2012 Annual Report - Commonwealth Brewery Limited€¦ · 2012 ANNUAL REPORT 1 Table Of Contents...
Transcript of 2012 Annual Report - Commonwealth Brewery Limited€¦ · 2012 ANNUAL REPORT 1 Table Of Contents...
2 0 1 2 A n n u a l R e p o r t
The Beer of The Bahamas
1 9 8 8 - 2 0 1 3
t h A n n i v e r s a r y
Vision Statement:
Commonwealth Brewery Limited is committed to being a stable, profitable, respected and viable
Bahamian beverage company which contributes on a continuous basis to the well-being of our
shareholders, employees, the Bahamian economy and society in general.
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Ta b l e O f C o n t e n t s
Introduction 2
Financial Highlights 3
Commonwealth Brewery Limited Directors’ Bios 4 - 5
Chairman’s Message 6
Managing Director’s Review 7 - 9
Management Discussion And Analysis 10 - 12
Executive Management Team 13
Corporate Responsibility 14 - 15
Environmental Sustainability 16 - 18
Heineken Overview 19
25 Years Of Kalik 20 - 21
List Of Stores 22
Advisors 23
Audited Financial Statements
Independent Auditors’ Report 24
Consolidated Statement of Financial Position 25
Consolidated Statement of Comprehensive Income 26
Consolidated Statement of Changes in Equity 27
Consolidated Statement of Cash Flows 28
Notes to Consolidated Financial Statements 29 - 50
Disclaimer: This Annual Report might from time to time contain forward-looking statements. Readers should be cautious in interpreting these statements.
Forward looking statements involve numerous assumptions and changes in these assumptions could cause actual results to differ materially from the expecta-
tions in those statements.
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I N T R O D U C T I O N
Celebrating For All The Right Reasons
Every anniversary calls for a celebration; three anniversaries in a single
year deserve extraordinary attention. Thus, this 2012 Commonwealth
Brewery Limited (CBL) annual report Celebrating for All the Right
Reasons marking three anniversaries is more than the standard
report of company results and projections. It is a celebratory docu-
ment, beginning with positive company performance and extending
to brands which brought it honour, and the country in which it is
honoured to operate.
Among the reasons for celebration: Fiscal 2012 January 1 - Decem-
ber 2012 marks the first full fiscal year Commonwealth Brewery was
a publicly-held company and financial results were strong despite a
still struggling economy.
Good results alone would not warrant a report entitled Celebrating…
The title helps us mark three anniversaries between 2012 and 2013:
25 years for Kalik, The Beer of The Bahamas, with its four interna-
tional awards for taste and quality and its millions of fans worldwide;
140 years for the Heineken brand, and we join with everyone in the
nation as The Bahamas celebrates its 40th anniversary of indepen-
dence.
In a broad perspective, it has been a short, but active and exciting
journey to the anniversaries of Commonwealth Brewery. What started
in 1986 as a private brewery to produce Heineken and Guinness
has evolved into a publicly-held industrial enterprise with over 380
employees, the largest network of liquor stores in The Bahamas with
54 company-owned retail outlets acting as distributors for 70+ brands
of beer, wine and spirits, including some of the most prestigious
labels of vodka, scotch, whiskey, gin, liqueurs, aperitifs, sherry, port
and cognac, in addition to non-alcoholic beverages. Its manufactur-
ing has grown from the initial two international brands to four labels
under the Kalik brand -- Kalik, Kalik Light, Kalik Gold and Kalik Lime
-- as well as the popular malt drink Vitamalt and the full line of Ron
Ricardo and Ole Nassau rums with their exotic tropical fruit flavors
and attractive souvenir-satisfying labels.
One hundred forty years since the first Heineken quenched a taster’s
thirst, forty years since the nation gained its independence and one
quarter of a century since the first Kalik rolled off the conveyor belt
and Commonwealth Brewery Limited is proud to be part of all three.
We invite you to Celebrate with us for All The Right Reasons.
“It is a celebratory document, beginning with positive company performance and extending to brands which brought the brewery honour, and the country in which we are honoured to operate.”
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BSD ‘000 2012 2011 2010 2009 2008
Volume (‘000 hectoliters)* 194 187 187 203 213
Revenue 118,468 113,409 109,376 111,833 113,831
Result from operating activities 19,297 17,278 19,943 16,104 14,747
Earning per share (cts) 0.64 0.58 0.74 0.57 0.46
Assets 73,280 72,008 76,967 83,363 83,165
Long term liabilities nil nil nil nil 1,652
Dividends 17,400 25,153 26,268 6,850 10,250
Capital expenditure 2,445 1,314 1,404 1,885 5,236
Employees (FTE) 381 390 384 390 408
* 1 hectoliter = 100 litres or 3,381 fl. oz. (US)
f i n a n c i a l h i g h l i g h t s
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Mr. Francis is a former governor of the Central Bank of The
Bahamas and brings a wealth of knowledge and experience to
the Board. He was previously the Chairman of The Bahamas
Telecommunications Company Limited (BTC) and has held
other chairmanships and posts in both governmental and private
organisations. He holds Bachelor’s (with special honours) and
Master’s degrees in Finance from New York University.
Mr. Pinotsis is the President and Managing Director of Commonwealth Brewery
Ltd. With more than 25 years of experience with Heineken NV, Mr. Pinotsis has
operated in various capacities within the company and around the world in sales,
export, brand development and management positions. He has been in Managing
Director positions for the last 15 years. He holds a Master of Science degree in
Naval Architecture and Shipyard Operations.
Mr. Archer is the immediate past President and Managing Director of the
Commonwealth Brewery Group. A certified public accountant, Mr. Archer spent
more than three years with KPMG in Boston before returning with the firm to
Nassau. Mr. Archer was employed by Commonwealth Brewery since 1989, hold-
ing a range of positions, including Financial Manager and Financial Controller of
Heineken’s regional office in Miami. He is the first and only Caribbean person
to receive the “Financial Manager for Heineken Worldwide” award. Mr. Archer
holds a Bachelor of Arts degree in Accounting from Florida Atlantic University.
Director and CEO of the National Insurance Board, Mr. Cargill
holds an MBA from the University of Miami. Mr. Cargill has both
local and international experience and held positions in commer-
cial banking and the petroleum industry prior to entering the
insurance industry and being recruited to head NIB.
C o m m o n w e a lt h B r e w e r y L i m i t e d
D i r e c t o r s ’ B i o s
Julian W. Francis, Chairman
Nico Pinotsis, President and Managing Director
LeRoy Archer
Algernon Cargill
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Mr. Fields is the Senior Vice President of Retail Services and Public Affairs for Kerzner
International and General Manager of Ocean Club Estate and Golf Course. A well-known
radio host with a diverse background, he serves as Director of the Bahamas Airport
Authority, Catholic Board of Education and Downtown Nassau Partnership. Mr. Fields is
the Founder and Chairman of the non-partisan, non-profit organisation We the People.
He holds a Bachelor’s degree in Government from St. John’s University in Minnesota
and a Master’s degree in Public Administration from the University of Georgia.
CFO of Americas Region Heineken in New York, Mr. van den Huijsen holds an MBA
from the Erasmus University. He has extensive financial experience, having worked
for Heineken NV in several countries. Prior to joining the company in 1996, Mr. van
den Huijsen was a senior consultant for Ernst & Young in The Netherlands. Mr. Van
den Huijsen was appointed Executive Director of Global Strategic Planning & Busi-
ness Control at Heineken Group in the fourth quarter of 2012.
Mr. Ubalijoro is the Managing Director of Heineken Caribbean & American
Export. He has had a varied career with Heineken since joining in 1990 as the
first African international trainee. In 1995, Eugene became Heineken USA’s first
Regional Marketing Manager for the Southeast Region. He has been a consultant
in Amsterdam, Commercial Manager in Sub Sahara Africa and Managing Director
in La Reunion. Mr. Ubalijoro holds a Bachelor’s degree in Business Administra-
tion from Georgetown University and an MBA from Université de Sherbrooke.
Ed Fields
Bart van den Huijsen
Eugene Ubalijoro
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C H A I R M A N ’S M E S S A G E
Dear Shareholders,
Once again, it is my distinct pleasure as
Chairman of Commonwealth Brewery Limited
to share with you news, results and the vision
of this exciting and dynamic company, and
to invite you to share with us as we celebrate
three very special anniversaries.
It was 25 years ago that the first bottle of Kalik rolled off the conveyor
belt for its official final product taste test and introduction to the
market. It was 40 years ago that The Bahamas achieved political
independence, and it was 140 years ago that the first Heineken was
produced.
Throughout this year, and intensifying as we approach July 10, we will
devote considerable time and resources to celebrating our country’s
independence. We at Commonwealth Brewery look forward to partici-
pating meaningfully in national events to recognize this important
milestone in the life of the Bahamian nation.
Celebrating yet another milestone in the history of Heineken also gives
us reason to feel pride. The brand is nowadays the most internation-
ally sold beer in the world with distribution in over 178 countries
across the globe.
In preparing to celebrate the brands and the business that make up
Commonwealth Brewery Limited, a BISX-listed company with more
than 3,000 local shareholders, I am also pleased to remind share-
holders of the depth and strength of our company. The business of
Commonwealth Brewery incorporates a 150,000 square foot brewery
at Clifton Pier, the wholesale distribution of beer, wine and spirits and
the network of the largest liquor chain in The Bahamas, comprised
of 54 stores from the northernmost island to near the southernmost
point. In addition to the full portfolio of Kalik brands -- Kalik, Light,
Gold and Lime -- the company produces Heineken and Guinness
beers, Vitamalt, a full range of Ron Ricardo rums and Ole Nassau and
represents 70-plus labels of spirits and wines.
Commonwealth Brewery Limited is the only business in the indus-
try that is publicly traded, sharing profits through dividend payouts
across a wide cross-section of our community, and contribut-
ing importantly to the ownership by Bahamians of a “piece of the
economy”. After nearly a quarter of a century of private ownership,
Commonwealth Brewery went public in March, 2011, offering 25% to
the public with the remaining shares held by Heineken International
BV. Some 15.1% of the company’s publicly-traded shares are now
held by Bahamian individual and institutional shareholders and the
remaining 9.9% of publicly-traded shares is held by the government
through the National Insurance Board.
At the conclusion of the second year of public ownership and the full
fiscal year which runs from January 1- December 31, I am pleased to
report that Commonwealth Brewery Limited performed well, affording
a dividend payment increase to $0.64 from the $0.58 per share as
paid out over 2011. Total revenue exceeded $118 million, an increase
of $5 million from 2011. Operating expenses also rose by more than
$2 million over the previous year, resulting in a net income increase
of $2.0 million.
While performance is paramount, we never lose sight of our broad
corporate responsibility, and our obligation to the environment.
Throughout this annual report “Celebrating for All the Right Reasons”,
you will see clear evidence of Commonwealth Brewery’s commitment
to both. Even during the height of economic challenges, our spon-
sorship levels to regattas and Junkanoo increased, and our support
for other national endeavors has remained consistent. Our dedica-
tion to the environment is evidenced by a further reduction of our
consumption of natural resources and an increase in the volume of
bottles processed by our recycling center. We continue to expand our
commitment to staff development, investing more in skills training,
new competencies and interpersonal development than ever, know-
ing that the success of a business depends, more than anything else,
on its people.
The near term outlook is dependent to a significant degree on
economic recovery, about which we remain hopeful. As I did last
year, I wish to point to our continuing concern regarding - the ability
to operate on a level playing field, where all in the industry pay taxes,
duties and fees at comparable rates.
At this time, as we celebrate a trio of anniversaries, I wish to extend
personal appreciation to our customers for their support, our consum-
ers for continuing to prefer our brands, the management and staff in
the brewery, distribution centre, affiliated facilities and in wholesale
and retail establishments for their service and to you, our sharehold-
ers, for your loyalty. We will continue to do all we can to earn your
trust.
Julian W. Francis
Chairman
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In 2012 the trading environment for
Commonwealth Brewery Limited showed
signs of a moderate recovery. An increase in
tourist arrivals affected consumer spending
patterns positively. The beer market grew and
Commonwealth Brewery benefited through
increased sales volume. This enabled the
company despite the continuous increas-
ing costs of doing business to deliver strong financial results, and
maintain our commitments to investing in human resources and
marketing. We continued to focus on enhancing operational excel-
lence, strengthening our brand portfolio, and making sure that we
retain and extend the preference and loyalty for our brands with our
consumers and increase the value we add to our customers.
Financial Performance
Revenue increased by $5.0 million largely driven by beer sales
volume growth in the domestic market. Our export volumes declined
in 2012 because the company had to pass on price increases due
to continuously increasing input costs. Three specific areas fuelled
the higher cost of sales: import duties on raw materials and bottles,
higher shipping and local transportation costs and increases in
energy tariffs. Combined, they resulted in the need to increase our
pricing, making us less attractive than our regional competitors in the
US market. The sales volumes of wines and spirits in the domestic
market remained stable.
The increase in revenue becomes especially noteworthy given the
reality that operating expenses grew by $ 2.1 million. As mentioned
the costs of input materials continued to rise in 2012. Excise tax paid
increased due to higher beer sales. Costs in general, however, were
well under control. Operating expenses as % of revenue improved
slightly from 86% to 84%. Overall the favorable top line development
led to a positive impact on results from operating activities.
Net income amounted to $19.3 million or 64 cents per share. This
represents a growth of 11.5% compared to 2011. The cash genera-
tion remained strong. The company generated $22.3 million net cash
from operations before changes in working capital. This was partially
utilized for investments and working capital needs. Commonwealth
Brewery’s balance sheet per 31 December 2012 remained debt free.
The company paid a $7.5 million interim dividend related to 2012 in
December.
M a n a g i n g D i r e c t o r ’ s R e v i e w
“At Commonwealth Brewery we believe it is important to create a balance between people, profit and planet. It is key that long term growth should come in a responsible way.”
Vitamalt, sponsor of CARIFTA 2012 Swimming Championship.
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Marketing Programs
Our marketing programs in 2012 featured well-branded, well-covered
and well-supported key events that were well received by the public.
Kalik Pop the Top again excited consumers in the summer months.
Kalik, The Beer of The Bahamas, also strengthened its support
towards Junkanoo and the native sloop regattas.
Activities around Heineken in 2012 were for a large part centered
around the relationship with the latest James Bond Movie ‘Skyfall’
where, through various promotional activities, consumers could win a
variety of prizes including tickets for the unique eye-catching premiere
at the Mall of Marathon where over 400 leading business and civic
personalities, customers and press experienced the premiere of
‘Skyfall’ the Heineken way.
Heineken also increased its presence with various events amongst
others through a rugby sponsorship that was signed in late 2012
and the bright green Heineken bus that became an instant traveling
status symbol for private parties or groups enjoying a night out.
Guinness achieved a new record by winning, for the third year in a
row, the regional quality award for brewing the best Guinness in the
Caribbean, testimony once again to the quality of the products that
leave our brewery.
Guinness celebrated with founder Arthur Guinness Day and Guinness
Greatness street parties. Vitamalt backed CARIFTA and a basketball
series, Budweiser hosted NFL nights and Hennessy and Absolut both
aligned with art and artistry.
Community Programs
The company continued to support the work of a large number of
organizations directly or indirectly. Amongst others were The Bahama
Red Cross, The Bahamas Blood Bank, The Bahamas Cancer Society,
The Heart Foundation, The Aids Foundation, The National Youth
Council and the Royal Bahamas Police Force. Commonwealth
Brewery funded a scholarship at St. Andrews School and supported
a number of other educational institutions at specific events. The
company supported the 7th Annual Outreach Summer Youth Camp
organized by the Z-Bandit Junkanoo and Community Organization.
These and many other organizations received donations in money or
in kind in order to help defray costs and make initiatives feasible to
improve our local community.
Safety Health and Environment
At Commonwealth Brewery we believe it is important to create a
balance between people, profit and planet. It is key that long term
growth should come in a responsible way. Therefore all at Common-
wealth Brewery are working hard to contribute to a greener, happier
and healthier society.
I am proud to inform you that by continuously focusing on adherence
to safety policies and procedures we were also able to reduce the
number of accidents at the workplace this year. Also with regards to
the environment, the usage of energy and water has been reduced
taking care of the scarce resources of our planet while our Bottle
Recycle Centre, collected more bottles from the market than in
2011.
People
Currently over 98% of our total employee base is Bahamian.
Commonwealth Brewery recruited six new professionals in order
to improve customer service and quality of commercial execution.
These and other measures were taken in order to strengthen our role
as supplier of choice for alcoholic beverages. The company contin-
ued also to invest in the skills and competencies of existing staff. Our
front line managers enrolled in a program that taught them the skills
required to be successful leaders in an increasingly complex and
fast changing competitive landscape. We also continued our valuable
wine training program that we believe will have long-term benefits.
An increasing number of store clerks are more knowledgeable than
ever to assist customers with selecting their wines of choice. Due
to popular demand the company enlarged the scope of our training
program even to include customers.
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As stated last year the success of a company depends on the commit-
ment and skills of its employees. Our results in 2012 were solid. I
would like to thank the entire team for their contribution to these
results.
Outlook for 2013
We remain cautiously optimistic for the calendar and fiscal year
ahead, but see a potentially tougher competitive environment down
the road that will need to be addressed. Although the economic
climate is showing signs of recovery, competition is increasing, not in
the least through an increase of parallel imports as well as due to a
more fragmented spirits and wine market. The announced introduc-
tion of a Value Added Tax by Government in 2014 will require careful
management, if severe price disruption to our domestically manufac-
tured, as well as our imported products, is to be avoided. We will seek
to collaborate closely with Government in this regard.
We will have to step up efforts to defend our leading position as
supplier of choice. As stated last year that means we need to continue
to earn brand preference among consumers by satisfying existing
customers, wholesale and retail, and by winning new customers. We
will continue to focus on these objectives in our marketing programs
and all our operating processes.
Renovations are underway at several of our best-located stores,
including Harbour Bay Shopping Centre in Nassau which should be
finalized by the time this report is out and more projects in upgrad-
ing our retail stores are slated, demonstrating our commitment to
enhancing the shopping experience for customers.
“In 2013 Kalik, The Beer of The Bahamas, will celebrate its 25th Anniversary. This mile-stone both for the brand as well as the company will not pass unmarked.”
In 2013 Kalik, The Beer of The Bahamas, will celebrate its 25th Anni-
versary. This milestone both for the brand as well as the company will
not pass unmarked. Various activities have been planned to celebrate
this memorable event.
We will also be celebrating the 140th anniversary of the Heineken
brand throughout this year and finally, we look forward to playing a
role in activities and celebrations to commemorate the 40th indepen-
dence anniversary of the Commonwealth of The Bahamas.
Here we invite you our customers, consumers and shareholders to
celebrate with us and toast to the continued success of Common-
wealth Brewery and the brands you love.
Nico Pinotsis
President & Managing Director
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Costs were overall under control. The increase in excise duties and
taxes ($1.2 million), distribution and marketing expenses ($0.7
million), repair & maintenance ($0.3 million) and royalties ($0.1
million) were partially offset by savings in bad debt expenses ($0.1
million) and occupancy expenses ($0.1 million). Excise duties and
taxes increased $1.2 million directly driven by higher sales volume
of beer, while distribution and marketing expenses increased due
to higher investments in the marketing of our brands. These cost
increases are related to the higher sales volume realized. Repair
& maintenance expenses were impacted by higher cleaning costs
and to a lesser extent by preventive maintenance on equipment that
was not part of the maintenance plan in 2011 (bottle recycle center,
canning line). Utilities stayed stable. Although the rates increased,
Commonwealth Brewery managed to offset this to a large extent by
realizing higher efficiency in utilization.
At the end of 2012 Commonwealth Brewery remained debt free with
$11.8 million in cash and equivalents following a $7.5 million interim
dividend payment to shareholders in December 2012.
In many ways 2012 was an exceptional year with a high level of
domestic activities and tourist arrivals especially in the first half of the
year. The trend remained positive in the second half of the year, but
at a clearly lower pace.
Results from Operations
Results from operations amounted to $19.3 million, close in line with
net income. The company has limited finance costs.
Due to successful promotions and marketing campaigns Common-
wealth Brewery managed to reverse the declining sales volume trend
that started in 2010. Volume grew 4% compared to 2011. Average
revenue per hl increased to $611, up 0.6 % year-over-year, mainly
due to price increases to compensate for increases charged by
suppliers, which were partially offset by a sales mix that featured a
higher growth of products with a relative low price per liter.
The results per reportable segment in note 24 of the consolidated
financial statements show a solid growth of revenue in all segments.
As a result of the revenue growth, net income in both wholesale and
retail increased respectively 34% and 38%. Net income in produc-
tion went down 9% as result of amongst other higher input costs
(raw/packaging materials, transport costs). Revenue from exporting
Kalik to the USA declined 20% due to the competitive landscape in
the USA market, where beers from other Caribbean nations have a
price advantage due to lower production costs.
Management Discussion and Analysis
This management discussion and analysis (MD&A) should be read
in conjunction with the audited consolidated financial statements for
the year end December 31 2012 and related notes. The consolidated
financial statements have been prepared in accordance with Interna-
tional Financial Reporting Standards and are expressed in Bahamian
dollars. This MD&A is dated March 5th 2013.
Financial Performance
Revenue in 2012 grew $5.0 million or 4.5% mainly driven by sales
volume, which grew from 187 khls (or 2.08 million nine liter cases)
to 194 khls (or 2.16 million nine liter cases) in 2012. Commonwealth
Brewery’s beer portfolio contributed significantly to this volume
growth. Sales volume benefitted from higher tourist arrivals in 2012
(spring break was excellent), especially in the first quarter and from
a higher level of activities in the domestic market. Due to the strong
revenue performance net income grew to $19.3 million, which repre-
sented an increase of $2.0 million or 11.5% over 2011.
Other income declined $1.0 million, which is mainly due to a combi-
nation of non-recurring losses in 2012 and non-recurring gains in
2011. These non-recurring items ($0.7 million) include reimburse-
ments from suppliers for claims and loss on disposal of impaired
assets. Commonwealth Brewery also received less proceeds from
own organized events, rent and franchise fees in 2012.
M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s
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Consolidated Statement of Financial Position
Cash and cash equivalents amounted to $11.8 million at December
31, 2012 (+4% compared to 2011). This is the remaining balance
after the company paid $7.5 million interim dividend in December
2012.
Trade receivables, inventories and accounts payable third parties/
related parties were up compared to 2011. Working capital items
were higher due to a higher level of sales activity than in the previous
year. Outstanding accrued liabilities reduced compared to 2011.
Property, plant and equipment and intangible assets declined respec-
tively $0.4 million (1%) and 0.2 million (42%). In 2012 the company
continued to execute a prudent investment program at a level below
depreciation, although commercial and supply chain investments
were prioritized.
Retained earnings increased due to the solid net income generated in
2012, which exceeded the amounts related to final dividend of 2011
and the interim dividend of 2012.
Liquidity
Commonwealth Brewery’s cash flow generation from operating activi-
ties in 2012 amounted to $20.3 million of which $2.4 million was used
for investments. The remaining cash flow was mainly allocated to
dividend payout. Cash flow from operating activities was $0.8 million
lower than in 2011 due to higher working capital requirements, which
are linked to a higher sales activity. Net cash from operations before
working capital changes was up $1.7 million. Under stable market
conditions the company normally does not experience major fluctua-
tions in liquidity. The company does not employ derivative financial
instruments and is free of long term debt. The liquidity risk of the
company is described in notes 14 and 23(c) of the disclosures to
the consolidated financial statements and relates mainly to accounts
payable obligations and operating leases. The company’s approach
to managing liquidity is to ensure, as far as possible, that it will always
have sufficient liquidity to meet its liabilities and other commitments
when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the company’s
reputation.
The table below provides an aging analysis of Commonwealth Brew-
ery’s contractual obligations at December 31, 2012.
Contractual obligations 2012 Payment due by period
(all figures in $) Total < 1 year 1-2 years 2-5 years > 5 years
Long term debt NIL NIL NIL NIL NIL
Capital leases NIL NIL NIL NIL NIL
Operating leases 5,625,666 1,820,405 1,242,774 1,689,145 873,342
Purchase obligations NIL NIL NIL NIL NIL
Accounts payable and accrued expenses 13,202,341 13,202,341 NIL NIL NIL
Total contractual obligations 18,828,007 15,022,746 1,242,774 1,689,145 873,342
M a n a g e m e n t D i s c u s s i o n a n d A n a l y s i s
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Capital Resources
At December 31, 2012, Commonwealth Brewery had $361,763
commitment of capital resources in place amongst others related to
the upgrade of retail stores. The company generates sufficient cash
from operations for its needs. In 2012 the Group had access to $1
million overdraft facilities with local banks for contingency purposes.
At December 31, 2012 these facilities were not in use. In view of the
robust cash flow development and in order to fine-tune the short-term
facilities and related bank charges, the level of overdraft facilities was
reduced to $1 million in 2012. Commonwealth Brewery agreed on
termination and release of all collateral with the banks.
With effect from January 1st, 2011 the dividend policy of Common-
wealth Brewery is 100% of net income. The frequency and payout
ratio for any dividend remains the discretion of the Board of Direc-
tors and is subject to ratification at the Annual General Meeting of
shareholders.
Should the company need funding for large investment projects, the
company has the option to initiate long-term debt.
Off Balance Sheet Arrangements
As of December 31, 2012 the company had no off balance sheet
arrangements with any parties. Note 14 of the consolidated financial
statements lists the commitments and contingent liabilities of the
company. The majority of commitments relate to lease contracts for
commercial real estate, most of which are short-term with duration of
1 to 5 years. The main contingent liabilities are related to Customs
bond guarantees and standby letters of credit. Commonwealth Brew-
ery reached agreement with a number of suppliers to cancel letters
of credit.
Transactions with Related Parties
Commonwealth Brewery has a number of transactions and agree-
ments with other entities of the Heineken Group in place. These
transactions and agreements relate to the secondment of senior
employees, purchasing of raw and packaging materials, supply chain
consultancy, transport of products, bottling, trademark licensing, IT
services and management services. The amounts related to these
transactions are specified in note 15 to the consolidated financial
statements.
In 2012 the IT service charges from Heineken Group Companies
increased. This was for a substantial extent due to a shift towards
use of global network services that were made available through
the Heineken Group as opposed to direct purchase from third party
contractors like in prior years. Commonwealth Brewery’s total out-
of-pocket IT expenses in 2012 increased by $0.3 million. This was
among other factors linked to the upgrade of the local infrastructure
to improve connectivity between retail stores and head-office as well
as a number of projects to upgrade application software.
Critical Accounting Estimates
Note 3 of the consolidated financial statements details the significant
accounting policies of Commonwealth Brewery. Management consid-
ers none of these accounting policies to be critical, meaning that the
policies require the company to make assumptions about matters
that are highly uncertain and that different estimates are reasonably
likely to occur from period to period, which could have a material
impact on financial results.
Note 8 details the assumption used to test impairment on goodwill
annually. The company carries net $4.5 million goodwill, resulting
from the acquisition of 100% ownership interest in Butler & Sands
Company Limited in the year 2000. Goodwill by its nature is subject
to the risk of impairment if key assumptions like the projected sales
volume of acquired wine and spirit brands change. However using
reasonable expectations only a limited change in key assumptions
would occur, and this would not cause a material impact on results.
Changes in Accounting Policies
Commonwealth Brewery has not applied new standards or report-
ing policies in the current period. As described in note 3(u) of the
consolidated financial statements, the company does not plan to
adopt IFRS 9 Financial Instruments before 2015 and the extent of
the impact has not yet been determined.
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E x e c u t i v e M a n a g e m e n t T e a m
Pictured left to right: Top Row - Remi den Broeder, Brewery Manager; Lino Villareal, Group Marketing Manager and Brent Ferguson, Group Sales
Manager Middle Row - Shun Chou, Group Financial Manager and Christiane Jung, Group Human Resources Manager Front Row - Nico Pinotsis,
Managing Director and Dennis Hanna, Retail and Distribution Manager
- Lino Villarreal
Group Marketing Manager
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C o r p o r at e R e s p o n s i b i l i t y
Education
Commonwealth Brewery for many years has been supporting indi-
viduals and educational institutions in numerous ways.
In order to further strengthen these initiatives, the Company
announced the establishment of an education trust at the Kalik 25th
Anniversary Celebration Launch in February 2013. The Common-
wealth Brewery Limited Education Trust will seek to nurture youth
development by providing scholarships to Bahamian college students
and educational equipment to local schools. More specifically the
purpose of this Trust is to facilitate the continuance and maintenance
of scholarships for the purpose of providing encouragement and
practical assistance to eligible students and to provide educational
equipment to secondary, tertiary or technical schools.
Charity
Commonwealth Brewery is actively committed to its corporate and
social responsibilities and participates in a variety of community
initiatives. In 2012 the company’s contribution increased significantly
as more charitable and non-profit entities were assisted. Common-
wealth Brewery places much emphasis on areas that impact overall
community development with a focus on health and education. Such
affiliations are intricately aligned to our values and principles.
“The Bahamas Red Cross Society acknowledges and is grateful for
the support of our corporate sponsor Commonwealth Brewery Ltd.
Thanks to their consistent donations, we can do more, do it better
and reach further in serving the most vulnerable amongst us.” Ms.
Caroline Turnquest, Director General, The Bahamas Red Cross.
Commonwealth Brewery strives to foster good corporate relations with
its communities and particular attention is given to programs and
organizations that share its value for excellence and social perfor-
mance. To this end, it views goodwill as an essential factor not only in
its business but also in nation building.
“Commonwealth Brewery has been a most consistent and generous
corporate donor to the Princess Margaret Hospital Blood Bank for
more than two decades. We at the Princess Margaret Hospital Blood
Bank are truly grateful for your continuous support. Your donations
of Vitamalt and Guinness have impacted thousands of patients,
their families and indeed the general Bahamian community.” Mr.
Everette Miller, Supervisor, Blood Bank/Transfusion Medicine, Prin-
cess Margaret Hospital.
“Our business affords us the opportunity to assist others in pursuing their goals...”
Vitamalt essay competition 2012, Abaco’s winner receiving a laptop.
- Silbert Ferguson
Chairman of Junkanoo Corporation New Providence Limited
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The company’s charitable contributions for 2012 included amongst
others The Bahamas Red Cross, The St. Andrew’s Scholarship
Foundation, The Cancer Society of The Bahamas, Princess Margaret
Hospital Blood Bank, The Sir Victor Sassoon (Bahamas) Heart Foun-
dation and The Bahamas Aids Foundation.
Sponsorships
In 2012, Commonwealth Brewery’s sponsorship program focused
primarily on cultural and sports partnerships. In the area of sports,
Commonwealth Brewery sponsored amongst others rugby (The
Bahamas Rugby Union), swimming (Bahamas Swim Federation
Carifta 2012), track and field (Government Secondary Schools Sports
Association Track and Field Meet), basketball (Carlos Reid Basketball
Camp), and boating (Blind Boat Challenge).
Following its global sponsorship strategy the Heineken brand spon-
sored for the first time locally The Bahamas Rugby Union.
“Heineken’s sponsorship is the most significant since the union’s
more than forty year inception in The Bahamas.” Steven Johnson,
Chairman, The Bahamas Rugby Union,
By continually supporting cultural festivities such as Junkanoo, Regat-
tas, Local Festivals and Homecoming across most major islands,
Kalik has become synonymous with local culture and a symbol of
national pride. In 2012 Kalik signed on as the platinum sponsor of
the Junkanoo Corporation New Providence Limited (JCNP) for the
next three years; subsequently earning the distinction as title sponsor
for several major categories in both Boxing Day and New Year’s Day
parades.
“Kalik has always supported our local culture and many different
areas of Junkanoo.” Silbert Ferguson, Chairman of Junkanoo Corpo-
ration New Providence Limited.
Guinness and Vitamalt have both been strong supporters of commu-
nity activities, Guinness in particular with music, having sponsored
several major musical events. Vitamalt has been an active partner
sponsoring an assortment of sporting events as well as creating spon-
sorship opportunities in the field of education. The Vitamalt Essay
competition provided primary students from New Providence, Abaco
and Grand Bahama with the opportunity to win computers and cash
prizes for themselves and their schools while simultaneously assisting
participating students to improve their writing and language skills.
“Commonwealth Brewery is not only proud of its 2012 sponsorships
but also excited about the opportunities that such investments allowed
in the promotion of local culture, education and sports development
across the Country.” Lino Villarreal, Group Marketing Manager
“Kalik has always supported our local culture and many different areas of Junkanoo.”
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E n v i r o n m e n ta l S u s ta i n a b i l i t y
Commonwealth Brewery’s electricity consumption decreased from
22.4 kWh/hl in 2011 to 19.9 kWh/hl in 2012, surpassing the target
of 22.1 kWh/hl. Improvements on packaging line efficiencies and
the introduction of an energy saving team in the cellars area have
resulted in an 11.2 % decrease of electricity consumption.
Water consumption at Commonwealth Brewery decreased from
6.3 hl/hl in 2011 to 5.9 hl/hl in 2012. The target of 6.2 hl/hl was
achieved.
Additionally in 2012 Commonwealth Brewery placed greater empha-
sis on the protection of the environment and as a result achieved the
following:
· Non-recycled industrial waste production decreased from 4.95
kg/hl in 2011 to 4.32 kg/hl.
· Total CO2 emissions from our brewery facility decreased from
21.7 kg CO2/hl in 2011 to 18.1 kg CO2/hl.
· The bottle recycle rate at the company’s recycle centre was
increased by 12% vs. 2011.
The objective for 2013 is to keep increasing energy, water and waste
efficiencies thus staying in line with continuous improvement goals
and according to the company’s value of operating in a sustainable
way.
In order to serve our consumers a
refreshing beer, cooling is essential,
however cooling also represents a
significant part of our total carbon
footprint and we aim to reduce its
impact by ensuring that old fridges
are replaced with ‘green fridges.‘
A ‘green fridge’ has three main char-
acteristics: the use of hydrocarbon
refrigerant, LED illumination and an
energy management system. As of
2012 all of the new fridges acquired
by Commonwealth Brewery had all
of the above green specifications.
Brewing a Better Future
Commonwealth Brewery Ltd. has fully adopted Heineken’s global
sustainability program ‘Brewing a Better Future’.
“At Commonwealth Brewery, we believe it is crucial that every day we
make a conscious effort to reevaluate the way we conduct business.
For us, paramount is our reduction of energy, water and waste while
optimizing production efficiencies. It is important to have a balance
between people, profit and planet and this should be reflective in our
daily activities at CBL.”
As a business it is vital to ensure that growth comes in a responsible
way. Therefore, we are all working hard to contribute to a greener,
happier and healthier society.” Nico Pinotsis, Managing Director
‘Brewing a Better Future’ is a comprehensive, integrated strategy for
creating a more sustainable company and future. Heineken’s long-
term aspiration is to be the world’s greenest brewer – an aspiration that
we view as a continuous journey which we will continue to measure as
we progress. It is based on three strategic imperatives around which
we have built our commitments and programs:
1. To continuously IMPROVE the environmental impact of our
brands and business
2. To EMPOWER our people and the communities in which we
operate
3. To positively IMPACT the role of beer in society.
Commonwealth Brewery’s sustainability initiatives follow these three
strategic imperatives.
Improve
Commonwealth Brewery’s focus is to increase the energy and water
efficiency of its brewery, offices and warehouses. The company made
good progress and achieved the goals set for 2012 which are in line
with continuous improvement goals.
Thermal energy consumption of Commonwealth Brewery decreased
from 182 MJ/hl in 2011 to 163 MJ/hl in 2012, so the target of 177
MJ/hl was achieved. The implementation of several energy saving
activities such as installing a smart brewing system in the brew house,
temperature optimization on bottle washers and improvements on
packaging line efficiencies have resulted in a 10.4% decrease of
thermal energy consumption.
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Empower
Commonwealth Brewery’s goal is to achieve an accident free work
environment and a safe working culture. In meeting this goal, the
company focuses on accident reduction by implementing safety
procedures and continuously providing the necessary training to its
employees and the people it works with.
In 2012, the number of accidents was reduced by 48% vs. 2011,
and the number of lost working days by 50%. This reduction was the
result of the development and implementation of additional safety
standards and procedures.
Impact
Beer is a natural product enjoyed by hundreds of millions of people
around the world. It is, can and should be a legitimate part of a
healthy balanced lifestyle when consumed in moderation.
Responsible Consumption
When consumed in moderation, Commonwealth Brewery believes
that alcohol can be part of a positive lifestyle. The company also
believes it is part of its responsibility to inform consumers about the
risks of excessive consumption, drinking and driving and under-
age consumption. To do this, Commonwealth Brewery places great
emphasis on making sure that all the advertising and promotions
of its brands, as well as of the brands it represents, run according
to the Heineken Responsible Commercial Communication Code,
which promotes responsible consumption. It is equally important for
Commonwealth Brewery to continuously educate its employees on its
Internal Alcohol Policy.
In 2012 Commonwealth Brewery strengthened its efforts in this
aspect by including “responsible consumption” messages on all of
the company’s beer primary packaging.
Safety data on production unit Unit 2010 2011 2012
Parameters (absolute values)
Fatalities of company & contractor personnel Cases 0 0 0
Permanent disabilities of company personnel Cases 0 0 0
Accidents of company personnel Cases 21 17 9
Accidents of contractor personnel Cases 0 0 0
Lost working days of company personnel Days 212 141 70
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“For us, paramount is our reduction of energy, water and waste while optimizing production efficiencies.”
20100
50
100
150
200
MJ/hl beer
Specific thermal energy consumption
Actual Performance Target
2011 2012
199182
163177
20100
5
10
15
20
25
30
24.522.4
19.922.1
kWh/hl beer
Specific electricity consumption
Actual Performance Target
2011 2012
20100.0
1.0
2.0
3.0
4.0
5.0
6.0
7.06.1 6.3
5.96.2
hl/hl beer
Specific water consumption
Actual Performance Target
2011 2012 2010 2011 20120
5
10
15
20
25
21
17
9
Number of Accidents of company personnel
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H E I N E K E N O V E R V I E W
“Heineken has the broadest geographical presence of all brewers, operating in more than 170 countries worldwide.”
Heineken International B.V. is a company incorporated on November
19, 1959 and existing under the laws of the Netherlands. It currently
holds 75% of the issued and outstanding shares in Commonwealth
Brewery either directly or through a nominee. Heineken International
B.V. is a holding company and a wholly owned subsidiary of Heineken
N.V. Heineken N.V. is a company incorporated on January 11, 1873
and existing under the laws of the Netherlands. Today, Heineken
is Europe’s largest brewer and the world’s third largest brewer by
volume.
Heineken has the broadest geographical presence of all brewers,
operating in more than 170 countries worldwide. With total consoli-
dated volume of 145.9 million hectoliters in 2010, the company
produces beer in more than 70 countries through its 140 breweries
and through other brewers under license.
Heineken N.V. shares are listed on Euronext Amsterdam and options
on these shares are traded on the Euronext.Liffe options exchange.
For further information pertaining to Heineken, please visit: www.
heinekeninternational.com.
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This year marks an important milestone for Commonwealth Brewery
and the Commonwealth of the Bahamas with the celebration of 25
years of brewing Kalik. The original Bahamian beer, Kalik has main-
tained its place as the favorite beer of The Bahamas since the first
sip. From the moment the first bottle of Kalik rolled off the bottling
line, Bahamian beer drinkers were elated. They now had a beer that
not only was their own, they had one that was produced at inter-
national standards but still possessed a Bahamian fare. From the
beginning Kalik was reminiscent of what Bahamians loved and held
dear about their country – the abundance of sun and sea, the sounds
and sights of Junkanoo and Regatta, spending time with family and
friends - sheer exhilaration of island life.
2 5 Y E A R S O F k a l i k
“Here’s to you, KALIK
The Beer of The Bahamas.
”2
01
2
AN
NU
AL
R
EP
OR
T
21
The Story Behind the Brand
In 1985 Commonwealth Brewery Ltd. located on the western tip of
New Providence bottled its first batch of beer, Heineken and Guin-
ness were the first two brands brewed, however the need for a Baha-
mian beer was overwhelming. Bahamian beer drinkers yearned for a
beer of their own; one that could make them proud and they got just
that when Kalik was introduced.
Bahamian beer lovers were chosen by Commonwealth Brewery to
define the beer’s taste profile and select the symbols which represent
our Bahamian culture. The cowbells were instrumental in coining the
name of the beer, Kalik, derived from the sound that emanates from
the cowbell used during The Bahamas’ iconic Junkanoo celebrations.
Two of the pioneers among Bahamian women in the art of brew-
ing, original master brewers Sophia Dames and Marcia Wright, were
responsible for the brewing of the first Bahamian beer.
When the first Kalik rolled off the line those who waited took a deep
breath in anticipation, however no one could have fathomed what lay
ahead. Once Bahamians tasted Kalik there was no doubt in anyone’s
mind that this new beer was a winner and was here to stay. This
significant moment in Commonwealth Brewery’s history cemented
the fact that now Bahamians not only had a brewery that could
produce international quality beers but they also had The beer of
The Bahamas. Our country, thanks to Commonwealth Brewery had
accomplished a remarkable feat - Kalik was a beer that was locally
brewed and could rival any internationally produced beer.
With much expectation and excitement Kalik was launched on Arawak
Cay in 1988 and took off very well, from the beginning its taste was
enjoyed by Bahamians and Tourists alike. In 1990, just two years
after inception, Kalik received a Monde Selection Gold Medal from
Belgium’s prestigious International Institute for Quality Selections
(IIQS). Subsequently, Kalik had the distinction of earning a Monde
Selection Gold Medal for three consecutive years.
Since the birth of Kalik in 1988, the Kalik Family has grown to include
Kalik Regular, Kalik Gold, Kalik Light and Kalik Lime. In 1992 Kalik
Gold was introduced as an extra strong beer and The Official Beer of
The Bahamas Quincentennial. This limited edition beer celebrated
the 500th anniversary of Columbus’ landing in the new world. Due
to overwhelming reception, Commonwealth Brewery now produces
Kalik Gold permanently. Kalik Light, a distinctively savory light beer
was introduced in 1997 in response to consumer requests for a Baha-
mian light beer, and in 2011 Kalik Lime was added. The refreshing
taste of Kalik Lime has a hint of lime and offers an exciting, new twist
on a great Bahamian tradition.
Commonwealth Brewery looks forward with much excitement to the
next 25 years of Kalik not only as The Beer of The Bahamas, but
also as a significant partner and contributor to the promotion and
enhancement of Bahamian culture. Like the sentiment shared in
1988, Kalik will continue to be a symbol of pride for Bahamians.
Here’s to you, KALIK
The Beer of The Bahamas.
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L I S T O F S T O R E S
Abaco
Butler & Sands (A&K) Marsh Harbour
Beverage Depot (AB1) Marsh Harbour
Butler & Sands (Spanky’s) Treasure Cay
Andros
Beverage Depot Lowe Sound
Central Beverage Depot Fresh Creek
Beverage Depot Mangrove Cay
Beverage Depot (A4) South Andros
Bimini
Butler & Sands Alice Town
Cat Island
Beverage Depot (Two Corners) New Bight
Eleuthera
Beverage Depot Rock Sound
Butler & Sands Governor’s Harbour
Beverage Depot (Pyfrom’s) Governor’s Harbour
Beverage Depot Bluff
Butler & Sands Jean’s Bay
Beverage Depot Harbour Island
Butler & Sands (Bayside) Harbour Island
Exuma
Beverage Depot (B.G.S.) George Town
Butler & Sands (John Marshall) George Town
Grand Bahama
Burns House Queens Highway
Ole Nassau Int’l Airport
Beverage Depot Churchill Square
Butler & Sands RND Shopping Centre
Ole Nassau Freeport Arcade
Beverage Depot Plaza Liquor THM
Butler & Sands Seahorse Plaza
Ole Nassau (House of Rum) Port Lucaya
Beverage Depot Eight Mile Rock
Butler & Sands West End
Long Island
Beverage Depot Queen’s Highway
New Providence
Butler & Sands Cable Beach
Butler & Sands J.F. Kennedy Drive
Beverage Depot (Henrea Carlette) Cable Beach
Beverage Depot (Saunders Beach) West Bay Street
Beverage Depot (I Need A Liquor) West Bay Street
Ole Nassau (Esquire Liquors) Bay Street
Burns House (Tippsters #2) Carmichael Road
Ole Nassau Bay Street
Ole Nassau (THM Emporium) Woodes Rogers Wharf
Burns House (Express Macy’s) East & Fowler Streets
Ole Nassau (Maury Roberts) Bay Street
Beverage Depot (Captain’s Cabin) East Bay Street
Butler & Sands (The Caves) West Bay Street
Butler & Sands Harbour Bay
Shopping Plaza
Butler & Sands Shirley Street
Beverage Depot (Budget) Bernard Road
Beverage Depot Marathon Mall
Beverage Depot (The Deck) Fox Hill Road
Butler & Sands East West Highway
Beverage Depot Independence
Shopping Centre
Domestic Bar LPIA/Family
Islands Section
Ole Nassau (Int’l Departure) LPIA/Non-U.S.
International Departure
Ole Nassau (Sammy’s) LPIA/Family
Islands Section
Heineken Duty Free Shop LPIA/U.S.
International Departure
The Heineken Bar LPIA/U.S.
International Departure
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A D V I S O R S
Auditors
KPMG
Montague Sterling Centre, East Bay Street
P.O. Box N-123
Bankers
Citibank
110 Thompson Boulevard
P.O. Box N-8158
First Caribbean International Bank
Shirley Street
P.O. Box N-7125
Legal Counsel
Higgs & Johnson
Ocean Centre, Montagu Foreshore, East Bay Street
P.O. Box N-3247
Registrar & Transfer Agents
Bahamas Central Securities Depository
2nd Floor, Fort Nassau Centre, British Colonial Hilton
P.O. Box EE-15672
Registered Office
Commonwealth Brewery Limited
c/o Higgs & Johnson Corporate Services Ltd.
Ocean Centre, Montagu Foreshore, East Bay Street
P.O. Box N-3247
Corporate Office
Clifton Pier
P.O. Box N-4936
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To the Shareholders of Commonwealth Brewery Limited
We have audited the accompanying consolidated financial statements of Commonwealth Brewery Limited (“the Company”), which comprise
the consolidated statement of financial position as at December 31, 2012, the consolidated statements of comprehensive income, changes
in equity and cash flows for the year then ended and notes, comprising a summary of significant accounting policies and other explanatory
information.
Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Inter-
national Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accor-
dance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation
and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the
overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as at Decem-
ber 31, 2012, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting
Standards.
March 5, 2013
I N D E P E N D E N T A U D I T O R S ’ R E P O RT
KPMG
PO Box N-123
Montague Sterling Centre
East Bay Street
Nassau, Bahamas
Telephone +1 242 393 2007
Fax +1 242 393 1772
Internet www.kpmg.com.bs
KPMG, a Bahamian partnership and a member firmof the KPMG network of independent member firmsaffiliated with KPMG lnternational Cooperative(“KPMG” international), a Swiss entity.
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Note(s) 2012 2011
Assets
Current Assets:
Cash and cash equivalents 4 $ 11,848,434 11,359,313
Trade receivables 5 2,859,718 1,786,488
Prepaid expenses and other assets 6, 15 2,013,603 2,126,341
Inventories 7 16,804,392 16,402,004
Total current assets 33,526,147 31,674,146
Non-current Assets:
Goodwill 8 4,487,242 4,487,242
Property, plant and equipment 9 35,002,959 35,388,064
Intangible assets 10 263,831 458,957
Total non-current assets 39,754,032 40,334,263
Total assets 24 $ 73,280,179 72,008,409
Liabilities and Equity
Current Liabilities:
Accounts payable and accrued expenses 11, 15 $ 13,202,341 13,847,253
Total current liabilities 24 13,202,341 13,847,253
Equity:
Share capital 12 150,000 150,000
Share premium 12,377,952 12,377,952
Contributed surplus 16,351,369 16,351,369
Revaluation surplus 13 4,269,587 4,269,587
Retained earnings 26,928,930 25,012,248
Total equity 60,077,838 58,161,156
Commitments and contingencies 4, 14
Total liabilities and equity $ 73,280,179 72,008,409
See accompanying notes to consolidated financial statements.
These consolidated financial statements were approved for issue on behalf of the Board of Directors on March 5, 2013 by:
Director Director
Consolidated Statement of Financial Position C O M M O N W E A LT H B R E W E R Y L I M I T E DDecember 31, 2012, with corresponding figures for 2011 (Expressed in Bahamian dollars)
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Note(s) 2012 2011
Income:
Revenue 24 $ 118,468,483 113,409,201
Other income 16 367,364 1,316,560
Total income 118,835,847 114,725,761
Operating expenses:
Raw materials, consumables and services 7, 15, 17 80,881,348 79,062,744
Personnel costs 15, 18 15,830,588 15,504,317
Depreciation 9 2,632,278 2,666,036
Amortisation 10 195,126 214,181
Total operating expenses 99,539,340 97,447,278
Results from operating activities 19,296,507 17,278,483
Finance income 20,175 41,836
Net and total comprehensive income 24 $ 19,316,682 17,320,319
Basic and diluted earnings per share 19 $ 0.64 0.58
See accompanying notes to consolidated financial statements.
Consolidated Statement of Comprehensive Income C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012, with corresponding figures for 2011 (Expressed in Bahamian dollars)
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Sh
are
Shar
e Co
ntri
bute
d Re
valu
atio
n Re
tain
ed
Tota
l
capi
tal
prem
ium
su
rplu
s su
rplu
s ea
rnin
gs
equi
ty
Bal
ance
at D
ecem
ber
31, 2
010
$
150,
000
12,3
77,9
52
16,3
51,3
69
4,26
9,58
7 32
,845
,316
65
,994
,224
Net
inco
me
and
tota
l com
preh
ensi
ve in
com
e
–
– –
– 17
,320
,319
17
,320
,319
Tran
sact
ions
wit
h ow
ners
, re
cord
ed d
irec
tly
in e
quit
y
Div
iden
ds d
ecla
red
(Not
e 20
)
–
– –
– (2
5,15
3,38
7)
(25,
153,
387)
Bal
ance
at D
ecem
ber
31, 2
011
150,
000
12,3
77,9
52
16,3
51,3
69
4,26
9,58
7 25
,012
,248
58
,161
,156
Net
inco
me
and
tota
l com
preh
ensi
ve in
com
e
–
– –
– 19
,316
,682
19
,316
,682
Tran
sact
ions
wit
h ow
ners
, re
cord
ed d
irec
tly
in e
quit
y
Div
iden
ds d
ecla
red
(Not
e 20
)
–
– –
– (1
7,40
0,00
0)
(17,
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000)
Bal
ance
at D
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ber
31, 2
012
$
150,
000
12,3
77,9
52
16,3
51,3
69
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9,58
7 26
,928
,930
60
,077
,838
See
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Con
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Sta
tem
ent
of C
hang
es in
Equ
ity
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Year
end
ed D
ecem
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31, 2
012,
with
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ng fi
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11
(Exp
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Bah
amia
n do
llars
)
Co
mm
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we
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th
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ew
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ed
28
Note(s) 2012 2011
Cash flows from operating activities
Net income $ 19,316,682 17,320,319
Adjustments for:
Depreciation 9 2,632,278 2,666,036
Amortisation 10 195,126 214,181
Bad debt expense 5, 6 (57,411) 97,113
Provision for obsolescence 7 – 162,504
Loss on disposal of property, plant and equipment 16 197,922 12,674
Loss on disposal of vehicles 15 – 88,315
Finance income (20,175) (41,836)
Net cash from operations before changes in working capital 22,264,422 20,519,306
Changes in non-cash working capital 21 (1,950,381) 562,841
Net cash from operating activities 20,314,041 21,082,147
Cash flows from financing activities
Dividends paid 20 (17,400,000) (25,153,387)
Net cash used in financing activities (17,400,000) (25,153,387)
Cash flows from investing activities
Additions to property, plant and equipment 9 (2,445,095) (1,314,743)
Proceeds from sale of property, plant and equipment – 150,842
Interest received 20,175 41,836
Net cash used in investing activities (2,424,920) (1,122,065)
Net increase/(decrease) in cash and cash equivalents 489,121 (5,193,305)
Cash and cash equivalents, beginning of year 11,359,313 16,552,618
Cash and cash equivalents, end of year 4 $ 11,848,434 11,359,313
See accompanying notes to consolidated financial statements.
Consolidated Statement of Cash Flows C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012, with corresponding figures for 2011 (Expressed in Bahamian dollars)
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1. General information
Commonwealth Brewery Limited (“CBL” or “the Company”) was incorporated under the laws of The Commonwealth of The Bahamas
on November 17, 1983 and commenced trading in March 1987. The consolidated financial statements of the Company comprise the
Company and its subsidiaries (together referred to as “the Group” and individually as “Group entities”). The principal activity of the Group
is the production of alcoholic and non-alcoholic beverages, liquor importation, distribution and sales. The Company’s principal place of
business and registered office is located at Clifton Pier, Nassau, Bahamas. Effective May 24, 2011, the Company’s shares were listed on
The Bahamas International Securities Exchange.
The Company is a subsidiary of Heineken International B.V. (“Heineken”). Heineken is incorporated under the laws of The Netherlands
and its corporate office is located at Tweede Weteringplantsoen 21, 1017 ZD, P. O. Box 28, 1000 AA Amsterdam, The Netherlands.
The ultimate parent of CBL is Heineken N.V. located at the same address. 75% of shares of the Company are owned by Heineken and
remaining 25% are owned by the Bahamian public.
2. Basis of preparation
(a) Statement of compliance
These consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS).
(b) Basis of measurement
These consolidated financial statements are prepared under the historical cost convention, except for land and buildings included
in property, plant and equipment which are carried at revalued amounts.
(c) Functional and presentation currency
These consolidated financial statements are presented in Bahamian dollars, the Group’s functional and reporting currency. The
Bahamian dollar is the currency of the country where the Group entities are domiciled and is the prime operating currency.
(d) Use of estimates and judgements
The preparation of consolidated financial statements in conformity with IFRS requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods affected.
Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recogn-
ised in the consolidated financial statements is included in the following notes:
Note 5 Trade receivables
Note 6 Prepaid expenses and other assets
Note 7 Inventories
Note 8 Goodwill
Note 9 Property, plant and equipment
Note 10 Intangible assets
Note 14 Commitments and contingencies
Note 23 Financial instruments and associated risks
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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3. Significant accounting policies
Following is a summary of the significant accounting policies which have been applied consistently by the Group in preparing these
consolidated financial statements.
(a) Basis of consolidation
The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences
to the date that control ceases. Subsidiaries are entities controlled by the Group. Control is the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into line with those adopted by the Group. All intra-group transactions,
balances, income and expenses and unrealised income and expense arising from inter-group transactions are eliminated in full on
consolidation.
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The carrying amount of non-
controlling interests is the amount of these interests at initial recognition plus the non-controlling interest’s share of subsequent
changes in equity. Total comprehensive income is attributed to non-controlling interests even if it results in the non-controlling
interests having a deficit balance.
When a controlling interest in a subsidiary is disposed of, the difference between the proceeds from the disposal and the carrying
amount of the Group’s interest in the subsidiary’s assets and liabilities, plus the carrying amount of goodwill related to the subsidiary
disposed of, is recognised in net income as a gain or loss on disposal.
Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The
carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative inter-
ests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of
the consideration paid or received is recognised directly in equity and attributed to owners of the Company.
(b) Financial instruments
Classification
Financial instruments include financial assets and financial liabilities. Financial assets that are classified as loans and receivables
include cash held with banks and trade and other receivables. Financial liabilities that are not at fair value through profit or loss
include accounts payable and accrued expenses and bank loans.
Recognition
The Group recognizes financial instruments initially at the trade date, which is the date when it becomes a party to the contractual
provisions of the instruments.
Measurement
Financial instruments are measured initially at fair value plus, in the case of a financial asset or financial liability not at fair value
through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial
liability. Transaction costs on financial assets and financial liabilities at fair value through profit or loss are expensed immediately,
while on other financial instruments they are amortised.
Subsequent to initial recognition, financial assets and financial liabilities not at fair value through profit or loss are carried at amor-
tised cost using the effective interest method, less in the case of financial assets, impairment losses, if any.
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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3. Significant accounting policies (continued)
(b) Financial instruments (continued)
Derecognition
The Group derecognises a financial asset when the contractual rights for cash flows from the financial asset expire or it transfers the
financial asset and the transfer qualifies for derecognition in accordance with International Accounting Standard 39.
The Group derecognises a financial liability when the obligation specified in the contract is discharged, cancelled or expired.
(c) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and cash held with banks.
(d) Accounts receivable
Accounts receivable are stated at amortised cost net of an allowance for doubtful accounts.
(e) Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted average method and
includes expenditure incurred in acquiring the inventories, production costs and other costs incurred in bringing them to their
existing location and condition. In the case of finished goods and work-in-progress, cost includes an allocation of those production
overhead costs that relate to bringing the inventories to their present location and condition. Net realisable value is the estimated
selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
(f) Goodwill
Goodwill is carried at cost less accumulated amortisation and impairment losses. Goodwill arising on the acquisition of the Group’s
100% ownership interest in Butler & Sands Company Limited and its subsidiaries in the year 2000 represents the excess of the cost
of acquisition over the net fair value of the identifiable assets and liabilities of Butler & Sands Company Limited and its subsidiaries
recognised at the date of acquisition less accumulated amortisation thereon to December 31, 2004, at which time amortisation
ceased and goodwill was deemed to have an indefinite useful life. Thereafter, goodwill is tested for impairment annually.
(g) Property, plant and equipment
Items of property, plant and equipment are carried at cost less accumulated depreciation and impairment losses, except land and
buildings, which are carried at revalued amounts. The directors review the carrying value annually. Whenever the directors deter-
mine that the carrying value differs materially from the fair value, an independent valuation is obtained and the land and buildings
are revalued.
The surplus on revaluation is recorded in equity and is transferred to retained earnings when the revalued asset is derecognised.
When an item of property, plant and equipment is revalued, accumulated depreciation is eliminated against the gross carrying
amount of the asset.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes
the cost of materials and direct labour and any other costs directly attributable to bringing the asset to a working condition for its
intended use.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major
components) of property, plant and equipment.
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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3. Significant accounting policies (continued)
(g) Property, plant and equipment (continued)
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably.
The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment
are recognised in the consolidated statement of comprehensive income as incurred.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal
with the carrying amount of property, plant and equipment, and are recognised net within other income in the consolidated state-
ment of comprehensive income.
Depreciation is calculated on the depreciable amount, which is the cost of an asset, or other amounts substituted for cost, less its
residual value.
Depreciation is recognised in the consolidated statement of comprehensive income on a straight-line basis over the estimated useful
lives of the items of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future
economic benefits embodied in the asset.
The estimated useful lives of property, plant and equipment are as follows:
Land No depreciation
Buildings 15 to 40 years
Leasehold improvements Over the lease term
Plant & machinery 5 to 30 years
Furniture, fixtures & equipment 3 to 25 years
Vehicles & transportation equipment 5 years
Capital work in progress No depreciation
Depreciation methods, useful lives and residual values are reviewed at each reporting date and are adjusted, if appropriate.
(h) Intangible assets
Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific soft-
ware. The computer software is carried at cost less accumulated amortisation and any accumulated impairment losses. Amortisation
is computed on the straight-line method over an estimated useful life of up to five years.
(i) Impairment
Financial assets
Financial assets other than receivables, which are reviewed on a continuous basis, are assessed at each reporting date to determine
whether there is any objective evidence of impairment. A financial asset is considered to be impaired if objective evidence indicates
that one or more events have had a negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows discounted at the original effective interest rate.
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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3. Significant accounting policies (continued)
(i) Impairment (continued)
Financial assets (continued)
Financial assets are tested for impairment on an individual basis. All impairment losses are recognised in the consolidated statement
of comprehensive income.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recog-
nised.
Non-financial assets
The carrying amounts of the Group’s non-financial assets other than inventories are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. The recov-
erable amount of goodwill is estimated each year at the same time. An impairment loss is recognised if the carrying amount of the
asset or its related cash generating unit (“CGU”) exceeds its estimated recoverable amount. The recoverable amount of an asset or
CGU is the greater of its value in use and its fair value less costs to sell. Value in use represents the present value of estimated future
cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
Impairment losses are recognised in the consolidated statement of comprehensive income except for revalued assets where the
impairment loss is first applied to the revaluation surplus and any excess is recognised in the consolidated statement of compre-
hensive income. Impairment loss recognised in respect of a CGU is allocated first to reduce the carrying amount of any goodwill
associated with the CGU and then to reduce the carrying amount of other assets in the CGU on a pro-rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods
are assessed at each reporting date for any indication that the loss has decreased or no longer exists. An impairment loss is reversed
if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined net of depreciation
or amortisation, if no impairment loss had been recognised except for assets normally carried at revalued amounts.
(j) Related parties
(a) A person or a close member of that person’s family is related to a reporting entity if that person:
(i) has control or joint control over the reporting entity;
(ii) has significant influence over the reporting entity; or
(iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.
(b) An entity is related to a reporting entity if any of the following conditions applies:
(i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and
fellow subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of
which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity
related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the
reporting entity.
(vi) The entity is controlled, or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of
the entity (or of a parent of the entity).
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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3. Significant accounting policies (continued)
(k) Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee. All other leases are classified as operating leases.
Rental income and expense from operating leases are recognised in the consolidated statement of comprehensive income on a
straight-line basis over the term of the relevant lease. Initial direct costs, if incurred, in negotiating and arranging an operating lease
are recognised on a straight-line basis over the lease term.
(l) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of shares are recognised as a deduction
from equity.
(m) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The
amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the
reporting period, taking into account the risks and uncertainties surrounding the obligation.
Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present
value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered
from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount
of the receivable can be measured reliably.
(n) Foreign currencies
Transactions in foreign currencies are translated into Bahamian dollars at exchange rates prevailing on the transaction dates.
Monetary assets and liabilities denominated in such currencies at the year-end date are translated at the rates prevailing at that date.
Any differences arising on translation are recognised as exchange gains/losses within other income in the consolidated statement
of comprehensive income.
(o) Revenue recognition
Products sold
Revenue from the sale of products in the ordinary course of business is measured at the fair value of the consideration received
or receivable net of customer discounts and other sales related discounts. Revenue from the sale of products is recognised in the
consolidated statement of comprehensive income when the amount of revenue can be measured reliably, the significant risks
and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and
possible return of products can be estimated reliably and there is no continuing management involvement with the products.
Services
Revenue from services, which is included in miscellaneous income, is recognised in the consolidated statement of comprehensive
income when the services are rendered.
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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3. Significant accounting policies (continued)
(p) Employee benefits
Defined contribution plans
A defined contribution plan is a pension plan under which the Group pays fixed contributions to the fund. The Group has no legal or
constructive obligation to pay further contributions. Contributions to the Group’s defined contribution pension plans are recognised
as an employee benefit expense in the consolidated statement of comprehensive income in the periods during which services are
rendered by employees.
Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term benefits if the Group has a present legal or constructive
obligation to pay this amount as a result of past service provided by the employees and the obligation can be estimated reliably.
(q) Finance income
Finance income is accrued on a daily basis using the effective interest rate method.
(r) Earnings per share
Earnings per share are based on consolidated net income attributable to owners of the Company divided by the weighted average
number of ordinary shares outstanding during the year.
(s) Dividends
Dividends are recognised as a liability in the period in which they are declared.
(t) Operating segments
Business segments are components of an enterprise about which separate financial information is available that is evaluated regu-
larly by management in deciding how to allocate resources and in assessing performance.
Generally, financial information is required to be reported on the basis that is used internally for evaluating segment performance
and deciding how to allocate resources to segments.
For management purposes, the Group is currently organized into three business segments: (i) Wholesale (ii) Retail and (iii) Produc-
tion. These divisions are the basis on which the Group reports its operating segment information.
(u) Standards and interpretations effective in the current period
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after January
1, 2012, and have not been applied in preparing these consolidated financial statements. None of these is expected to have a
significant impact on the consolidated financial statements of the Group except for IFRS 9 Financial Instruments, which becomes
mandatory for the Group’s 2015 consolidated financial statements and could change the classification and measurement of financial
assets. The Group does not plan to adopt this standard early and the extent of the impact has not been determined.
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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4. Cash and cash equivalents
2012 2011
Cash on hand $ 49,968 57,230
Cash held with banks 11,798,466 11,302,083
Cash and cash equivalents $ 11,848,434 11,359,313
The Company has an overdraft facility of $1,000,000 (2011: $1,000,000). As at December 31, 2012 and 2011, $Nil of the overdraft
facility had been utilized. This facility bears interest at the rate of Bahamian prime plus 0.625% per annum (2011: Bahamian prime plus
1.50% per annum). The facility is secured by unlimited guarantee of Burns House Limited (“BHL” or “Principal Subsidiary”).
BHL had a secured overdraft facility of $3,000,000 up to December 31, 2011 with no specific terms of repayment which bore interest at
the rate of Bahamian prime plus 0.625% per annum. This facility was not renewed in 2012, which resulted in termination and release
of all collateral.
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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5. Trade receivables
2012 2011
Trade receivables, gross $ 3,288,898 2,705,508
Allowance for doubtful debts (429,180) (919,020)
$ 2,859,718 1,786,488
Aging analysis of trade receivables, gross, as at December 31:
2012 2011
Current $ 2,265,015 1,585,814
Past due but not impaired 594,703 200,674
Past due and impaired 429,180 919,020
$ 3,288,898 2,705,508
Movement in the allowance for doubtful debts:
2012 2011
Balance at beginning of the year $ 919,020 786,907
Increase in allowance – 132,113
Reversal of allowance (120,905) –
Amounts written off as uncollectible (368,935) –
Balance at end of the year $ 429,180 919,020
Maximum exposure to credit risk for trade receivables at December 31, by geographic region:
2012 2011
The Bahamas $ 2,779,956 1,494,992
United States of America 79,762 291,496
Balance at end of the year $ 2,859,718 1,786,488
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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6. Prepaid expenses and other assets
2012 2011
Other receivables - third parties $ 1,395,288 1,353,414
Prepaid expenses 933,734 875,408
Staff loans 193,805 343,249
2,522,827 2,572,071
Allowance for doubtful debts (509,224) (445,730)
$ 2,013,603 2,126,341
Movement in the allowance for doubtful debts created for other receivables - third parties is as follows:
2012 2011
Balance at beginning of the year $ 445,730 480,730
Increase in allowance 63,494 –
Amounts recovered during the year – (35,000)
Balance at end of the year $ 509,224 445,730
7. Inventories
2012 2011
Goods bought for resale $ 13,102,917 11,996,166
Raw materials and packaging 2,602,567 2,040,637
Finished goods 200,024 751,427
Work-in-progress 120,117 146,853
Spare parts 531,715 528,188
Other stock items 716,922 1,443,827
17,274,262 16,907,098
Provision for obsolescence (469,870) (505,094)
$ 16,804,392 16,402,004
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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7. Inventories (continued)
Movement in the provision for obsolescence:
2012 2011
Balance at beginning of the year $ 505,094 802,688
Increase in provision – 162,504
Inventories written off (35,224) (460,098)
Balance at end of the year $ 469,870 505,094
As outlined in Note 17, the cost of inventories recognised as an expense during the year was $43,850,764 (2011: $43,981,742).
8. Goodwill
Goodwill comprises the following:
2012 2011
Cost $ 6,363,448 6,363,448
Accumulated amortisation (1,876,206) (1,876,206)
Balance at end of the year $ 4,487,242 4,487,242
Goodwill is tested for impairment annually. The recoverable amount of the CGU which includes the goodwill is based on a value in use
calculation. The value in use has been determined by discounting the future cash flows generated from the continuing use of the CGU.
The key assumptions used for the value in use calculations are as follows:
· Cash flows are projected based on actual operating results and the three year business plan. Cash flows for a further two year
period are projected using expected annual growth rates.
· Cash flows after the first five years were projected using expected annual long-term inflation, based on external sources, in
order to calculate the terminal recoverable amount.
· Weighted average cost of capital (“WACC”) is applied in determining the recoverable amount of the CGU.
The WACC, expected growth rate and the expected long-term inflation rate are as follows:
WACC 9.89%
Expected annual long-term inflation 2.42%
Expected growth rate 1.18%
The values assigned to the key assumptions represent management’s assessment of future trends in the wine & spirits industry and are
based on both external and internal sources (historical data). A limited change in key assumptions will not lead to a materially different
outcome. Based on the value in use calculation management has determined that there has not been any impairment in the carrying
amount of goodwill as at December 31, 2012 and 2011.
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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9.
Pro
pert
y, p
lant
and
equ
ipm
ent
Furn
iture
Ve
hicl
e an
d Ca
pita
l
Le
aseh
old
Plan
t and
fix
ture
s an
d tr
ansp
orta
tion
w
ork
in
Land
Bu
ildin
g im
prov
emen
ts
mac
hine
ry
equi
pmen
t eq
uipm
ent
prog
ress
To
tal
Cos
t/re
valu
ed a
mou
nt:
Bal
ance
at D
ecem
ber
31, 2
010
$ 6,
455,
460
15,7
94,5
40
2,17
3,94
8 31
,284
,322
12
,995
,209
1,
095,
228
1,03
1,37
7 70
,830
,084
Add
ition
s
- -
- -
- -
1,31
4,74
3 1,
314,
743
Tran
sfer
s
- -
267,
494
207,
341
452,
551
67,8
83
(995
,269
) -
Dis
posa
ls/W
rite
Offs
- -
- (1
51,0
83)
(69,
632)
(2
23,3
56)
- (4
44,0
71)
Bal
ance
at D
ecem
ber
31, 2
011
6,
455,
460
15,7
94,5
40
2,44
1,44
2 31
,340
,580
13
,378
,128
93
9,75
5 1,
350,
851
71,7
00,7
56
Add
ition
s
- -
- -
- -
2,44
5,09
5 2,
445,
095
Tran
sfer
s
- 62
,425
60
,308
1,
619,
383
492,
395
417,
031
(2,6
51,5
42)
-
Dis
posa
ls/W
rite
Offs
- -
- -
- -
(19
7,92
2)
(197
,922
)
Bal
ance
at D
ecem
ber
31, 2
012
$ 6,
455,
460
15,8
56,9
65
2,50
1,75
0 32
,959
,963
13
,870
,523
1,
356,
786
946,
482
73,9
47,9
29
Acc
umul
ated
dep
reci
atio
n:
Bal
ance
at D
ecem
ber
31, 2
010
$ -
- 1,
708,
828
19,9
19,6
34
11,4
34,8
54
775,
579
- 33
,838
,896
Dep
reci
atio
n
- 45
7,64
9 19
4,51
2 1,
391,
798
482,
957
139,
120
- 2,
666,
036
Dis
posa
ls/w
rite
offs
- -
- (8
,408
) (5
4,19
0)
(129
,642
) -
(192
,240
)
Bal
ance
at D
ecem
ber
31, 2
011
-
457,
649
1,90
3,34
0 21
,303
,025
11
,863
,621
78
5,05
7 -
36,3
12,6
92
Dep
reci
atio
n
- 40
0,11
9 23
8,94
9 1,
368,
289
466,
032
158,
889
2,
632,
278
Dis
posa
ls/w
rite
offs
- -
- -
- -
- -
Bal
ance
at D
ecem
ber
31, 2
012
$ -
857,
768
2,14
2,28
9 22
,671
,314
12
,329
,653
94
3,94
6 -
38,9
44,9
70
Net
boo
k va
lue:
-
Dec
embe
r 31
, 201
2 $
6,
455,
460
14,9
99,1
97
359,
461
10,2
88,6
49
1,54
0,87
0 41
2,84
0 94
6,48
2 35
,002
,959
Dec
embe
r 31
, 201
1 $
6,45
5,46
0 15
,336
,891
53
8,10
2 10
,037
,555
1,
514,
507
154,
698
1,35
0,85
1 35
,388
,064
Not
es t
o C
onso
lidat
ed F
inan
cial
Sta
tem
ents
C
OM
MO
NW
EA
LT
H B
RE
WE
RY
LIM
IT
ED
Year
end
ed D
ecem
ber
31, 2
012
(E
xpre
ssed
in B
aham
ian
dolla
rs)
20
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9.
Pro
pert
y, p
lant
and
equ
ipm
ent
Furn
iture
Ve
hicl
e an
d Ca
pita
l
Le
aseh
old
Plan
t and
fix
ture
s an
d tr
ansp
orta
tion
w
ork
in
Land
Bu
ildin
g im
prov
emen
ts
mac
hine
ry
equi
pmen
t eq
uipm
ent
prog
ress
To
tal
Cos
t/re
valu
ed a
mou
nt:
Bal
ance
at D
ecem
ber
31, 2
010
$ 6,
455,
460
15,7
94,5
40
2,17
3,94
8 31
,284
,322
12
,995
,209
1,
095,
228
1,03
1,37
7 70
,830
,084
Add
ition
s
- -
- -
- -
1,31
4,74
3 1,
314,
743
Tran
sfer
s
- -
267,
494
207,
341
452,
551
67,8
83
(995
,269
) -
Dis
posa
ls/W
rite
Offs
- -
- (1
51,0
83)
(69,
632)
(2
23,3
56)
- (4
44,0
71)
Bal
ance
at D
ecem
ber
31, 2
011
6,
455,
460
15,7
94,5
40
2,44
1,44
2 31
,340
,580
13
,378
,128
93
9,75
5 1,
350,
851
71,7
00,7
56
Add
ition
s
- -
- -
- -
2,44
5,09
5 2,
445,
095
Tran
sfer
s
- 62
,425
60
,308
1,
619,
383
492,
395
417,
031
(2,6
51,5
42)
-
Dis
posa
ls/W
rite
Offs
- -
- -
- -
(19
7,92
2)
(197
,922
)
Bal
ance
at D
ecem
ber
31, 2
012
$ 6,
455,
460
15,8
56,9
65
2,50
1,75
0 32
,959
,963
13
,870
,523
1,
356,
786
946,
482
73,9
47,9
29
Acc
umul
ated
dep
reci
atio
n:
Bal
ance
at D
ecem
ber
31, 2
010
$ -
- 1,
708,
828
19,9
19,6
34
11,4
34,8
54
775,
579
- 33
,838
,896
Dep
reci
atio
n
- 45
7,64
9 19
4,51
2 1,
391,
798
482,
957
139,
120
- 2,
666,
036
Dis
posa
ls/w
rite
offs
- -
- (8
,408
) (5
4,19
0)
(129
,642
) -
(192
,240
)
Bal
ance
at D
ecem
ber
31, 2
011
-
457,
649
1,90
3,34
0 21
,303
,025
11
,863
,621
78
5,05
7 -
36,3
12,6
92
Dep
reci
atio
n
- 40
0,11
9 23
8,94
9 1,
368,
289
466,
032
158,
889
2,
632,
278
Dis
posa
ls/w
rite
offs
- -
- -
- -
- -
Bal
ance
at D
ecem
ber
31, 2
012
$ -
857,
768
2,14
2,28
9 22
,671
,314
12
,329
,653
94
3,94
6 -
38,9
44,9
70
Net
boo
k va
lue:
-
Dec
embe
r 31
, 201
2 $
6,
455,
460
14,9
99,1
97
359,
461
10,2
88,6
49
1,54
0,87
0 41
2,84
0 94
6,48
2 35
,002
,959
Dec
embe
r 31
, 201
1 $
6,45
5,46
0 15
,336
,891
53
8,10
2 10
,037
,555
1,
514,
507
154,
698
1,35
0,85
1 35
,388
,064
9. Property, plant and equipment (continued)
The latest revaluation of land and buildings was done on December 31, 2010 by a qualified independent appraiser, Robin Brownrigg,
using the income approach, except for one property where the cost basis was used. Had there been no revaluation, the carrying value of
land would have been $1,689,070 (2011: $1,689,070) and of buildings would have been $6,172,242 (2011: $7,082,767).
10. Intangible assets
Intangible assets consist of computer software as follows:
2012 2011
Cost:
Balance at January 1 and December 31 $ 3,277,317 3,277,317
Accumulated amortisation:
Balance at January 1 $ 2,818,360 2,604,179
Amortisation 195,126 214,181
Balance at December 31 $ 3,013,486 2,818,360
Net Book Value $ 263,831 458,957
11. Accounts payable and accrued expenses
Accounts payable and accrued expenses comprise the following:
2012 2011
Accounts payable - third parties $ 7,645,274 5,886,566
Accounts payable - related parties 1,525,438 1,240,052
Accrued liabilities 4,031,629 6,720,635
$ 13,202,341 13,847,253
12. Share capital
Authorised, issued and fully paid share capital at December 31:
No. of shares Amount
2012 and 2011:
Ordinary shares of $0.005 each 30,000,000 $ 150,000
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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13. Revaluation surplus
As discussed in Note 9, the latest revaluation of land and buildings was carried out by an independent appraiser on December 31,
2010 which resulted in a surplus of $2,566,757. The remaining amount relates to previous revaluations including those done in the
pre-acquisition period for BHL.
2012 2011
Balance at January 1 and December 31 $ 4,269,587 4,269,587
14. Commitments and contingencies
Commitments - The Group’s commitments on operating leases are as follows:
Less than 1 - 2 2 - 5 More than Total 1 year years years 5 years
2012 $ 1,820,405 1,242,774 1,689,145 873,342 5,625,666
2011 $ 1,931,110 1,460,132 1,606,571 247,704 5,245,517
Commitments and contingencies other than lease commitments are as follows:
At December 31, the Group was contingently liable under customs bond guarantees totalling $341,500 (2011: $805,100).
At December 31, the Group was contingently liable under standby letters of credit totalling $522,000 (2011: $1,288,500).
At December 31, the Group had capital commitment of $361,763 (2011 - $344,562).
Pending Litigation - Legal proceedings are pending against the Group in the ordinary course of business. Management considers that the
aggregate liability resulting from these proceedings will not be material.
15. Balances and transactions with related parties
For the purpose of this note, affiliates include other Heineken group entities and directors. Additional related party transactions are
disclosed in other notes to the consolidated financial statements.
2012 2011
Balances with parent (Heineken)
Accounts payable $ 652,615 1,083,167
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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15. Balances and transactions with related parties (continued)
2012 2011
Transactions with parent (Heineken)
Know-how fee $ 439,110 399,108
Royalties 438,946 414,318
IT related fee 478,519 58,857
Directors’ fee – 32,300
Dividends paid 13,050,000 5,625,000
Balances with affiliates
Other receivables – 34,985
Accounts payable 872,823 156,885
Transactions with affiliates
Purchases of inventories 763,072 639,614
IT related fee 860,329 593,700
Supply chain fee 134,505 151,125
Directors’ fee 78,000 28,000
Loss on disposal of vehicles – 88,315
IT related fees, supply chain fee and other fees are charged by Heineken and other Heineken group entities as incurred.
Compensation of key management personnel
During the year, key management personnel received compensation amounting to $1,543,095 (2011: $2,002,981), including short-term
employee benefits of $1,309,949 (2011: $1,929,516), and post employment benefits of $233,146 (2011: $73,465).
Included in key management costs are costs relating to a Long Term Incentive Plan. This is a share based plan which provides senior
employees of Heineken NV shares based on the performance of the Heineken Group as a whole. The amount recognised in personnel
cost amounted to $18,615 (2011: $51,526).
16. Other income
2012 2011
Exchange loss $ (96,584) (85,648)
Loss on disposal of property, plant and equipment (197,922) (12,674)
Miscellaneous income 661,870 1,414,882
$ 367,364 1,316,560
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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17. Raw materials, consumables and services
2012 2011
Cost of inventories (including related import duties) $ 43,850,764 43,981,742
Excise duties and taxes 14,106,360 12,877,498
Distribution and marketing expenses 5,740,590 5,091,157
Occupancy expenses 3,034,360 3,148,533
Utilities 3,513,740 3,521,784
Royalties 1,887,615 1,809,565
Bad debt expense (57,411) 97,113
Insurance 1,133,328 1,170,106
Repairs and maintenance 1,994,123 1,689,815
Know-how fee 439,110 399,108
Other expenses 5,238,769 5,276,323
Total $ 80,881,348 79,062,744
With effect from May 18, 2010, the Company entered into an agreement with Heineken to pay 0.4% per annum of revenue to Heineken
as a know-how fee.
18. Employee pension plans
In 1997, the Company commenced a defined contribution pension plan. In accordance with the terms of the plan both employer and
employees are required to contribute 5% of the participants’ earnings to the plan. Employees are permitted to make additional contribu-
tions in order to increase their retirement benefits. The Company’s contribution to the plan included in personnel costs was $92,900
(2011: $152,568).
Employees are eligible to become participants of the plan upon the completion of a probationary period, provided they have attained
the age of 18 years. The plan is mandatory for all employees who joined the Company after January 1, 1997 and optional for those who
joined prior to January 1, 1997.
BHL has a defined contribution plan for eligible employees. The employees contribute 5% (2011: 4% up to March 1 and 5% thereafter) of
gross salary, and BHL contributes 5% (2011: 4% up to March 1 and 5% thereafter) of eligible earnings. BHL’s contribution to the pension
costs net of forfeitures in respect to the plan for the year included in personnel costs amounted to $286,472 (2011: $246,277).
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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19. Basic and diluted earnings per share
The calculation of basic and diluted earnings per share is based on the consolidated net income attributable to owners of the Company
divided by the weighted average number of ordinary shares outstanding during the year.
2012 2011
Net income attributable to owners of the Company $ 19,316,682 17,320,319
Weighted average number of shares 30,000,000 30,000,000
Basic and diluted earnings per share $ 0.64 0.58
20. Dividends
Dividends declared and paid by the Company amounted to $17,400,000 (2011: $25,153,387) including interim dividends of $7,500,000
(2011: $7,500,000).
21. Changes in non-cash working capital
2012 2011
Change in trade receivables $ (952,325) (659,576)
Change in prepaid expenses and other assets 49,244 (387,700)
Change in inventories (402,388) (1,264,673)
Change in accounts payable and accrued expenses (644,912) 2,874,790
$ (1,950,381) 562,841
22. Principal subsidiary and other significant operating subsidiaries
The following significant operating subsidiaries, all of which are incorporated in The Bahamas, are owned by the Company.
Percentage (%) Owned
2012 2011
Burns House Limited 100 100
Butler & Sands Company Limited 100 100
Kerland Limited 100 100
Todhunter-Mitchell Distillers Limited 100 100
Todhunter-Mitchell Wines & Spirits Limited 100 100
Wholesale Wines and Spirits Limited 100 100
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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23. Financial instruments and associated risks
The Board of Directors has established a risk management framework whose primary objective is to protect the Group from events that
hinder the sustainable achievement of the Group’s performance objectives.
There are a number of risks inherent in the drinks industry that the Board has identified and manages on an ongoing basis. Among these
risks, the more significant are market, credit and liquidity. In accordance with IFRS 7, Financial Instruments, the Group presents qualita-
tive information about its exposure to risk and the objectives, policies and processes for measuring and managing these risks. Further
quantitative disclosures are included throughout this note.
(a) Market risk
Market risk is the risk that future changes in market conditions such as foreign exchange rates and interest rates will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimizing the return on risk.
Currency risk
The Group is party to financial instruments or enters into transactions denominated in currencies other than its functional currency.
Consequently, the Group is exposed to risks that the exchange rate of its currency relative to other foreign currencies may change in
a manner that has an adverse effect on the value of that portion of the Group’s assets or liabilities denominated in currencies other
than the Bahamian dollar. Raw materials, packaging and finished products are purchased principally from Europe and are payable
in Euro. The Group does not hedge against movements in foreign currency exchange rates.
The Group’s total net liability exposure to fluctuations in foreign currency exchange rates (B$ vs. Euro) at December 31 was
$700,935 (2011: $478,887).
The average exchange rate between the B$ and the Euro was B$1 = Euro 0.78 (2011: B$1 = Euro 0.72). The spot rate at December
31, was B$1 = Euro 0.76 (2011: B$1 = Euro 0.77).
Sensitivity analysis
A 10 percent strengthening of the B$ against the Euro at December 31, would have increased equity and net income by approxi-
mately $70,094 (2011: $47,889). This analysis assumes that all other variables, in particular interest rates, remain constant. A 10
percent weakening of the B$ against the Euro at December 31, would have had the equal but opposite effect on equity and net
income of the amounts shown above, on the basis that all other variables remain constant.
Interest rate risk
Interest rate risk refers to the risk of loss due to adverse movements in interest rates. The Group’s interest rate risk arises from
long-term borrowings and its banking facilities. The Group manages its exposure to fluctuations in interest rates by linking its cost of
borrowing to prevailing domestic or international interest rates.
Interest rates on all facilities are tied to the Bahamian prime rate, which at the reporting date was 4.75% percent per annum and
stayed stable in 2012.
The Group believes that interest rate risk is minimal as the Group does not have any outstanding loans and has not utilised its
overdraft facility as outlined in note 4.
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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23. Financial instruments and associated risks (continued)
(b) Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered
into with the Group.
The Group’s maximum exposure to credit risk is as follows:
2012 2011
Cash held with banks $ 11,798,466 11,302,083
Trade receivables, net 2,859,718 1,786,488
Other receivables, net 886,064 907,684
Staff loans 193,805 343,249
$ 15,738,053 14,339,504
Management actively monitors the aging of receivables and establishes an allowance as circumstances warrant. The Group does not
anticipate any losses in excess of the allowance for doubtful accounts as a result of this exposure.
Cash at bank amounting to $11,798,466 (2011: $11,302,083) was deposited with regulated financial institutions. Accordingly
management considers this to bear minimal credit risk.
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities and other commit-
ments when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Group’s reputation.
A maturity analysis of financial liabilities is as follows:
At December 31, Carrying Contractual On 6 months 6 - 12 1 - 2 2 - 5 More than2012 Amount cash flows demand or less months years years 5 years
Accounts payable
and accrued expenses $ 13,202,341 13,202,341 - 13,202,341 - - - -
$ 13,202,341 13,202,341 - 13,202,341 - - - -
At December 31, Carrying Contractual On 6 months 6 - 12 1 - 2 2 - 5 More than2011 Amount cash flows demand or less months years years 5 years
Accounts payable
and accrued expenses $ 13,847,253 13,847,253 - 13,847,253 - - - -
$ 13,847,253 13,847,253 - 13,847,253 - - - -
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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24. Segment information
The Group has adopted IFRS 8 for reporting Operating Segments. IFRS 8 requires operating segments to be identified on the basis of
internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate
resources to the segments and to assess their performance. This standard has been applied to all years presented in the consolidated
financial statements. Information regarding the Group’s reportable segments is presented below.
The Group’s revenue from operations by reportable segment is as follows:
Segment revenue
2012 2011
Wholesale $ 101,507,447 97,748,759
Retail 36,017,347 33,900,768
Production 51,140,342 48,451,544
$ 188,665,136 180,101,071
Inter-segment revenue
2012 2011
Wholesale $ 19,836,775 19,220,741
Retail – –
Production 50,359,878 47,471,129
$ 70,196,653 66,691,870
Revenue from external customers
2012 2011
Wholesale $ 81,670,672 78,528,018
Retail 36,017,347 33,900,768
Production 780,464 980,415
$ 118,468,483 113,409,201
The Group’s net income by reportable segment is as follows:
2012 2011
Wholesale $ 5,854,089 4,376,597
Retail 4,879,976 3,540,657
Production 8,582,617 9,403,065
$ 19,316,682 17,320,319
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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24. Segment information (continued)
The Group’s assets by reportable segment are as follows:
2012 2011
Wholesale $ 22,061,785 21,633,550
Retail 4,678,702 3,850,260
Production 30,626,772 28,662,249
Total segment assets 57,367,259 54,146,059
Unallocated 15,912,920 17,862,350
Total assets $ 73,280,179 72,008,409
For the purposes of monitoring segment performance and allocating resources between segments, the only assets allocated by segment
are trade and other receivables, inventories and property, plant & equipment.
The Group’s liabilities by reportable segment are as follows:
2012 2011
Wholesale $ 7,685,121 7,065,074
Retail 862,814 1,319,896
Production 4,654,406 5,462,283
$ 13,202,341 13,847,253
The Group’s additions to property, plant and equipment by reportable segment are as follows:
2012 2011
Wholesale $ 465,375 273,419
Retail 303,122 481,445
Production 1,676,598 559,879
$ 2,445,095 1,314,743
The Group’s revenue from external customers by geographical location from operations from its major products and services are as
follows:
2012 2011
Bahamas $ 117,688,019 112,428,786
United States 780,464 980,415
$ 118,468,483 113,409,201
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
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24. Segment information (continued)
Included in revenues arising from direct sales from the Group’s wholesale segment to its customers is $27,814,995 (2011: $18,773,406)
which arose from sales to the Group’s top five customers.
25. Fair values of financial instruments
The carrying values of financial assets and liabilities are considered to approximate their fair values due to the following reasons:
(a) immediate or short-term maturity; and/or
(b) interest rates approximate current market rates
The fair values of cash and cash equivalents, trade and other receivables, accounts payable and accrued expenses are not considered
to be materially different from their carrying values due to their short-term nature.
26. Capital management
The Group is not subject to externally imposed capital requirements except that under The Companies Act 1992, the Group may not
declare and pay a dividend if there are reasonable grounds for believing that:
(a) the Group is unable or would, after the payment of dividends be unable to meet its liabilities as they become due; or
(b) the realisable assets of the Group will be less than the sum of its total liabilities and outstanding share capital.
There were no changes in the Group’s approach to capital management during the year.
With effect from January 1, 2011 the Group’s policy is to distribute 100% of consolidated net income as dividends subject to the provi-
sions of the The Companies’ Act 1992 as outlined above. The frequency of the payout is at the discretion of the Board of Directors and
is subject to approval at the annual shareholders’ meeting.
Notes to Consolidated Financial Statements C O M M O N W E A LT H B R E W E R Y L I M I T E DYear ended December 31, 2012 (Expressed in Bahamian dollars)
Commonwealth Brewery Limited
Clifton PierP.O. Box N-4936
Nassau, Bahamas
Produced by DP&A, Nassau, Bahamas