DESNOES & GEDDES LIMITED ANNUAL REPORT2013 · “Our aim is to achieve zero ... music, and social...

DESNOES & GEDDES LIMITED ANNUAL REPORT 2013DESNOES & GEDDES LIMITED | 214 SPANISH TOWN ROAD, PO BOX 190

KINGSTON 11 | JAMAICA | TEL: (876) 923-9291 | FAX: (876) 675-2029

MISSIONSTATEMENT

OURPURPOSE

OURVALUES

OURSTRATEGY

Celebrating and enriching Jamaica;

inspiring the world.

• Valuing each other

• Be the best

• Proud of what we do

• Passionate about consumers

and customers

• Freedom to succeed

• Brand value creation

• End to end efficiencies

• Profitable export growth

Red Stripe is one of Jamaica’s leading corporate entities,employing more than 300 permanent staff members andproducing the world famous Red Stripe beer.

The company’s legacy began in 1918 when Eugene Desnoesand Thomas Geddes merged their carbonated soft drinksbusiness to form Desnoes and Geddes Limited. In the ensuingyears, the company became a well-established manufacturer ofpopular sodas, including Pepsi-Cola™, 7Up™ and D&G™ softdrinks, and the distributor of the best imported spirits.

The award-winning Red Stripe™ beer was first brewed in 1928and later perfected to the golden lager we know today.Internationally, Red Stripe beer has received the prestigiousMonde Selection Gold Medal 11 times for its fine quality andtaste.

In 1993 Guinness plc acquired majority of the company’s sharesand in 1997 merged with UK-based Grand Metropolitan tobecome Diageo (Dee-AH-Gee-O), which is the parent companyof Red Stripe.

Diageo is the world’s leading premium drinks business with anoutstanding collection of beverage alcohol brands acrossspirits, wine and beer. These brands include Buchanan’s™,Johnnie Walker™, Old Parr™, Guinness™, Smirnoff™, J&B™,Baileys™, Tanqueray™, Red Stripe Beer, Zacapa™, Pampero™and Navarro Correas™ wine. Diageo is a global company, tradingin some 180 countries around the world.

Locally, Red Stripe has been recognised as a major player in themanufacturing business, having received the Jamaica Exporters‘Association Champion Exporter award in 2010, 2011 and 2012.

Red Stripe is the trading name of Desnoes and Geddes Limitedin which Diageo plc holds the majority share. Diageo is listedboth on the London and New York Stock Exchanges. Red Stripe,located at 214 Spanish Town Road, in Kingston, is listed on theJamaica Stock Exchange.

COMPANYPROFILE

RED STRIPE ANNUAL 2013 9/30/13 8:04 PM

LEADERSHIP01 Results at a Glance02 Chairmans’ Statement04 Board Attendance05 Ten-Year Statistical Summary06 Management’s Discussion & Analysis11 Notice of Annual General Meeting12 Board of Directors and Profiles16 Directors’ Report17 Disclosure of Shareholdings17 Corporate Data18 Executive Leadership Team and Profiles

TRANSFORMATION22 Sales24 Marketing28 Enriched Communities31 Supply34 Red Stripe International36 Our People

CONTENTSDESNOES & GEDDES LIMITEDANNUAL REPORT 2013


REPUTATION40 Employee Alcohol Policy42 Corporate Social Responsibility Policies44 Corporate Governance Guidelines

ACCOUNTABILITY50 Financial Statements95 Form of Proxy


LEADERSHIPChairman’s Statement

Management’s Discussion & Analysis

Notice of Annual General Meeting

Corporate Data

Ten-Year Statistical Summary

Board of Directors & Profiles

Disclosure of Shareholdings

Directors’ Report

Executive Leadership Team & Profiles

“We extract and reportquality information toensure that Red Stripedelivers to its internaland external customersand stakeholders.”

Sean ThompsonReporting Analyst

“I help ensure efficiency byreducing manufacturing costs,monitoring our use of rawmaterials, and therefore, the costconsumers pay.”

Neil GrantTechnical Manager

“I help to change how Red Stripeoperates by reviewing data andmaking forecasts thatabsolutely transform how weserve our customers.”

Andray McKenzieSales and Operations Planning

Manager

“Our aim is to achieve zerowaste to landfill by 2016;recycling everything we canrecycle, and eliminatingeverything we can from ouroperations. Our initiativeshelp conserve Jamaica’senvironment.”

Trecia CampbellEnvironmental Manager


RESULTS ATA GLANCE

DESNOES & GEDDES LIMITED__________________________ANNUAL REPORT 2013 1

2013 2012$’000 $’000

Turnover 12,732,391 13,154,054

Profit before tax 1,871,325 1,455,176

Profit attributed to stockholders 1,211,244 1,229,558

Profit per stock unit 43.12¢ 43.77¢

(calculated on net profit attributable to stockholders)

Dividends per stock unit 30.00¢ 20.00¢

STOCKHOLDERS’ EQUITY

Share capital 2,174,980 2,174,980

Capital and other reserves 1,440,990 1,409,653

Revenue reserves 4,054,824 3,650,382

7,670,794 7,235,015


CHAIRMAN’SSTATEMENT

DESNOES & GEDDES LIMITED__________________________ANNUAL REPORT 20132

“Turnaround strategy is gaining traction.”I am pleased to report that the turnaround strategy whichcommenced in 2012 is beginning to gain traction. Trading profitincreased by 27% compared to a year ago, driven by growth indomestic volumes and improved margins resulting from our newexport model.

Our innovation agenda coupled with the expansion in our stouts,ready to drinks (RTDs) and spirits segments contributedsignificantly to the 11% year on year growth in our domestic netsales. In addition, we almost doubled our cash position movingfrom $970 million in FY12 to $1.7 billion in FY13 leaving ourbusiness in a strong position to fund our major capitalimprovement programme in 2014.

The highlights of FY13 were:New route to market through the formation of CelebrationBrands Limited (CBL), a 50:50 joint venture between Red

Stripe and Pepsi-Cola Jamaica The new company with over 700 employees will sell anddistribute all Red Stripe/Diageo and Pepsi brands in Jamaicamaking this venture the single biggest distribution companyin Jamaica. The ethos of the new joint venture is to reap thesynergies from a much broader and diverse portfolio;radically enhance our customer service; and also benefitfrom the economies of scale. To realise best outcomesmeant a restructuring of our sales and distributionoperations and while this saw a significant reduction inthe staff complement at Red Stripe there was a net gain

of 200 jobs in CBL with approximately 90% of thoseleaving Red Stripe securing new jobs in CBL. The successfultransition of our Mandeville, and St. Ann Distribution Centres isalready reaping the projected results.

Profitable export growthWe registered year over year growth in our two main markets,Great Britain and North America. Our Canada businesshowever remained flat largely due to destocking within theCanadian Liquor Board. While it is early days, our positive FY13results in the US market indicate that the decision to move theproduction of Red Stripe beer for the United States (U.S.)market to that country was the right thing to do. This wasfuelled by the strong revenue performance from royaltiescoupled with the elimination of the cost of advertising andpromotions now being absorbed by the licensed brewery inthat market.


DESNOES & GEDDES LIMITED__________________________ANNUAL REPORT 20133

End-to-end efficienciesOur continued focus on driving out costs has created greaterefficiencies and contributed in a significant way to loweroperating costs. We expect to reap further results in FY14 whena number of initiatives such as the Combined Heat and PowerPlant and Brewery Modernization are fully implemented.

In addition to our focus on cost, there was a step change in ourhealth and safety, and our environmental agenda during FY14.For the first time in our history, Red Stripe has gone below 10litres of water for every litre of beer produced resulting in asavings of 200 million litres of water for FY13. Our health andsafety record was most improved across Diageo and we alsomade improvement in our waste to landfill.

We are fully compliant with our waste water treatment plant asit relates to NEPA’s trade effluent standards.

Brand value creationWe are extremely proud of the depth of our integration ineveryday Jamaican life, having invested in the occasions thatmatter to this market through sports, music, and socialentrepreneurship. These channels have allowed us to reconnectwith our grass-roots consumers while delighting our consumerswith our new offerings.

ReputationEven as we continue to create a robust business, we areunwavering in our commitment to fostering nationaldevelopment through a number of projects.

Red Stripe Learning for Life, one of our trademark initiatives,continues to empower young Jamaicans with skills training inkey areas, enabling them to obtain jobs and improve their well-being. Red Stripe is proud to have graduated more than 5,000Jamaicans from this programme since its inception in 2008.Thisyear we partnered with two of Jamaica's leading educationalinstitutions – Bars to Go Training Institute and the Institute forWorkforce Education and Development to enroll another 6,000participants, bringing to 11,000 the number of Jamaicansimpacted by these programme since 2008.

Red Stripe is also proud to have been recognised by industrypeers with numerous accolades during FY13. At the JamaicaManufacturers’Association Awards, Red Stripe was honoured forcommunity development, skills and productivity in the largemanufacturer category, HIV advocacy and for being champion

exporter among large exporters. The Company was alsonominated for the Jamaica Observer Corporate Award, whichrecognises companies that have helped to develop the nationsince Independence. Additionally, the company received globalrecognition from Diageo as Most Improved Plant for Health andSafety as well as Most Improved Plant - Enhancing Brand andDiageo Reputation.

The Board of Directors is fully dedicated to ensuring that thecompany continues on its current trajectory of creating asustainable future for Red Stripe shareholders, employees, andthe country. In executing it duties, the Board met seven timesduring the year, the Audit Committee met on four occasions andthe Governance Committee convened twice. One change wasmade to the Board of Directors, with the resignation of LisaLewis. We are extremely grateful and would like to record ourappreciation to Mrs. Lewis for her valuable contribution to thecompany over the five years.

I would also like to place on record the tremendous contributionof Renato Gonzales, past General Manager who wasinstrumental in steering the company into growth. Even thoughhis stay was short his impact was significant. This growthtrajectory was ably maintained by Cedric Blair who has led thecompany into a successful year in his first term.

The management and every single member of staff must also becommended for their resilience and delivering a very strongperformance despite an extremely challenging year. I extendthanks too to our shareholders for your unwavering supportand recommit to our service promise of delivering maximumreturns on your loyalty.

Richard BylesChairman



DIRECTORS BOARD AUDIT GOVERNANCE ANNUAL GENERAL MEETINGS COMMITTEE COMMITTEE MEETING

____________________________________________________________________________________________________________# OF MEETINGS HELD 7 4 2 1____________________________________________________________________________________________________________

Richard O. Byles - Chairman 7 - 1 1

Cedric M. Blair - Managing Director 7 - 2 1

Noel DaCosta 6 - - 1

Jed Dryer 7 4 2 1

Alberto Gavazzi 6 - - -

Gary C. Hendrickson 4 - 1 1

Dr. Damien King 7 4 - 1

Johan H. van Mameren* 3 - - 1

Oliver L. S. McIntosh 6 4 - 1

Peter K. Melhado 5 4 2 1

Renato Gonzalez 5 - - -

Lisa A. Soares Lewis** 7 - - 1

**Mr Johan van Mameren was appointed to the Board of Directors August 31, 2012.**Mrs Lisa Soares Lewis resigned from the Board of Directors June 30, 2013.

MEMBERS OF THE AUDIT COMMITTEEDamien King - ChairmanJed DryerOliver McIntoshPeter K. Melhado

MEMBERS OF THE GOVERNANCE COMMITTEEPeter Melhado - Chairman Cedric M. BlairRichard O. BylesJed DryerGary C. HendricksonJ. H. van Mameren

BOARDATTENDANCE


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PERFORMANCE HIGHLIGHTSI am pleased to introduce Management’s Discussion and Analysis(MD&A) for the 2013 fiscal year. The results posted by Desnoes &Geddes Limited reflect the focused and disciplined approach tocreating a sustainable business for our shareholders andemployees. In 2013, we delivered growth in domestic net sales+11%, gross profit +4%, and trading profit +27%. In an uncertainand challenging economic environment impacting tradingconditions, the aforementioned achievements allowed us toincrease our dividends and to state with confidence that your

business continues to head in the right direction.

Each of our market segments, specifically domestic andexport, contributed to this year’s successful financial

performance. An ongoing strategy of brand valuecreation, end to end efficiencies, and profitable export

growth continued to support sustainableperformance results.

Turnover was $12,732 million, a 3% declinecompared to last year. Net sales also declined

to $10,369 million representing a 6%decrease. These results were primarily dueto the change in our export model to theUS market as we fully transitioned to ournew distribution structure of Licensee

6 DESNOES & GEDDES LIMITED__________________________ANNUAL REPORT 2013

MANAGEMENT’S DISCUSSION & ANALYSIS

"Our domestic netsales grew by 11% for

the full year".


brewing versus direct export. Notwithstanding, ourdomestic net sales grew by +11% for the full year.Theimproved domestic performance was buoyed by ourincreasing ability to innovate through the creation ofnew-to-world products and to renovate existingbrands. Additionally, the company’s competitivenessin the domestic alcohol beverages market wassupported by greater market intelligence and ournew route to market 50:50 Joint Venture (JV) Salesand Distribution Company, Celebration BrandsLimited (CBL).

Profit before taxes amounted to $1,871 million, a 28%increase over the previous year. This translates intoearning per stock unit of 43.12 cents compared to43.77 cents in FY12. In 2012, the tax charge waspositively impacted primarily by a deferred tax creditassociated with the unwinding of the accountingtreatment which previously revalued certain items ofplant, property, and equipment. The resulting effecton FY13 is higher effective tax rates which lead to asmall decline (1%) in profit after tax to $1,211 million.The stock price as at June 30, 2013 was $4.80 pershare compared to $3.80; a price appreciation of 26%.

7 DESNOES & GEDDES LIMITED__________________________ANNUAL REPORT 2013

Our balance sheet is strong and our improved profitability, coupled withbetter working capital management has strengthened our cash flowssignificantly.

BRAND VALUE CREATIONThe effectiveness of our marketing and innovation agenda remains acompetitive advantage for us and this year we have seen thesecampaigns extend the leadership of our brands. Marketing costs of $926million for the year represented a reduction of 23% when compared tolast year. This was largely driven by our new export model in the UnitedStates (US) where there is now a full-risk licensing model that haseliminated Advertising and Promotional costs.

PROFITABLE EXPORT GROWTHWe registered year over year growth in Great Britain and North Americawhile our Canada business was flat, driven by destocking within theCanadian Liquor Board. While it is early days, our positive FY13 results inthe US market indicate that the decision to move the production of RedStripe beer for the United States (US) market to that country was theright thing to do. This was fuelled by the strong revenue performancefrom royalties coupled with the elimination of the cost of advertising andpromotions now being absorbed by the licensed brewery in that market.


END TO END EFFICIENCIESRed Stripe is committed to maintaining a solid focus on drivingout cost to invest in our brands. In 2013 we commenced severalinitiatives to drive out cost from our business. This included our50:50 Joint Venture (JV) company with Pepsi-Cola JamaicaLimited, breaking ground for our Combined Heat and Powerplant (CHP), Brewery Modernization, and pilot brews using 10%local raw material (LRM), cassava.

In the second half, the new JV company, Celebration BrandsLimited (CBL) commenced operations. The JV is designed toyield economies of scale, improved efficiencies and mostimportantly to deliver superior service to our customers acrossJamaica. CBL has already demonstrated successes havingseamlessly integrated three of our four distribution centreswhile contributing positively to our bottom line, recordingprofits of $11.9m during the three months to June 30, 2013.

COST OF SALESCost of sales for the full year of $6,118 million decreased by 12%versus the previous year.This was supported by the reduction inthe export business and production, as well as distributionefficiency measures, particularly efforts to rightsize the business.

OVERHEADSGeneral, selling, and administrative (GS&A) expenses for the yearwere $1,336 million (3%) above last year despite significantinflationary pressures as we continued our efforts on costmanagement.

BEST PEOPLEThe team demonstrated remarkable resilience and performedexceptionally despite personal uncertainty during the transitionto CBL. We saw step-changes in the leadership and ownershipbehaviors across a broad cross section of our people. The routeto market changes we made in 2013, which impacted almosthalf of the staff population, were significant and the executiveteam would like to use this opportunity to express our gratitude




for the positive way in which the team remained focused ondelivering our business goals in 2013.

ENRICHED COMMUNITIESRed Stripe again entered yet another phase of strategicintervention in FY13, aimed at human capital developmentthrough the further expansion of its Learning for Lifeprogrammes.

Through these programmes, unskilled and unemployed youthliving in depressed communities across the island are providedskills training and ongoing support to become employable or tostart their own businesses.

Since inception in 2008, over 11,000 Jamaicans have beenimpacted and for FY13 alone more than 6,000 residents acrossthe country were enrolled in the programmes. This wasachieved in partnership with two of Jamaica’s leadingvocational educational institutions – Bars to Go TrainingAcademy and The Institute for Workforce Education andDevelopment, Ltd.

OutlookOur opportunity at Red Stripe is to ensure that we build on ourstrengths, while staying agile and adaptable, to compete

effectively and enhance our reputation in a more demandingworld. We have made substantial investment in route toconsumer and will similarly accelerate our drive to reduce coststhrough key projects such as cogeneration, optimal supplymanufacturing footprint modernisation, and Project Growwhich aims at replacing at least 40% of raw materials used in ourbrewery with Local Raw Material (LRM) by 2016, in line with theDiageo Supply Strategy.

We are determined to deepen our reputation by becomingincreasingly more trusted and respected by our customers andconsumers. Our goal is to make CBL the #1 supplier of choice inJamaica and to delight our consumers with our brands.

Finally, to our shareholders, we want you to remain confident inour ability to deliver what we say and to continue being a forceof good in the communities we operate.

Cheers,

Cedric


NOTICE IS HEREBY GIVEN THAT the Ninety-Fourth AnnualGeneral Meeting of Desnoes & Geddes Limited will be held at214 Spanish Town Road, Kingston 11 on Friday, November 1,2013 at 10:00 am for the following purposes:

1. Audited accounts for the year ended June 30, 2013To receive the Audited Financial Statements for the yearended June 30, 2013 together with the reports of theDirectors and Auditors thereon. To consider and (if thoughtfit) to pass the following resolution:

“THAT the Audited Financial Statements for the year endedJune 30, 2013 together with the reports of the Directors andthe Auditors thereon, be and are hereby adopted.”

2. Declaration of Dividend To declare the first and second interim dividends of $0.30paid during the year as final for the year ended June 30,2013.

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

“THAT as recommended by the Directors, the interimdividends of $0.20 per stock unit paid December 27, 2012,and $0.10 per stock unit paid June 25, 2013 making a totalof $0.30 be and is hereby declared as final dividend for theyear under review.

3. Remuneration of DirectorsTo fix the remuneration of the Non-Executive Directors:


“THAT Directors’ fees in the amount of $6,774,133 payablefor the year to all Non-Executive Directors of the company,be and are hereby approved.”

4. Election of Directors Pursuant to Article 108 of the Articles of Incorporation of theCompany, one-third of the Directors or the number nearestto one-third, where their number is not a multiple of three,shall retire from office each year. Messrs. Noel daCosta,Renato Gonzalez and Richard O. Byles will retire, and beingeligible, offer themselves for re-election. Mrs. Lisa Lewisresigned as a director of the company with effect from June30, 2013.

To consider and (if thought fit) pass the followingresolutions:

4(a) “THAT the retiring director Mr. Noel daCosta be and ishereby re-elected a Director of the company.”

4(b)“THAT the retiring director Mr. Renato Gonzalez be and ishereby re-elected a Director of the company.”

4(c) “THAT the retiring director Mr. Richard O. Byles be and ishereby re-elected a Director of the company.”

In accordance with Article 109 of the Articles of Incorporation,Mr. Jaime Graña who was appointed to the Board of Directorswith effect from August 23, 2013 must retire at this AnnualGeneral Meeting, and being eligible offers himself for election.


4(d) “THAT the retiring director Mr. Jaime Graña be and ishereby elected a Director of the company.”

5. Remuneration of auditorsTo fix the remuneration of the Auditors or to determine themanner in which such remuneration is to be fixed.


“THAT KPMG, having agreed to continue in office asAuditors, the Directors be and are hereby authorised toagree their remuneration in respect of the period endingwith the conclusion of the next Annual General Meeting beand is hereby approved.”

By Order of the Board

Gene M. DouglasCorporate SecretaryDated this 31st day of August 2013

Any member entitled to attend and vote is entitled to appoint aproxy to attend and on a poll, vote instead of the member. Aproxy need not be a member of the Company. An appropriateform of proxy is enclosed.

The proxy form must be signed, stamped, and deposited at theregistered office of the Company situated at 214 Spanish TownRoad, Kingston 11 addressed to “The Company Secretary” notless than 48 hours before the time of holding the meeting. Thestamp duty is $100.00 and may be paid by affixing a postagestamp to the proxy form.


NOTICE OF ANNUALGENERAL MEETING


BOARD OF DIRECTORSL-R: Oliver McIntosh, Jed Dryer, Richard BylesChairman, Noel daCosta, Lisa Soares Lewis,Damien King, Cedric Blair Managing Director,Peter Melhado, Gary C. ‘Butch’ Hendrickson,Johan H. Mameren, Renato Gonzalez,Alberto Gavazzi.



RICHARD BYLES - ChairmanRichard Byles is the President and CEO ofSagicor Life Jamaica Limited. He is theChairman of the Board of SagicorInvestments Jamaica Limited (formerlyPan Caribbean Financial Services) and aDirector of Pan Jamaican InvestmentTrust Limited. He is also a Vice President ofthe Private Sector Organisation ofJamaica and Co-Chair of the EconomicProgramme Oversight Committee(EPOC).

He holds a Bachelor’s degree inEconomics from the University of theWest Indies and a Master’s in NationalDevelopment from the University ofBradford, England.

CEDRIC BLAIR - Managing Director Cedric Blair was appointed GeneralManager of Red Stripe in September2012. Since joining Red Stripe in 1995, hehas worked in various roles inEngineering and Supply ChainManagement.

In 2005 Cedric was seconded to DiageoNorth America where he worked in thespirits industry for five years. He spent18 months in Diageo Relay, Maryland as aChange Manager and three years inMenlo Park, California as Director ofOperations. Cedric returned to Jamaica inAugust 2009 as Operations Manager anda year later was appointed Supply ChainDirector, joining the Jamaica ExecutiveTeam and the Desnoes & Geddes Board.Over the years he has acquired a wealthof experience across Diageo in processimprovement, change management, andbusiness transformation. Cedric has aBachelor of Science with Honours inChemical Engineering from theUniversity of the West Indies, StAugustine. In June 2011 he completedthe Kellogg School of Business ExecutiveDevelopment Programme.

NOEL daCOSTANoel daCosta is a managementconsultant, previously employed toDesnoes & Geddes (D&G)/Diageo in manyroles including: Central American andCaribbean Corporate Relations Directorfor Diageo, Chief Engineer, Brewmaster,Technical Director, and CorporateRelations Director for D&G. A CharteredEngineer, he is a Fellow and pastPresident of the Jamaica Institution ofEngineers. He has postgraduate degreesin Engineering, Business Administration,and Insurance. He is a Director and formerPresident of the Jamaica Chamber ofCommerce and has previously served onthe boards of many companies in thepublic and private sectors. He currentlyserves on the board of the Victoria MutualBuilding Society, the Bureau of Standards,and the Petroleum Corporation ofJamaica. He is also the Chairman of theDesnoes & Geddes Foundation. In 2012he was awarded the national honour ofCommander of the Order of Distinctionfor his services to the nation.

JED DRYER Jed Dryer was appointed FinanceDirector of Red Stripe in September 2010.Prior to this he was the Diageo FinanceDirector of Northern Latin America andCaribbean and the Financial Controller forLatin America and Caribbean. He alsoworked on Strategy, BusinessDevelopment, and Decision Supportprojects in the Global Business SupportGroup in Miami and London. Beforejoining Diageo, Jed worked in theFinancial Services industry in London andNew York. He holds a Bachelor’s degreefrom the University of Texas at Austin anda Master of Business Administration fromthe University of Chicago.

ALBERTO GAVAZZIAlberto Gavazzi, General Manager, DiageoWestLAC, is responsible for the WesternLatin America, Central America, andCaribbean markets. Alberto oversees aturnover of over £300m and more than1,000 people, leading a variety ofbusinesses including beer, wine, andspirits brands. He joined Diageo in 1993to guide the Diageo Brazil innovationagenda and has extensive experienceleading teams while implementingglobal, regional, and local sales andmarketing programmes. He has been theGeneral Manager with extendedresponsibilities over the South cone ofLatin America and Global MarketingDirector/Whisky and Gin in TheNetherlands. Before joining Diageo,Alberto worked for Colgate-Palmoliveand Unilever. Alberto studied for hisundergraduate degree in both São Paulo,Brazil and Milan, Italy, earning hisBusiness Administration degree at TheCatholic University of São Paulo in 1989.

RENATO GONZALEZRenato Gonzalez has twenty years’experience in the consumer goodsmarket in large multinationals across theworld. He has a wide range of experiencein supply chain management havingdesigned and successfully implementedprocedures and processes. Prior to hisone year tenure as Red Stripe's ManagingDirector he was the Customer OperationsDirector of Diageo’s Global Supply Chainbased in Amsterdam, with responsibilityfor order management and supplyplanning of Diageo’s number one brandsand export from multi-plants worldwide.While he was Supply Chain Director forDiageo, Mexico he received twoleadership awards for excellence inexecution and inspirational leader.Currently, Renato is the ManagingDirector of the newly acquired Diageocompany in Brazil, Ypióca. He has adegree from the Universidade de Cidade,Rio de Janiero, Brazil and speaks fluentEnglish, Portuguese, and Spanish.

DIRECTORS’PROFILES



GARY C. “BUTCH” HENDRICKSONGary C. “Butch” Hendrickson is theChairman and CEO of Continental BakingCo. Ltd. manufacturers of NATIONAL, HTB,and HOMADE baked products. Mr.Hendrickson is also Chairman and CEO ofCoconut Bay Beach Resort and Spa in StLucia. He sits on the Boards of RainforestSeafoods and The King’s HouseFoundation. Butch attended JamaicaCollege, Miami Military Academy andFordham University.

DR. DAMIEN KINGDr. Damien King is Senior Lecturer andHead of the Department of Economics atthe University of the West Indies, Mona.His teaching and research have been inthe areas of macroeconomics, growth,trade, poverty, and development. He isalso Executive Director of the CaribbeanPolicy Research Institute. Damienpreviously served on the boards ofBizWear, Dyoll Group, Dyoll InsuranceCompany, the National Export-ImportBank of Jamaica, the Jamaica Mutual LifeAssurance Society, and the UniversityHospital of the West Indies.

OLIVER MCINTOSHOliver McIntosh is the President and CEOof SportsMax Limited since thecompany’s start-up in 2003. He has over10 years experience in businessdevelopment and investment banking.He was previously a Vice President atMerrill Lynch International in London, abusiness development and mergers, andacquisitions officer for Home Depot,U.S.A. He also worked at SalomonBrothers Inc, where he focused on theDiversified Industrials and Media andEntertainment sectors. He holds an MBAfrom Harvard Business School and a BBAin actuarial science from HowardUniversity.

PETER MELHADOPeter Melhado is President and CEO ofthe ICD Group. He was responsible for thegrowth and development of theManufacturers’ Group, which was aleading financial and asset managementcompany in Jamaica prior to it mergerwith PanCaribbean. He is Chairman ofSagicor Bank, West Indies HomeContractors, CGMG Group, IndustrialChemical Company, and AmericanInternational School of Kingston. Hiscurrent directorships include BritishCaribbean Insurance Company and PortAuthority of Jamaica. He is a former VicePresident of the Private SectorOrganization of Jamaica and holds adegree in Mechanical Engineering fromMcGill University and a Master’s inBusiness Administration from ColumbiaSchool of Business.

LISA SOARES LEWIS Lisa Soares Lewis has held HumanResources Director roles for Red Stripeand the North Latin America and theCaribbean (NorthLAC) since joiningDiageo in November 2008. Hermanagement experience includesmanagement consulting, humanresource management, and corporateand commercial banking. She has heldoffices in the Jamaica Employers’Federation and the Private SectorOrganization of Jamaica, is a Director ofSagicor Investments Jamaica Limited,and chairs their Corporate Governanceand Nominations Sub-committee. Shehas a B.Sc. in Industrial Engineering (FirstClass Honours) and an MBA (Distinction)in Finance and Marketing from UWI, andhas held the SPHR (Senior Professional inHR) designation. Lisa resigned from theBoard of Directors effective June 30, 2013.

JOHAN H. VAN MAMERENHans van Mameren has been working forHeineken™ for 35 years. He joinedHeineken as a brewer and worked insupply chain before becoming managingdirector. He worked in Europe, Africaand the Far East. His last job beforeretirement was MD of Congo DRC wherehe stayed for 9 years.



The Directors are pleased to submit their Report and Audited Accounts for the year ended June 30, 2013.2013 2012$ Million $ Million

The Profit of the Company before tax was 1,859 1,455

Net Profit of the Company after tax was 1,199 1,230

DIVIDENDSThe Directors have recommended that the interim dividends of $0.20 paid to stockholders on December 27, 2012 and$0.10 paid on June 25, 2013 be declared as final dividend for the year ended June 30, 2013. No further dividend wasrecommended.

THE BOARD Pursuant to Article 108 of the Articles of Incorporation of the Company, one-third of the Directors or the number nearestto one-third, where their number is not a multiple of three, shall retire from office each year. Messrs. Noel daCosta, RenatoGonzalez and Richard O. Byles will retire, and being eligible, offer themselves for re-election. Mrs. Lisa Lewis resigned as adirector of the company with effect from June 30, 2013.

The Directors of the Board as at June 30, 2013 comprised:

Pursuant to Article 109 of the Articles of Incorporation, Mr. Jaime Graña who was appointed to the Board of Directors witheffect from August 23, 2013 must retire at this Annual General Meeting, and being eligible offers himself for election.

AUDITORSMessrs. KPMG, the present Auditors have indicated their willingness to continue in office and offer themselves for re-election.

The Directors wish to express their appreciation to the management and staff for the work they have done during theyear.By order of the Board

Gene M. DouglasCorporate Secretary

Dated this 31st day of August 2013

Mr. Richard O. Byles, ChairmanMr. Cedric M. Blair, Managing DirectorMr. Renato GonzalezMr. Peter K. MelhadoMr. Noel daCostaDr. Damien W. King

Mr. Jed Dryer Mr. Alberto GavazziMr. Gary C. “Butch” HendricksonMr. Oliver L. S. McIntoshMr. Johan H. van Mameren

DIRECTORS’REPORT



DISCLOSURE OFSHAREHOLDINGS

SHAREHOLDINGS OF DIRECTORSRichard Byles (Chairman) 1,500,000Cedric M. Blair (Managing Director) 400,300Renato Gonzalez NilJed Dryer NILGary C. Hendrickson NILJohan H. van Mameren NILPeter K. Melhado NILNoel daCosta 440,000Alberto Gavazzi NILDamien W. King 600,000Oliver L.S. McIntosh NIL

TEN (10) LARGEST SHAREHOLDERSUdiam Holdings AB 1,625,549,827Heineken Finance N V 303,454,633Heineken International B V 130,578,508National Commercial Bank Proprietory A/C 100,773,750Bardi Limited (In Bankruptcy) 84,255,986Sagicor PIF Equity Fund 45,441,367National Insurance Fund 31,709,129JCSD Trustee Services Ltd.-Sigma Optima 30,055,551Ivn Nom Ltd. A/C Las. Henriques ET AL S/F 28,147,931Jette Limited 26,254,292

SHAREHOLDINGS OF SENIOR MANAGERSCedric M. Blair (Managing Director) 400,300Jomo Cato NILMarguerite Cremin NILDaan Dekroon NILJed Dryer NILBrian Pengelley 51,526

As at June 30, 2013

BOARD OF DIRECTORSRichard O. Byles - ChairmanCedric M. Blair - Managing DirectorNoel daCostaJed DryerAlberto GavazziJaime GrañaGary C. HendricksonDamien W. KingJohan H. van MamerenOliver L. S. McIntoshPeter K. Melhado

COMPANY SECRETARYGene M. Douglas, FCIS; MBA

REGISTRAR AND TRANSFER AGENTNCB Jamaica (Nominees) Ltd.,32 Trafalgar Road, Kingston 5

AUDITORSKPMG,6 Duke Street, Kingston

BANKERSBank of Nova Scotia Jamaica Ltd.,Corner Duke and Port Royal Streets, Kingston

Citibank NA,19 Hillcrest Avenue, Kingston 6

National Commercial Bank Jamaica Ltd.,37 Duke Street, Kingston

ATTORNEYS-AT-LAWPatterson Mair Hamilton,Temple Court,85 Hope Road, Kingston 6

Myers Fletcher and Gordon,21 East Street, Kingston

REGISTERED OFFICE214 Spanish Town Road, Kingston 11

As at August 31, 2013

CORPORATEDATA


JEDDRYER

LISASOARES LEWIS

JOMOCATO

SHANEHEALY

EXECUTIVELEADERSHIP


BRIANPENGELLEY

DIANEWILLIS-REID

DAANDEKROON(Not pictured)

MARGUERITECREMIN

CEDRICBLAIR



CEDRIC BLAIRManaging Director (See page 14 - Red Stripe Directors)

JOMO CATOHead of MarketingJomo is a seasoned marketer with multi-industry experience including telecomsand beverages. He has led thedevelopment and roll out of pioneeringmarketing campaigns across 20 marketsin Latin America and the Caribbean. Histrack record includes 10 years’ experienceworking with global brands includingCoca Cola, Appleton Rums, Samsung,Heineken, Guinness, Hennessy, andDigicel. His career also includes a BrandStrategist role at Dunlop CorbinCommunications Caribbean andmanaging his own business,Dreammakers, a marketing consultancy. Agraduate of UWI Cave Hill, Barbados,Jomo holds a Bachelor of Science degreein Economics and Management(Honours).

MARGUERITE CREMINHead of Corporate RelationsMarguerite joined Red Stripe in October2009 with experience in marketing,sponsorship and public relations locallyand overseas. Prior to her appointment,she worked for mobile phone giant,Vodafone, in Ireland with responsibilityfor Marketing and Sponsorship. Her moveto Jamaica saw her helping to establishDigicel as one of the region's most visiblebrands. She has also managed JMMB'smarketing, sponsorship, and productdevelopment. Marguerite holds aBachelor of Business Studies from TrinityCollege, Dublin and an AdvancedManagement Diploma from UniversityCollege, Dublin.

She is a Board Member of the D&GFoundation and is also a Director of theJamaica Chamber of Commerce.

DAAN DEKROONHead of Licensed Breweries and RedStripe IinternationalDaan commenced his Diageo career in2003 as a telemarketeer in London.Since then he has held progressivemanagement roles gaining experiencesacross a range of continents, brands,categories, and functions in the areas ofaccount and territory management,trademarketing, brand management,innovation, global businessdevelopment, and strategy. Currently heis Head of Licensed Breweries and RedStripe International, Diageo WestLAC(Latin America and Caribbean). He holdsa Bachelor’s degree in InternationalMarketing Management from theHogeschool van Amsterdam and an MBAfrom the Florida International University.Daan is also Board Director at thebrewery in St. Lucia.

JED DRYERFinance Director (See page 14 - Red Stripe Directors)

SHANE HEALY Head of SupplyShane first joined Diageo 17 years ago,when he worked for Guinness Irelandfrom 1996 to 1999. He holds a first classHonours degree in Biological Sciencesfrom the University of Ulster. He also hasan MSc in Brewing and Distilling fromHeriot Watt, the International Centre forBrewing and Distilling. Shane wasawarded the Master Brewer qualificationin 2005 after completing the exams of theInstitute of Brewing and Distilling. He isalso a trained Black Belt in Six Sigma andtrained in World Class Manufacturingwhile with Interbrew (now part of ABInbev) and then with Molson Coors. In2007 Shane rejoined Diageo in ScotchMalt Distilling operating distilleries thatmake the whiskies for the Johnnie Walkerportfolio, including the famous Cardhu™distillery. Shane joined Red Stripe in 2011,firstly as Operations Manager and sinceSeptember 2012 as Head of Supply.

LISA SOARES LEWISHR Director(See page 15 - Red Stripe Directors)

BRIAN PENGELLEYSales DirectorBrian was appointed Sales Director inSeptember 2009. He joined Red Stripe in1996 and has over the years, variouslymanaged the company’s Distribution,Sales and Supply Chain functions. Hiscurrent role gives him responsibility forRed Stripe’s domestic sales andislandwide distribution. He is thePresident of the Jamaica Manufacturers’Association, representing Red Stripethere for the past seven years. Brian hasworked in North America in the industrialchemical industry for over twenty-fiveyears. His early training was in VeterinaryMedicine for which he holds a Diploma.

DIANE WILLIS-REIDSenior Executive AdministratorDiane Willis-Reid is a veteran BusinessAdministrator who joined Red Stripe in1995 as a junior Administrative Assistant.Within a year she was promoted to theposition of Executive Assistant and sincethen has held progressive managementroles, supporting several ExecutiveTeams. During her tenure at Red Stripe,Diane has developed expertise inbusiness operations, culturetransformation, and changemanagement. She has consistentlyhoned her functional and leadershipcapabilities through several external andinternal training and experientialinterventions. She has made a hugecontribution to Red Stripe’s complianceagenda and is credited with establishingthe first-ever records and informationmanagement business unit and servicecentre at Red Stripe and in the DiageoLAC region.

EXECUTIVE LEADERSHIPPROFILES


“I ensure that we deliverour products to ourcustomers on time, in full ,no exceptions.”

Rennae Ennis- LutasOutbound Logistics

Manager

“We add value; our role is tomake sure the right plans are inplace to deliver value to all ourclients.”

Yaniece GentlesFinance Planning and Analysis

Manager

“Here at records and informationmanagement, we provide thedata which helps to inform everydecision that’s made at RedStripe and which helps to ensureinstitutional and regulatorycompliance.”

Tricia LawrenceRecords and Information

Management Coordinator

“Zero harm: Everyone goeshome safe, everyday,everywhere.”

Cleve HenrySafety Manager, Conversion-

Governance and Compliance

TRANSFORMATIONSalesMarketingEnriched CommunitiesSupplyRed Stripe InternationalOur People


Red Stripe’s sales team delivered remarkably on theexpectations of the business in a very tough and challengingenvironment. The team must be commended for theirconsistency and commitment to driving maximum sales as theyfocused on a key strategy to create value across all touch pointsand for all targets – our people, our customers and the companyitself. This was definitively demonstrated through five strategicgrowth imperatives:

Route to consumerRoute to consumer is about ensuring that we are getting to allof the right places, with the right programmes, executed withthe right skills in the most efficient and sustainable way. Theroll-out of the new joint venture between Red Stripe andPepsiCola Jamaica, Celebration Brands Limited, was a strategicmove that positions our beverage distribution system amongthe strongest in the market and is anticipated to deliver growthand enhanced customer service. Celebration Brands is still in itsinfancy, however we are already reaping the benefits that wehad expected with positive feedback from our customers. Wewill close the roll-out in September with the hand-over of ourKingston Distribution Centre.

Winning at the moment of choice‘Winning at the moment of choice’ means we get moreconsumers and shoppers buying, purchasing more frequently,and spending more on Red Stripe products each time theyshop. We delivered this through improved marketing of ourproduct portfolio, in collaboration with our customers, and moreeffectively merging our brand and channel programmes.

Winning the visibility ‘war’ is also vital to Red Stripe’s futuresuccesses in both the on and the off trade. Each sector continuesto experience its own unique set of challenges; however, we aremaking shifts in our visibility investment strategy, focusing onimpactful, breakthrough, and engaging displays that influenceconsumer choice at the point of purchase.

Winning customer offerWe delivered growth in all channels in FY13 through focusingon three main objectives: brilliance in programme execution,customer co-creation, and perfection in the entire serviceexperience. We delivered shopper solutions that connectedwith shoppers in the off trade and created more engagingdrinking experiences for consumers in the on trade.We ensuredthat these programmes delivered on our customers’ core needsof immediate and sustained sales growth.

Investing in growthWith a robust repository of business data, now more than everwe are able to provide the company with valuable informationon store, customer, channel, and brand performance. Wesolidified the use of our data systems in FY13 which empoweredus to react in a positive way to information received oncustomer purchases. We are now better equipped to focus onboth familiar and uncharted sales regions, making moreinformed investment decisions and driving growth for thebusiness. Having this data at our fingertips also allowed us toexecute a proactive investment strategy aligned with our tradestrategy. This also enabled more efficient use of funds throughan elaborate measurement and evaluation of our investments.

SALES



Commercially strong sales teamIn FY13, we continued our focus onbuilding the commercial capabilities ofour team. A new tool called iCAT waslaunched which has allowed us tounderstand and build the individualcapabilities required for current andfuture roles. Our sales team continues tobe engaged and committed to thesuccess of the business, as can be seenfrom the results posted.

Of course, none of these successes wouldhave been realised without the supportof our customers. This decades’ worth ofsupport was celebrated at livelyappreciation events in their honour inKingston, Ocho Rios, Mandeville, andMontego Bay. We look forward to manymore years partnering with our valuedcustomers as we enhance every drinkingoccasion, every day across the island.

Red Stripe Bar AcademyAnother 400 students graduated fromthe Red Stripe Bar Academy in FY13bringing the total of students graduatedsince the inception in 2010 to over 1,000.This programme is delivered inconjunction with the HEART Trust/NTAand Bars to Go Training Academy, and is

designed to ‘raise the bar’ by developingbartenders’ professional capabilities andheighten the standards of consumers’bar experience.

The programme takes students througha six-module curriculum, which includesthe World of Bartending, Brand Passion,Sales 101, Customer Service, Alcohol andthe Law, and the award-winningresponsible drinking course, DRINKiQ.There are also lessons on personaldevelopment and positive attitudes,concepts students should take withthem to enrich every day of their lives.This programme has evolved greatlysince inception and is a major win/winopportunity for our customers and RedStripe as it is a proven growth driver.

SpiritsGrowth continues to be realised in ourspirits portfolio, with our two primaryproducts in the segment – Smirnoff andJohnnie Walker – posting solid numbersin FY13. CIROC™ Vodka, a high valueproduct introduced to our portfoliotowards the end of last year, alsorecorded strong growth.



MARKETING“We have to stay relevant to excite consumers and bringnew and attractive products to them. It’s about openingthe consumer to delightful experiences through each ofour brands every day. Staying relevant in the heartlandis also vital. Our FY13 investment in activating belowthe line campaigns in the heartland, has paiddividends.”

- Joma Cato, Marketing Head

Red Stripe, through all its brands, boasts a proud history ofbeing an integral part of the Jamaican culture and people’s lives,enhancing celebratory occasions and making life on the islethat much more ‘Irie’. The company experienced creditableperformance from all brands in FY13 and, as it confidentlymoves into FY14, recommits to its service promise of value forall, from production to consumption.

The company is very proud of its depth of integration in every-day Jamaican life, having invested in the occasions that matterto this market through sports, music, and socialentrepreneurship.

RED STRIPERed Stripe delivered another year of solid growth despite thecontinuation of a challenging economic environment. This wassupported by a number of successful activations throughoutthe year. The Red Stripe Independence Campaign was a bigfactor in raising brand awareness. Aimed primarily at an urbantarget in search of values, the campaign was a success with bothmature and emerging consumers. Refraining from thetraditional retrospective look at the last 50 years, the brandinstead embraced Jamaica’s future, showing a bold confidence

in the island’s potential. In addition to being featured onAdforum.com, as one of the best ads in the world at the time ofbeing aired, it was relatable to all audiences across alldemographics – bringing a sense of hope about the future toyoung and mature consumers and creating a connection withRed Stripe’s positive vision for the country.

Red Stripe Beer remained top of class as the company’s fastestgrowing beer locally.The Red Stripe Premier League has allowedthe brand to reconnect with long-time consumers whilerecruiting new drinkers. Additionally, the 2012 LondonOlympics, of which Red Stripe was a broadcast sponsor on CVMTV, provided another avenue which helped the brand repositionitself as an iconic part of people’s lives. These sponsorshipproperties and events activations largely impacted positiveconsumption trends that led to a good showing from the brand.

The brand was also quick to capitalise on the use of socialnetworks to maintain its links with consumers.Today, the brand’sFacebook page has 199,000 fans allowing for a transparent andongoing dialogue with its fans which include consumers andstakeholders.

Red Stripe Light, the vibrant variant of a well loved classic beer,also kept pace with the company’s other innovations andmultiple other flavours are expected to be launched for FY14.

HEINEKEN FY13 was a breakout year for Heineken with the launch of itsHeineken Inspire Competition. The mission was to create thenext big star in four categories — music, film, fashion and art.The concept, which began unfolding at Devon House onThursday, March 22, continued with the Inspire Me tours across



the island which gave the brand a platform toconnect with the next generation ofinnovators. The Heineken Inspire competitionended April 28 at the Railway Station indowntown Kingston. Category winnersKimona Wickham (Art), Kevoy Burton (Film),Mystikal Revolution (Music) and, SimoneNeilson (Fashion) each walked away with$250,000.

The ‘left-Handed Beer’ promotion fullyenergised the brand through a uniqueapproach while its local activations of theglobally sponsored James Bond moviefranchise were also very well received byconsumers who were fully engaged throughelements such as movie premieres in Kingstonand Montego Bay.

Heineken also tapped into football through aviewing event for the UEFA ChampionsLeague which was hosted by Chelsea’s FlorentMalouda who donated his talent fee to charity.

The brand’s major challenge was a 16% priceincrease that resulted in a volume decline inthe first half of the year. However, its strengthshone through when it landed close toprojected sales in the second half of the year.

Heineken is now in a very healthy position.With its 40th anniversary In October 2013, thebrand will refresh itself to attract newgenerations of drinkers and keep that

connection with them alive through all theirdrinking occasions.

GUINNESS Guinness retained its close connection withconsumers through its number one platform –dancehall music.

In keeping with Jamaica50 celebrations, thestout brand offered a platform for consumersto choose the 50 greatest dancehall icons of alltime.

Fans selected the top 50 from the 60nominated icons, and Guinness rewardedconsumers in the first week of voting, with fivepersons winning $50,000 each. Multipleweekly cash prizes of $5,000, tickets to ReggaeSumfest Dancehall Night, and voting credit forcellphones were also up for grabs during thevoting by texts and logging on to theGuinness Caribbean Facebook page.



Dancehall music is a shared passion betweenGuinness and our consumers and we believethe activity created much excitement anddebate, while allowing us to recognize someof the great contributors to dancehall culture.

Guinness further re-established andstrengthened relationships with consumersthrough the Arthur Guinness Fund wheremillions of dollars were contributed to 10projects that positively impactedcommunities in music, adult education, skillsdevelopment, and sports. In continuedcelebration of Arthur Guinness Day, a concertwas held on September 27 that reached aviewing audience of one million across theCaribbean.

The brand performance was also on target,with its share of market and profitabilitygrowing over the previous year. For FY14, thefocus is to keep evolving to appeal toconsumers as it continues to be front ofchoice in everyday occasions, celebrating lifeeverywhere.

THE STOUTS - DRAGON™ AND D&GMALTA™Dragon’s high visibility was maintainedthrough the ‘Blaze Up the Dragon’ campaign.The brand showed tremendous growth overthe previous year, illustrating that it remainsrelevant and a product of choice toconsumers.

Malta’s four variants – Original, Light, Velvetand Refresh – continue to satisfy consumerneeds and overall performance showedgrowth in profitability and volume year onyear. Malta Light was launched to greatreviews because of its low caloric countwhich appeals to a wide cross section ofconsumers seeking an even healthier drink.The highlight activity of Malta was signingwith the Sunshine Girls. Sasha-Gay Lynchwas featured in brand ads and supermarketpromotions.

The brand exceeded profitability andvolumes over the year prior, and as thebiggest malt-based drink, will continue torise to the challenge of being visible andrelevant in the non-alcoholic beveragesegment.

MARKETING CONTINUED



SPIRITS PORTFOLIO:SMIRNOFFThis was a stellar year for Smirnoff which grew share of marketby recruiting the trendy and hip consumer. The overall volumeand value growth was solid, despite performing in amarketplace that has become noisier with greater and fiercercompetition.

Exciting experiences such as ‘Midnight Circus’ and the ‘Yours forthe Making’ campaign were delivered while Smirnoff DreamWeekend was, once again, the number one party weekend inJamaica. In the digital space, interactive apps were developedwhich encouraged fun conversation and grew the SmirnoffFacebook community exponentially.

The brand further upped the ante with the introduction of threenew flavours – Peach, Coconut and Blueberry. All are trendingwell, inspiring and empowering consumers to be creative withthe different ways to consume.

For this coming year, the brand will continue to invest withprecision in the right places and there is a very robust projectionfor the brand with a focus on double-digit growth in volumeand value.

CIROC VODKA CIROC Vodka expanded ownership of the vodka category inJamaica, delivering double-digit growth. New flavoursinnovation – Red Berry, Peach, Coconut, – helped to acceleratethe phenomenal growth year on year.

WHISKEYThere was an expansion of this category by the addition ofsingle malts - Cardhu and Singleton™ of Glendullan.

INNOVATIONInnovation and anticipation are central to our growth strategyas we seek to create added value by identifying trends,behaviours and technological developments. In FY13, welaunched three new products, 7 Mixer™, Smirnoff Ice™ GreenApple, and Smirnoff Ice Red Berry Crush, to great reception fromthe public and are exceeding expectations.

OUTLOOKThe company’s marketing strategy is focused on putting itscompetitive weight against:

Brands – a focus on recruitment and share of voiceMarket Transformation – aimed at shifting the drinking cultureand expanding the consumption window beyond thetraditional Innovation – this has contributed significantly to thecompany’s growth over the past two financial years and remainscritical to the company’s relevancy.

The company will continue to make groundbreaking, iconic andturnkey decisions that will translate the brands’ advertising intocommercial activations that connect with consumers andprovide real value.

In actualizing Vision 2016, Red Stripe is committed to remainingtrue to its core brand values to not only maintain a bond withestablished drinkers, but also in revving up its recruitment.Leveraging the power of its extensive social media community,the company will seek to position its brands as top of mindchoice in the market.



ENRICHED COMMUNITIES.RED STRIPE LEARNING FOR LIFE, A Diageo trainingintervention“The growth and sustainability of any company is dependent

largely on the affluence of the markets it serves as well as on thesocio-economic conditions of the people within the communities itoperates. Red Stripe recognises the importance of this symbioticrelationship between business and community and thereforecontinues to drive the sustainability of Learning for Life to addressthis fundamental principle. The main objective of this project is totrain and certify participants across the island, thus increasing thelevels of skill, while making available to Red Stripe, its affiliates, andJamaican employers generally, a cadre of skilled and competentworkers across the island.”

- Dianne Ashton-Smith, Communications Manager

In challenging economic times, creative solutions to boost theeconomy and underserved communities are at a premium. Acommonly held view is that a trained and certified workforce,will likely lead to greater productivity, business competitivenessand, ultimately, economic growth and development. Beingmindful of this and our own role as a socially responsiblecorporate entity, Red Stripe again entered yet another phase ofstrategic intervention in FY13, aimed at human capitaldevelopment by way of the further expansion of its Learning forLife programmes.

Through these programmes, unskilled and unemployed youthliving in depressed communities across the island are providedskills training resources and ongoing support to becomeemployable or to start their own businesses.

Since inception in 2008, over 11,000 Jamaicans have beenimpacted and for FY13 alone more than 6,000 residents acrossJamaica were enrolled in the programmes. This was achieved inpartnership with two of Jamaica’s leading educationalinstitutions – Bars to Go Training Academy and The Institute forWorkforce Education and Development, Ltd. as well as TasteeLtd., who provided reduced costs for meals.

Through an informal needs assessment survey with ourcustomer base, Red Stripe, along with our training partners,developed a specialised suite of vocational trainingprogrammes targeted at unemployed inner-city youth rangingin ages from 18 – 30 years old:

• Project Hospitality- Housekeeping- General Office Administration - Supervisory Management - Customer Service

• Project Retailer- Data Operations - Cashiering- Merchandising

• Project Bartender

• Project Entrepreneur- Events Coordination

ENRICHEDCOMMUNITIES



Students who successfully matriculate into the programmesbenefit from full tuition scholarship, lunch, all course material,assessment and certification, and internship opportunities.Each programme lasts between 9 and 12 weeks and is designedto equip participants with the basic skills, attitude andtechniques needed for full competency in the requisite skillareas. Participants are exposed to a blend of theoretical,cognitive, and practical exercises and, upon successfulcompletion, they receive statements of competency fromNCTVET.

D&G Staff Outreach Led by a seven-member executive body namely, Kandice Derby,Antoinette Latty-Johnson, Tricia Lawrence, Wayne Morrison,Hervin Rowe, Pauline Samuda, and Sean Thompson, the Fundcontinues to provide financial assistance and mentorship tostudents attending various secondary schools across Jamaica.For the year in review, nine students benefited from the fundprimarily for tuition and monthly stipends for lunch andtransportation.

STUDENT NAME SCHOOL GRADE

Dujae Downie St. George’s College 10

Shanell Pitter Ascot High School 8

Vaniah Findlay St. Andrew High School 6th Form

Jovane Chung Wolmer’s Boys’ 6th Form

Shamar Thompson Kingston College 9

Treleven Morgan Calabar Junior High 8

Elesia Douglas deCarteret College 8

Deana Givans Camperdown High 7

Miquelia Jemieson Clarendon College 7

This year two of our students, Vaniah Findlay and Jovane Chungsat the CAPE Unit 1. Vaniah has been accepted to the Universityof Technology to pursue a BSc in Urban and Regional Planningwhile Jovane will be returning to Wolmer’s to complete CAPEUnit 2 after which his intention is to pursue a career in medicine.

In August 2012 we received requests from our nine students forapproximately $180,000.00 toward tuition fees.Through our on-going fundraising efforts and sponsorship support fromcorporate partners including Paramount Trading, GeddesRefrigeration, Faith Fabrication, Main Events Limited, Image One,Rose Painting, and Lawrence Electrical, the Fund contributed$143,000.00. Our main fundraising activity raised approximately$88,950.00 whilst annual staff contributions for January –December 2012 netted approximately $230,400.00.

RED STRIPE EMPLOYEES ADVOCATES OF CARE AND HOPE(REACH) “In a period demanding self-reliance for self-empowerment, it isindeed timely for our employee volunteer group, REACH, to initiatethis programme of civic literacy. We believe this strategy, which isdirectly aligned to our purpose of celebrating and enrichingJamaica, will not only provide basic skills in literacy and raiseliteracy levels to keep pace with the demands of the moderneconomy, but will allow our employees the opportunity to make adifference in the lives of our young people and in so doing createchange for the better across Jamaica.”

- Cedric Blair, General Manager at Red Stripe

In a bid to raise the literacy level of students across Jamaica andin turn national literacy standards, Red Stripe EmployeesAdvocates of Care and Hope (REACH) refocused its efforts on anumber of initiatives geared towards ‘Improving literacy,changing lives, inspiring Jamaica’.



This, in response to media reports that 60% of students at theprimary level in public schools who sit the Grade Four LiteracyTest more than two times fail to obtain mastery and stillcontinue to struggle. The initial phase of a much largercollaborative framework, REACH partnered with the SeaviewGardens Junior High and Primary School where Red Stripevolunteers participated as tutors and mentors in a speciallydesigned literacy interventionist programme for grade fourstudents who failed the Grade Four Literacy Test and had onlytwo of four opportunities remaining to re-sit the exams andmatriculate to the Grade Six Achievement Test (GSAT) for highschool.

The programme serves to support and strengthen the work ofthe schools and in this pilot project it did not only involve theleadership and students of the school but also the parents whosigned consent forms allowing their child to remain one hour,after dismissal, three times per week. Pre-assessments weredone to determine literacy levels and revealed that moststudents were reading at least three grade levels below.

A 12 member team from the Red Stripe Sales departmentlaunched the programme in early March and had nothing buthigh optimism for the tremendous impact the intervention willhave on the students. On April 2, 2013, 22 students were formallywelcomed into the programme, and in an effort to create thechange, the REACH team successfully lobbied for an additional30 minutes of teaching time. Each student was provided with atleast one reading book and a toolkit of activities covering theentire programme.

On June 3, 2013, after the school’s mock examination the REACHteam received feedback from the school’s principal, Mrs. Jonesthat every student moved from non-mastery to “almostmastery” or “mastery.” She lauded the employee volunteergroup for its continued support of the school since their firstproject in 2010 when an 800 employee strong team gave theschool a $250,000 facelift. Since then the REACH Team has hadongoing involvement, engaging students enrolled there inreading, face-painting and scrap-booking; as well as donatedscholarships and computers to students in Grades 3 and 5 toprepare them for the 2012 GSAT and Grade 4 numeracy andliteracy assessments via access to the website GSATready.com.

A 53 member team from the company’s Finance Departmentalso participated through their Annual Charity Day at theCockburn Gardens Primary and Junior High School. They spentthe entire school day with the students leading devotions andconducting interactive learning and career developmentsessions. This included 30-45 minute video presentationsprepared in tandem with the respective Grade curriculumfollowed by interactive ‘what did you learn?’ sessions in whichprizes were given based on the students’ level of participation.

The REACH team is committed to its sustained support of theSeaview Gardens and Cockburn Gardens Primary and JuniorHigh Schools with the ultimate goal of making Jamaica 100%literate by 2015.

ENRICHED COMMUNITIESCONTINUED



A continued focus on the company’s three broad strategic

pillars – brand value creation, profitable export growth and end-

to-end efficiencies – led to the achievement of manufacturing

and supply chain excellence in FY13. Through cost reduction,

output optimisation, and quality enhancement initiatives, Red

Stripe delivered significant savings, saw growth and

diversification of the product portfolio and, most importantly,

improved customer satisfaction.

BRAND VALUE CREATIONInnovationAfter introducing five new products in FY12, the team addedanother three products in FY13, including Smirnoff Ice RedBerry Crush, Smirnoff Ice Green Apple, and 7 Mixer. Theseinnovations received rave consumer reviews and came tomarket at pace due to the company’s fit-for-purpose breweryand an agile cross functional team that ensured expeditiousdelivery from idea to market. Fully cognisant of the need toexcite consumers through diversity, the company remains onpoint to delivering more innovations in FY14.

Improved customer deliveryRed Stripe understands its customers’ needs and, as a result ofimproved communication across the supply chain, focused onSchedule Adherence, improving by almost eight percentagepoints from 50.17% to 58.06% in FY13. For FY14, a globaltarget of 85% has been set. Schedule Adherence is the metricused to show how accurately the Supply function achievesthe production plan.

Environmental impactAs an ISO 14000 accredited company, Red Stripe’senvironmental management system is on par with globalstandards and the company continues to implementmeasures to maintain this standing. For the year under review,breakthrough targets for water consumption and waste-to-landfill activities were set, with great progress made in bothmetrics.

Water consumption was remarkably reduced, with anoticeable and record decline from 12 to 10 HL/L of water inprevious years to 9.96 HL/L of water to a litre of Red Stripe inFY13. This is the first time in history that Red Stripe has gonebelow 10 litres resulting in a savings of 200 million litres ofwater. This was realised through an expansive educationcampaign on water usage across the company and everyoneplaying their part in water conservation. In FY13 Red Stripewas awarded a Silver award from Diageo GreenIQ inrecognition of this achievement.

Red Stripe is also resolutely focused on achieving zero wasteto landfill. Recognizing that a large amount of waste isdispatched to the Riverton City dump on a yearly basis, thecompany developed a rigorous recycle programme in FY13with plastic, paper and cardboard refuse collected on site andsent for recycling. As a result of this campaign we achieved areduction of 26% in waste to landfill from FY12 to FY13. Thisinitiative will be continued in FY14, as we seek to achieve our2016 goal of zero waste to landfill.

SUPPLY



Profitable export growthUnited States export productionA strategic decision last financial year to move production forthe United States export market to that country is bearingpositive results as the company seeks to become a big playerin the lucrative U.S. market. A third party producer, CityBrewing in Latrobe, Pennsylvania, is now producing RedStripe under license for the U.S. market, which has resulted ina tripling of the company’s export profits in FY13 compared tothe prior year.

Red Stripe continues to service other markets outside USAand we shipped over 1 million cases in FY13 with an On Timein Full with No Error (OTIFNE) score of 97%.

End to end efficienciesManufacturing ExcellenceCost reduction continues to be a major focus for Red Stripeand is tracked daily to report against Diageo global standards.An important element of this initiative is the ManufacturingExcellence programme which has driven plant performanceimprovement that has helped reduce Cost of Goods (COGs)/unit and energy costs. Overall Equipment Effectiveness (OEE)remains strong at 53% in FY13. Red Stripe, at 15th, remainsranked in the top 20 among Diageo’s 90 plants worldwide inthis key productivity and efficiency metric.The aim for FY14 isto reach 62% OEE. A structured Engineering Reliability Planusing the world class Asset Management Information System(AMIS) tool and improved ways of working across functionswill achieve the 62% and put Red Stripe in the top10 sites.

Plant improvementRed Stripe has two of the best operation teams within Diageo– Ultimate Warriors and Gladiators who are ably supported byworld class Utility and Logistics Teams. The teams achieved a6.3% improvement in employee productivity compared toFY12. During FY13, the company invested in two weeks ofpreventative maintenance work, where every machine on theline was improved, resulting in the line moving from 50% to65% efficiency. There was a step change in QualityPerformance with an 11% improvement in the Diageo QualityIndex from 74% to 85%.This was reflected in improvements inconsistency in Heineken and Guinness Quality Award metrics.

Cutting costsWith an aim to becoming completely self sufficient inelectricity by the end of FY14, the implementation of a US$7million co-generation plant is fully on-stream withconstruction scheduled for completion in FY14. A brewingconsolidation project is also being pursued to allow thecompany to rationalise all its facilities to make beer at theleast cost. The new consolidated brewery will be in place byend of FY14 to support the co-generation power plant.

Additionally, Red Stripe remains committed to Project Grow,through which it plans to replace up to 20% of imported rawmaterials with local produce by the end of FY14. Cassava hasbeen proven as an excellent brewing raw material, as parentcompany Diageo launched a beer in Ghana called Ruut Extrawith over 50% cassava in FY13. Red Stripe created a trial batchof beer with the locally produced crop to rave reviews.


SUPPLYCONTINUED


Celebration BrandsThe highlight of the year was the formation of CelebrationBrands Limited (CBL), Red Stripe’s new joint venture withPepsiCola Jamaica which is poised to be the largest andstrongest sales and distribution company in Jamaica. Both RedStripe and PepsiCola Jamaica have key synergies and this newjoint venture brings value added and economies of scaleensuring significant efficiencies to the companies’ route tomarket networks. Three of the four Distribution Centres havebeen handed over to CBL with the transfer of the KingstonDistribution Centre in September completing the fulloperational handover of distribution to CBL.

A safe place to work Compliance is at the heart of everything we do, and is deeplyentrenched in our reputation both internally and externally.Against the background of nine Lost Time Accidents (LTAs) inFY12, an audacious goal of a 75% reduction was set in FY13 tothree LTAs. For the year under review we exceeded expectationswith zero LTAs. This amazing achievement is credited to theimplementation of an intense safety and fatality improvementprogramme that educated staff on the golden rules of zeroharm. The programme was developed from best practiceinformation gleaned from Diageo sites across the world and wasalso extended to Red Stripe’s contractor population thataccounted for the bulk of LTAs in FY12. Every single employee onall sites is required to wear the correct personal protectiveequipment at all times to ensure that everyone goes home safeevery day.

AwardsThe company is proud that its mission towards manufacturingexcellence has been lauded externally through recognition inthe Jamaica Manufacturers’ Association Awards for skills andproductivity in the large manufacturer category, as well as forbeing champion exporter among large manufacturers. Thecompany also received global recognition from Diageo as MostImproved Plant for Health and Safety as well as Most ImprovedPlant - Enhancing Brand and Diageo Reputation.

Going forwardRed Stripe anticipates continued great performances in FY14and is committed to delivering the company’s targets for Vision2016 through the three pillar strategy. The overall strategicintent is to reduce our fixed manufacturing costs by 20% by2016 as we continue to establish the company and its well lovedbrands as the most celebrated in Jamaica and the world.



RED STRIPEINTERNATIONAL

Red Stripe continued on a path of profitable export growth in FY13.We increased profit (Contributions after Advertising andPromotions - CAAP) by 23% over FY12 while volumes increased asteady seven per cent. This performance establishes Red Stripe asthe fastest growing beer in the Diageo portfolio globally and is adirect result of focus placed in the following areas:

High growth marketsWe continued to move away from distributing Red Stripe in alarge number of minor markets, concentrating instead onmarkets with significant growth potential, namely the USA,Great Britain and Canada. U.S.A and Great Britain significantlyoutperformed results from previous years. We also focusedon other emerging markets in the Caribbean, ContinentalEurope and Central America.

The right business modelThe new licensing model in the US has proven to besuccessful, facilitating profit margins and enhancingcustomer experience through the delivery of the freshestpossible beer in that market.

Key SKUsWe concentrated on top Stock Keeping Units (SKUs) such asRed Stripe Original and Dragon Stout, while de-listing smallvolume SKUs such as Red Stripe Light and Bold in severalmarkets with no clear indicators for growth potential. Weremain focused in our efforts to become more efficient andhave made clear business decisions on what SKUs can help ussupport us in that drive.

Among the FY13 highlights in our markets were:

CanadaCanada was flat year-on-year due to distribution challenges inFY13 which impacted its market share.We are, however, pleasedto report that these were and continue to be successfullycountered by several key strategic approaches designed toaccelerate growth and build top-of-mind awareness within theCanadian market. To further allow us to grow brand awarenessand establish us for long term success in Canada, an additionalUS$250,000 in A&P support was invested in the market.

An aggressive awareness campaign called ‘Hooray Beer’ waslaunched to great reception. Alongside this, we embarked on acomprehensive and integrated media presence that featurednew advertising with greater reach and frequency. Noting theimportance of social media to drive awareness of the brand andincrease interaction with drinkers, the Facebook Canada site waslaunched in October 2012. Additionally, we delivered a summer2013 ‘Red Stripers’ Activation (May to August), a retail activationwith sampling at key shows, summer events, and beach blitzes.

We also saw a significant turnaround of the tall can performancelargely stemming from a focus on City Brewing in April 2013 andnew packaging. This change from local Canadian MooseheadBrewery to City Brewing in the U.S. gave us retail display spacein this important segment, while revamping the packaging withthe global look and feel of Red Stripe. City Brewing recordedimproved service levels and minimum production runs whileopening the potential of new markets in British Columbia andQuébec.



United StatesThe new export model has made Red Stripe more efficient andprofitable in the U.S., however the Red Stripe Brand Equity in theU.S. is disadvantaged against competitors. Despite thechallenges of FY13, however, we believe we have identified theroot causes of the inconsistent growth of the past years andhave built an FY14 Game Plan that not just addresses our coreissues but sets a foundation for accelerated growth goingforward.

Great BritainGreat Britain significantly outperformed vs. previous years. RedStripe had an exceptional year of visibility, consumerinteraction, distribution and consumption levels in Great Britainin FY13. We realised the conception and activation of severallively and far-reaching campaigns that capitalized on a mainpassion of consumers – music. The Notting Hill Carnivalpresented us with an exceptional opportunity for brandvisibility and coverage through our collaboration withphotographer Pennie Smith to create a photo gallerycelebrating the Makers of Carnival.

Additionally, Red Stripe partnered with the world’s leadingunderground music show, Boiler Room, in a bid to establish thebeer as a culturally connected brand in Great Britain and otherkey markets. We collaborated with pioneering music artists tomake original performances that could be streamed live tocreate mass online events, hosting over 100 events acrossLondon, Berlin, New York, and Los Angeles. Red Stripe wasstocked exclusively at all of them with a cumulative footfall of20,000. On average our content has reached over three millionpeople per month, and direct bolierroom.tv site visits has risento over 800,000 a month.

Export tool kitWe developed a global brand tool kit that, among other things,gives direction, guidance and governance to markets regardingstrategic direction, positioning, key brand benefits and growthdrivers.

Red Stripe Beach and Royal CaribbeanWe experienced raised awareness of Red Stripe and Red StripeLight through a strategic partnership with GTME and RoyalCaribbean Cruise Lines during Jamaica’s Independencecelebrations.The initiative involved the creation of a compellingconsumer sweepstakes platform in all key U.S. markets,encouraging entries for a chance to win a cruise to Falmouth,Jamaica to enjoy the exclusive ‘Red Stripe Beach’experience andcelebrate Jamaican Independence Day.

OutlookLooking towards FY14, we remain bullish on our strategytowards profitable export growth and will continue along thesame trajectory. We will target sizeable markets with doubledigit growth opportunities in the premium lager segment.International growth drivers will focus on three simple elementsof engaging consumers in a way that will make them curiousabout the brand, delivering authentic experiences andproducing holistic opportunities.

Specifically, we will compete more aggressively with a target ofhitting 20 million actual cases of Red Stripe product outsideJamaica by FY17.



Along with continuing its capacity building and engagementprogrammes in FY13, Red Stripe’s Human Resources teamsuccessfully introduced strategic change management policiesfor the seamless implementation of the Celebrations BrandsLimited (CBL) project.

“The company is very pleased with and appreciative ofthe resilience and loyalty of employees to maintainindustrial harmony and high levels of individual andteam performance during this period of change in thebusiness.”

- Lisa Soares Lewis, HR Director

The company’s employment brand was impacted by therestructuring exercise for CBL which had far reaching changesfor all employees. Maintaining open communications andimplementing active change management programmes wereimportant to ensure that employees could transition smoothlyto CBL or on to a new career.

Despite the significant job changes, the company continued toattract great talent to Red Stripe due to the stand-out Diageovalues and the career opportunities that it offers to buildleadership capability while being rewarded at competitivelevels. External talent pipelines are built through traditionalchannels, online options such as LinkedIn, and brand events atthe Red Stripe location, such as ‘Big Vibes’ where prospectiveemployees get to interact with team members, through whomreferrals are made.

Red Stripe’s People Agenda framework for FY13 focused on thefollowing three key areas:

LEADERSHIP1. To develop strong and performance-focused leadership in

Red Stripe through the Diageo Leadership PerformanceProgramme (DLPP):

• A 12-month programme designed around the theme ‘OurLeadership Transforms Jamaica’ from which more than120 leaders graduated

• Highlights included learning events, experientialengagement segments, leadership coaching, 360 degreesurveys, line manager effectiveness surveys, strengthsfinder and the corporate athlete assessments; amongother interventions

• All coaching elements of the programme were done in abusiness context to deliver breakthrough plans andprojects for Destination 2016

• As part of this programme participants assembled over 20bicycles for the students at the SOS Children's Village

• The DLPP alumni undertook activities to raise over J$5million for the Children’s Village in Stony Hill tosupplement their annual operational budget.

TRANSITION2. To allow employees to transition respectfully and seamlessly

in the re-organisation of the business to form CelebrationBrands Limited (CBL), and create a residual organisation:• The business transferred the sales, customer services, and

distribution centre operations to CBL, leaving a smallerresidual Red Stripe organisation for FY14 and beyond

OUR PEOPLE



• In partnership with the business, HR led all restructuring and change management processes and supported thecreation of the new employment brand for CBL

• Emphasis was placed on employee communication to keepthem informed of all options open to them

• Employees received full redundancy entitlements and weresupported with outplacement services for those who didnot get a job in CBL or the residual organisation. Financialand emotional counseling sessions were also put in placeto help outgoing employees get accustomed to their newcircumstances.

“The Workday training was absolutely amazing. Thenew system empowers us and of course, places a lot ofresponsibility on us as individuals. It is the first system Ihave really seen introduced in Diageo that I think willdeliver great business outcomes because of thecapabilities of the programme.”

- Caroline Kelly, Trade and Customer Marketing

MODERNISATION3. Modernisation of HR to create more transparency, agility of

processes, and service through a reward and talentmanagement HRIS system called Workday. This modern,cloud-based technology allows unprecedented self-service toevery employee and line manager. It also offers multipleaccess points that will allow Red Stripe to achieve certainambitions for its employees and its employment brand.• Jamaica is among the first set of Diageo businesses to

implement Workday with an integrated payroll and newpaperless benefits module implemented in conjunctionwith its local benefits provider

• Prospective and existing employees will have unmatchedaccess to their information on core HR, reward, career andperformance management – all online

• Workday offers full mobility with access from smart phones,iPads and home PC’s, allowing employees and LineManagers to access the system anytime, anywhere

• Supply (Operations) employees will have the same accessand capability to use Workday as office/desk basedemployees as a result of a dedicated computer room whichwas built exclusively for their use

• Line Managers are now empowered to complete peopletasks online

• Employees can access and change personal information,share feedback online and upload their career informationfrom LinkedIn among other smart features.

CAPACITY BUILDING AND ENGAGEMENTThe company launched the Red Stripe BreakthroughRecognition Programme to recognise and reward breakthroughstaff ideas that improved and enhanced operations. To furthersupport this, teams received budgets to execute their own teambuilding events, including several off-site fun-days.

Although overall budgets were tight and several traditionalengagement plans were deferred, the company engagedemployees in brand and sponsorship activities to connect themwith the brands and customers whilst, at the same time, havingfun. Functional training also allowed employees to build jobspecific capabilities and improve job performance; this wasdone face to face and through the Diageo Academy onlinelearning system.



Some employees were also selected to participate in globalcareer development programmes such as the Future LeadersProgramme in South Africa and the Early Careers Programme inLatin America. Additionally, each year the company offersemployees opportunities in overseas Diageo companies andcurrently has talent in Tanzania and the Seychelles.

“FY13 was the most significant people agendatransformation year in this four year plan.”

- Cedric Blair, Managing Director

WELLNESS PROGRAMMEThis programme recorded continued success in FY13 withadded and improved components to the programme:

• Overweight and obesity measurements• Hypertension and cholesterol measurements• Partnership with canteen concessionaire to monitor meal

content, quality and serving sizes and create new signs torecommend healthy choices

• Annual wellness retreat• Wellness and goal setting and participant wellness

passports to support the competition.

VISION 2016For the year under review, there was continued monthly TownHall meetings with all employees across the island to sharebusiness updates and business performance qualifiers.

FY14 and beyond will see more focus on talent managementand optimisation of the changes to produce great businessresults. Some short and medium term plans include:

• Creation of comprehensive talent plan using global bestpractice to ensure our plans are guaranteed with the rightpeople and capabilities, both now and in the future

• Successful completion of the route to market (RTM)transition in early FY14

• Building commercial leadership capabilities that willoptimise the new RTM and improve year over yearbusiness results

• Employee engagement through events such as the annualconference and prioritisation action plans from the DiageoValues Survey

• Building on the leadership capabilities gained in the DLPPand improved functional capabilities across the business.

• Rollout of People Manager Essentials programme,designed to increase the capability of our Line Managers

• Continuation of the People,Values and Culture agenda intoD2016.



REPUTATIONEmployee Alcohol Policy

Corporate Social ResponsibilityPolicies

Corporate Governance Guidelines

“My role is to help RedStripe contributepositively to Jamaica’senvironmental footprint;improving efficiency,enhancingperformance.”

Gary JacksonSpecial Projects Manager

“The biggest impact we’ve madeis to forge great businesspartnerships, allowing us toreduce our costs while providingquality products and service tocustomers.”

Glenise DurrantBusiness Performance Management

and Supply Finance Manager

“Every bottle that leaves this siteshould be of excellent quality; weensure that customers arethoroughly satisfied- gettingquality beer every time.”

Mickellia LawrenceQuality Operations Manager

“Here, at Red Stripe, wework hard to establish andmaintain brand value withour customers. We do thisby connecting with ourcustomers, ensuring thatthey are satisfied, everytime.”

Ulanda Sutherland- MartinSales Administrator



OUR COMMITMENT Diageo brands are enjoyed by millions of consumers around theworld every day. For most people, drinking responsibly is apleasurable part of a balanced and healthy lifestyle. Responsibledrinking is at the heart of our business and we are committed toproviding leadership on this agenda both internally, and insociety at large.

Diageo recognises that most of its employees drink responsiblybut as a company we need to set out the standards that arerequired; the serious consequences, both for the individual andfor the business, when these standards are breached; and thesupport that will be provided to employees who are unable tomeet these standards.

SCOPE OF THIS POLICY The Diageo Employee Alcohol Policy applies to all Diageoemployees and employees of subsidiaries and joint ventureswhere Diageo has a controlling interest. It also covers agencyworkers and contractors acting on Diageo’s behalf or workingon Diageo sites.

In joint ventures where Diageo does not have overall control,the leaders and managers of those businesses are stronglyencouraged to adopt the same or similar standards.

PRINCIPLES

EMPLOYEE EDUCATION AND SUPPORT We are committed to ensuring that our employees understandthe nature and effects of alcohol and that this will support themin drinking responsibly at all times.To this end, we have a globalprogramme called DRINKiQ which is a resource to promoteresponsible alcohol consumption through communication andthe sharing of best practice tools, information and initiatives. It isour intention that all employees will have the opportunity toexperience the DRINKiQ programme.

ALCOHOL AND THE WORKPLACE All employees must ensure that their judgement andperformance at work are never impaired by alcohol, especiallythose employees whose jobs involve activities which impactsignificantly upon the safety of themselves or others.

For example, drivers or operators of moving machinery mustensure that their consumption of alcohol never threatens thesafe performance of their duties and that their behaviour neverputs themselves or others at risk.

For safety reasons, it will be appropriate that some Diageolocations apply a zero tolerance approach to alcoholconsumption in the workplace.

ALCOHOL RELATED OFFENCESAny conviction for an alcohol related offence is considered abreach of this Policy and it is mandatory that employees reportany such conviction to the company through the HR function.Our first concern will be to support employees, especially toavoid any recurrence, and we will seek to provide guidance orcounselling. However, depending on the severity of the offenceand its potential impact on Diageo’s reputation, it may beconsidered a disciplinary matter. For example, a work relateddrink driving conviction would be considered gross misconductand likely to result in dismissal. More detailed guidance isavailable through the HR function and all cases will be treatedindividually based on the circumstances. A second convictionfor any alcohol related offence, however, would almost certainlyresult in dismissal.Diageo does not condone drinking and driving, even incountries where drink-drive legislation is not in force.We expectour general managers to put appropriate arrangements in placeso that all their employees, especially sales staff, can operateeffectively, without putting themselves or others at risk.Employees should never feel that the nature of their job makesit difficult for them to avoid drink driving.

We will fully respect the legal drinking age in all markets and willtake care not to encourage or condone underage purchase orconsumption of alcohol. This is especially the case for anyemployees under the legal drinking age.

PROBLEM DRINKING If an employee has difficulty in meeting Diageo’s requiredstandards because of any alcohol related problem, howeverminor, or is concerned about their drinking, then Diageostrongly encourages the individual to seek medical advice orcounselling, either from their occupational health centre, orfrom an external agency. A dependency problem may beidentified by the employee, by colleagues or by managers. Wedo our utmost to provide support to any employee in thissituation.

DIAGEO’S REPUTATION The image and reputation of any company is determined in partby the way its employees are seen to behave. This is particularlytrue for a company which is in the premium drinks business. Ouremployees are our ambassadors and can enhance ourreputation by showing a responsible attitude to drinking. In

EMPLOYEE ALCOHOLPOLICY



contrast, if our employees drink irresponsibly, they put Diageo’sreputation at risk.

Employees are expected to act as role models for responsibledrinking at all times, whether on company business or not.Putting Diageo’s reputation at risk by not drinking responsiblymay be viewed as a breach of this Policy and could result indisciplinary action.

HOW DOES THIS POLICY APPLY TO ME? Responsible drinking is at the heart of our business and weunderstand our duty to act as role models for consumers.We areproud of the way we carry out our business and will not act in away that damages Diageo’s reputation.

We should never allow alcohol to affect our performance atwork or to put others at risk. We will follow a zero-alcohol policywhen required to do so.

We will always obey any alcohol-related legislation applicable toour market and will encourage others to do the same. We willreport any conviction for an alcohol-related offence. We do notcondone drink driving, even in countries where there is nodrink-drive legislation. We will seek medical advice orcounselling if we are concerned about our own or a colleague’salcohol consumption.

RESPONSIBILITY We are all individually responsible for making sure that wecomply with this Policy in addition to Diageo’s Code of BusinessConduct and all laws, regulations, and industry standards. If youmanage people, you are expected to ensure that the individualswho report to you receive the guidance, resources, and trainingthey need to enable them to do their jobs in compliance withthis Policy.

MONITORING Any breach of this Policy is also considered to be a breach of theDiageo Code of Business Conduct and should be reportedpromptly through one of the routes described in the Code. Youcan also discuss concerns or make a confidential report usingSpeakUp.

Breaches of this Policy will be dealt with in accordance with theDiageo internal investigations policy and local disciplinarypolicies, as permitted by law.

FURTHER INFORMATION AND CONTACTS For further information and support related to this policy, pleasecontact your local HR team.The Global Compliance and Ethics team manages the DiageoCompliance and Ethics programme and is available to providehelp and guidance on all issues relating to the Code and Diageopolicies.

For further information on responsible drinking choices, pleasevisit www.drinkiq.com.



1. POLICY DEVELOPMENT AND COMPLIANCEAs part of Diageo, we benefit from a comprehensivecollection of world-class codes and policies, which often gofurther than Jamaican legislation. Policy developmentinvolves referring to external codes and best practice andconsulting widely both outside and within the business.Broad dialogue with external groups ensures that our policiesaddress the legitimate concerns of stakeholders and wherepossible, incorporate their expectations as to how we shouldact on particular issues.

We are subject to the Diageo Code of Business Conduct thatsets out standards on issues such as conflicts of interest,competition law, insider trading, corrupt payments, moneylaundering, and other illegal practices. In addition, the Codeacts as an overarching compliance instrument by including arequirement to comply with the company’s other mainpolicies. Each year, all Red Stripe employees are required toconfirm compliance with the Code and other Diageo policies.

2. RISK MANAGEMENTOur aim is to manage risk and control our activities cost-effectively. We do so in a manner that enables us to take upprofitable business opportunities, avoid or reduce risks thatcan cause loss, reputation damage or business failure, supportoperational effectiveness, and enhance resilience to externalevents. We have established a Risk Management Committee,which meets on a quarterly basis to carry out this objective.

3. DIAGEO MARKETING CODEThe Code provides marketing and advertising practitionerswith guidance on the naming, packaging, and promotion ofour brands, setting standards, which are in addition toJamaican laws and regulations. We staged workshops withboth external and internal stakeholders that included oursponsors, advertising agencies, and media among others.

4. DIGITAL MARKETING CODEDiageo’s commitment to responsible marketing andpromoting responsible drinking extends across all mediaincluding digital channels. As more opportunities in thedigital environment emerge there is an increasing need forguidance beyond our Diageo Marketing Code (DMC).Recognising this, we created a digital code to help ourmarketing teams navigate the complexities of operating in adynamic digital environment. Diageo’s digital code providesdetailed guidance and clarification on the interpretation ofthe DMC principles that apply to digital marketing activityincluding websites, mobile, email, social network sites, blogs,text messaging.

5. RECORDS RETENTION POLICYThe purpose of this records retention policy (and associatedretention schedules and procedures) is to protect theinterests of the company by ensuring the consistent andorderly maintenance and retention of adequate, unalteredand accurate company records for the appropriate periods oftime to satisfy relevant statutory and contractual legal,regulatory, financial, operational and research requirements. Itis also to ensure the prompt and confidential disposal ofrecords when such requirements have ceased so as to avoidunnecessary costs relating to records maintenance.

6. SUPPLIER STANDARDSThe high levels we aspire to in our own behaviour arereflected in the expectations we have of our suppliers. Thestandards outline Diageo’s position on corporate citizenshipissues that are currently being phased into our relationshipwith suppliers.

7. EMPLOYEE ALCOHOL POLICYThe policy ensures that employees fully understand thenature and effects of alcohol and sets out the expectationsRed Stripe has for their behaviour.

8. OCCUPATIONAL HEALTH AND SAFETY POLICYThe policy sets standards for risk assessment, occupationalhealth, hazardous substances, first aid, noise, ergonomics,protective equipment, emergency evacuation, work permits,visitors and contractors, and accident reporting.

9. QUALITY POLICYThe policy sets a framework for quality management systemsand commits every business to continuous improvement inperformance.

10. HIV/AIDS POLICYThis is an enabling policy, which sets out the minimumstandards which will be adopted by the company. Theobjective is to ensure the employees’ fundamental rights arenot infringed in any way and to ensure that Red Stripe isequipped with the methodology to implement high qualityHIV/Aids workplace objectives.

11. EXTERNAL CODES AND CHARTERSDiageo is a signatory to certain external codes that definecorporate citizenship principles and standards of conduct.These include the Business Charter for SustainableDevelopment, the UN Global Compact, the World EconomicForum Leadership Challenge, and the Dublin Principles.Further information on these codes is available in the Diageoglobal Sustainability and Responsibility report.

CORPORATE SOCIALRESPONSIBILITY POLICIES



12. MEASURING PERFORMANCEWe have measures of our progress covering corporatecitizenship and other areas of concern to our stakeholders.The data required for each of these measures are collected atleast annually. This allows the integration of corporatecitizenship measures into business strategy and forms thebasis for monitoring performance improvement.

13. ENVIRONMENTAL POLICYRed Stripe, being a producer of alcohol and non-alcoholbeverages and ready to drink products, is an environmentallyresponsible company that operates in a way that protects andenhances our people, brands, and the communities in whichwe work and live. We are committed to supportingenvironmental sustainability and biodiversity. We complywith all applicable legal and other requirements such as theDiageo Global Risk Management and Licence to OperateStandards governing Environmental Management andensure continual improvement and prevention of pollution.

14. HARASSMENT POLICYThe company is committed to promoting and providing aworking environment where individuals are treated withrespect and courtesy by ensuring the fair and equitabletreatment of all employees. The company in keeping with ourvalues considers unacceptable any conduct involvingharassment of any employee for any reason. Whilst sexualharassment is one form of harassment, there are many typesof harassment in the workplace. Harassment at work is notacceptable on ethical, moral and, in some instances, legalgrounds, and its existence in the workplace is a barrier to theeffective running of the business.



BOARD MISSION

1) Mission statementThe Desnoes & Geddes (D&G) Board of Directors representsthe owners’ interest in maintaining and growing asuccessful business, including optimizing long-termfinancial returns and lowering cost of capital. The Board iscommitted to achieving the highest standards of corporategovernance, corporate responsibility and risk managementin directing and controlling the business.

The Board is responsible for determining that D&G ismanaged in such a way to ensure this result. This is anactive, not a passive, responsibility. The Board has theresponsibility to ensure that management is capablyexecuting its responsibilities.The Board’s responsibility is toregularly monitor the effectiveness of management policiesand decisions including the execution of its strategies.

In addition to fulfilling its obligations for increasedstockholder value, the Board has a responsibility to deliverholistic performance embracing corporate responsibilitytowards D&G customers, employees, suppliers and to thecommunities where it operates — all of whom are essentialto a successful business. All of these responsibilities,however, are founded upon the successful perpetuation ofthe business.

BOARD FUNCTIONS

1) Areas of responsibilities The Board makes decisions and reviews and approves keypolicies and decisions of the company in particular inrelation to:

• Corporate governance;• Compliance with laws, regulations and the

company’s code of business conduct;• Corporate citizenship, ethics, environment;• Strategy and operating plans;• Business development including major investments

and disposals;• Financing and treasury;• Appointment or removal of Directors;• Remuneration of Directors;• Risk management;• Financial reporting and audit;• Pensions.

2) Specific responsibilities for Chairman, CompanySecretary and DirectorsThe Chairman is principally responsible for the effectiveoperation and chairing of the Board and for ensuring that

information that it receives is sufficient to make informedjudgments. He also provides support to the ManagingDirector, particularly in relation to external affairs.

The Company Secretary is responsible for ensuring thatBoard processes and procedures are appropriately followedand support effective decision-making and governance. Heis appointed by, and can only be removed by the Board. Heis also responsible for ensuring that new Directors receiveappropriate training and induction into D&G. All Directorshave access to the Company Secretary’s advice and servicesand there is also a formal procedure for Directors to obtainindependent professional advice in the course of theirduties, if necessary, at the company’s expense.

Each Board Member is expected to commit sufficient timefor preparing and attending meetings of the Board, itscommittees and, if applicable, of the independent Directors.Regular attendance at Board meetings is a prerequisitetherefore unless explicitly agreed upfront, a Director shouldnot miss two consecutive regular Board meetings.

Because in-depth knowledge of the particulars of thecompany’s business is vital for each Director in makinginformed and objective decisions, management is to allowdirect involvement and review of operational activities.Similarly, management also is to communicate to Boardmembers opportunities to interact in strategy and day-to-day business settings. Board members are stronglyencouraged to take advantage of such opportunities asfrequently as feasible. The Directors have complete accessto the leadership of the Company.

SELECTION AND COMPOSITION OF THE BOARD

The Board is responsible for the over viewing of the interest ofall stakeholders on the matters as outlined above. Thecomposition of the Board should be such that these interestsare best served and therefore the Directors require a diversity inskills and characteristics.1) Size of the Board

The Board will have a minimum of 10 and a maximum of15 Directors. Considering the size of the organisation andthe environment in which it operates, the Board believessuch numbers are adequate.

2) Executive and Non-Executive Directors At any time the number of Executive Directors should notexceed 50% of the total number of Directors.

CORPORATE GOVERNANCEGUIDELINES



3) Conflicts of Interest/ DisclosureAny dealings in the company’s shares by any Director mustbe promptly reported to the Company Secretary who isobliged to disclose such information on a regular basis tothe Jamaica Stock Exchange.

With respect to ‘block out ‘ dates, no Director should tradein the company’s shares during the period from which thecompany declares the payment of a dividend to thepayment date of such dividend.

A Director who has an interest in the company or in anytransactions with the company which could create orappear to create a conflict of interest must disclose suchinterests to the company. These would include:

• Any interest in contracts or proposed contracts with thecompany

• General disclosure on interest in a firm, which doesbusiness with the company

• Interest in securities held in the company• Emoluments received by the company• Loans or guarantees granted by the company to/for the

Director.

Disclosure shall be made at the first opportunity at a Boardmeeting in writing and such disclosure shall be recorded inthe minutes of the Board meeting.

The Director shall then excuse himself from the Boardmeetings when the Board is deliberating over any suchcontract and shall not vote on any such issue.The disclosureof Director’s interest shall include interests of his family andaffiliates.

4) Election, terms, re-election and retirement Election, terms, re-election and retirement of each Boardmember is conducted in line with the articles of associationof the company, articles 92 to 100, with the exception thateach Board member is to retire during the financial year,when the Director reaches the age of 70 years, unless aspecial resolution of exemption to this rule is passed by theBoard.

Equally the maximum number of terms of the Chairmanshould not exceed 10 successive years, unless a specialresolution of exemption of this rule is passed by the Board.

5) Board compensation The level of compensation of the Non-Executive Directorsreflects the time commitment and responsibilities of therole. It consists of a package appropriate to attract, retain,and motivate Non-Executive Directors of the qualityrequired. The compensation is competitive and subject toregular review to what is paid in comparable situationselsewhere.

No remuneration committee shall be in effect. A review bythe Board of the remuneration policies for ExecutiveDirectors and the members of the central leadership teamas applied by the ultimate parent to the company, will takeplace during a regular Board meeting annually.

6) Director orientation and educationThe Board and Management will conduct a comprehensiveorientation process for new Directors to become familiarwith the Company’s vision, strategic direction, core values,financial matters, corporate governance practices and otherkey policies and practices through a review of backgroundmaterial, meetings with senior management and visits tothe company’s facilities.

The Board also recognizes the importance of education forits Directors. It is the responsibility of the Board to advisethe Non-Executive Directors about their education,including corporate governance issues. Directors areencouraged to participate in continuing Directoreducation programs.

7) Access to outside advisors and fundsThe Company will make such funds available to the Boardand in particular the Non-Executive Directors as isreasonably required for those Directors to objectively makedecisions. This may include providing funds to accessoutside advisors and cover cost associated with travel andthe gathering of relevant information for the execution oftheir responsibilities.

8) Code of conduct The Board expects all Directors, as well as officers andemployees, to act ethically at all times and to adhere to allDiageo codes and policies specifically including ‘TheDiageo Code of Business Conduct’, ‘The Diageo MarketingCode,’ and the ‘Employee Alcohol Policy.’ The Board will notpermit any waiver of any of these policies for any Director orExecutive Officer. If an actual or potential conflict of interestarises for a Director, the Director shall promptly inform theChairman. If a conflict exists and cannot be resolved, theDirector should resign.



CORPORATE GOVERNANCEGUIDELINES CONTINUED

BOARD COMMITTEES

The Board has established several Committees, each withclearly defined terms of reference, procedures, responsibilitiesand powers.

1) Audit committee On behalf of the Board, the audit Committee shall:

• Monitor the adequacy and effectiveness of thecompany’s systems of risk management andcontrol, the Business Risk Assurance function, andexternal auditors; and

• Review the company’s annual and interimfinancial statements and related policies andassumptions and any accompanying reports orrelated policies and statements

• Monitor and review the effectiveness of thecompany’s internal audit function.

• Monitor and review the external auditor’sindependence, objectivity and effectiveness

• Develop and implement policy on theengagement of the external auditor to supplynon-audit services.

The Audit Committee shall consist of Non-ExecutiveDirectors of the Company duly appointed by the Board.TheChairman and Secretary of the Audit Committee shall alsobe appointed by the Board. The Board Chairman shall notbe a member of the Committee. The Committee shallconsist of not less than three members.

The Audit Committee shall meet at least four (4) times ayear, within twenty (20) days of the end of each quarter, andat such other times as any member of the Committee or theexternal auditors may request.

2) Nomination committeeThis Committee comprises of two Non-Executive Directorsand one Executive Director. The Committee is responsiblefor keeping under review the composition of the Board andsuccession to it. It makes recommendations to the Boardconcerning appointments to the Board of Non-ExecutiveDirectors, having regard to the balance and structure of theBoard and the required blend of skills and experience. TheCommittee has responsibility to:

• Nominate potential candidates and evaluates thesuitability of those candidates for future Boardmembership;

• Proposes suitable candidates to the board forapproval prior to approaching the candidate;

• Approaches the future candidate and uponpositive response, introduces the future Boardmember to the Board.

The nomination of one Non-Executive Director throughDiageo and one Non-Executive Director through Heinekenare exempt from nomination through the NominationCommittee.

The Nomination Committee shall meet in line with electionand re-election procedures determine and at such othertimes as any member of the Committee may request.

3) Evaluation committeeThis Committee comprises of the Chairman, the ManagingDirector and the company Secretary. The Committee isresponsible for keeping under review the performance ofall Board members. It develops, maintains, and executes anannual process of self-evaluation and 360 degrees feedbackbetween Board members. Results of the self-evaluation arediscussed annually in a Board meeting.The Chairman and the Managing Director will presentresults of the 360 degrees feedback to the relevant Boardmember individually.

The Evaluation Committee shall meet annually to initiateand assess the outcome of the evaluations and at suchother times as any member of the Committee may request.

4) Ad hoc committeesThe Board may call any ad hoc committee as it deemsnecessary. The rules under which such Committee governswill be set out at each occasion by the Board. AllCommittees including those explicitly mentioned abovewill be subject to the annual evaluation process, similar asapplied to the Board itself.

MEETINGS

1) Frequency of meetingsDuring each financial year, there will be a minimum of 4regular Board meetings. Special Board meetings may occurat such other times as any member of the Board mayrequest.

2) Non-executive director meetings The Company is to provide opportunity for the Non-Executive Directors to meet Independently of the Executive



Directors. On the decision of the Non-Executive Directors,the Managing Director may be invited if they desire so.

3) Operational review meetings To further engage the Board and strengthen its in-depthknowledge of the particulars of the Company’s business amonthly one hour (virtual) meeting on the past month’sperformance is conducted. This meeting allows directinvolvement and review of operational activities.Attendance to these meetings is on a voluntary basis.

4) Strategy and operating plan setting meeting The Board is consulted on a regular basis on matters whichare of strategic importance to the Company. Annually theCompany will set, in coordination with the Chairman, ameeting to review the Company’s strategy in depth prior tofinal agreement of such strategy and annual operating planwith the Company’s parent Company.

5) Selection of agenda items for board meetings The Chairman and Company Secretary will establish theagenda for each Board meeting. Each Board member maysuggest the inclusion of item(s) on the agenda.

Information important to the Board’s understanding of thebusiness will be distributed electronically and or in writingto the Board before the Board meetings. As a general rule,presentations on specific subjects should be sent to theBoard members in advance to save time at Board meetingsand focus discussion on the Board’s questions. On thoseoccasions in which the subject matter is extremelysensitive, the presentation will be discussed at the meeting.

6) Additional attendees to the meetingFurthermore, the Board encourages the Management to,where it assist the ability of the Board members to executetheir responsibilities, bring managers into Board meetingswho: (a) can provide additional insight into the items beingdiscussed because of personal involvement in these areas,and/or (b) are managers with future potential that thesenior management believes should be given exposure tothe Board.


ACCOUNTABILITYFinancial Statements

Form of Proxy

“I manage deliveries,ensuring my team is fullyengaged and areoperating efficiently andoptimally to ensure allour deliveries aredispatched on time andin full .”

Basil BaileyKingston Direct

Distribution CentreManager

“By the year 2016, through Learning forLife, Red Stripe will impact 20,000 lives.There is no better way to transform anation than through education and theDiageo Learning for Life programmes dojust that. Being responsible for theadministration of these programmes Ihave the privilege of living the Red Stripepurpose every single day,“Celebratingand enriching Jamaica, inspiring theworld.”

Totlyn Brown-RobbPublic Relations Coordinator

“We ensure that Red Stripe’s dayto day operations are efficientand executed with precision,agility and with 100% accuracy.”

Daika MitchellAdministration and Clerical General

Manager

“I provide the right softwareand computer operatingsystems to ensure that RedStripe has a stable network toeffectively conduct businessboth internally and externallyand to ensure businesscontinuity especially dringperiods of transition.”

Kerron ClarkeBusiness Systems Manager



DESNOES & GEDDES LIMITED

FINANCIAL STATEMENTS

JUNE 30, 2013




5


Company Income StatementYear ended June 30, 2013

The accompanying notes form an integral part of these financial statements.

Notes 2013 2012

Gross sales 18 12,732,391 13,154,054Special Consumption Tax ( 2,362,977) ( 2,122,350)

Net sales 10,369,414 11,031,704Cost of sales ( 6,117,884) ( 6,957,878)

Gross profit 4,251,530 4,073,826Marketing costs ( 926,091) ( 1,201,726)

Contribution after marketing costs 3,325,439 2,872,100General, selling and administration expenses ( 1,336,424) ( 1,293,285)Other expenses, net ( 129,930) ( 120,368)

Trading profit 1,859,085 1,458,447Employee benefits expense, net 8(d) ( 19,000) ( 18,000)Finance income interest 27,811 8,665(Loss)/gain on disposal of property, plant and equipment ( 8,473) 8,043

Profit before finance cost 1,859,423 1,457,155Finance cost interest - ( 1,979)

Profit before taxation 19 1,859,423 1,455,176Taxation 20 ( 660,081) ( 225,618)

Profit for the year 1,199,342 1,229,558




6

DENOES & GEDDES LIMITED

Group Income StatementYear ended June 30, 2013


Notes 2013 2012

Gross sales 18 12,732,391 13,154,054Special Consumption Tax ( 2,362,977) ( 2,122,350)

Net sales 10,369,414 11,031,704Cost of sales ( 6,117,884) ( 6,957,878)

Gross profit 4,251,530 4,073,826Marketing costs ( 926,091) ( 1,201,726)

Contribution after marketing costs 3,325,439 2,872,100General, selling and administration expenses ( 1,336,424) ( 1,293,285)Other expenses, net ( 129,930) ( 120,368)

Trading profit 1,859,085 1,458,447

Employee benefits expense, net 8(d) ( 19,000) ( 18,000)Finance income interest 27,811 8,665Share of profit in joint venture 11,902 -(Loss)/gain on disposal of property, plant and equipment ( 8,473) 8,043

Profit before finance cost 1,871,325 1,457,155Finance cost interest - ( 1,979)

Profit before taxation 19 1,871,325 1,455,176Taxation 20 ( 660,081) ( 225,618)


Earnings per stock unit 21 43.12¢ 43.77¢




7


Company and Group Statements of Comprehensive IncomeYear ended June 30, 2013


Company2013 2012

Notes


Other comprehensive income:Fair value adjustment on available-for-sale investments 4(a) 70,932 487,833Revaluation surplus on property, plant and equipment 67,755 -Change in unrecognised employee benefits asset 8(a) 118,000 ( 857,000)Deferred taxation on employee benefits assets/obligation 17 30,600 94,000Actuarial (losses)/gains on employee benefits assets/

obligation 8(e) ( 220,000) 481,000

67,287 205,833

Total comprehensive income for the year 1,266,629 1,435,391

GroupNotes 2013 2012


Other comprehensive income:Fair value adjustment on available-for-sale investments 4(a) 70,932 487,833Revaluation surplus on property, plant and equipment 67,755 -Change in unrecognised employee benefits asset 8(a) 118,000 ( 857,000)Deferred taxation on employee benefits assets/obligation 17 30,600 94,000Actuarial (losses)/gains on employee benefits assets/

obligation 8(e) ( 220,000) 481,000

67,287 205,833

Total comprehensive income for the year 1,278,531 1,435,391




8


Company Statement of Changes in EquityYear ended June 30, 2013


Share Capital Other Retainedcapital reserves reserves earnings Total$'000 $'000 $'000 $'000 $'000

(Note 13) (Note 14) (Note 15)

Balances at June 30, 2011 2,174,980 - 1,108,467 2,930,318 6,213,765

Total comprehensive income for the year:Profit for the year - - - 1,229,558 1,229,558

Other comprehensive income:Fair value adjustment on available-for-sale

investment - - 487,833 - 487,833Change in unrecognised employee benefit asset - - - ( 857,000) ( 857,000)Deferred taxation on employee benefit asset/

obligation - - - 94,000 94,000Actuarial gains recognised in equity - - - 481,000 481,000

Total other comprehensive income - - 487,833 ( 282,000) 205,833

Total comprehensive income - - 487,833 947,558 1,435,391

Movement between reserves:Transfer to pension equalisation reserve - - ( 194,417) 194,417 -

Transaction with owners recorded directly in equityDividends (note 22) - - - ( 561,834) ( 561,834)

Balances at June 30, 2012 2,174,980 - 1,401,883 3,510,459 7,087,322

Total comprehensive income for the year:Profit for the year - - - 1,199,342 1,199,342


investment - - 70,932 - 70,932Revaluation surplus on property, plant and

equipment - 67,755 - - 67,755Change in unrecognised employee benefit asset - - - 118,000 118,000Deferred taxation on employee benefit asset/

obligation - - - 30,600 30,600Actuarial losses recognised in equity - - - ( 220,000) ( 220,000)

Total other comprehensive income - 67,755 70,932 ( 71,400) 67,287

Total comprehensive income - 67,755 70,932 1,127,942 1,266,629

Movement between reserves:Transfer to pension equalisation reserve - - ( 107,350) 107,350 -

Transaction with owners recorded directly in equityDividends (note 22) - - - ( 842,752) ( 842,752)

Balances at June 30, 2013 2,174,980 67,755 1,365,465 3,902,999 7,511,199




9


Group Statement of Changes in EquityYear ended June 30, 2013


Attributable to equity holders of the company

Share Capital Other Retained Non-controllingcapital reserves reserves earnings interest Total$'000 $'000 $'000 $'000 $'000 $'000

(Note 13) (Note 14) (Note 15)

Balances at June 30, 2011 2,174,980 7,770 1,108,467 3,070,241 7,447 6,368,905

Total comprehensive income for the year:Profit for the year - - - 1,229,558 - 1,229,558


investment - - 487,833 - - 487,833Change in unrecognised employee benefit asset - - - ( 857,000) - ( 857,000)Deferred taxation on employee benefitasset/obligation - - - 94,000 - 94,000Actuarial gains recognised in equity - - - 481,000 - 481,000

Total other comprehensive income - - 487,833 ( 282,000) - 205,833

Total comprehensive income - - 487,833 947,558 - 1,435,391

Movement between reserves:Transfer to pension equalisation reserve - - ( 194,417) 194,417 - -

Transaction with owners recorded directly in equityDividends (note 22) - - - ( 561,834) - ( 561,834)

Balances at June 30, 2012 2,174,980 7,770 1,401,883 3,650,382 7,447 7,242,462

Total comprehensive income for the year:Profit for the year - - - 1,211,244 - 1,211,244


investment - - 70,932 - - 70,932Revaluation surplus on property, plant

and equipment - 67,755 - - - 67,755Change in unrecognised employee benefit asset - - - 118,000 - 118,000Deferred taxation on employee benefit

asset/obligation - - - 30,600 - 30,600Actuarial losses recognised in equity - - - ( 220,000) - ( 220,000)

Total other comprehensive income - 67,755 70,932 ( 71,400) - 67,287

Total comprehensive income - 67,755 70,932 1,139,844 - 1,278,531

Movement between reserves:Transfer to pension equalisation reserve - - ( 107,350) 107,350 - -

Transaction with owners recorded directly in equityDividends (note 22) - - - ( 842,752) - ( 842,752)

Balances at June 30, 2013 2,174,980 75,525 1,365,465 4,054,824 7,447 7,678,241




10


Company Statement of Cash FlowsYear ended June 30, 2013


2013 2012$’000 $’000

CASH FLOWS FROM OPERATING ACTIVITIESProfit for the year 1,199,342 1,229,558Adjustments for:

Interest income ( 27,811) ( 8,665)Interest expense - 1,979Depreciation 667,803 659,743Investment written-off 1,173 -Loss/(gain) on disposal of property, plant and equipment 8,473 ( 8,043)Taxation 660,081 225,618Employee benefits expense, net 19,000 18,000

2,528,061 2,118,190Changes in:

Accounts receivable ( 513,773) ( 47,013)Due from fellow subsidiaries 218,321 276,190Inventories 269,714 116,462Accounts payable 233,662 ( 33,080)Due to fellow subsidiaries 149,150 ( 200,137)

Cash generated from operations 2,885,135 2,230,612

Pension contribution ( 17,000) ( 16,000)Interest paid - ( 2,608)Income taxes paid ( 475,235) ( 511,197)

Net cash provided by operating activities 2,392,900 1,700,807

CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of property, plant and equipment ( 647,205) ( 473,260)Investment in joint venture ( 191,500) -Proceeds from disposal of property, plant and equipment 1,423 24,460Interest received 27,811 8,665

Net cash used by investing activities ( 809,471) ( 440,135)

CASH FLOWS FROM FINANCING ACTIVITYDividends paid ( 842,752) ( 561,834)

Net increase in cash and cash equivalents 740,677 698,838

Cash and cash equivalents at beginning of year 971,137 272,299

Cash and cash equivalents at end of year 1,711,814 971,137

Comprised of –Cash and bank balances 1,710,683 969,189Short-term deposits 1,131 1,948

1,711,814 971,137




11


Group Statement of Cash FlowsYear ended June 30, 2013


2013 2012$’000 $’000

CASH FLOWS FROM OPERATING ACTIVITIESProfit for the year 1,211,244 1,229,558Adjustments for:

Interest income ( 27,811) ( 8,665)Interest expense - 1,979Depreciation 667,803 659,743Loss/(gain) on disposal of property, plant and equipment 8,473 ( 8,043)Taxation 660,081 225,618Employee benefits expense, net 19,000 18,000Share of profit in joint venture ( 11,902) -

2,526,888 2,118,190

Changes in:Accounts receivable ( 513,773) ( 47,013)Due from fellow subsidiaries 218,321 276,190Inventories 269,714 116,462Accounts payable 234,835 ( 33,080)Due to fellow subsidiaries 149,150 ( 200,137)

Cash generated from operations 2,885,135 2,230,612

Pension contribution ( 17,000) ( 16,000)Interest paid - ( 2,608)Income taxes paid ( 475,235) ( 511,197)

Net cash provided by operating activities 2,392,900 1,700,807

CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of property, plant and equipment ( 647,205) ( 473,260)Investment in joint venture ( 191,500) -Proceeds from disposal of property, plant and equipment 1,423 24,460Interest received 27,811 8,665

Net cash used by investing activities ( 809,471) ( 440,135)

CASH FLOWS FROM FINANCING ACTIVITYDividends paid ( 842,752) ( 561,834)

Net increase in cash and cash equivalents 740,677 698,838

Cash and cash equivalents at beginning of year 972,893 274,055

Cash and cash equivalents at end of year 1,713,570 972,893

Comprised of –Cash and bank balances 1,712,439 970,945Short-term deposits 1,131 1,948

1,713,570 972,893




12


Notes to the Financial StatementsJune 30, 2013

1. Identification

58% subsidiary of Udiam Holdings AB, a company incorporated in Sweden. The ultimateparent company gisteredoffice is located at 214 Spanish Town Road, Kingston 11. The principal activities of thecompany comprise the brewing, bottling and distribution of beers, stouts and spirits. The c and its subsidiaries arecollectively referred to as

The number of employees at June 30, 2013 was 455 (2012: 601) for the company and the group.

2. Basis of preparation

(a) Statement of compliance:

The financial statements are prepared in accordance with International FinancialReporting Standards (IFRS) and their interpretations, issued by the InternationalAccounting Standards Board.

Certain new, revised and amended standards and interpretations came into effect duringthe year. Based on the group current operations, none of them resulted in changes toaccounting policies or had any significant effect on the amounts and disclosures in thefinancial statements.

At the date of the authorisation of the financial statements, there were certain newstandards, amendments to standards and interpretations of existing standards, which havebeen issued are not yet effective.

The group has early adopted IFRS 10 Consolidated Financial Statements, IFRS 11 JointArrangements and IFRS 12 Disclosure of Interests in Other Entities, as well as theconsequential amendments to IAS 28 Investments in Associates and Joint Ventures(2011), with a date of initial application of July 1, 2012.

IFRS 10 Consolidated Financial Statements:

IFRS 10 introduces a new control model that is applicable to all investees; among otherthings, it requires the consolidation of an investee if the group controls the investee on the basis of de facto circumstances.

This adoption of this standard had no impact on the recognition ofinvestments in unquoted equities.




13


Notes to the Financial Statements (Continued)June 30, 2013

2. Basis of preparation (continued)

(a) Statement of compliance (continued):

IFRS 11 Joint Arrangements:

Under IFRS 11, the group classifies its interests in joint arrangements as either jointoperations or joint ventures depending on the g rights to the assets and obligationsfor the liabilities of the arrangements. When making this assessment, the group considersthe structure of the arrangements, the legal form of any separate vehicles, the contractualterms of the arrangements and other facts and circumstances. Previously, the structure ofthe arrangement was the sole focus of classification.

The group has evaluated its involvement in the joint arrangement entered into during theyear and has classified the investment as a joint venture.

Other standards, amendments and interpretations:

The group has assessed the relevance of new standards, amendments, and interpretationswhich are not yet effective and have not been early adopted, with respect to its operationsand have concluded as follows:

x IFRS 9, Financial Instruments, is effective for annual reporting periods beginning onor after January 1, 2015 (previously January 1, 2013). The standard retains butsimplifies the mixed measurement model and establishes two primary measurementcategories for financial assets: amortised cost and fair value. It eliminates the existingIAS 39 categories of held to maturity, available-for-sale and loans and receivables.For an investment in an equity instrument which is not held for trading, the standardpermits an irrevocable election, on initial recognition, to present all fair valuechanges from the investment in other comprehensive income. The standard includesguidance on classification and measurement of financial liabilities designated as fairvalue through profit or loss and incorporates certain existing requirements of IAS 39Financial Instruments: Recognition and Measurement on the recognition and de-recognition of financial assets and financial liabilities. The group is assessing theimpact the standard will have on its 2016 financial statements.

x IFRS 13, Fair Value Measurement, effective for annual reporting periods beginningon or after January 1, 2013 replaces the fair value measurement guidance containedin individual IFRSs with a single source of fair value measurement guidance. Itdefines fair value, establishes a framework for measuring fair value and sets outdisclosure r to measure fair value when it is required or permitted by other IFRSs. IFRS 13 does notintroduce new requirements to measure assets or liabilities at fair value, nor does iteliminate the practicability exceptions to fair value measurements that currently existin certain standards. It defines fair value as the price that would be received to sell anasset or paid to transfer a liability in an orderly transaction between marketparticipants at the measurement date, i.e. an exit price. The group is assessing theimpact that the standard will have on its 2014 financial statements.




14





x IAS 27 (2011), Separate Financial Statements, is effective for annual reporting periods beginning on or after January 1, 2013. The amended standard carries forwardthe existing accounting and disclosure requirements of IAS 27 (2008) for separatefinancial statements, with some minor clarifications. The requirements of IAS 28(2008) and IAS 31 for separate financial statements have been incorporated into IAS27. The group is assessing the impact that the standard may have on its 2014 financial statements.

x IAS 19, Employee Benefits, has been amended to require all actuarial gains and lossesto be recognized immediately in other comprehensive income. This change willremove the corridor method and eliminate the ability for entities to recognize allchanges in the defined benefit obligation and in plan assets in profit or loss. It alsorequires the expected return on plan assets recognized in profit or loss to becalculated based on the rate used to discount the defined benefit obligation. Theamendment also includes changes to the definitions and disclosure requirements inthe current standard. The amendment is effective for annual reporting periodsbeginning on or after January 1, 2013. While the group is currently assessing theimpact the amended standard may have on its 2014 financial statements, theelimination of the corridor method is not expected to materially affect the group, as itrecognises all actuarial gains and losses immediately in other comprehensive income.

x Improvements to IFRS 2009-2011 cycle contains amendments to certain standardsand interpretations and are effective for annual reporting periods beginning on orafter January 1, 2013. The main amendments applicable to the group are as follows:

x IAS 1, Presentation of Financial Statements is amended to clarify that only onecomparative period, which is the preceding period, is required for a completeset of financial statements. IAS 1 requires the presentation of an openingstatement of financial position when an entity applies an accounting policyretrospectively or makes a retrospective restatement or reclassification. IAS 1 has been amended to clarify that (a) the opening statement of financial positionis required only if a change in accounting policy, a retrospective restatement ora reclassification has a material effect upon the information in that statement offinancial position; (b) except for the disclosures required under IAS 8, notesrelated to the opening statement of financial position are no longer required;and (c) the appropriate date for the opening statement of financial position isthe beginning of the preceding period, rather than the beginning of the earliestcomparative period presented.

x IAS 16, Property, Plant and Equipment is amended to clarify that the6 is now considered in

determining whether spare parts, stand-by equipment and servicing equipmentshould be accounted for under the standard. If these items do not meet thedefinition, then they are accounted for using IAS 2 Inventories.




15





x Improvements to IFRS 2009-2011 (continued)

x IAS 32, Financial Instruments: Presentation is amended to clarify that IAS 12Income Taxes applies to the accounting for income taxes relating todistributions to holders of an equity instrument and transaction costs of anequity transaction.

The group is assessing the impact that the amendments may have on its 2014 financial statements.

(b) Basis of measurement:

The financial statements are prepared on the historical cost basis, except for available-for-sale investments (other than those for which a reliable measure of fair value is notavailable), and investment properties which are carried at fair value.

(c) Functional and presentation currency:

Thefunctional currency. All financial information presented has been rounded to the nearestthousand, unless otherwise indicated.

(d) Use of estimates and judgements:

The preparation of the financial statements requires management to make judgements,estimates and assumptions that affect the application of accounting policies, the reportedamounts of assets, liabilities, contingent assets and contingent liabilities at the reportingdate and the income and expenses for the year then ended. Actual amounts could differfrom those estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisionsto accounting estimates are recognised in the period in which the estimate is revised, ifthe revision affects only that period, or in the period of the revision and future periods ifthe revision affects current and future periods.




16




(d) Use of estimates and judgements (continued):

The significant areas of estimation uncertainty and critical judgements in applyingaccounting policies that have the most significant effect on the amounts recognised in thefinancial statements are in respect of the measurement of defined benefit obligations andthe fair value of certain available-for-sale investments.

(i) Pension and other post-employment benefits

The amounts recognised in the statements of financial position, income statementand statement of comprehensive income for pension and other post-employmentbenefits are determined actuarially using several assumptions. The primaryassumptions used in determining the amounts recognised include expected long-term return on plan assets, the discount rate used to determine the present valueof estimated future cash flows required to settle the pension and other post-retirement obligations and the expected rate of increase in medical costs for post-retirement medical benefits.

The expected return on plan assets is assumed considering the long-termhistorical returns, asset allocation and future estimates of long-term investmentreturns. The discount rate is determined based on the estimate of yield on long-term government securities that have maturity dates approximating the terms of

igation. In the absence of such instruments in Jamaica, it hasbeen necessary to estimate the rate by extrapolating from the longest-tenuresecurity on the market. The estimate of expected rate of increase in medical costsis determined based on inflationary factors.

(ii) Fair value of available-for-sale investments

The carrying amount for available-for-sale investments is determined by aprofessional valuator using a relevant market-based approach. Certainassumptions are made in respect of profitability, future tax rates, applicablemultiples and discount rates for a minority share in an unquoted investment asdetailed in note 4(a).

(iii) Investment property

Investment property reflect revalued amounts, based on market valuations done byexternal independent valuers. On the instructions of management, the valuers have used a direct sales comparison approach to determine fair market value. Thisapproach is based on the principle of substitution, whereby there is a purchaserwith perfect knowledge of the property market who would pay no more for theproperty than the cost of acquiring an existing property, comparable with others ofsimilar design and utility which were sold in the recent past.




17




(d) Use of estimates and judgements (continued):

(iii) Investment property (continued)

However, as no two properties are exactly alike, adjustments are made by thevaluers to reflect differences between properties. Consequently, the determinationof fair market value of the property requires that the valuers analyse the differencesin relation to age and physical condition, time of sale, land to building ratio, theadvantages and disadvantages of the location and other functional gains to bederived from the property, and make necessary adjustments.

(iv) Allowance for impairment losses on accounts receivable

In determining amounts recorded for impairment losses in the financial statements,management makes judgements regarding indicators of impairment, that is,whether there are indicators that there may be a measurable decrease in theestimated future cash flows from receivables, for example, due to default oradverse economic conditions. Management also makes estimates of the likelyestimated future cash flows from impaired receivables as well as the timing of suchcash flows.

(v) Net realizable value of inventories

Estimates of net realizable value are based on the most reliable evidence availableat the time the estimates are made, of the amount the inventories are expected torealize. These estimates take into consideration fluctuations of price or costdirectly relating to events occurring after the reporting date to the extent that suchevents confirm conditions existing as at that date. Estimates of net realizable value also take into consideration the purpose for which the inventory is held.

It is reasonably probable, based on existing knowledge, that outcomes within the nextfinancial year that are different from these assumptions could require a materialadjustment to the carrying amounts reflected in the financial statements.

3. Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented inthese financial statements and have been applied consistently by the group.

(a) Basis of consolidation:

(i) Subsidiaries

Subsidiaries are entities controlled by the group. The group controls an entity whenit is exposed to, or has rights to, variable returns from its involvement with theentity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidatedfinancialstatements from the date that control commences until the date that control ceases.




18



3. Significant accounting policies (continued)

(a) Basis of consolidation (continued):

(i) Subsidiaries (continued)

The consolidated financial statements include the financial statements of thecompany and its subsidiaries, made up to June 30, 2013. The wholly-owned subsidiaries, incorporated in Jamaica are as follows:-

D & G Wines Limited (In liquidation)Jamaica Metal Lithographers Limited (In liquidation)Foods of Jamaica (Export) LimitedRed Stripe Brewing Company Limited [formerly GJL Limited]

These companies are currently inactive and the shareholdings are the same for 2013 and 2012previously reduced to $Nil.

(ii) Associates

Associates are those entities in which the group has significant influence, but notcontrol or joint control, over the financial and operating policies. Significantinfluence is presumed to exist when the group holds between 20% and 50% of thevoting power of another entity.

Investments in associates are accounted for using the equity method and arerecognised initially at cost. The cost of the investments includes transaction costs.

The consolidated financial statements include the g share of the profit or lossand other comprehensive income of equity-accounted investees, after adjustmentsto align the accounting policies with those of the group, from the date thatsignificant influence commences until the date that significant influence ceases.

When the g share of losses exceeds its interest in an equity-accountedinvestee, the carrying amount of the investment, including any long-term intereststhat form part thereof, is reduced to zero, and the recognition of further losses isdiscontinued except to the extent that the group has an obligation or has made payments on behalf of the investee.

(iii) Joint arrangements

Joint arrangements are arrangements of which the group has joint control, established by contracts requiring unanimous consent for decisions about the

ed andaccounted for as follows:

Joint operation when the group has rights to the assets, and obligations forthe liabilities, relating to an arrangement, it accounts for each of its assets,liabilities and transactions, including its share of those held or incurred jointly,in relation to the joint operation.




19




(a) Basis of consolidation (continued):

(iii) Joint arrangements (continued)

Joint venture when the group has rights only to the net assets of thearrangements, it accounts for its interest using the equity method, as forassociates in (ii) above,

(iv) Transactions eliminated on consolidation:

Intragroup balances and any unrealised gains and losses or income and expensesarising from intragroup transactions, are eliminated in preparing the consolidatedfinancial statements. Unrealised gains arising from transactions with associates and

entity. Unrealised losses are eliminated in the same way as unrealised gains, butonly to the extent that there is no evidence of impairment.

(b) Financial instruments:

A financial instrument is any contract that gives rise to a financial asset of one entity anda financial liability or equity instrument of another entity.

Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, short-term deposits, related partybalances, accounts payable and long-term liabilities.

Non-derivative financial instruments are recognised initially at fair value. Subsequent toinitial recognition non-derivative financial instruments are measured as described below.

A financial instrument is recognised when the group becomes a party to the contractualpcontractual rights to the cash flows from the financial assets expire or when the grouptransfers the financial asset to another party without retaining control or substantially all

obligations specified in the contract expire, or are discharged or cancelled.

Cash and cash equivalents comprise cash balances and call deposits. Short-term deposits,

management, are included in cash and cash equivalents for the purpose of the statementof cash flows.




20




(b) Financial instruments (continued):

Non-derivative financial instruments are subsequently measured as follows:

(i) Unquoted equity investments are classified as available-for-sale financial assetsand are measured at fair value, except that where fair value cannot be reliablydetermined, they are measured at cost. Gains and losses arising from changes infair value, except for impairment losses are recognised in other comprehensive income. When an investment is derecognised, the cumulative gain or loss in othercomprehensive income is transferred to profit or loss. Fair value is estimated by aprofessional valuator using an appropriate valuation technique; maintainableearnings approach or by reference to recent bid price [note 4(a)].

(ii) Debt securities are classified as loans and receivables and, after initial recognition,are measured at amortised cost, using the effective interest method, less impairmentlosses.

(iii) Other non-derivative financial instruments, including cash and cash equivalents,short-term deposits, trade and other receivables, related party balances, accountspayable and long-term liabilities, are measured at amortised cost using the effective interest method, less any impairment losses in respect of financial assets.

(c) Investment properties:

Investment properties are measured at fair value determined annually by an independentregistered valuator or the directors (note 6). Fair value is based on current prices in anactive market for similar properties in the same location and condition. Any gain or lossarising from changes in fair value is recognised in profit or loss.

(d) Property, plant and equipment:

(i) Items of property, plant and equipment are measured at cost, less accumulated depreciation and impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of theasset. The cost of self-constructed assets includes the cost of materials and directlabour and any other costs directly attributable to bringing the asset to a working condition for its intended use. Purchased software that is integral to thefunctionality of the related equipment is capitalised as part of that equipment.

Where parts of an item of property, plant and equipment have different useful lives,they are accounted for as separate items of property, plant and equipment.



DESNOES & GEDDES LIMITED21




(d) Property, plant and equipment (continued):

The group recognises in the carrying amount of an item of property, plant and equipmentthe cost of replacing part of such an item when that cost is incurred, if it is probable thatthe future economic benefits embodied with the item will flow to the group and the costof the item can be measured reliably. The cost of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

(ii) Depreciation:

Depreciation is calculated on the straight-line basis at annual rates to write down the carrying value of each asset to its estimated residual value over the period of its expected useful life. Annual rates are as follows:

Buildings 2%-2½%Plant and equipment 2%-12½%Furniture, fixtures and computer equipment 25%Vending equipment 20%Returnable bottles 20%Returnable crates 10%

The depreciation methods, useful lives and residual values are reassessed annually.

(e) Employee benefits:

Employee benefits are all forms of consideration given by the group in exchange forservice rendered by employees. These include current or short-term benefits such assalaries, bonuses, NIS contributions, annual leave, and non-monetary benefits such asmedical care and housing, post-employment benefits such as pension and other long-termemployee benefits such as termination benefits.

Short-term employee benefits are recognised as a liability, net of payments made, andcharged as expense. The expected cost of vacation leave that accumulates is recognised when the employee becomes entitled to the leave. Post employment benefits areaccounted for as described below.

Employee benefits, comprising pensions and other post-employment obligations includedin the financial statements, have been actuarially determined by a qualified independent

the valuation-

employment benefit asset and obligation as computed by the actuary. In carrying out theiraudit, the auditors




22




(e) Employee benefits (continued):

-benefit pension plan is calculated byestimating the amount of future benefits that employees have earned in return for theirservice in the current and prior periods; that value is discounted to determine the presentvalue, and the fair value of any plan assets is deducted. The discount rate is determinedby reference to the yield at the reporting date on long-term government bonds with

performed by a qualified actuary, using the projected unit credit method.

When the benefits of the plan are improved, the portion of the increased benefit relatingto past service by employees is recognised as an expense in profit of loss on the straight-line basis over the average period until the benefits become vested. To the extent that thebenefits are vested immediately, the expense is recognised immediately in profit or loss.

The group recognises all actuarial gains and losses directly in equity.

When the fair value of plan assets exceeds the present value of the obligation, a pensionasset is recorded to the extent of economic benefits which can be derived in the form ofreduction in future contributions to the plan.

The group also provides post-retirement health benefits to employees upon retirement.The expected costs of these benefits are accrued over the period of employment, using amethodology similar to that for the defined-benefit pension plan and the present value offuture benefits at the reporting date is shown as an obligation on the statement offinancial position.

(f) Inventories:

Inventories are stated at the lower of cost and net realisable value. The cost of inventoriesis based mainly on standard cost (which approximates to actual on a first-in-first-outbasis). Standard cost, where applicable, includes an appropriate share of productionoverheads based on normal operating capacity. Net realisable value is the estimatedselling price in the ordinary course of business, less estimated costs of completion andselling expenses.

(g) Taxation:

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to itemsrecognised in other comprehensive income, in which case it is recognised in othercomprehensive income.

Current tax is the expected tax payable on the taxable income for the year, using tax ratesenacted at the reporting date, and any adjustment to tax payable in respect of previousyears.




23




(g) Taxation (continued):

Deferred tax is provided for temporary differences between the carrying amounts ofassets and liabilities for financial reporting purposes and the amounts used for taxationpurposes. The amount of deferred tax provided is based on the expected manner ofrealisation or settlement of the carrying amount of assets and liabilities, using tax ratesenacted at the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxableprofits will be available against which the asset can be utilised. Deferred tax assets arereduced to the extent that it is no longer probable that the related tax benefit will berealised.

(h) Provisions:

A provision is recognised in the statement of financial position when the group has alegal or constructive obligation as a result of a past event, it is probable that an outflow ofeconomic benefits will be required to settle the obligation and a reliable estimate of theamount can be made. If the effect is material, provisions are determined by discountingthe expected future cash flows at a pre-tax rate that reflects current market assessments ofthe time value of money and, where appropriate, the risks specific to the liability.

(i) Impairment:

(i) Financial assets:

A financial asset is considered to be impaired if objective evidence indicates thatone or more events have had a negative effect on the estimated future cash flows ofthat asset.

An impairment loss in respect of a financial asset measured at amortised cost iscalculated as the difference between its carrying amount and the present value ofthe estimated future cash flows discounted at the original interest rate. Receivableswith a short duration are not discounted. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value.

Individually significant financial assets are tested for impairment on an individualbasis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in profit or loss. Any cumulative loss inrespect of an available-for-sale financial asset recognised previously in othercomprehensive income is transferred to profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an eventoccurring after the impairment loss was recognised. For financial assets measuredat amortised cost, the reversal is recognised in profit or loss. For available-for-salefinancial assets that are equity securities, the reversal is recognised in othercomprehensive income.




24



3. Significant accounting policies (continued)(i) Impairment (continued):

(ii) Non-financial assets:

-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash in flows that largely areindependent from other assets and groups. Impairment losses are recognised inprofit or loss.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, theestimated future cash flows are discounted to their present value using a pre-taxdiscount rate that reflects current market assessments of the time value of moneyand the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Impairment losses recognised in prior periods are assessed at each reporting datefor any indications that the loss has decreased or no longer exists. An impairmentloss is reversed if there has been a change in the estimates used to determine therecoverable amount. An impairment loss is reversed only to the extent that theassets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had beenrecognised.

(j) Revenue:

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts, volume rebates andspecial consumption tax. Revenue is recognised in the income statement when thesignificant risks and rewards of ownership have been transferred to the buyer, recovery ofthe consideration is probable, the associated costs and possible return of goods can beestimated reliably and there is no continuing management involvement with the goods.

(k) Finance income and costs:

Finance income comprises interest income on funds invested, dividend and foreign exchange gains. Interest income is recognised as it accrues, using the effective interest

ivepayment is established.

Finance costs comprise interest expense on borrowings and foreign currency losses.Borrowing costs are recognised in profit or loss using the effective interest method.




25



3. Significant accounting policies (continued)(l) Foreign currencies:

Transactions in foreign currencies are converted at the foreign exchange rates ruling atthe dates of the transactions. Monetary assets and liabilities denominated in foreigncurrencies, which are stated at historical cost, are translated at the foreign exchange rateruling at the reporting date. Foreign exchange differences arising from fluctuations inexchange rates are recognised in the income statement. Non-monetary assets andliabilities denominated in foreign currencies, which are stated at historical cost, aretranslated at the foreign exchange rates ruling at the dates of the transactions. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fairvalue are translated to the functional currency at the foreign exchange rates ruling at thedates that the values were determined.

(m) Segment reporting:

An operating segment is a component of the group that engages in business activitiesfrom which it may earn revenues and incur expenses, including revenues and expenses

about resources to be allocated to the segment and assess its performance, and for whichdiscrete financial information is available.

(n) Earnings per stock unit:

The group presents basic earnings per stock unit (EPS) data for its ordinary stock. BasicEPS is calculated by dividing the profit or loss attributable to ordinary stockholders of thecompany by the weighted average number of ordinary stock units outstanding during the year.

4. Investments

(a) Investments comprise:Company Group

2013 2012 2013 2012

Available-for-sale:Unquoted

Brasserie Nat (i) 487,925 487,925 487,925 487,925Windward and Leeward

Brewery Limited (WLBL)(ii) 472,729 401,797 472,729 401,797Other - 1,173 - -

Loans and receivables - - 18 18

960,654 890,895 960,672 889,740

(i) This represents a 5% interest in the investee. The fair value of the investment hasbeen determined by a professional business valuator with reference to a recent bidmade by a third party for the shares.




26



4. Investments (continued)

(a) Investments comprise (continued):

(ii) This represents a 10% interest in the investee. The investment in WLBL is carriedat fair value determined by a professional business valuator, using a maintainableearnings approach.

Changes in the fair value of the investments are recognised in other comprehensiveincome.

(b) Associated companies, incorporated in Jamaica, unless stated otherwise, are as follows:

interest2013 2012

% %

West Indies Yeast Company Limited 28.0 28.0Jamaica Extracts Limited 20.0 20.0Red Stripe Marketing Company Limited

(Resident in the United Kingdom) 50.0 50.0

These companies are inactive.

5. Investment in joint ventureThe group jointly controls Celebration Brands Limited (CBL), in which it holds a 50% shareholding and is party toon significant strategic and operating decisions. CBL is engaged in the distribution of theproducts of the venturers in Jamaica. This involves taking orders, delivery and collection,management of credit risk, maintaining coolers and trade dispensing equipment.

CBL is structured as a separate vehicle and provides the group rights to the net assets of theentity, accounted for using the equity method.

In accordance with the agreement under which CBL is established, the group and the otherinvestor may make additional capital contributions as determined by the Board of CBL to bereasonably necessary for the the capital call, the other may advance the funds and treat such advance as a deficiency loan tothe venture, which would be repayable before any distributions to the non-contributing party.This contingency has not been recognised in the consolidated financial statements.

The company The group2013 2012 2013 2012

Shares, at cost 191,500 - 191,500 -Share of accumulated profits - - 11,902 -

191,500 - 203,402 -




27



5. Investment in joint venture (continued)

The following tables summarise the financial information of CBL, as adjusted for anydifferences in accounting policies.

2013 201200

Non-current assets 52,101 -Current assets 1,542,524 -Non current liabilitiesCurrent liabilities (1,187,821) -

Net assets 406,804 -

2013 2012

Revenue 1,816,482 -Profit for the period 23,804 -

6. Investment properties

Company and Group2013 2012

Balance as at beginning of year 152,650 152,650Transfer from property, plant & equipment 123,000 -

Balance as at end of year 275,650 152,650

The carrying amount of investment properties is the fair value of the properties as determinedin prior years by Property Consultants Limited and Breakenridge & Associates, registeredindependent valuators having an appropriate recognised professional qualification and recentexperience in the locations and category of the properties being valued. In estimating the fairvalues of the properties at the reporting date, the directors have used the independent valuationsas a point of reference.

The transfer during the year represents the value of two (2) distribution centers which are to beleased to the joint venture (see note 5).

No income was earned from these properties during the year. Expenses of $349,000 wereincurred in relation to these properties.




28



7. Property, plant and equipmentCompany and Group

Furniture,Freehold Plant fixtures and Constructionland and and computer in Returnablebuildings equipment equipment progress (CIP) packaging Total

$Cost:

June 30, 2011 1,689,937 4,979,240 611,918 386,348 1,683,277 9,350,720Additions 2,328 51,931 5,293 143,227 270,481 473,260Transfers 35,851 346,366 3,666 (385,883) - -Disposals/write- off ( 19,574) ( 17,409) ( 157) - ( 4,550) ( 41,690)

June 30, 2012 1,708,542 5,360,128 620,720 143,692 1,949,208 9,782,290Additions 4,368 40,325 3,997 291,216 307,299 647,205Revaluation of building reclassified

to investment property 67,755 - - - - 67,755Offset of accumulated depreciation on

building reclassified to investmentproperty ( 23,687) - - - - ( 23,687)

Reclassified to investment property ( 114,472) - - ( 8,528) - ( 123,000)Transfers - 127,946 6,224 (134,170) -Disposals/write- off - - ( 19,227) - ( 39,716) ( 58,943)

June 30, 2013 1,642,506 5,528,399 611,714 292,210 2,216,791 10,291,620

Depreciation and impairment losses:June 30, 2011 88,255 3,002,728 302,071 - 1,080,422 4,473,476Charge for the year 42,165 311,344 96,136 - 210,098 659,743Eliminated on disposals/write-off ( 6,650) ( 17,753) ( 217) - ( 654) ( 25,274)June 30, 2012 123,770 3,296,319 397,990 - 1,289,866 5,107,945Charge for the year 41,548 326,903 71,572 - 227,780 667,803Eliminated on disposals/write-off ( 23,687) - ( 9,331) - ( 4,745) ( 37,763)

June 30, 2013 141,631 3,623,222 460,231 - 1,512,901 5,737,985Carrying amounts:

June 30, 2013 1,500,875 1,905,177 151,483 292,210 703,890 4,553,635June 30, 2012 1,584,772 2,063,809 222,730 143,692 659,342 4,674,345June 30, 2011 1,601,682 1,976,512 309,847 386,348 602,855 4,877,244

8. Employee benefits asset/obligation

The company operates a defined-benefit pension scheme which is open to all permanentemployees and is managed by an independent fund manager. The scheme is funded byemployee contributions at rates varying between 6% and 10% of salary and employercontributions at rates recommended by independent actuaries from time to time. Retirement andother benefits are based on average salary for the last three years of pensionable service. Thecompany also provides post-employment medical benefits to employees upon retirement.

(a) Employee benefit asset/(obligation):Company and Group Company and Group

Pension asset Medical obligation2013 2012 2013 2012

Present value of funded obligation (3,889,000) (3,559,000) (92,000) (104,000)Fair value of plan assets 5,892,000 5,796,000 - -Asset not recognised due to limitation (1,324,000) (1,442,000) - -

Net asset/(obligation) at end of year 679,000 795,000 (92,000) (104,000)




29



8. Employee benefits asset/obligation (continued)

(b) Movements in the present value of funded and unfunded obligations:

Company and Group Company and GroupPension asset Medical obligation

2013 2012 2013 2012

Balance at beginning of year (3,559,000) (3,605,000) (104,000) (128,000)Benefits 219,000 176,000 4,000 4,000Service and interest costs ( 405,000) ( 450,000) ( 18,000) ( 23,000)Contributions ( 102,000) ( 100,000) - -Actuarial (loss)/gain ( 42,000) 420,000 26,000 43,000

Balance at end of year (3,889,000) (3,559,000) ( 92,000) (104,000)

(c) Movement in pension plan assets:Company and Group

2013 2012

Fair value of plan assets at July 1 5,796,000 5,387,000Contributions paid 115,000 112,000Expected return on plan assets 404,000 455,000Benefits paid ( 219,000) ( 176,000)Actuarial gain ( 204,000) 18,000

Fair value of plan assets on June 30 5,892,000 5,796,000

Plan assets consist of the following:Equities 1,966,000 2,270,000Foreign currency 753,000 536,000Fixed income securities 1,931,000 1,793,000Money market securities - 190,000Real estate 1,242,000 1,007,000

5,892,000 5,796,000




30



8. Employee benefit asset/obligation (continued)

(d) Income recognised for the company and group:

Company and GroupPension asset Medical obligation

2013 2012 2013 2012

Current service costs 67,000 99,000 8,000 10,000Interest on obligation 338,000 351,000 10,000 13,000Expected return on plan assets (404,000) (455,000) - -

1,000 ( 5,000) 18,000 23,000

Actual return on plan assets 3.0% 9.0%

(e) Actuarial gains and losses recognised in other comprehensive income:

Company and Group Company and GroupPension asset Medical obligation

2013 2012 2013 2012$

Cumulative amount at the beginningof the year ( 62,000) 376,000 (39,000) 4,000

Recognised during the year 246,000 (438,000) (26,000) (43,000)Cumulative amount at the end of

the year 184,000 ( 62,000) (65,000) (39,000)

(f) Principal actuarial assumptions at the reporting date (expressed as weighted averages):

2013 2012% %

Discount rate 10 10Expected return on plan assets 7 7Future salary increases 5.5 5Future pension increases 4.5 4Medical claims growth 8.5 8

(i) The expected long-term rate of return is based on market expectation of inflation of5.5% (2012: 5%) plus a margin for real returns (2%) on a balanced portfolio ofequities and bonds.

(ii) Assumptions regarding future mortality are based on American 1994 GroupAnnuitant Mortality (GAM94) table.

(iii)the next financial year is $72,000,000.




31



8. Employee benefit asset/obligation (continued)

(g) Assumed health care cost trends have a significant effect on the amounts recognised inprofit or loss. A one percentage point change in assumed healthcare cost trend rateswould have the following effects:

One Onepercentage percentage

point increase point decrease$ $

Effect on the aggregate service and interest cost 23,000,000 15,000,000Effect on the defined-benefit obligation 109,000,000 78,000,000

The company expects to contribute approximately $5,000,000 to the plan for year endingJune 30, 2014 in respect of health benefits.

(h) Historical information

(i) Defined benefit pension plan:

2013 2012 2011 2010 2009

Present value of defined benefit obligation (3,889,000) (3,559,000) (3,605,000) (3,357,000) (2,261,000)Fair value of plan assets 5,892,000 5,796,000 5,387,000 4,922,000 4,636,000

Surplus 2,003,000 2,237,000 1,782,000 1,565,000 2,375,000

Experience adjustments on plan liabilities 42,000 ( 420,000) ( 95,000) 765,000 ( 645,000)Experience adjustments on plan assets 204,000 ( 18,000) ( 105,000) 259,000 837,000

(ii) Post-employment medical benefits:2013 2012 2011 2010 2009

Present value of defined benefit obligation 92,000 104,000 128,000 86,000 69,000Experience adjustments on plan liabilities 26,000 43,000 30,000 3,000 (19,000)

9. Accounts receivableCompany and Group

2013 2012

Trade 1,037,191 531,418 Other 126,529 106,727

1,163,720 638,145Less: allowance for doubtful debts ( 43,418) ( 31,616)

1,120,302 606,529




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9. Accounts receivable (continued)

The movement in the allowance for doubtful debtors is as follows:


Balance at July 1, 2012 31,616 35,641Debts recovered ( 2,533) ( 5,631)Debts written-off trade receivable ( 7,412) ( 4,493)Charge for the year trade receivable 21,747 6,099

Balance at June 30, 2013 43,418 31,616

10. Due from/to fellow subsidiaries

Due from:

This represents balances due on exports to related companies within the Diageo group.

Due to:

This represents balances with Diageo group of companies arising in the ordinary course ofbusiness. The balances are unsecured and interest-free.

11. InventoriesCompany and Group

2013 2012

Raw materials 140,296 122,475Work-in-progress 159,918 175,283Finished goods 262,319 383,751Consumables 267,609 383,376Plant and equipment spares 190,742 190,742

1,020,884 1,255,627

12. Accounts payable

Company Group2013 2012 2013 2012

Trade 610,204 639,366 610,204 639,366Staff accruals 660,832 397,621 660,832 397,621Other 745,534 745,921 749,413 748,629

2,016,570 1,782,908 2,020,449 1,785,616




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13. Share capital

Company and GroupAuthorised:

2,810,500,000 ordinary shares of no par value2013 2012

Issued and fully paid:2,809,170,386 ordinary stocks of no par value 2,174,980 2,174,980

14. Capital reserves

Company Group2013 2012 2013 2012

Realised gain on disposal ofproperty, plant and equipment - - 7,770 7,770

Revaluation surplus on property,plant and equipment 67,755 - 67,755 -

67,755 - 75,525 7,770

15. Other reservesCompany and Group

2013 2012

Investment revaluation reserve [see (a) below] 954,565 883,633Pension equalisation reserve [see (b) below] 410,900 518,250

1,365,465 1,401,883

(a) This represents the unrealised gains on the revaluation of available-for-sale investments.

(b) This represents the net employee benefits asset of $587,000,000 (2012: $691,000,000),less deferred tax of $176,100,000 (2012: $172,750,000), arising on the actuarial

the scheme are shown in the company and group income statements and statements ofcomprehensive income, then transferred to this reserve.

16. Long-term liabilities

This represents loans from subsidiaries that are unsecured, bore no interest for 2013 and 2012, and have no fixed repayment date.






17. Deferred tax liabilitiesCompany and group

2013Balance at Recognised Recognised Balance atJuly 1, 2012 in income in equity June 30, 2013

[Note 20(a) (ii)]

Accrued vacation leave ( 7,929) ( 3,847) - ( 11,776)Unrealised foreign exchange (loss)/gain ( 212) 3,813 - 3,601Property, plant and equipment 278,312 90,030 - 368,342Employee benefits asset 172,750 33,950 (30,600) 176,100

442,921 123,946 (30,600) 536,267

2012

Balance at Recognised Recognised Balance at July 1, 2011 in income in equity June 30, 2012

[Note 20(a) (ii)]

Accrued vacation leave ( 8,534) 605 - ( 7,929)Unrealised foreign exchange loss ( 4,336) 4,124 - ( 212)Property, plant and equipment 420,376 (142,064) - 278,312Interest payable ( 210) 210 - -Employee benefits asset 356,333 ( 89,583) (94,000) 172,750

763,629 (226,708) (94,000) 442,921

18. Gross sales

Gross sales represents the invoiced value of goods and services, including Special ConsumptionTax (SCT) and royalties but excluding General Consumption Tax (GCT).






19. Profit before taxation

Profit before taxation is stated after charging/(crediting):


6,600 5,663Depreciation 667,803 659,743

Fees 6,774 5,612Management remuneration 101,275 93,412

Staff costs 2,246,865 1,947,516Redundancy expenses 311,941 186,823Foreign exchange (gains)/losses ( 30,343) 11,736Dividends received on overseas investments ( 184,132) ( 59,514)Royalties earned ( 556,193) ( 341,816)Bad debts 19,214 220Inventories written off 28,117 31,491

20. Taxation

(a)adjusted for taxation purposes, and comprises:

Company and group2013 2012

(i) Current tax expense:Income tax at 30% 544,174 454,722Prior year over-provision ( 8,039) ( 2,396)

536,135 452,326(ii) Deferred taxation:

Origination and reversal of temporarydifferences (note 17) 123,946 (226,708)

Actual taxation in income statement 660,081 225,618




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20. Taxation (continued)

(b) Reconciliation of actual taxation charge:Company

2013 2012

Profit before taxation 1,859,423 1,455,176

Computed "expected" tax charge at 30% 557,827 485,059Difference between profit for financial statements

and tax reporting purposes on:Depreciation charge and capital allowances 38,592 ( 53,634)Dividend income ( 24,271) ( 19,930)Effect of change in tax rates 88,584 ( 190,960)Prior year overprovision ( 8,039) ( 2,396)Other 7,388 7,479

Actual taxation charge 660,081 225,618

Group2013 2012

Profit before taxation 1,871,325 1,455,176

Computed "expected" tax charge a 561,398 485,059Difference between profit for financial statements

and tax reporting purposes on:Depreciation charge and capital allowances 38,592 ( 53,634)Dividend income ( 24,271) ( 19,930)Effect of change in tax rates 88,584 ( 190,960)Prior year overprovision ( 8,039) ( 2,396)Other 3,817 7,479

Actual taxation charge 660,081 225,618

21. Earnings per stock unit

The calculation of earnings per stock unit is $1,211,244,000 (2012: $1,229,558,000) and 2,809,170,386 stock units, being the number ofstock units in issue for the year.






22. Dividends2013 2012$'000 $'000

Ordinary dividends:First interim dividend: 20¢ (2012: 20¢)

per stock unit gross 561,834 561,834

Second interim dividend: 10¢ per stock unit gross 280,918 -

842,752 561,834

23. Related party balances and transactions

A related party is a person or entity that is related to the entity that is preparing its financialstatements (referred to in IAS 24 Related Party Disclosures

A party is related to a reporting entity, if:

(a) ing 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 meansthat 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 jointventure 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 entityis 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).

A related party transaction is a transfer of resources, services or obligations between related parties,regardless of whether a price is charged.




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23. Related party balances and transactions (continued)

During the year, the (income)/expenses, arising in the ordinary course of business with relatedparties, were as follows:

2013 2012

Fellow subsidiaries:Sales (1,035,875) (2,769,490)Royalty income ( 468,217) ( 319,501)Royalty expense 125,361 101,966Marketing cost 37,440 351,839Purchases of raw materials and finished goods 227,143 150,728

Joint venture:Sales (1,254,345) -General, selling and administration espenses 88,101 -Share of profit 11,902 -Accounts receivable 614,432 -Accounts payable ( 24,409) -

Key management personnel compensation:Short-term employment benefits 166,217 135,974Post-employment benefits ( 38) 1,000

The statement of financial position includes balances arising in the ordinary course of businesswith related parties as follows:

2013 2012

Key management personnel:Accounts receivable 222 263

24. Segment reporting

The identification of business segments is reporting structure. The group is managed based on its operating strategic business segmentswhich are domestic and export. Both segments are involved in the bottling and distribution ofpremium drinks.

Segment results, assets and liabilities include items directly attributable to a segment, as well asthose that can be allocated on a reasonable basis.

Domestic Export Group2013 2012 2013 2012 2013 2012

Gross sales 10,803,071 9,749,925 1,929,320 3,404,128 12,732,391 13,154,054Special Consumption Tax ( 2,362,977) (2,122,350) - - ( 2,362,977) ( 2,122,350)Net external revenue 8,440,094 7,627,575 1,929,320 3,404,128 10,369,414 11,031,704Segment profit 2,491,593 2,467,483 833,846 404,617 3,325,439 2,872,100General, selling and

administration expenses ( 1,336,424) ( 1,293,285)Other income/ expenses ( 129,930) ( 120,368)Trading profit carried forward 1,859,085 1,458,447




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24. Segment reporting (continued)Domestic Export Group

2013 2012 2013 2012 2013 2012

Trading profit brought forward 1,859,085 1,458,447Employee benefits expense ( 19,000) ( 18,000)

Interest income 27,811 8,665

Share of profit in joint ventre 11,902 -(Loss)/gain on disposal of property,

plant and equipment ( 8,473) 8,043Profit before finance cost 1,871,325 1,457,155Finance cost - ( 1,979)Profit before taxation 1,871,325 1,455,176Taxation ( 660,081) ( 225,618)Profit for the year 1,211,244 1,229,558Segment assets 10,845,105 9,883,095Segment liabilities 3,166,864 2,640,633

Depreciation 667,803 659,743

Capital expenditure 647,205 473,260

Segment information below represents segment revenue based on the country receiving thebenefit of our products. Segment assets are based on the geographic location of assets.

2013 2012

Jamaica 8,440,094 7,753,020United States 565,720 2,300,160Canada 404,438 372,472Europe 108,974 355,334Great Britain 424,959 -Caribbean 288,403 248,360Other 136,826 2,358

10,369,414 11,031,704

All non-current assets are located in Jamaica.

25. Contingent liabilities

( i) At the reporting date, the company had a contingent liability in respect of letters of creditissued in favour of the Collector of Customs, amounting to $47,500,000 (2012:$47,500,000), in the ordinary course of business.




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25. Contingent liabilities (continued)

(ii) Two claims amounting to $27.4 million in total have been made against the company byformer employees. Defence has been filed against these claims and no provision has beenmade in the financial statements with respect to these amounts as the managementexpects the defence to be successful.

26. Financial risk management

The company has exposure to credit risk, liquidity risk, and market risk from its use of financialinstruments and its operations. each of the above risks, the g ectives, policies and processes for measuring and

included throughout these financial statements.

The Board of Directors has overall responsibility for the establishment and oversight of thea Risk Management

policies. The group, through its training and management standards and procedures, aims todevelop a disciplined and constructive control environment in which all employees understandtheir roles and obligations.

(i) Credit risk:

Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally fromthe investments, cash resources and receivables from customers. The primaryconcentration of credit risk is within trade receivables, which is mitigated by the performance of regular credit evaluation of customers.

Trade receivables:

Appropriate credit checks, references and analyses are performed and/or received in orderxisting credit

limits. Customers who are in receivership or liquidation or exceeding their credit limitsare identified and the appropriate actions taken. Key performance indicators arereviewed at least monthly, including the amount of cash collected, average debtcollection period, percentage of customers with overdue balances and debts deemed uncollectible.

Credit limits and group limits for all customers are reviewed at least annually, against thecredit risk and sales department

information.






26. Financial risk management (continued)

(i) Credit risk (continued):

Cash and cash equivalents:

The group maintains cash resources with reputable financial institutions. The credit riskis considered to be low.

No allowance for impairment is deemed necessary.

Exposure to credit risk:

The carrying amount of financial assets on the statement of financial position represents the maximum exposure to credit risk at the reporting date.

The maximum exposure to credit risk for trade receivables, less allowance for doubtfuldebts, at the reporting date by type of customer was:

Company and group2013 2012$

On-trade 96,407 72,045Off-trade 833,507 385,113Export 54,127 42,643Other 9,732 -

993,773 499,801

2013 2012Gross Impairment Gross Impairment

Not past due 988,429 ( 3,648) 499,802 -Past due 31-60 days 16,718 ( 7,726) - -Past due 61-90 days 4,190 ( 4,190) - -More than 90 days 27,854 (27,854) 31,616 (31,616)

Total 1,037,191 (43,418) 531,418 (31,616)

Management makes specific doubtful allowance, irrespective of ageing for certain tradereceivables, after assessing the circumstances relating to those receivable. The majorityof the overall trade receivable balance relates to customers that have a good record ofpayment. The balance with the joint venture company, Celebration Brands Limited,accounts for approximately 60% of the trade receivable balance.




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(i) Credit risk (continued):

Exposure to credit risk (continued):

During 2013, the company and group did not renegotiate the terms of trade receivableswith any of its customers.

The allowance account in respect of trade receivables is used to record impairment losses, unless the management is satisfied that no recovery of the amount owing is possible. Atthat point, the amount considered irrecoverable is written off directly against thereceivable balance.

credit risk or the manner in which itmeasures and manages this risk during the year.

(ii) Liquidity risk:

Liquidity risk is the risk that the group will not be able to meet its financial obligations as

that it has sufficient funds to meet its liabilities when due, under both normal and stressed conditions, without incurreputation.

The group ensures that it has sufficient cash on demand to meet expected operationalexpenses. The group maintains two lines of unsecured credit which are available if thegroup does not have sufficient cash to settle its obligation, these are as follows:

(a) $600,000,000 facility with The Bank of Nova Scotia Jamaica Limited. Interest isnegotiated or determined at the time the funds are accessed.

(b) US$9,000,000 line of credit with Citibank N.A. Jamaica Branch. The rate ofinterest per annum is determined at the time the funds are accessed.

The contractual outflows for accounts payable and the amounts due to fellow subsidiariesare represented by the carrying amounts and may require settlement within 12 months ofthe reporting date.

measures and manages this risk during the year.

(iii) Market risk:

Market risk is the risk that changes in market prices, such as foreign exchange rates and

instruments. The objective of market risk management is to manage and control marketrisk exposures within acceptable parameters, while optimising the return on risk.




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(iii) Market risk (continued):

(a) Foreign currency risk:

The group is exposed to currency risk on purchases and borrowings that aredenominated in a currency other than the Jamaica dollar, the functional currency ofthe company.

Exposure to currency risk:

At June 30, 2013, the group had net foreign currency assets/(liabilities) as follows:

2013 2012

Currency

United States dollars 629,201 326,336Canadian dollars 23,317 18,857Pounds sterling ( 176) ( 8,652)Euro ( 3,620) 9,741

Sensitivity analysis:

10% (2012: 1%)strengthening and 1% (2012: 1%) weakening of the relevant currencies against theJamaica dollar based on the effect that such changes would have on the reportedprofits for the year. This analysis assumes that all other variables, in particularinterest rates, remain constant and were performed on the same basis as 2012.

2013 201210% strengthening 1% weakening 1% strengthening 1%weakening

Currency

United States dollars 62,920 (6,292) 3,297 (3,231)Canadian dollars 2,331 ( 233) 190 ( 595)Pounds sterling ( 20) 2 ( 88) 529Euro ( 362) 36 98 ( 25)

(b) Interest rate risk:

Interest rate risk is the risk that the value of a financial instrument will fluctuatedue to changes in market interest rates.

The group materially contracts financial liabilities at fixed interest rates for theduration of the term. When utilised, bank overdrafts are subject to fixed interestrates, which may be varied with appropriate notice by the lender. At June 30, 2013the long-term liabilities were interest-free.

Thermeasures and manages this risk during the year.




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26. Financial risk management (continued)(iv) Fair value of financial instruments:

Fair value amounts represent estimatescurrently agreed upon between knowledgeable, willing parties who are under nocompulsion to act and is best evidenced by a quoted market price, if one exists.

The fair values of cash and cash equivalents, short-term deposits, accounts receivable,accounts payable and related party balances approximate to their carrying values due totheir relatively short-term nature.

The fair value of long-term liabilities is assumed to approximate their carrying values asno discount on settlement is anticipated.

The fair value of available-for-sale investment and the method of determining fair valueare disclosed at note 4(a). The valuation method falls in evel 3 of the fair value hierarchy,which is defined as a price determined based on inputs that are not based on observablemarket data.

(v) Capital management:

Neither the company nor any of its subsidiaries is subject to externally imposed capitalrequirements. se so as to maintaininvestor, creditor and market confidence and to sustain future development of thebusiness. The Board of Directors monitors the level of dividends to ordinary stockholdersand the return on capital, which the group defines as total stominority interest.

The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.

There were n


NOTES

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FORM OF PROXY

I/We………………………………………………of……………………………………………………………Being a member/members of Desnoes & Geddes Limited, hereby appoint

…………………………………………………….of ………………………………………………………….

or failing him, ……………………………………of …………………………………………………………

as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to beheld on Friday, November 1, 2013 at 10:00 am and any adjournment thereof.

Dated…………………………………………… Signed …………………………………………………..

………………………………………………….

Please indicate by inserting “X” in the space below how you wish your vote to be cast. If no indication is givenyour proxy will vote for or against resolution or abstain as he/she thinks fit.

RESOLUTIONSFor Against

1 Adopting the financial statements and reports ofDirectors and Auditors thereon

2 Declaration of Dividend

3 Approving Fees for Non-Executive Directors for the year

4(a). Re-electing Director Mr. Noel daCosta

4(b). Re-electing Director Mr. Renato Gonzales

4(c). Re-electing Director Mr. Richard O. Byles

4(d). Electing Director Mr. Jaime Grana

5 Remuneration of the Auditors

Notes:1. If a member is a corporation, this form must be done under common seal or under the hand of an officer or

attorney duly authorised in writing.2. To be valid, this form must be received at the Registered Office of the Company, 214 Spanish Town Road, Kingston

11, no later than 10:00 am on October 31, 2013.

PLACE$100

STAMPHERE


MISSIONSTATEMENT

OURPURPOSE

OURVALUES

OURSTRATEGY

Celebrating and enriching Jamaica;

inspiring the world.

• Valuing each other

• Be the best

• Proud of what we do

• Passionate about consumers

and customers

• Freedom to succeed

• Brand value creation

• End to end efficiencies

• Profitable export growth

DESNOES & GEDDES LIMITED ANNUAL REPORT 2013DESNOES & GEDDES LIMITED | 214 SPANISH TOWN ROAD, PO BOX 190

KINGSTON 11 | JAMAICA | TEL: (876) 923-9291 | FAX: (876) 675-2029

DESNOES & GEDDES LIMITED ANNUAL REPORT2013 · “Our aim is to achieve zero ... music, and social...

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