cementing global standards - kingston wharves limited

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cementing Global standardsannual report 2017

FCii

2 Vision2 Mission3 Core Values

4 Notice of Annual General Meeting

6 KWL At A GLAnce10 2017 Performance Summary12 Ten Year Statistical Review

14 Chairman’s Message16 Board of Directors

20 Directors’ Report22 Corporate Governance

26 CEO’s Message28 Leadership Team30 Strategic Focus

32 MAnAGeMent Discussion & AnALysis

34 Financial Performance35 Divisional Report

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Cementing Global Standards

36 Transforming Into A Logistics Service Provider

40 Terminal Operations43 Outlook

44 Another Best yeArBusiness & Community Highlights 2017

48 shArehoLDinGs48 Top Ten Shareholders

48-49 Senior Managers’ & Directors’ Shareholdings

50 Corporate Data

52 FinAnciAL stAteMents55 Independent Auditor’s Report

Proxy Form

Cementing Global standards

2

KWL Annual Report - 2017 //// for more information please visit: www.kingstonwharves.com

Vision

To become The region’s leading mulTi-purpose mulTi-user porT Terminal.

Mission

To be the multi-purpose port of choice for the movement of cargo in the western hemisphere by providing consistently high quality service to the benefit of all stakeholders.

The largest post-panamax vessel to dock at KWL

3


cusTomer focus

We are deeply committed to meeting the needs of our customers, and we will constantly focus on customer satisfaction.

inTegriTy

Our actions and decisions shall reflect the highest ethical standards, professionalism and honesty.

social responsibiliTy

We play an active role in making our country and the community in which we operate a better place to live and work, knowing that the ongoing vitality of our country and community has a direct impact on the long-term success of our business.

performance

We strive for continuous improvement in our performance, measuring results carefully and ensuring that integrity and respect for people are never compromised.

Teamwork

We know that to be a successful company we must work together, frequently transcending organizational and departmental boundaries to meet the changing needs of our customers.

respecT

We will respect the dignity and rights of our employees and stakeholders.

core VALues

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NOTICE is hereby given that the Annual General Meeting of Kingston Wharves Limited will be held at the Jamaica Pegasus hotel, 85 Knutsford Boulevard, Kingston 5,st. Andrew on thursday, June 21, 2018 at 10 a.m. for the following purposes:

1. To receive the Audited Financial Statements for the year ended December 31, 2017 and the Reports of the Directors and Auditors circulated herewith:

To consider and (if thought fit) pass the following resolution:

“THAT the Audited Financial Statements for the year ended December 31, 2017 and the Reports of the Directors and Auditors circulated with the Notice convening the meeting be adopted”.

2. To declare the dividend of seventeen cents ($0.17) per share paid on August 9, 2017 and of twenty-one cents ($0.21) per share paid on January 19, 2018 as final.


“THAT as recommended by the Directors, the dividend of seventeen cents ($0.17) per share paid on August 9, 2017 and of twenty-one cents ($0.21) per share paid on January 19, 2018 be and are hereby declared as final and that no further dividend be paid in respect of the year under review.

3. Rotation of Directors

(a) The Directors retiring from office by rotation pursuant to Article 107 of the Company’s Articles of Incorporation are Messrs. Alvin Henry, Roger Hinds, Charles Johnston, and Harriat Maragh. All the retiring Directors, being eligible, offer themselves for re-election.

To consider and (if thought fit) pass the following resolutions:

(i) “THAT Mr. Alvin Henry be and is hereby re-elected a Director of the Company.”

(ii) “THAT Mr. Roger Hinds be and is hereby re-elected a Director of the Company.”

(iii) “THAT Mr. Charles Johnston be and is hereby re-elected a Director of the Company.”

(iv) “THAT Mr. Harriat Maragh be and is hereby re-elected a Director of the Company.”

notice oF AGM

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4. To appoint auditors and authorise the Directors to fix the remuneration of the Auditors.

To consider and if thought fit pass the following resolution:

“THAT PricewaterhouseCoopers, Chartered Accountants, having agreed to continue in office as auditors, be and are hereby appointed Auditors of the Company to hold office until the next Annual General Meeting at a remuneration to be fixed by the Directors of the Company.”

5. To fix the fees of the Directors or to determine the manner in which such fees are to be fixed.


“THAT the amount shown in the audited accounts of the Company for the year ended December 31, 2017 as fees of the Directors for their service as directors, be and is hereby approved.”

Dated the 19th day of April, 2018.

By Order of the Board

AnnA i. hArryCompany Secretary

REGISTERED OFFICE195 Second Street Newport West Kingston 13Kingston, Jamaica

NB: A member entitled to vote at the meeting is entitled to appoint a proxy to vote in his stead. A proxy need not be a member of the company. Enclosed is a proxy form for your convenience, which must be lodged at the office of the Registrar and Transfer Agent of the company, Jamaica Central Securities Depository Limited, 40 Harbour Street, Kingston, Jamaica, or with the Company Secretary at Total Logistics Facility, 195 Second Street, Newport West, Kingston 13, St. Andrew, Jamaica, at least forty-eight hours before the time appointed for holding the meeting. The Proxy Form shall bear the stamp of $100.00. The stamp duty may be paid by adhesive stamp (s) to be cancelled by the person executing the proxy.

KinGston WhArVes LiMiteD (KWL) is consistently recognized as the Region’s leading Multi-purpose Port Terminal Operator, connecting our nation’s importers and exporters to over 30 international ports in the Caribbean, Latin and North America.

KWL At A GLAnce

The KWL Group has experienced steady growth through prudent management and a commitment

to continuous improvement that has ensured competitiveness, since its inception in 1945.

our business

In addition to its core business

of terminal operations and

logistics services, the KWL

Group operates Security

Administrators Limited, a

provider of maritime and

industrial security services.

A listed company on The Jamaica stock

exchange

neT ASSeTS vALue

us$187 MiLLion

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we deliver The port terminal provides full-range cargo handling and

logistics services 24-hours per day, 7 days per week, including:

` MooRinG AnD unMooRinG oF veSSeLS

` STeveDoRinG

` eQuiPMenT RenTAL

` STRiPPinG AnD STuFFinG oF ConTAineRS

` SToRAGe AnD WARehouSinG

` ReConSoLiDATion oF ConTAineRS

` CARGo hAnDLinG SeRviCeS

` TRAnSShiPMenT

` ReFRiGeRATeD ConTAineR MAnAGeMenT & SuPPoRT

` ThiRD AnD FouRTh PARTY LoGiSTiCS SeRviCeS

TransshipmenT

KWL’s transshipment service has achieved exponential growth

over the last decade.

` Two of the Region’s premier shipping lines utilize KWL’s terminal as their transshipment hub, operating weekly feeder services to Caribbean and Latin American Ports.

` The regional transshipment hub for one of the world’s leading motor vehicle carriers is managed by KWL, the fi rst direct service of its kind from Europe to Jamaica.

best multi-purpose Terminal of the year awardee2006 / 2007 / 2009 / 2013 / 2015Caribbean Shipping Association

KWL is the recipient of numerous awards

and accolades for excellence:

our achievemenTs

best in chamber nominee 2011 2016Jamaica Chamber of Commerce

growth & development awardee 2016 2010Caribbean Shipping Association

most efficient port awardee 2008 2010Caribbean Shipping Association

BEST IN CHAMBERAWARDEEfor large companies 2017Jamaica Chamber of Commerce




our achievemenTs








our achievemenTs








our achievemenTs








our achievemenTs








our achievemenTs





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KWL At A GLAnce cont’D

Terminal infrasTrucTure

on-dock open sTorage: Approximately 250,000 square metres or 2,694,000 square feet

reefer plugs: 172 at 440 volts

vessel drafT 9 metres (29 feet) to 13 metres (32 feet)

off-dock sTorage: 20,000 square metres or 215,000 square feet

9 deepwaTer berThs for ro-ro, lo-lo, container, general break bulk and bulk cargoes

on-dock warehouse sTorage: 16,680 square metres or 180,000 square feet.

conTinuous quay measuring 1,655 metres (5,430 feet)

on-dock TransshipmenT car park: 48,562 square metres or 522,720 square feet

ToTal logisTics faciliTy160,000 square feet of ultra-Modern Logistics Warehouse completed in 2017

global auTo logisTics cenTre (Tinson pen) 72,840 square metres or 784,080 square feet

Strategically located on the Port of Kingston 17º58’W, 76º48’N, the Terminal operates 24 hours per day, 365 days per year.

MARCuS G

ARVEY DRIV

E

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A

C

B

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KW

L A

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co

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’D

G

H

BeRTh 1GRAin SiLoS

BeRTh 2

BeRTh 3

BeRTh 4

BeRTh 5

warehouse 5

warehouse 6BeRTh 6

BeRTh 7

BeRTh 8

how we work

Mobile harbourCranes6 Container

handler(Top loader) 2

Terberg Tug Master 4x41Terminal

Tractors 4x213

Reach Stackers18 Bomb

Carts19

Tideworks Terminal operating System

Container Chassis20

in ADDiTion To TheSe ReSouRCeS, We ARe ABLe To SouRCe ADDiTionAL ChASSiS, TRuCKS, TRAiLeRS AnD FoRKLiFTS, uPon ReQueST

The Equipment & Supporting Systems include:

SECOND STREETTHIRD STREET

FIRST STREET

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our faciliTy

A

F

2,694,000 ft2

open Storage

B

1,655 mContinuous Quay with draft of up to 13m

A

12-acreTransshipment Car Park

C

2 TowerGrain Silos

G

40,000 ft2 Kingport Warehouse Complex (opposite TLF)

D

160,000 ft2 Total Logistics Facility

E

18-acre Global Auto Logistics Centre (Tinson Pen)

F

2-acre new on-Dock Car Park

H

eiGhT Ave

BeRTh 9

2017 PerForMAnce suMMAry

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KW

L A

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GL

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co

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4232

.4

3819

.7 4672

.9

5409

.8 6369

.2

20172016201520142013

group revenue ($m)

1477

.0

1145

.3 1572

.1

1675

.3 2026

.7

20172016201520142013

operaTing profiT ($m)

8667

8581

.2

1624

7.1

2861

8.3

4648

1.5

20172016201520142013

markeT capiTalisaTion ($m)

1268

9.4 16

958.

3

1749

6.9

1854

0.2 22

981.

8

20172016201520142013

shareholders equiTy ($m)

Shareholders’ Interest

Financial

11


sTock price aT year end ($)

0.59

0.59

0.88 0.

9

1.14

20172016201520142013

earnings per share ($)

257.

4

286.

0 357.

6

486.

3 543.

5

20172016201520142013

dividends declared ($m)

2013

47,

401

17,

098

15,

207

34,

521

22,

971

36,

930

31,

230

34,

637 41,

378

46,

771

2014 2015 2016 2017

MOTOR UNIT MOVES

moTor uniT moves

Tran

sshi

pmen

t

Dom

estic

domesTic Tonnage

conTainer Teu handled

2013

204,

244

90,8

68

69,7

43 124,

550

86,7

07 134,

288

93,2

51 137,

720

95,2

47 129,

999

2014 2015 2016 2017

CONTAINER TEU'S HANDLED

Tran

sshi

pmen

t

Dom

estic

Operational

2013

1,49

1

1,34

9 1,67

9

1,69

7

1,67

9

2014 2015 2016 2017

DOMESTIC TONNAGE

(‘000)

2013 2014 2015 2016 2017

6.06 6.0011.36

20.01

32.50

STOCK PRICE AT YEAR END

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10 yeAr stAtisticAL reVieW

2017 2016 2015

No. of Stock Units @ 20 cents each (000’s) 1,430,200 1,430,200 1,430,200

Total Assets ($'000) 29,475,959 23,536,808 21,411,543

Net Current Assets ($'000) 2,922,727 2,478,345 2,281,209

Deposit & Cash Balance ($'000) 3,948,221 3,190,846 3,019,868

Capital Expenditure ($'000) 1,847,257 1,865,654 1,202,414

Total Gearing ($'000) 2,888,132 2,342,913 1,538,117

Shareholders’ Equity ($’000) 22,981,794 18,540,246 17,496,896

ProFit AnD Loss Account

Revenue ($'000) 6,369,238 5,409,801 4,672,884

% Increase/(Decrease) over prior year 17.74 15.77 22.34

Operating Profit (J$'000) 2,026,685 1,675,251 1,572,056


Finance Costs ($'000) 134,923 186,408 162,718

% Increase/(Decrease) over prior year (27.62) 14.56 (27.41)

Profit Before Income Tax ($'000) 1,891,762 1,488,843 1,409,338


Net Profit Attributable to Equity Stockholders ($'000) 1,628,538 1,293,480 1,256,397


Dividends Declared ($'000) 543,476 486,268 357,550


iMPortAnt rAtios

Return on Sales 25.57% 23.91% 26.89%

Return on Equity 7.09% 6.98% 7.18%

Current Ratio 2.68:1 2.50:1 2.68:1

Debt to Equity Ratio 12.57% 12.64% 8.79%

Profit Before Tax to Sales 29.70% 27.52% 30.16%

Dividend Cover - Times 3.00 2.66 3.51

Interest cover (inclusive of foreign exchange movement) 15.02 8.99 9.66

Total No. of Employees (Permanent and Contractual) 625 663 717

Net Profit After Income Tax per Employee ($'000) 2,605.7 1,951.0 1,752.3

MArKet stAtistics

Stock Price at year end $32.50 $20.01 $11.36

Earnings per Stock Unit $1.14 $0.90 $0.88

Price Earnings Ratio 28.51 22.23 12.91

Market Capitalisation ($'000) 46,481,500 28,618,302 16,247,072

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2014 *2013 *2012 2011 2010 2009 2008

1,430,200 1,430,200 1,430,200 1,072,650 1,072,650 1,072,650 1,072,650

21,001,026 16,716,664 16,386,680 14,369,707 12,317,049 12,160,635 12,233,560

2,606,034 2,911,375 2,844,769 800,995 912,786 896,221 836,735

2,909,435 3,159,899 3,100,658 1,076,655 1,282,678 1,120,133 1,182,095

1,252,601 579,447 52,168 638,022 111,172 141,950 390,520

1,926,748 1,998,940 2,046,359 2,390,675 2,462,422 3,007,277 3,110,254

16,958,261 12,689,393 12,136,160 9,536,247 7,908,397 7,434,373 7,289,040

3,819,691 4,232,408 3,670,177 3,168,802 3,025,883 2,570,325 2,774,922

(9.75) 15.32 15.82 4.72 17.72 (7.37) 8.02

1,145,267 1,477,042 1,075,667 640,764 921,723 693,091 717,528

(22.46) 37.31 67.87 (30.48) 32.99 (3.41) 24.48

224,151 325,746 266,330 173,465 34,442 497,056 500,043

(31.19) 22.31 53.54 403.64 (93.07) (0.60) 201.03

921,116 1,151,296 809,337 467,299 887,281 196,035 217,485

(19.99) 42.25 73.19 (47.33) 352.61 (9.86) (47.00)

842,730 839,255 550,203 337,604 602,741 145,333 160,705

0.41 52.54 62.97 (43.99) 314.73 (9.57) (52.70)

286,040 257,436 143,020 45,512 128,717 - 53,632

11.11 80.00 214.25 (64.64) 100.00 (100.00) (37.50)

22.06% 19.83% 14.99% 10.65% 19.92% 5.65% 5.79%

4.97% 6.61% 4.53% 3.54% 7.62% 1.95% 2.20%

3.39:1 3.94:1 3.63:1 1.95:1 2.02:1 2.24:1 2.12:1

11.36% 15.75% 16.86% 25.07% 31.14% 40.45% 42.67%

24.11% 27.20% 22.05% 14.75% 29.32% 7.63% 7.84%

2.95 3.26 3.85 7.42 4.68 - 3.00

5.11 4.53 4.04 3.69 26.76 1.39 1.43

738 819 756 481 458 434 347

1,141.9 1,024.7 727.8 701.9 1,316.0 334.9 795.6

$6.00 $6.06 $5.00 $5.92 $4.00 $3.08 $4.80

$0.59 $0.59 $0.41 $0.31 $0.56 $0.14 $0.15

10.17 10.27 12.20 19.10 7.14 22.00 32.00

8,581,200 8,667,012 7,151,000 6,350,088 4,290,600 3,303,762 5,148,720

I am pleased to present the Annual Report for 2017, a year in which the Kingston Wharves Group demonstrated, once again, the benefits of a strong portfolio of businesses

that have the potential to deliver attractive long-term returns. Continued pursuit of our clear and focused growth-oriented strategy has again delivered improved financial results for the Group. This year, the group benefited from the launch of KWL’s new logistics facilities for the warehousing of general cargo (the “Total Logistics Facility”), the holding of automotive cargo (the “Global Auto Logistics Centre”) and the storage of bulk cargo (the “Grain Terminal”) for the domestic and transhipment markets. We saw encouraging increases in revenue in both our terminal operations and our integrated logistics services.

Ultimately, KWL’s port-centred logistics model must continue to pull cargo to Kingston not solely as its final destination, but for redistribution and the addition of value in the form of customisation, assembly and inventory and supply chain management. This objective, together with the goal of handling a diverse range of cargo types for a diverse range of customers, has formed the basis for our ambitious investment programme.

Going into 2018, we are keenly aware that the dynamics of our industry remain highly changeable and competitive. We will continue to take a disciplined approach to driving down costs and to improving efficiency through cementing global standards in our operations and deploying capital to strengthen our unique cargo handling capabilities. In addition to our physical infrastructure and equipment – which have been the subject of considerable focus in recent years – we will turn our attention in 2018 to ensuring that we have even better information

technology, security systems, human resources and customer service. We are convinced that this focus on world class people, processes and technology will position us to generate the highest returns from our tangible assets.

We are pleased that our goal of leveraging Kingston’s potential as a logistics hub is now expressly shared by policy makers in Government. We believe that this augurs well for the necessary changes in regulation that will allow us to achieve our full potential. Put simply, as a logistics hub, we must be able to receive and process legal cargo of all types within a highly secure environment on terms that are simple, transparent and no less favourable to the user of our facility than would be the case at any other centre for the handling of similar cargo anywhere in Central America, or the Caribbean. We welcome every opportunity to work closely with our industry peers and the government to achieve this important goal.

The Board and I remain confident in KWL’s prospects for long-term growth. Our focus in the coming year is to continue to execute aggressively against our strategic priorities, which will position us for growth while at the same time using the diversity of our business lines as a source of resilience. I am grateful for the dedication of our management team and for the loyalty of our customers and on behalf of our board, I wish to thank them all for their continued support.

Jeffrey hall BA, MPP, JDChairman

Chairman’s message

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Cementing Global Standards”


Directors

Our board of directors is committed to providing guidance, strategic direction and corporate governance oversight to the management of the kingston wharves group of ensure the interests of all stakeholders.

16


Jeffrey Hall BA, MPP, JD Chairman

The Chief Executive Officer of Jamaica Producers Group Ltd. (JPG) and has been Non-Executive Chairman of the KWL Group since 2014. Mr. Hall was nominated for the Jamaica Observer Business Leader Award 2016 in recognition of his entrepreneurial excellence and for redefining the mission of his company. Other Board and Committee Association: Jamaica Producers Group, Scotia Group Jamaica Limited, Scotia Investments Jamaica Ltd, Blue Power Group Limited, National Housing Trust.

Committee: Executive (Chair)Length of Directorship - 6 Years

Grantley StephensonCD, Hon D Sc, JPChief Executive Officer

Grantley Stephenson, Chief Executive Officer of the Kingston Wharves Group and has served in the dual capacity of Executive Chairman and CEO between 2004 - 2009 and 2011 – 2013. Mr. Stephenson was conferred the Honorary Doctor of Science in Port Management by the Caribbean Maritime University in 2017. He received the 2015 ‘Manager of the Year’ Award from the Jamaica Institute of Management and was ranked the No. 1 CEO among all companies trading on the Jamaica Stock Exchange by the Businessuite Magazine in 2010. He is also a fellow of the Jamaica Institute of Management.

Other Board and Committee Association: Jamaica Producers Group, Security Administrators Limited, Shipping Association of Jamaica, Shipping Association of Jamaica Property Limited, Assessment Recoveries Limited, Ports Management and Security Limited, ADVANTUM.

Committees: AllLength of Directorship - 14 Years

Bruce Brecheisen

Bruce Brecheisen is an Executive Vice President with Seaboard Marine, a leading ocean carrier in the Caribbean and Latin America. Mr. Brecheisen is a voting member of the Board of the Port of Miami Crane Management, Inc. Other Board and Committee Association: CareerSource South Florida.

Committee: AuditLength of Directorship - 3 Years

Kim Clarke

Kim Clarke is the President of the Shipping Association of Jamaica and Managing Director of the Maritime and Transport Group of Companies. He is also the Managing Director of Boat Services Limited and Chairman of Caribbean Crewing and Manning Services Limited.

Other Board and Committee Association: R.S. Gamble Limited, Arnold L. Malabre & Company Limited, Newport Fersan Jamaica Limited, Shipping Association of Jamaica Property Limited, Jamaica Customs Advisory Board.

Committees: Executive, Compensation and Leadership Development Length of Directorship - 14 Years

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Marshall Hall CD

Dr. Marshall Hall, formerly Professor of Management at the University of the West Indies, is a Director of Jamaica Producers Group Limited. Dr. Hall is a member of the PSOJ Hall of Fame.

Other Board and Committee Association: Police Services Commission, Council – University of the West Indies.

Committee: AuditLength of Directorship - 3 Years

Alvin Henry

Alvin Henry is a Chartered Accountant and has worked in the accounting profession in both the public and private sectors. During his over thirty years in the shipping industry he has served as the General Manager of the Shipping Association of Jamaica and Executive Vice President of the Caribbean Shipping Association, and as a member of several Boards and Committees. Mr. Henry is currently a member of the Board of Management of the Meadowbrook High School, a Trustee of Kingston Wharves Limited and Security Administrators Limited pension funds.

Committees: Compensation and Leadership Development, Audit (Chair)Length of Directorship - 13 Years

Roger Hinds

Roger Hinds is the Managing Director of MSC Mediterranean Shipping Company Jamaica Limited. He is the Chairman of Transocean Shipping Limited, Transport Logistics Limited, Marine Haulage Service Limited and Port Computer Services, trading as ADVANTUM.

Other Board and Committee Association: Shipping Association of Jamaica, Shipping Association of Jamaica Property Limited, The Caribbean Maritime University.

Committees: Compensation and Leadership DevelopmentLength of Directorship - 14 Years

Charles Johnston CD

Charles Johnston is Chairman and Managing Director of Jamaica Fruit and Shipping Company Limited and its subsidiary Jamaica Freight & Shipping Company Limited. He is the Chairman of Jamaica Producers Group Limited, Seaboard Freight & Shipping Company Limited. Other Board and Committee Association: Shipping Association of Jamaica, Shipping Association of Jamaica Property Limited, Kingston Port Workers Superannuation Fund, Jamaica Public Service Company Limited, B&D Trawling Limited, Lennox Portland Limited, Kingston Logistics Centre Limited, German Ship Repair Jamaica Limited.

Committee: Executive Length of Directorship - 14 Years

Directors cont’d

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Harriat Maragh

Harriat Maragh is the Chairman and Chief Executive Officer of Lannaman & Morris Shipping Limited. He is the Chairman of Main Event Entertainment Group, Seafreight Lines Inc., Metro Investments Limited, and the Kingston Port Workers Superannuation Fund. Mr. Maragh is a member of the Institute of Chartered Shipbrokers.

Other Board and Committee Association: Shipping Association of Jamaica, Shipping Association of Jamaica Property Limited, Seafreight Agencies Inc., ADVANTUM, National Cruise Council of Jamaica, Assessment Recoveries LimitedCommittees: Audit, Executive Length of Directorship - 14 Years

Kathleen Moss BSC, MBA, CBV

Kathleen Moss is a Management Consultant and Chartered Business Valuator with Sierra Associates, an independent advisory and business valuation firm which she established. Mrs. Moss is the Chairman of JN General Insurance and the Roman Catholic Archdiocesan Finance Council. She is also a member of the Canadian Institute of Chartered Business Valuators. Other Board and Committee Association: Jamaica Producers Group Limited, Assurance Brokers Jamaica Limited, JN General Insurance Company Limited, Jamaica National Group Limited and JN Bank, Pan Jam Investment Limited, the Violence Prevention Alliance.

Committees: Audit, Compensation and Leadership Development (Chair)Length of Directorship - 6 Years

Robert Scavone

Robert Scavone provides advisory and management consulting services to a variety of clients in the international cargo transport sector. Mr. Scavone has served on various Boards, including Terminales Rio de la Plata in Buenos Aires, Halterm Limited in Halifax, Fraser Surrey Docks near Vancouver and Trans-Siberian Express Railway and Vostochny International Container Terminals in Russia. He has also been a board member for several U.S. companies, including Port of Miami Terminal Operating Company, Port Newark Container Terminal, Delaware River Stevedores (Philadelphia), and CP&O (Norfolk).


Dorian Valdes

Dorian Valdes is an Executive Vice President with The Sarandrea Associates Group Corporation (SAGC), an A/E firm providing leading engineering, program management, construction management for private business and government agencies.


19

cementing Global standards

Directors’ rePort

The Directors are pleased to submit the Group results for Kingston Wharves Limited for the year 2017. operating results:- The Profit for the Group before income tax was $1,891,762,000.00.- The Profit for the Group after Tax and Minority Interest was $1,628,538,000.

Dividends:The Directors recommend that the following dividends declared during 2017 be declared as final:- Seventeen cents ($0.17) per share paid on August 9, 2017- Twenty-One cents ($0.21) per share paid on January 19, 2018 Messrs. PricewaterhouseCoopers, the present auditors will continue pursuant to Section 154 of the Companies Act.

The Directors wish to express their sincere appreciation to the management and employees for their contribution.

On behalf of the BoardApril 19, 2018

AnnA i. hARRYCompany Secretary

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In 2017, the Kingston Wharves Group continued its focus on conforming to international governance standards. Using new measurement tools which have recently been implemented by the Jamaica Stock Exchange (JSE), the Group directed its focus to improving the frequency and quality of its disclosures via communication with the JSE and publication of material on the website www.kingstonwharves.com, as well as ensuring consistency between day-to-day operational activities and the principles espoused in our Corporate Governance Policy and the Terms of Reference for the Board and its Committees, which are available on the website.

The decision was also taken to publish the following information and documents via the website to foster public accountability:

1. Profiles of our Directors and Senior Managers;2. Minutes of the Annual General Meeting held in the previous year; and3. A summary of the Group’s Related Party and Conflict of Interest Policy, Code of Conduct and

Confidentiality Policy, Risk Assessment Policy, Employee Welfare Policy, Safety, Health and Environment Policy, and Communications Policy.

BoArD coMPosition AnD Director sKiLLs AnD eXPerience There were no changes to the composition of the Board of Directors in 2017. The Directors continued to exercise a high level of prudence and independent judgment in conducting the business of the Group, and aimed at all times to act in the best interest of the Group, while balancing competing interests of stakeholders, including by relying on the expertise and guidance of the Company’s senior management, external professional advisors and auditors. In doing so, the Directors brought to bear their experience in the following areas:

01. Asset Procurement;02. Law;03. Business Management and Administration;04. Engineering;05. Finance/Economics/Accounting;06. Industrial Relations;07. Risk Management and Strategic Planning;08. Ship Management, Ship Operations and Ship Agency;09. Stevedoring, Transportation and Logistics; and10. Terminal Operations.

22


Corporate GovernanCe

AttenDAnce At BoArD MeetinGsThere were six (6) scheduled meetings and two (2) special meetings of the full Board during 2017.

Regularly Scheduled Board Meetings

DirectorsAttendance at

Meetings

Jeffrey Hall, Chairman 6/6

Bruce Brecheisen 6/6

Kim Clarke 5/6

Dr. Marshall Hall 6/6

Alvin Henry 6/6

Roger Hinds 6/6

Charles Johnston 5/6

Harriat Maragh 6/6

Kathleen Moss 5/6

Robert Scavone 5/6

Grantley Stephenson 6/6

Dorian Valdes 5/6

Special Board Meetings

DirectorsAttendance at

Meetings



Kim Clarke 1/2


Alvin Henry 2/2

Roger Hinds 2/2


Harriat Maragh 1/2

Kathleen Moss 1/2

Robert Scavone 1/2


Dorian Valdes 1/2

In addition to their attendance at and participation in Board meetings, all but 1 of the Directors were present at the Annual General Meeting held on June 22, 2017.

coMMitteesThe Board of Directors continues to receive support from the Executive, Audit, and Compensation and Leadership Development Committees, all of which meet on a quarterly basis and report to the Board after each meeting to guide the Board’s review and decision-making processes.

eXecutiVe coMMitteeAs set out in the Terms of Reference, the Executive Committee is empowered to act on behalf of the Board during on-demand activities that occur between Board meetings and that are later presented for full Board review. The mandate of the Executive Committee includes oversight of the Group’s overall business and commercial strategy and performance, annual operating budget and financial plans necessary to achieve these objectives, including ensuring that any required corrective action is taken.

Committee MembersAttendance at

Meetings


Kim Clarke 3/4


Harriat Maragh 4/4

Robert Scavone 3/4


Dorian Valdes 4/4

AuDit coMMitteeThe Audit Committee facilitates the external and internal audit of the Company in order for the Board to obtain independent information about the Company’s activities. In order to perform the role defined in the Company’s Corporate Governance Policy, the Audit Committee’s specific responsibilities include:

1. overseeing the financial reporting and disclosure process, and monitoring the choice of accounting policies and principles;

2. reviewing the audit plans and reports of the external auditors and internal auditors, and considering the effectiveness of the actions taken by management on the auditors’ recommendations;

3. conducting periodic internal checks on key processes to ensure compliance with the established procedures, and reporting to the Board on the findings and recommendations for improvements; and

4. analysing and addressing the risks that are associated with the key processes.

23


Throughout the year, the Audit Committee executed the following activities:

a. oversight of documentation of internal policies;b. oversight of enterprise risk assessment exercises; andc. oversight of remedial intervention in response to adverse

Internal Audit findings.


Meetings

Alvin Henry , Chairman 4/4



Harriat Maragh 4/4

Kathleen Moss 4/4


coMPensAtion AnD LeADershiPDeVeLoPMent coMMitteeUnder the Company’s Corporate Governance Policy, the CLD Committee is charged with constantly reviewing the composition of the Board and succession to it, as well as reviewing the remuneration policies for Executive Directors and Senior Officers of KW as well as material employee benefits and compensation plans and programmes. The Committee Terms of Reference define the following as the CLD Committee’s specific responsibilities:

24


Corporate GovernanCe ConT’D

Directors’ continuinG eDucAtionOur Directors continue to receive year-round education and training regarding the Group and legal or regulatory and other changes impacting operations.

1. managing the recruitment of new directors under the supervision of the Board (in its Corporate Governance oversight capacity);

2. overseeing the drafting and/or revision of personnel policies;

3. reviewing job descriptions of the Company’s Executives; 4. establishing a salary structure for the Company’s

Executives and reviewing expenditure on staff salaries; 5. reviewing the benefits package including the Company’s

incentive scheme; and 6. establishing and reviewing the Company’s Human

Resource Metrics and annual performance targets.


Meetings

Kathleen Moss, Chairman 4/4

Kim Clarke 3/4

Alvin Henry 4/4

Roger Hinds 4/4

Grantley Stephenson 4/4 BoArD eVALuAtionIn December 2017, the Directors assessed the performance of the Board in relation to oversight of the Group’s performance against its strategic objectives, management and risk assessment processes. The results of the exercise indicate that the Board is comfortable with the alignment of its strategy with the Company’s objectives, and with the Board’s management of the Company’s progress in meeting those objectives. The action plan emanating from the evaluation exercise includes measures aimed at improving governance in addition to further training on conflicts of interest particularly in light of recent changes to the Companies Act.

25


Success in any business can be the difference between choosing the right opportunities that optimize the achievement of strategic priorities and

saying no to those that do not. Our financial results, and the opening of our purpose-built terminal and logistics facilities during the year, confirm our selection of the right opportunities that delivered #winning results that we can be very proud of in 2017.

The Kingston Wharves Group delivered a robust performance in 2017. Net profits for the Group were $1.6 billion, representing a 25% increase over 2016. The Group also achieved an 18% increase in revenue, representing a J$1 billion increase over the prior year. I am especially pleased to share with you that we experienced growth in both our terminal and logistics lines of business. Terminal Operations accounted for revenue of J$5.1 billion, an increase of 22% and Logistics & Ancillary Services accounted for revenue of J$1.5 billion, an increase of 18%.

A significant milestone for KWL and Jamaica’s Logistics Journey was the completion and opening of our purpose-built facilities, important achievements in our strategic vision penned over 10 years ago. In 2017 we completed the construction of our Total Logistics Facility (TLF), a game-changing 160,000 square foot intelligently designed warehouse housing facility. The Facility emboldens KWL’s entry into supply chain management, light manufacturing, order fulfilment and other new value-added services. In addition to relocating our current on-dock warehouses, the Facility is a one-stop logistics and warehousing solution that integrates KW customer service support and customs

processing. It is intended to be a 24-hour operation, and is expected to drive upwards the volume of cargo in and out of our port, to provide new revenue streams and to create much needed jobs. The completion and commissioning of our domestic facility at the Global Auto Logistics Centre (GALC), on 18 acres at Tinson Pen Near-Port Development, increased our physical footprint within the immediate environs of the Newport West area. It offers services to the local motor vehicle industry with expansion plans for regional distribution. The TLF and the GALC have critically raised the bar for service delivery and enhanced the competitive scorecard of the complimentary terminal and logistics business lines. These facilities stand as testament to the rewards that come with the discipline of staying focused on our strategic priorities. They will also raise Jamaica’s profile as a logistics destination, particularly with successful execution of some of the partnerships being negotiated with major distribution chains in the automotive and pharmaceutical industries. In pursuit of our growth agenda, and, with the understanding that continued diversification of our revenue stream is a critical driver of this important objective, the grain silos at Berth 1 were completed in 2017. They also signal to potential customers the multi-purpose nature of KWL’s terminal operations.

KWL delivered another year of improved operating performance through strategic focus on excellence in operational execution. Several key wins were realized in operations including human capital development and improvement in the container vessel productivity and truck turn time.

ceo’s MessAGe

26


Best-in-class practices have been adopted and implemented by key members of the operations leadership team who participated in exchange and training programmes in France, Panama and the United States of America. These experiences have positively impacted KWL’s operational performance through improved efficiency and productivity and enhanced service delivery to all our customers, particularly shipping lines.

The container vessel productivity showed improvement for two consecutive years; in 2017, a 10% increase was recorded over the prior year’s performance. Gate turn time showed marginal improvements over the prior year. These improvements in container vessel productivity and truck turn time indicate that we are moving in the right direction, especially as we strive to achieve and maintain global standards. The implementation of initiatives geared toward bridging the gap between KWL’s current performance and comparable global standards will be intensified in 2018. We have set our sight on Cementing Global Standards that Drive Growth & Profitability. This will make the Group an outstanding enterprise in which to work and with which to do business. Greater emphasis will be placed on building High Performing Work Teams, especially in improving our leadership capacity in 2018. Work will continue on the review and implementation of new work processes and procedural documentation. The technology systems used by the Terminal and key port stakeholders such as the Port Authority of Jamaica (PAJ) and the Jamaica Customs Agency (JCA) will be incorporated in our operational improvement efforts.

On behalf of the Board and our Shareholders, I would like to thank our Management Team and all our colleagues for their contributions to KWL delivering impressive financial results and receiving the Chamber of Commerce Best in class, in 2017. I especially want to thank KWL’s employees. Thanks to them, this was another successful year for the Group. I would also like to say a special thank you to our customers for their contribution to our proud achievement in 2017. It is their collective power that makes KWL a strong force in Jamaica and the Caribbean. Kingston Wharves Group’s strong financial performance in 2017 puts us in a good position but the work must continue towards an even greater vision for KWL and Jamaica. We will be a beacon of stability and confidence, no matter what. Perhaps this is even more relevant in the context of the uncertainty we see today, whether from geopolitical or other risks.

Grantley stephenson C.D., J.P.Chief exeCutive OffiCer

27


LeADershiP teAM

Our Management Team of tenured and respected industry professionals bring significant experience and expertise in shipping and logistics, finance, engineering, human resources, information technology and other specialist areas. The team continues to steer the KWL Group through a transformational period in global shipping, logistics and allied services to deliver growth.

28


grantley stephenson C.D., J.P.Chief Executive Officer //// KWL

LenGTh oF TenuRe: 14 YeARS

mark williamsChief Operating Officer //// KWL


clover moodieGroup Chief Financial Officer //// KWL


anna harry Corporate Secretary and Legal Counsel //// KWL


valrie campbell Terminal Manager //// KWL


lorna dwyer Human Resources & Administration Manager //// KWL


Jodenia fergueson- bryan Internal Audit Manager //// KWL


lancelot green Information Technology Specialist //// KWL


captain george reynolds OD, JPManaging Director //// SAL


2 Tower Grain Silos completed in 2017


29

30


` Expand the range of cargo types offered to clients

` Provide integrated logistics services to the region’s major importers and exporters

` Expand the range of ports that receive a direct call from the network of shipping lines that use Kingston Wharves

` A high-performance workforce passionate and enthusiastic about their work and take positive action to further KWL’s reputation and interests.

` To strengthen the unique capabilities of staff and the Company

` To Build a High Level of Trust and Respect To Build a Sense of Pride within the Organization

leadership and Team members

enGAGe

01

strAteGic Focus

clienTs

31


` High growth trajectory with clear, stretching yet realistic goals resulting in value Creation for All KWL Stakeholders

` The best terminal operations and logistics workforce in the Region driven by a culture of Accountability, Commitment and Excellence (ACE) and powered by transformational leadership

` In an operationally efficient, productive, performance-driven and technology enabled work environment

` Through Mastery of and cross-functional competencies in logistics skill sets. Building competencies in leading and managing in a dynamic and evolving space

` World Class Service Everyday… All Day, enabled by customer-driven service standards benchmarked against world-class standards.

eXecute

DeLiVer GroWth02

03

ceMentinG GLoBAL

stAnDArDs

32


MAnAGeMent Discussion & AnALysis 2017

Preface

The Management of Kingston Wharves Limited (KWL) is responsible for the reliability of the information disclosed in the Management and Discussion Analysis (MD&A). The MD&A provides an overview of the operational and financial performance of the Group and its divisions which is consistent with previous disclosures made by the Group and its audited financial statements for the Financial Year 2017. This MD&A sets out forward-looking statements based on our strategic plans and expectations subject to risks that our actual performance will differ materially.

Busiest Day on Port in 2017

33


Our industry is faced with strong rivalry among existing competitors, the continuing threat of new entrants, potential

for global substitutes, and the presence of powerful customers and suppliers. Dealing with these forces is a continuing challenge for the KWL Group. It requires keen awareness of port-user requirements, knowing their constraints in the global market, and having a strategy for making the port a partner in business development. We are acutely aware of and accept these challenges. We deliver results results for which we are proud even in the face of these challenges..

fINaNcIaL PerfOrMaNce

the GrouPOur 2017 results demonstrate both the strength and the potential of the KWL Group. Net profits for the Group for 2017 were $1.6 billion, an increase of 25% over 2016/J$1.3 billion.

The Group generated revenues of J$ 6.4 billion representing an increase of 18% over 2016/J$5.4 billion. Terminal Operations accounted for J$5.1 billion, an increase of 22% and Logistics & Ancillary Services accounted for J$1.5 billion, an increase of 18%.

For the 5-year period 2013 – 2017 the stock price increased from J$6.06 to J$32.50, an

increase of 436%. This significant increase in the value of the share price reflects the strength and performance of the Group and the value delivered to shareholders.

MAnAGeMent Discussion& AnALysis (MD&A)

a ‘gaTeway’ for logisTics

Best Terminal operations in the Region

2013 2014 2015 2016 2017

6.06 6.0011.36

20.01

32.50

STOCK PRICE AT YEAR END

34


DIVISIONaL rePOrT

LOGISTICS & ANCILLARY

23%

TERMINAL OPERATIONS

77%

Terminal Operations contributed 77% and Logistics & Ancillary Services accounted for 23% of the revenue earned for 2017. Increases of 34% in motor units, 5% in bulk and breakbulk cargo and 17% in Logistics & Ancillary Services were the main drivers for the growth in revenue over 2016.

terMinAL oPerAtions KWL’s terminal operations division, saw operating revenue of $5.1 billion, an increase of J$926 million or 22% increase year-on-year. A 34%/22,282 increase in motor units moved was the main contributor to the increase with only a marginal difference between domestic and transhipment units moved. Domestic Motor Units moved increased by 32%/10,148 and Transshipment Motor Units moved increased by 35%/12,134 over 2016. In spite of the continued growth in domestic motor units between 2014-2017, transshipment continues to be higher than domestic in both motor units and containers handled. In fact, after a decline in 2014 – 2016, Transshipment Motor Units moved is almost at the level it was in 2013.

2013 4

7,40

1 1

7,09

8

15,

207

34,

521

22,

971

36,

930

31,

230

34,

637 41,

378

46,

771

2014 2015 2016 2017

MOTOR UNIT MOVES

TransshipmentDomestic

2013

204,

244

90,8

68

69,7

43 124,

550

86,7

07 134,

288

93,2

51 137,

720

95,2

47 129,

999

2014 2015 2016 2017

CONTAINER TEU'S HANDLED

Container TEUs Handled remained relatively flat: Domestic Container TEUs increased by only 2%/1,996- while Transshipment Container TEUs decreased by 6%/-7,721 over 2016.

35


LoGistics AnD AnciLLAry serVicesThe logistics and ancillary services division, including services ranging from warehousing to third and fourth party logistics services, cold storage and maritine security operations, generated revenues of $1.5 billion, a 18% or $234 million increase over 2016.

The engagement of a global telecommunications equipment manufacturer gave a big boost to our logistics operations in 2017. The company is executing a major capital project in Jamaica and the Caribbean. The Jamaican component, the hub for regional distribution, is significant to the overall execution of the project. KWL manages over 40,000 square feet of the company’s inventory to support third and fourth party logistics for the project. Going forward, KWL has positioned itself as an important partner for the next phase of the telecommunications operations for the client by solidifying a longer term service engagement to provide integrated logistics services for their expanded and redundancy operations in Jamaica.

One major initiative for 2018 will be the continued development of our near-port facility at Tinson Pen for automotive logistics services. We will work with existing clients, locally and internationally, to deepen their relationship with us through increased use of our warehousing and distribution facilities. We also have the objective of increasing the number of clients who


use our 3PL services for inventory management, storage and distribution. Plans are already underway for the on-boarding of 2 major automotive dealers.

TraNSfOrMING INTO a LOGISTIcS SerVIce PrOVIDer

In 2017, KWL continued its strategic investment in where we work; in expanding physical infrastructure and in improving maintenance to support our operational efficiency strategy. In addition to

completing the construction of the game-changing 160,000 square foot Total Logistics Facility (TLF), we increased our physical footprint within the immediate environs of the Newport West area through the lease of 18 acres at Tinson Pen Near-Port Development.

CBI#4: Maximize benefits of KWL’s Free Zone Status and Become the Best Terminal for integrated Logistics in the Caribbean

ConT’D

36


totAL LoGistics FAciLity (tLF)The TLF, an intelligently designed warehouse space, is a one-stop logistics and warehousing facility which houses KWL’s administrative offices and customer service support as well as Customs manifest, inspection and processing. The Facility, officially opened by the Honorable Andrew Holness, Prime Minister of Jamaica, is hailed as a significant step towards the vision of a regional ‘gateway’ for logistics; KWL it is currently a regional hub for Seaboard.

Its completion is a significant milestone for KWL’s logistics journey, an important achievement in our strategic vision penned over 10 years ago. Multiple benefits are expected from this Facility including

increasing the volume of cargo in and out of our port, providing an entirely new revenue stream, and creating much needed jobs. It should also raise Jamaica’s profile as a logistics destination, particularly if some of the partnerships being negotiated with major distribution chains in the automotive and pharmaceutical industries are successfully executed.

It is envisioned that the Facility will transition into a 24-hour operation and will embolden KWL’s entry into supply chain management, light manufacturing, order fulfilment and other new value-added services. The investment viewed as an important indicator initiative of government support of the private sector for positive confluence.

#WINNING MOMeNTS from the Official Opening ceremony

37



GLoBAL Auto LoGistics centreKWL is a niche provider of service to the global automobile trade. We are the regional hub for auto transshipment for Höegh Autoliners, a leading provider of roll-on, roll-off vehicle transportation with a global network reaching

all continents. In 2017, we handled approximately 88,000 motor unit moves; 46,771 were for transhipment. We have configured our operations to allow for seamless expansion of our capacity in this area.

The completion and commissioning of a near-port automotive centre, the Global Logistics Centre at Tinson Pen, will benefit both terminal

operations and integrated logistics. The Centre will further expand our capacity to serve our domestic and regional clients.

The Centre offers services to the local motor vehicle industry through the facilitation of domestic motor vehicle imports which have increased by approximately 36% since 2015. There are expansion plans for regional distribution.

“A one stop centre which offers opportunities for global logistics (warehousing of parts, tires and other motor vehicle accessories) as well as the efficient storage and delivery of services to the domestic market.”

• A new motor vehicle logistics centre

• 18-arce development inside the proposed Special economic Zone of the Tinson Pen near Port Logistics Centre

• Better service to domestic clients by improving vehicle stock management and pre-delivery operations

• Full service centre including Ja. Customs

global auTo logisTics cenTre

ConT’D

CBI#3: Diversify and expand Revenue Source to improve profitability | Regional Leadership in Autos | Domestic Leadership in Autos | Construction Materials | Basic Food

38


39


TerMINaL OPeraTIONS

oPerAtionAL eXceLLence: PeoPLe, Process AnD ProDuctiVity In 2017, we continued our efforts toward process re-engineering and operational excellence. Several key wins were realized in Terminal Operations during the year. Primary among these were human capital development and improvement in the container vessel productivity and truck turn time.

As a fundamental pillar of the Company’s strategy, the development of human capital was again at the forefront of the objectives of Terminal Operations.The competency-based human capital development initiatives geared toward equipping the workforce with the skills required to drive operational efficiency and support the company’s strategic goals continued in 2017 and saw the addition of several key personnel in management, supervisory and technical roles.

Key members of the operations leadership team participated in exchange and training programmes in France, Panama and the United States of America. Through these experiences, best-in-class practices have been adopted and implemented which have had positive impact on KWL’s operational performance by improving efficiency and productivity and enhancing service delivery to customers. Combined, these initiatives are providing the framework for KWL to achieve and consistently maintain global performance standards.

Improvements in container vessel productivity and truck turn time indicate that we are moving in the right direction, especially as we strive to achieve and maintain global standards.


Operational Excellence: Key Wins in 2017• Increased Terminal Capacity - 18 Acres added at

Tinson Pen

• Resurfaced Berth 8 Container Yard

• Boosted equipment fleet: 4 Bomb Carts and 10 chassis added. 2 Reach Stackers and 4 Trucks were ordered for delivery in 2018.

• Taylor Master Certification achieved by Two team members - two of first five internationally (outside of USA) to achieve this designation; Four (4) new Crane Trainees completed training in 2017

In 2018, the implementation of initiatives geared toward bridging the gap between KWL’s current performance and comparable global standards will be intensified. Several key operational initiatives which are currently in train will be continued and other initiatives will be implemented. Key among these initiatives are the increase in terminal capacity enabled by the addition of the Global Auto Logistics Centre at Tinson Pen, and the removal of the warehouse and logistics operations from the main terminal. In addition to increasing storage capacity for containerized and break-bulk cargo, these changes have cleared the way for full implementation of an improved yard layout and traffic flow system which commenced in 2017. These changes will see the full compartmentalizational of the terminal yard by cargo type and operation activity and the reduction of stacking height and density.

Work will continue on the review and implementation of new work processes and procedural documentation which will, among other things, further incorporate the various technology systems which are used by the Terminal and key port stakeholders such as the Port Authority of Jamaica (PAJ) and the Jamaica Customs Agency (JCA). When full implementation and integration is achieved, primarily with the Port Community System (PCS), the Terminal operational interfaces with customers will be fully automated.

As a part of the service enhancement strategy to improve the clearance of domestic cargo, KWL will be introducing an appointment system for the

ConT’D

40


clearance of domestic cargo from the Terminal. The full implementation of the PCS will further enhance this process. The importing public will benefit from significant reduction in the processing time for the clearance of cargo from the Terminal.

oPerAtionAL eXceLLence: LooKinG AheAD to 2018

increased use of Technology and process auTomaTion

Implementation of the Motor Vehicle Management System (MVMS)

Full implementation of Import Module of the Port Community System

Installation of Wireless Infrastructure in the container yard and the upgrade of handheld computers and MDUs

Modification of computerized maintenance management system to improve cost tracking and analysis of maintenance issues

process developmenT

and enhancemenTs

Development and implementation of new SOPs for Terminal Operations

Introduction of an appointment system for the clearance of motor units and domestic FCL containers.

Centralization of domestic motor vehicle operation to the Global Auto Logistics Centre.

A stronG sAFety cuLture: security systeMs, GLoBAL stAnDArDs AnD seLF-MonitorinGPlanned enhancement of electronic security systems, progressed in 2017 with development of a platform for an integrated electronic security management system. This was rolled out during the launch of the Total Logistics Facility and Global Auto Logistics Centre.

A specialist safety management consultancy firm was engaged to review the handling of International Maritime Dangerous Goods [IMDG] cargo. Based on assessments conducted by the team, recommendations encompassing policy, staff training, cargo segregation and response during an incident have been made to enhance KWL’s management of IMDG cargo to international best-class standards. These will be reviewed and actioned starting in 2018.

In accordance with KWL’s commitment to a strong safety culture, safety orientation and assessment were conducted for of staff, including new employees, as we continued our focus on improving safety awareness and responsibility, and reducing accidents. The “Safety Monitor Program” was revised and relaunched to ensure desired effectiveness.

During 2018 we will continue to work assiduously to improve our health and safety performance in accordance with guidance and standards recommended by the International Labour Organization or required by applicable local law. As KWL continues its growth thrust and cements its

41


path to sustainable development; safety will continue to be prioritized and we will endeavour to apply an analytical, strategic and collaborative approach to security, safety, health and environment management.

A MArKet-LeADinG terMinAL & LoGistics WorKForce: trAin, certiFy AnD retAin Kingston Wharves Limited is operating in a changing landscape and within this framework effective human resource management processes are critical in attaining high morale, commitment, trust, high

productivity and a willingness to embrace change.

In 2017, we continued to align our strategic focus on human capital development. Two members of the maintenance team achieved the coveted Taylor Master Certified Service Technician

designation. The coveted Taylor Master Certified Service Technician designation achieved by two members of the maintenance team consists of three (3) levels of training and assessment that includes a basic Taylor model with TICS (Taylor Integrated Control System), an Advanced Hydraulics, and an Advanced TICS.

Special emphasis was placed on establishing a safety culture which is an on-going process. Both internal and external certification programs were implemented through the port development agreement with HEART/NTA and partnership with CMU, to improve skill levels in docking, stevedoring and equipment Operations. Additionally, we delivered training on operational processes which we consider to be crucial in delivering our business objectives. Employees were exposed to how the activities involved in the processes ensure a smooth workflow, the safety parameters and the importance of adhering to these processes at all times.

Focus was also firmly placed on institutionalizing and maintaining a system which encourages safe, productive and positive work practices. The organization places high priority on safety and has dedicated organizational resources, to bring about the needed changes in employee attitude and behaviour.

In 2018, greater emphasis will be placed on Building high Performing Work teams with a focus on employee retention and productivity; improved leadership capacity; staff learning and development; and performance and career management. A comprehensive approach to personal and professional development is necessary so that the organization can create the career opportunities and reward structures that contribute to ongoing job satisfaction and retention. The use of people analytics to better understand, improve and optimize the people side of the business will be used to strengthen KWL’s position in the global marketplace.


CBI#6: Develop and Retain the Market Leading Terminal Management Workforce in Jamaica

Stevedoring Level 1

28Stevedoring

Level 3

8

CMu Mooring

14CMu

Docking Master

10

Stacker operations

10

Crane operations

4We boast

successful completion

in these programmes

ConT’D

42


The issue of work-life balance has become a high priority that will be addressed in 2018 as the Company recognizes that work-life conflict has negative implications on family life and that employee welfare affects the “bottom line” of the business.

OUTLOOK

An enabling business environment and development readiness are precursors to embarking and continuing on the long and arduous journey of development into a logistics-centred economy. There are also other imperatives which have long been the subject of discussions that must be swiftly implemented. We must move forward with the implementation of the Port Community System, and modernize our Customs legislation. Like several other players with vested interest and investment in Jamaica’s logistics industry, KWL will continue to pursue its development goals in anticipation of the implementation of requisite enabling and facilitatory framework.

Ports face high capital costs to innovate and find cheaper means of providing the same or better service. KWL has responded to the demand by reducing consumption of energy and identifying cheaper sources. We also have active plans to include the

use of renewable energy and eco-friendly building technologies on future development projects. High on our cost reduction/cost containment agenda is systematically reducing costs across the board, but specifically, reducing the use of paper and lowering communication costs through the use of technology. We have started and will continue automating processes.

Our strategic theme in 2018, cementing Global standards that Drive Growth & Profitability” continues our focus on growth. This theme will help to reinforce discipline in our adherence to global standards in order to enhance efficiency and productivity, thereby positioning us even more competitively in the local, regional and global marketplaces.

43


Another Best yeAr

01 besT in class - KWL received another vote of confidence copping the Jamaica Chamber of Commerce’s Best of Chamber Award for Large Companies. Grantley

Stephenson, CEO receives award with other members of the KWL leadership team. 02 03 04 invesTor Tour - KWL welcomed the touring party which included

representatives of the International Finance Cooperation, Export Development Canada, Caribbean Development Bank, Inter-American Investment Cooperation, Portland Private

Equity and Portland JSX. The investors were briefed on the work Kingston Wharves has been doing in the field of logistics and the modernisation of the port facilities to capitalize

on the expansion of the Panama Canal and the advantage provided by Jamaica’s location. 05 m/v hoegh Trigger - KWL welcomed the M/V Hoegh Trigger, a post-Panamax

vessel ranked among the world’s largest Pure Car and Truck Carrier (PCTC). 06 dr. (h.c.) granTley sTephenson - The Caribbean Maritime University, at its first

01

02 03 04

2017 is aptly summed up as Another Best year for the Group. Achievements in 2016, including the best Caribbean port award, the commissioning of the Caribbean’s largest crane and the servicing of the largest container ship, set the bar much higher for 2017. We were able to, through the commitment of our employees, the continued patronage of our clients and key partnership with our stakeholders. These are some of the highlights from 2017:

44


06

08

10 11

09

12

07

05

Graduation Ceremony as a University, conferred the Honorary Doctor of Science in Port Management on Grantley Stephenson, Chief Executive Officer of KWL.

07 Six KWL Managers, amongst a cohort of nine Caribbean port executives, successfully accredited as Certified Port Executives. 08 bromma Training - KWL partnered

with the Caribbean Shipping Association (CSA) and Bromma, the world leader in ship-to-shore crane spreaders, to provide high-quality Mobile Harbor Crane Spreader Training

for employees and other members of the regional shipping community. 09 mulTi-purpose is our name - RFA Mounts Bay, a British naval auxiliary landing ship docked

at KWL Berth 2. 10 11 kwl faciliTaTes dr andrew wheaTley (left), Minister of Science, Technology, Energy and Mining, and executives of the Petroleum Corporation

of Jamaica, boarding the Harrier Explorer seismic vessel during a tour of the oil and gas exploration ship at Kingston Wharves. 12 Party Chief for Harrier Explorer David Healy

(left) Minister of Science, Energy and Technology Andrew Wheatley (right)

45


10

13

16

17

11

14

18

12

15

10 11 12 kwl commissions The global logisTics cenTre at Tinson Pen adding to its growing investment in providing logistics services. 13 14 full

uTilisaTion - Busiest Day on Port! In a rare berthing operation, KWL executed simultaneous operations at most of its berths in one shift. Pictured are Car Carrier Hoegh

Viking Conquest and Seaboard Conti Elektra being discharged and loaded simultaneously at Berths 8 and 9. 15 The ToTal logisTics faciliTy welcomes iTs firsT

cusTomers Lannaman & Morris and Pas Cargo Jamaica during pilot operations. Grantley Stephenson thanks company heads, Harry Maragh and Leslie Baugh, respectively.

16 17 safe harbour - Kingston Wharves experienced another very busy day, not for traditional Christmas cargo, but for the number of cruise passengers arriving on the

two largest cruise vessels to call on the Port. Both the Pullmantur Cruises Monarch of the Seas and Mein Schiff 6, a cruise ship owned by TUI Cruises, were serviced at the Port

Another Best yeAr

46


19

23

26

20

22

24

21

25

27

in the same day, at the same berth. 18 growing logisTics - KWL hosts facility tour for executives of its logistics client and internaltioin oil company – Total. Mark Williams,

Chief Opening Officer, leads KWL team in hosting David Ducognon, Total Country Head. 19 20 21 employee engagemenT programme - ACE Hearts and Minds,

debuted in 2017 with a series of competitions amongst the Chairman named teams which culminated into a company sports day. Sports day Champion, Hall house celebrates

the inaugural win while other teams Stephenson, Alexander and Diaz join in photos. csr /// 22 children of union gardens Infant School perform at the Tinson pen

opening. 23 24 kingsTon wharves is proud of The work ThaT is done by The missionaries of The poor firstly in bringing wholesome family entertainment

to the stage that embodies high production values seen in many highly developed theatre productions. Secondly, and very importantly, Father Ho Lung and his team over the years

have been delivering care to members of our society who are often neglected and outcast. It is for this reason that the we renewed our commitment to the production. Clover

Moodie, KWL Group Chief Financial Officer, joins Father Ho Lung and the Missionaries of the Poor at the launch of the 2017 production of Queen Esther.

25 26 from launch To finals, The 28Th kingsTon wharves u-15 crickeT compeTiTion continues to achieve its main objective of helping to identify young

talented cricketers who can be prepared for national duty. At the launch a young cricketer shows KWL CEO, Grantley Stephenson and Cricket President, Billy Heaven how to spin

bowl. Four weeks later, Manchester team celebrates winning the championship. Sharing the happy moment are the CEO, and Andre Pariman (right), Deputy Chairman of associate

sponsor, NCB Foundation. 27 kwl employees show Their supporT as they join corporate Jamaica in the goal to raise $60 million in the 19th staging of the Sagicor

Sigma Corporate Run in 2017. The beneficiaries were abandoned children and babies in the Bethlehem Home operated by Missionaries of the Poor, the Paediatric Units of the

Spanish Town and Mandeville Hospitals.

cSrWe believe in the mantra of being good in our neighbourhood with 2017 being no exception. Amongst the projects supported were our longstanding support of the under-15 Cricket Competition, Father ho Long &Friends and the union Gardens infant School.

47


48


shArehoLDinGs

Top Ten Shareholders as at December 31, 2017

names shareholding % oF cAPitAL

Jamaica Producers Group Ltd 600,736,635 42.00

S.B.D. LLC 300,689,810 21.02

The Shipping Association of Jamaica Property Limited 151,933,715 10.62

Kingston Portworkers Superannuation Fund 151,405,130 10.59

Maritime & Transport Services Ltd 71,695,305 5.01

Lannaman & Morris (Shipping) Ltd 28,845,258 2.02

Sagicor Pooled Equity Fund 26,481,198 1.85

NCB Insurance Co Ltd. - A/C WT 181 10,000,000 0.70

Seafreight Line Ltd 6,029,108 0.42

SJIML A/C 3119 6,000,000 0.42

1,353,816,159 94.6592

Senior Managers’ Shareholdings as at December 31, 2017

names shareholding connected total

Anna Harry NIL - -

Clover Moodie NIL - -

Dean Panton NIL - -

Jodenia Fergueson Bryan NIL - -

Lancelot Green NIL - -

Lloyd Smith NIL - -

Lorna Dwyer NIL - -

Marcello Richards NIL - -

Mark Williams NIL - -

Michael Arbouine NIL - -

Simone Murdock NIL - -

Valrie Campbell NIL - -

49


Directors’ Shareholdings as at December 31, 2017

names shareholding connected shareholding total

Grantley Stephenson 331,369 Shipping Association of Jamaica Property Limited 151,933,715 152,265,084

Roger Hinds NIL Transocean Shipping Limited 1,481,481 153,415,196

Shipping Association of Jamaica Property Limited 151,933,715

Kim Clarke NIL Maritime & Transport Services Ltd. 71,695,305 379,311,926


NIL A.E. Parnell Company Limited 4,277,776

Kingston Portworkers Superannuation Fund 151,405,130

Harriat Maragh NIL Lannaman & Morris Shipping Ltd. 28,845,258 338,213,211

Seafreight Line Limited 6,029,108



Charles Johnston 24,458 Jamaica Fruit & Shipping Limited 709,507 904,784,987

Jamaica Producers Group Limited 600,736,635



Alvin Henry 91,333 91,333

Kathleen Moss 2,000 Jamaica Producers Group Limited 600,736,635 601,736,635

Assurance Brokers Limited 1,000,000

Jeffrey Hall NIL Jamaica Producers Group Limited 600,736,635 752,670,350


Marshall Hall NIL Jamaica Producers Group Limited 600,736,635 602,114,840

Mcgowan Properties Limited 378,205

Assurance Brokers Limited 1,000,000

Bruce Brecheisen NIL S.B.D. LLC 300,689,810 300,689,810

Robert Scavone NIL niL

Dorian Valdes NIL niL

corPorAteDAtA

chAirMAn

Jeffrey Hall

chieF eXecutiVeoFFicer

Grantley Stephenson

AuDitors

PricewaterhouseCoopers

Scotiabank CentreCorner of Duke &Port Royal StreetsKingston

*reGistrAr & trAnsFer AGent

Jamaica Central

Securities Depository

Limited

40 Harbour Street Kingston

corPorAte secretAry

Anna I. Harry

195 Second Street Newport West Kingston 13, JamaicaTel: (876) 923-9211 Fax: (876) 923-5361

ADMinistrAtiVe oFFices

Total Logistics Facility

195 Second Street Newport West Kingston 13, JamaicaTel: (876) 923-9211 Fax: (876) 923-5361

Attorneys-At-LAW

Brahamlegal

Suite 1 & 232 Lady Musgrave Road Kingston 5

Brocard

Suite 1 & 232 Lady Musgrave Road Kingston 5

DunnCox

48 Duke Street Kingston

BAnKers

Bank of Nova Scotia

(Jamaica) Limited

Scotiabank Centre

Corner of Duke & Port Royal Streets Kingston

First Caribbean

International Bank

(Jamaica) Ltd.

23 Knutsford Boulevard Kingston 5

First Global Bank

2 St. Lucia Avenue Kingston 5

National Commercial

Bank Jamaica Limited

The Atrium 32 Trafalgar Road Kingston 10

Hart Muirhead Fatta

2nd Floor 53 Knutsford Boulevard Kingston 5

Hylton & Hylton

19 Norwood Avenue, Kingston 5

Hylton Powell

11A Oxford RoadKingston 5

Livingston Alexander

& Levy

72 Harbour StreetKingston

Myers, Fletcher &

Gordon

21 East StreetKingston

Patterson Mair Hamilton

63-67 Knutsford Boulevard Kingston 5

Directors

Bruce Brecheisen Charles Johnston

Kim Clarke Harriat Maragh

Jeffrey Hall Kathleen Moss

Marshall Hall Robert Scavone

Alvin Henry Grantley Stephenson

Roger Hinds Dorian Valdes

50


51


FinAnciAL stAteMents31 December 2017

Kingston Wharves Limited

52


53


Independent Auditor’s Report to the Members 55

Financial Statements

Group statement of comprehensive income 62

Group statement of financial position 63

Group statement of changes in equity 65

Group statement of cash flows 66

Company statement of comprehensive income 67

Company statement of financial position 68

Company statement of changes in equity 70

Company statement of cash flows 71

Notes to the financial statements 72

index

31 December 2017FinAnciAL stAteMents

54


55


Independent auditor’s report To the Members of Kingston Wharves Limited

Report on the audit of the consolidated and stand-alone financial statements Our opinion In our opinion, the consolidated financial statements and the stand-alone financial statements give a true and fair v iew of the consolidated financial position of Kingston Wharves Limited (the Company) and its subsidiaries (together ‘the Group’) and the stand-alone financial position of the Company as at 31 December 2017, and of their consolidated and stand-alone financial performance and their consolidated and stand-alone cash flows for the y ear then ended in accordance with International Financial Reporting Standards (IFRS) and the requirements of the Jamaican Companies Act .

What we have audited Kingston Wharves Limited ’s consolidated and stand-alone financial statements comprise:

the Group and Company statements of financial position as at 31 December 2017;

the Group and Company statements of comprehensive income for the y ear then ended;

the Group and Company statements of changes in equity for the y ear then ended;

the Group and Company statements of cash flows for the y ear then ended; and

the notes to the financial statements, which include a summary of significant accounting policies.

Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated and stand-alone financial statements section of our report.

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

Independence We are independent of the Group in accordance with the International Ethics Standards Boa rd for Accountants’ Code of Ethics for Professional Accountants (IESBA Code). We have fulfilled our other ethical responsibilities in accordance with the IESBA Code.

56


Our audit approach Our 2017 audit was planned and executed having regard to the fact that the operations of the Group remain largely unchanged from the pr ior y ear with the exception of management’s revaluation exercise on freehold land, plant and buildings. Given the judgements and estimates required to account for this exercise and the size of the revaluation surplus recorded, this has become a new key audit matter for our audit in 2017 . In addition, as a result of a decrease in risk due to the reduction in value of the intangible assets, we did not consider the assessment of the carrying values, included in our 2016 report, to require highlighting as a key audit matter in the current y ear’s report. Audit scope As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated and stand-alone financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncerta in. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was ev idence of bias that represented a risk of material misstatement due to fraud.

How we tailored our group audit scope We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates. The financially significant components of the Group are all located in Jamaica with the accounting records of all entities maintained at the same location. A single audit team was responsible for the audits of all of the financially significant components of the Group. Key audit m atters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated and stand-alone financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and stand-alone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matte rs.

Key audit m atter How our audit addressed the key audit m atter

Valuation of freehold land, plant and buildings Refer to notes 2 (d) and 15 to the consolidated and stand-alone financial statements for disclosures of related accounting policies, judgments and estimates. Freehold land and plant and buildings totalling $7 .3 billion and $12.6 billion for the Group and $4.9 billion and $10.0 billion for the Company standing alone are held at fair value within

We assessed the competency and capabilities of the external valuers and concluded that they hold the requisite professional qualifications and experience to carry out reliable valuations of the Group ’s and

57


property, plant and equipment on the Group and Company statements of financial position respectively. These balances are material to the financial statements of the Group and Company as a whole representing in aggregate 67 .5% of the Group’s and 62.3% of the Company ’s total assets at y ear end. The Group’s valuation policy for freehold land, plant and buildings allows for triennial valuations by external independent valuation experts who were engaged in the current year to perform a revaluation exercise. We focused on this area:

as the fair value in respect of land and property valuation is by its nature subjective with significant judgement applied including the determination of ‘highest and best’ use , assumptions about contractors’ charges, labour rates, material costs, professional fees, market rents and the impact of market forces on transactions; and

due to the quantum/size of revaluation gains that directly impact the Group and Company statements of comprehensive income.

Company ’s freehold land, plant and buildings.

We obtained confirmations of independence from the external valuers. We inspected the final valuation reports and agreed the fair value to the Group ’s and Company’s accounting records noting no material exceptions. We recalculated the revaluation gains by reference to the valuation reports and the accounting records noting no material exceptions. For a sample of external valuations:

We compared the current valuations for plant and building with the prev iously completed ones to determine whether useful lives and ages of properties were consistent.

With the assistance of our own independent expert, we reviewed the valuations and performed an independent assessment of the assumptions that underpin the valuations as well as determined whether the valuations are within an acceptable range.

We considered the carrying value in the financial statements in relation to the report provided by our independent expert. No material exceptions were noted. As a result of the procedures above we did not propose any adjusting entries to the values recorded by management for the fair values and the revaluation surplus recorded.

Valuation of retirement benefit assets and liabilities See notes 2 (r) and 20 of the consolidated and stand-alone financial statements for disclosures of related accounting policies, judgements and estimates. The cost of pension benefits and the present value of these benefits depend on a number of factors and assumptions. Due to the complexity of the balance, management appointed an external actuary to perform the valuations. The assumptions used in

We evaluated the valuation technique used to perform the valuation of retirement benefits and found it to be consistent with the requirements of IAS 19, Employ ee Benefits. We assessed the competence and objectivity of the

58


determining the assets for the pension benefits and the liabilities for the other post-employment benefits included: the expected long-term rate of return on the

relevant plan assets; the discount rate; the expected rate of increase in medical

costs in the case of post-employment medical benefits.

Any changes in these assumptions will impact the valuation of the assets and liabilities recorded for pension and post-employment benefits. This was an area of focus due to the numerous assumptions used, and that, as at 31 December 2017, the values for the post-employment benefits in the statement of financial position for the Group and Company totalled $ 1,175 million (assets) or 4.0% and 4.9% of total assets and $358 million (liabilities) 5.6% and 6.3% of total liabilities, respectively.

management appointed actuary, confirming that they are qualified and that there was no affiliation to the Group. We checked the employee data submitted to the actuary against information maintained on the employees’ personnel files maintained by the Group. We assessed and challenged the assumptions used by the actuary which included comparing them to externally derived data such as mortality tables from the Society of Actuaries, economic statistics from the Bank of Jamaica and the discount rate from the Institute of Chartered Accountants of Jamaica. We also confirmed certain assets of the plans with the custodian of these assets and recomputed their fair values by reference to readily available external data including quoted stock prices and y ield curves. Based on the procedures performed, we found the assumptions and computations to be in line with our expectations.

Other information Management is responsible for the other information. The other information comprises the information presented in the Annual Report (but does not include the consolidated and stand-alone financial statements and our auditor’s report thereon), which is expected to be made available to us after the date of this auditor’s report.

Our opinion on the consolidated and stand-alone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated and stand-alone financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated and stand -alone financial statements or our knowledge obtained in the audit, or otherwise appears to be materially mi sstated.

When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

59


Responsibilities of management and those charged with governance for the consolidated and stand-alone financial statements Management is responsible for the preparation of the consolidated and stand-alone financial statements that give a true and fair v iew in accordance with International Financial Reporting Standards and the requirements of the Jamaican Companies Act, and for such internal control as management determines is necessary to enable the preparation of consolidated and stand-alone financial statements that are free from material misstatement, whether due to fraud or e rror.

In preparing the consolidated and stand-alone financial statements, management is responsible for assessing the Group’s and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s and Company’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated and stand-alone financial statements Our objectives are to obtain reasonable assurance about whether the consolidated and stand-alone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, indiv idually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and stand-alone financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated and stand-alone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit ev idence that is sufficient and appropriate to provide a basis for ou r opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and Company’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

60


Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit ev idence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and stand-alone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit ev idence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the consolidated and stand-alone financial statements, including the disclosures, and whether the consolidated and stand-alone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated and stand-alone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on other legal and regulatory requirements As required by the Jamaican Companies Act, we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

In our opinion, proper accounting records have been kept, so far as appears from our examination of those records, and the accompanying consolidated and stand-alone financial statements are in agreement therewith and give the information required by the Jamaican Companies Act, in the manner so required.

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The engagement partner on the audit resulting in this independent auditor’s report is Peter Williams.

Chartered Accountants 1 March 2018 Kingston, Jamaica

Kingston Wharves Limited Group Statement of Comprehensive Income Year ended 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

Note 2017 $’000

2016 $’000

Revenue 6,369,238 5,409,801 Direct costs (3,310,521) (2,897,704) Gross Profit 3,058,717 2,512,097 Other operating income 8 31,029 196,642 Administration expenses (1,063,061) (1,033,488) Operating Profit 2,026,685 1,675,251 Finance costs 9 (134,923) (186,408) Profit before Income Tax 1,891,762 1,488,843 Income tax expense 10 (244,266) (176,056) Net Profit for Year 1,647,496 1,312,787 Other Comprehensive Income Item that may be reclassified to profit or loss

Changes in fair value of available-for-sale investments - 41,948 Items that will not be reclassified to profit or loss

Re-measurements of post-employment benefits 131,848 269,906 Deferred tax effect on re-measurements of post-employment benefits (14,648) (28,583) De-recognition of revaluation surplus on disposal of property plant and

equipment - (8,046) Deferred tax effect on de-recognition of revaluation surplus - 575 Surplus on revaluation of property, plant and equipment 3,487,486 - Deferred tax effect on revaluation surplus (226,595) - Effect of change in tax rate on deferred taxation on revaluation surplus (21,605) (39,662)

Total other comprehensive income, net of taxes 3,356,486 236,138 Total Comprehensive Income for Year 5,003,982 1,548,925

Net Profit Attributable to:

Equity holders of the company 11 1,628,538 1,293,480 Non-controlling interest 12 18,958 19,307

1,647,496 1,312,787 Total Comprehensive Income Attributable to:

Equity holders of the company 4,985,024 1,529,618 Non-controlling interest 12 18,958 19,307

5,003,982 1,548,925 Earnings per stock unit for profit attributable to the equity holders of

the company during the year 13 $1.14 $0.90


Group statement of comprehensive incomeYear ended 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

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Kingston Wharves Limited Group Statement of Financial Position 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

Note 2017 $’000

2016 $’000

ASSETS Non-current Assets Property, plant and equipment 15 22,886,762 18,085,443 Intangible assets 16 133,844 256,871 Investments 18 128,466 128,466 Deferred income tax assets 30 1,587 1,363 Retirement benefit asset 20 1,174,675 936,177 24,325,334 19,408,320 Current Assets Inventories 21 345,729 303,994 Trade and other receivables 23 839,578 617,395 Taxation recoverable 17,097 16,253 Short term investments 24 3,573,360 2,830,027 Cash and bank 24 374,861 360,819

5,150,625 4,128,488 Total Assets 29,475,959 23,536,808


Group statement of Financial Position31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

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Kingston Wharves Limited Group Statement of Financial Position (Continued) 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

Approved for issue by the Board of Directors on 1 March 2018 and signed on its behalf by:

Jeffrey Hall Chairman Alvin Henry Director

Note 2017

$’000 2016 $’000

EQUITY Stockholders’ Equity (attributable to equity holders of the company) Share capital 25 2,079,398 2,079,398 Other reserves 26 14,019,866 10,768,001 Asset replacement/rehabilitation and depreciation reserves 27 216,331 216,161

Retained earnings 6,666,199 5,476,686 22,981,794 18,540,246 Non-controlling Interest 12 115,523 96,565 23,097,317 18,636,811 LIABILITIES Non-current Liabilities Borrowings 28 2,385,038 1,795,373 Long term liability 29 - 9,454 Deferred income tax liabilities 30 1,407,914 1,168,265 Retirement benefit obligations 20 357,792 276,762

4,150,744 3,249,854 Current LiabilitiesTrade and other payables 31 1,641,672 1,002,529 Taxation 61,819 31,413 Borrowings 28 503,094 547,540 Current portion of long term liability 29 21,313 68,661

2,227,898 1,650,143 Total equity and liabilities 29,475,959 23,536,808


Group statement of Financial Position (Cont’d)31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

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Kingston Wharves Limited Group Statement of Changes in Equity Year ended 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

Attributable to equity holders of the company

Non-controlling

Interest Total

Equity

Note Share

Capital Other

Reserves

Asset Replacement/ Rehabilitation

and Depreciation

Reserves

Retained Earnings Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

Balance at 31 December 2015 2,079,398 10,760,607 215,917 4,440,974 17,496,896 77,258 17,574,154

Total comprehensive income for the year - (5,185) - 1,534,803 1,529,618 19,307 1,548,925

Transfer of net interest to asset replacement/rehabilitation and depreciation reserves 27 - - 244 (244) - - -

Transfer to asset replacement/ rehabilitation and depreciation reserves 27 - - 12,579 (12,579) - - -

Transfer from asset replacement/rehabilitation and depreciation reserves 27 - 12,579 (12,579) - - - -

Transactions with owners:

Dividends 14 - - - (486,268) (486,268) - (486,268)

Balance at 31 December 2016 2,079,398 10,768,001 216,161 5,476,686 18,540,246 96,565 18,636,811Total comprehensive income for the

year - 3,239,286 - 1,745,738 4,985,024 18,958 5,003,982 Transfer of net interest to asset

replacement/rehabilitation and depreciation reserves 27 - - 170 (170) - - -

Transfer to asset replacement/ rehabilitation and depreciation reserves 27 - - 12,579 (12,579) - - -

Transfer from asset replacement/rehabilitation and depreciation reserves 27 - 12,579 (12,579) - - - -

Transactions with owners:

Dividends 14 - - - (543,476) (543,476) - (543,476)

Balance at 31 December 2017 2,079,398 14,019,866 216,331 6,666,199 22,981,794 115,523 23,097,317


Group statement of changes in equityYear ended 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

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Kingston Wharves Limited Group Statement of Cash Flows Year ended 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

Note 2017 $’000

2016 $’000

Cash flows from operating activities Net profit 1,647,496 1,312,787 Adjustments for:

Amortisation 16 108,367 108,770 Depreciation 15 534,718 468,541

Impairment loss - 5,000 Foreign exchange adjustment on loans (5,562) 51,550 Foreign exchange loss/(gains) on operating activities 90,191 (113,057)

Loss on disposal/write-off of property, plant and equipment - 2,081 Retirement benefit asset (46,670) (35,764) Retirement benefit obligations 21,050 19,960 Interest income 8 (86,629) (86,167) Interest expense 9 140,485 134,858 Taxation 10 244,266 176,056

2,647,712 2,044,615 Changes in operating assets and liabilities: Inventories (44,595) (100,945) Trade and other receivables (225,719) (215,130) Trade and other payables 585,691 147,481 Cash provided by operations 2,963,089 1,876,021 Tax paid (238,127) (238,436)Net cash provided by operating activities 2,724,962 1,637,585 Cash flows from investing activitiesPurchase of property, plant and equipment 15 (1,845,691) (1,822,862)Purchase of intangible asset 16 (1,566) (42,792)Purchase of investments - (2,172)Proceeds from sale of property, plant and equipment - 1,050 Short term deposits with maturity greater than three months - 14,685 Restricted cash - (189,000)Interest received 80,868 86,409 Net cash used in investing activities (1,766,389) (1,954,682)Cash flows from financing activitiesDividends paid to equity holders of the company (529,157) (414,773)Interest paid (142,039) (137,193)Loans received 1,118,110 1,275,250 Loans repaid (567,218) (524,425)Net cash (used in)/provided by financing activities (120,304) 198,859 Net increase/(decrease) in cash and cash equivalents 838,269 (118,238)Net cash and cash equivalents at beginning of year 3,001,846 3,005,183 Exchange adjustment on foreign currency cash and cash equivalents (80,894) 114,901 NET CASH AND CASH EQUIVALENTS AT END OF YEAR 24 3,759,221 3,001,846

Total additions to property, plant and equipment in 2016 per Note 15 include $28,612,000 acquired within the Group.


Group statement of cash FlowsYear ended 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

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Kingston Wharves Limited Company Statement of Comprehensive Income Year ended 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

Note 2017

$’000 2016 $’000

Revenue 5,658,495 4,768,731 Direct expenses (2,744,018) (2,379,378)Gross Profit 2,914,477 2,389,353 Other operating income 8 36,389 495,498 Administration expenses (955,524) (930,863)Operating Profit 1,995,342 1,953,988 Finance costs 9 (134,923) (189,280)Profit before Income Tax 1,860,419 1,764,708 Income tax expense 10 (215,658) (171,763)Net Profit for Year 1,644,761 1,592,945 Other Comprehensive Income Item that may be reclassified to profit or loss

Changes in fair value of available-for-sale investments - 27,768 Items that will not be reclassified to profit or loss

Re-measurements of post-employment benefits 131,848 269,906 Deferred tax effect on re-measurements of post-employment benefits (14,648) (28,583) De-recognition of revaluation surplus on disposal of property, plant and

equipment - (8,046)Deferred tax effect on de-recognition of revaluation surplus - 575 Surplus on revaluation of property, plant and equipment 2,424,143 - Deferred tax effect on revaluation surplus (134,008) - Effect of change in tax rate on deferred taxation on revaluation surplus (21,605) (39,662)

Total other comprehensive income, net of taxes 2,385,730 221,958

Total Comprehensive Income for Year 4,030,491 1,814,903


company statement of comprehensive incomeYear ended 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

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Kingston Wharves Limited Company Statement of Financial Position 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

Note 2017

$’000 2016 $’000

ASSETS Non-current Assets Property, plant and equipment 15 17,843,784 14,011,688 Intangible assets 16 133,844 256,871 Investments in subsidiaries 17 75,731 75,731 Investments 18 85,818 85,818 Due from related party 22 102,405 102,405 Retirement benefit asset 20 1,174,675 936,177 19,416,257 15,468,690 Current AssetsInventories 21 341,393 292,090 Trade and other receivables 23 662,809 491,471 Group companies 22 123,731 376,906 Short term investments 24 3,034,900 2,048,456 Cash and bank 24 302,697 279,294

4,465,530 3,488,217 Total assets 23,881,787 18,956,907


company statement of Financial Position31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

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Kingston Wharves Limited Company Statement of Financial Position (Continued) 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

Note 2017 $’000

2016 $’000

EQUITY Stockholders’ Equity Share capital 25 2,079,398 2,079,398Other reserves 26 8,886,953 6,605,844Asset replacement/rehabilitation and depreciation reserves 27 212,968 212,968Retained earnings 7,016,432 5,810,526

18,195,751 14,708,736LIABILITIES Non-current Liabilities Borrowings 28 2,383,586 1,793,921Long term liability 29 - 9,454Deferred income tax liabilities 30 759,508 584,765Retirement benefit obligations 20 357,792 276,762 3,500,886 2,664,902Current LiabilitiesTrade and other payables 31 1,577,569 942,824Group companies 22 29,479 5,984Taxation payable 53,695 18,260Borrowings 28 503,094 547,540Current portion of long term liability 29 21,313 68,661

2,185,150 1,583,269Total equity and liabilities 23,881,787 18,956,907

Approved for issue by the Board of Directors on 1 March 2018 and signed on its behalf by:

Jeffrey Hall Chairman Alvin Henry Director


company statement of Financial Position (Cont’d) 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

69


Kingston Wharves Limited Company Statement of Changes in Equity Year ended 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

Note Share

Capital Other

Reserves


and Depreciation

Reserves Retained Earnings Total

$’000 $’000 $’000 $’000 $’000 Balance at 31 December 2015 2,079,398 6,612,630 212,968 4,475,105 13,380,101

Total comprehensive income for the year - (19,365) - 1,834,268 1,814,903Transfer to asset

replacement/rehabilitation and depreciation reserves 27 - - 12,579 (12,579) -

Transfer from asset replacement/ rehabilitation and depreciation reserves 27 - 12,579 (12,579) - -

Transactions with owners:Dividends 14 - - - (486,268) (486,268)

Balance at 31 December 2016 2,079,398 6,605,844 212,968 5,810,526 14,708,736

Total comprehensive income for the year - 2,268,530 - 1,761,961 4,030,491Transfer to asset





Page 10

Kingston Wharves Limited Company Statement of Cash Flows Year ended 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

Note 2017 $’000

2016 $’000



Impairment loss - 5,000 Foreign exchange adjustment on long term loans (5,562) 51,550 Foreign exchange loss/(gains) 73,743 (90,042)

Loss on disposal/write-off of property, plant and equipment - 2,940 Retirement benefit asset (46,670) (35,764) Retirement benefit obligations 21,050 19,960 Interest income 8 (73,036) (58,755) Interest expense 9 140,485 137,730

Taxation 10 215,658 171,763 2,507,483 2,270,362

Changes in operating assets and liabilities: Inventories (49,303) (97,034)

Group companies 276,670 (352,992) Trade and other receivables (174,514) (169,866) Trade and other payables 581,293 127,494 Cash provided by operations 3,141,629 1,777,964 Tax paid (175,741) (192,799)Net cash provided by operating activities 2,965,888 1,585,165 Cash flows from investing activitiesPurchase of property, plant and equipment 15 (1,836,640) (1,799,696)Purchase of intangible asset 16 (1,566) (42,792)Purchase of investments - (2,172)Proceeds from sale of property, plant and equipment - 1,050 Short term deposits with maturity greater than three months - 14,685 Restricted cash - (189,000)Interest received 66,915 58,462 Net cash used in investing activities (1,771,291) (1,959,463)Cash flows from financing activitiesDividends paid to equity holders of the company (529,157) (414,773)Interest paid (142,039) (178,000)Loans received 1,118,110 1,275,250 Loans repaid (567,218) (524,425)Net cash (used in)/provided by financing activities (120,304) 158,052 Net increase/(decrease) in cash and cash equivalents 1,074,293 (216,246)Net cash and cash equivalents at beginning of year 2,138,750 2,263,110 Exchange adjustment on foreign currency cash and cash equivalents (64,446) 91,886 NET CASH AND CASH EQUIVALENTS AT END OF YEAR 24 3,148,597 2,138,750


company statement of changes in equityYear ended 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

70


Kingston Wharves Limited Company Statement of Changes in Equity Year ended 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

Note Share

Capital Other

Reserves


and Depreciation

Reserves Retained Earnings Total

$’000 $’000 $’000 $’000 $’000 Balance at 31 December 2015 2,079,398 6,612,630 212,968 4,475,105 13,380,101

Total comprehensive income for the year - (19,365) - 1,834,268 1,814,903Transfer to asset





Total comprehensive income for the year - 2,268,530 - 1,761,961 4,030,491Transfer to asset





Page 10

Kingston Wharves Limited Company Statement of Cash Flows Year ended 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

Note 2017 $’000

2016 $’000



Impairment loss - 5,000 Foreign exchange adjustment on long term loans (5,562) 51,550 Foreign exchange loss/(gains) 73,743 (90,042)

Loss on disposal/write-off of property, plant and equipment - 2,940 Retirement benefit asset (46,670) (35,764) Retirement benefit obligations 21,050 19,960 Interest income 8 (73,036) (58,755) Interest expense 9 140,485 137,730

Taxation 10 215,658 171,763 2,507,483 2,270,362

Changes in operating assets and liabilities: Inventories (49,303) (97,034)

Group companies 276,670 (352,992) Trade and other receivables (174,514) (169,866) Trade and other payables 581,293 127,494 Cash provided by operations 3,141,629 1,777,964 Tax paid (175,741) (192,799)Net cash provided by operating activities 2,965,888 1,585,165 Cash flows from investing activitiesPurchase of property, plant and equipment 15 (1,836,640) (1,799,696)Purchase of intangible asset 16 (1,566) (42,792)Purchase of investments - (2,172)Proceeds from sale of property, plant and equipment - 1,050 Short term deposits with maturity greater than three months - 14,685 Restricted cash - (189,000)Interest received 66,915 58,462 Net cash used in investing activities (1,771,291) (1,959,463)Cash flows from financing activitiesDividends paid to equity holders of the company (529,157) (414,773)Interest paid (142,039) (178,000)Loans received 1,118,110 1,275,250 Loans repaid (567,218) (524,425)Net cash (used in)/provided by financing activities (120,304) 158,052 Net increase/(decrease) in cash and cash equivalents 1,074,293 (216,246)Net cash and cash equivalents at beginning of year 2,138,750 2,263,110 Exchange adjustment on foreign currency cash and cash equivalents (64,446) 91,886 NET CASH AND CASH EQUIVALENTS AT END OF YEAR 24 3,148,597 2,138,750


company statement of cash FlowsYear ended 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

71


Kingston Wharves Limited Notes to the Financial Statements 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

1. Identification and Principal Activities

The company and its subsidiaries (the Group) are incorporated and domiciled in Jamaica. The principal activities of the company and its subsidiaries comprise the operation of public wharves, stevedoring, logistics services and security services.

The wharfage rates and penal charges billed to customers by the company are subject to regulation by the Port Authority of Jamaica.

The company’s registered office was located at the Kingport Building, Third Street, Newport West, Kingston. Subsequent to the year end, the registered office was changed to the Total Logistics Facility, 195 Second Street, Newport West, Kingston.

The company is a public company listed on the Jamaica Stock Exchange.

2. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Basis of preparation These financial statements have been prepared in accordance and comply with International Financial Reporting Standards (IFRS), and have been prepared under the historical cost convention as modified by the revaluation of certain items of property, plant and equipment.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’saccounting policies. Although these estimates are based on management’s best knowledge of current events and actions, actual results could differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4.

Standards, amendments and interpretations to published standards effective in the current year Certain new accounting standards, interpretations and amendments to existing standards have been published that became effective during the current financial year. The Group has assessed the relevance of all such new standards, interpretations and amendments and has adopted the following which are relevant to its operations:

Amendments to IAS 12, ‘Income Taxes, (effective for annual periods beginning on or after 1 January 2017). In January 2017, the IASB published amendments to IAS 12 clarifying specifically how to account for deferred tax assets related to debt instruments measured at fair value as well as clarifying the guidance for deferred tax assets in general by adding examples and elaborating on some of the requirements in more detail. The amendments do not change the underlying principles for the recognition of deferred tax assets.

Amendments to IAS 7, ‘Statement of Cash Flows’, (effective for annual periods beginning on or after 1 January 2017). In January 2017, the IASB published amendments to IAS 7 to improve information about an entity's financing activities. These amendments are part of the IASB initiative to improve presentation and disclosure in financial reports. The amendments require disclosure of information enabling users to evaluate changes in liabilities arising from financing activities including both cash and non-cash changes. The Group has provided the additional disclosures in these financial statements.

Page 12


2. Summary of Significant Accounting Policies (Continued)

(a) Basis of preparation (continued)

Standards, amendments and interpretations to existing standards that the Group has not yet adopted At the date of authorisation of these financial statements, certain new accounting standards, amendments and interpretations to existing standards have been issued which are mandatory for the Group’s accounting periods beginning on or after 1 January 2017 or later periods, but were not effective for the current period, and which the Group has not early adopted. The Group has assessed the relevance of all such new standards, interpretations and amendments, has determined that the following may be relevant to its operations. Unless stated otherwise, the impact of the changes is still being assessed by management.

. IFRS 9, ‘Financial instruments’ (effective for annual periods beginning on or after 1 January 2018). The

standard introduces new requirements for the classification, measurement and recognition of financial assets and financial liabilities, in order to ensure that relevant and useful information is presented to users of financial statements. It replaces the multiple classification and measurement models in IAS 39 with a single model that has only two classification categories: amortised cost and fair value. The determination of classification will be made at initial recognition, and depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument.

IFRS 9 introduces a new model for the recognition of impairment losses – the expected credit losses (ECL) model. There is a ‘three stage’ approach which is based on the change in credit quality of financial assets since initial recognition. In practice, the new rules mean that entities will have to record an immediate loss equal to the 12-month ECL on initial recognition of financial assets that are not credit impaired (or lifetime ECL for trade receivables). Where there has been a significant increase in credit risk, impairment is measured using lifetime ECL rather than 12-month ECL. The model includes operational simplifications for lease and trade receivables.

Management is in the process of assessing the impact of IFRS 9 on the Group. An implementation team headed by the Group Chief Financial Officer was created to oversee the implementation project. The project involves impact assessment to determine the key potential areas of impact and to develop a plan to address the implementation of the standard, conversion assessment to focus on key areas of impact identified and quantify what changes to the financial statements may be required and embedding the new accounting standard into the existing reporting structure.

Currently management has completed impact assessment and key decisions around the transition approach, practical expedients and data and system needs are currently being reviewed by management. Based on the impact assessment of the effects of applying the new standard, management does not expect any significant impact on the Group’s financial statements.

IFRS 15, ‘Revenue from contracts with customers’ (effective 1 January 2018) deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. Any bundled goods or services that are distinct must be separately recognised, and any discounts or rebates on the contract price must generally be allocated to the separate elements. When the consideration varies for any reason, minimum amounts must be recognised if they are not at significant risk of reversal. Costs incurred to secure contracts with customers have to be capitalised and amortised over the period when the benefits of the contract are consumed. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations. While the standard is effective for annual periods beginning on or after 1 January 2018, earlier application is permitted.


Notes to the FiNaNcial StatemeNtS31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

72



1. Identification and Principal Activities

The company and its subsidiaries (the Group) are incorporated and domiciled in Jamaica. The principal activities of the company and its subsidiaries comprise the operation of public wharves, stevedoring, logistics services and security services.

The wharfage rates and penal charges billed to customers by the company are subject to regulation by the Port Authority of Jamaica.

The company’s registered office was located at the Kingport Building, Third Street, Newport West, Kingston. Subsequent to the year end, the registered office was changed to the Total Logistics Facility, 195 Second Street, Newport West, Kingston.

The company is a public company listed on the Jamaica Stock Exchange.

2. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Basis of preparation These financial statements have been prepared in accordance and comply with International Financial Reporting Standards (IFRS), and have been prepared under the historical cost convention as modified by the revaluation of certain items of property, plant and equipment.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’saccounting policies. Although these estimates are based on management’s best knowledge of current events and actions, actual results could differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4.

Standards, amendments and interpretations to published standards effective in the current year Certain new accounting standards, interpretations and amendments to existing standards have been published that became effective during the current financial year. The Group has assessed the relevance of all such new standards, interpretations and amendments and has adopted the following which are relevant to its operations:

Amendments to IAS 12, ‘Income Taxes, (effective for annual periods beginning on or after 1 January 2017). In January 2017, the IASB published amendments to IAS 12 clarifying specifically how to account for deferred tax assets related to debt instruments measured at fair value as well as clarifying the guidance for deferred tax assets in general by adding examples and elaborating on some of the requirements in more detail. The amendments do not change the underlying principles for the recognition of deferred tax assets.

Amendments to IAS 7, ‘Statement of Cash Flows’, (effective for annual periods beginning on or after 1 January 2017). In January 2017, the IASB published amendments to IAS 7 to improve information about an entity's financing activities. These amendments are part of the IASB initiative to improve presentation and disclosure in financial reports. The amendments require disclosure of information enabling users to evaluate changes in liabilities arising from financing activities including both cash and non-cash changes. The Group has provided the additional disclosures in these financial statements.

Page 12



(a) Basis of preparation (continued)

Standards, amendments and interpretations to existing standards that the Group has not yet adopted At the date of authorisation of these financial statements, certain new accounting standards, amendments and interpretations to existing standards have been issued which are mandatory for the Group’s accounting periods beginning on or after 1 January 2017 or later periods, but were not effective for the current period, and which the Group has not early adopted. The Group has assessed the relevance of all such new standards, interpretations and amendments, has determined that the following may be relevant to its operations. Unless stated otherwise, the impact of the changes is still being assessed by management.

. IFRS 9, ‘Financial instruments’ (effective for annual periods beginning on or after 1 January 2018). The

standard introduces new requirements for the classification, measurement and recognition of financial assets and financial liabilities, in order to ensure that relevant and useful information is presented to users of financial statements. It replaces the multiple classification and measurement models in IAS 39 with a single model that has only two classification categories: amortised cost and fair value. The determination of classification will be made at initial recognition, and depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument.

IFRS 9 introduces a new model for the recognition of impairment losses – the expected credit losses (ECL) model. There is a ‘three stage’ approach which is based on the change in credit quality of financial assets since initial recognition. In practice, the new rules mean that entities will have to record an immediate loss equal to the 12-month ECL on initial recognition of financial assets that are not credit impaired (or lifetime ECL for trade receivables). Where there has been a significant increase in credit risk, impairment is measured using lifetime ECL rather than 12-month ECL. The model includes operational simplifications for lease and trade receivables.

Management is in the process of assessing the impact of IFRS 9 on the Group. An implementation team headed by the Group Chief Financial Officer was created to oversee the implementation project. The project involves impact assessment to determine the key potential areas of impact and to develop a plan to address the implementation of the standard, conversion assessment to focus on key areas of impact identified and quantify what changes to the financial statements may be required and embedding the new accounting standard into the existing reporting structure.

Currently management has completed impact assessment and key decisions around the transition approach, practical expedients and data and system needs are currently being reviewed by management. Based on the impact assessment of the effects of applying the new standard, management does not expect any significant impact on the Group’s financial statements.

IFRS 15, ‘Revenue from contracts with customers’ (effective 1 January 2018) deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. Any bundled goods or services that are distinct must be separately recognised, and any discounts or rebates on the contract price must generally be allocated to the separate elements. When the consideration varies for any reason, minimum amounts must be recognised if they are not at significant risk of reversal. Costs incurred to secure contracts with customers have to be capitalised and amortised over the period when the benefits of the contract are consumed. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related interpretations. While the standard is effective for annual periods beginning on or after 1 January 2018, earlier application is permitted.


Notes to the FiNaNcial StatemeNtS 31 December 2017 (expressed in Jamaican dollars unless otherwise indicated)

73



2. Summary of Significant Accounting Policies (Continued)asis of preparation (continued)

(a) Basis of preparation (continued) Standards, amendments and interpretations to existing standards that the Group has not yet adopted (continued)

IFRS 15, ‘Revenue from contracts with customers’ (continued)

Management is in the process of assessing the impact of IFRS 15 on the Group. An implementation team headed by the Group Chief Financial Officer was created to oversee the implementation of the standard. This involves impact assessment to determine the key potential areas of impact and development of a plan to address the implementation of the standard, conversion assessment to focus on key areas of impact identified and quantification of what changes to the financial statements may be required and embedding the new accounting standard into the existing reporting structure.

Currently management has completed impact assessment and key decisions around the transition approach, practical expedients and data and system needs are currently being reviewed. Based on the impact assessment of the effects of applying the new standard management does not expect any significant impact on the financial statements.

Amendments to IFRS 15, ‘Revenue from contracts with customers’ (effective 1 January 2018). These amendments comprise clarifications of the guidance on identifying performance obligations, accounting for licences of intellectual property and the principal versus agent assessment (gross versus net revenue presentation). New and amended illustrative examples have been added for each of those areas of guidance.

IFRS 16, ‘Leases’, (effective for annual periods beginning on or after 1 January 2019). In January 2017,

the IASB published IFRS 16 which replaces the current guidance in IAS 17. Under IAS 17, lessees were required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). IFRS 16 now requires lessees to recognise a lease liability reflecting future lease payments and a ‘right-of-use asset’ for virtually all lease contracts. There is an optional exemption for lessees for certain short-term leases and leases of low-value assets.

IFRIC 22,’ Foreign currency transactions and advance consideration’, (effective for annual periods

beginning on or after 1 January 2018). This IFRIC addresses foreign currency transactions or parts of transactions where there is consideration that is denominated or priced in a foreign currency. The interpretation provides guidance for when a single payment/receipt is made as well as for situations where multiple payments/receipts are made. The guidance aims to reduce diversity in practice.

IFRIC 23, ‘Uncertainty over income tax treatments’ (effective for annual periods beginning on or after 1 January 2019). This IFRIC clarifies how the recognition and measurement requirements of IAS 12 ‘Income taxes’, are applied where there is uncertainty over income tax treatments.

The IFRS IC had clarified previously that IAS 12, not IAS 37 ‘Provisions, contingent liabilities and contingent assets’, applies to accounting for uncertain income tax treatments. IFRIC 23 explains how to recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment.

Page 14



(a) Basis of preparation (continued) Standards, amendments and interpretations to existing standards that the Group has not yet adopted

(continued)

Annual improvements to IFRS 2015 - 2017 Cycle – Amendments to IAS 12 and IAS 23 (effective for annual periods beginning on or after 1 January 2019). The amendments to IAS 12 clarify that all income tax consequences of dividends should be recognised in profit or loss, regardless of how the tax arises. The amendments to IAS 23 clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings.

There are no other standards, amendments to existing standards or interpretations that are not yet effective that would be expected to have a significant impact on the operations of the Group.

(b) Consolidation Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquiree on an acquisition- by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the netassets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement.



74



2. Summary of Significant Accounting Policies (Continued)asis of preparation (continued)

(a) Basis of preparation (continued) Standards, amendments and interpretations to existing standards that the Group has not yet adopted (continued)

IFRS 15, ‘Revenue from contracts with customers’ (continued)

Management is in the process of assessing the impact of IFRS 15 on the Group. An implementation team headed by the Group Chief Financial Officer was created to oversee the implementation of the standard. This involves impact assessment to determine the key potential areas of impact and development of a plan to address the implementation of the standard, conversion assessment to focus on key areas of impact identified and quantification of what changes to the financial statements may be required and embedding the new accounting standard into the existing reporting structure.

Currently management has completed impact assessment and key decisions around the transition approach, practical expedients and data and system needs are currently being reviewed. Based on the impact assessment of the effects of applying the new standard management does not expect any significant impact on the financial statements.

Amendments to IFRS 15, ‘Revenue from contracts with customers’ (effective 1 January 2018). These amendments comprise clarifications of the guidance on identifying performance obligations, accounting for licences of intellectual property and the principal versus agent assessment (gross versus net revenue presentation). New and amended illustrative examples have been added for each of those areas of guidance.

IFRS 16, ‘Leases’, (effective for annual periods beginning on or after 1 January 2019). In January 2017,

the IASB published IFRS 16 which replaces the current guidance in IAS 17. Under IAS 17, lessees were required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). IFRS 16 now requires lessees to recognise a lease liability reflecting future lease payments and a ‘right-of-use asset’ for virtually all lease contracts. There is an optional exemption for lessees for certain short-term leases and leases of low-value assets.

IFRIC 22,’ Foreign currency transactions and advance consideration’, (effective for annual periods

beginning on or after 1 January 2018). This IFRIC addresses foreign currency transactions or parts of transactions where there is consideration that is denominated or priced in a foreign currency. The interpretation provides guidance for when a single payment/receipt is made as well as for situations where multiple payments/receipts are made. The guidance aims to reduce diversity in practice.

IFRIC 23, ‘Uncertainty over income tax treatments’ (effective for annual periods beginning on or after 1 January 2019). This IFRIC clarifies how the recognition and measurement requirements of IAS 12 ‘Income taxes’, are applied where there is uncertainty over income tax treatments.

The IFRS IC had clarified previously that IAS 12, not IAS 37 ‘Provisions, contingent liabilities and contingent assets’, applies to accounting for uncertain income tax treatments. IFRIC 23 explains how to recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment.

Page 14



(a) Basis of preparation (continued) Standards, amendments and interpretations to existing standards that the Group has not yet adopted

(continued)

Annual improvements to IFRS 2015 - 2017 Cycle – Amendments to IAS 12 and IAS 23 (effective for annual periods beginning on or after 1 January 2019). The amendments to IAS 12 clarify that all income tax consequences of dividends should be recognised in profit or loss, regardless of how the tax arises. The amendments to IAS 23 clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on general borrowings.

There are no other standards, amendments to existing standards or interpretations that are not yet effective that would be expected to have a significant impact on the operations of the Group.

(b) Consolidation Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquiree on an acquisition- by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the netassets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement.



75




(b) Consolidation (continued)

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies.

When the Group ceases to have control any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

The subsidiaries, which are all incorporated and domiciled in Jamaica (except KWGHSLL), are as follows:

Principal Activities

Holding by

Company Holding

by Group Financial Year End

Harbour Cold Stores Limited Rental of and repair services to cold storage facilities 100% 100% 31 December

Security Administrators Limited Security services 33 ⅓% 66 ⅔% 31 DecemberWestern Storage Limited Property rental 100% 100% 31 DecemberWestern Terminals Limited Property rental 100% 100% 31 DecemberKWL Group Holdings (St Lucia)

Limited (KWGHSLL) Non-Trading 100% 100% 31 December Kingston Terminal Operators

Limited Dormant 100% 100% 31 December Newport Stevedoring Services

Limited (formerly Jamaica Cooling Stores Limited) Provision of contract labour - 100% 31 December

Kingston Wharves Group Limited Non-Trading - 100% 31 December KW Logistics Limited Non-Trading - 100% 31 December KW Stevedores Limited Non-Trading - 100% 31 December Security Administrators Specialist

Services Limited Security services - 66 ⅔% 31 December

Transactions with non-controlling interests Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Page 16



(c) Revenue and income recognition Revenue comprises the fair value of the consideration received or receivable for the provision of services in the ordinary course of the Group’s activities. Revenue is shown net of General Consumption Tax, rebates and discounts and after eliminating sales within the Group. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities.

Services These are charges made for wharfage operations, port security, installation of cold storage facilities, storage and warehousing of goods after deduction of discounts and other reductions applicable to such charges. Wharfage and other revenue items are accounted for on an accrual basis, except penal charges which are accounted for on a cash basis. Interest income Interest income is recognised on a time-proportion basis using the effective interest method. When interest 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.

(d) Property, plant and equipment Plant and buildings comprise mainly of walls, piers, dredging facilities, roadways, warehouses and offices. Land, plant and buildings are shown at fair value, based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is restated proportionately with the change in the gross carrying amount of the asset so that the asset’s carrying amount after revaluation equals its revalued amount. Fair value represents open market value for land while buildings are shown at depreciated replacement cost as there is no market-based evidence of fair value because of the specialised nature of the buildings and the buildings cannot be sold except as part of a continuing business. All other property, plant and equipment are stated at cost less depreciation. Cost includes any expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Increases in the carrying amount arising on revaluation of land and buildings are credited to other comprehensive income and shown as capital reserves in stockholders’ equity. Decreases that offset previous increases of the same asset are charged in other comprehensive income and debited against capital reserves directly in equity; all other decreases are charged to the income statement.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives. The annual rates in use are:

Plant and buildings comprising buildings, leasehold properties, walls, piers, dredging and roadways 1.33% - 5%

Machinery and equipment 4% - 20%Cold room and air conditioning equipment 10%Furniture and fixtures 5% - 10%Motor vehicles 10% - 20%



76




(b) Consolidation (continued)

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies.

When the Group ceases to have control any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

The subsidiaries, which are all incorporated and domiciled in Jamaica (except KWGHSLL), are as follows:

Principal Activities

Holding by

Company Holding

by Group Financial Year End

Harbour Cold Stores Limited Rental of and repair services to cold storage facilities 100% 100% 31 December

Security Administrators Limited Security services 33 ⅓% 66 ⅔% 31 DecemberWestern Storage Limited Property rental 100% 100% 31 DecemberWestern Terminals Limited Property rental 100% 100% 31 DecemberKWL Group Holdings (St Lucia)

Limited (KWGHSLL) Non-Trading 100% 100% 31 December Kingston Terminal Operators

Limited Dormant 100% 100% 31 December Newport Stevedoring Services

Limited (formerly Jamaica Cooling Stores Limited) Provision of contract labour - 100% 31 December

Kingston Wharves Group Limited Non-Trading - 100% 31 December KW Logistics Limited Non-Trading - 100% 31 December KW Stevedores Limited Non-Trading - 100% 31 December Security Administrators Specialist

Services Limited Security services - 66 ⅔% 31 December

Transactions with non-controlling interests Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Page 16



(c) Revenue and income recognition Revenue comprises the fair value of the consideration received or receivable for the provision of services in the ordinary course of the Group’s activities. Revenue is shown net of General Consumption Tax, rebates and discounts and after eliminating sales within the Group. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities.

Services These are charges made for wharfage operations, port security, installation of cold storage facilities, storage and warehousing of goods after deduction of discounts and other reductions applicable to such charges. Wharfage and other revenue items are accounted for on an accrual basis, except penal charges which are accounted for on a cash basis. Interest income Interest income is recognised on a time-proportion basis using the effective interest method. When interest 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.

(d) Property, plant and equipment Plant and buildings comprise mainly of walls, piers, dredging facilities, roadways, warehouses and offices. Land, plant and buildings are shown at fair value, based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is restated proportionately with the change in the gross carrying amount of the asset so that the asset’s carrying amount after revaluation equals its revalued amount. Fair value represents open market value for land while buildings are shown at depreciated replacement cost as there is no market-based evidence of fair value because of the specialised nature of the buildings and the buildings cannot be sold except as part of a continuing business. All other property, plant and equipment are stated at cost less depreciation. Cost includes any expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Increases in the carrying amount arising on revaluation of land and buildings are credited to other comprehensive income and shown as capital reserves in stockholders’ equity. Decreases that offset previous increases of the same asset are charged in other comprehensive income and debited against capital reserves directly in equity; all other decreases are charged to the income statement.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts to their residual values over their estimated useful lives. The annual rates in use are:

Plant and buildings comprising buildings, leasehold properties, walls, piers, dredging and roadways 1.33% - 5%

Machinery and equipment 4% - 20%Cold room and air conditioning equipment 10%Furniture and fixtures 5% - 10%Motor vehicles 10% - 20%



77




(d) Property, plant and equipment (continued) Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets, or where shorter, the term of the relevant lease. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (Note 2(f)). Gains and losses on disposal of property, plant and equipment are determined by comparing proceeds with their carrying amounts and are included in profit or loss. When revalued assets are sold, the amounts included in other reserves are transferred to retained earnings.

(e) Intangible assets Separately acquired rights and benefits under third party contracts with a finite useful life are shown at historical cost less subsequent amortisation. Amortisation is calculated using the straight-line method to allocate the cost of the rights and benefits over their estimated useful lives of two to ten years. Separately acquired computer software licences are shown at historical cost less subsequent amortisation. Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of five years.

(f) Impairment of non-financial assets

Assets that have an indefinite useful life, for example land, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash flows. Non-financial assets that suffer impairment are reviewed for possible reversal of the impairment at each statement of financial position date.

(g) Foreign currency translation 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 financial statements are presented in Jamaican dollars, which is the Group’s presentation currency and the functional currency of all the entities in the Group.

Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Foreign exchange gains and losses that relate to borrowings are presented in profit or loss with ‘finance costs’.

(h) 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 the 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 market interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in profit and loss. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited in profit or loss.

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(i) Investments in subsidiaries Investments by the company in subsidiaries are stated at cost.

(j) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in, first-out basis. Net realisable value is the estimated selling price in the ordinary course of business, less the cost of selling expenses.

(k) Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly

liquid investments with original maturities of three months or less net of bank overdrafts.

(l) Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past

events, when it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

(m) Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

(n) Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are

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

(o) Leases Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other long term payables. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term.

Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit and loss on a straight-line basis over the period of the lease.

Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis over the lease term. The respective leased assets are included in the balance sheet based on their nature.

(p) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer who makes strategic decisions as it relates to operations.



78




(d) Property, plant and equipment (continued) Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets, or where shorter, the term of the relevant lease. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (Note 2(f)). Gains and losses on disposal of property, plant and equipment are determined by comparing proceeds with their carrying amounts and are included in profit or loss. When revalued assets are sold, the amounts included in other reserves are transferred to retained earnings.

(e) Intangible assets Separately acquired rights and benefits under third party contracts with a finite useful life are shown at historical cost less subsequent amortisation. Amortisation is calculated using the straight-line method to allocate the cost of the rights and benefits over their estimated useful lives of two to ten years. Separately acquired computer software licences are shown at historical cost less subsequent amortisation. Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of five years.

(f) Impairment of non-financial assets

Assets that have an indefinite useful life, for example land, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash flows. Non-financial assets that suffer impairment are reviewed for possible reversal of the impairment at each statement of financial position date.

(g) Foreign currency translation 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 financial statements are presented in Jamaican dollars, which is the Group’s presentation currency and the functional currency of all the entities in the Group.

Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Foreign exchange gains and losses that relate to borrowings are presented in profit or loss with ‘finance costs’.

(h) 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 the 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 market interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in profit and loss. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited in profit or loss.

Page 18



(i) Investments in subsidiaries Investments by the company in subsidiaries are stated at cost.

(j) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in, first-out basis. Net realisable value is the estimated selling price in the ordinary course of business, less the cost of selling expenses.

(k) Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short term highly

liquid investments with original maturities of three months or less net of bank overdrafts.

(l) Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past

events, when it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

(m) Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

(n) Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are

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

(o) Leases Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other long term payables. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term.

Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit and loss on a straight-line basis over the period of the lease.

Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis over the lease term. The respective leased assets are included in the balance sheet based on their nature.

(p) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer who makes strategic decisions as it relates to operations.



79




(q) DividendsDividend distribution to the company’s equity holders is recognised initially as a liability in the Group’sfinancial statements in the period in which the dividends are approved.

(r) Employee benefits

Pension obligationsThe Group participates in two retirement plans, the assets of which are generally held in separate trustee-administered funds. The pension plans are funded by payments from employees and by the Group, taking into account the recommendations of qualified actuaries. The Group has a defined benefit and a defined contribution plan.

A defined benefit plan is a pension plan that defines 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 asset or liability recognised in the statement of financial position in respect of the defined benefit pension plan is the present value of the defined benefit obligation at the statement of financial position date less the fair value of plan assets, together with adjustments for past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Past-service costs are recognised immediately in the income statement.

The Group, through a subsidiary, also participates in a defined contribution plan whereby it pays contributions to a privately administered pension plan which is administered by trustees. Once the contributions have been paid, the subsidiary has no further payment obligations. The contributions are charged to the income statement in the period to which they relate. Other retirement obligations The Group provides post-employment health care and life insurance benefits to its retirees. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment using an accounting methodology similar to that for defined benefit pension plans. Actuarial gains and losses arising from experience adjustments, and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. These obligations are valued annually by independent qualified actuaries. Termination benefits Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

Page 20



(s) 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 profit and loss 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 twelve months after the statement of financial position date.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fees are deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fees are capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

(t) Borrowing costs General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

(u) Taxation

The tax expense comprises current and deferred income taxes. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Current income tax charges are based on taxable profit for the year, which differs from the profit before tax reported because it excludes items that are taxable or deductible in other years, and items that are never taxable or deductible. The Group’s liability for current income tax is calculated at tax rates that have been enacted at the statement of financial position date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is the tax expected to be paid or recovered on differences between the carrying amounts of assets and liabilities and the corresponding tax bases. 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 financial statements. Currently enacted tax rates are used in the determination of deferred income tax.

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.

Tax assets and liabilities are offset when they arise from the same taxable entity, relate to the same Tax

Authority and when the legal right of offset exists.



80




(q) DividendsDividend distribution to the company’s equity holders is recognised initially as a liability in the Group’sfinancial statements in the period in which the dividends are approved.

(r) Employee benefits

Pension obligationsThe Group participates in two retirement plans, the assets of which are generally held in separate trustee-administered funds. The pension plans are funded by payments from employees and by the Group, taking into account the recommendations of qualified actuaries. The Group has a defined benefit and a defined contribution plan.

A defined benefit plan is a pension plan that defines 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 asset or liability recognised in the statement of financial position in respect of the defined benefit pension plan is the present value of the defined benefit obligation at the statement of financial position date less the fair value of plan assets, together with adjustments for past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Past-service costs are recognised immediately in the income statement.

The Group, through a subsidiary, also participates in a defined contribution plan whereby it pays contributions to a privately administered pension plan which is administered by trustees. Once the contributions have been paid, the subsidiary has no further payment obligations. The contributions are charged to the income statement in the period to which they relate. Other retirement obligations The Group provides post-employment health care and life insurance benefits to its retirees. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment using an accounting methodology similar to that for defined benefit pension plans. Actuarial gains and losses arising from experience adjustments, and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. These obligations are valued annually by independent qualified actuaries. Termination benefits Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

Page 20



(s) 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 profit and loss 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 twelve months after the statement of financial position date.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fees are deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fees are capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

(t) Borrowing costs General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

(u) Taxation

The tax expense comprises current and deferred income taxes. Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Current income tax charges are based on taxable profit for the year, which differs from the profit before tax reported because it excludes items that are taxable or deductible in other years, and items that are never taxable or deductible. The Group’s liability for current income tax is calculated at tax rates that have been enacted at the statement of financial position date. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is the tax expected to be paid or recovered on differences between the carrying amounts of assets and liabilities and the corresponding tax bases. 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 financial statements. Currently enacted tax rates are used in the determination of deferred income tax.

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.

Tax assets and liabilities are offset when they arise from the same taxable entity, relate to the same Tax

Authority and when the legal right of offset exists.



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2. Summary of Significant Accounting Policies (Continued) (v) Investments and other financial instruments

A financial instrument is any contract that gives rise to both a financial asset in one entity and a financial liability or equity of another entity. Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

Financial assets The Group classifies its financial assets as 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. At initial recognition, the Group measures a financial asset at its fair value plus transaction costs that are directly attributable to the acquisition. Loans and receivables are subsequently carried at amortised cost.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the statement of financial position date. These are classified as non-current assets and comprise recoverable from The Port Authority of Jamaica in the statement of financial position. Loans and receivables included in current assets comprise trade and other receivables, group balances, cash and short-term investments in the statement of financial position.

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, in which case, they are included in current assets. Balances classified as available-for-sale include unquoted equity securities.

Gains and losses arising from changes in the fair value are recognised in other comprehensive income. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to profit or loss as gains or losses from investment securities included in other income. Dividends on available-for-sale equity instruments are recognised in the statement of comprehensive income when the Group’s right to receive payments is established.

Impairment of financial assets The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as ‘available-for-sale’, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Page 22



(v) Investments and other financial instruments (continued) Impairment of financial assets (continued) For loans and receivables category, the amount of the loss is measured as the difference between the asset’scarrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.

If there is objective evidence of impairment of 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 profit or loss. Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit or loss in the subsequent year.

Financial liabilitiesThe Group’s financial liabilities are initially measured at fair value, and are subsequently measured at amortised cost using the effective interest method. They are included as trade and other payables, group company balances, bank overdrafts and long term loans on the statement of financial position.

3. Financial Risk Management

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

The Group’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-to-date information systems. The Group regularly reviews its risk management policies and systems to reflect changes in markets, products and emerging best practice.

The Board of Directors is ultimately responsible for the establishment and oversight of the Group’s risk management framework. The Board provides guidance for overall risk management, covering specific areas, such as credit risk, market risk, foreign exchange risk, interest rate risk, and investment of excess liquidity.

Management seeks to minimise potential adverse effects on the financial performance of the Group by applying procedures to identify, evaluate and manage these risks, based on guidelines set by the Board.

The Board, through the Audit Committee, oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.



82



2. Summary of Significant Accounting Policies (Continued) (v) Investments and other financial instruments

A financial instrument is any contract that gives rise to both a financial asset in one entity and a financial liability or equity of another entity. Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

Financial assets The Group classifies its financial assets as 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. At initial recognition, the Group measures a financial asset at its fair value plus transaction costs that are directly attributable to the acquisition. Loans and receivables are subsequently carried at amortised cost.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the statement of financial position date. These are classified as non-current assets and comprise recoverable from The Port Authority of Jamaica in the statement of financial position. Loans and receivables included in current assets comprise trade and other receivables, group balances, cash and short-term investments in the statement of financial position.

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, in which case, they are included in current assets. Balances classified as available-for-sale include unquoted equity securities.

Gains and losses arising from changes in the fair value are recognised in other comprehensive income. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to profit or loss as gains or losses from investment securities included in other income. Dividends on available-for-sale equity instruments are recognised in the statement of comprehensive income when the Group’s right to receive payments is established.

Impairment of financial assets The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as ‘available-for-sale’, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Page 22



(v) Investments and other financial instruments (continued) Impairment of financial assets (continued) For loans and receivables category, the amount of the loss is measured as the difference between the asset’scarrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.

If there is objective evidence of impairment of 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 profit or loss. Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit or loss in the subsequent year.

Financial liabilitiesThe Group’s financial liabilities are initially measured at fair value, and are subsequently measured at amortised cost using the effective interest method. They are included as trade and other payables, group company balances, bank overdrafts and long term loans on the statement of financial position.

3. Financial Risk Management

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

The Group’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-to-date information systems. The Group regularly reviews its risk management policies and systems to reflect changes in markets, products and emerging best practice.

The Board of Directors is ultimately responsible for the establishment and oversight of the Group’s risk management framework. The Board provides guidance for overall risk management, covering specific areas, such as credit risk, market risk, foreign exchange risk, interest rate risk, and investment of excess liquidity.

Management seeks to minimise potential adverse effects on the financial performance of the Group by applying procedures to identify, evaluate and manage these risks, based on guidelines set by the Board.

The Board, through the Audit Committee, oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.



83



3. Financial Risk Management (Continued)

(a) Credit risk The Group is exposed to credit risk where a party to a financial instrument may fail to discharge an obligation

and causes the Group to incur a financial loss. The Group manages its concentrations of credit risk and places its cash and cash equivalents with high quality financial institutions. The Group limits the amount of credit exposure to any one financial institution. The Group’s choice of financial institution is based primarily on its high asset base and stability over the years. The Group's customer base comprises a number of shipping lines represented by their local agents and numerous other customers in a variety of business sectors. The Group has policies in place to ensure that sales of services are made to customers with an appropriate credit history.

Maximum exposure to credit risk The maximum exposure of the Group and Company to credit risk is as follows:

The Group The Company 2017 $’000

2016 $’000

2017 $’000

2016 $’000

Due from related party - - 102,405 102,405 Investments 128,466 128,466 85,818 85,818 Trade receivables 636,484 509,855 472,391 401,039 Other receivables 163,477 89,370 155,373 76,794 Group companies - - 123,731 376,906 Short term investments 3,573,360 2,830,027 3,034,900 2,048,456 Cash and bank 374,861 360,819 302,697 279,294

4,876,648 3,918,537 4,277,315 3,370,712

Credit review process Management performs regular analyses of the ability of customers and other counterparties to meet repayment obligations.

(i) Aging analysis of trade receivables that are past due but not impaired Trade receivables that are less than thirty-one (31) days past due are not considered impaired. As of 31 December 2017, trade receivables of $371,044,000 (2016 - $204,782,000) for the Group and $287,598,000 (2016 - $182,983,000) for the company were past due but were not considered to be impaired. These relate to a number of independent customers for whom there is no recent history of default. The aging analysis of these trade receivables is as follows:


2016 $’000

2017 $’000

2016 $’000

31 - 60 days 240,296 142,448 174,264 134,443Over 60 days 130,748 62,334 113,334 48,540

371,044 204,782 287,598 182,983

Page 24



(a) Credit risk (continued) (ii) Aging analysis of trade receivables that are past due and are impaired As of 31 December 2017, trade receivables of $59,816,000 (2016 - $33,527,000) and $42,450,000

(2016 - $19,153,000) for the Group and company respectively were past due and considered to be impaired. These receivables were fully provided for.

The aging of these receivables is as follows: The Group The Company

2017 $’000

2016 $’000

2017 $’000

2016 $’000

Over 60 days 59,816 33,527 42,450 19,153

Movement in the provision for impairment of receivables Trade and other receivables Movements on the provision for impairment of trade receivables are as follows


2016 $’000

2017 $’000

2016 $’000

At 1 January 33,527 23,421 19,153 10,016 Provision for impairment 45,108 13,673 41,595 12,609 Amounts recovered (18,819) (3,567) (18,298) (3,472) At 31 December 59,816 33,527 42,450 19,153

The movement in the provision for the year included $4,775,000 (2016 - $1,455,000) and $2,990,000 (2016 - $727,000) for the Group and company respectively for related companies. These amounts are included in bad debt expense in profit or loss.

The creation and release of provision for impaired receivables have been included in expenses in profit or loss in the statement of comprehensive income. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

There are no financial assets other than those listed above that were individually impaired.



84




(a) Credit risk The Group is exposed to credit risk where a party to a financial instrument may fail to discharge an obligation

and causes the Group to incur a financial loss. The Group manages its concentrations of credit risk and places its cash and cash equivalents with high quality financial institutions. The Group limits the amount of credit exposure to any one financial institution. The Group’s choice of financial institution is based primarily on its high asset base and stability over the years. The Group's customer base comprises a number of shipping lines represented by their local agents and numerous other customers in a variety of business sectors. The Group has policies in place to ensure that sales of services are made to customers with an appropriate credit history.

Maximum exposure to credit risk The maximum exposure of the Group and Company to credit risk is as follows:


2016 $’000

2017 $’000

2016 $’000

Due from related party - - 102,405 102,405 Investments 128,466 128,466 85,818 85,818 Trade receivables 636,484 509,855 472,391 401,039 Other receivables 163,477 89,370 155,373 76,794 Group companies - - 123,731 376,906 Short term investments 3,573,360 2,830,027 3,034,900 2,048,456 Cash and bank 374,861 360,819 302,697 279,294

4,876,648 3,918,537 4,277,315 3,370,712

Credit review process Management performs regular analyses of the ability of customers and other counterparties to meet repayment obligations.

(i) Aging analysis of trade receivables that are past due but not impaired Trade receivables that are less than thirty-one (31) days past due are not considered impaired. As of 31 December 2017, trade receivables of $371,044,000 (2016 - $204,782,000) for the Group and $287,598,000 (2016 - $182,983,000) for the company were past due but were not considered to be impaired. These relate to a number of independent customers for whom there is no recent history of default. The aging analysis of these trade receivables is as follows:


2016 $’000

2017 $’000

2016 $’000

31 - 60 days 240,296 142,448 174,264 134,443Over 60 days 130,748 62,334 113,334 48,540

371,044 204,782 287,598 182,983

Page 24



(a) Credit risk (continued) (ii) Aging analysis of trade receivables that are past due and are impaired As of 31 December 2017, trade receivables of $59,816,000 (2016 - $33,527,000) and $42,450,000

(2016 - $19,153,000) for the Group and company respectively were past due and considered to be impaired. These receivables were fully provided for.

The aging of these receivables is as follows: The Group The Company

2017 $’000

2016 $’000

2017 $’000

2016 $’000

Over 60 days 59,816 33,527 42,450 19,153

Movement in the provision for impairment of receivables Trade and other receivables Movements on the provision for impairment of trade receivables are as follows


2016 $’000

2017 $’000

2016 $’000

At 1 January 33,527 23,421 19,153 10,016 Provision for impairment 45,108 13,673 41,595 12,609 Amounts recovered (18,819) (3,567) (18,298) (3,472) At 31 December 59,816 33,527 42,450 19,153

The movement in the provision for the year included $4,775,000 (2016 - $1,455,000) and $2,990,000 (2016 - $727,000) for the Group and company respectively for related companies. These amounts are included in bad debt expense in profit or loss.

The creation and release of provision for impaired receivables have been included in expenses in profit or loss in the statement of comprehensive income. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

There are no financial assets other than those listed above that were individually impaired.



85




(a) Credit risk (continued) Concentrations of risk

(i) Trade receivables

The following table summarises the Group and company’s credit exposure for trade receivables at their carrying amounts, as categorised by the concentration of customers:


2016 $’000

2017 $’000

2016 $’000

Top ten customers 597,384 490,743 427,647 376,112 Other 98,916 52,639 87,194 44,080

696,300 543,382 514,841 420,192 Less: Provision for impairment (59,816) (33,527) (42,450) (19,153)

636,484 509,855 472,391 401,039

(ii) Short term investments The Group’s short term investments comprise cash on deposit held with financial institutions.

(b) Liquidity risk

Liquidity risk is the risk that the Group may be unable to meet its payment obligations associated with its financial liabilities when they fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions.

Liquidity risk management processThe Group’s liquidity management process, as carried out within the Group and monitored by the Board of Directors, includes:

(i) Monitoring future cash flows and liquidity on a daily basis. This incorporates an assessment of expected cash flows and the availability of high grade collateral which could be used to secure funding if required.

(ii) Maintaining committed lines of credit;

(iii) Optimising cash returns on investment;

(iv) Managing the concentration and profile of debt maturities.

The matching and controlled mismatching of the maturities and interest rates of assets and liabilities is fundamental to the management of the Group.

The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing liabilities as they mature, are important factors in assessing the liquidity of the Group and its exposure to changes in interest rates and exchange rates.

Page 26



(b) Liquidity risk (continued)

Financial liabilities cash flows The tables below summarise the maturity profile of the Group’s and company’s financial liabilities at 31 December based on contractual undiscounted payments at contractual maturity dates.

The Group Within 1

Month 1 to 3

Months 3 to 12 Months

1 to 5 Years

Over 5 Years Total

$’000 $’000 $’000 $’000 $’000 $’000 2017 Borrowings 71,173 140,762 520,511 2,414,967 534,315 3,681,728Long term liability 21,313 - - - - 21,313Trade and other payables 1,641,672 - - - - 1,641,672Total financial liabilities 1,734,158 140,762 520,511 2,414,967 534,315 5,344,713

2016 Borrowings 57,002 112,338 497,115 1,642,262 448,160 2,756,877Long term liability 7,193 48,624 12,844 9,454 - 78,115Trade and other payables 1,002,529 - - - - 1,002,529Total financial liabilities 1,066,724 160,962 509,959 1,651,716 448,160 3,837,521

The Company

Within 1

Month 1 to 3


1 to 5 Years

Over 5 Years Total

$’000 $’000 $’000 $’000 $’000 $’000 2017 Borrowings 71,173 140,762 520,511 2,414,967 532,863 3,680,276Long term liability 21,313 - - - - 21,313Trade and other payables 1,577,569 - - - - 1,577,569Group companies 29,479 - - - - 29,479Total financial liabilities 1,699,534 140,762 520,511 2,414,967 532,863 5,308,637 2016 Borrowings 57,002 112,338 497,115 1,642,262 446,708 2,755,425Long term liability 7,193 48,624 12,844 9,454 - 78,115Trade and other payables 942,824 - - - - 942,824Group companies 5,984 - - - - 5,984Total financial liabilities 1,013,003 160,962 509,959 1,651,716 446,708 3,782,348



86




(a) Credit risk (continued) Concentrations of risk

(i) Trade receivables

The following table summarises the Group and company’s credit exposure for trade receivables at their carrying amounts, as categorised by the concentration of customers:


2016 $’000

2017 $’000

2016 $’000

Top ten customers 597,384 490,743 427,647 376,112 Other 98,916 52,639 87,194 44,080

696,300 543,382 514,841 420,192 Less: Provision for impairment (59,816) (33,527) (42,450) (19,153)

636,484 509,855 472,391 401,039

(ii) Short term investments The Group’s short term investments comprise cash on deposit held with financial institutions.

(b) Liquidity risk

Liquidity risk is the risk that the Group may be unable to meet its payment obligations associated with its financial liabilities when they fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions.

Liquidity risk management processThe Group’s liquidity management process, as carried out within the Group and monitored by the Board of Directors, includes:

(i) Monitoring future cash flows and liquidity on a daily basis. This incorporates an assessment of expected cash flows and the availability of high grade collateral which could be used to secure funding if required.

(ii) Maintaining committed lines of credit;

(iii) Optimising cash returns on investment;

(iv) Managing the concentration and profile of debt maturities.

The matching and controlled mismatching of the maturities and interest rates of assets and liabilities is fundamental to the management of the Group.

The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing liabilities as they mature, are important factors in assessing the liquidity of the Group and its exposure to changes in interest rates and exchange rates.

Page 26



(b) Liquidity risk (continued)

Financial liabilities cash flows The tables below summarise the maturity profile of the Group’s and company’s financial liabilities at 31 December based on contractual undiscounted payments at contractual maturity dates.

The Group Within 1

Month 1 to 3


1 to 5 Years

Over 5 Years Total

$’000 $’000 $’000 $’000 $’000 $’000 2017 Borrowings 71,173 140,762 520,511 2,414,967 534,315 3,681,728Long term liability 21,313 - - - - 21,313Trade and other payables 1,641,672 - - - - 1,641,672Total financial liabilities 1,734,158 140,762 520,511 2,414,967 534,315 5,344,713

2016 Borrowings 57,002 112,338 497,115 1,642,262 448,160 2,756,877Long term liability 7,193 48,624 12,844 9,454 - 78,115Trade and other payables 1,002,529 - - - - 1,002,529Total financial liabilities 1,066,724 160,962 509,959 1,651,716 448,160 3,837,521

The Company

Within 1

Month 1 to 3


1 to 5 Years

Over 5 Years Total

$’000 $’000 $’000 $’000 $’000 $’000 2017 Borrowings 71,173 140,762 520,511 2,414,967 532,863 3,680,276Long term liability 21,313 - - - - 21,313Trade and other payables 1,577,569 - - - - 1,577,569Group companies 29,479 - - - - 29,479Total financial liabilities 1,699,534 140,762 520,511 2,414,967 532,863 5,308,637 2016 Borrowings 57,002 112,338 497,115 1,642,262 446,708 2,755,425Long term liability 7,193 48,624 12,844 9,454 - 78,115Trade and other payables 942,824 - - - - 942,824Group companies 5,984 - - - - 5,984Total financial liabilities 1,013,003 160,962 509,959 1,651,716 446,708 3,782,348



87




(c) Market risk The Group takes on exposure to market risk, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk mainly arise from changes in foreign currency exchange rates and interest rates.

There has been no change to the Group’s exposure to market risk or the manner in which it manages and measures the risk.

(i) Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group is primarily exposed to such risks arising from its significant level of foreign currency borrowings. This is partially offset by its US dollar revenue transactions and its holdings in US dollar cash and other accounts.

The Group manages its foreign exchange risk by ensuring that the net exposure in foreign assets and liabilities is kept to an acceptable level by monitoring currency positions. The Group further manages this risk by maximising foreign currency earnings and holding foreign currency balances.

Page 28



(c) Market risk (continued)

(i) Currency risk (continued)

Concentrations of currency risk

The table below summarises the Group and company exposure to foreign currency exchange rate risk at 31 December.

The Group Jamaican$ US$ Total

J$’000 J$’000 J$’000 2017

Financial Assets Investments 128,466 - 128,466Short term investments 1,566,567 2,006,793 3,573,360Trade and other receivables 260,670 539,291 799,961Cash and bank 220,084 154,777 374,861Total financial assets 2,175,787 2,700,861 4,876,648Financial Liabilities Borrowings 2,719,111 169,021 2,888,132Long term liability - 21,313 21,313Trade and other payables 1,560,449 81,223 1,641,672Total financial liabilities 4,279,560 271,557 4,551,117Net financial position (2,103,773) 2,429,304 325,531 2016 Financial Assets Investments 128,466 - 128,466Short term investments 1,025,462 1,804,565 2,830,027Trade and other receivables 477,188 122,037 599,225Cash and bank 210,931 149,888 360,819Total financial assets 1,842,047 2,076,490 3,918,537Financial Liabilities Borrowings 1,822,404 520,509 2,342,913Long term liability - 78,115 78,115Trade and other payables 921,628 80,901 1,002,529Total financial liabilities 2,744,032 679,525 3,423,557Net financial position (901,985) 1,396,965 494,980



88




(c) Market risk The Group takes on exposure to market risk, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk mainly arise from changes in foreign currency exchange rates and interest rates.

There has been no change to the Group’s exposure to market risk or the manner in which it manages and measures the risk.

(i) Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group is primarily exposed to such risks arising from its significant level of foreign currency borrowings. This is partially offset by its US dollar revenue transactions and its holdings in US dollar cash and other accounts.

The Group manages its foreign exchange risk by ensuring that the net exposure in foreign assets and liabilities is kept to an acceptable level by monitoring currency positions. The Group further manages this risk by maximising foreign currency earnings and holding foreign currency balances.

Page 28



(c) Market risk (continued)

(i) Currency risk (continued)

Concentrations of currency risk

The table below summarises the Group and company exposure to foreign currency exchange rate risk at 31 December.

The Group Jamaican$ US$ Total

J$’000 J$’000 J$’000 2017

Financial Assets Investments 128,466 - 128,466Short term investments 1,566,567 2,006,793 3,573,360Trade and other receivables 260,670 539,291 799,961Cash and bank 220,084 154,777 374,861Total financial assets 2,175,787 2,700,861 4,876,648Financial Liabilities Borrowings 2,719,111 169,021 2,888,132Long term liability - 21,313 21,313Trade and other payables 1,560,449 81,223 1,641,672Total financial liabilities 4,279,560 271,557 4,551,117Net financial position (2,103,773) 2,429,304 325,531 2016 Financial Assets Investments 128,466 - 128,466Short term investments 1,025,462 1,804,565 2,830,027Trade and other receivables 477,188 122,037 599,225Cash and bank 210,931 149,888 360,819Total financial assets 1,842,047 2,076,490 3,918,537Financial Liabilities Borrowings 1,822,404 520,509 2,342,913Long term liability - 78,115 78,115Trade and other payables 921,628 80,901 1,002,529Total financial liabilities 2,744,032 679,525 3,423,557Net financial position (901,985) 1,396,965 494,980



89




(c) Market risk (continued) (i) Currency risk (continued)

Concentrations of currency risk (continued) The Company Jamaican$ US$ Total

J$’000 J$’000 J$’000 2017

Financial Assets Investments 85,818 - 85,818 Short term investments 1,429,254 1,605,646 3,034,900 Trade and other receivables 111,137 516,627 627,764 Group companies 123,731 - 123,731

Cash and bank 196,831 105,866 302,697 Total financial assets 1,946,771 2,228,139 4,174,910 Financial Liabilities Borrowings 2,717,659 169,021 2,886,680 Long term liability - 21,313 21,313 Trade and other payables 1,496,346 81,223 1,577, 569 Group companies 29,479 - 29,479 Total financial liabilities 4,243,484 271,557 4,515,041 Net financial position (2,296,713) 1,956,582 (340,131) 2016 Financial AssetsInvestments 85,818 - 85,818 Short term investments 574,541 1,473,915 2,048,456 Trade and other receivables 355,796 122,037 477,833 Group companies 376,906 - 376,906 Cash and bank 170,848 108,446 279,294 Total financial assets 1,563,909 1,704,398 3,268,307 Financial LiabilitiesBorrowings 1,820,952 520,509 2,341,461 Long term liability - 78,115 78,115 Trade and other payables 861,923 80,901 942,824 Group companies 5,984 - 5,984 Total financial liabilities 2,688,859 679,525 3,368,384 Net financial position (1,124,950) 1,024,873 (100,077)

Page 30



(c) Market risk (continued)(i) Currency risk (continued)

Foreign currency sensitivity The following tables indicate the currency to which the Group and company had significant exposure on its monetary assets and liabilities and its forecast cash flows. The change in currency rate below represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis represents outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 2% (2016 - 1%) appreciation and a 4% (2016 - 6%) depreciation change in foreign currency rates. The sensitivity of the profit was primarily as a result of foreign exchange gains/losses on translation of US dollar-denominated trade receivables, short term investments and US dollar-denominated borrowings. Profit is more sensitive to movements in Jamaican dollar/US dollar exchange rates because of the significant level of US-dollar denominated borrowings. The correlation of variables will have a significant effect in determining the ultimate impact on market risk, but to demonstrate the impact due to changes in variables, variables had to be on an individual basis. There is no direct impact on other comprehensive income or equity.

Change in Currency

Rate

Effect on Profit before

Taxation

Change in Currency

Rate


Taxation

2017

% 2017 $’000

2016 %

2016 $’000

The Group Currency:

USD +2 48,586 +1 13,970 USD -4 (97,172) -6 (83,818)

The Company

USD +2 39,132 +1 10,249 USD -4 (78,263) -6 (61,492)

(ii) Interest rate riskInterest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Floating rate instruments expose the Group to cash flow interest risk, whereas fixed interest rate instruments expose the Group to fair value interest risk.

The Group’s interest rate risk policy requires it to manage interest rate risk by maintaining an appropriate mix of fixed and variable rate instruments. The policy also requires it to manage the maturities of interest bearing financial assets and liabilities.

The following tables summarise the Group’s and the company’s exposure to interest rate risk. It includes the Group and company financial instruments at carrying amounts, categorised by the earlier of contractual repricing or maturity dates.



90




(c) Market risk (continued) (i) Currency risk (continued)

Concentrations of currency risk (continued) The Company Jamaican$ US$ Total

J$’000 J$’000 J$’000 2017

Financial Assets Investments 85,818 - 85,818 Short term investments 1,429,254 1,605,646 3,034,900 Trade and other receivables 111,137 516,627 627,764 Group companies 123,731 - 123,731

Cash and bank 196,831 105,866 302,697 Total financial assets 1,946,771 2,228,139 4,174,910 Financial Liabilities Borrowings 2,717,659 169,021 2,886,680 Long term liability - 21,313 21,313 Trade and other payables 1,496,346 81,223 1,577, 569 Group companies 29,479 - 29,479 Total financial liabilities 4,243,484 271,557 4,515,041 Net financial position (2,296,713) 1,956,582 (340,131) 2016 Financial AssetsInvestments 85,818 - 85,818 Short term investments 574,541 1,473,915 2,048,456 Trade and other receivables 355,796 122,037 477,833 Group companies 376,906 - 376,906 Cash and bank 170,848 108,446 279,294 Total financial assets 1,563,909 1,704,398 3,268,307 Financial LiabilitiesBorrowings 1,820,952 520,509 2,341,461 Long term liability - 78,115 78,115 Trade and other payables 861,923 80,901 942,824 Group companies 5,984 - 5,984 Total financial liabilities 2,688,859 679,525 3,368,384 Net financial position (1,124,950) 1,024,873 (100,077)

Page 30



(c) Market risk (continued)(i) Currency risk (continued)

Foreign currency sensitivity The following tables indicate the currency to which the Group and company had significant exposure on its monetary assets and liabilities and its forecast cash flows. The change in currency rate below represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis represents outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 2% (2016 - 1%) appreciation and a 4% (2016 - 6%) depreciation change in foreign currency rates. The sensitivity of the profit was primarily as a result of foreign exchange gains/losses on translation of US dollar-denominated trade receivables, short term investments and US dollar-denominated borrowings. Profit is more sensitive to movements in Jamaican dollar/US dollar exchange rates because of the significant level of US-dollar denominated borrowings. The correlation of variables will have a significant effect in determining the ultimate impact on market risk, but to demonstrate the impact due to changes in variables, variables had to be on an individual basis. There is no direct impact on other comprehensive income or equity.

Change in Currency

Rate


Taxation

Change in Currency

Rate


Taxation

2017

% 2017 $’000

2016 %

2016 $’000

The Group Currency:

USD +2 48,586 +1 13,970 USD -4 (97,172) -6 (83,818)

The Company

USD +2 39,132 +1 10,249 USD -4 (78,263) -6 (61,492)

(ii) Interest rate riskInterest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Floating rate instruments expose the Group to cash flow interest risk, whereas fixed interest rate instruments expose the Group to fair value interest risk.

The Group’s interest rate risk policy requires it to manage interest rate risk by maintaining an appropriate mix of fixed and variable rate instruments. The policy also requires it to manage the maturities of interest bearing financial assets and liabilities.

The following tables summarise the Group’s and the company’s exposure to interest rate risk. It includes the Group and company financial instruments at carrying amounts, categorised by the earlier of contractual repricing or maturity dates.



91




(c) Market risk (continued) (ii) Interest rate risk (continued)

The Group

Within 1 Month

1 to 3 Months

3 to 12 Months

1 to 5 Years

Over 5 Years

Non-Interest Bearing Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

2017 Assets Investments - - - - - 128,466 128,466

Short term investments 1,772,102 1,801,258 - - - - 3,573,360

Trade and other receivables - - - - - 799,961 799,961

Cash and bank 224,938 - - - - 149,923 374,861

Total financial assets 1,997,040 1,801,258 - - - 1,078,350 4,876,648

Liabilities Borrowings 257,481 412,500 1,469,383 98,400 646,570 3,798 2,888,132

Long term liability - - - - - 21,313 21,313

Trade and other payables - - - - - 1,641,672 1,641,672

Total financial liabilities 257,481 412,500 1,469,383 98,400 646,570 1,666,783 4,551,117

Total interest repricing gap 1,739,559 1,388,758 (1,469,383) (98,400) (646,570) (588,433) 325,531




Cash and bank 151,093 - - - - 209,726 360,819

Total financial assets 1,750,294 1,230,826 - - - 937,417 3,918,537

Liabilities Borrowings - 296,594 1,011,580 778,040 251,347 5,352 2,342,913



Total financial liabilities 296,594 1,011,580 778,040 251,347 1,085,996 3,423,557

Total interest repricing gap 1,750,294 934,232 (1,011,580) (778,040) (251,347) (148,579) 494,980

Page 32



(c) Market risk (continued)(ii) Interest rate risk (continued)

The Company

Within 1 Month

1 to 3 Months

3 to 12 Months

1 to 5 Years

Over 5 Years


$’000 $’000 $’000 $’000 $’000 $’000 $’000 2017 Assets Investments - - - - - 85,818 85,818



Group companies - - - - - 123,731 123,731

Cash and bank 171,879 - - - - 130,818 302,697





Group companies - - - - - 29,479 29,479

Total financial liabilities 257,481 412,500 1,469,383 98,400 646,570 1,630,707 4,515,041 Total interest repricing gap 1,601,672 935,126 (1,469,383) (98,400) (646,570) (662,576) (340,131)


Short term investments 817,630 1,230,826 - - - - 2,048,456


Group companies - - - - - 376,906 376,906

Cash and bank 151,093 - - - - 128,201 279,294

Total financial assets 968,723 1,230,826 - - - 1,068,758 3,268,307



Trade and other payables - - - - - 942,824 942,824

Group companies - - - - - 5,984 5,984

Total financial liabilities - 296,593 1,011,580 778,040 251,348 1,030,823 3,368,384Total interest repricing gap 968,723 934,233 (1,011,580) (778,040) (251,348) 37,935 (100,077)



92





The Group

Within 1 Month

1 to 3 Months

3 to 12 Months

1 to 5 Years

Over 5 Years


$’000 $’000 $’000 $’000 $’000 $’000 $’000




Cash and bank 224,938 - - - - 149,923 374,861

Total financial assets 1,997,040 1,801,258 - - - 1,078,350 4,876,648




Total financial liabilities 257,481 412,500 1,469,383 98,400 646,570 1,666,783 4,551,117

Total interest repricing gap 1,739,559 1,388,758 (1,469,383) (98,400) (646,570) (588,433) 325,531




Cash and bank 151,093 - - - - 209,726 360,819





Total financial liabilities 296,594 1,011,580 778,040 251,347 1,085,996 3,423,557

Total interest repricing gap 1,750,294 934,232 (1,011,580) (778,040) (251,347) (148,579) 494,980

Page 32



(c) Market risk (continued)(ii) Interest rate risk (continued)

The Company

Within 1 Month

1 to 3 Months

3 to 12 Months

1 to 5 Years

Over 5 Years


$’000 $’000 $’000 $’000 $’000 $’000 $’000 2017 Assets Investments - - - - - 85,818 85,818



Group companies - - - - - 123,731 123,731

Cash and bank 171,879 - - - - 130,818 302,697





Group companies - - - - - 29,479 29,479

Total financial liabilities 257,481 412,500 1,469,383 98,400 646,570 1,630,707 4,515,041 Total interest repricing gap 1,601,672 935,126 (1,469,383) (98,400) (646,570) (662,576) (340,131)


Short term investments 817,630 1,230,826 - - - - 2,048,456


Group companies - - - - - 376,906 376,906

Cash and bank 151,093 - - - - 128,201 279,294

Total financial assets 968,723 1,230,826 - - - 1,068,758 3,268,307



Trade and other payables - - - - - 942,824 942,824

Group companies - - - - - 5,984 5,984

Total financial liabilities - 296,593 1,011,580 778,040 251,348 1,030,823 3,368,384Total interest repricing gap 968,723 934,233 (1,011,580) (778,040) (251,348) 37,935 (100,077)



93





Interest rate sensitivity

The following table indicates the sensitivity to a possible change in interest rates, with all other variables held constant, on the Group’s and company’s statement of comprehensive income and stockholders’equity.

The Group’s interest rate risk arises mainly from short term deposits and borrowings. The sensitivity of the profit or loss is the effect of the assumed changes in interest rates on net income based on floating rate deposits and borrowings. The correlation of variables will have a significant effect in determining the ultimate impact on market risk, but to demonstrate the impact due to changes in variables, variables had to be on an individual basis. It should be noted that movements in these variables are non-linear. There was no direct impact on other comprehensive income or equity.

The Group The Company


Taxation


Taxation


Taxation


Taxation

2017 $’000

2016 $’000

2017 $’000

2016 $’000

Change in basis points 2017 2017 2016 2016 JMD USD JMD USD +100 +50 +100 +100 1,047 10,588 4,188 2,764-100 -50 -100 -50 (1,047) (3,418) (4,188) 2,545

(d) Capital management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for stockholders and benefits for other stakeholders, to effectively service its customers and to maintain an optimal capital structure to reduce the cost of capital as well as meet externally imposed capital requirements. The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by total stockholders’ equity and non-controlling interests. The Board of Directors also monitors the level of dividends to ordinary equity holders.

The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as total debt divided by total stockholders’ equity. Debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated statement of financial position) less bank overdraft and interest payable. Total stockholders’ equity is calculated as capital and reserves attributable to company’s equity holders as shown in the consolidated statement of financial position.

Page 34



(d) Capital management (continued)

During 2017, the Group’s strategy, which was unchanged from 2016, was to maintain the gearing ratio no higher than 75%. The gearing ratios at 31 December 2017 and 2016 were as follows:

2017 $’000

2016 $’000

Total long term borrowings (Note 28) 2,888,132 2,342,913

Total stockholders’ equity 22,981,794 18,540,246

Gearing ratio (%) 12.57% 12.63%

There were no changes to the Group’s approach to capital management during the year.

(e) Fair Value of Financial Instruments

In assessing the fair value of financial instruments, the Group uses a variety of methods and makes assumptions that are based on market conditions existing at the statement of financial position date. The estimated fair values have been determined using available market information and appropriate valuation methodologies. However, considerable judgement is necessarily required in interpreting market data to develop estimates of fair value.

Financial instruments that, subsequent to initial recognition, are measured at fair value are grouped into Levels 1 to 3 based on the degree to which the fair value is observable. At the reporting date, the Group and company had only Level 2 financial instruments which are defined as:

those with fair value measurements that are derived from inputs other than quoted prices that are observable for the asset or liability either directly (that is as prices) or indirectly, (that is, derived from prices).

At 31 December 2017, instruments included within this level comprised available-for-sale unquoted equities which totalled $128,466,000 (2016 - 128,466,000) and $85,818,000 (2016 – 85,818,000) for the Group and company, respectively. There were no transfers between levels in 2017 and 2016.

The following methods and assumptions have been used in determining fair values for instruments not re-measured at fair value after initial recognition

(i) The carrying values less any impairment provision of financial assets and liabilities with a maturity of less than one year are estimated to approximate their fair values due to the short term maturity of these instruments. These financial assets and liabilities are cash and bank balances, trade and other accounts receivables, trade and other accounts payables, related companies balances and short term investments.

(ii) The fair values of the long term receivables (due from related party and The Port Authority of Jamaica) could not be reliably determined as no reliable active market exists for these assets.

(iii) The carrying values of long term loans closely approximate amortised cost, which is estimated to be their fair value as they attract terms and conditions available in the market for similar transactions.



94





Interest rate sensitivity

The following table indicates the sensitivity to a possible change in interest rates, with all other variables held constant, on the Group’s and company’s statement of comprehensive income and stockholders’equity.

The Group’s interest rate risk arises mainly from short term deposits and borrowings. The sensitivity of the profit or loss is the effect of the assumed changes in interest rates on net income based on floating rate deposits and borrowings. The correlation of variables will have a significant effect in determining the ultimate impact on market risk, but to demonstrate the impact due to changes in variables, variables had to be on an individual basis. It should be noted that movements in these variables are non-linear. There was no direct impact on other comprehensive income or equity.



Taxation


Taxation


Taxation


Taxation

2017 $’000

2016 $’000

2017 $’000

2016 $’000

Change in basis points 2017 2017 2016 2016 JMD USD JMD USD +100 +50 +100 +100 1,047 10,588 4,188 2,764-100 -50 -100 -50 (1,047) (3,418) (4,188) 2,545

(d) Capital management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for stockholders and benefits for other stakeholders, to effectively service its customers and to maintain an optimal capital structure to reduce the cost of capital as well as meet externally imposed capital requirements. The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by total stockholders’ equity and non-controlling interests. The Board of Directors also monitors the level of dividends to ordinary equity holders.

The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as total debt divided by total stockholders’ equity. Debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated statement of financial position) less bank overdraft and interest payable. Total stockholders’ equity is calculated as capital and reserves attributable to company’s equity holders as shown in the consolidated statement of financial position.

Page 34



(d) Capital management (continued)

During 2017, the Group’s strategy, which was unchanged from 2016, was to maintain the gearing ratio no higher than 75%. The gearing ratios at 31 December 2017 and 2016 were as follows:

2017 $’000

2016 $’000

Total long term borrowings (Note 28) 2,888,132 2,342,913

Total stockholders’ equity 22,981,794 18,540,246

Gearing ratio (%) 12.57% 12.63%

There were no changes to the Group’s approach to capital management during the year.

(e) Fair Value of Financial Instruments

In assessing the fair value of financial instruments, the Group uses a variety of methods and makes assumptions that are based on market conditions existing at the statement of financial position date. The estimated fair values have been determined using available market information and appropriate valuation methodologies. However, considerable judgement is necessarily required in interpreting market data to develop estimates of fair value.

Financial instruments that, subsequent to initial recognition, are measured at fair value are grouped into Levels 1 to 3 based on the degree to which the fair value is observable. At the reporting date, the Group and company had only Level 2 financial instruments which are defined as:

those with fair value measurements that are derived from inputs other than quoted prices that are observable for the asset or liability either directly (that is as prices) or indirectly, (that is, derived from prices).

At 31 December 2017, instruments included within this level comprised available-for-sale unquoted equities which totalled $128,466,000 (2016 - 128,466,000) and $85,818,000 (2016 – 85,818,000) for the Group and company, respectively. There were no transfers between levels in 2017 and 2016.

The following methods and assumptions have been used in determining fair values for instruments not re-measured at fair value after initial recognition

(i) The carrying values less any impairment provision of financial assets and liabilities with a maturity of less than one year are estimated to approximate their fair values due to the short term maturity of these instruments. These financial assets and liabilities are cash and bank balances, trade and other accounts receivables, trade and other accounts payables, related companies balances and short term investments.

(ii) The fair values of the long term receivables (due from related party and The Port Authority of Jamaica) could not be reliably determined as no reliable active market exists for these assets.

(iii) The carrying values of long term loans closely approximate amortised cost, which is estimated to be their fair value as they attract terms and conditions available in the market for similar transactions.



95



4. Critical Accounting Estimates and Assumptions in Applying Accounting Policies

Judgements and estimates 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.

Key sources of estimation uncertainty 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.

Depreciable assets Estimates of the useful life and residual value of property, plant and equipment are required in order to apply an adequate rate of transferring the economic benefits embodied in these assets in the relevant periods. The Group applies a variety of methods including the use of certified independent valuators in an effort to arrive at these estimates. Any changes in estimates of residual value will directly impact the depreciation charge.

Income taxes Estimates are required in determining the provision for income taxes. There are some transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for possible tax 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.

The company was granted free zone status in December 2013, resulting in an income tax rate which is variable and based on approved methodology, and which is 11.11% (2016 – 10.59%) (Note 10).

Fair value of financial instrumentsThe fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses its judgement to select a variety of methods and valuation inputs and make assumptions that are mainly based on market conditions existing at each statement of financial position date. The Group uses discounted cash flow analyses and references to prices for other instruments that are substantially the same for various available-for-sale financial assets that were not traded in active markets. Details of investment securities valued using other than quoted prices in an active market are provided in Note 3(e) of the financial statements.

Page 36


4. Critical Accounting Estimates and Assumptions in Applying Accounting Policies (Continued)

Pension and other retirement benefits The cost of these benefits and the present value of the pension and the other post-employment liabilities depend on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net periodic cost (income) for pension and post-employment benefits include the expected long-term rate of return on the relevant plan assets, the discount rate and, in the case of the post-employment medical benefits, the expected rate of increase in medical costs. Any changes in these assumptions will impact the net periodic cost (income) recorded for pension and other post-employment benefits and may affect planned funding of the pension plans. The expected return on plan assets assumption is determined on a uniform basis, considering long-term historical returns, asset allocation and future estimates of long-term investment returns. The Group determines the appropriate discount rate at the end of each year, which represents the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension and other post-employment benefit obligations. In determining the appropriate discount rate, the Group considered interest rate of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. The expected rate of increase of medical costs has been determined by comparing the historical relationship of actual medical cost increases with the rate of inflation in the economy. Past experience has shown that the actual medical costs have increased on average by one time the rate of inflation. Other key assumptions for the pension and other post-employment benefit costs and credits are based in part on current market conditions.

If the actual health care costs trend for the post-employment obligations varied by 1% from estimates applied in valuation of the benefits, the consolidated net profit would be an estimated $59,747,000 lower or $45,990,000 higher (Note 20). Variations in the other financial assumptions can cause material adjustments in the next financial year, if it is determined that actual experience differed from the estimate (Note 20).

Impairment assessment of intangible assets The Group and Company test annually whether Rights to Customer lists included in intangible assets has suffered any impairment, in accordance with the accounting policy stated in Note 2(f). The recoverable amounts of cash-generating units have been determined based on value-in-use calculations, which require the use of estimates. In determining the value in use, management has made certain assumptions regarding revenue growth rate, projected cash flows and discount rates.



96



4. Critical Accounting Estimates and Assumptions in Applying Accounting Policies

Judgements and estimates 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.

Key sources of estimation uncertainty 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.

Depreciable assets Estimates of the useful life and residual value of property, plant and equipment are required in order to apply an adequate rate of transferring the economic benefits embodied in these assets in the relevant periods. The Group applies a variety of methods including the use of certified independent valuators in an effort to arrive at these estimates. Any changes in estimates of residual value will directly impact the depreciation charge.

Income taxes Estimates are required in determining the provision for income taxes. There are some transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for possible tax 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.

The company was granted free zone status in December 2013, resulting in an income tax rate which is variable and based on approved methodology, and which is 11.11% (2016 – 10.59%) (Note 10).

Fair value of financial instrumentsThe fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Group uses its judgement to select a variety of methods and valuation inputs and make assumptions that are mainly based on market conditions existing at each statement of financial position date. The Group uses discounted cash flow analyses and references to prices for other instruments that are substantially the same for various available-for-sale financial assets that were not traded in active markets. Details of investment securities valued using other than quoted prices in an active market are provided in Note 3(e) of the financial statements.

Page 36


4. Critical Accounting Estimates and Assumptions in Applying Accounting Policies (Continued)

Pension and other retirement benefits The cost of these benefits and the present value of the pension and the other post-employment liabilities depend on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net periodic cost (income) for pension and post-employment benefits include the expected long-term rate of return on the relevant plan assets, the discount rate and, in the case of the post-employment medical benefits, the expected rate of increase in medical costs. Any changes in these assumptions will impact the net periodic cost (income) recorded for pension and other post-employment benefits and may affect planned funding of the pension plans. The expected return on plan assets assumption is determined on a uniform basis, considering long-term historical returns, asset allocation and future estimates of long-term investment returns. The Group determines the appropriate discount rate at the end of each year, which represents the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension and other post-employment benefit obligations. In determining the appropriate discount rate, the Group considered interest rate of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability. The expected rate of increase of medical costs has been determined by comparing the historical relationship of actual medical cost increases with the rate of inflation in the economy. Past experience has shown that the actual medical costs have increased on average by one time the rate of inflation. Other key assumptions for the pension and other post-employment benefit costs and credits are based in part on current market conditions.

If the actual health care costs trend for the post-employment obligations varied by 1% from estimates applied in valuation of the benefits, the consolidated net profit would be an estimated $59,747,000 lower or $45,990,000 higher (Note 20). Variations in the other financial assumptions can cause material adjustments in the next financial year, if it is determined that actual experience differed from the estimate (Note 20).

Impairment assessment of intangible assets The Group and Company test annually whether Rights to Customer lists included in intangible assets has suffered any impairment, in accordance with the accounting policy stated in Note 2(f). The recoverable amounts of cash-generating units have been determined based on value-in-use calculations, which require the use of estimates. In determining the value in use, management has made certain assumptions regarding revenue growth rate, projected cash flows and discount rates.



97



5. Segment Financial Information

The Chief Executive Officer is the Group’s chief operating decision maker (CODM). Management has determined the operating segments based on the information reviewed by the CODM for the purposes of allocating resources and assessing performance. The Group is organised into the following business segments:

(a) Terminal operations - Operation of public wharves and stevedoring of vessels.

(b) Logistics and Ancillary Services

- Operation of warehousing and logistics facilities, security services, rental of and repairs to cold storage facilities and property rental.

Transactions between the business segments are on normal commercial terms and conditions.

The Group’s operations are located at Newport West, Kingston, Jamaica.

Terminal Operations

Logistics and Ancillary

Services Eliminations Group Year ended 31 December 2017 $’000 $’000 $’000 $’000

External operating revenue 4,918,349 1,450,889 - 6,369,238 Operating revenue from segments 189,724 89,231 (278,955) - Total revenue 5,108,073 1,540,120 (278,955) 6,369,238

Operating profit 1,566,815 449,107 10,763 2,026,685 Interest expense (85,534) (55,001) 50 (140,485)

1,481,281 394,106 10,813 1,886,200 Foreign exchange gain 5,562 Profit before income tax 1,891,762 Income tax expense (244,266) Profit before non-controlling interest 1,647,496 Non-controlling interest (18,958) Net profit attributable to equity holders of the company 1,628,538

Segment assets 23,561,663 4,946,648 (225,711) 28,282,600 Unallocated assets 1,193,359 Total assets 29,475,959

Segment liabilities 3,001,460 1,703,337 (153,680) 4,551,117 Unallocated liabilities 1,827,525 Total liabilities 6,378,642 Other segment items: Interest income (Note 8) 73,036 13,643 (50) 86,629 Capital expenditure (Note 15) 735,418 1,110,273 - 1,845,691 Capital expenditure (Note 16) 1,566 - - 1,566 Amortisation (Note 16) 108,367 - - 108,367 Depreciation 505,839 28,879 - 534,718

Page 38


5. Segment Financial Information (Continued)

Terminal Operations




Operating profit 1,644,833 387,762 (357,344) 1,675,251 Interest expense (107,458) (30,793) 3,393 (134,858)

1,537,375 356,969 (353,951) 1,540,393 Foreign exchange loss (51,550) Profit before income tax 1,488,843 Income tax expense (176,056) Profit before non-controlling interest 1,312,787 Non-controlling interest (19,307) Net profit attributable to equity holders of the company 1,293,480

Segment assets 20,341,823 2,741,269 (500,077) 22,583,015 Unallocated assets 953,793 Total assets 23,536,808

Segment liabilities 3,163,765 687,838 (428,046) 3,423,557 Unallocated liabilities 1,476,440 Total liabilities 4,899,997 Other segment items: Interest income (Note 8) 58,755 30,805 (3,393) 86,167 Capital expenditure (Note 15) 1,170,424 681,050 - 1,851,474 Capital expenditure (Note 16) 42,792 - - 42,792 Amortisation (Note 16) 108,770 - - 108,770 Depreciation and impairment 416,829 56,712 - 473,541

Revenues of approximately $1,933,756,000 (2016 – $1,783,843,000) were earned from two customers. The revenues are attributable to the Terminal Operations segment.



98



5. Segment Financial Information

The Chief Executive Officer is the Group’s chief operating decision maker (CODM). Management has determined the operating segments based on the information reviewed by the CODM for the purposes of allocating resources and assessing performance. The Group is organised into the following business segments:

(a) Terminal operations - Operation of public wharves and stevedoring of vessels.

(b) Logistics and Ancillary Services

- Operation of warehousing and logistics facilities, security services, rental of and repairs to cold storage facilities and property rental.

Transactions between the business segments are on normal commercial terms and conditions.

The Group’s operations are located at Newport West, Kingston, Jamaica.

Terminal Operations




Operating profit 1,566,815 449,107 10,763 2,026,685 Interest expense (85,534) (55,001) 50 (140,485)

1,481,281 394,106 10,813 1,886,200 Foreign exchange gain 5,562 Profit before income tax 1,891,762 Income tax expense (244,266) Profit before non-controlling interest 1,647,496 Non-controlling interest (18,958) Net profit attributable to equity holders of the company 1,628,538

Segment assets 23,561,663 4,946,648 (225,711) 28,282,600 Unallocated assets 1,193,359 Total assets 29,475,959

Segment liabilities 3,001,460 1,703,337 (153,680) 4,551,117 Unallocated liabilities 1,827,525 Total liabilities 6,378,642 Other segment items: Interest income (Note 8) 73,036 13,643 (50) 86,629 Capital expenditure (Note 15) 735,418 1,110,273 - 1,845,691 Capital expenditure (Note 16) 1,566 - - 1,566 Amortisation (Note 16) 108,367 - - 108,367 Depreciation 505,839 28,879 - 534,718

Page 38


5. Segment Financial Information (Continued)

Terminal Operations




Operating profit 1,644,833 387,762 (357,344) 1,675,251 Interest expense (107,458) (30,793) 3,393 (134,858)

1,537,375 356,969 (353,951) 1,540,393 Foreign exchange loss (51,550) Profit before income tax 1,488,843 Income tax expense (176,056) Profit before non-controlling interest 1,312,787 Non-controlling interest (19,307) Net profit attributable to equity holders of the company 1,293,480

Segment assets 20,341,823 2,741,269 (500,077) 22,583,015 Unallocated assets 953,793 Total assets 23,536,808

Segment liabilities 3,163,765 687,838 (428,046) 3,423,557 Unallocated liabilities 1,476,440 Total liabilities 4,899,997 Other segment items: Interest income (Note 8) 58,755 30,805 (3,393) 86,167 Capital expenditure (Note 15) 1,170,424 681,050 - 1,851,474 Capital expenditure (Note 16) 42,792 - - 42,792 Amortisation (Note 16) 108,770 - - 108,770 Depreciation and impairment 416,829 56,712 - 473,541

Revenues of approximately $1,933,756,000 (2016 – $1,783,843,000) were earned from two customers. The revenues are attributable to the Terminal Operations segment.



99



6. Expenses by Nature

Total direct and administration expenses: The Group The Company

2017 $’000

2016 $’000

2017 $’000

2016 $’000

Advertising and public relations 33,750 28,267 33,038 27,094 Amortisation (Note 16) 108,367 108,770 108,367 108,770 Auditors' remuneration 16,342 14,583 9,719 9,561 Bad debts 30,521 10,106 26,997 9,137 Bank charges 44,597 34,264 44,156 33,838 Claims 35,719 23,940 35,719 15,777 Cleaning and sanitation 24,950 33,560 24,950 20,676 Customs overtime 63,153 41,612 63,153 41,612 Depreciation (Note 15) 534,718 468,541 428,687 364,265 Directors’ fees 16,876 18,003 16,201 17,328 Equipment rental 199,803 108,787 199,803 108,787 Fuel 165,302 142,907 165,302 142,907 Information technology 82,599 77,759 79,672 74,522 Insurance 130,472 148,907 119,815 137,931 Irrecoverable General Consumption Tax 21,732 8,889 15,591 3,800 Legal and consultation expenses 67,025 67,763 64,199 63,020 Occupancy: property taxes and rent 18,869 8,867 17,798 11,461 Provision for impairment of PPE - 5,000 - 5,000 Repairs and maintenance 435,221 468,265 427,681 446,454 Security 279,038 166,616 77,903 56,613 Staff costs (Note 7) 1,577,126 1,579,043 1,308,085 1,261,226 Terminal transfers 10,000 22,871 10,000 22,871 Utilities 227,780 181,984 223,968 176,454 Other 249,622 161,888 198,738 151,137

4,373,582 3,931,192 3,699,542 3,310,241

Page 40


7. Staff Costs


2017

$’000 2016 $’000

2017 $’000

2016 $’000

Wages and salaries 1,241,705 1,142,747 1,030,113 892,331 Payroll taxes – employer’s contributions 131,160 123,734 106,519 94,419 Pension costs – defined benefit plan (Note 20) (41,963) (20,489) (41,963) (20,489)Pension costs – defined contribution plan 6,321 5,586 - - Other retirement benefits (Note 20) 32,240 29,319 32,240 29,319 Meal and travelling allowances 76,534 62,277 70,783 58,092 Termination costs - 105,855 - 105,855 Other 131,129 130,014 110,393 101,699

1,577,126 1,579,043 1,308,085 1,261,226 8. Other Operating Income


2017

$’000 2016 $’000

2017 $’000

2016 $’000

Dividends 792 1,612 562 349,047 Interest 86,629 86,167 73,036 58,755 Foreign exchange (losses)/gains (90,191) 113,057 (73,743) 90,042 Management fees - - 2,575 2,221 Termination costs recoverable from PAJ 33,725 - 33,725 - Other 74 (4,194) 234 (4,567)

31,029 196,642 36,389 495,498 9. Finance Costs

The Group The Company 2017

$’000 2016 $’000

2017 $’000

2016 $’000

Interest expense 140,485 134,858 140,485 137,730 Foreign exchange (gains)/losses (5,562) 51,550 (5,562) 51,550

134,923 186,408 134,923 189,280



100



6. Expenses by Nature

Total direct and administration expenses: The Group The Company

2017 $’000

2016 $’000

2017 $’000

2016 $’000

Advertising and public relations 33,750 28,267 33,038 27,094 Amortisation (Note 16) 108,367 108,770 108,367 108,770 Auditors' remuneration 16,342 14,583 9,719 9,561 Bad debts 30,521 10,106 26,997 9,137 Bank charges 44,597 34,264 44,156 33,838 Claims 35,719 23,940 35,719 15,777 Cleaning and sanitation 24,950 33,560 24,950 20,676 Customs overtime 63,153 41,612 63,153 41,612 Depreciation (Note 15) 534,718 468,541 428,687 364,265 Directors’ fees 16,876 18,003 16,201 17,328 Equipment rental 199,803 108,787 199,803 108,787 Fuel 165,302 142,907 165,302 142,907 Information technology 82,599 77,759 79,672 74,522 Insurance 130,472 148,907 119,815 137,931 Irrecoverable General Consumption Tax 21,732 8,889 15,591 3,800 Legal and consultation expenses 67,025 67,763 64,199 63,020 Occupancy: property taxes and rent 18,869 8,867 17,798 11,461 Provision for impairment of PPE - 5,000 - 5,000 Repairs and maintenance 435,221 468,265 427,681 446,454 Security 279,038 166,616 77,903 56,613 Staff costs (Note 7) 1,577,126 1,579,043 1,308,085 1,261,226 Terminal transfers 10,000 22,871 10,000 22,871 Utilities 227,780 181,984 223,968 176,454 Other 249,622 161,888 198,738 151,137

4,373,582 3,931,192 3,699,542 3,310,241

Page 40


7. Staff Costs


2017

$’000 2016 $’000

2017 $’000

2016 $’000

Wages and salaries 1,241,705 1,142,747 1,030,113 892,331 Payroll taxes – employer’s contributions 131,160 123,734 106,519 94,419 Pension costs – defined benefit plan (Note 20) (41,963) (20,489) (41,963) (20,489)Pension costs – defined contribution plan 6,321 5,586 - - Other retirement benefits (Note 20) 32,240 29,319 32,240 29,319 Meal and travelling allowances 76,534 62,277 70,783 58,092 Termination costs - 105,855 - 105,855 Other 131,129 130,014 110,393 101,699

1,577,126 1,579,043 1,308,085 1,261,226 8. Other Operating Income


2017

$’000 2016 $’000

2017 $’000

2016 $’000

Dividends 792 1,612 562 349,047 Interest 86,629 86,167 73,036 58,755 Foreign exchange (losses)/gains (90,191) 113,057 (73,743) 90,042 Management fees - - 2,575 2,221 Termination costs recoverable from PAJ 33,725 - 33,725 - Other 74 (4,194) 234 (4,567)

31,029 196,642 36,389 495,498 9. Finance Costs


$’000 2016 $’000

2017 $’000

2016 $’000

Interest expense 140,485 134,858 140,485 137,730 Foreign exchange (gains)/losses (5,562) 51,550 (5,562) 51,550

134,923 186,408 134,923 189,280



101



10. Income Tax Expense

The tax on profit differs from the theoretical amount that would arise using a basic statutory rate of 11.11% (2016 – 10.59%) as follows:


2016 $’000

2017 $’000

2016 $’000

Profit before tax 1,891,762 1,488,843 1,860,419 1,764,708

Tax calculated at a tax rate of 11.11% (2016 – 10.59%) 210,175 157,669 206,693 186,883

Adjusted for the effects of: Income not subject to tax (9,405) (1,264) (9,405) (36,964) Income taxed at higher rate 4,353 8,486 - - Expenses not deductible for tax purposes 19,943 15,422 22 6,430 Adjustment to opening deferred taxes 5,539 - - - Change in rate for deferred income taxes 7,108 8,735 7,108 8,735 Prior year (over)/under provision (1,312) (3,183) 3,856 (3,082) Other 7,865 (9,809) 7,384 9,761

Income tax expense 244,266 176,056 215,658 171,763

The company was granted free zone status under the Jamaica Export Free Zones Act effective December 2013, resulting in income tax being charged on applicable profits at zero for export activities and 25% for non-export activities. This resulted in an effective statutory rate of 11.11% (2016 – 10.59%). This rate has also been applied in determining the amounts for deferred taxation for the company in these financial statements (Note 30).


2017 $’000

2016 $’000

2017 $’000

2016 $’000

Current tax on profit for the year 269,001 189,640 207,320 150,089 Prior year (over)/under provision (1,312) (3,183) 3,856 (3,082) Deferred income tax (Note 30) (23,423) (10,401) 4,482 24,756

244,266 176,056 215,658 171,763

Page 42


11. Profit Attributable to Equity Holders of the Company

2017 $’000

2016 $’000

(a) Net profit is dealt with as follows in the financial statements of:

Holding company 1,644,761 1,592,945

Inter-group dividends from subsidiaries eliminated on consolidation - (348,000)

Adjusted net profit – holding company 1,644,761 1,244,945

Subsidiaries (16,223) 48,535

1,628,538 1,293,480

(b) Retained earnings are dealt with as follows in the financial statements of:


Subsidiaries (350,233) (333,840)

6,666,199 5,476,686

12. Non-controlling Interest

2017 $’000

2016 $’000

At beginning of year 96,565 77,258 Share of net profit of subsidiary 18,958 19,307

115,523 96,565 13. Earnings Per Stock Unit

Basic earnings per stock unit is calculated by dividing the net profit attributable to equity holders by the weighted average number of ordinary stock units in issue during the year.

2017 2016 Net profit attributable to equity holders of the company ($’000) 1,628,538 1,293,480

Number of ordinary stock units in issue (thousands) 1,430,200 1,430,200

Basic earnings per stock unit $1.14 $0.90

14. Dividends

During the year, the company declared dividends to equity holders on record as follows. 2017 $’000

2016 $’000

Ordinary dividends, gross - 38 cents (2016 – 34 cents) 543,476 486,268 In December 2017, the company declared a dividend of 21 cents per share which is payable on 19 January 2018 to shareholders on record at 20 December 2017 (Notes 31 and 35) which is included in the total dividend above.



102



10. Income Tax Expense

The tax on profit differs from the theoretical amount that would arise using a basic statutory rate of 11.11% (2016 – 10.59%) as follows:


2016 $’000

2017 $’000

2016 $’000

Profit before tax 1,891,762 1,488,843 1,860,419 1,764,708

Tax calculated at a tax rate of 11.11% (2016 – 10.59%) 210,175 157,669 206,693 186,883

Adjusted for the effects of: Income not subject to tax (9,405) (1,264) (9,405) (36,964) Income taxed at higher rate 4,353 8,486 - - Expenses not deductible for tax purposes 19,943 15,422 22 6,430 Adjustment to opening deferred taxes 5,539 - - - Change in rate for deferred income taxes 7,108 8,735 7,108 8,735 Prior year (over)/under provision (1,312) (3,183) 3,856 (3,082) Other 7,865 (9,809) 7,384 9,761

Income tax expense 244,266 176,056 215,658 171,763

The company was granted free zone status under the Jamaica Export Free Zones Act effective December 2013, resulting in income tax being charged on applicable profits at zero for export activities and 25% for non-export activities. This resulted in an effective statutory rate of 11.11% (2016 – 10.59%). This rate has also been applied in determining the amounts for deferred taxation for the company in these financial statements (Note 30).


2017 $’000

2016 $’000

2017 $’000

2016 $’000

Current tax on profit for the year 269,001 189,640 207,320 150,089 Prior year (over)/under provision (1,312) (3,183) 3,856 (3,082) Deferred income tax (Note 30) (23,423) (10,401) 4,482 24,756

244,266 176,056 215,658 171,763

Page 42


11. Profit Attributable to Equity Holders of the Company

2017 $’000

2016 $’000

(a) Net profit is dealt with as follows in the financial statements of:


Inter-group dividends from subsidiaries eliminated on consolidation - (348,000)

Adjusted net profit – holding company 1,644,761 1,244,945

Subsidiaries (16,223) 48,535

1,628,538 1,293,480

(b) Retained earnings are dealt with as follows in the financial statements of:


Subsidiaries (350,233) (333,840)

6,666,199 5,476,686

12. Non-controlling Interest

2017 $’000

2016 $’000

At beginning of year 96,565 77,258 Share of net profit of subsidiary 18,958 19,307

115,523 96,565 13. Earnings Per Stock Unit

Basic earnings per stock unit is calculated by dividing the net profit attributable to equity holders by the weighted average number of ordinary stock units in issue during the year.

2017 2016 Net profit attributable to equity holders of the company ($’000) 1,628,538 1,293,480

Number of ordinary stock units in issue (thousands) 1,430,200 1,430,200

Basic earnings per stock unit $1.14 $0.90

14. Dividends

During the year, the company declared dividends to equity holders on record as follows. 2017 $’000

2016 $’000

Ordinary dividends, gross - 38 cents (2016 – 34 cents) 543,476 486,268 In December 2017, the company declared a dividend of 21 cents per share which is payable on 19 January 2018 to shareholders on record at 20 December 2017 (Notes 31 and 35) which is included in the total dividend above.



103



15. Property, Plant and Equipment

The Group

Freehold Land

Plant and Buildings

Machinery and

Equipment

Cold Room and Air

Conditioning Equipment

Furniture

and Fixtures

Motor Vehicles

Work In Progress

Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

2017

Cost or Valuation - At 31 December 2016 5,075,925 16,040,702 3,248,191 267,404 205,672 184,764 1,436,691 26,459,349

Additions - 14,995 46,539 - 24,184 63,011 1,696,962 1,845,691 Transfers 315,204 2,314,651 68,461 - 92,896 - (2,791,212) - Transfers in - 2,860 - - - - - 2,860 Revaluation 1,910,942 2,199,568 - - - - - 4,110,510 At 31 December 2017 7,302,071 20,572,776 3,363,191 267,404 322,752 247,775 342,441 32,418,410

Depreciation -

At 31 December 2016 - 7,047,295 852,018 261,321 115,901 97,371 - 8,373,906

Charge for the year - 295,903 203,470 1,984 11,287 22,074 - 534,718 On revaluation - 623,024 - - - - - 623,024 At 31 December 2017 - 7,966,222 1,055,488 263,305 127,188 119,445 - 9,531,648

Net Book Value -

At 31 December 2017 7,302,071 12,606,554 2,307,703 4,099 195,564 128,330 342,441 22,886,762

2016

Cost or Valuation - At 31 December 2015 4,731,771 16,050,950 2,385,176 267,404 384,188 190,805 775,672 24,785,966 Additions 110,250 43,718 23,032 - 7,922 4,712 1,661,840 1,851,474 Transfers 233,904 1,020 860,220 - - 8,082 (1,000,821) 102,405 Disposals - (54,986) (20,237) - (186,438) (18,835) - (280,496)At 31 December 2016 5,075,925 16,040,702 3,248,191 267,404 205,672 184,764 1,436,691 26,459,349

Depreciation -

At 31 December 2015 - 6,775,277 728,897 259,320 282,341 95,237 - 8,141,072 Charge for the year - 288,984 141,589 2,001 14,999 20,968 - 468,541 Relieved on disposals - (16,966) (18,468) - (181,439) (18,834) - (235,707)At 31 December 2016 - 7,047,295 852,018 261,321 115,901 97,371 - 8,373,906

Net Book Value -

At 31 December 2016 5,075,925 8,993,407 2,396,173 6,083 89,771 87,393 1,436,691 18,085,443

Page 44


15. Property, Plant and Equipment (Continued) The Company

Freehold Land

Plant and Buildings

Machinery and

Equipment

Cold Room and Air


Furniture

and Fixtures

Motor Vehicles

Work in Progress

Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

2017 Cost or Valuation -

At 31 December 2016 3,366,520 10,611,212 3,216,927 19,137 191,989 165,667 1,436,691 19,008,143

Additions - 12,831 46,539 - 24,043 56,265 1,696,962 1,836,640

Transfers 315,204 2,314,649 68,463 - 92,896 - (2,791,212) -

Revaluations 1,217,942 1,617,253 - - - - - 2,835,195

At 31 December 2017 4,899,666 14,555,945 3,331,929 19,137 308,928 221,932 342,441 23,679,978

Depreciation -

At 31 December 2016 - 3,970,766 819,722 14,089 104,553 87,325 - 4,996,455

Charge for the year - 196,662 200,692 1,270 10,656 19,407 - 428,687

On revaluation 411,052 - - - - - 411,052

At 31 December 2017 - 4,578,480 1,020,414 15,359 115,209 106,732 - 5,836,194

Net Book Value -

At 31 December 2017 4,899,666 9,977,465 2,311,515 3,778 193,719 115,200 342,441 17,843,784

2016

Cost or Valuation -

At 31 December 2015 3,124,771 10,621,192

2,356,962 19,137 370,803 174,811 775,672 17,443,348

Additions 110,250 -

19,982 - 7,624 - 1,661,840 1,799,696

Transfers 131,499 1,020

860,220 - - 8,082

(1,000,821) -

Disposals - (11,000)

(20,237) - (186,438) (17,226) - (234,901)

At 31 December 2016 3,366,520 10,611,212 3,216,927 19,137 191,989 165,667 1,436,691 19,008,143

Depreciation -

At 31 December 2015 - 3,780,769 698,823 12,823 271,488 86,152 - 4,850,055


Relieved on disposal - (733) (18,468) -

(181,439)

(17,225) - (217,865)

At 31 December 2016 - 3,970,766 819,722 14,089 104,553 87,325 - 4,996,455

Net Book Value -

At 31 December 2016 3,366,520 6,640,446 2,397,205 5,048 87,436 78,342 1,436,691 14,011,688



104



15. Property, Plant and Equipment

The Group

Freehold Land

Plant and Buildings

Machinery and

Equipment

Cold Room and Air


Furniture

and Fixtures

Motor Vehicles

Work In Progress

Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

2017

Cost or Valuation - At 31 December 2016 5,075,925 16,040,702 3,248,191 267,404 205,672 184,764 1,436,691 26,459,349

Additions - 14,995 46,539 - 24,184 63,011 1,696,962 1,845,691 Transfers 315,204 2,314,651 68,461 - 92,896 - (2,791,212) - Transfers in - 2,860 - - - - - 2,860 Revaluation 1,910,942 2,199,568 - - - - - 4,110,510 At 31 December 2017 7,302,071 20,572,776 3,363,191 267,404 322,752 247,775 342,441 32,418,410

Depreciation -

At 31 December 2016 - 7,047,295 852,018 261,321 115,901 97,371 - 8,373,906

Charge for the year - 295,903 203,470 1,984 11,287 22,074 - 534,718 On revaluation - 623,024 - - - - - 623,024 At 31 December 2017 - 7,966,222 1,055,488 263,305 127,188 119,445 - 9,531,648

Net Book Value -

At 31 December 2017 7,302,071 12,606,554 2,307,703 4,099 195,564 128,330 342,441 22,886,762

2016

Cost or Valuation - At 31 December 2015 4,731,771 16,050,950 2,385,176 267,404 384,188 190,805 775,672 24,785,966 Additions 110,250 43,718 23,032 - 7,922 4,712 1,661,840 1,851,474 Transfers 233,904 1,020 860,220 - - 8,082 (1,000,821) 102,405 Disposals - (54,986) (20,237) - (186,438) (18,835) - (280,496)At 31 December 2016 5,075,925 16,040,702 3,248,191 267,404 205,672 184,764 1,436,691 26,459,349

Depreciation -

At 31 December 2015 - 6,775,277 728,897 259,320 282,341 95,237 - 8,141,072 Charge for the year - 288,984 141,589 2,001 14,999 20,968 - 468,541 Relieved on disposals - (16,966) (18,468) - (181,439) (18,834) - (235,707)At 31 December 2016 - 7,047,295 852,018 261,321 115,901 97,371 - 8,373,906

Net Book Value -

At 31 December 2016 5,075,925 8,993,407 2,396,173 6,083 89,771 87,393 1,436,691 18,085,443

Page 44


15. Property, Plant and Equipment (Continued) The Company

Freehold Land

Plant and Buildings

Machinery and

Equipment

Cold Room and Air


Furniture

and Fixtures

Motor Vehicles

Work in Progress

Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

2017 Cost or Valuation -

At 31 December 2016 3,366,520 10,611,212 3,216,927 19,137 191,989 165,667 1,436,691 19,008,143

Additions - 12,831 46,539 - 24,043 56,265 1,696,962 1,836,640

Transfers 315,204 2,314,649 68,463 - 92,896 - (2,791,212) -

Revaluations 1,217,942 1,617,253 - - - - - 2,835,195

At 31 December 2017 4,899,666 14,555,945 3,331,929 19,137 308,928 221,932 342,441 23,679,978

Depreciation -

At 31 December 2016 - 3,970,766 819,722 14,089 104,553 87,325 - 4,996,455


On revaluation 411,052 - - - - - 411,052

At 31 December 2017 - 4,578,480 1,020,414 15,359 115,209 106,732 - 5,836,194

Net Book Value -

At 31 December 2017 4,899,666 9,977,465 2,311,515 3,778 193,719 115,200 342,441 17,843,784

2016

Cost or Valuation -

At 31 December 2015 3,124,771 10,621,192

2,356,962 19,137 370,803 174,811 775,672 17,443,348

Additions 110,250 -

19,982 - 7,624 - 1,661,840 1,799,696

Transfers 131,499 1,020

860,220 - - 8,082

(1,000,821) -

Disposals - (11,000)

(20,237) - (186,438) (17,226) - (234,901)

At 31 December 2016 3,366,520 10,611,212 3,216,927 19,137 191,989 165,667 1,436,691 19,008,143

Depreciation -

At 31 December 2015 - 3,780,769 698,823 12,823 271,488 86,152 - 4,850,055


Relieved on disposal - (733) (18,468) -

(181,439)

(17,225) - (217,865)

At 31 December 2016 - 3,970,766 819,722 14,089 104,553 87,325 - 4,996,455

Net Book Value -

At 31 December 2016 3,366,520 6,640,446 2,397,205 5,048 87,436 78,342 1,436,691 14,011,688



105



15. Property, Plant and Equipment (Continued)

(a) Freehold land of the Group was revalued as at 31 December 2017 on the basis of open market value by D.C. Tavares and Finson Reality Limited, independent qualified valuators. The freehold plant and buildings of the Group were also revalued as at 31 December 2017 on the depreciated replacement cost basis which approximates fair value, by Stoppi, Cairney and Bloomfield, quantity surveyors and construction cost consultants. The carrying value of these assets has been adjusted upwards and the increase in value net of deferred income taxes has been recognised in capital reserves (Note 26).

The property, plant and equipment that, subsequent to initial recognition, are measured at fair value are grouped into Levels 1 to 3 based on the degree to which the fair value is observable. The levels are as follows:

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices);

Level 3 fair value measurements are those derived from inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The items of property, plant and equipment of the Group and the company shown at revalued amounts are included in Level 2 and 3. There were no transfers between levels. The following tables disclose the Group and company’s non-financial assets carried at fair value:

The Group Fair Value measurements as at 31 December 2017

using

Categories Date of revaluation

Quoted price in an active

market

Significant other observable

inputs (Level 2)

$'000

Significant other observable inputs

(Level 3) $'000

Freehold Land Dec-17 - 7,302,071 -Plant and Buildings Dec-17 - - 12,606,554Total - 7,302,071 12,606,554

The CompanyFreehold Land Dec-17 - 4,899,666 -Plant and Buildings Dec-17 - - 9,977,465Total - 4,899,666 9,977,465

Page 46



(a) (continued)Level 2 fair values of land have been derived using the sales comparison approach and is comparable to sales of properties in close proximity and are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is price per square foot. The valuation techniques for Level 3 fair values of plant and buildings are disclosed in the tables below.

The valuation technique for Level 3 uses the current construction replacement cost (depreciable replacement cost) approach of the assets based on current rates for labour, material and contractors charges. It is also based on the location, age and condition of the plant and buildings.

Fair Value Measurements using significant unobservable inputs (Level 3) Group Company Plant &

Buildings Plant &

Buildings $’000 $’000

Opening balance at valuation 8,993,407 6,640,446 Additions/Transfers in 2,332,503 2,327,480 Revaluation surplus 1,576,547 1,206,201 Depreciation through profit or loss (295,903) (196,662)Closing Balance 12,606,554 9,977,465

The Group

Fair value at December

2017 $’000

Valuation Technique(s)

Unobservable inputs

Range of unobservable

inputs (probability –

weighted average)

Relationship of unobservable inputs

to fair value 2017

$’000 Description

Plant and Building

12,606,554 Depreciable Replacement Cost method

Labour, material and contractor's

charges

None noted The higher the cost of labour, material and

contractors’ charges, the higher the

replacement costRemaining useful lives

1 year If the estimates for the useful lives of the assets were higher or

lower by one year, the value would be higher by $14,958

and lower by $17,068.



106




(a) Freehold land of the Group was revalued as at 31 December 2017 on the basis of open market value by D.C. Tavares and Finson Reality Limited, independent qualified valuators. The freehold plant and buildings of the Group were also revalued as at 31 December 2017 on the depreciated replacement cost basis which approximates fair value, by Stoppi, Cairney and Bloomfield, quantity surveyors and construction cost consultants. The carrying value of these assets has been adjusted upwards and the increase in value net of deferred income taxes has been recognised in capital reserves (Note 26).

The property, plant and equipment that, subsequent to initial recognition, are measured at fair value are grouped into Levels 1 to 3 based on the degree to which the fair value is observable. The levels are as follows:

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices);

Level 3 fair value measurements are those derived from inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The items of property, plant and equipment of the Group and the company shown at revalued amounts are included in Level 2 and 3. There were no transfers between levels. The following tables disclose the Group and company’s non-financial assets carried at fair value:

The Group Fair Value measurements as at 31 December 2017

using

Categories Date of revaluation

Quoted price in an active

market

Significant other observable

inputs (Level 2)

$'000

Significant other observable inputs

(Level 3) $'000

Freehold Land Dec-17 - 7,302,071 -Plant and Buildings Dec-17 - - 12,606,554Total - 7,302,071 12,606,554

The CompanyFreehold Land Dec-17 - 4,899,666 -Plant and Buildings Dec-17 - - 9,977,465Total - 4,899,666 9,977,465

Page 46



(a) (continued)Level 2 fair values of land have been derived using the sales comparison approach and is comparable to sales of properties in close proximity and are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is price per square foot. The valuation techniques for Level 3 fair values of plant and buildings are disclosed in the tables below.

The valuation technique for Level 3 uses the current construction replacement cost (depreciable replacement cost) approach of the assets based on current rates for labour, material and contractors charges. It is also based on the location, age and condition of the plant and buildings.

Fair Value Measurements using significant unobservable inputs (Level 3) Group Company Plant &

Buildings Plant &

Buildings $’000 $’000

Opening balance at valuation 8,993,407 6,640,446 Additions/Transfers in 2,332,503 2,327,480 Revaluation surplus 1,576,547 1,206,201 Depreciation through profit or loss (295,903) (196,662)Closing Balance 12,606,554 9,977,465

The Group


2017 $’000


Unobservable inputs



weighted average)


to fair value 2017

$’000 Description

Plant and Building



charges



replacement costRemaining useful lives


lower by one year, the value would be higher by $14,958

and lower by $17,068.



107




(a) (continued)

The Company


2017 $’000


Unobservable inputs



weighted average)


to fair value 2017

$’000 Plant and Building



charges



replacement cost

Remaining useful lives


lower by one year, the value would be

higher by $9,535 and lower by $10,887.

(b) A fixed charge totalling US$26.6 million has been placed over the property, plant and equipment of the company as well as mortgages totalling $1,040 million over certain premises and equipment owned by the company in keeping with the terms of certain loan agreements (Note 28).

(c) Borrowing costs of $55 million (2016 – $11.7 million) were capitalised in the year.

(d) If freehold land, plant and buildings were stated on the historical cost basis, the amounts would be as follows:


2017 $’000

2016 $’000

2017 $’000

2016 $’000

Cost 7,815,750 5,168,042 7,608,644 4,965,960Accumulated depreciation (860,150) (833,233) (831,202) (805,265)Net book value 6,955,600 4,334,809 6,777,442 4,160,695

Page 48


16. Intangible Assets

The Group and Company

Computer Software

$’000

Rights to Customer Contracts

$’000 Total $’000

At Cost - At 31 December 2015 25,076 460,419 485,495

Additions 16,348 26,444 42,792

At 31 December 2016 41,424 486,863 528,287 Additions 1,566 - 1,566 Write-off - (16,226) (16,226)

At 31 December 2017 42,990 470,637 513,627 Amortisation -

At 31 December 2015 11,421 151,225 162,646 Amortisation charge for year 4,015 104,755 108,770 At 31 December 2016 15,436 255,980 271,416 Amortisation charge for year 7,065 101,302 108,367 At 31 December 2017 22,501 357,282 379,783

Net Book Value - 31 December 2017 20,489 113,355 133,844 31 December 2016 25,988 230,883 256,871

The additions to ‘Rights to Customer Contracts’ during the prior year, related to the acquisition by Group of the stevedoring contracts of an operator at Port Bustamante. The amortisation period for the related contract is two years. Previously acquired contracts are amortised over two – ten years.

The total amortisation charge is included in direct expenses in profit or loss.

17. Investments in Subsidiaries

2017 $’000

2016 $’000

Harbour Cold Stores Limited 13,335 13,335 Security Administrators Limited 6 6 Western Storage Limited 16,301 16,301 Western Terminals Limited 46,039 46,039 Kingston Terminal Operators Limited 50 50

75,731 75,731



108




(a) (continued)

The Company


2017 $’000


Unobservable inputs



weighted average)


to fair value 2017

$’000 Plant and Building



charges



replacement cost

Remaining useful lives


lower by one year, the value would be

higher by $9,535 and lower by $10,887.

(b) A fixed charge totalling US$26.6 million has been placed over the property, plant and equipment of the company as well as mortgages totalling $1,040 million over certain premises and equipment owned by the company in keeping with the terms of certain loan agreements (Note 28).

(c) Borrowing costs of $55 million (2016 – $11.7 million) were capitalised in the year.

(d) If freehold land, plant and buildings were stated on the historical cost basis, the amounts would be as follows:


2017 $’000

2016 $’000

2017 $’000

2016 $’000

Cost 7,815,750 5,168,042 7,608,644 4,965,960Accumulated depreciation (860,150) (833,233) (831,202) (805,265)Net book value 6,955,600 4,334,809 6,777,442 4,160,695

Page 48


16. Intangible Assets


Computer Software

$’000

Rights to Customer Contracts

$’000 Total $’000

At Cost - At 31 December 2015 25,076 460,419 485,495

Additions 16,348 26,444 42,792

At 31 December 2016 41,424 486,863 528,287 Additions 1,566 - 1,566 Write-off - (16,226) (16,226)

At 31 December 2017 42,990 470,637 513,627 Amortisation -

At 31 December 2015 11,421 151,225 162,646 Amortisation charge for year 4,015 104,755 108,770 At 31 December 2016 15,436 255,980 271,416 Amortisation charge for year 7,065 101,302 108,367 At 31 December 2017 22,501 357,282 379,783

Net Book Value - 31 December 2017 20,489 113,355 133,844 31 December 2016 25,988 230,883 256,871

The additions to ‘Rights to Customer Contracts’ during the prior year, related to the acquisition by Group of the stevedoring contracts of an operator at Port Bustamante. The amortisation period for the related contract is two years. Previously acquired contracts are amortised over two – ten years.

The total amortisation charge is included in direct expenses in profit or loss.

17. Investments in Subsidiaries

2017 $’000

2016 $’000

Harbour Cold Stores Limited 13,335 13,335 Security Administrators Limited 6 6 Western Storage Limited 16,301 16,301 Western Terminals Limited 46,039 46,039 Kingston Terminal Operators Limited 50 50

75,731 75,731



109



18. Investments


2017 $’000

2016 $’000

2017 $’000

2016 $’000

Available-for-sale at fair value Unquoted equities in a related company 128,466 128,466 85,818 85,818

19. Recoverable from the Port Authority of Jamaica The Port Authority of Jamaica (PAJ) requires the company to allocate 16% of wharfage collected to a special

reserve. This reserve, that was created in 1976 can only be utilised for retroactive labour costs and special expenditure in accordance with directives from The Port Authority of Jamaica.


2017 $’000

2016 $’000

Balance at 1 January - - Severance payments 33,725 - Allocation of 16% of wharfage collections (33,725) - Balance at 31 December - -

Severance payments incurred in 2014 subject to final validation and approval by The PAJ were approved in the current year. The approval allowed for the allocation of the wharfage collections to be used to liquidate the balance.

Page 50


20. Retirement Benefit Asset and Obligations

The Group and Company 2017 $’000

2016 $’000

Statement of financial position (asset)/obligations for: Pension benefits (1,174,675) (936,177) Other retirement benefits 357,792 276,762 Profit or loss for (Note 7): Pension benefits (41,963) (20,489) Other retirement benefits 32,240 29,319

Remeasurements for: Pension benefits (191,828) (281,330) Other retirement benefits 59,980 11,424

(131,848) (269,906)(a) Pension benefits

The Group has established two pension schemes covering all permanent employees, a defined benefit plan and a defined contribution plan. The assets of the funded plans are held independently of the Group’s assets in separate trustee administered funds.

Defined benefit plan The Group operates a joint contributory defined benefit pension scheme which is fully funded. The scheme is open to all permanent employees of the Group and is administered by trustees. Under the scheme, retirement benefits are based on average salary during the three years preceding retirement. The scheme is funded by employee contributions at 5% and employer contribution of 1% of salary, as recommended by independent actuaries. Members may also make voluntary contribution of up to 5% of their earnings.

The assets of the scheme are held independently of the Group’s assets in a separate trustee-administered fund. The scheme is valued by independent actuaries annually using the projected unit credit method. The latest actuarial valuation was carried out as at 31 December 2017.

Additionally, the plan is valued by independent actuaries triennially to determine the adequacy of funding. The latest such valuation being as at 31 December 2014 revealed that the scheme was adequately funded as at that date.

Defined contribution plan The Group, through a subsidiary, participates in a defined contributory pension scheme which was established in May 2001 and is open to security personnel and administrative personnel contracted to the subsidiary. The scheme is administered by trustees. The scheme is funded by employer’s contribution of 5% as well as mandatory contributions of 5% by members. Members may also make voluntary contributions of up to 5% of their earnings.

The plan is valued by independent actuaries triennially to determine the adequacy of funding. The latest such valuation being as at 31 December 2015 revealed that the scheme was adequately funded as at that date.



110



18. Investments


2017 $’000

2016 $’000

2017 $’000

2016 $’000

Available-for-sale at fair value Unquoted equities in a related company 128,466 128,466 85,818 85,818

19. Recoverable from the Port Authority of Jamaica The Port Authority of Jamaica (PAJ) requires the company to allocate 16% of wharfage collected to a special

reserve. This reserve, that was created in 1976 can only be utilised for retroactive labour costs and special expenditure in accordance with directives from The Port Authority of Jamaica.


2017 $’000

2016 $’000

Balance at 1 January - - Severance payments 33,725 - Allocation of 16% of wharfage collections (33,725) - Balance at 31 December - -

Severance payments incurred in 2014 subject to final validation and approval by The PAJ were approved in the current year. The approval allowed for the allocation of the wharfage collections to be used to liquidate the balance.

Page 50


20. Retirement Benefit Asset and Obligations

The Group and Company 2017 $’000

2016 $’000

Statement of financial position (asset)/obligations for: Pension benefits (1,174,675) (936,177) Other retirement benefits 357,792 276,762 Profit or loss for (Note 7): Pension benefits (41,963) (20,489) Other retirement benefits 32,240 29,319

Remeasurements for: Pension benefits (191,828) (281,330) Other retirement benefits 59,980 11,424

(131,848) (269,906)(a) Pension benefits

The Group has established two pension schemes covering all permanent employees, a defined benefit plan and a defined contribution plan. The assets of the funded plans are held independently of the Group’s assets in separate trustee administered funds.

Defined benefit plan The Group operates a joint contributory defined benefit pension scheme which is fully funded. The scheme is open to all permanent employees of the Group and is administered by trustees. Under the scheme, retirement benefits are based on average salary during the three years preceding retirement. The scheme is funded by employee contributions at 5% and employer contribution of 1% of salary, as recommended by independent actuaries. Members may also make voluntary contribution of up to 5% of their earnings.

The assets of the scheme are held independently of the Group’s assets in a separate trustee-administered fund. The scheme is valued by independent actuaries annually using the projected unit credit method. The latest actuarial valuation was carried out as at 31 December 2017.

Additionally, the plan is valued by independent actuaries triennially to determine the adequacy of funding. The latest such valuation being as at 31 December 2014 revealed that the scheme was adequately funded as at that date.

Defined contribution plan The Group, through a subsidiary, participates in a defined contributory pension scheme which was established in May 2001 and is open to security personnel and administrative personnel contracted to the subsidiary. The scheme is administered by trustees. The scheme is funded by employer’s contribution of 5% as well as mandatory contributions of 5% by members. Members may also make voluntary contributions of up to 5% of their earnings.

The plan is valued by independent actuaries triennially to determine the adequacy of funding. The latest such valuation being as at 31 December 2015 revealed that the scheme was adequately funded as at that date.



111



20. Retirement Benefit Asset and Obligations (Continued)

(a) Pension benefits (continued)

The defined benefit asset amounts recognised in the statement of financial position are determined as follows: The Group and Company

2017 $’000

2016 $’000

Fair value of plan assets (3,020,836) (2,588,704) Present value of funded obligations 1,846,161 1,652,527 Surplus of funded plan /Asset in the statement of financial position (1,174,675) (936,177)

Movements in the amounts recognised in the statement of financial position:


2017 $’000

2016 $’000

Asset at beginning of year (936,177) (619,083) Amounts recognised in statement of comprehensive income (233,791) (301,819) Contributions paid (4,707) (15,275) Asset at end of year (1,174,675) (936,177)

The movement in the defined benefit asset recognised in the statement of financial position is as follows:


2017 $’000

2016 $’000

Balance at beginning of year (2,588,704) (2,166,696)Interest income (231,364) (182,007)Re-measurements -

Return on plan assets, excluding amounts included in interest expense (236,746) (290,866)

Members’ contributions (27,119) (28,086)Employer’s contributions (4,707) (15,275)Benefits paid 67,804 94,237 Transfer in - (11)Balance at end of year (3,020,836) (2,588,704)

Page 52




The movement in the present value of the funded obligations over the year is as follows: The Group and Company

2017 $’000

2016 $’000

Balance at beginning of year 1,652,527 1,547,613 Current service cost 73,322 64,892 Interest cost 152,350 132,718 Re-measurements -

Loss from change in financial assumptions 66,312 6,954 Loss from change in experience assumptions (21,394) 2,582

Members’ voluntary contributions 12,497 12,810 Benefits paid (67,804) (94,237)Transfer in - 11 Gain on curtailment (21,649) (20,816)Balance at end of year 1,846,161 1,652,527

As at the last valuation date, the present value of the defined benefit obligation was comprised of approximately $1,057,840,000 relating to active employees, $83,862,000 relating to deferred members, $700,501,000 relating to members in retirement and $3,958,000 representing other liabilities.

The amounts recognised in profit or loss are as follows: The Group and Company

2017

$’000 2016

$’000 Current service cost 58,700 49,616 Interest income, net (79,014) (49,289) Gain on curtailment (21,649) (20,816) Total, included in staff costs (Note 7) (41,963) (20,489)



112





The defined benefit asset amounts recognised in the statement of financial position are determined as follows: The Group and Company

2017 $’000

2016 $’000

Fair value of plan assets (3,020,836) (2,588,704) Present value of funded obligations 1,846,161 1,652,527 Surplus of funded plan /Asset in the statement of financial position (1,174,675) (936,177)

Movements in the amounts recognised in the statement of financial position:


2017 $’000

2016 $’000

Asset at beginning of year (936,177) (619,083) Amounts recognised in statement of comprehensive income (233,791) (301,819) Contributions paid (4,707) (15,275) Asset at end of year (1,174,675) (936,177)

The movement in the defined benefit asset recognised in the statement of financial position is as follows:


2017 $’000

2016 $’000

Balance at beginning of year (2,588,704) (2,166,696)Interest income (231,364) (182,007)Re-measurements -

Return on plan assets, excluding amounts included in interest expense (236,746) (290,866)

Members’ contributions (27,119) (28,086)Employer’s contributions (4,707) (15,275)Benefits paid 67,804 94,237 Transfer in - (11)Balance at end of year (3,020,836) (2,588,704)

Page 52




The movement in the present value of the funded obligations over the year is as follows: The Group and Company

2017 $’000

2016 $’000

Balance at beginning of year 1,652,527 1,547,613 Current service cost 73,322 64,892 Interest cost 152,350 132,718 Re-measurements -

Loss from change in financial assumptions 66,312 6,954 Loss from change in experience assumptions (21,394) 2,582

Members’ voluntary contributions 12,497 12,810 Benefits paid (67,804) (94,237)Transfer in - 11 Gain on curtailment (21,649) (20,816)Balance at end of year 1,846,161 1,652,527

As at the last valuation date, the present value of the defined benefit obligation was comprised of approximately $1,057,840,000 relating to active employees, $83,862,000 relating to deferred members, $700,501,000 relating to members in retirement and $3,958,000 representing other liabilities.

The amounts recognised in profit or loss are as follows: The Group and Company

2017

$’000 2016

$’000 Current service cost 58,700 49,616 Interest income, net (79,014) (49,289) Gain on curtailment (21,649) (20,816) Total, included in staff costs (Note 7) (41,963) (20,489)



113





Plan assets are comprised as follows: The Group and Company

2017 2016 $’000 % $’000 %

Quoted securities: Equity securities 1,388,337 46.0% 934,911 36.1%

Government of Jamaica securities 943,514 31.2% 1,043,682 40.3%Corporate bonds and promissory notes 155,150 5.1% 155,883 6.1%Repurchase agreements 269,206 8.9% 213,652 8.3%Leases 18,536 0.6% 11,433 0.4%Real estate 108,056 3.6% 99,561 3.8%Other 138,037 4.6% 129,582 5.0%

3,020,836 100.0 2,588,704 100.0

The pension plan assets include ordinary stock units of the company with a fair value of $330,000,000 (2016 - $240,000,000).

Expected contributions to the post-employment plan for the year ending 31 December 2018 are $3.2 million.

The significant actuarial assumptions used were as follows:

2017 2016

Discount rate 8.00% 9.00%

Future salary increases 5.50% 6.50%

Expected pension increase 3.75% 4.50%

Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience in each territory. These assumptions translate into an average life expectancy in years for a pensioner retiring at age 65.

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

Impact on Post-employment obligations Change in

Assumption Increase in

Assumption Decrease in

Assumption $’000 $’000

Discount rate 1% (225,791) 224,982Future salary increases 1% 39,329 (36,336)Expected pension increase 1% 215,726 (177,649)Life expectancy 1% 30,675 (33,767)

Page 54



(a) Pension benefits (continued) Sensitivity (continued):

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised within the statement of financial position.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

(b) Other retirement benefits

The Group operates both a group health plan and a group life plan. The parent company covers 100% of the premiums of both plans. However pensioners under the health plan have the option to pay an additional premium for single dependant or multiple dependants’ coverage.

The method of accounting and the frequency of valuations for these plans are similar to those used for the pension scheme. In addition to the assumptions used for the pension scheme, the main actuarial assumption is a long term increase in health costs of 7% per year (2016 – 8%) for the insured group health plan. The insured group life plan assumes a salary rate increase of 5.5% per year (2016 – 6.5%).

The amounts recognised in the statement of financial position were determined as follows:


2017 $’000

2016 $’000

Present value of unfunded obligations 357,792 276,762

Movement in the amounts recognised in the statement of financial position:


2017 $’000

2016 $’000

Liability at beginning of year 276,762 245,378 Amounts recognised in the statement of comprehensive income 92,220 40,743 Contributions paid (11,190) (9,359) Liability at end of year 357,792 276,762



114





Plan assets are comprised as follows: The Group and Company

2017 2016 $’000 % $’000 %

Quoted securities: Equity securities 1,388,337 46.0% 934,911 36.1%

Government of Jamaica securities 943,514 31.2% 1,043,682 40.3%Corporate bonds and promissory notes 155,150 5.1% 155,883 6.1%Repurchase agreements 269,206 8.9% 213,652 8.3%Leases 18,536 0.6% 11,433 0.4%Real estate 108,056 3.6% 99,561 3.8%Other 138,037 4.6% 129,582 5.0%

3,020,836 100.0 2,588,704 100.0

The pension plan assets include ordinary stock units of the company with a fair value of $330,000,000 (2016 - $240,000,000).

Expected contributions to the post-employment plan for the year ending 31 December 2018 are $3.2 million.

The significant actuarial assumptions used were as follows:

2017 2016

Discount rate 8.00% 9.00%

Future salary increases 5.50% 6.50%

Expected pension increase 3.75% 4.50%

Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience in each territory. These assumptions translate into an average life expectancy in years for a pensioner retiring at age 65.


Impact on Post-employment obligations Change in

Assumption Increase in

Assumption Decrease in

Assumption $’000 $’000

Discount rate 1% (225,791) 224,982Future salary increases 1% 39,329 (36,336)Expected pension increase 1% 215,726 (177,649)Life expectancy 1% 30,675 (33,767)

Page 54



(a) Pension benefits (continued) Sensitivity (continued):

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised within the statement of financial position.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

(b) Other retirement benefits

The Group operates both a group health plan and a group life plan. The parent company covers 100% of the premiums of both plans. However pensioners under the health plan have the option to pay an additional premium for single dependant or multiple dependants’ coverage.

The method of accounting and the frequency of valuations for these plans are similar to those used for the pension scheme. In addition to the assumptions used for the pension scheme, the main actuarial assumption is a long term increase in health costs of 7% per year (2016 – 8%) for the insured group health plan. The insured group life plan assumes a salary rate increase of 5.5% per year (2016 – 6.5%).

The amounts recognised in the statement of financial position were determined as follows:


2017 $’000

2016 $’000

Present value of unfunded obligations 357,792 276,762

Movement in the amounts recognised in the statement of financial position:


2017 $’000

2016 $’000

Liability at beginning of year 276,762 245,378 Amounts recognised in the statement of comprehensive income 92,220 40,743 Contributions paid (11,190) (9,359) Liability at end of year 357,792 276,762



115



20. Retirement Benefit Asset and Obligations (Continued) (b) Other retirement benefits (continued)

The movement in the present value of the defined benefit obligation over the year is as follows:


2017 $’000

2016 $’000

Balance at beginning of year 276,762 245,378 Current service cost 15,125 12,234 Interest cost 25,576 21,319 Gain on curtailment (8,461) (4,234) Included in staff costs in profit or loss (Note 7) 32,240 29,319 Re-measurements -

Loss from change in financial assumptions 2,037 18,547 Experience losses 57,943 (7,123)

Total, included in other comprehensive income 59,980 11,424 Benefits paid (11,190) (9,359) Balance at end of year 357,792 276,762


Impact on Post-employment Obligations - Life

Change in Assumption

Increase in Assumption

$’000

Decrease in Assumption

$’000 Discount rate 1% (3,600) 4,318 Future salary increases 1% 1,183 (1,093)

Impact on Post-employment Obligations - Medical



$’000


$’000 Discount rate 1% (45,990) 59,747 Future medical cost rate 1% 59,747 (45,990)

Page 56



(c) Risks associated with pension plans and other post-employment plans

Through its defined benefit pension plans and post-employment medical plans, the company is exposed to a number of risks, the most significant of which are detailed below: Asset volatility The plan liabilities are calculated using a discount rate set with reference to Government of Jamaica bond yields; if plan assets underperform this yield, this will create a deficit.

As the plan matures, the trustees intends to reduce the level of investment risk by investing more in assets that better match the liabilities. The Government bonds largely represent investments in Government of Jamaica securities.

However, the company believes that due to the long-term nature of the plan liabilities, a level of continuing equity investment is an appropriate element of the company’s long term strategy to manage the plans efficiently. See below for more details on the company’s asset-liability matching strategy.

Changes in bond yields

A decrease in Government of Jamaica bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings.

Inflation risk

Higher inflation will lead to higher liabilities. The majority of the plan’s assets are unaffected by fixed interest bonds, meaning that an increase in inflation will reduce the surplus or create a deficit.

Life expectancy

The majority of the plan’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plan’s liabilities. This is particularly significant, where inflationary increases result in higher sensitivity to changes in life expectancy.

The company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the pension scheme. Within this framework, the company’s ALM objective is to match assets to the pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due. The company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the pension obligations. The company has not changed the processes used to manage its risks from previous periods. The company does not use derivatives to manage its risk. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. A large portion of assets in 2017 consists of bonds and equities.

Funding levels are monitored on an annual basis and the current agreed contribution rate is 5% of pensionable salaries for the employees and 1% for the company. The next triennial valuation is due to be completed as at 31 December 2017. The company considers that the contribution rates set at the last valuation date to be sufficient to prevent a deficit and that regular contributions, which are based on service costs, will not increase significantly.



116



20. Retirement Benefit Asset and Obligations (Continued) (b) Other retirement benefits (continued)

The movement in the present value of the defined benefit obligation over the year is as follows:


2017 $’000

2016 $’000

Balance at beginning of year 276,762 245,378 Current service cost 15,125 12,234 Interest cost 25,576 21,319 Gain on curtailment (8,461) (4,234) Included in staff costs in profit or loss (Note 7) 32,240 29,319 Re-measurements -

Loss from change in financial assumptions 2,037 18,547 Experience losses 57,943 (7,123)

Total, included in other comprehensive income 59,980 11,424 Benefits paid (11,190) (9,359) Balance at end of year 357,792 276,762


Impact on Post-employment Obligations - Life



$’000


$’000 Discount rate 1% (3,600) 4,318 Future salary increases 1% 1,183 (1,093)

Impact on Post-employment Obligations - Medical



$’000


$’000 Discount rate 1% (45,990) 59,747 Future medical cost rate 1% 59,747 (45,990)

Page 56



(c) Risks associated with pension plans and other post-employment plans

Through its defined benefit pension plans and post-employment medical plans, the company is exposed to a number of risks, the most significant of which are detailed below: Asset volatility The plan liabilities are calculated using a discount rate set with reference to Government of Jamaica bond yields; if plan assets underperform this yield, this will create a deficit.

As the plan matures, the trustees intends to reduce the level of investment risk by investing more in assets that better match the liabilities. The Government bonds largely represent investments in Government of Jamaica securities.

However, the company believes that due to the long-term nature of the plan liabilities, a level of continuing equity investment is an appropriate element of the company’s long term strategy to manage the plans efficiently. See below for more details on the company’s asset-liability matching strategy.

Changes in bond yields

A decrease in Government of Jamaica bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings.

Inflation risk

Higher inflation will lead to higher liabilities. The majority of the plan’s assets are unaffected by fixed interest bonds, meaning that an increase in inflation will reduce the surplus or create a deficit.

Life expectancy

The majority of the plan’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plan’s liabilities. This is particularly significant, where inflationary increases result in higher sensitivity to changes in life expectancy.

The company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the pension scheme. Within this framework, the company’s ALM objective is to match assets to the pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due. The company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the pension obligations. The company has not changed the processes used to manage its risks from previous periods. The company does not use derivatives to manage its risk. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. A large portion of assets in 2017 consists of bonds and equities.

Funding levels are monitored on an annual basis and the current agreed contribution rate is 5% of pensionable salaries for the employees and 1% for the company. The next triennial valuation is due to be completed as at 31 December 2017. The company considers that the contribution rates set at the last valuation date to be sufficient to prevent a deficit and that regular contributions, which are based on service costs, will not increase significantly.



117




(c) Risks associated with pension plans and other post-employment plans (continued) Life expectancy (continued)

The weighted average duration of the defined benefit obligation for pension scheme is 15 years. The weighted average duration of the defined benefit obligation for post-employment medical and life insurance benefits is 16 years.

21. Inventories


2016 $’000

2017 $’000

2016 $’000

Fuel 5,856 6,471 5,856 6,471 Operating supplies 339,873 297,523 335,537 285,619

345,729 303,994 341,393 292,090

Operating supplies are shown net of provision for impairment of $5,000,000 (2016 – $5,000,000). 22. Related Party Transactions and Balances

(a) During the year the Group had normal business transactions with related parties with which there are common directors, as follows:


2016 $’000

2017 $’000

2016 $’000

(i) Revenue earned from sales of services Subsidiaries - - 9,600 4,842 Companies controlled by directors/members or related by virtue of common directorships 2,608,915 2,426,203 2,114,185 1,963,446

2,608,915 2,426,203 2,123,785 1,968,288

Services provided to related parties are negotiated, as with non-related party customers, and are all at arms’ length.

(ii) Other income Subsidiaries - dividends - - - 348,000 Subsidiaries – management fees - - 2,575 2,221

Companies controlled by directors/members or related by virtue of common directorships - dividends 841 1,612 562 1,047

(iii) Purchases of goods and services

Subsidiaries - - 178,433 68,155 Companies controlled by directors/members related by virtue of common directorships 205,060 137,781 213,732 137,238

205,060 137,781 392,165 205,393

Services are bought from related parties on the basis of the prices offered to non-related parties.

Page 58


22. Related Party Transactions and Balances (Continued)

(a) Transactions (continued) The Group The Company

2017 $’000

2016 $’000

2017 $’000

2016 $’000

(iv) Interest expense Subsidiaries - - - 2,883

Companies controlled by directors/members or related by virtue of common directorships 10,286 7,660 10,286 7,660

(b) Year-end balances with related parties:


2016 $’000

2017 $’000

2016 $’000

(i) Due from related companies Subsidiaries

Long term receivable - - 102,405 102,405 Current accounts - - 123,731 376,906

Companies controlled by directors/members or related by virtue of common directorships

Trade receivables (Note 23) 402,897 369,961 267,774 295,124 402,897 369,961 493,910 774,435

The long term amount receivable for the Company from a subsidiary company is interest free and not due for repayment in twelve months.

Provisions of $11,348,000 (2016 - $6,573,000) and $7,213,000 (2016 - $4,223,000) for the Group and company respectively are held against trade accounts receivable from related parties.

(ii) Due to related companies Subsidiaries - - 29,479 5,984 Companies controlled by directors/members or related by virtue of common directorships

(Notes 29 and 31) 42,211 58,216 42,211 58,216 42,211 58,216 71,690 64,200


2016 $’000

2017 $’000

2016 $’000

(iii) Borrowings Companies controlled by directors/members

or related by virtue of common directorships 122,803 144,330 122,803 144,330



118




(c) Risks associated with pension plans and other post-employment plans (continued) Life expectancy (continued)

The weighted average duration of the defined benefit obligation for pension scheme is 15 years. The weighted average duration of the defined benefit obligation for post-employment medical and life insurance benefits is 16 years.

21. Inventories


2016 $’000

2017 $’000

2016 $’000

Fuel 5,856 6,471 5,856 6,471 Operating supplies 339,873 297,523 335,537 285,619

345,729 303,994 341,393 292,090

Operating supplies are shown net of provision for impairment of $5,000,000 (2016 – $5,000,000). 22. Related Party Transactions and Balances

(a) During the year the Group had normal business transactions with related parties with which there are common directors, as follows:


2016 $’000

2017 $’000

2016 $’000

(i) Revenue earned from sales of services Subsidiaries - - 9,600 4,842 Companies controlled by directors/members or related by virtue of common directorships 2,608,915 2,426,203 2,114,185 1,963,446

2,608,915 2,426,203 2,123,785 1,968,288

Services provided to related parties are negotiated, as with non-related party customers, and are all at arms’ length.

(ii) Other income Subsidiaries - dividends - - - 348,000 Subsidiaries – management fees - - 2,575 2,221

Companies controlled by directors/members or related by virtue of common directorships - dividends 841 1,612 562 1,047

(iii) Purchases of goods and services

Subsidiaries - - 178,433 68,155 Companies controlled by directors/members related by virtue of common directorships 205,060 137,781 213,732 137,238

205,060 137,781 392,165 205,393

Services are bought from related parties on the basis of the prices offered to non-related parties.

Page 58



(a) Transactions (continued) The Group The Company

2017 $’000

2016 $’000

2017 $’000

2016 $’000

(iv) Interest expense Subsidiaries - - - 2,883

Companies controlled by directors/members or related by virtue of common directorships 10,286 7,660 10,286 7,660

(b) Year-end balances with related parties:


2016 $’000

2017 $’000

2016 $’000

(i) Due from related companies Subsidiaries

Long term receivable - - 102,405 102,405 Current accounts - - 123,731 376,906

Companies controlled by directors/members or related by virtue of common directorships

Trade receivables (Note 23) 402,897 369,961 267,774 295,124 402,897 369,961 493,910 774,435

The long term amount receivable for the Company from a subsidiary company is interest free and not due for repayment in twelve months.

Provisions of $11,348,000 (2016 - $6,573,000) and $7,213,000 (2016 - $4,223,000) for the Group and company respectively are held against trade accounts receivable from related parties.

(ii) Due to related companies Subsidiaries - - 29,479 5,984 Companies controlled by directors/members or related by virtue of common directorships

(Notes 29 and 31) 42,211 58,216 42,211 58,216 42,211 58,216 71,690 64,200


2016 $’000

2017 $’000

2016 $’000

(iii) Borrowings Companies controlled by directors/members

or related by virtue of common directorships 122,803 144,330 122,803 144,330



119




(c) Key management compensation:


2016 $’000

2017 $’000

2016 $’000

Salaries and other short term employee benefits 88,971 81,556 78,266 71,543 Payroll taxes – employer’s contributions 6,527 5,093 5,452 4,589

Pension benefits 525 2,929 418 1,868 Other 6,645 5,530 3,814 4,231

102,668 95,108 87,950 82,231 Directors' emoluments –

Fees 16,876 18,003 16,201 17,328 Consultancy - 7,500 - 7,500 Management remuneration (included in

salaries above) 38,655 35,518 38,655 35,518

23. Trade and Other Receivables


2016 $’000

2017 $’000

2016 $’000

Trade receivables 696,300 543,382 514,841 420,192 Less: Provision for impairment (59,816) (33,527) (42,450) (19,153)

636,484 509,855 472,391 401,039 Prepayments 39,617 18,170 35,045 13,638 Other 163,477 89,370 155,373 76,794

839,578 617,395 662,809 491,471

Trade receivables include amounts receivable from related parties (Note 22). The fair values for trade and other receivables approximates the carrying values.

Included in ‘Other” receivables are amounts totalling $104,836,000 (2016 - $49,654,000) relating to repairs to damaged berths. These amounts are recoverable from the principals of the offending ships.

Page 60


24. Cash and Cash Equivalents


2017 $’000

2016 $’000

2017 $’000

2016 $’000

Short term investments - deposits 3,573,360 2,830,027 3,034,900 2,048,456 Less: Restricted cash (189,000) (189,000) (189,000) (189,000)

3,384,360 2,641,027 2,845,900 1,859,456 Cash and bank 374,861 360,819 302,697 279,294

3,759,221 3,001,846 3,148,597 2,138,750

The weighted average effective interest rate on short term deposits was 1.49% (2016 – 1.48%) per annum for United States dollar denominated deposits and 4.49% (2016 – 5.17%) per annum for Jamaican dollar deposits. These short term deposits have an average maturity of 67 days.

Cash and bank and short term investments include amounts placed with related parties (Note 22). Cash at bank includes a United States dollar savings account and an interest earning current account. Interest is currently 0.15% (2016 – 0.15%) per annum and 3% (2016 – 3%) per annum respectively.

Restricted cash represents hypothecation of deposits to secure credit facilities (Note 28).

The Group has undrawn credit facilities via bank overdrafts of $60 million and $5 million which attract interest at 16.85% and 16.25% respectively. Security for the facilities is described in Note 28.

25. Share Capital

Number of Stock

Units

Ordinary Stock Units

’000 $’000 Issued share capital at:

31 December 2016 1,430,200 2,079,398

31 December 2017 1,430,200 2,079,398

The total authorised number of ordinary shares is 1,507,550,000 (2016 - 1,507,550,000) units. All issued shares are fully paid.

The no par shares in issue comprise the stated capital of the company.



120




(c) Key management compensation:


2016 $’000

2017 $’000

2016 $’000

Salaries and other short term employee benefits 88,971 81,556 78,266 71,543 Payroll taxes – employer’s contributions 6,527 5,093 5,452 4,589

Pension benefits 525 2,929 418 1,868 Other 6,645 5,530 3,814 4,231

102,668 95,108 87,950 82,231 Directors' emoluments –

Fees 16,876 18,003 16,201 17,328 Consultancy - 7,500 - 7,500 Management remuneration (included in

salaries above) 38,655 35,518 38,655 35,518

23. Trade and Other Receivables


2016 $’000

2017 $’000

2016 $’000

Trade receivables 696,300 543,382 514,841 420,192 Less: Provision for impairment (59,816) (33,527) (42,450) (19,153)

636,484 509,855 472,391 401,039 Prepayments 39,617 18,170 35,045 13,638 Other 163,477 89,370 155,373 76,794

839,578 617,395 662,809 491,471

Trade receivables include amounts receivable from related parties (Note 22). The fair values for trade and other receivables approximates the carrying values.

Included in ‘Other” receivables are amounts totalling $104,836,000 (2016 - $49,654,000) relating to repairs to damaged berths. These amounts are recoverable from the principals of the offending ships.

Page 60


24. Cash and Cash Equivalents


2017 $’000

2016 $’000

2017 $’000

2016 $’000

Short term investments - deposits 3,573,360 2,830,027 3,034,900 2,048,456 Less: Restricted cash (189,000) (189,000) (189,000) (189,000)

3,384,360 2,641,027 2,845,900 1,859,456 Cash and bank 374,861 360,819 302,697 279,294

3,759,221 3,001,846 3,148,597 2,138,750

The weighted average effective interest rate on short term deposits was 1.49% (2016 – 1.48%) per annum for United States dollar denominated deposits and 4.49% (2016 – 5.17%) per annum for Jamaican dollar deposits. These short term deposits have an average maturity of 67 days.

Cash and bank and short term investments include amounts placed with related parties (Note 22). Cash at bank includes a United States dollar savings account and an interest earning current account. Interest is currently 0.15% (2016 – 0.15%) per annum and 3% (2016 – 3%) per annum respectively.

Restricted cash represents hypothecation of deposits to secure credit facilities (Note 28).

The Group has undrawn credit facilities via bank overdrafts of $60 million and $5 million which attract interest at 16.85% and 16.25% respectively. Security for the facilities is described in Note 28.

25. Share Capital

Number of Stock

Units

Ordinary Stock Units

’000 $’000 Issued share capital at:

31 December 2016 1,430,200 2,079,398

31 December 2017 1,430,200 2,079,398

The total authorised number of ordinary shares is 1,507,550,000 (2016 - 1,507,550,000) units. All issued shares are fully paid.

The no par shares in issue comprise the stated capital of the company.



121



26. Other Reserves

Other reserves comprise: The Group The Company

2017 $’000

2016 $’000

2017 $’000

2016 $’000

Capital reserves 13,977,918 10,726,053 8,859,185 6,578,076 Fair value reserve 41,948 41,948 27,768 27,768

14,019,866 10,768,001 8,886,953 6,605,844

Capital Reserves The Group The Company

2017 $’000

2016 $’000

2017 $’000

2016 $’000

Unrealised surplus on revaluation of property, plant and equipment 14,940,186 11,452,700 9,119,225 6,695,082

Less: Deferred taxation (1,461,796) (1,213,596) (595,585) (439,972) 13,478,390 10,239,104 8,523,640 6,255,110

Realised gain on sale of assets 30,188 30,188 5 5 Capital distributions received 3,612 3,612 3,612 3,612 Capitalisation of profits 130,325 130,325 - - Replacement reserve 331,918 319,339 331,918 319,339 Capitalisation of depreciation reserve 66 66 10 10 Arising on consolidation 3,419 3,419 - -

13,977,918 10,726,053 8,859,185 6,578,076

Fair Value Reserve This represents unrealised surplus on revaluation of available-for-sale investments.

27. Asset Replacement/Rehabilitation and Depreciation Reserves The Port Authority of Jamaica under the Wharfage Act mandated the creation of a special reserve to be provided through the tariff of wharfage rates, for the replacement and/or rehabilitation of the wharf facilities.

The Port Authority of Jamaica also stipulated that the depreciation charged on the historical cost of property, plant and equipment be matched with amounts placed in a Depreciation Fund. The requirement for these reserves became effective in 1998.

The Authority requires that both the Asset Replacement/Rehabilitation and the Depreciation Reserves be represented by a Fund consisting of cash, deposits or highly liquid securities. The net interest arising on such Funds should be transferred to the Asset Replacement/Rehabilitation and Depreciation Reserves, respectively. Amounts from these reserves are used for capital projects in accordance with guidelines set by The Port Authority of Jamaica.

Page 62


27. Asset Replacement/Rehabilitation and Depreciation Reserves (Continued) The balance of the reserves comprises:


2017 $’000

2016 $’000

2017 $’000

2016 $’000

Asset Replacement/Rehabilitation

Reserve - - - -

Depreciation Fund 216,331 216,161 212,968 212,968

216,331 216,161 212,968 212,968

The movement in each category of reserves was as follows:

(a) Asset Replacement/Rehabilitation Reserve The Group and Company

2017 $’000

2016 $’000

At beginning of year - - Transfers from profit or loss account during the year 12,579 12,579 Transfer to capital reserves - utilised for capital expansion (12,579) (12,579)At end of year - -

(b) Depreciation Fund


2017 $’000

2016 $’000

2017 $’000

2016 $’000

At beginning of year 216,161 215,917 212,968 212,968 Transfer from retained earnings (net

interest) 170 244 - - At end of year 216,331 216,161 212,968 212,968

(c) Value of Reserve Funds Represented by Cash and Short Term Investments

The dollar amount of approvals received by the company from The Port Authority of Jamaica to undertake capital projects to date, exceeds the required provisions. As such, all related cash, deposits or highly liquid securities pertaining to reserves have been fully utilised.



122



26. Other Reserves

Other reserves comprise: The Group The Company

2017 $’000

2016 $’000

2017 $’000

2016 $’000

Capital reserves 13,977,918 10,726,053 8,859,185 6,578,076 Fair value reserve 41,948 41,948 27,768 27,768

14,019,866 10,768,001 8,886,953 6,605,844

Capital Reserves The Group The Company

2017 $’000

2016 $’000

2017 $’000

2016 $’000

Unrealised surplus on revaluation of property, plant and equipment 14,940,186 11,452,700 9,119,225 6,695,082

Less: Deferred taxation (1,461,796) (1,213,596) (595,585) (439,972) 13,478,390 10,239,104 8,523,640 6,255,110

Realised gain on sale of assets 30,188 30,188 5 5 Capital distributions received 3,612 3,612 3,612 3,612 Capitalisation of profits 130,325 130,325 - - Replacement reserve 331,918 319,339 331,918 319,339 Capitalisation of depreciation reserve 66 66 10 10 Arising on consolidation 3,419 3,419 - -

13,977,918 10,726,053 8,859,185 6,578,076

Fair Value Reserve This represents unrealised surplus on revaluation of available-for-sale investments.

27. Asset Replacement/Rehabilitation and Depreciation Reserves The Port Authority of Jamaica under the Wharfage Act mandated the creation of a special reserve to be provided through the tariff of wharfage rates, for the replacement and/or rehabilitation of the wharf facilities.

The Port Authority of Jamaica also stipulated that the depreciation charged on the historical cost of property, plant and equipment be matched with amounts placed in a Depreciation Fund. The requirement for these reserves became effective in 1998.

The Authority requires that both the Asset Replacement/Rehabilitation and the Depreciation Reserves be represented by a Fund consisting of cash, deposits or highly liquid securities. The net interest arising on such Funds should be transferred to the Asset Replacement/Rehabilitation and Depreciation Reserves, respectively. Amounts from these reserves are used for capital projects in accordance with guidelines set by The Port Authority of Jamaica.

Page 62


27. Asset Replacement/Rehabilitation and Depreciation Reserves (Continued) The balance of the reserves comprises:


2017 $’000

2016 $’000

2017 $’000

2016 $’000

Asset Replacement/Rehabilitation

Reserve - - - -

Depreciation Fund 216,331 216,161 212,968 212,968

216,331 216,161 212,968 212,968

The movement in each category of reserves was as follows:

(a) Asset Replacement/Rehabilitation Reserve The Group and Company

2017 $’000

2016 $’000

At beginning of year - - Transfers from profit or loss account during the year 12,579 12,579 Transfer to capital reserves - utilised for capital expansion (12,579) (12,579)At end of year - -

(b) Depreciation Fund


2017 $’000

2016 $’000

2017 $’000

2016 $’000

At beginning of year 216,161 215,917 212,968 212,968 Transfer from retained earnings (net

interest) 170 244 - - At end of year 216,331 216,161 212,968 212,968

(c) Value of Reserve Funds Represented by Cash and Short Term Investments

The dollar amount of approvals received by the company from The Port Authority of Jamaica to undertake capital projects to date, exceeds the required provisions. As such, all related cash, deposits or highly liquid securities pertaining to reserves have been fully utilised.



123



28. Borrowings


2016 $’000

2017 $’000

2016 $’000

(a) The Port Authority of Jamaica 1,480 1,480 1,480 1,480(b) The Port Authority of Jamaica 1,452 1,452 - -(c) Bank of Nova Scotia 1,281,610 615,000 1,281,610 615,000(d) Development Bank of Jamaica/First Global

Bank Limited 98,400 127,200 98,400 127,200(e) The Shipping Association of Jamaica Property

Limited 104,052 108,490 104,052 108,490(f) Development Bank of Jamaica/CIBC

FirstCaribbean International Bank (Jamaica) Limited 107,143 142,857 107,143 142,857

(g) CIBC FirstCaribbean International Bank (Jamaica) Limited 169,021 520,509 169,021 520,509

(h) CIBC FirstCaribbean International Bank (Jamaica) Limited 257,481 296,593 257,481 296,593

(i) CIBC FirstCaribbean International Bank (Jamaica) Limited 412,500 491,071 412,500 491,071

(j) CIBC FirstCaribbean International Bank (Jamaica) Limited 435,375 - 435,375 -

(k) Kingston Portworkers Superannuation Fund 18,751 35,840 18,751 35,8402,887,265 2,340,492 2,885,813 2,339,040

Add: Interest payable 867 2,421 867 2,4212,888,132 2,342,913 2,886,680 2,341,461

Less: Current portion (503,094) (547,540) (503,094) (547,540)2,385,038 1,795,373 2,383,586 1,793,921

(a) These loans, which are interest free and unsecured, were obtained to build a security wall and are repayable only if the wharf is sold.

(b) This comprises a loan towards the partial cost of construction of a security wall. This interest-free and unsecured loan is repayable only in the event of the asset being sold.

(c) This represents a partial disbursement of a $1.8 billion loan facility from The Bank of Nova Scotia for the financing of the company’s Total Logistics Facility. The loan is repayable over a 7 year period with a 2 year moratorium on principal. Thereafter, principal is repayable in 19 quarterly instalments of J$63,000,000 each and one final payment of J$603,000,000. The interest rate varies over the life of the loan with rates initially fixed at 8.0% and capped at 9.5% for the remaining 4 years and is scheduled to be repaid in September 2023.

(d) This represents a loan of $288 million granted by the Development Bank of Jamaica through First Global Bank Limited. Interest rate is fixed at 9.75% per annum. The principal is repayable in one hundred and twenty monthly instalments of $2,400,000 and is scheduled to be repaid in May 2021.

Page 64


28. Borrowings (Continued)

(e) This represents a loan facility of $110 million from The Shipping Association of Jamaica Property Limited for financing of the company’s capital projects. The interest rate is fixed at 7% and the loan is scheduled to be repaid in July 2031.

(f) This represents a credit facility granted by the Development Bank of Jamaica through CIBC FirstCaribbean International Bank (Jamaica) Limited towards the company's capital expenditure program. The interest rate is fixed at 8.25% and the loan is repayable in December 2020.

(g) This represents a credit facility of US$26.6 million through CIBC FirstCaribbean International Bank (Jamaica) Limited towards the company's capital expenditure program. Interest is currently computed based on US six-month LIBOR plus 4.50% per year. This loan was issued in 2006 and is scheduled to be repaid in June 2018.

(h) This represents a loan facility from CIBC FirstCaribbean International Bank (Jamaica) Limited toward the company’s capital expenditure program for the amount of $352 million. The loan will be amortized over a ten year period at a fixed interest rate of 9.5% for the first two years and WATBY plus 2.5% thereafter. The loan facility also attracted a moratorium on principal in the first year and is scheduled to be repaid in July 2024.

(i) This represents a loan facility from CIBC FirstCaribbean International Bank (Jamaica) Limited toward the company’s capital expenditure program for the amount of $550 million. The loan will be amortized over a 7 year period and interest is currently computed based on six-month WATBY plus 2.5%; subject to a cap of 10.25% and is scheduled to be repaid in March 2023.

(j) This represents a credit facility of $372 million granted by the Development Bank of Jamaica through CIBC FirstCaribbean International Bank (Jamaica) Limited and loan of $79.5 million from CIBC FirstCaribbean International Bank (Jamaica) Limited toward the company’s capital expenditure program. The loan will be amortised over a 7 year period at a fixed rate of interest of 8.25% to be repaid in September 2024

(k) This represents a loan of $100 million granted by the Kingston Port Workers Superannuation Fund. The interest rate is fixed at 10% per annum. The principal is scheduled to be repaid in December 2018.

The loan facilities with First Global Bank Limited (d) above are secured by mortgages over property owned by the Group, bills of sale over certain pieces of machinery and assignment of insurance over these pieces of machinery.

Security for the loan facilities with CIBC FirstCaribbean International Bank (Jamaica) Limited (f)-(j) above and including the bank overdrafts (Notes 3 and 24) and guarantees (Note 33), is a registered demand debenture providing fixed and floating charges over the company’s fixed and floating assets stamped to cover US$26.6 million, assignment of insurance proceeds and promissory notes stamped in the sums of $1.302 billion and US$26.6 million and mortgages/charges over property and machinery owned by the Group of $1,503.5 million. Undrawn facilities with this institution (excluding overdrafts (Note 24)) total $150 million for capital expenditure .

The facility with Kingston Portworkers Superannuation Fund (k) is secured by mortgages over property owned by the Group and bill of sales over certain pieces of machinery (Note 15). The facility with The Shipping Association of Jamaica Property Limited (e) is secured by mortgages over property owned by the Group.

The Bank of Nova Scotia (BNS) facility (c) is secured by a debenture ranked pari passu with CIBC FirstCaribbean International Bank (Jamaica) Limited over the fixed and floating assets of the Company, together with a legal mortgage over land and buildings owned by the Group, hypothecation of deposits totalling $189 million (Note 24) and supported by guarantees totalling $1.8 billion. Undrawn facilities from BNS include insurance premium financing of US$1.5 million, unsecured revolving loan of $4 million and bank overdraft (Note 24).



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28. Borrowings


2016 $’000

2017 $’000

2016 $’000

(a) The Port Authority of Jamaica 1,480 1,480 1,480 1,480(b) The Port Authority of Jamaica 1,452 1,452 - -(c) Bank of Nova Scotia 1,281,610 615,000 1,281,610 615,000(d) Development Bank of Jamaica/First Global

Bank Limited 98,400 127,200 98,400 127,200(e) The Shipping Association of Jamaica Property

Limited 104,052 108,490 104,052 108,490(f) Development Bank of Jamaica/CIBC

FirstCaribbean International Bank (Jamaica) Limited 107,143 142,857 107,143 142,857

(g) CIBC FirstCaribbean International Bank (Jamaica) Limited 169,021 520,509 169,021 520,509

(h) CIBC FirstCaribbean International Bank (Jamaica) Limited 257,481 296,593 257,481 296,593

(i) CIBC FirstCaribbean International Bank (Jamaica) Limited 412,500 491,071 412,500 491,071

(j) CIBC FirstCaribbean International Bank (Jamaica) Limited 435,375 - 435,375 -

(k) Kingston Portworkers Superannuation Fund 18,751 35,840 18,751 35,8402,887,265 2,340,492 2,885,813 2,339,040

Add: Interest payable 867 2,421 867 2,4212,888,132 2,342,913 2,886,680 2,341,461

Less: Current portion (503,094) (547,540) (503,094) (547,540)2,385,038 1,795,373 2,383,586 1,793,921

(a) These loans, which are interest free and unsecured, were obtained to build a security wall and are repayable only if the wharf is sold.

(b) This comprises a loan towards the partial cost of construction of a security wall. This interest-free and unsecured loan is repayable only in the event of the asset being sold.

(c) This represents a partial disbursement of a $1.8 billion loan facility from The Bank of Nova Scotia for the financing of the company’s Total Logistics Facility. The loan is repayable over a 7 year period with a 2 year moratorium on principal. Thereafter, principal is repayable in 19 quarterly instalments of J$63,000,000 each and one final payment of J$603,000,000. The interest rate varies over the life of the loan with rates initially fixed at 8.0% and capped at 9.5% for the remaining 4 years and is scheduled to be repaid in September 2023.

(d) This represents a loan of $288 million granted by the Development Bank of Jamaica through First Global Bank Limited. Interest rate is fixed at 9.75% per annum. The principal is repayable in one hundred and twenty monthly instalments of $2,400,000 and is scheduled to be repaid in May 2021.

Page 64



(e) This represents a loan facility of $110 million from The Shipping Association of Jamaica Property Limited for financing of the company’s capital projects. The interest rate is fixed at 7% and the loan is scheduled to be repaid in July 2031.

(f) This represents a credit facility granted by the Development Bank of Jamaica through CIBC FirstCaribbean International Bank (Jamaica) Limited towards the company's capital expenditure program. The interest rate is fixed at 8.25% and the loan is repayable in December 2020.

(g) This represents a credit facility of US$26.6 million through CIBC FirstCaribbean International Bank (Jamaica) Limited towards the company's capital expenditure program. Interest is currently computed based on US six-month LIBOR plus 4.50% per year. This loan was issued in 2006 and is scheduled to be repaid in June 2018.

(h) This represents a loan facility from CIBC FirstCaribbean International Bank (Jamaica) Limited toward the company’s capital expenditure program for the amount of $352 million. The loan will be amortized over a ten year period at a fixed interest rate of 9.5% for the first two years and WATBY plus 2.5% thereafter. The loan facility also attracted a moratorium on principal in the first year and is scheduled to be repaid in July 2024.

(i) This represents a loan facility from CIBC FirstCaribbean International Bank (Jamaica) Limited toward the company’s capital expenditure program for the amount of $550 million. The loan will be amortized over a 7 year period and interest is currently computed based on six-month WATBY plus 2.5%; subject to a cap of 10.25% and is scheduled to be repaid in March 2023.

(j) This represents a credit facility of $372 million granted by the Development Bank of Jamaica through CIBC FirstCaribbean International Bank (Jamaica) Limited and loan of $79.5 million from CIBC FirstCaribbean International Bank (Jamaica) Limited toward the company’s capital expenditure program. The loan will be amortised over a 7 year period at a fixed rate of interest of 8.25% to be repaid in September 2024

(k) This represents a loan of $100 million granted by the Kingston Port Workers Superannuation Fund. The interest rate is fixed at 10% per annum. The principal is scheduled to be repaid in December 2018.

The loan facilities with First Global Bank Limited (d) above are secured by mortgages over property owned by the Group, bills of sale over certain pieces of machinery and assignment of insurance over these pieces of machinery.

Security for the loan facilities with CIBC FirstCaribbean International Bank (Jamaica) Limited (f)-(j) above and including the bank overdrafts (Notes 3 and 24) and guarantees (Note 33), is a registered demand debenture providing fixed and floating charges over the company’s fixed and floating assets stamped to cover US$26.6 million, assignment of insurance proceeds and promissory notes stamped in the sums of $1.302 billion and US$26.6 million and mortgages/charges over property and machinery owned by the Group of $1,503.5 million. Undrawn facilities with this institution (excluding overdrafts (Note 24)) total $150 million for capital expenditure .

The facility with Kingston Portworkers Superannuation Fund (k) is secured by mortgages over property owned by the Group and bill of sales over certain pieces of machinery (Note 15). The facility with The Shipping Association of Jamaica Property Limited (e) is secured by mortgages over property owned by the Group.

The Bank of Nova Scotia (BNS) facility (c) is secured by a debenture ranked pari passu with CIBC FirstCaribbean International Bank (Jamaica) Limited over the fixed and floating assets of the Company, together with a legal mortgage over land and buildings owned by the Group, hypothecation of deposits totalling $189 million (Note 24) and supported by guarantees totalling $1.8 billion. Undrawn facilities from BNS include insurance premium financing of US$1.5 million, unsecured revolving loan of $4 million and bank overdraft (Note 24).



125




Reconciliation of liabilities arising from financing activities The table below details changes in the Group and Company’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group and Company’s statements of cash flows as cash flows from financing activities.


2017 $’000

2016 $’000

2017 $’000

2016 $’000

At beginning of year 2,340,492 1,538,117 2,339,040 1,536,665

Financing cash inflows 1,118,110 1,275,250 1,118,110 1,275,250

Financing cash outflows (567,218) (524,425) (567,218) (524,425)

Non-cash changes (4,119) 51,550 (4,119) 51,550 At end of year 2,887,265 2,340,492 2,885,813 2,339,040

29. Long Term Liability

Long term liability represents amounts due to third parties in relation to stevedoring contracts acquired (Note 16). The amounts are interest free and are payable upon the achievement of stipulated conditions. This balance includes amounts payable to companies controlled by directors or related by virtue of common directorships. The non-cash changes on the long term liability totalled $1,443,000.



126




Reconciliation of liabilities arising from financing activities The table below details changes in the Group and Company’s liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group and Company’s statements of cash flows as cash flows from financing activities.


2017 $’000

2016 $’000

2017 $’000

2016 $’000

At beginning of year 2,340,492 1,538,117 2,339,040 1,536,665

Financing cash inflows 1,118,110 1,275,250 1,118,110 1,275,250

Financing cash outflows (567,218) (524,425) (567,218) (524,425)

Non-cash changes (4,119) 51,550 (4,119) 51,550 At end of year 2,887,265 2,340,492 2,885,813 2,339,040

29. Long Term Liability

Long term liability represents amounts due to third parties in relation to stevedoring contracts acquired (Note 16). The amounts are interest free and are payable upon the achievement of stipulated conditions. This balance includes amounts payable to companies controlled by directors or related by virtue of common directorships. The non-cash changes on the long term liability totalled $1,443,000.

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30. Deferred Income Tax

Deferred income taxes are calculated on all temporary differences under the liability method using a tax rate of 11.11% (2016 10.59%) for the company and 25% (2016- 25%) for the subsidiaries.


$’000 2016

$’000 2017

$’000 2016

$’000 Statement of financial position (assets)/liabilities for:

Deferred income tax assets (1,587) (1,363) - - Deferred income tax liabilities 1,407,914 1,168,265 759,508 584,765

1,406,327 1,166,902 759,508 584,765

Deferred income tax assets and liabilities are due to the following items: The Group The Company

2017 $’000

2016 $’000

2017 $’000

2016 $’000

Deferred income tax assets - Vacation leave accrual 3,420 3,062 2,366 1,750 Other payables 116 640 - - Employee benefit obligations 39,751 29,309 39,751 29,309 Property, plant and equipment 220 130 - - Unrealised foreign exchange losses 400 227 - 227 Interest payable 96 256 96 256

44,003 33,624 42,213 31,542 Deferred income tax liabilities -

Property, plant and equipment 1,316,109 1,098,192 669,831 516,557 Unrealised foreign exchange gains 2,231 2,291 176 82 Interest receivable 1,484 902 1,208 527 Retirement benefit asset 130,506 99,141 130,506 99,141

1,450,330 1,200,526 801,721 616,307 Net deferred income tax liabilities 1,406,327 1,166,902 759,508 584,765



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30. Deferred Income Tax (Continued)

The movement in the net deferred income tax assets and liabilities during the year is as follows: The Group The Company

2017 $’000

2016 $’000

2017 $’000

2016 $’000

Net liabilities at beginning of year 1,166,902 1,109,633 584,765 492,339 Profit or loss (Note 10) (23,423) (10,401) 4,482 24,756 Effect on re-measurements of post- employment

benefits 14,648 28,583 14,648 28,583 Stockholders’ equity on disposal of PPE - (575) - (575)Stockholders’ equity on revaluation surplus 226,595 - 134,008 - Effect of change in tax rate on previous years’

revaluation surplus 21,605 39,662 21,605 39,662 Net liabilities at end of year 1,406,327 1,166,902 759,508 584,765

The deferred tax movement in the profit or loss comprises the following temporary differences: The Group The Company

2017 $’000

2016 $’000

2017 $’000

2016 $’000

Vacation leave accrual (358) (346) (616) (346)Other payables 524 (131) - 163 Employee benefit obligations 10,053 (4,395) 10,053 (4,395)Unrealised foreign exchange losses (173) 49 227 (227)Interest payable 160 3,533 160 3,533 Property, plant and equipment (30,373) (9,592) (2,339) 16,327 Unrealised foreign exchange gains (60) 2,291 94 82 Interest receivable 582 (11,354) 681 75 Retirement benefit asset (3,778) 9,544 (3,778) 9,544

(23,423) (10,401) 4,482 24,756

The deferred tax movement on the re-measurements of post-employment benefits in other comprehensive income comprises:


2016 $’000

2017 $’000

2016 $’000

Retirement benefit asset 21,312 29,793 21,312 29,793 Employee benefit obligations (6,664) (1,210) (6,664) (1,210)

14,648 28,583 14,648 28,583



128



30. Deferred Income Tax (Continued)

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 offset amounts shown in the statement of financial position include the following: The Group The Company

2017 $’000

2016 $’000

2017 $’000

2016 $’000

Deferred income tax assets to be recovered - After more than 12 months 39,971 29,439 39,751 29,881

Deferred income tax liabilities to be extinguished -

After more than 12 months 1,446,615 1,197,333 800,337 615,698 31. Trade and Other Payables


2017 $’000

2016 $’000

2017 $’000

2016 $’000

Trade payables 204,227 102,825 180,465 83,151 Dividends payable 306,779 292,460 306,779 292,460 Provision for 16% wharfage reserve 43,384 45,176 43,384 45,176 Third party collections 468,247 20,369 468,247 20,369 Contract retention 66,455 - 66,455 - Other payables and accruals 552,580 541,699 512,239 501,668

1,641,672 1,002,529 1,577,569 942,824 Trade and other payables include amounts payable to related parties (Note 22).

32. Operating Leases

During the year the Group entered into an operating lease for property to expand its port and logistics operations. The future minimum lease payments under operating leases are as follows

2017 $’000

2016 $’000

No later than 1 year 23,958 - Within 1 to 5 years 95,832 - Over 5 years 231,595 -

351,385 -



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32. Operating Leases (Continued)

The Group earned property rental income of $103,585,000 (2016: $52,607,000) under operating leases. The future minimum lease payments receivable under operating leases are as follows:

2017 $’000

2016 $’000

No later than 1 year 119,401 35,965 Within 1 to 5 years 70,016 84,192 Over 5 years 15,894 35,419

205,311 155,576

33. Contingent Liabilities Litigation

The company and its subsidiaries are subject to various claims, disputes and legal proceedings, in the normal course of business. Provision is made for such matters when, in the opinion of management and its legal counsel, it is probable that a payment will be made by the Group, and the amount can be reasonably estimated.

In respect of claims asserted against the Group which have not been provided for, management is of the opinion that such claims are either without merit, can be successfully defended or will result in exposure to the Group which is immaterial to both financial position and results of operations. The Group is not currently involved in any significant litigation.

Other The Group is contingently liable to its bankers in respect of guarantees in the ordinary course of business totalling approximately $2.8 million.

34. Commitments

The Group and company had capital commitments at 31 December 2017 as follows: $’000

Authorised and contracted for 106,000 35. Subsequent Events

Subsequent to the year end, the company paid a dividend of 21 cents per share to equity holders on record on 20 December 2017 (Note 14).



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notes

131


notes

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cementing global standards - kingston wharves limited

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