Fair value estimation (continued)
The following table presents the Group’s assets and liabilities that are measured at fair value at 30 September 2010
Level 1 Level 2 Level 3 Total
Assets
Financial assets at fair value through
profit or loss
- Trading securities 77,963 – – 77,963
Available-for-sale financial assets
- Equity securities 19,085 – 665 19,750
- Debt investments 5,561 – – 5,561
102,609 – 665 103,274
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 2.6. The recoverable amounts of cash-generating units have been determined based on value-in-use
calculations. These calculations require the use of estimates.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
44 45 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
4 Critical accounting estimates and judgements (continued)
4.1 Critical accounting estimates and assumptions (continued)
(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 has used discounted
cash flow analysis 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.
4.2 Critical judgements in applying the entity’s accounting policies
(a) Defined benefit pension plan
Certain actuarial and economic assumptions used in determining defined benefit pension obligations and pension
plan assets include: discount rates, long-term rates of return for plan assets, market estimates and rates of future
compensation increases. Material changes in overall financial performance and the carrying amount of the pension
obligations may arise because of revised assumptions to reflect updated historical information and updated economic
conditions, in the material assumptions underlying this estimate.
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 the 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 bonds that are denominated in the currency in which the benefits will be paid, and that have the terms to
maturity approximating the terms of the related pension liability.
4 Critical accounting estimates and judgements (continued)
4.2 Critical judgements in applying the entity’s accounting policies (continued)
(b) 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.
5 Segment information
Management has determined the operating segments based on the reports reviewed by the Executive Committee and the
Board of Directors of Neal & Massy Holdings Limited.
The Committee considers the business from both a geographic and business unit perspective. Geographically, management
considers the performance of operating companies in Trinidad and Tobago, Barbados and Guyana.
At 30 September 2010, the Group is organized into six main business segments: (1) Automotive & Industrial Equipment; (2)
Energy & Industrial Gases; (3) Food Group; (4) Information Technology and Communications (ITC); (5) Tourism/Hospitality; (6)
Financial Property and Other.
The Committee assesses the performance of the operating segments based on a measure of profit before tax, profit after
tax and asset utilization.
Automotive & 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 & 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 industry in Trinidad and Tobago and the region.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
46 47 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
A
uto
mo
tive
En
erg
y &
Fin
anci
al
&
Ind
ust
rial
In
du
stri
al
Foo
d
To
uri
sm/
Pro
per
ty
G
ran
d
Eq
uip
men
t G
ases
G
rou
p
ITC
H
osp
ital
ity
& O
ther
O
ther
To
tal
$
$ $
$ $
$ $
$
Sal
es
1,34
3,52
7 68
6,52
5 4,
286,
784
532,
374
288,
014
1,12
5,51
1 22
5 8,
262,
960
Ope
ratin
g pr
ofit/
(loss
)
segm
ent
resu
lt 13
5,83
0 11
3,90
0 29
2,31
4 73
,111
(3
5,10
7)
145,
388
(53,
446)
67
1,99
0
Fina
nce
cost
s –
Net
(Not
e 28
) (4
91)
(3,3
09)
(10,
903)
(1
,768
) (2
9,19
2)
30,1
97
(61,
512)
(7
6,97
8)
Shar
e of
res
ults
of
asso
ciat
es
and
join
t ve
ntur
es b
efor
e ta
x (N
ote
9)
756
28,3
45
11,6
55
5,12
4 (3
7,74
1)
2,13
6 42
4 10
,699
Pro
fit/
(lo
ss)
bef
ore
inco
me
tax
136,
095
138,
936
293,
066
76,4
67
(102
,040
) 17
7,72
1 (1
14,5
34)
605,
711
Taxa
tion
(37,
569)
(4
5,44
7)
(65,
486)
(1
6,75
0)
(89)
(4
4,84
7)
28,4
23
(181
,765
)
Pro
fit
/(lo
ss)
for
the
year
98
,526
93
,489
22
7,58
0 59
,717
(1
02,1
29)
132,
874
(86,
111)
42
3,94
6
The
segm
ent
asse
ts a
nd li
abili
ties
at 3
0 Se
ptem
ber
2010
and
cap
ital e
xpen
ditu
re f
or t
he y
ear
then
end
ed a
re a
s fo
llow
s:
Ass
ets
Tota
l ass
ets
767,
080
635,
161
1,52
2,01
2 35
0,87
5 82
7,74
4 3,
100,
095
1,10
8,46
3 8,
311,
430
Ass
ocia
tes
and
join
t ve
ntur
es
4,22
2 10
4,13
7 22
2,39
9 21
,489
58
,108
27
,620
15
,307
45
3,28
2
Tota
l lia
bilit
ies
525,
655
239,
595
700,
197
163,
445
561,
824
1,37
3,09
5 1,
297,
707
4,86
1,51
8
Cap
ital e
xpen
ditu
re
88,7
63
38,2
04
35,2
16
29,0
97
6,87
5 21
,638
3,
408
223,
201
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 (N
ote
6)
64,7
30
20,9
78
46,1
30
28,2
92
23,9
21
29,1
28
1,07
1 21
4,25
0
Dep
reci
atio
n –
disc
ontin
ued
oper
atio
ns
3,19
3 –
– –
– –
– 3,
193
67
,923
20
,978
46
,130
28
,292
23
,921
29
,128
1,
071
217,
443
Impa
irmen
t of
goo
dwill
(Not
e 7)
90
6 –
1,43
1 –
– 50
9 –
2,84
6
5 Segment information (continued)
Food Group
This segment derives its revenue mainly from the sale of retail, wholesale foods, general merchandise and distribution and
logistics operations.
ITC
This segment derives its revenue mainly from the sale and rental of technology-based solutions and office interiors and the
provision of long-distance communications.
Tourism / Hospitality
This segment derives its revenue from its hotel operations in the tourism sector in Barbados and St. Lucia.
Financial, Property and Other
This segment includes an insurance company and a financing company that accept deposits for fixed terms and the grant
of installment credit secured on specific equipment and goods and mortgage loans and also undertakes insurance premium
financing and leasing. In addition, revenue is generated from consultancy and property management services.
The major shift in the operating segments from the prior year was Pres-T-Con being included in a segment “Financial, Property
and Other.” This entity is now included in “Automotive & Industrial Equipment” to be consistent with how the Committee
monitors and manages 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 “Other” segment.
The segment results for the year ended 30 September 2010 are as follows:
48 49 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
5 Se
gm
ent
info
rmat
ion
(con
tinue
d)
T
he s
egm
ent
resu
lts f
or t
he y
ear
ende
d 30
Sep
tem
ber
2009
are
as
follo
ws:
A
uto
mo
tive
En
erg
y &
Fin
anci
al
&
Ind
ust
rial
In
du
stri
al
Foo
d
To
uri
sm/
Pro
per
ty
G
ran
d
Eq
uip
men
t G
ases
G
rou
p
ITC
H
osp
ital
ity
& O
ther
O
ther
To
tal
$
$ $
$ $
$ $
$
Sal
es
1,46
5,68
6 68
0,79
8 4,
254,
271
531,
514
287,
179
1,11
7,84
8 1,
174
8,33
8,47
0
Ope
ratin
g pr
ofit/
(loss
) seg
men
t re
sult
168,
443
157,
395
278,
507
69,7
48
(139
) 14
8,77
4 (6
4,19
5)
758,
533
Fina
nce
cost
s –
Net
(Not
e 28
) (9
,682
) (2
3,05
3)
(14,
026)
(1
,854
) (1
9,81
0)
21,4
45
(54,
994)
(1
01,9
74)
Shar
e of
res
ults
of
asso
ciat
es
and
join
t ve
ntur
es b
efor
e ta
x (N
ote
9)
672
20,4
86
15,1
94
3,11
7 (6
,215
) 2,
626
(197
) 35
,683
Pro
fit
/ (lo
ss)
bef
ore
inco
me
tax
159,
433
154,
828
279,
675
71,0
11
(26,
164)
17
2,84
5 (1
19,3
86)
692,
242
Taxa
tion
(44,
657)
(3
9,65
8)
(65,
711)
(1
7,16
8)
6,34
3 (4
3,29
2)
28,7
57
(175
,386
)
Pro
fit
/ (lo
ss)
for
the
year
11
4,77
6 11
5,17
0 21
3,96
4 53
,843
(1
9,82
1)
129,
553
(90,
629)
51
6,85
6
The
segm
ent
asse
ts a
nd li
abili
ties
at 3
0 Se
ptem
ber
2009
and
cap
ital e
xpen
ditu
re f
or t
he y
ear
then
end
ed a
re a
s fo
llow
s:
Tota
l ass
ets
854,
767
617,
479
1,47
4,29
8 33
9,86
3 85
3,55
7 3,
127,
584
1,02
6,91
7 8,
294,
465
Ass
ocia
tes
and
join
t ve
ntur
es
3,68
2 96
,613
24
8,24
7 18
,299
10
4,59
0
26,
160
15,1
32
512,
723
Tota
l lia
bilit
ies
569,
646
278,
491
706,
515
178,
132
527,
313
1,46
1,35
5 1,
343,
265
5,06
4,71
7
Cap
ital e
xpen
ditu
re
99,3
28
20,4
62
31,0
21
35,3
35
29,6
04
26,8
18
4,50
0 24
7,06
8
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 (N
ote
6)
65,3
34
19,7
26
46,0
61
27,1
46
24,2
67
32,1
15
1,65
7 21
6,30
6
Dep
reci
atio
n –
disc
ontin
ued
oper
atio
ns
2,62
6 –
– –
– –
– 2,
626
67
,960
19
,726
46
,061
27
,146
24
,267
32
,115
1,
657
218,
932
Impa
irmen
t of
goo
dwill
(Not
e 7)
89
8 85
5 1,
431
– –
515
– 3,
699 5 Segment information (continued)
Inter-segment transfers or transactions are entered into under the normal commercial terms and conditions that would also
be available to unrelated third parties.
Capital expenditure comprises additions to property, plant and equipment (Note 6).
The Group’s six business segments operate in two main geographical areas, even though they are managed on a regional
basis.
The main operations occur in the home country of the Company. The areas of operation are principally trading,
manufacturing, service industries and finance.
Total Capital
Sales Assets Expenditure
2010 2009 2010 2009 2010 2009
$ $ $ $ $ $
Trinidad and Tobago 4,185,515 4,305,491 3,709,229 3,408,487 149,204 156,446
Barbados 2,870,026 2,842,360 3,820,758 4,151,461 43,004 69,988
Guyana 582,375 562,428 264,166 240,341 13,707 4,106
Other 625,044 628,191 517,277 494,176 17,286 16,528
8,262,960 8,338,470 8,311,430 8,294,465 223,201 247,068
50 51 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
6 Pr
op
erty
, pla
nt
and
eq
uip
men
t (c
ontin
ued)
Fixt
ure
s &
C
apit
al
Fr
eeh
old
In
vest
men
t Le
aseh
old
Pl
ant
and
R
enta
l M
oto
r W
ork
in
Pr
op
erty
Pr
op
erty
Pr
op
erty
Eq
uip
men
t A
sset
s V
ehic
les
Pro
gre
ss
Tota
l
$
$ $
$ $
$ $
$
Yea
r en
ded
30
Sep
tem
ber
200
8
Cos
t 1,
860,
262
321,
222
153,
522
1,07
5,51
6 29
0,47
3 30
5,25
1 17
,000
4,
023,
246
Acc
umul
ated
dep
reci
atio
n (5
3,26
4)
(9,1
99)
(52,
758)
(6
90,6
86)
(132
,193
) 17
7,91
8)
– (1
,116
,018
)
Net
boo
k am
ount
1,
806,
998
312
,023
10
0,76
4 38
4,83
0 15
8,28
0 12
7,33
3 17
,000
2,
907,
228
Yea
r en
ded
30
Sep
tem
ber
200
9
Ope
ning
net
boo
k am
ount
1,
806,
998
312,
023
100,
764
384,
830
158,
280
127,
333
17,0
00
2,90
7,22
8
Add
ition
s 27
,437
7,
867
5,53
2 49
,085
10
3,78
8 40
,992
12
,367
24
7,06
8
Fair
valu
e ad
just
men
ts
500
– 20
0 –
– –
– 70
0
Dis
posa
ls a
nd a
djus
tmen
ts
(3,5
47)
7,52
4 22
,038
(7
0,62
9)
(17,
335)
33
,513
(1
5,58
4)
(44,
020)
Dep
reci
atio
n ch
arge
(1
8,53
0)
(838
) (7
,768
) (7
3,70
8)
(68,
474)
(4
9,61
4)
– (2
18,9
32)
Clo
sing
net
boo
k am
ount
1,
812,
858
326,
576
120,
766
289,
578
176,
259
152,
224
13,7
83
2,89
2,04
4
At
30 S
epte
mb
er 2
009
Cos
t 1,
880,
271
339,
210
195,
792
927,
647
320,
395
455,
390
13,7
83
4,13
2,48
8
Acc
umul
ated
dep
reci
atio
n (6
7,41
3)
(12,
634)
(7
5,02
6)
(638
,069
) (1
44,1
36)
(303
,166
) –
(1,2
40,4
44)
Net
boo
k am
ount
1,
812,
858
326,
576
120,
766
289,
578
176,
259
152,
224
13,7
83
2,89
2,04
4
Yea
r en
ded
30
Sep
tem
ber
201
0
Ope
ning
net
boo
k am
ount
1,
812,
858
326,
576
120,
766
289,
578
176,
259
152,
224
13,7
83
2,89
2,04
4
Add
ition
s 7,
639
8,93
5 6,
366
47,6
34
96,2
16
31,3
04
25,1
07
223,
201
Dis
posa
ls a
nd a
djus
tmen
ts
(15,
854)
(2
4,74
4)
(256
) 23
,945
(2
0,27
5)
(26,
846)
(1
1,86
5)
(75,
895)
Dep
reci
atio
n ch
arge
(1
8,59
4)
(945
) (7
,129
) (7
7,99
3)
(71,
426)
(4
1,35
6)
– (2
17,4
43)
Tran
sfer
red
to d
ispo
sal g
roup
cla
ssifi
ed f
or s
ale
– –
(126
) (9
77)
– (1
,696
) –
(2,7
99)
Clo
sing
net
boo
k am
ount
1,
786,
049
309,
822
119,
621
282,
187
180,
774
113,
630
27,0
25
2,81
9,10
8
At
30 S
epte
mb
er 2
010
Cos
t 1,
873,
790
324,
504
197,
870
1,03
5,76
4 34
8,50
4 39
2,79
4 27
,025
4,
200,
251
Acc
umul
ated
dep
reci
atio
n
(87,
741)
(1
4,68
2)
(78,
249)
(7
53,5
77)
(167
,730
) (2
79,1
64)
– (1
,381
,143
)
Net
boo
k am
ount
1,
786,
049
309,
822
119,
621
282,
187
180,
774
113,
630
27,0
25
2,81
9,10
8
The
fair
valu
e of
the
inve
stm
ent p
rope
rtie
s am
ount
ed to
$74
2,87
2 (2
009:
$74
2,87
2) a
s va
lued
by
an in
depe
nden
t, p
rofe
ssio
nally
qua
lified
val
uer t
akin
g in
to c
onsi
dera
tion
curr
ent
repl
acem
ent
cost
s, la
nd t
ax v
alua
tions
and
oth
er v
alua
tion
tech
niqu
es.
D
epre
ciat
ion
expe
nse
of $
115,
067
(200
9: $
112,
784)
has
bee
n ch
arge
d in
cos
t of g
oods
sol
d an
d $1
02,3
76 (2
009:
$10
6,14
8) in
‘sel
ling,
gen
eral
and
adm
inis
trat
ion
expe
nses
’ (N
ote
26).
Ba
nk b
orro
win
gs a
re s
ecur
ed o
n la
nd a
nd b
uild
ings
for
the
val
ue o
f $5
26,0
08 (2
009:
$58
4,07
7).
Th
e pr
oper
ty r
enta
l inc
ome
earn
ed b
y th
e G
roup
dur
ing
the
year
fro
m it
s in
vest
men
t pr
oper
ties,
am
ount
ed t
o $3
5,78
7 (2
009:
$34
,604
). D
irect
ope
ratin
g ex
pens
es
aris
ing
on t
he in
vest
men
t pr
oper
ties
amou
nted
to
$17,
970
(200
9: $
16,5
42).
52 53 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
7 Goodwill
2010 2009
$ $
At 1 October
Cost 213,197 212,931
Accumulated impairment (45,194) (42,233)
Net book amount 168,003 170,698
Year ended 30 September
Opening net book amount 170,698 169,106
Adjustments 151 5,291
Impairment charge (Note 26) (2,846) (3,699)
Closing net book amount 168,003 170,698
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.
2010 2009
$ $
Trinidad Trinidad
and Tobago Overseas and Tobago Overseas
Automotive & Industrial Equipment 30,698 – 31,604 –
Energy & Industrial Gases 31,817 2,485 31,817 2,485
Food Group 12,283 49,883 13,714 49,883
Financial Property & Other – 39,861 – 40,219
Other – 976 – 976
Total 74,798 93,205 77,135 93,563
The recoverable amount of CGUs 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.
7 Goodwill (continued)
Key assumptions used for value-in-use calculations:
Trinidad
and Tobago Overseas
Growth rate¹ 0 - 3% 2 - 6.5%
Discount rate² 8.51 - 11.1% 8.3 - 11.3%
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.
8 Other Intangible Assets
Intangibles represent brands and have been recognised at fair value at the acquisition date. These assets are expected to have
an indefinite life and no impairment has been recorded during the periods presented.
2010 2009
$ $
Year ended 30 September
Cost 35,070 35,070
Accumulated impairment – –
Net book amount 35,070 35,070
54 55 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
9 Investments in associated companies and joint ventures
2010 2009
$ $
Investment and advances 382,660 442,030
Share of post acquisition reserves 70,622 70,693
453,282 512,723
Balance at beginning of year 512,723 515,034
Additional investments 61,083 20,266
Share of results before tax 10,699 35,683
Share of tax (13,548) (7,547)
Dividends received (22,408) (32,617)
Loans and advances – 6,637
Exchange differences 1,286 2,101
Transferred to disposal group classified as held for sale (Note 33) (87,818) (19,515)
Other (8,735) (7,319)
Balance at end of year 453,282 512,723
The share of results before tax includes $766 (2009 : $766) representing the impairment charge for goodwill in respect of
acquisition of associates. Investments in associates at 30 September 2010 include goodwill of $10,113 (2009 : $10,879), net
of accumulated impairment of $5,926 (2009 : $5,160).
The principal associate is Banks Holdings Limited which is incorporated in Barbados.
2010 2009
$ $
Investments and advances 177,949 177,939
Share of post acquisition reserves (1,117) 4,171
176,832 182,110
The market value of shares in Banks Holdings Limited as at 30 September 2010 is $158,567 (2009 : $169,528)
9 Investments in associated companies and joint ventures (continued)
The Group has investments in associated companies whose year ends are not coterminous with 30 September 2010. 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
10 Credit quality of financial assets
Credit quality – investments
Sub-
Low Standard Standard
Risk Risk Risk Impaired
$ $ $ $
Investments
2010 254,585 212,783 7 –
2009 243,872 256,402 – –
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
56 57 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
10 Credit quality of financial assets (continued)
Credit quality – other financial assets
Past Due Provision
Fully but not For
Performing Impaired Impaired Impairment
$ $ $ $
2010
Installment credit and other loans 233,373 24,836 20,436 (5,898)
Trade receivables 472,294 318,308 130,494 (134,737)
705,667 343,144 150,930 (140,635)
Past Due Provision
Fully but not For
Performing Impaired Impaired Impairment
$ $ $ $
2009
Installment credit and other loans 274,977 38,275 6,030 (7,627)
Trade receivables 515,650 345,013 72,044 (76,608)
790,627 383,288 78,074 (84,235)
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.
11 Long term investments and financial assets at fair value through profit or loss
Financial
Available assets at
for sale fair value
financial Held to Loans and through profit
assets maturity Receivables Total or loss
$ $ $ $ $
2010
Beginning of the year 29,600 315,835 48,561 393,996 106,278
Exchange differences 94 996 153 1,243 335
Adjustments to Opening Balance – 305 – 305 –
Change in market value/
impairment charge (5,947) – – (5,947) 4,176
Additions – 22,484 1,732 24,216 –
Disposals (141) (22,975) (2,990) (26,106) (32,826)
Net gains transferred from equity
to other comprehensive income 1,705 – – 1,705 –
End of the year 25,311 316,645 47,456 389,412 77,963
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
58 59 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
11 Long term investments and financial assets at fair value through profit or loss (continued)
Financial
Available assets at
for sale fair value
financial Held to Loans and through profit
assets maturity Receivables Total or loss
$ $ $ $ $
2009
Beginning of the year 35,996 250,221 50,610 336,827 98,037
Exchange differences 444 3,195 699 4,338 1,242
Adjustments to Opening Balance 2,346 (247) (948) 1,151 (706)
Change in market value/
impairment charge (58) – – (58) (3,656)
Additions – 62,666 1,666 64,332 18,759
Disposals (1,268) – (3,466) (4,734) (7,398)
Net losses transferred from equity
to other comprehensive income (7,860) – – (7,860) –
End of the year 29,600 315,835 48,561 393,996 106,278
Financial assets at fair value through profit or loss are presented within ‘operating activities’ as part of changes in working
capital in the statement of cash flows.
Changes in fair value of financial assets at fair value through profit or loss are recorded in ‘other income’ in the operating
profit before finance costs in the consolidated income statement.
2010 2009
$ $
Financial assets include the following:
Bonds and treasury bills 356,421 358,424
Quoted securities 96,985 126,658
Unquoted securities 783 3,581
Other 13,186 11,611
467,375 500,274
The fair value of held to maturity financial assets amounts to $346,259.
12 Deferred income tax
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 taxes relate to the same fiscal authority.
Deferred income taxes are calculated in full on temporary differences under the liability method using a principal tax rate
of 25% (2009: 25%).
The movement in the deferred income tax account is as follows:
Deferred income tax liabilities
2010 2009
$ $
Balance at beginning of year 96,316 92,315
Charge for the year 5,353 8,797
Exchange adjustment 511 (1,741)
Other movements (2,271) (3,055)
Balance at end of year 99,909 96,316
The movement in the deferred tax liabilities during the year ended 30 September 2010 is as follows:
Charge to
Consolidated
Income
Statement Other
30.09.09 (Note 29) Movements 30.09.10
$ $ $ $
Accelerated tax depreciation 46,803 1,668 (955) 47,516
Pension plan surplus 48,241 3,094 (691) 50,644
Other 1,272 591 (114) 1,749
96,316 5,353 (1,760) 99,909
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
60 61 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
12 Deferred income tax (continued)
The movement in the deferred tax liabilities during the year ended 30 September 2009 is as follows:
Charge to
Consolidated
Income
Statement Other
30.09.08 (Note 29) Movements 30.09.09
$ $ $ $
Accelerated tax depreciation 44,009 4,480 (1,686) 46,803
Pension plan surplus 49,108 2,664 (3,531) 48,241
Other (802) 1,653 421 1,272
92,315 8,797 (4,796) 96,316
Deferred income tax assets
The movement in the deferred tax assets during the year ended 30 September 2010 is as follows:
2010 2009
$ $
Balance at beginning of year 76,009 60,286
Credit for the year 19,426 16,043
Other movements (10,104) (320)
Balance at end of year 85,331 76,009
12 Deferred income tax (continued)
Deferred income tax assets (continued)
The movement in the deferred tax asset during the year ended 30 September 2010 is as follows:
(Charge) /
Credit to
Consolidated
Income
Statement Other
30.09.09 (Note 29) Movements 30.09.10
$ $ $ $
Accelerated depreciation 48,174 (4,411) 1,827 45,590
Tax losses carried forward 23,639 24,645 (15,396) 32,888
Other 4,196 (808) 3,465 6,853
76,009 19,426 (10,104) 85,331
The movement in the deferred tax assets during the year ended 30 September 2009 is as follows:
(Charge) /
Credit to
Consolidated
Income
Statement Other
30.09.08 (Note 29) Movements 30.09.09
$ $ $ $
Accelerated depreciation 10,522 19,598 18,054 48,174
Tax losses carried forward 49,764 (3,988) (22,137) 23,639
Other – 433 3,763 4,196
60,286 16,043 (320) 76,009
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
62 63 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
12 Deferred income tax (continued)
Deferred income tax assets (continued)
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.
13 Installment credit and other loans
These represent the installment credit and other loans granted mainly by General Finance Corporation Limited.
2010 2009
$ $
Amounts due within one year 136,004 145,471
Between two and five years 139,466 171,121
Over five years 3,175 2,690
278,645 319,282
Provision for losses (5,898) (7,627)
272,747 311,655
Due within one year (130,105) (137,845)
142,642 173,810
13 Installment credit and other loans (continued)
13.1 Sectorial analysis of installment credit and other loans
2010 2009
$ $
Consumer 109,281 118,500
Manufacturing 9,896 13,866
Distribution 31,305 34,748
Construction 34,535 48,264
Transport 30,239 29,247
Agriculture 1,906 1,814
Petroleum 1,065 672
Residential mortgages 355 530
Other 54,165 64,014
272,747 311,655
13.2 Provision for losses
2010 2009
$ $
Balance at beginning of year 7,627 19,110
Charge for the year 2,400 2,472
Amount written off net of recoveries (4,129) (13,955)
Balance at end of year 5,898 7,627
The maximum exposure to credit risk at the reporting date is the carrying value of the installment credit and other
loans. The Group holds $323,117 (2009: $336,076) of collateral as security.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
64 65 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
14 Retirement benefit assets
2010 2009
$ $
Neal & Massy Group Pension Fund Plan 189,471 188,350
Overseas plans – Other 24,428 15,550
213,899 203,900
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:
2010 2009
$ $
Fair value of plan assets 1,207,711 1,121,556
Present value of obligation (908,593) (878,909)
299,118 242,647
Unutilisable asset (109,647) (54,297)
Asset in the statement of financial position 189,471 188,350
The movement in the defined benefit obligation over the year is as follows:
2010 2009
$ $
Opening present value of defined benefit obligation 878,909 781,301
Current service cost 16,087 14,278
Interest cost 64,766 66,237
Actuarial losses/ (gains) on obligation (16,106) 49,740
Benefits paid (35,063) (32,647)
Closing present value of defined benefit obligation at 30 September 908,593 878,909
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
14 Retirement benefit assets (continued)
Neal & Massy Group Pension Fund Plan (continued)
The movement in the fair value of plan assets of the year is as follows:
2010 2009
$ $
Opening fair value of plan assets 1,121,556 1,106,472
Expected return on plan assets 93,843 92,664
Actuarial gains / (losses) on plan assets 27,349 (44,974)
Employer contributions 25 41
Benefits paid (35,062) (32,647)
Closing fair value of plan assets at 30 September 1,207,711 1,121,556
The amounts recognised in the consolidated income statement are as follows:
2010 2009
$ $
Current service cost 16,087 14,278
Interest cost 64,766 66,237
Expected return on plan assets (93,843) (92,664)
Total included in other income (12,990) (12,149)
2010 2009
$ $
Actuarial (gains)/losses recognised in other
comprehensive income (before tax) (43,455) 94,714
Cumulative actuarial gains recognised in other
comprehensive income (before tax) (140,481) (97,025)
66 67 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
14 Retirement benefit assets (continued)
2010 2009
$ $
Actual return on plan assets 121,192 47,690
Movement in the asset recognised in the statement of financial position:
2010 2009
$ $
Asset at beginning of year 188,350 186,541
Net pension income 12,990 12,149
Actuarial losses (11,895) (10,382)
Contributions paid 26 42
Asset at end of year 189,471 188,350
The principal actuarial assumptions used were:
2010 2009
Per annum Per annum
Discount rate 7.5% 8.0%
Future salary increases 7.0% 7.0%
Expected return on plan assets 7.85% 8.50%
Future pension increases – post retirement 5.0% 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.
14 Retirement benefit assets (continued)
Plan assets are comprised as follows:
2010 2009
Local Equities/Mutual Funds 34% 60%
Local Bonds/Mortgages 26% 15%
Foreign investments 27% 13%
Deferred annuities/insurance policy 6% 8%
Short term securities 7% 4%
The average life expectancy in years of a pensioner retiring at age 60 is as follows:
2010 2009
Male 82 81
Female 86 85
2010 2009 2008 2007 2006
$ $ $ $ $
Plan asset 1,207,711 1,121,556 1,106,472 1,024,355 992,710
Defined benefit obligation (908,593) (878,909) (781,301) (812,160) (784,151)
Surplus 299,118 242,647 325,171 212,195 208,559
Experience adjustments on plan liabilities (10,934) (13,317) (18,576) (14,133) 34,260
Experience adjustments on plan assets 27,349 (44,974) 16,942 (25,750) (227,056)
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
68 69 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
14 Retirement benefit assets (continued)
Overseas plans - Other (continued)
The amounts recognised in the statement of financial position are as follows:
2010 2009
$ $
Fair value of plan assets 172,407 156,808
Present value of the defined benefit obligation (104,354) (90,046)
68,053 66,762
Unrecognised asset (43,625) (51,292)
Unrecognised past service cost – 80
Asset recognised in the statement of financial position 24,428 15,550
The amounts recognised in the consolidated income statement are as follows:
2010 2009
$ $
Current service cost 1,829 2,400
Interest cost 9,345 8,790
Expected return on plan assets (16,961) (14,761)
Past service benefit – non-vested benefits 80 78
Total included in other income (5,707) (3,493)
Actual return on plan assets 12,577 1,117
14 Retirement benefit assets (continued)
Overseas plans - Other (continued)
Movement in the asset recognised in the consolidated statement of financial position:
2010 2009
$ $
Asset at beginning of year 15,550 32,430
Decrease/(increase) in recognisable asset 7,667 (16,514)
Loss recognised in other comprehensive income (8,286) (680)
Net pension income 5,707 3,493
Contributions paid 2,177 1,788
Exchange adjustment 1,613 (4,967)
Asset at end of year 24,428 15,550
2010 2009
$ $
Actuarial losses recognised in other
comprehensive income (before tax) (8,286) (680)
Cumulative actuarial losses recognised in other
comprehensive income (before tax) 26,184 27,183
Plan assets are comprised as follows:
2010 2009
Equities 30% 27%
Real Estate 2% 2%
Government of Jamaica Securities 21% 22%
Bonds 7% 7%
Short term deposits/Money Market/Cash 8% 10%
Fixed income 26% 26%
Other 5% 6%
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
70 71 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
14 Retirement benefit assets (continued)
Overseas plans - BS& T
The amounts recognised in the statement of financial position are as follows:
2010 2009
$ $
Fair value of plan assets 431,733 440,754
Present value of the defined benefit obligation (455,690) (509,750)
Liability in the statement of financial position (23,957) (68,996)
The amounts recognised in the consolidated income statement are as follows:
2010 2009
$ $
Current service cost 9,843 10,108
Interest cost 37,904 38,039
Expected return on plan assets (34,490) (36,568)
Gains on curtailments / settlements – (2,827)
Expense recognised in the profit or loss 13,257 8,752
Actual return on plan assets 8,873 (10,695)
The liability recognised in the consolidated statement of financial position is included in provisions for other liabilities and
charges:
2010 2009
$ $
(Liability)/asset at beginning of year (68,996) 16,284
Income/(loss) recognised in other comprehensive income 49,222 (85,071)
Net pension expense (13,257) (8,752)
Contributions paid 9,152 9,290
Exchange adjustment (78) (747)
Liability at end of year (23,957) (68,996)
14 Retirement benefit assets (continued)
Plan assets are comprised as follows:
2010 2009
Cash and cash equivalents 3% 3%
Bonds 8% 8%
Mortgage loans 1% 2%
Real estate 14% 14%
Equities 67% 71%
Other 6% 2%
The principal actuarial assumptions used were:
2010 2009
Per annum Per annum
Discount rates 7.5% 7.5%
Expected return on plan assets 8.0% 8.0%
Future salary increases 5.0% 5.0%
Future NIS increases 3.5% 3.5%
Future pension increases – 2.75%
Assumptions regarding future mortality experience are set based on advice from published statistics and experience in each
territory.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
72 73 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
14 Retirement benefit assets (continued)
The average life expectancy in years of a pensioner retiring at age 60 is as follows:
2010 2009
Male 82 81
Female 86 86
Neal & Massy Post Retirement Group Health Plan
The medical liability amounted to $16,023 (2009: $13,108) and is included in the provision for liabilities and other charges on
the consolidated statement of financial position. The post retirement group health plan was valued by an independent actuary
using the projected unit credit method.
The staff costs recognised in the consolidated income statement amounted to $1,825 and (2009: $1,493) representing
both current service costs and interest costs for the year.
The financial and demographic assumptions have been based on market expectations at the date of the statement of
financial position, for the period over which the obligations are to be settled.
The principal actuarial assumptions used were:
2010 2009
Per annum Per annum
Discount rate 7.5% 8.0%
Medical Claims inflation 5.0% 5.0%
The expected mortality before and after retirement is GAM 94.
The effect of a 1% movement in the assumed medical premium escalation is as follows:
Increase Decrease
Effect on the aggregate of the current service cost and interest cost 397 (303)
Effect on the defined benefit obligation 2,824 (2,214)
14 Retirement benefit assets (continued)
BS&T Post Retirement Medical Scheme
The medical liability amounted to $61,223 (2009: $55,944) and is included in the provision for liabilities and other charges on
the consolidated statement of financial position. The post retirement medical scheme was valued by an independent actuary
using the projected unit credit method.
The staff costs recognised in the consolidated income statement amounted to $6,150 and (2009: $5,696) representing
both current service costs and interest costs for the year.
The medical claim inflation assumption was based on the experience of the BS&T’s self insured arrangement and the medical
and personal index component of the Retail Price Index.
The principal actuarial assumptions used were:
2010 2009
Per annum Per annum
Discount rate 7% 7.5%
Medical Claims inflation 4.5% 4%
The expected mortality before and after retirement is GAM 94.
The effect of a 1% movement in the assumed medical premium escalation is as follows:
Increase Decrease
Effect on the aggregate of the current service cost and interest cost 2,469 (1,680)
Effect on the defined benefit obligation 23,259 (16,355)
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
74 75 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
15 Inventories
2010 2009
$ $
Finished goods and goods for resale 737,056 805,722
Goods in transit 170,225 134,021
Raw materials and consumables 122,548 112,815
Work in progress 23,924 27,797
1,053,753 1,080,355
The cost of inventories recognised as expense and included in “cost of sales” amounted to $5,260 (2009: $5,409).
16 Trade and other receivables
2010 2009
$ $
Trade receivables 921,096 932,707
Less: provision for impairment of receivables (134,737) (76,608)
Trade receivables - net 786,359 856,099
Other debtors and prepayments 804,984 697,705
1,591,343 1,553,804
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.
16 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
$ $ $ $ $
2010
Installment credit and other loans 17,151 3,704 1,462 2,519 24,836
Trade receivables 67,915 104,480 58,243 87,670 318,308
Total 85,066 108,184 59,705 90,189 343,144
Past Due But Not Impaired
<30 days 31- 60 days 61- 90 days > 90 days Total
$ $ $ $ $
2009
Installment credit and other loans 15,285 4,271 2,674 16,045 38,275
Trade Receivables 39,286 125,621 76,984 103,122 345,013
Total 54,571 129,892 79,658 119,167 383,288
Provision for impairment
Provision Written off unused
Opening for during provisions Closing
balance impairment the year reversed balance
$ $ $ $ $
2010
Installment credit and other loans 7,627 2,400 (3,074) (1,055) 5,898
Trade receivables 76,608 69,333 (3,770) (7,434) 134,737
Other debtors and prepayments 854 1,801 (461) – 2,194
85,089 73,534 (7,305) (8,489) 142,829
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
76 77 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
16 Trade and other receivables (continued)
Provision Written off unused
Opening for during provisions Closing
balance impairment the year reversed balance
$ $ $ $ $
2009
Installment credit and other loans 19,110 2,682 (5,286) (8,879) 7,627
Trade receivables 64,233 25,563 (6,882) (6,306) 76,608
Other debtors and prepayments 10,141 – (779) (8,508) 854
93,484 28,245 (12,947) (23,693) 85,089
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned
above.
17 Cash and cash equivalents
2010 2009
$ $
Cash at bank and in hand 755,176 516,478
Short-term bank deposits 382,759 441,455
1,137,935 957,933
The effective interest rate on short-term bank deposits was 2% (2009: 4%); these deposits have an average maturity of 90 days.
17 Cash and cash equivalents (continued)
Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement:
2010 2009
$ $
Cash and cash equivalents 1,137,935 957,933
Bank overdrafts (61,336) (37,633)
Other short term borrowings (30,000) –
(91,336) (37,633)
1,046,599 920,300
18 Share capital
Number Ordinary
Of Shares Shares Total
# $ $
At 30 September 2008 95,968 512,573 512,573
Employee share option scheme
- value of services provided – 2,543 2,543
Share option exercised 172 6,200 6,200
Acquisition of subsidiary 17 838 838
At 30 September 2009 96,157 522,154 522,154
At 30 September 2009 96,157 522,154 522,154
Employee share option scheme
- value of services provided – 250 250
Share option exercised 438 15,816 15,816
At 30 September 2010 96,595 538,220 538,220
The total authorised number of ordinary shares is unlimited with no par value. All issued shares are fully paid.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
78 79 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
18 Share capital (continued)
The number of issued shares at 30 September 2008 excludes 3,500,000 treasury shares held by the Barbados Shipping &
Trading Limited. These shares were acquired with the acquisition of Barbados Shipping & Trading Limited and the fair value of
these shares as at 1 March 2008 has been deducted from shareholders equity.
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:
2010 2009
Average Average
Exercise Exercise
Price in $ Options price in $ Options
At 1 October – 2,768 – 2,211
Granted – – 58.33 756
Forfeited – (502) – (27)
Exercised – (438) – (172)
At 30 September 1,828 2,768
Out of the 1,828 thousand outstanding options, 827 thousand options were exercisable.
Share options outstanding at the end of the year have the following expiry date and exercise prices:
18 Share capital (continued)
Expiry date – 1 October Exercise Options
Price $ 2010 2009
2010 34.90 – 196
2011 49.39 483 483
2012 37.03 344 585
2013 47.52 558 748
2014 58.33 443 756
1,828 2,768
The fair value of options granted during 2010 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 of 6%, option life disclosed above, and annual risk-free interest rate of 5.5%, and expected volatility 6%. No
options were granted in 2010.
19 Dividends per share
2010 2009
$ $
Interim paid – 40 cents per share (2009 – 40 cents) 40,038 39,863
Final paid – 100 cents per share (2009 – 100 cents) 99,797 99,524
139,835 139,387
On 14 December 2010, the Board of Directors of Neal & Massy Holdings Limited declared a final dividend per share of 86 cents,
bringing the total dividends per share for the financial year ended 30 September 2010 to $1.26 (2009: $1.40).
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
80 81 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
21 Borrowings (continued)
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:
2010 2009
$ $
6 months or less 91,336 37,633
6-12 months 567,744 590,590
1-5 years 1,040,145 1,184,349
Over 5 years 279,014 362,785
1,978,239 2,175,357
The carrying amount and fair value of the non-current borrowings are as follows:
Carrying Amount Fair Value
2010 2009 2010 2009
$ $ $ $
Fixed interest mortgage loans 479,101 480,006 479,101 480,006
Other secured advances 539,919 476,464 550,726 493,746
Unsecured advances 867,883 1,181,254 867,863 1,181,254
1,886,903 2,137,724 1,897,690 2,155,006
The carrying amounts of short-term borrowings and current borrowings approximate their fair value. The fair values are
based on cash flows discounted using a rate based on the borrowing rate of 6% (2009: 6%)
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
20 Non-controlling interests
2010 2009
$ $
Balance at beginning of year 478,073 476,496
Disposals – (10,000)
Share of net profit of subsidiaries 4,701 48,169
Dividends paid (32,449) (26,191)
Investment 1,590 –
Other movements 1,101 (10,401)
Balance at end of year 453,016 478,073
21 Borrowings
2010 2009
$ $
Fixed interest mortgage loans 479,101 480,006
Other secured advances 539,919 476,464
Unsecured advances 867,883 1,181,254
Bank overdrafts and other short term borrowings 91,336 37,633
Total borrowings 1,978,239 2,175,357
Less short term borrowings (659,080) (628,223)
Medium and long term borrowings 1,319,159 1,547,134
Short-term borrowings comprise:
Bank overdrafts and other short term borrowings 91,336 37,633
Current loan installments 567,744 590,590
659,080 628,223
Total borrowings include secured liabilities of $775,970 (2009: $816,654). Bank borrowings are secured by the land and
buildings of the Group (Note 6).
82 83 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
21 Borrowings (continued)
2010 2009
$ $
The maturity of borrowings is as follows:
Payable within one year 567,744 590,590
Payable between two and five years 1,040,145 1,184,349
Payable between six and ten years 181,286 354,557
Payable over ten years 97,728 8,228
1,886,903 2,137,724
Interest charges on secured and unsecured loans vary from 2.54% to 12.75% (2009 - 5% to 12.5%) per annum.
The effective interest rates in 2010 were as follows:
2010 2009
uS$ TT$ Other uS$ TT$ Other
% % % % % %
Fixed interest mortgage loans 3.3-10.2 8-10 5.75 – 8-10 –
Other secured advances 4.29-12 8.5-10.5 5.25-6.3 6-9 6-15 5.5
Unsecured advances 2.54-12 2.85-10.5 4-4.75 5-8 6-9 4-5.5
Bank overdrafts and other
short term borrowings – 8.75-9 9-18.35 8.7-10.5 9-12 12.2
The carrying amounts of short-term borrowings and current borrowings approximate their fair value.
The carrying amounts of the Group’s borrowings are denominated in the following currencies:
2010 2009
$ $
US dollars 903,743 958,108
Barbados dollars 638,153 761,547
Trinidad & Tobago dollars 345,007 418,069
1,886,903 2,137,724
22 Customers’ deposits
These represent the deposits for fixed terms accepted mainly by General Finance Corporation Limited.
2010 2009
$ $
Payable within one year 285,969 342,813
Payable between one and five years 166 296
286,135 343,109
Sectorial analysis of deposit balances
Private sector 30,635 35,758
Consumers 255,500 307,351
286,135 343,109
23 Provisions for other liabilities and charges
The Company maintains a self-insured program covering portions of Group life and consequential loss insurance. The amounts
in excess of the self-insured levels are fully insured; subject to certain limitations and exclusions. The Company accrues its
estimated liability for these self insured programs, including estimates for insured but not reported claims, based on known
claims and past claims history. The remaining balance for provisions for other liabilities and charges stem from accruals for
outstanding tax claims or assessments.
24 Trade and other payables
2010 2009
$ $
Trade creditors 633,104 677,272
Other creditors and accruals 754,212 744,586
1,387,316 1,421,858
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
84 85 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
25 Liabilities on insurance contracts
The major classes of general insurance written by the Group’s insurance operations include motor, property, and other
miscellaneous types of general insurance. Risks under these policies usually cover a twelve month duration. Liabilities are
comprised as follows:
2010 2009
$ $
Outstanding claims 361,134 352,698
Unearned premiums 364,000 264,796
725,134 617,494
Movement in outstanding claims reserve may be analysed as follows:
Insurance Reinsurers’ Insurance Reinsurers’
Liabilities Share Liabilities Share
2010 2010 2009 2009
$ $ $ $
Beginning of the year 352,698 90,613 382,436 143,638
Exchange adjustment 1,196 287 5,227 1,836
Claims incurred 195,669 19,095 178,604 (11,276)
Claims paid (188,429) 3,173 (213,569) (43,585)
361,134 113,168 352,698 90,613
25 Liabilities on insurance contracts (continued)
Movement in the unearned premium reserve may be analysed as follows:
Insurance Reinsurers’ Insurance Reinsurers’
Liabilities Share Liabilities Share
2010 2010 2009 2009
$ $ $ $
Beginning of the year 264,798 154,915 257,984 152,944
Exchange adjustment 834 489 3,298 1,955
Premiums written in the year 770,341 496,488 638,641 333,224
Premiums earned in the year (671,973) (378,872) (635,127) (333,208)
364,000 273,020 264,796 154,915
The reinsurers’ share of outstanding claims and unearned premium reserves are included in accounts receivable. Claims reserves
comprise provisions for claims reported by policyholders and claims incurred but not yet reported and are established to cover
the ultimate cost of settling the liabilities in respect of claims that have occurred and are estimated based on known facts at
the statement of financial position date. Outstanding claims reserves are not discounted for the time value of money.
The principal assumption underlying the estimates is past claims development experience. This includes assumptions in
respect of average claims costs and claims numbers for each accident year. In addition, larger claims are separately assessed
by loss adjusters. Judgement is used to assess the extent to which external factors such as judicial decisions and government
legislation affect the estimates. The ultimate liabilities will vary as a result of subsequent developments. Differences resulting
from reassessment of the ultimate liabilities are recognized in subsequent periods.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
86 87 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
26 Operating profit before finance costs
2010 2009
$ $
Revenue 8,262,960 8,338,470
Cost of sales (5,799,491) (5,818,314)
Gross profit 2,463,469 2,520,156
Selling, general and administrative expenses (1,921,366) (1,878,293)
Other income 129,887 116,670
671,990 758,533
Selling, general and administrative expenses include the following:
Administration staff costs 688,723 687,378
Depreciation 99,183 103,523
Impairment of goodwill 2,846 3,699
Directors’ fees 1,518 1,518
Operating lease rentals 40,761 38,979
Administrative staff costs:
Continuing operations 688,723 687,378
Discontinued operations 5,047 5,024
693,770 692,402
Depreciation:
Continuing operations 99,183 103,523
Discontinued operations 3,193 2,625
102,376 106,148
27 Staff costs
2010 2009
$ $
Wages and salaries and termination benefits 902,669 903,070
Share options granted to directors and employees 250 2,543
Pension costs 14,432 15,081
917,351 920,694
Average number of persons employed by the Group during the year:
Full time 7,967 7,734
Part time 1,982 2,190
9,949 9,924
28 Finance costs - Net
2010 2009
$ $
Interest expense 168,322 209,295
Interest income (91,344) (107,321)
Finance costs – net, continuing operations 76,978 101,974
Finance costs – net, discontinued operations 305 5,698
77,283 107,672
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
88 89 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
29 Income tax expense
2010 2009
$ $
Trinidad and Tobago subsidiaries 114,853 129,034
Overseas subsidiaries 67,437 46,051
Associated companies 13,548 7,547
Deferred taxation (Note 12) (14,073) (7,246)
181,765 175,386
The Group’s effective tax rate of 30% (2009 – 25%) differs from the statutory Trinidad and Tobago tax rate of 25% as
follows:
2010 2009
$ $
Profit before taxation 605,711 692,242
Tax calculated at a tax rate of 25% 151,428 173,061
Effect of different tax rates in other countries 18,368 10,859
Income not subject to tax/expenses not deductible for tax purposes (6,312) (7,927)
Business levy/green fund levy/withholding taxes 7,395 5,551
Other adjustments 6,410 (8,104)
Adjustments to prior year tax provisions 4,476 1,946
Tax charge 181,765 175,386
There is no tax charge or credit relating to the components of other comprehensive income.
30 Earnings per share
Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the year.
30 Earnings per share (continued)
Basic (continued)
2010 2009
$ $
Profit attributable to shareholders – continuing operations 419,245 468,687
Profit attributable to shareholders – discontinued operations (117,880) (33,275)
301,365 435,412
Weighted average number of ordinary shares in issue 96,390 96,069
Basic earnings per share – continuing operations 4.35 4.88
Basic earnings per share – discontinued operations (1.22) (0.35)
3.13 4.53
Weighted average number of ordinary shares
for diluted earnings per share 96,390 96,109
Diluted earnings per share – continuing operations 4.35 4.88
Diluted earnings per share – discontinued operations (1.22) (0.35)
3.13 4.53
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares: share
options. For the share options, a calculation is done to determine the number of shares that could have been acquired at fair
value (determined as the average annual market share price of the Company’s shares) based on the monetary value of the
subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the
number of shares that would have been issued assuming the exercise of the share options.
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
90 91 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
30 Earnings per share (continued)
Basic (continued)
2010 2009
Profit attributable to equity holders of the Company 301,365 435,412
Weighted average number of ordinary shares in issue (thousands) 96,390 96,069
Adjustments for:
share options (thousands) – 36
Weighted average number of ordinary shares for diluted earnings per share (thousands) 96,390 96,109
Diluted earnings per share ($ per share) 3.13 4.53
31 Contingencies
At 30 September 2010 the Group had contingent liabilities in respect of bank and other guarantees and other matters arising
in the ordinary course of business from which it is anticipated that no material liabilities will arise. In the ordinary course of
business the Group has given guarantees amounting to $264,908 (2009: $298,589) to third parties of which $126,000 (2009:
$126,000) amount relates to Cool Petroleum Limited.
A guarantee of $33,814 (“guaranteed sum”) was given by Neal & Massy in October 2009 to the Royal Bank of Canada
(“RBC”) as collateral security for loans given by RBC Holdings Limited (“BSLH”) and Bahamas Supermarkets Limited (“BSL”).
The other five shareholders of BSLH agreed to indemnify Neal & Massy in respect of the guaranteed sum to the extent of their
respective proportionate shareholdings in BSLH. RBC called the loans in October 2010 and agreed to accept the guaranteed
sum in settlement of all liabilities and obligations of BSLH and BSL under the two loan agreements. Neal & Massy’s exposure
was for the sum of $17,236 as all the other five shareholders paid their respective proportionate share of the guaranteed sum
to RBC. This is included in trade and other payables in the statement of financial position.
Group companies are defendants in various legal actions. In the opinion of the directors, after taking appropriate legal
advice, the outcome of such actions will not give rise to any significant loss. However, the Group has pending tax appeals with
The Board of Inland Revenue for the Income Years 1998 and 2001.
32 Commitments
Capital commitments
Capital expenditure contracted at the statement of financial position date but not yet incurred is as follows:
2010 2009
$ $
Property, plant and equipment 31,969 13,063
Operating lease commitments - where a Group Company is the lessee:
The Group leases various retail outlets, offices and warehouses under non-cancellable operating lease agreements. The leases
have varying terms, escalation clauses and renewal rights.
The Group also leases various plant and machinery under cancellable operating lease agreements. The Group is required to
give a six-month notice for the termination of these agreements.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
2010 2009
$ $
No later than 1 year 31,878 23,224
Later than 1 year and no later than 5 years 99,442 76,335
Later than 5 years 66,259 80,052
197,579 179,611
Operating lease commitments - where a Group company is the lessor:
2010 2009
$ $
Less than one year 82,005 86,991
One year to five years 50,908 73,721
132,913 160,712
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
92 93 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
33 Assets of disposal group classified as held for sale
Warrens Motors
The assets and liabilities related to Warrens Motors Inc have been presented as held for sale following the decision by the parent
Board in August 2010 to dispose of the business. The transaction is expected to be completed by January 2011.
Analysis of the results is as follows:
2010 2009
$ $
Revenue 72,778 87,529
Operating loss before finance costs (29,757) (8,062)
Finance costs – net (305) (5,698)
Loss before tax (30,062) (13,760)
Tax – –
Loss for the year (30,062) (13,760)
Assets of disposal group classified as held for sale:
2010
$
Property plant and equipment 2,799
Inventories 10,785
Other current assets –
Total Assets 13,584
There are no liabilities of disposal group classified as held for sale.
33 Assets of disposal group classified as held for sale (continued)
Warrens Motors (continued)
Analysis of the cash flows is as follows:
2010 2009
$ $
Operating cash flows 17,090 8,030
Investing cash flows 666 (5,055)
Financing cash flows – –
Total Cash Flows 17,756 2,975
Bahamas Supermarkets Limited
Bahamas Supermarkets Limited is an associated company of the Neal & Massy Group in the Food Retailing business in the
Bahamas. The effective ownership was 31% and the Group’s investment in that entity has been presented as held for sale
following the approval by the Group’s Board on 28 September 2010. The transaction was completed on 10 November 2010.
Analysis of the results is as follows:
2010 2009
$ $
Share of loss (87,818) (19,515)
Tax – –
Share of loss for the year (87,818) (19,515)
Analysis of the cash flows is as follows:
2010 2009
$ $
Investing cash flows (35,768) –
Notes to the Consolidated Financial Statements
NO
TESNO
TES
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
94 95 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
34 Related party transactions
The ultimate parent of the Group is Neal & Massy Holdings Limited (incorporated in Trinidad and Tobago).
The following transactions were carried out with related parties:
2010 2009
$ $
i) Sales of goods and services:
Sales of goods:
- Associates 84,614 91,435
Goods are sold on the basis of the price lists in force with non-related parties.
ii) Purchases of goods and services:
Purchases of goods:
- Associates 17,089 17,257
Goods are bought on the basis of the price lists in force with non-related parties.
iii) Key management compensation:
Salaries and other short-term employee benefits 55,975 56,406
Post-employment benefits 3,638 3,666
Share-based payments 250 2,543
59,863 62,615
iv) Year-end balances arising from sales/purchases of goods/services:
Receivables from related parties:
Associates 4,727 4,652
Payables to related parties:
Associates 697 2,052
Goods purchased from entities controlled by non-executive Directors 54,267 59,892
34 Related party transactions (continued)
2010 2009
$ $
v) Loans to associates:
Beginning of year 54,190 54,755
Loans advanced during year – 6,637
Loans repayments received – (7,107)
Interest charged 976 1,193
Interest received (751) (1,288)
Other movements (39,165) –
End of the year 15,250 54,190
Included in other movements is a write off of a loan receivable balance from Bahamas Supermarkets Limited.
vi) Loans from associates:
Beginning of year 3,307 6,276
Loans advanced during year – –
Loans repayments received – (3,090)
Interest charged 49 219
Interest received (128) (98)
Other movements 3 –
End of the year 3,231 3,307
vii) Total loans to other related parties:
Beginning of year 14,764 15,394
Loans advanced during year 60 75
Loan repayments received (511) (1,272)
Interest charged 1,321 1,328
Interest received (19) (761)
End of the year 15,615 14,764
The loans to associates are due on demand and carry interest rates between 4.2 % – 12.5%.
Notes to the Consolidated Financial StatementsN
OTESN
OTE
S
Year ended 30 September 2010
Expressed in thousands of Trinidad & Tobago dollars
96 97 NEAL & MASSY HOLDINGS LIMITED 2010 ANNUAL REPORT
34 Related party transactions (continued)
viii) Goods are purchased from entities controlled by non-executive directors of the Company on normal commercial terms
and conditions. The purchases during the current year amounted to $54,267 (2009: $59,892).
ix) Commitments and contingencies
The related party guarantee in relation to Cool Petroleum Limited is described in Note 31.
NO
TES
Notes to the Consolidated Financial Statements
98
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