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ANNUAL REPORT 2005

ANGOSTURA HOLDINGS LIMITED

ANNUAL REPORT 2005 OUR V IS ION IS TO

BUILD A GLOBAL

DRINKS COMPANY,

REPRESENTED BY

STRONG BRANDS,

MARKETED IN EVERY

COUNTRY AROUND

THE GLOBE.

Notice of Meeting 4

Corporate Information 5

Supervisory Board of Directors 6

Report of the Directors 7

Report of the Chairman 8-18

Executive Team and Senior Management 19

Report of the Auditors 21

Consolidated Balance Sheet 22

Consolidated Income Statement 23

Consolidated Statement of Changes in Equity 24

Consolidated Cash Flow Statement 25

Notes to the Consolidated Financial Statements 26

Five Year Review 65

Management Proxy Circular 66

Proxy Form Card inserted

TABLE OF CONTENTSAnnual Report 2005

3

Ordinary Business

1. To receive the Report of the Directors, the Accounts for the year ended December

31st, 2005, the Report of the Auditors thereon and to approve the final dividend.

2. To elect directors.

3. To appoint PricewaterhouseCoopers as auditors and authorise the directors to fix

their remuneration.

By Order of the Board

Michael E. Carballo

Secretary

March 24th, 2006

NOTICE OF MEETING

4

NOTICE IS HEREBY GIVEN, that the Twenty Fourth Annual

General Meeting of the Company will be held at the House

of Angostura, Angostura Complex, Eastern Main Road,

Laventille, Trinidad and Tobago, on Wednesday May 3rd, 2006

at 10.00 a.m. for the for the following purposes:

Notes

1. Every member entitled to attend and vote at the meeting is entitled to appoint a

proxy to attend and on a poll to vote in his place and such proxy need not be a

member of the company.

2. No service contracts not expiring or determinable within 10 years have been

entered into between the company and any of its directors.

Company Secretary:

Michael E. Carballo F.C.C.A., C.A.

Registered Office: Corner Eastern Main Road & Trinity Avenue

Laventille, Trinidad & Tobago

E-mail: [email protected]

Website: www.angostura.com

Registrar & Transfer Office: Angostura Holdings Limited

Corner Eastern Main Road & Trinity Avenue

Laventille, Trinidad & Tobago

CORPORATE INFORMATION

5

Auditors: PricewaterhouseCoopers,

11-13 Victoria Avenue

Port of Spain, Trinidad & Tobago

Bankers: Republic Bank Limited

Promenade Centre

72 Independence Square


Citibank (Trinidad and Tobago) Limited

12 Queen’s Park East

Port of Spain, Trinidad & Tobago Attorneys-at-Law: J. D. Sellier & Company

129 - 131 Abercromby Street


Lawrence A. Duprey Nil Nil

Martin G. Daly, S.C. 1,500 1,500

Nicholas K. Inniss Nil Nil

Louis A. Monteil Nil Nil

Patrick B. Patel Nil Nil

Substantial Shareholders:Rumpro Company Limited 92,551,212 92,551,212

Colonial Life Insurance

Company (T&T) Limited 64,900,981 64,900,981

A substantial interest means 5% or more of the issued share capital of the company.

Directors’ Shareholdings: Dec. 31st, 2005 Mar. 24th, 2006

SUPERVISORY BOARD OF DIRECTORS

6

L. André Monteil

Martin G. Daly, S.C.

Lawrence A. Duprey, C.M.T., Chairman

Nicholas K. Inniss, H.B.M.

Patrick B. Patel

The Directors present their Report and Statement of Account for the year

ended December 31st, 2005.

Financial Results for the Year $’000

Profit attributable to shareholders 371,346

Currency translation differences (134)

Other reserve movements 1,606

Dividends on ordinary stock

Final Dividend paid (2004 -7¢) 7¢ (14,407)

Interim paid (2004 - 5¢) 5¢ (10,291)

348,121

Retained profits from the previous year 593,452

Retained profits at the end of the year 941,573

REPORT OF THE DIRECTORS

7Dividends The Directors declared a final dividend of 7¢ per ordinary share, which,

with the interim already paid, makes a total of 12¢ for the year.

Directors(a) Mr. Clive Cook retired from the Board and did not offer himself for re-election.

(b) Pursuant to paragraph 4.6.1 of By-Law No. 1 of the Company, Messrs. Martin G.

Daly and Nicholas K. Inniss retire and being eligible, offer themselves for re-

election until the close of the Annual Meeting next following.

Auditors The company’s auditors, PricewaterhouseCoopers, have expressed their willingness

to continue in office and offer themselves for re-election.

By order of the Board

Michael E. Carballo

Secretary

March 24th, 2006

Corner Eastern Main Road and Trinity Avenue

Laventille, Trinidad and Tobago

8

REPORT OF THE CHAIRMAN

CONTINUED GLOBALISATION

I am delighted, once again, to report to you on the performance of our group during 2005.

This has been a year of significant activity and success in many ways for Angostura as we continued the process of restructuring our business to position it for continued international development and expansion.

I am extremely proud and fortunate to be leading the charge at Angostura, especially at this important juncture of the company’s evolution. During the past year, I have met with a number of strategic partners, customers, distributors and other important representation in various markets around the globe, including India and the Far East, and these interactions have reaffirmed that the Angostura brand is strong, well known worldwide, with huge upside potential and, more importantly, that the strategies embarked upon are indeed yielding positive results.

After one hundred and eighty two (182) years, Angostura continues to serve Trinidad and Tobago with great pride and distinction, and we are proud of our heritage. Over the past five (5) years in particular, Angostura has developed and expanded continuously through both organic growth and successive acquisitions.

We have global ambitions; our vision is to build a global drinks group, represented by strong brands being marketed throughout all major regions around the globe. We intend to continue with our international development strategy that will be strengthened by an enriched portfolio of brands and an increased global presence, operating within an efficient decentralised organisation. In the spirits world, the power of global branding, premiumization and consolidation is now ever so strong, that we have to continually reshape our business to capitalize on these ongoing trends otherwise we would be left behind.

The transition of the business from commodity bulk rum, one characterised by low margins and profitability, to that of a business focused on building a robust branded business, has not been without its fair share of challenges. Our people fully understand and share our philosophy that building great brands and strong consumer franchises is the cornerstone of our continued development.

Our strategy of global expansion and brand building is the only viable way of enhancing shareholder value and it is only through continued investment that our brands will secure their long term development.

Law

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9

Your group continues to be in a very

solid financial position with total assets

now reaching $2.5B. This solid financial

position has enabled your group to

finalise negotiations for further strategic

acquisitions in Belvedere SA and Marie

Brizard SA which will allow us to grow our

brands globally and, at the same time,

maintain a fairly conservative balance sheet

and debt profile.

While earnings per share (EPS) improved

substantially from 29 cents in 2004 to 180

cents in 2005, your board, in view of the

continued investments being made, has

conservatively declared a final dividend of

7 cents, consistent with prior year, which,

together with the interim dividend of 5

cents already paid, makes a total of 12 cents

per share.

Group turnover, net of excise duty,

increased by a healthy 18.2% over the

corresponding period last year, exceeding

global industry trends. While there have

been increased volumes in our branded

cased export business this year, sales of

lower margin bulk rum continued to soften

in addition to our traditional rum business

within the local market.

Operating profit before net finance costs,

share of results of Associates and taxation,

increased from $95.1M to $378.4M and

reflects in the main, the net gain on the

sale of our 69.1% interest in Cruzan on

September 28th, 2005. The results reported

also include the full consolidation this year

of Cruzan’s reported results of a net pre-tax

loss of US$14.5M (TT$91.3M) compared to a

corresponding US$3.6M loss in 2004.

REPORT OF THE CHAIRMAN (CONTINUED)

2005 GROUP RESULTSTurnover (Net of Duty)

Shareholders’ Equity and Total Assets

Profit Attributable to Shareholders and

Dividends

Bulk Export Sales

Our investment in Cruzan, Inc., a company

with a great brand and future, and a

management team focused and well

compensated, did not benefit our core

Angostura brands in terms of distribution

and other “pull through” synergies. Our

decision to dispose of this asset therefore,

has now given us the platform to take

advantage of other great opportunities

within the global spirits sector that have

presented themselves.

Notwithstanding the above, core

operating profits of our Trinidad-

based business, before finance

costs and other income, declined

from $60.5M to $17.1M this year,

primarily due to the effects of

lower profitability on our bulk rum

business, higher raw material input

prices, such as for molasses, and

a reduced net contribution from

our local cased rum business as we

reposition our branded rum business to

reflect changing consumer tastes.

We also continue to invest heavily

in international market and brand

development to build critical mass, paving

the way for future top and bottom line

sustainable growth. These initiatives, no

doubt, will strategically position the group

for robust growth and above average

returns for shareholders.

10


THE DOMESTIC MARKET

For the first time in a number of years, we witnessed the trend of domestic market slippage in our cased rum sales. Local consumers, with increased spending

power in an economic environment typical

of boom conditions, where to many,

perceived image is key, have been switching

their affinity to other spirits categories such

as scotch, vodka and cognac. There has

been a definite trend towards premium

spirits in the local market.

Strong branding activity for all major spirits

categories at all pricing points within the

spectrum is now also increasing in intensity.

In our home market, we still continue to

command, however, over 95% market share

for rum. We have expanded and reorganised

our brand and trade teams to benefit from

better coverage and focus, both in the on

and off trades.

will form the basis of a new category of

growth for us.

Our agency business continues to perform

well, with increased sales volumes coming

from Highlander Scotch Whisky, Grey Goose

Vodka and JP Chenet Wines. The outlook

for the agency business is extremely

positive and it is our intention, over time,

to dominate our positions in the respective

categories.

With local consumers continuing to

demand quality and variety, we will

continue to place focus on our premium

offerings, brand imagery, appeal, packaging

upgrades and line extensions so as to gain a

higher level of consumer acceptance from a

broader cross section of consumers.

Our local Brand and Trade Team, headed by Mr. Gabriel Faria (front row, third from left)

During 2005, White Oak® firmly repositioned

itself as the dominant local brand of

choice, with Forres Park® and Black Label®

running in the number 2 and 3 positions

respectively in the rum categories. Royal

Oak® and Angostura 1919® have also been

showing signs of increasing popularity,

especially at the on-premise level.

In January 2005, our non-alcoholic

Angostura Lemon, Lime and Bitters (LLB®)

was introduced on to the local market,

for which we have been receiving a great

response from consumers. This follows

the great success that this brand has been

enjoying in Australia over the past couple

of years. From indications thus far, it also

appears that regionally, the brand has been

well accepted. We are currently formalising

strategies and expect to announce soon the

global rollout plan for Angostura LLB, which

11


INTERNATIONAL FOCUSThe world market for spirits grew by a

favourable 4% in 2005 driven largely

by vodka, Scotch whisky and rum.

Continued strong economic growth also

bode well for the spirits sector going

forward, with consumers now expanding

their horizons at a fast rate into premium

offerings. Boutique vodkas, premium

and super-premium rums and whiskies

are now very much in vogue, not only in

the traditional markets such as Europe

and the United States, but also in key

developing spirits markets such as China

and India.

Testimony to this trend is the new upscale

10 Cane Rum brand owned and marketed

by international brand powerhouse LVMH

(Louis Vuitton Moët Hennessy), being

manufactured by Angostura for the US

market, and retailed at US$35 – US$40

per bottle. We expect new entrants into

the premium rum segment during 2006.

The rum market, for example, doubled its

growth rate to over 8% during 2005 in the

USA alone. The growing popularity of rum

is also driven by the nature of its image,

taste and mixability.

Our global brand, Angostura 1919® is

receiving great reviews in the United

States and Europe. We are confident that

this brand is a global winner and with

focused marketing investment, we expect

to grab a fair market share from our

competitors.

12


ANGOSTURA ASIA PACIFIC

During early 2005, we formalised the

establishment of a permanent office

located at Pacific Place in Hong Kong.

Angostura Asia Pacific Limited will serve the

group’s interests across this diverse region

and deepen our presence in countries such

as China and Taiwan, in Hong Kong, the

Philippines and the South East Asia hub

including Vietnam, Thailand, Malaysia and

Singapore.

The primary focus during 2005 was the

strengthening of the existing distribution

platforms for Angostura® aromatic bitters

throughout the region, and to establish

proper distributor relationships for all our

priority rum brands including Angostura

1919®.

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During 2006 and over the medium-

term, emphasis will be placed on the

continued strengthening of distributor

relationships, repackaging, aggressive retail

merchandising and media advertising for

Angostura® aromatic bitters and our rums,

especially at the premium end and other

spirits brands, such as Scottish Leader

Supreme, Hine Cognac and Sobieski Vodka.

Our Asia Pacific office is headed by Simon

Murphy, an industry veteran with over 25

years experience, gained mostly in Asia.

Asia Pacific is a vast spirits market with a

strong affinity for premium products that

presents significant potential for Angostura’s

core business. Our strategy involves the

establishment of an organisation in Asia

with strong commercial capabilities,

participating in Angostura’s global

expansion. We will focus on key market

development where we can have significant

impact on brand, volume and profit growth.

Simon Murphy

13

We are satisfied with the level of

cased sales depletions of Angostura®

aromatic bitters and Angostura

Lemon Lime and Bitters (LLB®) in

the Australian market. This market

has been extremely important and

profitable for us over the years

and during 2006, we would be

establishing Angostura Australia Limited, a

full commercial distribution and marketing

entity to enhance our brand presence and

capabilities down under.

Angostura and Tilaknagar Industries, a well established

Indian distiller and marketer, formalised and set up a

marketing joint venture operation in April 2005 which

will focus primarily on the penetration of rum, scotch,

vodka and Angostura® aromatic bitters within the

Indian market.

With the ongoing liberalisation of the Indian market, both

commercially and culturally, it is expected that this 112

million case spirits market will continue to grow at over 9%

per annum. India is currently the largest rum market in the

world, with a 2005 consumption of 35 million nine-litre cases.

Our portfolio of exciting international brands will appeal to

a wide range of Indian consumers looking for an original

lifestyle experience. Our intent is to work closely with our

joint venture partner, eventually obtain a full commercial

license to conduct business in India and acquire a

meaningful and profitable share of this important market to

build brand value for the long-term.


INDIA

Chairman Lawrence A. Duprey with executives of Tilaknagar Industries and Angostura India.

AUSTRALIA

Right: Angostura aromatic bitters and Angostura 1919® continue to be proud sponsors of the Association of New South Wales Golf Tournament for which we have been obtaining great exposure.

Left: Angostura-sponsored West Indies world record holder Brian Lara and Australian cricketer Shane Warne team up in the Australian Masters Golf Pro-Am.

14


In January 2006, we announced our

intention to increase the shareholding of

the CL Financial Group in Belvedere SA, a

Paris listed company, from 25.8% to 51%,

of which Angostura currently owns 4.5%.

In addition to this, Belvedere, with its fresh

injection of capital will, during April 2006,

acquire French counterpart Marie Brizard et

Roger International SA, in a deal worth in

excess of 300M Euros.

Belvedere commands a strong position in

vodka and wines within Central and Eastern

Europe and will now, in addition to this, be

concentrating and expanding its efforts in

Western Europe, the United States and Asia.

Their Sobieski vodka brand now commands

position No. 58 in the top 100 premium spirits

brands worldwide (Source: Impact Databank).

Marie Brizard is known for its eponymous

aniseed-flavoured aperitif, for its wines and

for the recently acquired William Pitters’

International Scotch Whisky brand. The Marie

Brizard brand is ranked No. 93 in the top 100

premium spirits brands worldwide (Source:

Impact Databank). William Pitters’ William Peel

Scotch is one of the world’s top 20 Scotch

whisky brands and it commands the number

1 position in France, the world’s largest

Scotch whisky market.

This global alliance therefore will no doubt

strengthen the group’s position globally

and, more importantly, advance Angostura’s

efforts in expanding our reach, so that we

can capitalise on the tremendous growth

opportunities that abound in our industry at

this time.

A NEW GLOBAL ALLIANCE

The team at Paragon Vintners, Angostura’s new distibution partner, is

now responsible for marketing and distribution of our brands in the

United Kingdom.

15


THE FRENCH CONNECTIONOne of the many development strategies

utilised in France for our Angostura brands is the

distribution and retailing through a chain of retail

liquor stores, Repaire de Bacchus, owned by one of

our related companies, Angostura Suisse SA.

These retail shops, situated at key locations

throughout Paris, carry some of the finest and

widest selections of wines and spirits.

Plans are in progress to expand the number of

Repaire de Bacchus shops from 38 to 55 and

also to expand our base in Switzerland through

a similar type retail operation, Caves du Palais du

Justice.

16

I am pleased to report that progress

continues to be made on our 400+ acre

Golden Grove development in Tobago,

acquired in 2000.

In March 2006, we received our Certificate

of Environmental Clearance (CEC), a major

step in our overall developmental process.

The Samaan Grove residential sub-

development is progressing nicely, with

six completed residential units now on

site. Interest continues to be expressed by

potential equity participants and resort

developers, and we should be in a position

to conclude the appropriate financing

and capital structure for the project going

forward.

Tobago Plantations Limited, our 50%

integrated tourism and resort development

joint venture company, has recommenced

construction activity of villas and

condominiums, for which there is strong

demand. In 2005, however, the project

contributed negatively, with our net share

of operating loss being $7.2M, primarily

due to the non-cash amortisation of both

the golf course assets and our 30% interest

in Vanguard Limited, owners of the Hilton

Tobago.

We are confident that our two Tobago-

based projects, while long-term in nature,

will be able to achieve their full potential

and value.


GOLDEN GROVE, TOBAGO

17


OUR ENTRY INTO FUEL ETHANOL

During the last quarter of 2005,

through our wholly owned subsidiary,

Trinidad Bulk Traders Limited (TBTL),

we commissioned our new state-of-the

-art fuel ethanol dehydration plant,

located in Point Fortin at a total cost of

US$15.6M and commenced commercial

activities.

Ethanol has developed into an alternative

fuel derived from grain, corn and, in

our instance, sugar cane. It is also a

substitute for MTBE, now being banned for

environmental concerns throughout many

countries worldwide.

The output of our ethanol plant, which has

presently an annual capacity of 50 million

gallons, is exported in its entirety to the

United States market to meet growing

demand in that market, which currently

stands at 4.3 billion gallons per year, and

is estimated to reach 10 billion gallons by

2010.

While we do have some US congressional

challenges, we are confident that we will

continue to supply dehydrated ethanol to

the United States market over the long-

term. We are also in final negotiations to

expand the plant capacity to 100 million

gallons. This arm of our business will, no

doubt, provide the group with positive

net cash flows which will ultimately be

utilised for ongoing international brand

development.

TBTL’s senior operations and technical staff.

18

ECONOMY AND OUTLOOK

The world economy continued on a solid

growth path during 2005, albeit at a slightly

lower rate of 4.25% compared to 5.5% in

2004.

Notwithstanding a slowdown in industrial

production and global trade, along with the

adverse impact of sustained high energy

prices, the short-term outlook suggests solid

growth through to the end of 2007.

With respect to Trinidad and Tobago, the

strong economic performance of 2005 is

expected to continue into the medium-

term, bolstered by increasing investments,

production and high commodity prices.

With now a clear lead in the export of

primary petrochemicals such as methanol

and ammonia, the economy is set to grow

in excess of 10% in 2006. We must, however,

ensure that our non-energy sector develops

to its full potential so that we can increase

our competitiveness with all of our trading

partners.

With these clear economic boom

conditions, we fully expect that the

alcoholic drinks industry, both locally and

abroad, will continue to grow at healthy

rates.

CORPORATE GOVERNANCE

Your Board remains committed to the

highest level of corporate governance

practices throughout the group. We are

dedicated as always to the highest level of

corporate integrity, transparency and ethical

standards in all aspects of our business

operations and activities.

IN APPRECIATION

To our customers and consumers, I

extend sincere appreciation. We remain

committed to providing superior, exciting

and innovative service and brands. We are

instilling in our people the culture that

creates and preserves lasting relationships

with partners across all channels of

distribution.

To all our people at Angostura, and

especially those who are passionate about

our brands, committed to world-class

quality standards and expanding our

international reach, I say thanks.

I also wish to thank Mr. Clive Cook, who

retired from the Board during 2005. Clive,

who spent his entire career at Angostura,

was a true industry veteran and was

instrumental in a number of strategic

initiatives entered into by the group over

the years. For his valuable contribution to

the group, we wish him all the very best in

the future.


LOOKING AHEAD

Your company is strong and we are in

an extremely advantageous position to

command a prominent position in the

global spirits arena. We have excellent

brands which deserve further international

investment behind them. Brand-

building through effective marketing,

premiumisation and innovation, in addition

to being responsive to the marketplace is

extremely key for us.

We have built a sound foundation and

created significant value from past strategic

moves, above average return acquisitions

and creative joint venture partnerships to

deliver ongoing value for our shareholders.

In addition, we are committed to

continuously improving our operational and

cost structures, elevating our productivity

and benefiting from process improvements

and global synergies in international

distribution, logistics and global sourcing.

These initiatives will allow us to improve

operating earnings which can in turn be

reinvested into global brand-building

initiatives.

Thanks once again for your ongoing

support as we continue to build the

Angostura group into a high value drinks

company with global reach.

Lawrence A. Duprey

Chairman

EXECUTIVE TEAM AND SENIOR MANAGEMENT

Executive Team:

Gabriel Faria (Executive Director - Marketing)

Michael E. Carballo (Executive Director / Secretary)

Vidia P. Doodnath (Executive Manager - Quality Systems)

Robert L. Garcia (Executive Manager - Management Information Systems)

Patrick B. Patel (Executive Director - Production)

Sherrand K. Malzar (Executive Manager - Finance)

Not in picture: Lawrence A. Duprey, C.M.T. (Chairman) and

Kevin M. Kenny (Executive Manager - Properties and Resort Development)

Senior Management:

John P. Georges (Senior Manager - Production)

Keith W. Leggard (Senior Manager - Trade Marketing)

Nigel Bissoon (Senior Manager - Brand Marketing)

Rose-May Naraynsingh (Senior Manager - Administration & Operations)

Robert G. Wong (Senior Manager - Bulk Rum Sales)

Ioan M. Lloyd (Senior Manager - Maintenance)

Curtis Mohammed (General Manager - Trinidad Bulk Traders Limited)

19

THE SPRITZ FOR EVERY BARThe Angostura® aromatic bitters atomiser has been on trial throughout

the U.K. in a variety of hotel bars, style bars and other cocktail venues

throughout the year. With this spraying device, there is no spillage, it

delivers an even coating of bitters in the glass and adds the important

element of accuracy to cocktail mixing.

20

REPORT OF THE AUDITORS

We have audited the accompanying consolidated balance sheet of Angostura Holdings Limited (the Company)

and its subsidiaries (together, the Group) as of December 31st 2005, and the related consolidated statements of

income, changes in equity and cash flows for the year then ended. These financial statements set out on pages

22 to 64 are the responsibility of the Company’s management. Our responsibility is to express an opinion on

these financial statements based on our audit.

We conducted our audit in accordance with International Standards on Auditing. Those Standards require that

we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free

of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing the accounting principles used and

significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the

financial position of the Group as of December 31st, 2005 and the results of its operations and cash flows for the

year then ended in accordance with International Financial Reporting Standards.

PricewaterhouseCoopers

Port of Spain

Trinidad, West Indies

March 24th, 2006

To the Shareholders of Angostura Holdings Limited

21

22

Notes 2005 2004 $’000 $’000ASSETSNon-current AssetsProperty, plant and equipment 6 533,535 696,691Intangible assets 7 40,099 166,232Investments in associates 8 14,834 22,784Investments in joint ventures 9 2,783 8,597Available-for-sale financial assets 10 132,934 218,892Held-to-maturity investments 11 -- 179Loans receivable 12 468,289 417,671Pension asset 13 23,834 21,938Cash in escrow 19,879 22,584Other non-current assets -- 11,210 1,236,187 1,586,778Current assets Inventories 14 223,655 315,209Trade and other receivables 15 519,834 410,277Held to maturity assets -- 1,351Cash and cash equivalents 16 497,464 79,549 1,240,953 806,386Total Assets 2,477,140 2,393,164

EQUITY AND LIABILITIES Shareholders’ equity Share capital 17 118,558 118,558Other reserves 18 70,019 36,224Retained earnings 941,573 593,452Minority interest 8,094 161,113 1,138,244 909,347Liabilities Non-current liabilities Borrowings 19 641,032 757,183Deferred taxation 20 12,038 11,744Other non-current liabilities 21 79,025 96,351 732,095 865,278Current liabilities Trade and other payables 171,650 197,768Taxation payable 1,707 1,932Borrowings 19 433,444 418,839 606,801 618,539Total liabilities 1,338,896 1,483,817

Total equity and liabilities 2,477,140 2,393,164

The notes on pages 26 to 65 are an integral part of these consolidated financial statements.

Director: Director:L. A. Duprey P. B. Patel

CONSOLIDATED BALANCE SHEET(expressed in Trinidad & Tobago Dollars) - as at December 31st, 2005

23

Note 2005 2004

$’000 $’000

Sales 1,198,642 1,013,758

Cost of goods sold (773,070) (614,846)

Gross profit 425,572 398,912

Selling and marketing costs (194,456) (158,190)

Administrative expenses (225,471) (186,715)

Other income 372,787 41,176

Operating profit 22 378,432 95,183

Finance costs (net) 23 (25,098) (52,576)

Share of results of associates before tax (859) (2,748)

Profit before taxation 352,475 39,859

Taxation credit 24 18,885 12,972

Profit for the year 371,360 52,831

Attributable to:

Equity holders of the company 371,346 59,126

Minority interest 14 (6,295)

371,360 52,831

Earnings per share for profits attributable to the equity holders of the company

during the year

- Basic 25 $1.80 29¢

- Diluted 25 $1.76 28¢


CONSOLIDATED INCOME STATEMENT(expressed in Trinidad & Tobago dollars) Year ended December 31st

24

Attributable to equity holders

of the Company

Share Other Retained Minority Total

capital reserves earnings interest equity

$’000 $’000 $’000 $’000 $’000

Balance at January 1st, 2004 118,558 251 559,976 163,878 842,663

Property revaluation -- 39,607 -- -- 39,607

Currency translation differences -- 1,221 (935) -- 286

Effect of increased interest in subsidiary -- -- -- (17,868) (17,868)

Effect of share capital increase in subsidiary -- -- -- 21,527 21,527

Other movements in subsidiaries -- -- -- (129) (129)

Revaluation of investments -- (4,855) -- -- (4,855)

Net income/(expense) recognised directly in equity -- 35,973 (935) 3,530 38,568

Profit for the year -- -- 59,126 (6,295) 52,831

Total recognised income for 2004 -- 35,973 58,191 (2,765) 91,399

Dividends -- -- (24,715) -- (24,715)

Balance at December 31st, 2004 118,558 36,224 593,452 161,113 909,347

Balance at January 1st, 2005 118,558 36,224 593,452 161,113 909,347

Depreciation on revalued assets -- (405) 405 -- --

Currency translation differences -- -- (134) -- (134)

Negative goodwill transferred -- -- 1,201 -- 1,201

Disposal of subsidiary -- -- -- (152,877) (152,877)

Other movements in subsidiary -- -- -- (156) (156)

Revaluation of investments -- 34,200 -- -- 34,200

Net income/(expense) recognised directly in equity -- 33,795 1,472 (153,033) (117,766)

Profit for the year -- -- 371,346 14 371,360

Total recognised income for 2005 -- 33,795 372,818 (153,019) 253,594

Dividends -- -- (24,697) -- (24,697)

Balance at December 31st, 2005 118,558 70,019 941,573 8,094 1,138,244


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY(expressed in Trinidad & Tobago dollars)

25

Note 2005 2004 $’000 $’000Cash flows from operating activities

Group profit before taxation 352,475 39,859Adjustments for: Depreciation and amortisation 23,928 55,865Profit on disposal of property, plant and equipment (15,910) (31,816)Profit on disposal of investments (359,829) (25,386)Pension charge/(credit) (1,008) (118)Finance costs 25,098 52,576Share of results of associates before tax 859 2,748

Operating profit before working capital changes 27,629 93,728Increase in accounts receivable and prepayments (198,908) (42,257)Increase in inventories (85,306) (3,962)Increase in accounts payable and accruals 72,862 61,181

Cash (used in)/generated from operations (183,723) 108,690Interest paid (97,505) (92,211)Corporation tax refunds received 13 8,254Corporation tax paid (7,312) (7,237)Retirement benefits paid (2,985) (2,784)Dividends paid (16,825) (24,715)

Net cash used in operating activities (308,337) (10,003)Cash flows (used in)/from investing activities

Proceeds on disposal of property, plant and equipment 24,173 55,325Proceeds on sale of subsidiary 32 705,187 --Proceeds on disposal of investments 195,230 10,017Additions to property, plant and equipment (114,280) (104,925)Additions to investments (128,249) (11,517)Increase in equity in subsidiaries -- (66,087)Repayments received on notes receivable -- 3,269Dividends received 2,968 1,239Interest received 50,366 43,746Increase in other assets (95,766) (2,945)Increase in other liabilities -- 117,775

Net cash from investing activities 639,629 45,897Cash flows from/(used in) financing activities

Loan proceeds 506,077 66,698Repayment of loans (443,013) (181,783)

Net cash from/(used in) financing activities 63,064 (115,085) Increase/(decrease) in net cash 394,356 (79,191)Net cash balances at January 1st 87,733 166,924

Net cash balances at December 31st 482,089 87,733Represented by:

Cash and bank balances 16 497,464 79,549Cash in escrow 16 19,879 22,584Bank overdrafts 16 (35,254) (14,400)

482,089 87,733The notes on pages 26 to 64 are an integral part of these consolidated financial statements.

CONSOLIDATED CASH FLOW STATEMENT (expressed in Trinidad & Tobago dollars) Year ended December 31st

26

1. General information

The Company is a limited liability company incorporated and domiciled in Trinidad and Tobago. The address of its registered

office is Corner Eastern Main Road and Trinity Avenue, Laventille, Trinidad and Tobago. The Company has its primary listing on the

Trinidad and Tobago Stock Exchange. It is a holding company whose subsidiaries are engaged in the manufacture and sale of

rum, ANGOSTURA® aromatic bitters and other spirits, the bottling of beverage alcohol and other beverages on a contract basis,

the production of vinegar and cooking wine, the production and sale of food products and the manufacture of fuel ethanol. The

principal subsidiaries are:

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31st, 2005

Company Country of incorporation Percentage OwnedAngostura Limited Trinidad and Tobago 100%

Trinidad Distillers Limited Trinidad and Tobago 100%

Servis Limited Trinidad and Tobago 100%

Trinidad Bulk Traders Limited Trinidad and Tobago 100%

Angostura International Limited United States of America 100%

World Harbors, Inc. United States of America 100%

Suriname Alcoholic Beverages, NV Suriname 75%

The Group’s ultimate parent entity is CL Financial Limited, a company incorporated in the Republic of Trinidad and Tobago.

These consolidated financial statements have been approved for issue by the Board of Directors on March 24th, 2006.

27

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDecember 31st, 2005 (continued)

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 of Angostura Holdings Limited have been prepared in accordance with International

Financial Reporting Standards (IFRS). The consolidated financial statements have been prepared under the historical cost

convention as modified by the revaluation of land and buildings and available-for-sale financial assets.

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 Company’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.

Adoption of standards

In 2005, the Group adopted the IFRS below, which are relevant to its operations. The 2004 accounts have been amended as

required, in accordance with the relevant requirements.

• IAS 1 (revised 2003) Presentation of Financial Statements

• IAS 2 (revised 2003) Inventories

• IAS 8 (revised 2003) Accounting Policies, Changes in Accounting Estimates and Errors

• IAS 10 (revised 2003) Events after the Balance Sheet Date

• IAS 16 (revised 2003) Property, Plant and Equipment

• IAS 17 (revised 2003) Leases

• IAS 21 (revised 2003) The Effects of Changes in Foreign Exchange Rates

• IAS 24 (revised 2003) Related Party Disclosures

• IAS 27 (revised 2003) Consolidated and Separate Financial Statements

• IAS 28 (revised 2003) Investments in Associates

• IAS 32 (revised 2003) Financial Instruments: Disclosure and Presentation

• IAS 33 (revised 2003) Earnings per Share

• IAS 36 (revised 2004) Impairment of Assets

• IAS 38 (revised 2004) Intangible Assets

• IAS 39 (revised 2003) Financial Instruments: Recognition and Measurement

• IFRS 2 (issued 2004) Share-based Payments

• IFRS 3 (issued 2004) Business Combinations

28


2.1 Basis of preparation (continued)

Adoption of standards (continued)

The adoption of IAS 1, 2, 8, 10, 16, 17, 21, 24, 27, 28, 32 and 33 (all revised 2003) did not result in substantial changes to the Group’s

accounting policies. In summary:

• IAS 1 (revised 2003) has affected the presentation of minority interest and other disclosures.

• IAS 2, 8, 10, 16, 17, 27, 28, 32 and 33 (all revised 2003) had no material effect on the Group’s accounting policies.

• IAS 21 (revised 2003) had no material effect on the Group’s accounting policies. The functional currency of each of the

consolidated entities has been re-evaluated based on the guidance to the revised standard. All the Group entities have

the same functional currency as their measurement currency.

• IAS 24 (revised 2003) has affected the identification of related parties and some other related-party disclosures.

• The adoption of IAS 39 (revised 2004) has resulted in a change in the accounting policy relating to the classification of

financial assets at fair value through profit or loss.

• The adoption of IFRS 2 has resulted in a change in the accounting policy for share-based payments. Until 31 December

2003, the provision of share options to employees did not result in a charge in the income statement. Subsequent to that

date, the Group charges the cost of share options to the income statement.

• The Group has reassessed the useful lives of its intangible assets in accordance with the provisions of IAS 38. No

adjustment resulted from this reassessment.

All changes in the accounting policies have been made in accordance with the transition provisions in the respective standards.

All standards adopted by the Group require retrospective application other than:

• IAS 16 – the exchange of property, plant and equipment is accounted for at fair value prospectively;

• IAS 21 – prospective accounting for goodwill and fair value adjustments as part of foreign operations;

• IAS 39 – does not require the classification of financial assets as at ‘fair value through profit or loss’ of previously

recognised financial assets;

The adoption of IFRS 3, IAS 36 (revised 2004) and IAS 38 (revised 2004) resulted in a change in the accounting policy for goodwill.

Until December 31st, 2004, goodwill was:

• Amortised on a straight line basis over a period ranging from 5 to 15 years; and

• Assessed for an indication of impairment at each balance sheet date.

In accordance with the provisions of IFRS 3:

• The Group ceased amortisation of goodwill from January 1st, 2005.

• Accumulated amortisation as at December 31st, 2005, has been eliminated with a corresponding decrease in the cost of

goodwill

29


2.1 Basis of preparation (continued)

Adoption of standards (continued)

* From the year December 31st, 2005 and onwards, goodwill is tested annually for impairment, as well as when there are

indications of impairment.

• IFRS 2 – retrospective application for all equity instruments granted after November 7th, 2002, and not vested at

January 1st, 2004; and

• IAS 39 requires simultaneous adoption with IAS 32.

Standards, interpretations and amendments to published standards that are not yet effective

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the

Group’s accounting periods beginning on or after January 1st, 2006, or later periods but which the Group has not early adopted, as

follows:

• IAS 19 (Amendment), Employee Benefits (effective from January 1st, 2006)

• IAS 39 (Amendment), Cash Flow Hedge Accounting of Forecast Intragroup Transactions (effective from January 1st, 2006)

• IAS 39 (Amendment), The Fair Value Option (effective from January 1st, 2006)

• IAS 39 and IFRS 4 (Amendment), Financial Guarantee Contracts (effective from January 1st, 2006)

• IFRS 7, Financial Instruments: Disclosures, and a complementary Amendment to IAS 1, Presentation of Financial Statements

- Capital Disclosures (effective from January 1st, 2007)

• IFRIC 4, Determining whether an Arrangement contains a Lease (effective from January 1st, 2006).

2.2 Consolidation

a) Subsidiaries

Subsidiaries are all entities (including special purpose entities) in which the Group has the 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 presently exercisable or presently 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 no longer consolidated from the date that control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition

is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of

exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities

assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of

any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets

acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the

difference is recognised directly in the income statement (see Note 2.6).

Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised

losses are also eliminated but 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.

30


2.2 Consolidation (continued)

b) Transactions and minority interests

The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group.

Disposals to minority interests result in gains and losses for the Group that are recorded in the income statement. Purchases from

minority 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.

c) Associates

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 (see Note 2.6).

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement and its share of post-

acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the

cost 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.

Unrealised gains on transactions between the Group and its associates 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 have been changed where necessary to ensure consistency with the policies adopted by the

Group.

d) Joint ventures

The Group’s interest in jointly controlled entities is accounted for by the equity method of accounting.

2.3 Segment reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and

returns that are different from those of other business segments. A geographical segment is engaged in providing products or

services within a particular economic environment that is subject to risks and returns that are different from those of segments

operating in other economic environments.

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 presentation currency.

31


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

income statement.

Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analysed

between translation differences resulting from changes in the amortised cost of the security, and other changes in the carrying

amount of the security. Translation differences are recognised in profit or loss, and other changes in carrying amount are

recognised in equity.

Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value gain or loss. Translation

differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised

in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities

classified as available-for-sale are included in the fair value reserve in equity.

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 balance sheet presented are translated at the closing rate at the date of that balance sheet;

(ii) income and expenses for each income statement are translated at average exchange rates (unless this average is not a

reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income

and expenses are translated at the dates of the transactions); and

(iii) all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings

and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity.

When a foreign operation is sold, exchange differences that were recorded in equity are recognised in the 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.

32


2.5 Property, plant and equipment

Land and buildings are shown at fair value, based on periodic, but at least quintennial, valuations by competent independent

professionals, less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is eliminated

against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. All other

property, plant and equipment is 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. Repairs and maintenance are charged to the 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.

Increases in the carrying amount arising on revaluation of land and buildings are credited to revaluation surpluses in shareholders’

equity. Decreases that offset previous increases of the same asset are charged against revaluation surpluses directly in equity;

all other decreases are charged to the income statement. Each year the difference between depreciation based on the revalued

carrying amount of the asset charged to the income statement and depreciation based on the asset’s original cost is transferred

from ‘Revaluation surplus’ to ‘Retained earnings’.

Land is not depreciated. Buildings are depreciated on the straight-line basis, and all other fixed assets on the reducing balance

basis at rates set out below to allocate their cost or revalued amounts to their residual values over their estimated useful lives:

Buildings - 2%

Plant, machinery and equipment at varying rates from - 6% to 25%

The leasehold land is being amortised over the lease period of 99 years.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet 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 proceeds with carrying amount and are included in the income

statement. When revalued assets are sold, the amounts included in revaluation reserves are transferred to retained earnings.

33


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 on acquisition of subsidiaries is included in

‘Intangible assets’. Goodwill on acquisitions of associates is included in ‘Investments in associates’. Separately recognised goodwill

is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not

reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-

generating units or groups of cash-generating units that are expected to benefit from the business combination in which the

goodwill arose. Angostura Holdings Limited Group allocates goodwill to each business segment in each country in which it

operates.

b) Research and development

Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and

testing of new or improved products) are recognised as intangible assets when it is probable that the project will be a success

considering its commercial and technical feasibility and its costs can be measured reliably. 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. Capitalised development costs are recorded as intangible assets and amortised

from the point at which the asset is ready for use on a straight-line basis over its useful life, not exceeding five years.

Development assets are tested for impairment annually, in accordance with IAS 36.

c) Other intangible assets

Trademarks and other intangibles are recorded at cost and are amortised on a straight-line basis over their estimated useful lives

not exceeding twenty years

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.

34


2.8 Financial assets

The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, 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 and re-evaluates this designation at every reporting date.

a) Loans receivable

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 balance sheet date. These are

classified as non-current assets. Loans and receivables are classified as ‘trade and other receivables’ in the balance sheet (Note

2.10).

b) 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 balance sheet date.

Regular purchases and sales of investments are recognised on 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. Investments are derecognised 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 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 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 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 income statement. Dividends on available-for-sale equity

instruments are recognised in the income statement when the Group’s right to receive payments is established.

The fair values of quoted investments are based on current bid prices.

The Group assesses at each balance sheet 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 profit or loss – is removed from equity and recognised in

the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through

the income statement.

35


2.9 Inventories

Inventories are stated at the lower of cost and net realisable value.

Raw materials are stated at weighted average cost. The cost of finished goods and work in progress comprises raw materials,

direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing

costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.10 Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest

method, less provision for impairment. 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 income statement within ‘selling and marketing costs’.

2.11 Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with

original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities

on the balance sheet.

2.12 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in

equity as a deduction, net of tax, from the proceeds.

Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any

directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders

until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration

received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity

attributable to the Company’s equity holders.

36


2.13 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 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 balance sheet date.

Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to

complete and prepare the asset for its intended use. Costs incurred in obtaining long term borrowings are deferred and amortised

over the term of the loan. Other borrowing costs are expensed.

2.14 Deferred income tax

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. Deferred income tax is determined using tax

rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the

related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which

the temporary differences can be utilised.

2.15 Employee benefits

i) Pension obligations

Group companies operate various pension schemes. The schemes are generally funded through payments to trustee-administered

funds as determined by periodic actuarial calculations. The Group has both defined benefit and defined contribution plans. A

defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has

no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees

the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a

defined contribution plan. Typically, defined benefit plans define an amount of pension benefit that an employee will receive on

retirement, usually dependent on one or more factors such as age, years of service and compensation.

The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit

obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains

or losses and past service cost. The defined benefit obligation is calculated annually by independent qualified 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.

37


2.15 Employee benefits (continued)

i) Pension obligations (continued)

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to

income over the employees’ expected average remaining working lives.

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.

For defined contribution plans, the Group pays contributions to trustee administered funds on a contractual basis. The Group has

no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit

expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the

future payments is available.

ii) 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 balance sheet 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

income statement, with a corresponding adjustment to equity.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) when the

options are exercised.

iii) Termination 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 balance sheet date are

discounted to present value.

iv) Bonuses

The Group recognises a liability and an expense for bonuses based on a formula that takes into consideration the profit

attributable to the Company’s shareholders after certain adjustments. The Group recognises a provision where contractually

obliged or where there is a past practice that has created a constructive obligation.

38


2.16 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 eliminated sales

within the Group. Revenue is recognised as follows:

(a) Sales of goods – wholesaleSales of goods are recognised when a group entity has delivered products to the customer, the customer has accepted the

products and collectibility of the related receivables is reasonably assured.

(b) Sales of goods – retailSales of goods are recognised when a group entity sells a product to the customer. Retail sales are usually in cash or by credit or

debit card. Credit and debit card fees payable for the transaction are included in distribution costs.

(c) Sales of servicesSales of services are recognised in the accounting period in which the services are rendered, by reference to completion of the

specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.

(d) Interest incomeInterest income is recognised on a time-proportion basis using the effective interest method. When a receivable is impaired,

the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at original

effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired

loans is recognised using the original effective interest rate.

(e) Dividend incomeDividend income is recognised when the right to receive payment is established.

2.17 Leases

Leases in which a significant portion of the risk 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 income

statement on a straight-line basis over the period of the lease.

2.18 Dividends

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 Group’s shareholders.

2.19 Derivative financial instruments

The Group has derivatives which are not classified as hedge instruments. These are initially recognised at fair value on the date the

derivative contract is entered into and are subsequently remeasured at their fair value. Changes in the fair value of the derivative

instruments are recognised immediately in the income statement within ‘finance costs’.

39


3 Financial risk management

3.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk and

price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group’s overall risk management programme focuses on the

unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance.

(a) Market risk

(i) Foreign exchange risk

The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation

risk. Currency exposure arising from the net assets of the Group’s foreign operations is managed primarily through

borrowings denominated in the relevant foreign currencies.

(ii) Price risk

The Group is exposed to equity securities price risk because of investments held by the Group and classified on the

consolidated balance sheet as available-for-sale. The Group is not exposed to commodity price risk.

(b) Credit risk

The Group has no significant concentrations of credit risk. It has policies in place to ensure that wholesale sales of

products are made to customers with an appropriate credit history. Sales to retail customers are made in cash or via major

credit cards.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of

funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to

the dynamic nature of the underlying businesses, the Group aims to maintain flexibility in funding by keeping committed

credit lines available.

d) Interest Rate Risk

Differences in contractual repricing or maturity dates and changes in interest rates may expose the Group to interest

rate risk. The Group’s exposure and interest rates on its financial assets and liabilities are disclosed in Notes 12 and 19,

respectively.

40


3.2 Fair value estimation

The fair value of financial instruments traded in active markets (such as trading and available-for-sale securities) is based on quoted

market prices at the balance sheet date. The quoted market price used for financial assets held by the Group is the current bid

price.

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.

4 Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including

expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, 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 fair value calculations. These calculations

require the use of estimates (Note 7).

(b) Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide

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) Impairment of available-for sale financial assets

The Group follows the guidance of IAS 39 (revised 2004) on determining when an investment is other-than-temporarily impaired.

This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the

duration and extent to which the fair value of an investment is less than its cost; and the financial health of and near-term business

outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and

financing cash flow.

41


5. Segment information

Primary reporting format – business segments

At December 31st, 2005, the Group is organised into four main business segments: (1) Manufacture and sale of alcoholic products

on a wholesale basis; (2) Manufacture and sale of sauces and seasonings products on a wholesale basis; (3) Manufacture and sale

of fuel products and (4) Holdings in various subsidiaries involved in asset management.

The segment results for the year ended December 31st, 2005 are as follows:

Alcoholic Food Fuel Other Group

Products Products Products Total

$’000 $’000 $’000 $’000 $’000

Sales 792,929 204,726 95,749 105,238 1,198,642

Operating profit/segment result 372,455 17,129 (7,296) (3,856) 378,432

Finance costs (25,098)

Share of results of associates before tax 6,286 -- -- (7,145) (859)

Profit before taxation 352,475

Taxation credit 18,885

Profit for the year 371,360

Segment assets 1,668,138 184,714 163,893 309,844 2,326,589

Associates and joint ventures 17,617 -- -- -- 17,617

Unallocated 132,934

Total assets 2,477,140

Segment liabilities 196,075 15,288 2,644 36,704 250,711

Unallocated 1,088,185

Total liabilities 1,338,896

Capital expenditure 13,434 1,619 64,670 34,557 114,280

Depreciation 13,153 1,747 4,586 -- 19,486

Amortisation and impairment 80 4,362 -- -- 4,442

42


5. Segment information (continued)

Primary reporting format – business segments (continued)

The segment results for the year ended December 31st, 2004 are as follows:

Alcoholic Food Other Group Products Products Total $’000 $’000 $’000 $’000 Sales 714,034 200,114 99,610 1,013,758Operating profit/segment result 83,480 20,709 (9,006) 95,183Finance costs (52,576)Share of results of associates before tax 6,556 -- (9,304) (2,748)Profit before taxation 39,859Taxation credit 12,972

Profit for the year 52,831 Segment assets 1,624,949 216,933 299,478 2,141,360Associates and joint ventures 24,227 -- 7,154 31,381Unallocated 220,423

Total assets 2,393,164 Segment liabilities 222,740 15,059 56,320 294,119Unallocated 1,189,698

Total liabilities 1,483,817 Capital expenditure 75,720 1,608 34,850 112,178Depreciation 31,387 4,757 9,756 45,900Amortisation 5,601 4,364 -- 9,965

Inter-segment transfers or transactions are entered into under the normal commercial terms and conditions that would also be

available to unrelated third parties.

Segment assets consist primarily of property, plant and equipment, intangible assets, inventories, receivables and operating cash.

They exclude deferred taxation, investments and derivatives held for trading or designated as hedges of borrowings.

Segment liabilities comprise operating liabilities (including derivatives designated as hedges of future commercial transactions).

They exclude items such as taxation, corporate borrowings and related hedging derivatives.

Capital expenditure comprises additions to property, plant and equipment (Note 6) and intangible assets (Note 7), including

additions resulting from acquisitions through business combinations.

43


2005 2004 $’000 $’000

Analysis of sales by category

Sales of goods 1,117,505 939,314

Revenue from services 81,137 74,444

1,198,642 1,013,758

5. Segment information (continued)

Secondary reporting format – geographical segments

The Group’s three business segments operate in two main geographical areas, even though they are managed on a worldwide

basis.

The home country of the Company – which is also the main operating company – is Trinidad and Tobago. The areas of operation

are principally the manufacturing and sale of alcoholic and food products, and fuel products.

Sales Total Capital Assets Expenditure 2005 2004 2005 2004 2005 2004 $’000 $’000 $’000 $’000 $’000 $’000

Trinidad and Tobago 429,306 317,031 2,183,197 1,229,012 112,560 70,921Overseas 769,336 696,727 143,392 912,348 1,720 34,004

1,198,642 1,013,758 2,326,589 2,141,360 114,280 104,925Associates and joint ventures 17,617 31,381 Unallocated 132,934 220,423 2,477,140 2,393,164

44

At January 1st, 2004 Cost or valuation 311,070 640,957 144,509 1,096,536Accumulated depreciation (61,678) (413,289) -- (474,967)

Net book amount 249,392 227,668 144,509 621,569 Year ended December 31st, 2004 Opening net book amount 249,392 227,668 144,509 621,569Revaluation surplus 39,607 -- -- 39,607Additions 7,293 27,617 70,015 104,925Transfers 21,276 4,297 (25,573) --Disposals (15,144) (460) (7,906) (23,510)Depreciation charge (5,583) (40,317) -- (45,900)

Closing net book amount 296,841 218,805 181,045 696,691 At December 31st, 2004 Cost or valuation 356,296 660,791 181,045 1,198,132Accumulated depreciation (59,455) (441,986) -- (501,441)

Net book amount 296,841 218,805 181,045 696,691 Year ended December 31st, 2005 Opening net book amount 296,841 218,805 181,045 696,691Disposal of subsidiary (104,345) (145,342) -- (249,687)Additions 3,986 96,687 13,607 114,280Transfers 9,255 11,051 (20,306) --Disposals -- (4) (8,259) (8,263)Depreciation charge (2,926) (16,560) -- (19,486)

Closing net book amount 202,811 164,637 166,087 533,535 At December 31st, 2005 Cost or valuation 213,561 319,339 166,087 698,987Accumulated depreciation (10,750) (154,702) -- (165,452)

Net book amount 202,811 164,637 166,087 533,535


6. Property, plant and equipment

Land and Plant Assets in Total

buildings machinery progress

and equipment

$’000 $’000 $’000 $’000

45


6. Property, plant and equipment (continued)

The Group’s land and buildings were last revalued on December 31st, 2004 by the directors of the Company. Valuations were

made on the basis of market value. The revaluation surplus was credited to other reserves in shareholders’ equity (Note 18).

The amount of borrowing costs capitalised during the year on assets in progress totalled $7,127,311 (2004:$4,594,004) (Note 23).

The capitalisation rates ranged from 2.4% to 7.5% (2004: 1.8% to 7.5%) per annum.

Property, plant and equipment with a book value of $242,097,594 (2004 - $604,651,690) are pledged as security for borrowings.

46


At January 1st, 2004 Cost 202,474 8,538 2,886 213,898Accumulated amortisation and impairment (40,048) (3,000) (2,192) (45,240)Net book amount 162,426 5,538 694 168,658 Year ended December 31st, 2004 Opening net book amount 162,426 5,538 694 168,658Additions -- 619 -- 619Interest in subsidiary 6,634 -- -- 6,634Amortisation and impairment charge (9,258) (331) (90) (9,679)Closing net book amount 159,802 5,826 604 166,232

At December 31st, 2004 Cost 209,108 9,157 2,886 221,151Accumulated amortisation and impairment (49,306) (3,331) (2,282) (54,919)Net book amount 159,802 5,826 604 166,232 Year ended December 31st, 2005 Opening net book amount 159,802 5,826 604 166,232Transfer to reserves 1,201 -- -- 1,201Disposal of subsidiary (117,306) (5,586) -- (122,892)Amortisation and impairment charge (4,262) (80) (100) (4,442)Closing net book amount 39,435 160 504 40,099 At December 31st, 2005 Cost 47,980 400 2,886 51,266Accumulated amortisation and impairment (8,545) (240) (2,382) (11,167)Net book amount 39,435 160 504 40,099

7. Intangible assets

Goodwill Trademarks Other Total

$’000 $’000 $’000 $’000

Impairment tests for goodwill

Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to country of operation and business

segment.

The recoverable amount of a CGU is determined based on fair value calculations using best estimates of market multiples of

revenue and earnings before interest, taxes and depreciation.

47


2005 2004 $’000 $’000

Balance at January 1st 22,784 17,985

Share of profit 4,476 5,341

Exchange differences (134) 331

Disposal of subsidiary (10,799) --

Amortisation of goodwill -- (286)

Other movements (1,493) (587)

Balance at December 31st 14,834 22,784

8. Investment in associates

Investments in associates at December 31st, 2005 include goodwill of $119,023 (2004: $119,023).

The Group’s share of the results of its principal associates, all of which are unlisted, and its share of the assets (including

goodwill and liabilities) are as follows:

Name Country of Assets Liabilities Revenues Profit/ % interest

incorporation Loss held

2004

Premier Wines Spirits Limited US Virgin Islands 9,033 -- -- 2,204 45

St. Lucia Distillers Limited St. Lucia 22,322 8,571 30,554 3,137 25

31,355 8,571 30,554 5,341

2005

Premier Wines Spirits Limited US Virgin Islands -- -- -- 1,765 45

St. Lucia Distillers Limited St. Lucia 17,951 3,117 21,439 2,711 25

17,951 3,117 21,439 4,476

9. Investment in joint ventures

Company Country of incorporation Percentage OwnedTobago Plantations Limited Trinidad and Tobago 50% Heineken (Trinidad & Tobago) Limited Trinidad and Tobago 50%

2005 2004 $’000 $’000


Investment in joint venture -- 11,517

Share of loss (5,814) (8,530)


(i) (ii) (ii)

(ii)

(i) Group’s share of Associate’s net assets (ii) These details were not available.

48


10. Available-for-sale financial assets

2005 2004 $’000 $’000


Additions 128,249 --

Disposals (248,407) (18,610)

Revaluation surplus/(deficit) 34,200 (4,855)


Available-for-sale financial assets include the following:

Listed securities:

– Equity securities – Eurozone countries 126,803 --

– Equity securities – United States of America -- 145,062

– Equity securities – Trinidad and Tobago 5,222 33,980

– Equity securities – English speaking Caribbean 5 4

Unlisted securities 904 39,846

132,934 218,892

There were no impairment provisions on available-for-sale financial investments in 2005 or 2004.

11. Held-to-maturity investments

2005 2004 $’000 $’000

Balance at January 1st 179 179

Received on maturity (179) --

Balance at December 31st -- 179

49


2005 2004

$’000 $’000

12. Loans receivable

Unsecured loan notes from related company bearing interest at 10.5% per

annum payable semi-annually. Principal repayments commence in June 2007.

Unsecured loan to joint venture bearing interest at 8% per annum, with no

fixed repayment terms

Unsecured note from affiliate at 6% per annum. Principal and interest payments

of US$0.02 million due monthly until July 2005 and the remaining balance of

US$3.3 million due in August 2005.

Unsecured loan to related company bearing interest at 9% per annum with no

fixed repayment terms.

Unsecured loan to related company bearing interest at 9% per annum. Principal

repayments due from June 2005 to June 2008.

Unsecured loan to associate bearing interest at 6% per annum with no fixed

repayment terms.

Note secured by real property, monthly principal and interest payments of

US$0.01 million through April 2009. Interest is charged at 8% per annum.

Other

Less current maturities (Note 15)

361,995 361,995

32,445 30,581

-- 20,871

72,287 12,823

3,511 6,346

-- 4,919

-- 2,960

-- 204

470,238 440,699

(1,949) (23,028)

468,289 417,671

Fair values 482,652 444,012

50

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31st, 2005 (continued)

2005 2004 $’000 $’000

Fair value of plan assets 100,754 96,889

Present value of funded obligations (93,369) (85,371)

7,385 11,518

Present value of unfunded obligations (1,924) (2,247)

Unrecognised actuarial losses 18,373 12,667

Asset in the balance sheet 23,834 21,938

The amounts recognised in the income statement are as follows:

Net actuarial loss recognised during the year (230) (1,131)

Current service cost (2,288) (2,364)

Interest cost (6,395) (5,783)

Expected return on plan assets 7,905 7,943

Total charge in the income statement (1,008) (1,335)

Adjustment to carrying value of retirement severance -- 1,453

Net pension (expense)/income (1,008) 118

The movement for the year in the asset recognised in the balance sheet

for the year is as follows:


Total (charge)/credit in the income statement (1,008) 118

Employer contributions 2,389 2,443

Severance payments/(liability) 515 (3,700)


13. Pension asset

Pension benefits

The amounts recognised in the balance sheet are determined as follows:

51


2005 2004 $’000 $’000


Expected return on plan assets 7,905 7,943

Actuarial (losses)/gains (5,956) 9,552

Employer contributions 2,389 2,443

Employee contributions 2,389 2,443

Benefits paid (2,862) (5,109)


Actual return on plan assets 1,949 19,829

The principal actuarial assumptions used were as follows: 2005 2004

Discount rate 7.5% 7.0%

Expected return on plan assets 8.5% 8.0%

Future salary increases 5.5% 5.0%

Assumptions regarding future mortality experience are set based on US Table GAM83.

The average life expectancy in years of a pensioner retiring at age 60 is as follows:

Male 21 21

Female 26 26

The plan’s assets are fully invested in a diversified general portfolio fund managed by the carrier, Colonial Life Insurance Company

Limited.

The expected return on plan assets was determined by adding on appropriate margin to the discount rate. Expected

contributions to post employment benefit plans for the year ending December 31st, 2006 are approximately $3.1 million.

13. Pension asset (continued)

The movement for the year in the fair value of plan assets for the year is as follows:

52


2005 2004 $’000 $’000

Raw and packaging materials 79,032 115,330

Work in progress 95,800 72,994

Finished goods 48,823 126,885

223,655 315,209

Included above are inventories totalling $38,953,148 (2004 - $115,329,581), which are stated at net realisable value. Inventories

pledged as security for borrowings totalled $156,597,744 (2004 - $283,978,130).

14. Inventories

2005 2004 $’000 $’000

Trade receivables 158,493 260,799

Less: provision for impairment of receivables (6,181) (7,039)

Trade receivables – net 152,312 253,760

Prepayments 4,353 3,595

Receivables from related parties (Note 31) 354,528 123,428

Current portion of loans to related parties (Note 12) 1,949 23,028

513,142 403,811

Taxation refundable 6,692 6,466

519,834 410,277

There is no concentration of credit risk with respect to trade receivables, as the Group has a large number of customers,

internationally dispersed.

The Group has recognised a loss of $1,243,017 (2004: $407,831) for the impairment of its trade receivables during the year ended

December 31st, 2005. The creation and usage of provision for impaired receivables have been included in ‘selling and marketing

costs’ in the income statement.

15. Trade and other receivables

53


2005 2004 $’000 $’000

Cash at bank and in hand 71,798 57,400Short-term bank deposits 425,666 22,149 497,464 79,549

The effective interest rate on short-term bank deposits was 4.8% (2004: 4.0%); these deposits have an average maturity of 30 days.Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement:

Cash and cash equivalents 497,464 79,549Cash in escrow 19,879 22,584Bank overdrafts (Note 19) (35,254) (14,400) 482,089 87,733

16. Cash and cash equivalents

2005 2004

Number of shares in issue (000s) 205,820 205,820

Ordinary shares ($’000) 119,369 119,369Treasury stock ($’000) (811) (811) 118,558 118,558

Share optionsUnder the share option plan for employees approved by the shareholders at the annual general meeting on April 12th, 2000, the Company granted options to management and employees with ten or more years of service to subscribe for up to a total of 25,000,000 ordinary shares. Options have been granted in two phases. The first of these was exercisable between January 1st, 2004 and June 30th, 2004. The second phase is exercisable between January 1st, 2006 and June 30th, 2006. The option price has been fixed at $5.75. At December 31st, 2005, there were 4,685,000 options outstanding. Based on prevailing prices subsequent to the balance sheet date and the projections for the equities market in Trinidad and Tobago, management does not consider the options to have a fair value at December 31st, 2005, which could result in a charge to the income statement for 2005.

17. Share capital

54


Balance at January 1st, 2004 15,995 (25,856) 10,112 251Property revaluation 39,607 -- -- 39,607Revaluation of investments -- (4,855) -- (4,855)Currency translation differences -- -- 1,221 1,221

Balance at December 31st, 2004 55,602 (30,711) 11,333 36,224 Balance at January 1st, 2005 55,602 (30,711) 11,333 36,224Depreciation on revalued assets (405) -- -- (405)Revaluation of investments -- 34,200 -- 34,200

Balance at December 31st, 2005 55,197 3,489 11,333 70,019

18. Other reserves

Revaluation Investment revaluation Capital

surplus reserve reserve Total

$’000 $’000 $’000 $’000

2005 2004 $’000 $’000

Non-current: Debentures and other loans 652,352 768,172Deferred borrowing costs (11,320) (10,989) 641,032 757,183Current: Bank overdrafts (Note 16) 35,254 14,400Unsecured borrowings 375,378 226,216 Bank borrowings -- 128,921Debentures and other loans 22,812 49,302 433,444 418,839Total borrowings 1,074,476 1,176,022

Debentures and other loans are secured by charges on certain of the Group’s property, plant and equipment (Note 6) as well as the cash in escrow. The terms of the debentures and other loans include certain standard covenants with which the respective subsidiaries have to comply. The bank overdrafts are unsecured.

19. Borrowings

55


2005 2004 $’000 $’000

Between 1 and 2 years 203,775 200,071Between 2 and 5 years 139,951 396,033Over 5 years 297,306 161,079 641,032 757,183

The effective interest rates at the balance sheet date were as follows:

19. Borrowings (continued)

The maturity of non-current borrowings is as follows:

2005 2004 TT$ US$ £ TT$ US$ £

Bank overdrafts 9.50% -- -- 8.75% -- --

Bank borrowings -- 7.93% -- -- 4.40% --

Unsecured borrowings 7.89% -- -- 7.68% 6.92% --

Debentures and other loans 9.50% 7.35% 3.60% 9.13% 5.46% 2.25%

The carrying amounts and fair values of the non-current borrowings are as follows:

Carrying amounts Fair values

2005 2004 2005 2004 $’000 $’000 $’000 $’000

Debentures and other loans 641,032 757,183 611,313 797,388

56


2005 2004 $’000 $’000

United States dollar 438,908 495,015

Pound sterling 19,009 22,349

Trinidad and Tobago dollar 616,559 658,658

1,074,476 1,176,022

19. Borrowings (continued)

The fair values are based on cash flows discounted using rates based on the borrowing rates prevailing at the balance sheet date,

in the respective countries where the debts exist.

The carrying amounts of short-term borrowings approximate their fair value.

The carrying amounts of the Group’s borrowings are denominated in the following currencies:

57


2005 2004 $’000 $’000

Balance at January 1st 11,744 28,628Income statement credit (Note 24) (28,812) (16,884)Disposal of subsidiary 29,106 --


The movement in deferred tax assets and liabilities during the year is as follows:

20. Deferred taxation

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.

The gross movement on the deferred income tax account is as follows:

Charged/ At (credited) At Dec-31-03 to income statement Dec-31-04 $’000 $’000 $’000

Deferred tax liabilities

Accelerated tax depreciation 53,553 283 53,836

Pension asset 6,923 (342) 6,581

Goodwill amortisation -- 11,413 11,413

Other 113 966 1,079

60,589 12,320 72,909

Deferred tax assets

Provisions (15,157) 8,266 (6,891)

Tax loss carry forwards (16,804) (37,470) (54,274)

(31,961) (29,204) (61,165)

Net deferred tax liability 28,628 (16,884) 11,744

58


20. Deferred taxation (continued)

Charged/ At (credited) Disposal At Dec-31-04 to income statement of subsidiary Dec-31-05 $’000 $’000 $’000 $’000

Deferred tax liabilities

Accelerated tax depreciation 53,836 (5,507) (21,668) 26,661

Pension asset 6,581 (623) -- 5,958

Goodwill impairment 11,413 3,531 (14,944) --

Other 1,079 (967) -- 112

72,909 (3,566) (36,612) 32,731

Deferred tax assets

Provisions (6,891) (5,014) 11,524 (381)

Tax loss carry forwards (54,274) (20,232) 54,194 (20,312)

(61,165) (25,246) 65,718 (20,693)

Net deferred tax liability 11,744 (28,812) 29,106 12,038

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit

through the future taxable profits is probable. The Group did not recognise deferred income tax assets of $10,990,742 in respect

of losses amounting to $43,962,967 that can be carried forward against future taxable income.

2005 2004 $’000 $’000

Loan from related party (i) 62,095 62,095Currency swap derivative (ii) 8,602 26,900Retirement benefits 455 536Other 7,873 2,725Deferred property rent -- 3,012Deferred compensation -- 1,083

79,025 96,351

i) The loan is unsecured, interest free and has no fixed repayment terms.

ii) A subsidiary has established a currency swap instrument in relation to a US$25.0 million bond to take advantage of exchange movements between the United States dollar and Japanese yen. The agreement is for the term of the related bond but provides for earlier withdrawal. Gains and losses are included in finance cost (note 23) and the fair value of the instrument is shown above as a currency swap derivative.

21. Other non-current liabilities

59


2005 2004 $’000 $’000

Depreciation (19,486) (45,900)Profit on disposal of property, plant and equipment 15,910 31,816Gain on sale of investments 359,829 25,386Research and development (1,943) (2,073)Repairs and maintenance (22,193) (19,286)Impairment losses (15,905) (3,368)

22. Operating profit

Included are the following:

2005 2004 $’000 $’000

Interest expense: – Debentures and other loans 73,459 73,289– Bank borrowings 4,637 5,274– Bank overdrafts 1,871 1,256– Unsecured borrowings 25,782 18,294 105,749 98,113Net foreign exchange transaction (gains)/losses (732) 193Fair value (gain)/loss on currency swap (Note 21) (17,598) 4,579Financing costs amortised 3,622 1,555Interest capitalised (Note 6) (7,127) (4,594)Interest income (57,357) (46,430)Dividend income (1,459) (840)

25,098 52,576

23. Finance costs (net)

60

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31st, 2005 (continued)

2005 2004 $’000 $’000

Current charge 9,448 3,471Deferred tax credit (Note 20) (28,812) (16,884)

(19,364) (13,413)Associates and joint ventures charge 479 441

(18,885) (12,972)The tax on the Group’s profit before tax differs from that calculated at the tax rate in Trinidad and Tobago applicable to profits of the consolidated companies as follows: Profit before taxation 352,475 39,859 Tax charge at statutory rate of 30% (2004 – 30%) 105,742 11,958Effect of different tax rates in other countries (1,180) (736)Expenses not deductible for tax purposes 8,917 14,582Income not subject to tax (143,643) (39,715)Tax losses for which no deferred income tax was recognised 10,991 --Effect of legislated future tax rate change (1,106) --Revenue based taxes 1,394 939

(18,885) (12,972)

24. Taxation

61


2005 2004

Profit attributable to equity holders of the Company ($’000) 371,346 59,126 Number of ordinary shares in issue (000’s) 205,820 205,820 Basic earnings per share ($) 1.80 0.29

Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary outstanding to assume

conversion of all dilutive potential ordinary shares. The company has one category of dilutive potential ordinary shares which

is share options granted to management and employees (Note 17). 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.

25. Earnings per share

Basic

Basic Earnings per share is calculated by dividing the net profit attributable to equity holders of the Company by the number of

ordinary shares in issue during the year. , excluding ordinary shares purchased by the Company and held as treasury shares (Note

17).

2005 2004

Number of ordinary shares in issue (000’s) 205,820 205,820Adjustment for share options (000’s) 4,685 4,685

Number of ordinary shares for diluted earnings per share (000’s) 210,505 210,505

Diluted earnings per share ($) 1.76 0.28

62


2005 2004 $’000 $’000

Wages, salaries and other benefits 232,696 219,305Social security costs 506 404 Pension costs – defined contribution plans 8,787 8,125Pension costs – defined benefit plans (Note 13) 1,008 (118) 242,997 227,716

Number of employees as at year end 352 811

26. Employee benefit expense

27. Dividend per share

The Directors at their meeting on March 24th, 2006, declared a final dividend in respect of 2005 of 7¢ per share resulting in a total

dividend of 12¢ for the year. These financial statements do not reflect this final dividend payable, which will be accounted for in

shareholders’ equity as an appropriation of retained earnings in the year ending December 31st, 2006. The total dividend declared

in respect of 2004 was 12¢.

28. Leases

The Group has non-cancellable operating leases for vehicles and office space.

2005 2004 $’000 $’000

Expense for the year 7,741 7,893 Future minimum lease payments under these leases at December 31st 2005 are as follows: Within 1 year 4,451 6,931Between 1 and 5 years 5,642 5,597

10,093 12,528

63


29. Capital commitments 2005 2004 $’000 $’000

Expenditure contracted for but not provided for in the accounts 700 26,960

30. Contingent liability

One of the subsidiaries has guaranteed a loan on behalf of one of the joint venture companies.

31. Related party transactions

The ultimate parent of the Group is CL Financial Limited (incorporated in Trinidad and Tobago).

The following transactions were carried out with related parties:

2005 2004 $’000 $’000i) Sales of goods and services

Sales of goods: – Associates and joint ventures 360 4,122 – Other related parties 8,385 6,440– Key management 445 3,814

9,190 14,376 Interest income: – Associates and joint ventures 2,522 2,221 – Other related parties 48,059 38,068 50,581 40,289

Assets sold to other related parties 37,795 43,996

ii) Purchases of goods and servicesPurchases of goods: – Associates and joint ventures 870 1,780– Other related parties 122,499 7,847 Purchases of services and interest charges: – Other related parties 40,464 35,933

163,833 45,560

iii) Key management compensation

Salaries and other short-term employee benefits 9,701 9,689

64

32. Sale of subsidiary 2005 2004 $’000 $’000

Net assets disposed of 317,662 --Gain on disposal 387,525 --

Cash flow on disposal 705,187 --


31. Related parties (continued)

2005 2004 $’000 $’000

iv) Year-end balances arising from sales/purchases of goods/services– Associates and joint ventures 21,319 4,716– Other related parties 328,454 112,638– Key management 2,755 4,074– Loan to director 2,000 2,000

354,528 123,428The loan is interest-free and is repayable within two years of the director’s separation from the company. It is secured by a first charge on property owned by the director.

Payables to related parties – Associates and joint ventures 769 719– Other related parties 2,761 2,644

3,530 3,363

65

FIVE YEAR REVIEW 2001 - 2005(expressed in thousands unless otherwise stated)

2005 2004 2003 2002 2001

Gross sales 1,490,933 1,304,202 1,350,874 1,337,534 1,302,246

Profit before taxation 352,475 39,859 58,077 73,499 98,002

Profit attributable to shareholders 371,346 59,126 63,661 58,580 63,253

Dividends 24,697 24,715 22,648 22,690 16,146

Share capital 118,558 118,558 118,558 118,558 118,558

Shares in issue (’000) 205,820 205,820 205,820 205,820 205,820

Shareholders’ equity 1,138,244 748,234 678,785 590,627 529,838

Total assets 2,477,140 2,393,164 2,354,190 2,327,376 1,845,906

Return on shareholders’ equity (%) 32.6 7.9 9.4 9.9 11.9

Return on total assets (%) 15.0 2.5 2.7 2.5 3.4

Earnings per share (¢) 180 29 31 28 31

Dividend per share (¢) 12 12 12 11 8

Dividend cover 15.0 2.4 2.6 2.5 3.9

Share price December 31st ($) 5.76 5.00 4.25 6.00 4.50

Dividend yield (%) 2.1 2.4 2.8 1.8 1.7

Price/Earnings ratio 3.2 17.2 13.7 21.1 14.7

66

MANAGEMENT PROXY CIRCULAR

Republic of Trinidad and Tobago

The Companies Act, 1995

(Section 144)

1. Name of Company:

ANGOSTURA HOLDINGS LIMITED. Company No. A-719(C).

2. Particulars of Meeting:

Twenty-fourth Annual Meeting of the Company to be held on Wednesday May 3rd, 2006 at 10.00 a.m. at the House of Angostura,

Angostura Complex, Eastern Main Road, Laventille, Trinidad.

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, 1995.

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, 1995.

6. Any Shareholder’s proposal submitted pursuant to Sections 116 (a) and 117 (2):

No statement has been received from Shareholder pursuant to Sections 116 (a) and 117 (2) of the Companies Act, 1995.

Date Name and Title Signature

March 24th, 2006 Michael E. Carballo

Secretary

Design and Layout: Paria Publishing Co. Ltd. • Photography: Angostura, CLWB and Alice Besson • Printing: Caribbean Paper & Printed Products (1993) Ltd.

annual report 2005 angostura holdings limited · annual report 2005 3. ordinary business 1. to...

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