Rjr annual report 2014

MissionS T A T E M E N T

To b e t h e m o s t t r u s te d b ro a d c a s t m e d i u m

by h av i n g a co m m i t m e nt to t r u t h ,

a cc u ra c y a n d f a i r n e s s .

To i n fo r m , e d u c ate a n d e nte r t a i n

a u d i e n ce s w i t h c re d i b l e , b a l a n ce d a n d

i n n ovat i ve p ro gra m m i n g s u p p o r te d by

n at i o nw i d e cove ra g e a n d a s k i l l e d a n d

m o t i vate d wo r k fo rce.

To f u r t h e r p rov i d e a d ve r t i s e r s w i t h

q u a l i t y s e r v i ce a n d a co s t - e f fe c t i ve

m e d i u m , t h u s e n h a n c i n g o u r co m p e t i t i ve

a d va nt a g e a n d e n s u r i n g p ro f i t a b i l i t y.

Radio Jamaica Limited Annual Report 2014

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DIRECTORSJ.A. Lester Spaulding, C.D., J.P. – Chairman

ExecutiveGary Allen, Dip. Media & Comm. (Hons.), E.M.B.A., J.P. – Managing Director

Non-ExecutiveCarl Domville, B.Sc. (Hons), F.C.C.A., F.C.A.Glenworth Francis, B.Sc., E.M.B.A.Andrew Leo-Rhynie, B.Sc., M.B.A. Minna Israel, B.Sc. (Hons.), M.B.A.Nadine Molloy, B.A. (Hons.), M.A., M.L.S., J.P.Peter Chin, B.Sc., M.B.A.Lawrence Nicholson, B.Sc. , M.Sc., Ph.D

SECRETARYStephen Greig, LL.B.

SENIOR MANAGEMENT TEAMGary Allen, Dip. Media & Comm. (Hons.), E.M.B.A., J.P. – Managing Director

Stephen Greig, LL.B. – Company Secretary/Attorney-at-Law/Acting General Manager JNN and RE-TV

Gary Cole – Director of Marketing

Andrea Wilson-Messam, F.C.C.A., F.C.A. – Director of Finance

Claire Grant – B.Sc. (Hons.), M.A.,M.B.A. (Distinction) General Manager, Television Jamaica Limited

Francois St. Juste, B.Sc. (Hons.) – General Manager, Radio Services

Trevor Johnson, Dip. Bus. Admin., E.M.B.A. – Deputy General Manager TVJ & Outside Broadcast

Production Manager

Yvonne Wilks, Dip. Cam., B.A. (Hons.) – Director of Corporate & Commercial Strategy

Acting General Manager, Multi-Media Jamaica Limited

GROUP OFFICERSMarcha Christie, A.C.C.A., Dip. Bus. Admin. – Group Financial Controller

Milton Walker, B.A. – Group Head of News

Tanya Smith, Dip. Insurance, B.Sc., M.B.A. (HRM) – Group Human Resource Manager

Patrick Anderson – Group Head of Sports (Acting)

Noel Ellis, IMBA, B.Eng. – Chief Engineer, Transmission, Administration & Information Technology

Melvis Cummings - Chief Engineer, Operations

TELEVISION OPERATIONSClaire Grant –General Manager, Television Jamaica Limited

Trevor Johnson, Dip. Bus. Admin., E.M.B.A. – Deputy General Manager TVJ & Outside Broadcast

Production Manager

Allia McDonald, B.A., M.A. – Studio Production Manager

Judith Alberga, B.A. (Hons.)- Programmes Manager

Debbie Powell-Harris, Dip. Graphic Design, B.Sc. (Hons.) – Senior Art Director

Directors &

CORPORATE DATA


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SUBSIDIARIESTelevision Jamaica LimitedLawrence Nicholson, B.Sc., M.Sc.,Ph.D, – ChairmanJ.A. Lester Spaulding, C.D., J.P. - DirectorGary Allen, Dip. Media & Comm. (Hons.), E.M.B.A., J.P. – DirectorGregory PullenStephen Greig, LL.B. – Company Secretary

Multi-Media Jamaica LimitedGary Allen, Dip. Media & Comm. (Hons.), E.M.B.A., J.P. – ChairmanJ.A. Lester Spaulding, C.D., J.P. – DirectorRichard McCreath – DirectorRupert Hartley – DirectorAndrea Wilson-Messam – F.C.A., F.C.C.A. – DirectorCarlette DeLeon - DirectorStephen Greig, LL.B. – Director/Company Secretary

Reggae Entertainment Television LimitedJ.A. Lester Spaulding, C.D., J.P. – Acting ChairmanGary Allen, Gary Allen, Dip. Media & Comm. (Hons.), E.M.B.A., J.P. – DirectorDennis Howard, Ph.D. – DirectorDavid Geddes, M.B.A. – Director Angela Patterson, B.Sc., M.B.A. - DirectorStephen Greig, LL.B. – Company Secretary

Jamaica News Network LimitedJ.A. Lester Spaulding, C.D., J.P. – Acting ChairmanGary Allen, Gary Allen, Dip. Media & Comm. (Hons.), E.M.B.A., J.P. – DirectorDennis Howard, Ph.D. – DirectorDavid Geddes, M.B.A. – Director Angela Patterson, B.Sc., M.B.A. - DirectorStephen Greig, LL.B. – Company Secretary

AUDIT COMMITTEEJ.A. Lester SpauldingCarl DomvilleGlenworth Francis

AUDITORSPricewaterhouseCoopers

BANKERSFirst Global BankNational Commercial Bank Jamaica LimitedRBC Royal Bank Bank Jamaica LimitedREGISTRAR AND TRANSFER AGENTS

Jamaica Central Securities Depository40 Harbour StreetKingston

REGISTERED OFFICEBroadcasting House32 Lyndhurst RoadP.O. Box 23,Kingston 5, Jamaica W.I.

Directors &

CORPORATE DATA


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Notice of

MEETING

To receive the Accounts for the year ended March 31, 2014 and the reports of the Directors and Auditors thereon.

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

“THAT the Audited Accounts for the year ended March 31, 2014 together with the Reports of the Directors and Auditors thereon be and are hereby adopted.

To elect Directors:

Pursuant to Article 90 of the Company’s Articles of Incorporation, the retiring Director who is eligible for re-election is:

J.A. Lester Spaulding

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

“THAT retiring director J.A. Lester Spaulding be and is hereby elected a director of the company”.

Pursuant to Article 98 of the Company’s Articles of Incorporation, the retiring Directors all of whom are eligible for re election are:

Minna Israel, Nadine Molloy, Peter Chin

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

“THAT retiring director Minna Israel be and is hereby elected a director of the company”.

“THAT retiring director Nadine Molloy be and is hereby elected a

director of the company”.

“THAT retiring director Peter Chin be and is hereby elected a director of the company”.

To re-appoint the Auditors and to authorize the Directors to fix their remuneration. To consider and (if thought fit) pass the following Resolution:

“THAT Messrs. PricewaterhouseCoopers having agreed to continue in office as Auditors, the Directors be and are hereby authorized to agree to their remuneration in respect of the period ending with the conclusion of the next Annual General Meeting.”

A member entitled to attend and vote at this meeting may appoint another person as his proxy to attend and vote instead of him and such proxy need not be a member of the company. An appropriate form of proxy is enclosed.

Dated this 25 day of June 2014.

BY ORDER OF THE BOARD

Stephen Greig, LL.B.Secretary

Broadcasting House32 Lyndhurst RoadKingston 5, JAMAICA, W

NOTICE IS HEREBY GIVEN that the Sixty-sixthth Annual General Meeting of Radio Jamaica Limited will be held at the Jamaica Pegasus Hotel, 81 Knutsford Boulevard, Kingston 5, on Wednesday, August 27, 2014 commencing at 10:00 a.m. for the following purposes:

(i)

(ii)

(iii)

1.

2.

a)

b)

3.


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Shareholders as atMARCH 31, 2014

PAM/JPS Employees Superannuation Fund 29,863,401

NCB Jamaica Limited 28,064,400

Ideal Portfolio Services 27,653,901

Grace Kennedy & Co. Ltd. Pension Scheme 23,401,596

Mayberry West Indies Limited 22,829,846

Jamaica Co-operative Credit Union League 13,674,833

L.P. Azar Limited 12,937,688

Marlon C. Blake 10,800,000

King Alarm Systems 9,822,401

VMBS A/C Contributory Pension Scheme 9,621,620

Gary Allen 5,000

Francois St. Juste 362,000

Stephen Greig 6,000

Yvonne Wilks 354,742

Gary Cole 0

Andrea Messam 0

Marcha Christie 0

Trevor Johnson 6,000

1

2

3

4

5

6

7

8

9

10

1

2

3

4

5

6

7

8

9

1

2

3

4

5

6

7

8

TEN LARGEST No. of Units

DIRECTORS

SENIOR MANAGEMENT

J.A. Lester Spaulding 7,870,350

Carl Domville 317,607

Peter Chin 0

Minna Israel 0

Lawrence Nicholson 0

Glenworth Francis 3,000

Gary Allen 5,000

Nadine Molloy 0

Andrew Leo-Rhynie 0


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J.A. LESTER SPAULDING,C.D., J.P.

Appointed Managing Director 1978, Retired 2008, Chairman since 1994. Mr. Spaulding also serves as Chairman on two and director on two other subsidiary boards in the Group, a Co-Chair Digital Switchover Committee. Mr. Spaulding also serves as Director/Mentor on the boards of Lasco Distributors Ltd. and Lasco Manufacturing Ltd., Director of Guardsman Alarms Limited, JN Money Services Ltd, GV Media Group in London, PALS Jamaica Limited, Caribbean Community of Retired Persons, JSPCA and Hope Zoo Preservation Boards.

GARY ALLEN,E.M.B.A., J.P. Managing Director

(Appointed June 2006) Managing Director (October 1, 2008). Mr. Allen is a career journalist and Media Manager with experience in local, regional and international media. He has served RJR as a journalist for six years and now in a management capacity for ten years. At the regional level he served the Caribbean Broadcasting Union, (CBU), the Caribbean News Agency, (CANA) and the Caribbean Media Corporation (CMC). At CMC he rose to the position of Chief Operating Officer. He is a graduate of the Caribbean Institute of Media and Communications (CARIMAC), and the Mona School of Business (MSB) at the UWI, is a past Chairman of the Media Association Jamaica Limited and is also past Chairman of the Jamaica Debates Commission. He is Vice President of the CBU; and Vice President of the Commonwealth Broadcasters’ Association.

CARL DOMVILLE,B.Sc. (Hons.), F.C.C.A., F.C.A.

(Appointed June 1990) Mr. Domville was the Chief Operating Officer and Group Treasurer of the Seprod Group of Companies. (Retired October 2013) He serves on the Board of Directors of Barita Investments Limited, Golden Grove Sugar Co. Ltd., United Way of Jamaica and is a Trustee of the Superannuation Fund for Employees of Seprod Ltd. and Approved Organizations.

GLENWORTH FRANCIS,B.Sc., E.M.B.A

(Appointed April 2006) Mr. Francis is the Group Chief Executive Officer of the Jamaica Co-operative Credit Union League. He serves as Chairman of the Board of J.E.T.S. Limited (operator of the Multi Link debit card network) and is a member of the Board of Credit Union Fund Management Company Ltd. and Centralized Strategic Services Company.

ANDREW LEO-RHYNIE,B.Sc. (Acctg.), M.B.A. (Finance), Chartered Business Valuator

(Appointed December 2011) Mr. Leo-Rhynie is the Vice President, Strategy at GraceKennedy Financial Group Limited. Prior to joining GraceKennedy Financial Group in 2009, he was a Management Consultant at Sierra Associates Limited for 13 years where he provided management consulting and business valuation services to corporate clients.

Directors’ PROFILES


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MINNA ISRAEL,C.D., J.P. B.Sc. (Hons.), M.B.A. (Finance & General Management)

(Appointed September 26, 2012) Ms. Israel is currently Special Advisor to the Vice Chancellor, at the University of the West Indies. A former banker for over 30 years, Ms. Israel served as President & Country Head of RBC Royal Bank Jamaica and Managing Director of Scotiabank (Bahamas) Limited. She serves on a number of Boards and organisations including First Global Bank, Cari-Med Limited, the Public Accountancy Board and is Chairperson of the Mona School of Business & Management.

PETER D. CHIN,B.Sc., M.B.A

(Appointed September 26, 2012) Mr. Chin is the President of Alliance Investment Management Limited, an investment management company and licensed securities dealer. He is also President of Alliance Financial Services, a licensed Cambio and an Agent of MoneyGram International.

He has over thirty years’ experience in the fields of investment and financial management, commercial lending and project finance, providing services to major institutions.

Mr. Chin is Company Director of AMG Packaging and Paper Company Limited, a company listed on the Jamaica Stock Exchange Junior Market and is also a Director of Supreme Ventures Limited.

He is past president of the Munro College Old Boys’ Association and the first President of the Jamaica Securities Dealers Association.

An ardent sportsman, he is a member of the Caymanas Golf and Country Club, Constant Spring Golf Club and Kingston Cricket Club. He is also the Vice President of the Jamaica Golf Association.

NADINE A. MOLLOY,B.A. (Hons.), M.A., M.L.S., J.P.

(Appointed September 26, 2012) Ms. Molloy is a secondary school principal with more than thirteen years service and is currently the principal of Ardenne High School. She is a former president of the Jamaica Teachers’ Association (JTA) and the Jamaica Association of Principals of Secondary Schools (JAPSS). She remains an executive member of the Jamaica Teachers’ Association and the Caribbean Union of Teachers (CUT). A trained librarian, she has worked at the Brown’s Town Community College as Senior Lecturer Librarian. She is a member of the National Parenting Support Commission and Heritage Clubs of Jamaica. Ms. Molloy was named LASCO/MoE Principal of the Year 2009.

LAWRENCE NICHOLSON, B.Sc., M.Sc., Ph.D

(Appointed September 2013) Dr. Nicholson is a Lecturer in the Faculty of Social Sciences, Mona School of Business and Management, with over a decade of experience in Decision Sciences specializing in the areas of Business Statistics, Quantitative Methods and Operations Management.

Directors’ PROFILES


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Last year was one of the most challenging

for the Jamaican media, but our

company emerged stronger than

ever. Greater competition for audiences

and revenues against the background of

more radio stations, television channels

and newspapers pushing into electronic

media activities, all served to heighten

competitiveness to which our companies

responded well.

During the year under review the company

successfully lobbied the Government and

Regulators for a more business sensitive

approach to the planned Digital Switch Over

project, which is planned for implementation

within the next six to seven years.

The Board provided guidance and oversight

to the Management as it continued to

diversify its programme distribution onto

new platforms inside and outside Jamaica.

We were pleased with the early progress

made in this regard and look forward to an

acceleration of the benefits flowing out of our

stated strategy of “Going Global for Greater

Profitability”.

The Board of Radio Jamaica Limited and its

subsidiary Boards met 55 times during the

year under review, with over 95% attendance

by directors. Boards received and analyzed

management reports, including Accounts,

Budgets, Technology and Marketing and

Chairman’s

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Chairman’s

STATEMENTwere satisfied that appropriate

management practices are being

maintained throughout the Group.

The Finance and Compliance

Committee met quarterly and

the Audit Committee with internal

auditors Ernst and Young monitored

the implementation of policies and

their appropriate application, helping

us to strengthen our internal controls,

stay in step with contemporary

corporate governance practices

and generally maintain the best

operational positions for stakeholders.

The company has had to continuously

review and revamp its business

processes. This has been in response to

the constantly changing international

media industry that demands ongoing

adjustment. The industry’s dynamism

has been amplified by the continuous

decline in traditional advertising

business from several entities as they

struggle to cope with the slowdown in

the economy. It is clear that longevity

in this tough economic environment

will only be realized through expansion

within or outside our industry.

Like many businesses the company

also felt the harsh effects of the

increased cost of petrol, electricity

and all products and services that are

procured with foreign currency. The

ongoing devaluation of the Jamaican

dollar continued to increase our costs

but it makes the “Going Global for

Profitability” even more attractive for

our local copyright owned products,

as that is the only point at which

devaluation will benefit the company.

In this environment we were pleased

to have been able to guide the

management’s achievement of a

turnaround in the financial performance

of the company, year on year, moving

from a Net Loss of $29.8M in March 2013

to a Net Profit of $59.5M in March 2014.

This $89M turn around in performance

in these economic conditions is

commendable.

I would like to publicly extend my

thanks to the Directors who have

given dedicated service, and

Shareholders for their contribution to

making a difference in our company

and our country.

J.A. Lester Spaulding, C.D, J.P


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The Management team continued to diligently pursue the strategic goal of “Going Global for Greater Growth and Profitability”, entering the United Kingdom, the Caribbean and North America markets mainly with our TV content. These initiatives, plus the tight management of expenses and aggressive sales, led to a $95M turn around in the financial performance of the company, compared to the previous financial period.

The Group recorded profits after tax as at March 2014 of $59.8M, contrasting with the $29.8M net loss recorded at the end of March 2013.

The improved performance was driven by our audiovisual segment, as all our television channels recorded profits.

Even as the broadcast segment of the media industry continued to experience rapid change, the company moved quickly to pre-empt fallout and to respond effectively to the local and global developments in media. Today we are poised to take advantage of more opportunities as innovation in media still revolves around the fact that attractive local content remains king.

The RJR Communications Group realized better financial health for the financial year ending March 2014 when compared to the same period last year. This could not have been achieved without support from the business community, advertisers, advertising agencies; programme partners, a dependable staff and a dedicated management team and guided by our Boards of Directors of the company.

Managing Director’s

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Significant strides were made through our leading brand TVJ. The station continued to dominate TV viewing locally and returned to profitability. Its website grew in popularity and in foreign exchange earnings as people from across the world “logged on”. TVJ and the group’s technology company, Multimedia Jamaica Limited, are now working closely to translate this global interest and audience into greater earning of foreign exchange having embarked on the country’s most ambitious audio visual diversification project during the year. Our entry into the Over the Top Television (OTT) technology has started a phased roll out of “catch up” TV services in Jamaica, On Demand TV services at home and abroad, online subscription television globally entering both the subscription and advertising markets overseas.

TVJ still delivered a varied serving of high quality programmes offering extraordinary outcomes in audience interaction, revenue generation, infrastructure expansion and brand equity value last year.

TVJ signed a ten year deal with Supreme Ventures Limited to be the new broadcast platform for their seven lottery games that are aired four times a day seven days a week on TV. To facilitate this TVJ invested in a state of the art High Definition Studio.

The build out and commissioning were completed in three months, accelerating our competitive advantage in the marketplace.

TVJ secured the Free To Air and Cable rights for the American reality singing show “The Voice”, which featured Jamaican Tessanne Chin who eventually won the competition. This investment paid off for TVJ and for sister station RETV that was able to air the product live whilst TVJ ensured that there was the broad viewing audience through Free to Air TV.

TVJ and TVJ SN also acquired the exclusive Free To Air and Cable rights for the first ever staging of the Caribbean Premier League cricket competition. The Jamaican team, the Tallawahs, won the competition which was a great addition to the

IAAF World Championships exclusive

coverage that was in progress at the

time on TVJ.

Two entertainment products “Reggae

Sumfest” and “Jamaica Jazz and

Blues Festival” were returned to the

TVJ platform last year. Two special

mini-series were brought to television

“Thicker than Water” and “God’s

Way”. They brought a new flavour of

drama to television with one of the

programmes being shot in TVJ studios.


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A riveting investigative feature from TVJ’s “All Angles” on the bleaching phenomenon in Jamaica had the nation talking for weeks on talk shows, in social media, in newspapers and online.

The “All Angles” team won the prestigious Jamaica Broilers Fair Play Award of Excellence 2013 for its expose of Jamaica’s skin bleaching phenomenon. There were also a number of positives and extraordinary achievements at the 2013 Press Association of Jamaica National Awards Banquet for both News and Sports. Dionne Jackson Miller’s winning the Journalist of the Year Award meant a member of the RJR Group has won the PAJ’s Journalist of the Year prize for 5 of the last 6 years. A cameraman from TVJ has won the Videography award for the last 6 years. We also won two awards in the radio category.

Veteran journalist Courtney Barrett was elevated to the Radio News Editor position during the financial year.

The News Centre also delivered the most watched and talked about TV coverage of the Vybz Kartel trial and verdict cementing the TVJ’s position as the Market leader in News.

Flagship programmes on the brand

continued. The 2014 winner of TVJ’s Schools’ Challenge Quiz was Kingston College over Campion College. In TVJ’s Junior Schools’ Challenge Quiz Mona Prep were the 2013 winners over St. Richard’s Primary. TVJ’s All Together Sing top spot for 2013 went to deCarteret College ahead of Old Harbor and Herbert Morrison High Schools.

The Cable division comprising three business units - RETV, JNN and Production Services for TVJ News and Productions took the opportunity to rebrand and reposition the cable stations this year.

RETV is the first Jamaican 24 hour music video station featuring the best in Jamaican music videos, lifestyle and entertainment, building a rich and colourful history covering the premier entertainment events in Jamaica and in the Caribbean. With a steadily growing viewership in and outside the Caribbean region, RETV rebranded as REal Jamaican TV, with informative, inspirational and interactive, showcasing of the best of ‘Brand Jamaica’.

In keeping with the station’s new and exciting feel and a more modern twist, the music video blocks are now based on genres with hip and trendy names to appeal to target audiences, structured as part of the strategy for


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“appointment viewing”.

The “Real Prime” time block was created with programmes scheduled Weekdays @ 8pm-10pm and Weekends @ 6:30pm- 8:30pm. During these times Real Jamaican Television, delivers first class Jamaican content including some of our new and exciting programming.

Jamaica News Network (JNN) has also re-launched its brand to be the most credible, concise, and objective long form news station in Jamaica. With a new tagline “News Worth Watching” the station focuses on current affairs, health and financial news and has increased viewership.

Along with the new look, the live crawl of the JNN News Ticker Tape also gives viewers the latest news whenever they tune in.

JNN’s main newscast at 3PM provides a unique concise, fair and objective standpoint on happenings across the world. “Operation Justice”, a current affairs programme on crime fighting and legal developments is one of the station’s flagship programmes.

The Radio Division faced another challenging yet encouraging year in 2013/14. The landscape continues to evolve posing new hurdles but offering up new opportunities.

RJR 94FM, FAME 95FM and Hitz 92FM all improved their delivery of outside broadcasts by volume and by quality for clients and listeners.

The signature values of the stations continue to be strong with RJR94FM continuing to be the nation’s leader in the delivery of news and information with regular newscasts, a provocative daytime call in program and probing news analysis. All this is infused with some of the most loved personalities in radio.

FAME 95FM continues to hold its place as the entertainment touchstone for promoters and partygoers. Our Association continues to be strong with all major festivals, clubs, parties………. all things social.

Hitz 92FM has a growing foothold in the Reggae market with an authentic Jamaican presentation that crosses all demographics and regions of the island. This is supported by comprehensive sports reporting and world-class coverage of major sporting events.

Outside of the Cross Country Series, the stations have all staged signature events that have shown growth. The RJR94FM Family Affair and Back to School Fair; the FAME Road Party Series and Hitz 92FM’s Street Dance Series all maintain visibility and relevance.


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Social Media presents another frontier in broadcasting as listeners are engaged on many different platforms. Our radio brands have employed all the major social media engines and seen strong growth levels. This also has led to a more visual product delivery from radio.

All this has come together under the multimedia umbrella as last year proved to be one of the more exciting for that company. As the Group embarked on its “Going Global for Profitability” strategy, it was clear that MMJL would play a critical role in two key areas – the establishment of a solid base of diversified business activities in our home market and our new thrust to earn more revenues from overseas markets.

We kicked off the year with our consistent publication of a Sports Magazine, “SportsWorld” which captures the best moments in our sporting accomplishments for the previous year. SportsWorld was one of three major publications done for the year, as we added to it the Annual Report and then inaugurated the TVJ Schools’ Challenge Quiz Magazine. Entering the magazine publishing space is a move into a profitable segment of print media but also an online magazines space where products

can be bought and read all over the world.

In our expansion thrust, MMJ also commenced the production of low-cost, graphics driven commercials for TV clients who have to tailor their budgets. This helps build a clientele of business at home and abroad that may otherwise be underserved.

To expand services further, MMJ expanded the number of platforms on which our radio stations can be accessed across the world on mobile phones with new phone apps launched.

To underpin the advertising and subscription revenue earnings targeted from these sources, Multi Media also worked with the Finance Department to establish an online payment system that will allow people from across the world to book services with the company. These now include obituaries from home and abroad.

MMJ has worked closely with our technology partners and TVJ on the OTT system which will see the growth of foreign exchange earnings and the expansion in sale of our content overseas.

To support this thrust the Group, having invested substantially in acquiring broadcast sports rights leading into


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2022, has devised and implemented a number of communication plans for supporting TVJ in leveraging these sports properties. A campaign that supported the launch of Vibe 360 on 94FM with “The Biggest Turn On” launched in support of FAME 95FM were also embarked upon.

Three major signature corporate events were concluded during the year, - the RJR Sports Awards, RJR’s Pop-Up Café as part of our Restaurant Week and the Kingston Music Week in early December.

The RJR Sports Foundation National Sportsman and Sportswoman of the Year Awards 2013 was stronger than ever.

2013 Sportsman of the Year was Hon. Usain Bolt and Sportswoman was Mrs. Shelly-Ann Fraser-Pryce. Our new media partner is the Jamaica Observer. Our long standing sponsors remained VMBS, Digicel, Sagicor, Pure Juice, Main Event, Jamaica Pegasus and J. Wray and Nephew. CLIENT APPRECIATION RECEPTION

We hosted the yearly ‘’Thank You’’ reception for clients and agencies, with 16 of the 18 accredited advertising agencies represented

and 22 of the top 25 spending clients also there. CHIEF ENGINEER RETIRES!

The RJR family bade goodbye to Group Engineering Manager, Carroll Lawrence who retired after 45 sterling years. The engineering division, information technology and multimedia services have been re-organised with Mr. Melvis Cummings appointed Chief Engineer with responsibility for studio operations and Mr. Noel Ellis appointed Chief Engineer responsible for Transmission and Information Technology. Multimedia Services have been merged into the Commercial Strategy division.

The Engineering Division was busy during the year commissioning into service a new 350ft tower at Flower Hill, St. James and repairing the old tower while making it available for lease to commercial entities. A new antenna was installed for TVJ as a part of transition to the new tower thereby enhancing coverage in the west.

New transmitters were installed at Huntley, Manchester and Mt. Airy, Westmoreland for TVJ which led to a doubling of the power transmitted in Manchester and a tripling of power in Westmoreland.

The company also commissioned and


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received an international consultancy study for the first phase of our Digital Switch Over, DSO process.

As at March 31, 2014 the staff complement was 451, with a further 208 freelancers engaged in the eight companies/brands in the Group. Ten staff members celebrated their 10 year anniversaries with the Group.

The department facilitated the certification of staff in the areas of project management and information technology. Two staff obtained advanced degrees from local and overseas universities and the Group also provided the children of staff with 15 primary and 11 secondary level scholarships.

Our Annual Wellness Fair offered more health services to staff this year.

HR also implemented an Employee of the Quarter reward scheme and staff members of the year recognition plan.

The CAB/RJR Basic School through the efforts of Members of the Board, chaired by Mrs. Norma Brown Bell, Community Outreach Officer and Mr. Derrick Wilks, Vice Chairman, and volunteers, continued to be regarded as the Leader in the Zone 6 area, under which it falls.

Golden Age Home-Cluster C

The outpouring of love and graciousness extended year round to the over seventy residents at the National Golden Age Home, Cluster C, brought satisfaction to the management and staff of the RJR Communications Group.

The residents are the recipient of frequent visits by Mrs. Brown Bell, and on most of the occasions, the RJR Communications Group is able to offer care packages and personal items.

The last 12 months, while challenging, proved to be stimulating and profitable for the RJR Group, in spite of the continued downturn in the economy. The Management and Staff are committed to “Going Global for Greater Growth and Profitability” and look forward to building on the gains made last year while striving to remain the number one media entity on the Jamaican media landscape.


STATEMENT

Gary Allen, J.P


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Directors’ REPORTThe Sixty-Sixth Annual Report of Radio Jamaica LimitedThe Directors are pleased to present their report for the financial year ended March 31, 2014.

Financial Results

The Directors as at March 31, 2014 were as follows:

J.A. Lester Spaulding – Chairman Minna IsraelGary Allen Peter Chin Carl Domville Nadine MolloyGlenworth Francis Andrew Leo-RhynieLawrence Nicholson

In accordance with Article 90 of the Company’s Articles of Incorporation, Mr. J.A. Lester Spaulding, having attained the age of 70 years since the last Annual General Meeting will retire but is eligible for re-election up to but not exceeding the age of 75 years or until the next Annual General Meeting when he can offer himself for re-election.

In accordance with Article 98 of the Company’s Articles of Incorporation, Ms. Minna Israel, Ms. Nadine Molloy and Mr. Peter Chin will retire by rotation and being eligible offer themselves for re-election.

The company auditors, PricewaterhouseCoopers have indicated a willingness to continue in office pursuant with the provisions of Section 153 of the Companies Act.

The Directors wish to place on record their appreciation and recognition of the dedicated efforts and hard work given by the officers and staff of the company and its subsidiaries.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

………………………………………………..J.A. Lester Spaulding, Chairman

Profit before TaxationTaxation

Net Profit

Retained Earnings at beginning of the year

Retained Earnings at the end of the year

$’000

$72,905($13,429)

$59,476

$719,230

$736,399


Change

The Radio Jamaica Limited Consolidated

Financial Statement reflected a

Net Profit After Taxes of $59.5 million

compared with a Net Loss of $29.8 million

in the previous year. The turnaround in

net profits of $89.3 million resulted from

the company’s success in increasing

revenues and lowering expenses in spite

of the general inflationary trends and

stagnation in the Jamaican economy.

Although Jamaica’s Debt to GDP ratio

fell from 147% at March 2013 to 131.9%

at March 2014, the foreign exchange

rate devalued by 10.8% from April

2013 to March 2014 sliding from $98.89

to $109.57:1 in twelve months. Point to

point inflation stood at 8.3% at the end

of March 2014 and unemployment grew

from 13.7% at the end of 2012 to 15.2% at

the end of 2013. The overall econonmic

environment remained stagnat during

the financial year and impacted growth

in the Media Industry.

FINANCIAL HIGHLIGHTS

Total revenues for the period ending March 2014 was $1.84 billion up $60.2 million on prior years $1.78 billion. The $60.2 million growth in revenue broke the revenue decline trend of the 3 previous successive years. This was achieved by strategic programming to include the acquisition of the television programme “The Voice” and the refresing and

renewing of the sponorship and spot packages.

Direct Expenses fell by $7.8million or 0.9% over prior year largely due to savings in staff costs from the wage freeze and the sucessful cost containment strategy on overtime and freelancer payments . The Group had reduction in Agency Commissions due to the shifitng in business placements and lower Broadcast Rights of over $10m.

Other Operating Income increased by

Management DISCUSSION AND ANALYSIS

J$1,900,000

J$1,950,000

J$2,000,000

J$2,050,000

J$1,850,000

J$1,800,000

J$1,750,000

J$1,700,000

J$1,650,000

2010 2011 2012 2013 2014

Gross Revenues2010 - 2014

1,995,765

1,944,590

1,828,840

1,783,997

1,844,190

221,621

132,828

87,407

-29,845

59,476

J$250,000

J$200,000

J$150,000

J$100,000

J$50,000

J$0

J$50,000

2010 2011 2012 2013 2014


Embracing

$28.6 million on prior year driven mainly by the increase in transmitter rental income, foreign exchange gains and

gains on disposals.

Selling Expenses declined by 1.1% or $3.4 million although revenues grew by 3.4% or $60.2 million. The reduction was largely due to a shift from Agencies generated revenue carrying a higher commission rate to revenues earned from direct business.

Other Operating Expenses increased by $1.2m or 0.4% during the financial year. The minor increase in this expense category, which reflected a below inflationary increase, was achieved through the management of electricity usage, internet and other information telecommunication costs as well as staff overtime costs.

The Administration Expenses decreased by $37.8 million or 8.5%. The decrease was achieved by a salary freeze and other favourable cost reductions.There was no impairment charge during

2014 compared to a $35.1 million charge in 2013.

Finance Costs increased by $22.1 million or over 100% as a result of the twelve months interest charges during the year on a loan started in the previous year as well as new loan and lease facilities.

The profit before taxes of $72.9million represented a turnaround of $149.5 million on the Group’s prior year performace of $76.6 million in losses.

The Group’s Total Assets increased by $95.1 million or 5.3% during the financial year and the Shareholders’ Equity rose by 1.45% or $17.1 million. Long term loans and Finance lease obligation increased by $34.1 million and $25.2 million respectively during the year.

BUSINESS SEGMENTS

The Group’s business segments are based on the reports reviewed by the company’s Board of Directors that are used in making strategic business decisions. The Group is organised in two main business segments based on

Management DISCUSSION AND ANALYSIS

J$186,265

J$146,521

($76,628)

J$72,905

J$500,000

J$400,000

J$300,000

J$200,000

J$100,000

J$0

J$100,000

J$200,000

2010 2011 2012 2013 2014

J$390,966

600,000

700,000

800,000

900,000

500,000

400,000

300,000

200,000

100,000

2013 2014

Operating Expenses ($000)2013 vs 2014

DirectExpenses

SellingExpenses

AdministrationExpenses

OtherOperatingExpenses

ImpairmentCharges

J$819,096

J$811,326

J$310,166

J$306,750

J$443,142J$405,390

J$329,724J$330,959

J$0J$35,108


Change

Management DISCUSSION AND ANALYSISits business activities. Operating results for each segment are used to measure performance, as management deems that information to be the most relevant in evaluating segments relative to other entities that operate within these

industries. The designated segments are:-

1. Audio Visual, comprising the operations of the group’s free- to-air television station and its cable stations; and

2. Radio and Other, comprising the operations of the group’s radio stations and radio infrastructure

STOCK PRICE

As at March 31, 2014, the Company’s shares traded at $1.29, down $0.04 from the $1.32 at March 2013. Earnings per share improved by over 100% on 2013 from (9 cents) to 17 cents.

INVESTMENTS

One Caribbean Media Limited (Formerly, Caribbean Communications Network

(CCN))

The Company currently holds 48,254

shares in OCM with fair value of $16.3

million up from the $11.4 million at

March 31, 2013. OCM is a multi media

company which operates in Trinidad &

Tobago, Barbados, Grenada, Guyana,

Antigua and St.Lucia. Shares of the

OCM are listed on the Trinidad & Tobago

Stock Exchange and traded at TT$20 .00

at the end of March 2013 compared

to TT$15.50 at the end of March 2013

reflecting an increase of 29%.

40

50

60

70

30

20

10

0

10

2010 2011 2012 2013 2014

Earnings (Cents)2010 - 2014

64

17

9

J$1,450,000

J$1,500,000

J$1,550,000

J$1600,000

J$1,400,000

J$1,350,000

J$1,300,000

J$1,250,000

J$1,200,000

2010 2011 2012 2013 2014

Total Assets ($000)2010 - 2014

J$1,341,693

J$1,415,499 J$1,436,583

J$1,496,651

J$1,573,087


Embracing


Change

Consolidated statement of comprehensive income

RADIO JAMAICA LIMITEDFinancial Statements31 March 2014Independent Auditors’ Report to the Members

Financial Statements

36

Consolidated balance sheet

37

Consolidated statement of changes in equity

38

Consolidated statement of cash flows

39

Company statement of comprehensive income

40

Company balance sheet

Company statement of changes in equity

Company statement of cash flows

Notes to the financial statements

41

42

43

44-98

PricewaterhouseCoopersScotiabank CentreDuke StreetBox 372Kingston JamaicaTelephone (876) 922-6230Facsimile (876) 922-7581

Independent Auditors’ Report

To the Members ofRadio Jamaica Limited

Report on the Consolidated and Company Stand Alone Financial StatementsWe have audited the accompanying consolidated financial statements of Radio Jamaica Limited and its subsidiaries, set out on pages 36 to 98, which comprise the consolidated balance sheet as at 31 March 2014 and the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and the accompanying financial statements of Radio Jamaica Limited standing alone, which comprise the balance sheet as at 31 March 2014 and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated and Company Stand Alone Financial StatementsManagement is responsible for the preparation of consolidated and company stand alone financial statements that give a true and fair view in accordance with International Financial Reporting Standards and with the requirements of the Jamaican Companies Act, and for such internal control as management determines is necessary to enable the preparation of consolidated and company stand alone financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these consolidated and company stand alone financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated and company stand alone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated and company stand alone financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated and company stand alone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of consolidated and company stand alone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated and company stand alone financial statements.

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

PricewaterhouseCoopers, Scotiabank Centre, Duke Street, Box 372, Kingston, Jamaica T: (876) 922 6230, F: 876 922 7581, www.pwc.com/jm C.D.W. Maxwell P.W. Pearson E.A. Crawford J.W. Lee P.E. Williams L.A. McKnight L.E. Augier A.K. Jain B.L. Scott B.J. Denning G.A. Reece P.A. Williams R.S. Nathan

Independent Auditors’ Report

To the Members of Radio Jamaica Limited

Report on the Consolidated and Company Stand Alone Financial Statements

We have audited the accompanying consolidated financial statements of Radio Jamaica Limited and its subsidiaries, set out on pages 32 to 82, which comprise the consolidated statement of financial position as at 31 March 2013 and the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and the accompanying financial statements of Radio Jamaica Limited standing alone, which comprise the statement of financial position as at 31 March 2013 and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated and Company Stand Alone Financial Statements

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

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated and company stand alone financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated and company stand alone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated and company stand alone financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated and company stand alone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of consolidated and company stand alone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated and company stand alone financial statements.

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

Members of Radio Jamaica LimitedIndependent Auditors’ Report Page 2

OpinionIn our opinion, the consolidated financial statements of Radio Jamaica Limited and its subsidiaries, and the financial statements of Radio Jamaica Limited standing alone give a true and fair view of the financial position of the group and the company as at 31 March 2014, and of their financial performance and cash flows for the year then ended, so far as concerns the members of Radio Jamaica Limited, in accordance with International Financial Reporting Standards and the requirements of the Jamaican Companies Act.

Report on Other Legal and Regulatory RequirementsAs required by the Jamaican Companies Act, we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

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

Chartered Accountants30 May 2014Kingston, Jamaica

Radio Jamaica Limited

Annual Report 2014

Radio Jamaica LimitedConsolidated Statement of Comprehensive IncomeYear ended 31 March 2014(expressed in Jamaican dollars unless otherwise indicated)

Page 1

Radio Jamaica Limited Consolidated Statement of Comprehensive Income Year ended 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)

Note

2014

$’000

Restated 2013

$’000 Revenue 1,844,190 1,783,997

Direct expenses (811,326) (819,096)

Gross Profit 1,032,864 964,901

Other operating income 5 110,940 82,332

Selling expenses (306,750) (310,166)

Administration expenses (405,390) (443,142)

Other operating expenses (330,959) (329,724)

Impairment charge 14 - (35,108)

Operating (Loss)/Profit 100,705 (70,907)

Finance costs 8 (27,800) (5,721)

Profit/(Loss) before Taxation 72,905 (76,628)

Taxation 9 (13,429) 46,783

Net Profit/(Loss) 59,476 (29,845)

Other Comprehensive Income, net of taxes -

Item that will not be reclassified to profit or loss -

Re-measurements of post-employment benefits 9 (42,307) (18,213)

TOTAL COMPREHENSIVE INCOME 17,169 (48,058)

Earnings per Ordinary Stock Unit Attributable to Stockholders of the Company 12 $0.17 ($0.09)


Annual Report 2014

Radio Jamaica LimitedConsolidated Balance Sheet31 March 2014(expressed in Jamaican dollars unless otherwise indicated)

Page 2

Radio Jamaica Limited Consolidated Balance Sheet 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)

Note

2014 $’000

Restated 2013

$’000

Restated 2012

$’000 Non-Current Assets Fixed assets 13 912,914 682,677 696,259 Intangible assets 14 178,112 83,553 37,978 Retirement benefit assets 15 189,802 205,791 199,291 Investment securities 19 16,356 11,416 8,182 Current Assets Inventories 20 40,658 50,833 43,687 Receivables 22 369,923 419,539 407,963 Taxation recoverable 5,140 2,426 4,215 Cash and short term investments 23 155,075 316,678 265,029 570,796 789,476 720,894 Current Liabilities Payables 24 275,290 271,817 179,161 Taxation payable 19,603 4,445 46,860 294,893 276,262 226,021 Net Current Assets 275,903 513,214 494,873 1,573,087 1,496,651 1,436,583

Stockholders’ Equity Share capital 25 467,656 467,656 467,656 Retained earnings 736,399 719,230 795,322 1,204,055 1,186,886 1,262,978 Non-Current Liabilities Finance lease obligations 26 25,193 - - Long term loans 26 231,161 197,097 15,351 Deferred tax liabilities 16 59,597 77,290 132,372 Retirement benefit obligations 15 53,081 35,378 25,882 1,573,087 1,496,651 1,436,583 Approved for issue by the Board of Directors on 30 May 2014 and signed on its behalf by:

J.A. Lester Spaulding Director Gary Allen Director

Page 2

Radio Jamaica Limited Consolidated Balance Sheet 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)

Note

2014 $’000

Restated 2013

$’000

Restated 2012

$’000 Non-Current Assets Fixed assets 13 912,914 682,677 696,259 Intangible assets 14 178,112 83,553 37,978 Retirement benefit assets 15 189,802 205,791 199,291 Investment securities 19 16,356 11,416 8,182 Current Assets Inventories 20 40,658 50,833 43,687 Receivables 22 369,923 419,539 407,963 Taxation recoverable 5,140 2,426 4,215 Cash and short term investments 23 155,075 316,678 265,029 570,796 789,476 720,894 Current Liabilities Payables 24 275,290 271,817 179,161 Taxation payable 19,603 4,445 46,860 294,893 276,262 226,021 Net Current Assets 275,903 513,214 494,873 1,573,087 1,496,651 1,436,583

Stockholders’ Equity Share capital 25 467,656 467,656 467,656 Retained earnings 736,399 719,230 795,322 1,204,055 1,186,886 1,262,978 Non-Current Liabilities Finance lease obligations 26 25,193 - - Long term loans 26 231,161 197,097 15,351 Deferred tax liabilities 16 59,597 77,290 132,372 Retirement benefit obligations 15 53,081 35,378 25,882 1,573,087 1,496,651 1,436,583 Approved for issue by the Board of Directors on 30 May 2014 and signed on its behalf by:

J.A. Lester Spaulding Director Gary Allen Director


Annual Report 2014

Radio Jamaica LimitedConsolidated Statement of Changes in EquityYear ended 31 March 2014(expressed in Jamaican dollars unless otherwise indicated)

Page 3

Radio Jamaica Limited Consolidated Statement of Changes in Equity Year ended 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)

Number of Shares

Share Capital

Retained Earnings Total

Note ’000 $’000 $’000 $’000

Balance at 1 April 2012, as previously stated 350,154 467,656 800,538 1,268,194

Effects of restatement - - (5,216) (5,216)

Balance at 1 April 2012, as restated 350,154 467,656 795,322 1,262,978

Total comprehensive income as restated 30 - - (48,058) (48,058)

Ordinary dividends 11 - - (28,034) (28,034)

Balance at 31 March 2013 350,154 467,656 719,230 1,186,886

Total comprehensive income - - 17,169 17,169

Balance at 31 March 2014 350,154 467,656 736,399 1,204,055


Annual Report 2014

Radio Jamaica LimitedConsolidated Statement of Cash FlowsYear ended 31 March 2014(expressed in Jamaican dollars unless otherwise indicated)

2014 $’000

Restated 2013

$’000 Cash Flows from Operating Activities Net profit/(loss) 59,476 (29,845) Items not affecting cash:

Amortisation of intangible assets - 2,870 Depreciation 102,616 112,928 Fixed assets adjustment 72 723 Gain on disposal of fixed assets (1,705) (802) Spares utilised 5,048 6,602 Interest income (8,056) (8,190) Dividend income (545) (282) Impairment charge - 35,108 Interest expense 22,326 5,721 Income tax (credit)/charge 13,429 (46,783) Exchange gain on foreign currency balances (3,369) (3,134) Retirement benefits (22,719) (21,287) Revaluation of investment securities (4,940) (3,234) 161,633 50,395

Changes in operating assets and liabilities: Inventories 10,175 (7,146) Receivables 49,618 (11,576) Payables (18,379) 89,738 203,047 121,411

Income tax paid (4,576) (42,855) Net cash provided by operating activities 198,471 78,556 Cash Flows from Investing Activities Proceeds from disposal of fixed assets 2,230 2,851 Purchase of fixed assets (306,643) (108,720) Purchase of intangible assets (94,559) (83,553) Interest received 8,056 8,190 Dividends received 545 282 Net cash used in investing activities (390,371) (180,950) Cash Flows from Financing Activities Loans received 75,000 201,500 Loans repaid (24,300) (16,836) Principal lease repayments (1,446) - Interest paid (22,326) (5,721) Dividends paid - (28,034) Net cash provided by financing activities 26,928 150,909 (Decrease)/increase in cash and cash equivalents (164,972) 48,515 Exchange gains on cash and cash equivalents 3,369 3,134 Cash and cash equivalents at beginning of year 316,678 265,029 Cash and Cash Equivalents at End of Year (Note 23) 155,075 316,678


Annual Report 2014

Radio Jamaica LimitedCompany Statement of Comprehensive IncomeYear ended 31 March 2014(expressed in Jamaican dollars unless otherwise indicated)

Page 5

Radio Jamaica Limited Company Statement of Comprehensive Income Year ended 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)

Note

2014

$’000

Restated 2013

$’000 Revenue 552,075 622,883

Direct expenses (223,768) (252,797)

Gross Profit 328,307 370,086

Other operating income 5 117,987 96,765

Selling expenses (119,523) (129,168)

Administration expenses (181,518) (202,983)

Other operating expenses (150,293) (154,241)

Impairment charge 17 - (36,377)

Operating Loss (5,040) (55,918)

Finance costs 8 (19,247) (3,825)

Loss before Taxation (24,287) (59,743)

Taxation 9 10,293 27,249

Net Loss (13,994) (32,494)


Item that will not be reclassified to profit or loss -

Re-measurements of post-employment benefits 9 (36,138) (19,582)

TOTAL COMPREHENSIVE INCOME (50,132) (52,076)


Annual Report 2014

Radio Jamaica LimitedCompany Balance Sheet31 March 2014(expressed in Jamaican dollars unless otherwise indicated)

Page 6

Radio Jamaica Limited Company Balance Sheet 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)

Note

2014 $’000

Restated 2013

$’000

Restated 2012

$’000 Non-Current Assets Fixed assets 13 283,943 280,912 298,131 Retirement benefit asset 15 157,757 176,551 183,634 Investment in subsidiaries 17 431,924 431,924 121,513 Long term receivables 18 - 2,950 2,950 Investment securities 19 16,356 11,416 8,182 Current Assets Inventories 20 10,558 7,189 8,588 Due from subsidiaries 21 275,591 162,630 370,410 Receivables 22 123,138 131,624 164,999 Taxation recoverable 4,632 1,990 3,918 Cash and short term investments 23 154,742 316,270 260,131 568,661 619,703 808,046 Current Liabilities Payables 24 134,945 135,786 94,164 Taxation payable - 3,181 20,435 134,945 138,967 114,599 Net Current Assets 433,716 480,736 693,447 1,323,696 1,384,489 1,307,857

Equity Share capital 25 467,656 467,656 467,656 Retained earnings 613,624 663,756 743,866 1,081,280 1,131,412 1,211,522 Non-Current Liabilities Finance lease obligations 26 12,860 - - Long term loans 26 179,195 197,097 13,310 Deferred tax liabilities 16 13,324 31,401 65,176 Retirement benefit obligations 15 37,037 24,579 17,849 1,323,696 1,384,489 1,307,857 Approved for issue by the Board of Directors on 30 May 2014 and signed on its behalf by:

J. A. Lester Spaulding Director Gary Allen Director

Page 6

Radio Jamaica Limited Company Balance Sheet 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)

Note

2014 $’000

Restated 2013

$’000

Restated 2012

$’000 Non-Current Assets Fixed assets 13 283,943 280,912 298,131 Retirement benefit asset 15 157,757 176,551 183,634 Investment in subsidiaries 17 431,924 431,924 121,513 Long term receivables 18 - 2,950 2,950 Investment securities 19 16,356 11,416 8,182 Current Assets Inventories 20 10,558 7,189 8,588 Due from subsidiaries 21 275,591 162,630 370,410 Receivables 22 123,138 131,624 164,999 Taxation recoverable 4,632 1,990 3,918 Cash and short term investments 23 154,742 316,270 260,131 568,661 619,703 808,046 Current Liabilities Payables 24 134,945 135,786 94,164 Taxation payable - 3,181 20,435 134,945 138,967 114,599 Net Current Assets 433,716 480,736 693,447 1,323,696 1,384,489 1,307,857

Equity Share capital 25 467,656 467,656 467,656 Retained earnings 613,624 663,756 743,866 1,081,280 1,131,412 1,211,522 Non-Current Liabilities Finance lease obligations 26 12,860 - - Long term loans 26 179,195 197,097 13,310 Deferred tax liabilities 16 13,324 31,401 65,176 Retirement benefit obligations 15 37,037 24,579 17,849 1,323,696 1,384,489 1,307,857 Approved for issue by the Board of Directors on 30 May 2014 and signed on its behalf by:

J. A. Lester Spaulding Director Gary Allen Director


Annual Report 2014

Radio Jamaica LimitedCompany Statement of Changes in EquityYear ended 31 March 2014(expressed in Jamaican dollars unless otherwise indicated)

Page 7

Radio Jamaica Limited Company Statement of Changes in Equity Year ended 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)

Number of Shares Share Capital

Retained Earnings Total

Note ’000 $’000 $’000 $’000

Balance at 1 April 2012, as previously stated 350,154 467,656 744,782 1,212,438

Effects of restatement (916) (916)

Balance at 1 April 2012, as restated 350,154 467,656 743,866 1,211,522

Total comprehensive income 30 -

- -

- (52,076) (52,076)

Ordinary dividends 11 - - (28,034) (28,034)

Balance at 31 March 2013 350,154 467,656 663,756 1,131,412

Total comprehensive income - - (50,132) (50,132)

Balance at 31 March 2014 350,154 467,656 613,624 1,081,280


Annual Report 2014

Radio Jamaica LimitedCompany Statement of Cash FlowsYear ended 31 March 2014(expressed in Jamaican dollars unless otherwise indicated)

Page 8

Radio Jamaica Limited Company Statement of Cash Flows Year ended 31 March 2014 (expressed in Jamaican dollars unless otherwise indicated)

2014 $’000

Restated

2013 $’000

Cash Flows from Operating Activities Net loss (13,994) (32,494) Items not affecting cash:

Depreciation 31,708 34,914 Fixed assets adjustment 72 550 Gain on disposal of fixed assets (1,705) (70) Spares utilised 1,635 2,658 Interest income (6,758) (7,901) Dividend income (545) (10,282) Interest expense 19,247 3,825 Income tax (10,293) (27,249) Exchange gain on foreign currency balances (3,369) (3,134) Retirement benefits (16,933) (12,295) Revaluation of investment securities (4,940) (3,234)

(5,875) (54,712) Changes in operating assets and liabilities:

Inventories (3,369) 1,399 Due from subsidiaries(2) (110,011) (102,631) Receivables 8,487 33,375 Payables (4,581) 28,501

(115,349) (94,068) Income tax paid (1,561) (15,326)

Net cash used in operating activities (116,910) (109,394)

Cash Flows from Investing Activities Proceeds from disposal of fixed assets 2,230 239 Purchase of fixed assets(1) (21,404) (21,072) Interest received 6,758 7,901 Dividends received 545 10,282

Net cash used in investing activities (11,871) (2,650)

Cash Flows from Financing Activities Loan received - 201,500 Loans repaid (16,671) (4,592) Principal lease repayments (198) - Interest paid (19,247) (3,825) Dividends paid - (28,034)

Net cash(used in)/ provided by financing activities (36,116) 165,049

Decrease/(increase) in cash and cash equivalents (164,897) 53,005 Exchange gains on cash and cash equivalents 3,369 3,134 Cash and cash equivalents at beginning of year 316,270 260,131

Cash and Cash Equivalents at End of Year (Note 23) 154,742 316,270

(1) The principal non-cash transaction was the offset of the finance lease additions against the fixed assets additions. (2) The principal non-cash transaction for the prior year was the offset of the additional

investment in subsidiaries against due from subsidiaries.


Annual Report 2014

Radio Jamaica LimitedNotes to the Financial Statements31 March 2014(expressed in Jamaican dollars unless otherwise indicated)

Identification and Principal ActivitiesRadio Jamaica Limited (“the company”) is incorporated and domiciled in Jamaica. The company is listed on the Jamaica Stock Exchange, and has its registered office at 32 Lyndhurst Road, Kingston 5.These financial statements present the results of operations and financial position of the company and its subsidiaries, which are collectively referred to as “the group”.The group’s primary activities are the operation of a ‘free-to-air’ television station, cable television stations and radio stations.All subsidiaries are wholly owned. The company’s subsidiaries are as follows:Television Jamaica Limited Multi-Media Jamaica Limited Media Plus Limited, and its subsidiaries – Reggae Entertainment Television Limited Jamaica News Network Limited The subsidiaries are incorporated and domiciled in Jamaica, with the exception of Media Plus Limited, which is incorporated and domiciled in St. Lucia.

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

1.

2.

(a) Basis of preparationThese financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), and have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale investment securities.

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


Annual Report 2014


Basis of preparation (continued)Standards, interpretations and amendments to published standards effective in the current yearCertain new standards, interpretations and amendments to existing standards that have been published, became effective during the current financial year. The group has assessed the relevance of all such new standards, interpretations and amendments and has put into effect the following IFRS, which are immediately relevant to its operations.

Amendment to IAS 1, ‘Financial statement presentation’ regarding other comprehensive income. The main change resulting from these amendments is a requirement for entities to group items presented in ‘other comprehensive income’ (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments).

IAS 19, ‘Employee benefits’ was revised in June 2011. The changes on the Group’s accounting policies has been as follows: to immediately recognise all past service costs; and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (asset). See note 15 for the impact on the financial statements.

IFRS 10, ‘Consolidated financial statements’ builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. This did not impact on the financial statements as all subsidiaries are controlled.

IFRS 12, ‘Disclosures of interests in other entities’ includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off statement of financial position vehicles. There were no additional disclosures which impacted the Group

IFRS 13, ‘Fair value measurement’, aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS. The requirements, which are largely aligned between IFRS and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRS or US GAAP.

Amendment to IAS 16, ‘Property, plant and equipment which clarifies that spare parts and servicing equipment are classified as PP&E rather than inventory when they meet the definition of PP&E.

Summary of Accounting Policies (Continued)(a)

2.


Annual Report 2014


2. Summary of Accounting Policies (Continued) (a) Basis of preparation (continued)

Standards, interpretations and amendments to published standards that are not yet effective and have not been early adopted by the Group The following standards and amendments to existing standards have been published and are mandatory for the Group’s accounting periods beginning after 1 April 2014 or later periods, but the Group has not early adopted them:

IFRS 9, ‘Financial Instruments’ (effective for annual periods beginning on or after 1

January 2015). This standard specifies how an entity should classify and measure financial instruments, including some hybrid contracts. It requires all financial assets to be classified on the basis of the entity's business model for managing the financial assets and the contractual cash flow characteristics of the financial asset; initially measured at fair value plus, in the case of a financial asset not at fair value through profit or loss, particular transaction costs; and subsequently measured at amortised cost or fair value. These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of IAS 39. They apply a consistent approach to classifying financial assets and replace the four categories of financial assets in IAS 39, each of which had its own classification criteria. They also result in one impairment method, replacing the two impairment methods in IAS 39 that arise from the different classification categories. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. There has been no significant change in the recognition and measurement of financial liabilities carried at amortised cost from what obtained under IAS 39. While adoption of IFRS 9 is mandatory from 1 January 2015, earlier adoption is permitted. The Group is considering the implications of the standard, the impact on the Group and the timing of its adoption by the Group.

IFRS 15, 'Revenue from Contracts with Customers'. The IASB has published its new revenue standard, IFRS 15 'Revenue from Contracts with Customers'. The U.S. Financial Accounting Standards Board (FASB) has concurrently published its equivalent revenue standard which is the result of a convergence project between the two Boards. IFRS 15 applies to nearly all contracts with customers: the main exceptions are leases, financial instruments and insurance contracts. It specifies how and when an entity will recognise revenue as well as requiring entities to provide more informative, relevant disclosures. The standard supersedes IAS 18, 'Revenue', IAS 11, 'Construction Contracts' and a number of revenue-related interpretations. Application of the standard is mandatory for accounting periods beginning on or after 1 January 2017. The Group is assessing the impact of future adoption of the standard.


Annual Report 2014


2. Summary of Accounting Policies (Continued)

(b) Basis of consolidation Subsidiaries are all entities (including special purpose entities) over which the group has power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the group and are no longer consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus costs directly attributable to the acquisition. The excess of the cost of acquisition over the fair value of the net assets of the subsidiary acquired is recorded as goodwill. Intercompany transactions, balances and unrealised gains and losses on transactions between group companies are eliminated.

Investments in subsidiaries are stated in the company’s financial statements at cost.

(c) Foreign currency translation Functional and presentation currency Items included in the financial statements of each of the group’s entities are measured using the currency of primary economic environment in which the entity operates, referred to as the functional currency. The functional currency of each entity is the same as its presentation currency. The consolidated financial statements are presented in Jamaican dollars, which is the group’s functional and presentation currency. Transactions and balances Foreign currency transactions are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from such transactions and from the translation of foreign currency monetary assets and liabilities at the year end exchange rates are recognised in arriving at net profit or loss except when deferred in other comprehensive income.

(d) Revenue and income recognition

Revenue comprises the sale of airtime, programme material, and the rental of studios and equipment, net of General Consumption Tax. Revenue in respect of airtime and programming is recognised on performance of the underlying service. Rental income is recognised as it accrues.

Interest income is recognised as it accrues unless collectibility is in doubt.

Dividend income is recognised when the right to receive payment is established.


Annual Report 2014


Financial instrumentsA financial instrument is any contract that gives rise to both a financial asset in one entity and a financial liability or equity of another entity.

Financial assets

The group classifies its financial assets in the following categories: loans and receivables, available-for-sale, and at fair value through profit or loss. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date. At reporting date, trade receivables were classified as loans and receivables; cash and bank balances, short term investments and quoted investment securities were classified as financial assets at fair value through profit or loss; and unquoted investment securities were classified as available-for-sale.

Financial assets at fair value through profit or lossFinancial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets.Available-for-saleAvailable-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.

Financial liabilities

The group’s financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost using the effective interest method. At the balance sheet date, the following items were classified as financial liabilities: bank overdraft, finance lease obligations, long term loans and trade payables.

Summary of Accounting Policies (Continued)

(e)

2.


Annual Report 2014


2. Summary of Accounting Policies (Continued) (f) Income taxes

Taxation expense in the statement of comprehensive income comprises current and deferred tax charges.

Current tax charges are based on taxable profits for the year, which differ from the profit before tax reported because it excludes items that are taxable or deductible in other years, and items that are never taxable or deductible. The group’s liability for current tax is calculated at tax rates that have been enacted at reporting date.

Deferred tax is the tax expected to be paid or recovered on differences between the carrying amounts of assets and liabilities and the corresponding tax bases. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Currently enacted tax rates are used in the determination of deferred income tax.

Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference can be controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is charged or credited in arriving at profit or loss and other comprehensive income, except where it relates to items charged or credited to equity, in which case, deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when deferred tax assets and liabilities relate to income taxes levied by the same taxation authority.


Annual Report 2014


2. Summary of Accounting Policies (Continued) (g) Fixed assets

Freehold land and buildings are stated at deemed cost less subsequent depreciation for buildings. All other fixed assets are carried at historical cost less accumulated depreciation. Historical costs include expenditure that is directly attributable to the acquisition of the items.

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

Depreciation is calculated on the straight-line basis at rates estimated to write off the cost of the assets over their expected useful lives. Annual rates used are as follows:

Freehold buildings 2.5%

Improvements to leasehold property 2.5%

Furniture, office machinery and rental equipment 10 - 15%

Station equipment - Radio 10 - 15%

Station equipment - Television 6.67 - 25%

Computer equipment 10 - 33⅓%

Motor vehicles 10 - 25%

Land is not depreciated as it deemed to have an indefinite life.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amounts is greater than its estimated recoverable amount.

Gains and losses on disposal of fixed assets are determined by reference to their carrying amount and are taken into account in determining profit or loss.

(h) Intangible assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition, and is included in intangible assets on the balance sheet. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. Brands

Brands acquired in a business combination are recognised at fair value at the acquisition date. Brands have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of brands over their estimated useful lives of 10 to 20 years.


Annual Report 2014



(h) Intangible assets (continued)

Broadcast rights

Broadcast rights acquired are recognised at fair value at the acquisition date. These represent the exclusive rights to broadcast FIFA events for the period 2015 to 2022. Broadcast rights have a finite useful life. Amortisation is calculated using the straight-line method to allocate the cost of the rights over their estimated contractual lives. Amortisation will commence once the first event under the rights have been broadcast.

(i) Investment securities

Investment securities classified as financial assets at fair value through profit or loss and available-for-sale are carried at fair value. Realised and unrealised gains and losses arising from changes in the fair value of investments classified as financial assets at fair value through profit or loss are included in the determination of profit or loss in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of investments classified as available-for-sale are recognised in other comprehensive income. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in profit or loss.

The fair values of quoted investments are based on current bid prices. If the market for an investment is not active, the group establishes fair value by using valuation techniques. Where fair values cannot be reliably measured, the group carries the investment at cost.

(j) Retirement benefits

Pension plans

The group operates defined benefit plans, the assets of which are generally held in separate trustee-administered funds. A defined benefit plan is one that defines an amount of benefit to be provided, usually as a function of one or more factors such as age, years of service or compensation. The asset or liability in respect of defined benefit plans is the difference between present value of the defined benefit obligation at the reporting date and the fair value of plan assets. Where a pension asset arises, the amount recognised is limited to the present value of any economic benefits available in the form of refunds from the plan or reduction in future contributions to the plan. The pension costs are assessed using the Projected Unit Credit Method. Under this method, the cost of providing pensions is charged in arriving at profit or loss so as to spread the regular cost over the service lives of the employees in accordance with the advice of the actuaries, who carry out a full valuation of the plans every year. The pension obligation is measured at the present value of the estimated future cash outflows using discount estimated rates based on market yields on government securities which have terms to maturity approximating the terms of the related liability.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.


Annual Report 2014



(j) Retirement benefits (continued)

Other retirement benefits

The group provides retirement health care and life insurance to its retirees. The entitlement for these benefits is usually based on the employee remaining in services up to retirement age and the completion of a minimum period. The expected costs of these benefits are accrued over the period of employment, using a methodology similar to that for defined benefit pension plans. Valuations for these benefits are carried out annually by independent qualified actuaries.

(k) Impairment of non-financial assets

Assets that have an indefinite useful life – for example, goodwill or intangible assets not ready to use – are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

(l) Inventories

Inventories are stated at the lower of cost and net realisable value, cost being determined as follows:

Film, other - actual cost

Net realisable value is the estimated proceeds of disposal in the ordinary course of business, less applicable expenses.

(m) Trade receivables

Trade receivables are carried at original invoice amount less provision for impairment of these receivables. A provision for impairment of trade receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the carrying amount and the recoverable amount, being the present value of expected cash flows, discounted at the market rate of interest for similar borrowers.

(n) Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost and comprise balances which mature within 90 days of the date of acquisition, including cash and bank balances, net of bank overdrafts.

(o) Trade payables

Trade payables are stated at historical cost.


Annual Report 2014



(p) Leases

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

(q) Borrowings

Borrowings are recognised initially at the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective yield method. Any difference between proceeds (net of transaction costs) and the redemption value is recognised in arriving at profit or loss over the period of the borrowings.

(r) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Where any group entity purchases the company’s equity (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received (net of any directly attributable transaction costs and income taxes) is included in equity attributable to the company’s equity holders.

(s) Dividends

Dividends are recorded as a liability in the financial statements in the period in which they have been approved by shareholders.

(t) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the company’s Board of Directors.

3. Financial Risk Management

The group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the group’s financial performance.

The group’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-to-date information systems. There has been no change to the group’s exposure to financial risks or the manner in which it manages and measures the risks.

The Board of Directors is ultimately responsible for the establishment and oversight of the group’s risk management framework. The Board has established committees/departments for managing and monitoring risks, as follows:


Annual Report 2014


3. Financial Risk Management (Continued)

Department of Finance and Administration

The Department of Finance and Administration is responsible for managing the group’s assets and liabilities and the overall financial structure. It is also primarily responsible for the funding and liquidity risks of the group. The department identifies, evaluates and hedges financial risks in close co-operation with the group’s operating units. The credit department is primarily responsible for managing the group’s credit risk. It evaluates, monitors and manages credit risks through the close assessment of potential and present clients.

(a) Credit risk

Finance Committee

The Finance Committee oversees how management monitors compliance with the group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the group.

An important risk for the group is credit risk, other significant risks include liquidity risk, market risk and other operational risk. Market risk includes currency risk, interest rate and other price risk.

The group takes on exposure to credit risk, which is the risk that its customers, clients or counterparties will cause a financial loss for the group by failing to discharge their contractual obligations. Credit risk is the most important financial risk for the group’s business; management therefore carefully manages its exposure to credit risk. Credit exposures arise principally from the group’s receivables from customers and investment activities. The group structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to a single counterparty or groups of related counterparties and to industry segments. Credit review process

The Department of Finance and Administration has overall responsibility for the ongoing analysis of the ability of customers and other counterparties to meet repayment obligations.

(i) Trade and other receivables

Trade and other receivables relate mainly to the group’s direct customers and advertising agencies. The group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Finance Committee reviews monthly all material direct client accounts with balances over 90 days. The Department of Finance and Administration has established a credit policy under which each customer is analysed individually for creditworthiness prior to the group offering them a credit facility. Credit limits are assigned to each customer and approval is required from the Credit Manager for all direct customer transactions. The group has procedures in place to restrict customer orders if the order will exceed their credit limits. Customers that fail to meet the group’s benchmark creditworthiness may transact with the group on a prepayment basis.

Customer’s credit risks are monitored according to their credit characteristics, such as whether it is an individual or company, geographic location, industry, aging profile, and previous financial difficulties.

The group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The group addresses impairment assessment in two areas: individually assessed allowances and collectively assessed allowances.

The group’s average credit period for airing advertisements is 30 days for direct customers and 60 days for advertising agencies. The group has provided for most receivables over 90 days based on historical experience which indicates that amounts past due beyond 90 days are generally not recoverable.


Annual Report 2014



(a) Credit risk (continued)

(i) Trade and other receivables (continued) Trade receivables between 60 and 90 days are provided for based on an estimate of amounts that would be irrecoverable, determined by taking into consideration past default experience, current economic conditions and expected receipts and recoveries once impaired.

(ii) Cash, deposits and investments

The group limits its exposure to credit risk by maintaining cash, deposits and monetary investments with counterparties that have high credit quality. Accordingly, management does not expect any counterparty to fail to meet its obligations. The Finance Committee performs monthly reviews of the investments and securities held as part of their assessment of the group’s credit risk.

Trade receivables are primarily receivable from customers in Jamaica. The credit exposure for trade receivables at their carrying amounts, as categorised by the customer sector, is as follows:

The Group The Company

2014 2013 2014 2013

$’000 $’000 $’000 $’000

Advertising agencies 154,372 153,085 36,904 43,632

Direct customers 168,350 197,630 38,896 64,700

322,722 350,715 75,800 108,332

Less: Provision for impairment (19,889) (15,750) (10,145) (8,440)

302,833 334,965 65,655 99,892

Ageing analysis of trade receivables that are past due but not impaired

Trade receivables that are less than three months past due are not considered impaired. At reporting dates trade receivables relating to the group and the company amounting to $73,827,000 (2013 – $77,882,000) and $18,372,000 (2013 – $22,450,000), respectively, were past due but not impaired. Trade receivables that are past due relate to a number of independent customers and advertising agencies for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:


2014 2013 2014 2013

$’000 $’000 $’000 $’000

30 – 60 days 21,918 29,257 5,805 9,260

60 – 90 days 9,574 17,216 2,236 2,790

Greater than 90 days 42,335 31,409 10,331 10,400

73,827 77,882 18,372 22,450


Annual Report 2014



(a) Credit risk (continued)

Ageing analysis of trade and other receivables that are impaired

At reporting dates, trade receivables and other receivables of $31,224,000 (2013 – $30,543,000) for the group and $21,480,000 (2013 – $23,233,000) for the company were considered impaired. These receivables are all aged over 90 days and were fully provided for. The individually impaired receivables mainly relate to direct customers and agencies that are in unexpected difficult economic situations. The creation and release of provision for impaired receivables have been included in administration expenses in the profit and loss account. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

The movement on the provision for impairment was as follows:


2014 2013 2014 2013

$’000 $’000 $’000 $’000

At 1 April 30,543 10,669 23,233 6,675

Provision for receivables impairment 11,662 28,323 6,474 18,872

Receivables written off during the year as uncollectible (524) (6,140) (292) (742)

Unused amounts reversed/recovered (10,457) (2,309) (7,935) (1,572)

At 31 March 31,224 30,543 21,480 23,233

The provision includes amount relating to other receivables of $11,335,000 (2013 – $14,793,000) for the group and the company.

(b) Liquidity risk

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

Liquidity risk management process

The group’s liquidity management process, as carried out within the group and monitored by the Department of Finance and Administration, includes:

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

(ii) Maintaining a portfolio of highly marketable and diverse assets that can easily be liquidated as protection against any unforeseen interruption to cash flow;

(iii) Maintaining committed lines of credit;

(iv) Optimising cash returns on investment.


Annual Report 2014



(b) Liquidity risk (continued)

Cash flows of financial liabilities Trade payables are due within one month.

The maturity profile of long term liabilities at year end based on contractual undiscounted payments was as follows:

The Group

Within 1 Year 1 to 5 Years Over 5 Years Total

$’000 $’000 $’000 $’000

2014

Finance lease obligations 8,264 30,604 - 38,868

Long term loans 51,760 178,885 119,955 350,600

60,024 209,489 119,955 389,468

2013

Long term loans 37,360 133,598 150,598 321,556

The Company

Within 1 Year 1 to 5 Years Over 5 Years Total

$’000 $’000 $’000 $’000

2014

Finance lease obligations 4,014 15,722 - 19,736

Long term loans 30,624 122,521 119,955 273,100

34,648 138,243 119,955 292,836

2013

Long term loans 35,291 133,598 150,598 319,487

Assets available to meet all liabilities, including financial liabilities, include cash and short term deposits.


Annual Report 2014


3. Financial Risk Management (Continued) (c) Market risk

The group takes on exposure to market risks, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks mainly arise from changes in foreign currency exchange rates and interest rates. Market risk is monitored by the Department of Finance and Administration which seeks to minimise potential adverse effects on the performance of the group by applying procedures to identify, evaluate and manage this risks, based on guidelines set by the Board of Directors.

Price risk

Price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors specific to the individual instrument or its issuer or factors affecting all instruments traded in the market. The movements in market prices are not expected to have a significant impact on the net results or stockholders’ equity as the group does not hold significant equity securities.

Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The group is exposed to foreign exchange risk, arising primarily with respect to the US dollar, from commercial transactions such as the purchase of investment securities and station equipment, and the recognised assets and liabilities arising therefrom. The group manages its foreign exchange risk by ensuring that the net exposure in foreign assets and liabilities is kept to an acceptable level by monitoring currency positions. As the group has no significant foreign currency exposure, currency fluctuations are unlikely to have any material effect on the net results or stockholders’ equity.

At 31 March 2014, the group and company had net USD dominated monetary assets carried at a Jamaican Dollar equivalent of $18,474,000 (2013 – $38,362,000) and $38,693,000 (2013 – $54,214,000) respectively.

Foreign currency sensitivity

The sensitivity analysis represents the impact on the profit or loss due to the movement in the US dollar exchange rate. If the rate adjusts for a 1% revaluation and 10% devaluation (2013 – 1% revaluation and 10% devaluation), the pre-tax impact on the profit or loss would amount to ($185,000) – revaluation, $2,771,000 –devaluation (2013 – ($384,000)/ $3,836,000) and ($387,000) – revaluation and $5,804,000 – devaluation (2013 – ($542,000)/ $5,421,000) for the group and the company respectively.


Annual Report 2014


3. Financial Risk Management (Continued) (c) Market risk (continued)

Interest rate risk

Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Floating rate instruments expose the group to cash flow interest risk, whereas fixed interest rate instruments expose the group to fair value interest risk.

The group earns interest on its short term deposits disclosed in Note 23. As these deposits have a short term to maturity and are constantly reinvested at current market rates, they are not significantly exposed to interest rate risk.

The group incurs interest on its borrowings disclosed in Note 26. These borrowings are at fixed rates, and expose the group to fair value interest rate risk. Interest rate fluctuations are not expected to have a material effect on the net results or stockholders’ equity. The group analyses its interest rate exposure arising from borrowings on an ongoing basis, taking into consideration the options of refinancing, renewal of existing positions and alternative financing.

(d) Capital management

The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for stockholders and benefits for other stakeholders. The Board of Directors monitors the return on capital, which the group defines as net operating income divided by total stockholders’ equity. The Board of Directors also monitors the level of dividends to ordinary shareholders.

No company within the group is subject to externally imposed capital requirements.

(e) Fair value estimation

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

Financial instruments that, subsequent to initial recognition, are measured at fair value are grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical instruments. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets is the current bid price. At 31 March 2014, these instruments are quoted investment securities (Note 19), which are grouped in Level 1. The group has no financial assets group in Levels 2 and 3.

The following methods and assumptions have been used in determining fair values:

(i) The face value, less any estimated credit adjustments, for financial assets and liabilities with a maturity of less than one year are estimated to approximate their fair values. These financial assets and liabilities include cash and bank balances, short term investments, and trade receivables and payables.

(ii) The carrying values of long term loans, approximate their fair values, as these loans are carried at amortised cost reflecting their contractual obligations and the interest rates are reflective of current market rates for similar transactions.


Annual Report 2014


4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty

Judgements and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

(a) Critical judgements in applying the company’s accounting policies

In the process of applying the group’s accounting policies, management has not made any judgements that it believes would cause a significant impact on the amounts recognised in the financial statements.

(b) Key sources of estimation uncertainty

The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Retirement benefit obligations

The cost of these benefits and the present value of the future obligations depend on a number of factors that are determined by actuaries using a number of assumptions. The assumptions used in determining the net periodic cost or income for retirement benefits include the expected long-term rate of return on the relevant plan assets, the discount rate, and, in the case of health benefits, the expected rate of increase in health costs. Any changes in these assumptions will impact the net periodic cost or income recorded for retirement benefits and may affect planned funding of the pension plan. The expected return on plan assets assumption is determined on a uniform basis, considering long-term historical returns, asset allocation and future estimates of long-term investment returns.

The group determines the appropriate discount rate at the end of each year, which represents the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the retirement benefit obligations. In determining the appropriate discount rate, the group considered interest rate of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and have terms to maturity approximating the terms of the related obligations. The expected rate of increase of health costs has been determined by comparing the historical relationship of the actual health cost increases with the rate of inflation. Other key assumptions for the retirement benefits are based on current market conditions.

The principal actuarial assumptions used in valuing retirement benefits are disclosed in Note 15.

Intangible assets arising from the acquisition of subsidiaries The fair market value of the intangible assets arising from the group’s acquisition of subsidiaries (Note 14) was determined by professional valuers. On the instructions of management, the valuers used the excess of earnings method to determine fair market value. The approach used was deemed by management to be most appropriate to value the respective intangible assets. The excess of earnings method utilises discounted cash flow techniques. The cash flows discounted are derived by applying certain growth rates that management hads determined are reasonable and deem to be best estimates, considering all known information about the markets and industries in which the acquired entities operate at the time of acquisition. The intangibles are tested annually for impairment by utilising discounted cash flows derived by applying certain growth rates that management has determined are reasonable and deem to be best estimates, considering all known information about the markets and industries in which these acquired entities operate and applying an appropriate long term growth rate and discount rate. As a result of the impairment testing performed by management an impairment charge of $35,108,000 was recognised in 2013 (Note 14).


Annual Report 2014


4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty (Continued)

(b) Key sources of estimation uncertainty (continued)

Income taxes

Estimates are required in determining the provision for income taxes. There are some transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for possible tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Recognition of deferred tax assets

Deferred tax assets have not been recognised on tax losses carried forward in respect of certain subsidiaries based on management’s expectation that the subsidiaries will not generate sufficient taxable profits to utilise the tax losses carried forward (Note 16). At 31 March 2014, unrecognised deferred tax assets in respect of tax losses carried forward amounted to $66,740,000 (2013 – $72,144,000).

5. Other Operating Income


2014 $’000 2013

$’000 2014 $’000 2013

$’000

Interest income 8,056 8,190 6,758 7,901

Dividend income 545 282 545 10,282

Net foreign exchange gains 7,127 4,876 6,967 5,460

Unrealised losses on revaluation of investment securities classified as financial assets at fair value through profit or loss 4,940

3,234

4,940

3,234

Gain on disposal of fixed assets 1,705 802 1,705 70

Rental income 55,180 44,263 70,159 58,726

Compensation for damages 5,736 3,404 5,737 3,404

Other income 27,651 17,281 21,176 7,688

110,940 82,332 117,987 96,765


Annual Report 2014


6. Expenses by Nature

Total direct, selling, administration and other operating expenses:


2014 $’000

Restated

2013 $’000

2014 $’000

Restated 2013 $’000

Auditors' remuneration 7,288 6,353 3,607 3,294

Commissions 159,838 158,896 47,782 55,464

Depreciation 102,616 112,928 31,708 34,914

Distribution costs 1,160 22,007 - -

Impairment charge - 35,108 - 36,377

Insurance 57,983 54,167 23,442 22,703

Programming expenses 63,409 61,127 18,518 16,800

Publicity 24,958 28,693 14,579 18,079

Repairs and maintenance 88,422 76,178 36,776 39,101

Special events 166,450 186,861 4,066 10,219

Staff costs (Note 7) 744,711 744,891 304,709 304,303

Utilities 168,121 154,051 70,082 78,247

Other 269,469 295,976 119,833 156,065

1,854,425 1,937,236 675,102 775,566

7. Staff Costs


2014 $’000 2013

$’000 2014 $’000 2013

$’000

Wages and salaries 650,548 644,018 258,565 255,995

Statutory contributions 63,153 58,529 33,243 31,091

Pension benefits (Note 15) (131) (478) (3,014) (3,934)

Other retirement benefits (Note 15) 6,093 6,325 4,165 4,205

Redundancy costs - 915 - 579

Other 25,048 35,582 11,750 16,367

744,711 744,891 304,709 304,303


Annual Report 2014


8. Finance Costs


2014 $’000 2013

$’000 2014 $’000 2013

$’000

Interest expense –

Bank borrowings 20,106 3,811 18,620 2,820

Finance leases 1,014 359 136 359

Other 1,206 1,551 491 646

22,326 5,721 19,247 3,825

Foreign exchange losses 5,474 - - -

27,800 5,721 19,247 3,825

9. Taxation Expense

During the year, the Government of Jamaica continued its reform of taxes. As a result of this the Fiscal Incentives Act dated 20 December 2013 was signed into law. Under this Act the tax rate for large unregulated companies was reduced from 30% to 25% effective 1 January 2014. As such a blended rate of 28.75% was used in computing the income tax for a major subsidiary.

Taxation is computed on the profit or loss for the year adjusted for tax purposes. The charge for taxation comprises income tax at 25%/28.75%:


2014 $’000


2014 $’000


Current tax 21,282 2,229 - -

Prior year over accrual (4,262) - (4,262) -

Deferred tax (Note 16) (3,591) (49,012) (6,031) (27,249)

13,429 (46,783) (10,293) (27,249)


Annual Report 2014


9. Taxation Expense (Continued)

The tax on the group and the company’s profit was derived as follows. Deferred tax was derived as detailed in Note 16.


2014 $’000

Restated

2013 $’000

2014 $’000

Restated

2013 $’000

Profit/Losse before taxation 72,905 (76,628) (24,287) (59,743)

Tax calculated at a tax rate of 25% 18,226 (19,157) (6,071) (14,936)

Adjusted for the effects of :

Effect of change in the income tax rate 324 (31,447) - (15,435)

Effect of different tax rates 2,305 -

Prior year over accrual (4,262) - (4,262) -

Income not subject to tax (1,008) (688) (1,008) (688)

Expenses not deductible for tax purposes 3,891 12,536 506 9,452

Tax loss carried forward for which no deferred tax has been accounted for - 2,794 - -

Recognition of previously unrecognised deferred taxes (1,095) - (211) -

Tax losses utilised (5,365) (3,692) - -

Other 413 (7,129) 753 (5,642)

13,429 (46,783) (10,293) (27,249)

Tax (charge)/credit relating to components of other comprehensive income are as follows: Group

Before Tax

Tax Effect After

Tax

$'000 $'000 $'000

Remeasurements of post-employment benefit liabilities

2014

(56,409) 14,102 (42,307)


2013

(24,283) 6,070 (18,213)


Annual Report 2014


9. Taxation Expense (Continued) Tax (charge)/credit relating to components of other comprehensive income are as follows:

Company

Before Tax Tax

Effect After Tax

$'000 $'000 $'000


2014

(48,184) 12,046 (36,138)


2013

(26,110) 6,528 (19,582)

10. Net Profit and Retained Earnings Attributable to Stockholders of the Company

(a) The net (loss)/profit attributable to stockholders of the company is dealt with in the financial statements as follows:

2014

$’000

Restated 2013

$’000

The company (13,994) (32,494)

The subsidiaries 73,470 2,649

59,476 (29,845)

(b) Retained earnings are dealt with in the financial statements as follows:

2014

$’000

Restated 2013

$’000

The company 613,624 663,756

The subsidiaries 122,775 55,474

736,399 719,230

11. Ordinary Dividends

2014 2013

$'000 $'000

Interim dividends – Nil (2013 – 8 cents) per stock unit - 28,034


Annual Report 2014


12. Earnings per Ordinary Stock Unit

Basic earnings per stock unit is calculated by dividing the net profit attributable to stockholders by the weighted average number of ordinary stock units in issue during the year.

2014 Restated

2013

Net profit/(loss) attributable to stockholders $’000 59,476 (29,845)

Weighted average number of ordinary stock units in issue (‘000) 350,154 350,154

Basic earnings per ordinary stock unit $0.17 ($0.09)


Annual Report 2014


13. Fixed Assets

The Group

Freehold

Land Freehold

Buildings

Improvements to Leasehold

Property

Furniture, Fixtures &

Equipment Motor

Vehicles Spares Work in

Progress Total

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

Cost -

1 April 2012 (restated) 5,516 333,166 16,901 1,129,667 87,415 30,072 10,097 1,612,834

Additions - 8,319 - 27,051 4,230 - 69,120 108,720

Disposals - - - (1,105) (5,093) (6,602) - (12,800)

Adjustment - - - - - - (723) (723)

Transfers - - - 1,046 - - (1,046) -

31 March 2013 (restated) 5,516 341,485 16,901 1,156,659 86,552 23,470 77,448 1,708,031

Additions - 4,668 - 42,852 32,596 4,836 253,546 338,498

Disposals - - - (550) (7,246) (5,048) - (12,844)

Adjustment - - - - - - (72) (72)

Transfers - - 100,615 107,605 - - (208,220) -

31 March 2014 5,516 346,153 117,516 1,306,566 111,902 23,258 122,702 2,033,613

Depreciation -

1 April 2012 (restated) - 75,175 6,966 775,312 55,741 3,381 - 916,575

Charge for the year - 8,226 3,486 88,958 8,200 4,058 - 112,928

Relieved on disposals - - - (864) (3,285) - - (4,149)

31 March 2013 (restated) - 83,401 10,452 863,406 60,656 7,439 - 1,025,354

Charge for the year - 8,356 742 80,122 9,172 4,224 - 102,616

Relieved on disposals - - - (24) (7,247) - - (7,271)

31 March 2014 - 91,757 11,194 943,504 62,581 11,663 - 1,120,699

Net Book Value -

31 March 2014 5,516 254,396 106,322 363,062 49,321 11,595 122,702 912,914

31 March 2013 5,516 258,084 6,449 293,253 25,896 16,031 77,448 682,677


Annual Report 2014


13. Fixed Assets (Continued)

The Company

Freehold Land Freehold Buildings

Furniture, Fixtures &

Equipment Motor Vehicles Spare

s Work in

Progress Total

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

Cost -

1 April 2012 (restated) 5,516 279,841 323,321 27,247 13,547 1,115 650,587

Additions - 8,051 11,003 - - 2,018 21,072

Disposals - - (973) - (2,658) - (3,631)

Transfers - - 207 - - (207) -

Adjustments - - - - - (550) (550)

31 March 2013 (restated) 5,516 287,892 333,558 27,247 10,889 2,376 667,478

Additions - 1,468 9,385 16,309 1,281 8,528 36,971

Disposals - - (550) (7,246) (1,635) - (9,431)

Transfers - - 2,014 - - (2,014) -

Adjustments - - - - - (72) (72)

31 March 2014 5,516 289,360 344,407 36,310 10,535 8,818 694,946

Depreciation -

1 April 2012 (restated) - 65,105 262,268 23,521 1,562 - 352,456

Charge for the year - 6,892 24,989 1,090 1,943 - 34,914

Relieved on disposals - - (804) - - - (804)

31 March 2013 (restated) - 71,997 286,453 24,611 3,505 - 386,566

Charge for the year - 6,983 21,527 1,091 2,107 - 31,708

Relieved on disposals - - (25) (7,246) - - (7,271)

31 March 2014 - 78,980 307,955 18,456 5,612 - 411,003

Net Book Value -

31 March 2014 5,516 210,380 36,452 17,854 4,923 8,818 283,943

31 March 2013 5,516 215,895 47,105 2,636 7,384 2,376 280,912

The tables above include carrying values of $30,561,000 (2013: Nil) and $16,309,000 (2013: Nil) for the Group and the company, respectively, representing assets being acquired under finance leases. All amounts related to finance leases are shown in the ‘Motor Vehicles’ category of fixed assets.


Annual Report 2014


14. Intangible Assets

Goodwill and brands

Intangible assets in the balance sheet were determined as follows:

Goodwill Brands Broadcast

Rights Total

$'000 $'000 $'000 $'000

2014

Cost and net book value at 31 March 2014 - - 178,112 178,112

2013

Cost 53,726 50,472 83,553 187,751

Accumulated amortisation and impairment (53,726) (50,472) - (104,198)

Net book value at 31 March 2013 - - 83,553 83,553

The movement in intangible assets was due to the following:

Goodwill Brands Broadcast

Rights Total

$'000 $'000 $'000 $'000

Net book value at 31 March 2012 2,813 35,165 - 37,978

Additions - - 83,553 83,553

Amortisation charge - (2,870) - (2,870)

Impairment charge (2,813) (32,295) - (35,108)

Net book value at 31 March 2013 - - 83,553 83,553

Additions - - 94,559 94,559

Net book value at 31 March 2014 - - 178,112 178,112 The goodwill balance of $2,813,000 at prior year reporting date was allocated to Reggae Entertainment Television Limited.

Amortisation and impairment charges are included in administration expenses in arriving at net profit or loss. Impairment charge At 31 March 2013, goodwill and brands were deemed to be impaired based on current and projected losses being experienced by the related subsidiaries. The amount of the goodwill and brands impairment is based on the recoverable amount of the related subsidiary or cash generating unit (CGU). The recoverable amount of a CGU was determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using an estimated growth rate. The growth rate did not exceed the long-term average growth rate for the business in which the CGU operates.


Annual Report 2014


14. Intangible Assets (Continued)

Goodwill and brands (continued) The key assumptions used for value-in-use calculations were as follows: Discount rate – 21.5%; Projected revenue growth rates – 10% in year 2, 10% to 30% in year 3, and 10% to 20% thereafter; Projected expense growth rate – 10%;

The discount rate used is pre-tax and reflects specific risks relating to the respective subsidiaries. The rate was derived by computing the cost of equity for similar companies within the industry using imputs from Bloomberg as well as the risk free rate for GOJ long term bond. Management projected the revenue and expense growth rates based on past performance and its expectations of market development. Broadcast rights The amount of $83,553,000 represents the exclusive rights to broadcast FIFA events for the period 2015 to 2022. Amortisation will commence once the first event under the rights have been broadcast.

15. Retirement Benefits


2014 $’000 2013

$’000 2014 $’000 2013

$’000

Amounts recognised in the balance sheet –

Pension schemes 189,802 205,791 157,757 176,551

Other retirement benefits (53,081) (35,378) (37,037) (24,579)

Amounts recognised in profit or loss –

Pension schemes (131) (478) (3,014) (3,934)

Other retirement benefits 6,093 6,325 4,165 4,205

Pension schemes

The company operates a defined benefit pension scheme covering all permanent employees of Radio Jamaica Limited, Multi-Media Jamaica Limited and Television Jamaica Limited.

The scheme is managed by an outside agency under a management contract, and by Trustees. The scheme is funded at 13.18% of pensionable salaries, being 5% by members and 10% (2012 - 8.18%) by the sponsoring entity. Members may contribute up to an additional 5%.

The scheme is valued annually by independent actuaries. The latest actuarial valuation was done as at 28 February 2014.

The Board of the pension fund is required by law and its articles and association to act in the interest of the fund and all relevant stakeholders. The Board of the fund is responsible for the investment policy with regard to the assets of the fund. The funds are managed by First Global Financial Services who has responsibilities for the general management of the portfolio of investments and the administration of the fund.


Annual Report 2014


15. Retirement Benefits (Continued)

Pension schemes (continued)

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


2014 $’000

Restated 2013

$’000 2014

$’000 Restated

2013 $’000

Fair value of plan assets 738,071 666,182 598,323 554,616

Present value of funded obligation (548,269) (460,391) (440,566) (378,065)

Asset in the balance sheet 189,802 205,791 157,757 176,551

The movement in the present value of the funded obligation was as follows:


2014 $’000


2014 $’000


Balance at start of year 460,391 425,749 378,065 356,892

Current service cost 16,666 15,085 11,400 10,595

Interest cost 48,170 42,181 39,237 35,099

525,227 483,015 428,702 402,586

Remeasurements -

Experience gains (7,508) (8,206) (1,803) (4,084)

Losses from change in

demographic assumptions - 19,730 - 16,810

Losses/(gains) from change

in financial assumptions 45,790 (28,315) 35,003 (22,454)

38,282 (16,791) 33,200 (9,728)

Employee contributions 20,981 19,545 13,081 8,244

Benefits paid (36,221) (25,378) (34,417) (23,037)

548,269 460,391 440,566 378,065


Annual Report 2014




The movement in the fair value of plan assets was as follows:


2014 $’000


2014 $’000



Employee contributions 20,981 19,545 13,081 8,244

Employer contributions 27,648 26,262 17,245 11,873

Interest income on plan assets 71,008 63,135 58,505 54,055

Benefits paid (36,221) (25,378) (34,417) (23,037)

Administrative fees (6,041) (5,391) (4,854) (4,427)

Remeasurements of the plan assets (5,486) (37,031) (5,853) (32,618)

Balance at end of year 738,071 666,182 598,323 554,616

The amounts recognised in arriving at profit or loss were determined as follows:


2014 $’000


2014 $’000

Restated2013 $’000


Interest cost 48,170 42,181 39,237 35,099

Interest income on plan assets (71,008) (63,135) (58,505) (54,055)

Administrative fees 6,041 5,391 4,854 4,427

Total included in staff costs (Note 7) (131) (478) (3,014) (3,934)

The amounts recognised in other comprehensive income were determined as follows:


2014 $’000 2013

$’000 2014 $’000 2013

$’000

Remeasurements of the defined

benefit obligation 38,282 (16,791) 33,200 (9,728)

Remeasurements of the plan assets 5,486 37,031 5,853 32,618

Total 43,768 20,240 39,053 22,890


Annual Report 2014




At the last valuation date, the present value of the defined benefit obligation was comprised of approximately $327,898,000 and $224,072,000 relating to active members, $1,841,000 relating to deferred members and $218,530,000 and $214,653,000 relating to the members in retirement for the group and the company respectively.

Expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date. Expected returns on equity and property investments reflect long-term real rates of return experienced in the respective markets.

Expected employer contributions to the plan for the year ended 31 March 2015 amount to $29,690,000 for the group and $18,700,000 for the company.

The distribution of plan assets was as follows:

The Group & Company

2014 2013

% %

Equities 19 17

Government of Jamaica securities 54 61

Repurchase agreements 13 13

Corporate bonds 4 3

Other 10 6

100 100

Plan assets include the company’s ordinary shares with a fair value of $968,000 (2013 - $896,000).

The sensitivity of the defined benefit obligation to changes in the principal assumptions is :

The Group

Impact on post-employment obligations

Change in assumption Increase in

assumption Decrease in assumption

$’000 $’000

Discount rate 1% (66,770) 84,705

Future salary increases 1% 34,800 (29,854)

Pension increases 1% 42,271 (37,153)


Annual Report 2014




The sensitivity of the defined benefit obligation to changes in the principal assumptions is :

The Company




$’000 $’000

Discount rate 1% (49,988) 62,477


Pension increases 1% 34,293 (30,175)

The Group

Increase Assumption by

One Year

Decrease Assumption by

One Year

$’000 $’000

Life expectancy 16,300 (16,800)

The Company


One Year


One Year

$’000 $’000


The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised within the statement of financial position.



In addition to pension benefits, the group offers retiree medical and life insurance benefits that contribute to the health care and life insurance coverage of employees after retirement. The method of accounting and frequency of valuations are similar to those used for defined benefit pension schemes.



2014 $’000

Restate

d2013 $’000

2014 $’000


Present value of unfunded obligations 53,081 35,378 37,037 24,579

The movement in the present value of unfunded obligations was as follows:


2013 $’000

Restated

2013 $’000

2014 $’000

Restated

2013 $’000



Interest cost 3,660 2,646 2,536 1,851

Past service cost - 1,353 - 1,006

41,471 32,207 28,744 22,054

Remeasurements -

Experience gains 8,750 289 6,522 283

Losses from change in demographic assumptions - 1,818 - 1,159

Losses from change in financial assumptions 3,893 1,938 2,610 1,778

12,643 4,045 9,132 3,220

Benefits paid (1,033) (874) (839) (695)



Annual Report 2014




In addition to pension benefits, the group offers retiree medical and life insurance benefits that contribute to the health care and life insurance coverage of employees after retirement. The method of accounting and frequency of valuations are similar to those used for defined benefit pension schemes.



2014 $’000

Restate

d2013 $’000

2014 $’000


Present value of unfunded obligations 53,081 35,378 37,037 24,579

The movement in the present value of unfunded obligations was as follows:


2013 $’000

Restated

2013 $’000

2014 $’000

Restated

2013 $’000



Interest cost 3,660 2,646 2,536 1,851


41,471 32,207 28,744 22,054

Remeasurements -

Experience gains 8,750 289 6,522 283

Losses from change in demographic assumptions - 1,818 - 1,159

Losses from change in financial assumptions 3,893 1,938 2,610 1,778

12,643 4,045 9,132 3,220

Benefits paid (1,033) (874) (839) (695)



Annual Report 2014




The amounts recognised in arriving at net profit or loss were as follows:


2014 $’000

Restated

2013 $’000

2014 $’000

Restated

2013 $’000


Interest cost 3,660 2,646 2,536 1,851


Total included in staff costs (Note 7) 6,093 6,325 4,165 4,205

The amounts recognised in other comprehensive income were determined as follows:


2014 $’000 2013

$’000 2014 $’000 2013

$’000

Remeasurements of the defined benefit obligation 12,643 4,045 9,132 3,220

At the last valuation date, the present value of the defined benefit obligation was comprised of approximately $31,382,000 and $18,440,000 relating to active members and $1,698,000 and $18,596,000 relating to the members in retirement for the group and the company respectively.

The sensitivity of the defined benefit obligation to changes in the principal assumptions is:

The Group




$’000 $’000

Discount rate 1% (4,941) 6,186


The Company


Change in assumption

Increase in assumption Decrease in

assumption

$’000 $’000

Discount rate 1% (7,387) 9,274



Annual Report 2014




The Group


One Year


One Year

$’000 $’000


The Company


One Year


One Year

$’000 $’000


Principal actuarial assumptions used in valuing retirement benefits

The principal actuarial assumptions used were as follows:

The Group & The Company

2014 2013

Discount rate 9.5% 10.5%

Inflation rate 5.5% 6.0%

Future salary increases 6.5% 7.0%

Future pension increases 2.75% 3.0%

Long term increase in health cost 7% 7.5%

Expected remaining working lives (years) 24 24


Annual Report 2014



Risks associated with pension plans and post-employment plans

Through its defined benefit pension plans and post-employment medical plans, the Company is exposed to a number of risks, the most significant of which are detailed below: Asset volatility The plan liabilities are calculated using a discount rate set with reference to Government of Jamaica bond yields; if plan assets underperform this yield, this will create a deficit. As the plan matures, the Company intends to reduce the level of investment risk by investing more in assets that better match the liabilities. The Government bonds represent investments in Government of Jamaica securities. The Company believes that due to the long-term nature of the plan liabilities, a level of continuing equity investment is an appropriate element of the Company’s long term strategy to manage the plans efficiently. See below for more details on the Company’s asset-liability matching strategy. Changes in bond yields A decrease in Government of Jamaica bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings. Inflation risk Higher inflation will lead to higher liabilities. The majority of the plan’s assets are either unaffected by fixed interest bonds, meaning that an increase in inflation will reduce the surplus or create a deficit. Life expectancy The majority of the plan’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plan’s liabilities. This is particularly significant, where inflationary increases result in higher sensitivity to changes in life expectancy. The Company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the pension scheme. Within this framework, the company’s ALM objective is to match assets to the pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due. The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the pension obligations. The Company has not changed the processes used to manage its risks from previous periods. The Company does not use derivatives to manage its risk. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. A large portion of assets in 2014 consists of bonds and equities. Funding levels are monitored on an annual basis and the current agreed contribution rate is 10% of pensionable salaries. The next triennial valuation is due to be completed as at 31 December 2014. The Company considers that the contribution rates set at the last valuation date to be sufficient to prevent a deficit and that regular contributions, which are based on service costs, will not increase significantly.


Annual Report 2014


16. Deferred Taxation

Deferred income taxes are calculated in full on all temporary differences under the liability method using a principal rate of 25%.


2014 $’000 Restated 2013

$’000 2014 $’000 Restated 2013

$’000

Deferred income tax assets 45,684 26,917 34,742 20,740

Deferred income tax liabilities (105,281) (104,207) (48,066) (52,141)

(59,597) (77,290) (13,324) (31,401)

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


2014

$’000 Restated 2013 $’000 2014

$’000 Restated 2013 $’000

Balance as at 1 April restated (77,290) (132,372) (31,401) (65,176)

Credited/(charged) in arriving at profit or loss 3,591 49,012 6,031 27,247

Credited/(charged) to other comprehensive income 14,102 6,070 12,046 6,528

Balance as at 31 March (59,597) (77,290) (13,324) (31,401)

The movement in the deferred tax assets and liabilities (prior to appropriate offsetting of balances) during the year is as follows:

Group

Deferred tax liabilities

Accelerated Tax

Depreciation

Retirement Benefit Assets Unrealised

Foreign Exchange

Gains Interest

Receivable

Total

$’000 $’000 $’000 $’000 $’000

At 1 April 2012 restated 80,698 67,754 - 147 148,599

(Credited)/charged to profit or loss (28,302) (11,246) 161 55 (39,332)

(Credited)/charged to other comprehensive income - (5,060) - - (5,060)

At 31 March 2013 52,396 51,448 161 202 104,207

(Credited)/charged to profit or loss 4,892 6,943 85 95 12,015

(Credited)/charged to the statement of comprehensive income - (10,941) - - (10,941)

At 31 March 2014 57,288 47,450 246 297 105,281


Annual Report 2014


16. Deferred Taxation (Continued)

The movement in the deferred tax assets and liabilities (prior to appropriate offsetting of balances) during the year is as follows:

Group

Deferred tax assets

Retirement Benefit

Obligation Accrued Vacation

Tax losses Other

Total

$’000 $’000 $’000 $’000

$’000

At 1 April 2012 restated 4,950 11,101 - 176 16,227

(Credited)/charged to profit or loss 2,884 (1,591) 8,331 55 9,679

Credited/(charged) to the statement of comprehensive income 1,011 - - - 1,011

At 31 March 2013 8,845 9,510 8,331 231 26,917

(Credited)/charged to profit or loss 1,264 (1,664) 8,355 7,651 15,606

(Charged)/credited to the statement of comprehensive income 3,161 - - - 3,161

At 31 March 2014 13,270 7,846 16,686 7,882 45,684

Company

Deferred tax liabilities

Accelerated

Tax Depreciation

Retirement

Benefit Assets

Interest Receivable

Total

$’000 $’000 $’000 $’000

At 1 April 2012 restated 15,087 60,753 147 75,987

(Credited)/charged to profit or loss (7,286) (10,892) 55 (18,123)

(Credited)/charged to other comprehensive income - (5,723) - (5,723)

At 31 March 2013 7,801 44,138 202 52,141

(Credited)/charged to profit or loss - (9,763) - (9,763)

(Credited)/charged to other comprehensive income 524 5,064 100 5,688

At 31 March 2014 8,325 39,439 302 48,066


Annual Report 2014


16. Deferred Taxation (Continued)

The movement in the deferred tax assets (prior to appropriate offsetting of balances) during the year is as follows:

Company

Deferred tax assets

Retirement Benefit

Obligation Tax Losses Accrued Vacation Other

Total

$’000 $’000 $’000 $’000 $’000

At 1 April 2012 restated 3,415 - 7,364 32 10,811

(Credited)/charged to profit or loss 1,925 8,331 (1,331) 199 9,124

(Credited)/charged to other comprehensive income 805 - - - 805

At 31 March 2013 6,145 8,331 6,033 231 20,740

(Credited)/charged to profit or loss 831 8,355 (1,078) 3,611 11,719

(Credited)/charged to other comprehensive income 2,283 - - - 2,283

At 31 March 2014 9,259 16,686 4,955 3,842 34,742

Deferred income tax assets/liabilities amounts which are expected to be recovered/settled within one year:


2014

$’000 2013 $’000 2014

$’000 2013

$’000

Deferred income tax assets - 231 - 231

Deferred income tax liabilities 543 202 302 202

Deferred income tax assets are recognised for tax losses carried forward to the extent that realisation of the related tax benefit through the future taxable profits is probable. Subject to agreement with the Taxpayer Audit and Assessment Department, tax losses available for offset against future taxable profits amounted to $333,702,000 (2013 – $321,901,000) for the group and $66,743,000 (2013 – $33,326,000) for the company, and these losses may be carried forward indefinitely. Deferred income tax assets have not been recognised for tax losses carried forward in respect of certain subsidiaries. These tax losses amounted to $266,958,000 (2013 – $288,575,000).


Annual Report 2014


17. Investment in Subsidiaries

2014 $’000 2013

$’000

Multimedia Jamaica Limited 50 50

Television Jamaica Limited 20,002 20,002

Media Plus Limited –

Reggae Entertainment Television Limited 174,930 174,930

Jamaica News Network Limited 236,942 236,942

431,924 431,924

In the previous year a decision was taken to convert the amount receivable from Reggae Entertainment Television Limited and Jamaica News Network to an investment in these entities. An impairment charge of $36,377,000 was recorded based on impairment assessment undertaken.

18. Long Term Receivables


2014 $’000 2013

$’000 2014 $’000 2013

$’000

GV Media Group Limited 10,829 10,829 10,829 10,829


- - - -

Subsidiary - - - 2,950

- - - 2,950

GV Media Group Limited

In a revised shareholders’ deed dated 1 December 2007, the company disposed of its 20% shareholding in GV Media Group Limited. Arising from this revision, an unsecured loan (‘Layer One Debt’) from GV Media Group Limited of £179,000 was created.

Management has determined that this is fully impaired and should, therefore, be carried at nil value in the financial statements. No foreign exchange gains/losses have been recognised in respect of this receivable since the date of impairment in 2007.

Subsidiary

This represents the amount receivable in respect of the background music equipment transferred by the company to Multi-Media Jamaica Limited.


Annual Report 2014


19. Investment Securities

The Group & The Company

2014 $’000 2013

$’000

At fair value through profit or loss –

One Caribbean Media Limited, quoted 16,349 11,409

Available-for-sale –

Caribbean News Agency, unquoted 7 7

16,356 11,416

20. Inventories


2014 $’000 Restated 2013

$’000 2014 $’000 Restated 2013

$’000

Spares 3,055 3,173 1,049 1,161

Film 18,119 23,897 - -

Goods in transit 11,434 16,492 3,606 1,368

Other 8,050 7,271 5,903 4,660

40,658 50,833 10,558 7,189

21. Due from Subsidiaries

2014

$’000 2013

$’000

Multi-Media Jamaica Limited 83,633 67,260


Reggae Entertainment Television Limited 8,259 -

Jamaica News Network Limited 39,084 -

275,591 162,630

In the previous year a decision was taken to convert the amount receivable from Reggae Entertainment Television Limited and Jamaica News Network to an investment in these entities.


Annual Report 2014


22. Receivables


2014 $’000 2013

$’000 2014 $’000 2013 $’000

Trade receivables 322,722 350,715 75,800 108,332

Prepayments 14,286 54,624 7,299 7,780

Other 64,139 44,743 61,519 38,745

401,147 450,082 144,618 154,857


369,923 419,539 123,138 131,624

23. Cash and Cash Equivalents


2014 $’000 2013

$’000 2014 $’000 2013

$’000

Cash 57,591 55,822 57,258 55,414

Short term investments 97,484 260,856 97,484 260,856

155,075 316,678 154,742 316,270

(a) Cash comprises amounts held in current accounts, which currently attract interest at a rate of

1% per annum.

(b) Short term investments comprise securities purchased under resale agreements and are classified as financial assets at fair value through profit or loss. The average maturity of these investments was under 90 days. The weighted average effective interest rate on these instruments was as follows:

The Group & Company

2014

%

2013

%

United States dollar 3.46 2.46

Jamaican dollar 6.68 6.65

(c) The group has unsecured bank overdraft facilities. The effective interest rate on account overrun is between 24.75% - 48%.


Annual Report 2014


24. Payables


2014 $’000

2013 $’000 2014

$’000 2013 $’000

Trade 121,747 123,566 46,158 48,140

Accrued vacation leave 32,055 38,897 19,819 24,132

Other accruals 20,645 30,168 13,115 12,236

Current portion of finance leases (Note 26) 5,216 - 2,509 -

Current portion of long term loans (Note 26) 35,347 18,711 17,901 16,670

Statutory deductions 17,554 17,960 9,294 9,947

Other 42,726 42,515 26,149 24,661

275,290 271,817 134,945 135,786

25. Share Capital

Authorised –

50,000 5% Cumulative participating preference shares

378,000,000 Ordinary shares

2014

$’000 2013 $’000

Issued and fully paid –

357,467,991 (2012 – 357,476,991) Ordinary shares of no par value 472,695 472,695

7,323,100 Treasury shares (2012 – 7,323,100) Ordinary shares of no par value (5,039) (5,039)

467,656 467,656

The treasury shares are held by the RJR Employee Share Scheme.


Annual Report 2014


26. Long Term Loans & Finance Leases

Long term loans


2014 $’000 2013

$’000 2013 $’000 2012

$’000

(a) RBC Bank Jamaica Limited 9,759 13,308 9,759 13,308

(b) RBC Bank Jamaica Limited 2,041 - -

(c) RBC Bank Jamaica Limited 187,337 200,459 187,337 200,459

(d) Prime Sports Limited 69,412 - - -

266,508 215,808 197,096 213,767

Less: Current portion (Note 24) (35,347) (18,711) (17,901) (16,670)

231,161 197,097 179,195 197,097

(a) This loan is repayable on a monthly basis, maturing in December 2016 and attracts interest at 9.5% (2013 –9.5%). It is secured by a second mortgage over commercial properties owned by the company.

(b) This loan was repayable on a monthly basis and matured in April 2013 and attracted interest at 11% (2013 – 11%). It was secured by a first mortgage over commercial properties owned by the company.

(c) This loan is repayable on a monthly basis, maturing in September 2019 and attracts interest at 9% (2013 – 9%). It is secured by a first mortgage over commercial properties owned by the company.

(d) This loan is unsecured and repayable on a monthly basis, maturing in November 2017 and attracts interest at 6% (2013 – Nil).

Finance leases Finance lease liabilities – minimum lease payments


2014 $’000 2013

$’000 2014 $’000 2013

$’000

Not later than 1 year 8,264 - 4,014 -

Later than 1 year and not later than 5 years 30,604 - 15,722 -

38,868 - 19,736 -

Future finance charges on finance leases (8,459) - (4,367) -

Present value of finance lease obligations 30,409 - 15,369 -

26. Long Term Loans & Finance Leases (Continued)

The present value of finance lease obligations is as follows:


2014 $’000 2013

$’000 2014 $’000 2013

$’000

Not later than 1 year 5,216 - 2,509 -

Later than 1 year and not later than 5 years 25,193 - 12,860 -

30,409 - 15,369 -


Annual Report 2014


27. Segment Reporting

Management has determined the group’s operating segments based on the reports reviewed by the company’s Board of Directors that are used to make strategic decisions. The group is organised and managed in two main business segments based on its business activities. Operating results for each segment are used to measure performance, as management deems that information to be the most relevant in evaluating segments relative to other entities that operate within these industries.

The designated segments are:

(a) Audio visual, comprising the operations of the group’s free-to-air television station and its cable stations; and

(b) Radio and other, comprising the operations of the group’s radio stations.

The group’s operations are primarily located in Jamaica. Transactions between segments are done under terms similar to that with third parties.

Audio Visual Radio and Other Sub-total Eliminations Total

$’000 $’000 $’000 $’000 $’000

2014

Revenues 1,350,339 611,744 1,962,083 (117,893) 1,844,190

Operating profit 112,095 47 112,142 (11,437) 100,705

Assets 1,319,986 1,567,664 2,887,650 (1,019,670) 1,867,980

Liabilities 752,063 480,062 1,232,125 (568,200) 663,925

Capital expenditure 298,080 40,418 338,498 - 338,498

Depreciation 69,566 33,050 102,616 - 102,616

Finance costs 8,543 19,257 27,800 - 27,800

2013 Restated

Revenues 1,214,662 692,158 1,906,820 (122,823) 1,783,997

Operating loss (8,456) (52,451) (60,907) (10,000) (70,907)

Assets 942,197 1,610,611 2,552,808 (779,895) 1,772,913

Liabilities 449,253 476,636 925,889 (339,862) 586,027


Depreciation & amortisation 78,514 37,284 115,798 - 115,798

Finance costs 1,882 3,839 5,721 - 5,721

Impairment charge 35,108 - 35,108 - 35,108

The Group’s customers are mainly resident in, and operate from, Jamaica.

The result of its revenue from external customers in Jamaica is $1,812,354,000 (2013 - $1,744,658,000), and the total of revenue from external customers from other countries is $31,836,000 (2013 - $39,339,000).


Annual Report 2014


27. Segment Reporting

Management has determined the group’s operating segments based on the reports reviewed by the company’s Board of Directors that are used to make strategic decisions. The group is organised and managed in two main business segments based on its business activities. Operating results for each segment are used to measure performance, as management deems that information to be the most relevant in evaluating segments relative to other entities that operate within these industries.

The designated segments are:

(a) Audio visual, comprising the operations of the group’s free-to-air television station and its cable stations; and

(b) Radio and other, comprising the operations of the group’s radio stations.

The group’s operations are primarily located in Jamaica. Transactions between segments are done under terms similar to that with third parties.

Audio Visual Radio and Other Sub-total Eliminations Total

$’000 $’000 $’000 $’000 $’000

2014

Revenues 1,350,339 611,744 1,962,083 (117,893) 1,844,190

Operating profit 112,095 47 112,142 (11,437) 100,705

Assets 1,319,986 1,567,664 2,887,650 (1,019,670) 1,867,980

Liabilities 752,063 480,062 1,232,125 (568,200) 663,925


Depreciation 69,566 33,050 102,616 - 102,616

Finance costs 8,543 19,257 27,800 - 27,800

2013 Restated

Revenues 1,214,662 692,158 1,906,820 (122,823) 1,783,997

Operating loss (8,456) (52,451) (60,907) (10,000) (70,907)

Assets 942,197 1,610,611 2,552,808 (779,895) 1,772,913

Liabilities 449,253 476,636 925,889 (339,862) 586,027


Depreciation & amortisation 78,514 37,284 115,798 - 115,798

Finance costs 1,882 3,839 5,721 - 5,721

Impairment charge 35,108 - 35,108 - 35,108

The Group’s customers are mainly resident in, and operate from, Jamaica.

The result of its revenue from external customers in Jamaica is $1,812,354,000 (2013 - $1,744,658,000), and the total of revenue from external customers from other countries is $31,836,000 (2013 - $39,339,000).

28. Related Party Transactions and Balances

(a) Sale of services The company did not have any sale of services to its subsidiaries.

(b) Purchase of services

2014

$’000 2013

$’000

Multi-Media Jamaica Limited 26,658 37,009

Jamaica News Network Limited 10,220 12,890

36,878 49,899

(c) Rental expense – The company has rental expense with its subsidiaries as follows

2014

$’000 2013

$’000


Multi-Media Jamaica Limited 245 93

Reggae Entertainment Television Limited 240 135

Jamaica News Network Limited 240 135

15,039 14,034

(d) Key management compensation for the group was as follows:


2014 $’000 2013

$’000 2014 $’000 2013

$’000

Wages and salaries 35,509 29,129 35,509 29,129

Statutory contributions 2,178 1,769 2,178 1,769

Other 3,251 2,913 3,251 2,913

40,938 33,811 40,938 33,811


2014 $’000 2013

$’000 2014 $’000

2013 $’000

Directors' emoluments –

Fees 4,284 4,138 2,324 2,114

Management remuneration (included in staff costs) 13,230 13,206 13,230 13,206


Annual Report 2014


28. Contingencies The company and its subsidiaries are subject to various claims, disputes and legal proceedings, in the normal course of business. Provision is made for such matters when, in the opinion of management and its legal counsel, it is probable that a payment will be made by the group, and the amount can be reasonably estimated. In respect of claims asserted against the group which has not been provided for, management is of the opinion that such claims are either without merit, can be successfully defended or will result in exposure to the group which is immaterial to both financial position and results of operations.

29. Restatement Restatement of prior year balances relate to both the adoption of a new standard and the correction of prior year errors. Adoption of new standard – (a) The impact of the adoption of IAS 19 (Revised) and consequential adjustments to

deferred tax. The amendment eliminates the corridor approach to recognition of actuarial gains and losses arising from IAS 19 pension valuations and results in the recognition of all actuarial gains and losses in other comprehensive income (OCI) as they occur. Additionally, all past service costs are immediately recognised and interest cost and expected return on plan assets are replaced with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability. The effect of these revisions on 2012 statement of comprehensive income was the immediate recognition in other comprehensive income of actuarial losses of $3,478,000 and $2,911,000 on pension benefits and actuarial losses $1,241,000 and $1,143,000 on other retirement obligations, the recognition in profit or loss of $29,000 of past service cost and the recognition of a net interest expense decrease of $ 329,000 and $538,000 for group and company respectively. The effect of these revisions on 2013 statement of comprehensive income was the immediate recognition of actuarial losses of $9,801,000 and $13,977,000 on pension benefits and actuarial losses $2,812,000 and $2,079,000 on other retirement obligations, and the recognition of a net interest expense decrease of $646,000 and $596,000 for group and company respectively. As a result of the impact of the restatement in relation to IAS 19 (Revised) the effect of the change in tax rate from 331/3% to 25% on the restated amounts are also included.

(b) The impact of adopting amendments to IAS 16 resulted in amounts being reclassified from inventory to fixed assets with the amounts being depreciated. The impact on the statement of changes in equity of the adoption of IAS 19 (revised) and the corrections are represented by the movements in the statement of comprehensive income as no other equity accounts were affected. In accordance with the requirements of IAS 8 par 28 (f) the company is required to show the effect on each financial statement line item of the adoption of IAS 19 (revised) for the 2014 amounts presented. In the opinion of management this effect is not material and hence this disclosure has not been presented in these financial statements. The financial statements for the years ended 31 March 2013 and 2012 have been restated to reflect the financial position and results for these corrections. The financial effects of these corrections are as follows:


Annual Report 2014


30. Restatement (Continued)

Effect on statement of financial position at 1 April 2012

Group

As at 31 March 2012

$’000 (a)

$’000 (b)

$’000

As at 31 March 2012

$’000 presented

Non-Current Assets

Fixed assets 669,568 - 26,691 696,259

Retirement benefit assets 195,813 3,478 - 199,291

Other non-current assets 46,160 - - 46,160

Total Non-Current Assets 911,541 3,478 26,691 941,710

Inventory 73,759 - (30,072) 43,687

Other current assets 677,207 - - 677,207

Total Current Assets 750,966 - (30,072) 720,894

Total Current Liabilities 226,021 - - 226,021

Net Current Assets 524,945 - (30,072) 494,873

1,436,486 3,478 (3,381) 1,436,583

Stockholders’ Equity

Share capital 467,656 - - 467,656

Retained earnings 800,538 (1,835) (3,381) 795,322

1,268,194 (1,835) (3,381) 1,262,978

Non-Current Liabilities -

Long term liabilities 15,351 - - 15,351

Deferred tax liabilities 125,789 6,583 - 132,372 Retirement benefit obligations 27,152 (1,270) - 25,882

1,436,486 3,478 (3,381) 1,436,583


Annual Report 2014



Effect on statement of financial position at 31 March 2013

Group

As at 31 March

2013 $’000

(a) $’000

(b) $’000

As at 31 March

2013 $’000

presented Non-Current Assets

Fixed assets 666,646 - 16,031 682,677

Retirement benefit assets 215,592 (9,801) - 205,791


Total Non-Current Assets 977,207 (9,801) 16,031 983,437

Inventory 74,303 - (23,470) 50,833





1,513,891 (9,801) (7,439) 1,496,651


Share capital 467,656 - - 467,656


1,203,785 (9,460) (7,439) 1,186,886



Deferred tax liabilities 80,443 (3,153) - 77,290

Retirement benefit obligations 32,566 2,812 - 35,378

1,513,891 (9,801) (7,439) 1,496,651


Annual Report 2014



Effect on statement of comprehensive income at 31 March 2013

Group

As at 31 March

2013 $’000

(a) $’000

(b) $’000

As at 31 March

2013 $’000

presented

Revenue 1,783,997 - - 1,783,997

Direct expenses (819,096) - - (819,096)

Gross Profit 964,901 - - 964,901

Other operating income 82,332 - - 82,332

Selling expenses (310,166) - - (310,166)

Administration expenses (446,006) 6,922 (4,058) (443,142)

Other operating expenses (329,724) - - (329,724)

Impairment charge (35,108) - - (35,108)

Operating Loss (73,771) 6,922 (4,058) (70,907)

Finance costs (5,721) - - (5,721)

Loss before Taxation (79,492) 6,922 (4,058) (76,628)

Taxation 43,117 3,666 - 46,783

Net Loss (36,375) 10,588 (4,058) (29,845)

Other Comprehensive Income, net of taxes - Item that will not be reclassified to profit or

loss - Re-measurements of post-employment

benefits - (18,213) - (18,213)

TOTAL COMPREHENSIVE INCOME (36,375) (7,625) (4,058) (48,058)

Earnings per Ordinary Stock Unit

Attributable to

Stockholders of the Company ($0.10) 0.02 (0.01) ($0.09)


Annual Report 2014


Group

2013 $’000

(a), (b) $’000

Restated 2013

$’000 Cash Flows from Operating Activities Net loss (36,375) 6,530 (29,845) Items not affecting cash:

Amortisation of intangible assets 2,870 - 2,870 Depreciation 108,870 4,058 112,928 Fixed assets adjustment 723 - 723 Spares utilised - 6,602 6,602 Gain on disposal of fixed assets (802) - (802) Interest income (8,190) - (8,190) Dividend income (282) - (282) Impairment charge 35,108 - 35,108 Interest expense 5,721 - 5,721 Income tax credit (43,117) (3,666) (46,783) Exchange gain on foreign currency balances (3,134) - (3,134) Retirement benefits (14,365) (6,922) (21,287) Revaluation of investment securities (3,234) - (3,234)

43,793 6,602 50,395 Changes in operating assets and liabilities:

Inventories (544) (6,602) (7,146) Receivables (11,576) - (11,576) Payables 89,738 - 89,738

121,411 - 121,411 Income tax paid (42,855) - (42,855)

Net cash provided by operating activities 78,556 - 78,556

Cash Flows from Investing Activities Proceeds from disposal of fixed assets 2,851 - 2,851 Purchase of fixed assets (108,720) - (108,720) Purchase of intangible assets (83,553) - (83,553) Interest received 8,190 - 8,190 Dividends received 282 - 282

Net cash used in investing activities (180,950) - (180,950)

Cash Flows from Financing Activities Net cash provided by financing activities 150,909 - 150,909

Increase in cash and cash equivalents 48,515 - 48,515

Exchange gains on cash and cash equivalents 3,134 - 3,134

Cash and cash equivalents at beginning of year 265,029 - 265,029

Cash and Cash Equivalents at End of Year (Note 23) 316,678 - 316,678

30. Restatement (Continued) Impact on statement of cashflows for the year ended 31 March 2013


Annual Report 2014



Effect on statement of financial position at 1 April 2012

Company

As at 31 March

2012 $’000

(a) $’000

(b) $’000

As at 31 March

2012 $’000

presented Non-Current Assets

Fixed assets 286,146 - 11,985 298,131

Retirement benefit assets 180,723 2,911 - 183,634


Total Non-Current Assets 599,514 2,911 11,985 614,410

Inventory 22,135 - (13,547) 8,588





1,306,508 2,911 (1,562) 1,307,857


Share capital 467,656 - - 467,656

Retained earnings 744,782 646 (1,562) 743,866

1,212,438 646 (1,562) 1,211,522



Deferred tax liabilities 61,739 3,437 - 65,176

Retirement benefit obligations 19,021 (1,172) - 17,849

1,306,508 2,911 (1,562) 1,307,857


Annual Report 2014


30. Restatement (Continued) Effect on statement of financial position at 31 March 2013

Company

As at 31 March

2013 $’000

(a) $’000

(b) $’000

As at 31 March 2013

$’000 presented

Non-Current Assets

Fixed assets 273,528 - 7,384 280,912

Retirement benefit assets 190,528 (13,977) - 176,551


Total Non-Current Assets 910,346 (13,977) 7,384 903,753

Inventory 18,078 (10,889) 7,189





1,401,971 (13,977) (3,505) 1,384,489


Share capital 467,656 - - 467,656


1,146,959 (12,042) (3,505) 1,131,412



Deferred tax liabilities 35,415 (4,014) - 31,401 Retirement benefit obligations 22,500 2,079 - 24,579

1,401,971 (13,977) (3,505) 1,384,489


Annual Report 2014


30. Restatement (Continued) Effect on statement of comprehensive income at 31 March 2013

Company

As at 31 March

2013 $’000

(a) $’000

(b) $’000

As at 31 March

2013 $’000

presented

Revenue 622,883 - - 622,883

Direct expenses (252,797) - - (252,797)

Gross Profit 370,086 - - 370,086

Other operating income 96,765 - - 96,765

Selling expenses (129,168) - - (129,168)

Administration expenses (207,009) 5,969 (1,943) (202,983)

Other operating expenses (154,241) - - (154,241)

Impairment charge (36,377) - - (36,377)

Operating Loss (59,944) 5,969 (1,943) (55,918)

Finance costs (3,825) - - (3,825)

Loss before Taxation (63,769) 5,969 - (59,743)

Taxation 26,324 925 - 27,249

Net Loss (37,445) 6,894 (1,943) (32,494)


Item that will not be reclassified to profit or loss - Re-measurements of post-employment benefits - (19,582) - (19,582)

TOTAL COMPREHENSIVE INCOME (37,445) (12,688) (1,943) (52,076)

Annual Report 2014



30. Restatement (Continued) Impact on statement of cashflows for the year ended 31 March 2013

Company

2013 $’000

(a), (b) $’000

Restated 2013

$’000 Cash Flows from Operating Activities

Net loss (37,445) 4,951 (32,494)

Items not affecting cash: Depreciation 32,971 1,943 34,914 Fixed assets adjustment 550 - 550 Gain on disposal of fixed assets (70) - (70) Spares utilsed - 2,658 2,658 Interest income (7,901) - (7,901) Dividend income (10,282) - (10,282) Interest expense 3,825 - 3,825 Income tax credit (26,324) (925) (27,249) Exchange gain on foreign currency balances (3,134) - (3,134) Retirement benefits (6,326) (5,969) (12,295) Revaluation of investment securities (3,234) - (3,234)

(57,370) 2,658 (54,712) Changes in operating assets and liabilities:

Inventories 4,057 (2,658) 1,399 Due from subsidiaries (102,631) - (102,631) Receivables 33,375 - 33,375 Payables 28,501 - 28,501

(94,068) - (94,068) Income tax paid (15,326) - (15,326) Net cash used in operating activities (109,394) - (109,394) Cash Flows from Investing Activities Proceeds from disposal of fixed assets 239 - 239 Purchase of fixed assets (21,072) - (21,072) Interest received 7,901 - 7,901 Dividends received 10,282 - 10,282 Net cash used in investing activities (2,650) - (2,650) Cash Flows from Financing Activities Net cash provided by financing activities 165,049 - 165,049 Increase in cash and cash equivalents 53,005 - 53,005 Exchange gains on cash and cash equivalents 3,134 - 3,134 Cash and cash equivalents at beginning of year 260,131 - 260,131 Cash and Cash Equivalents at End of Year (Note 23) 316,270 - 316,270

Five-Years SummaryConsolidated Profit & Loss Account

Restated Restated2010 2011 2012 2013 2014$000 $000 $000 $000 $000

Turnover 1,995,765 1,944,590 1,828,840 1,783,997 1,844,190

Profit/(Loss) (before tax) 390,966 186,265 146,521 (76,628) 72,905 Taxation (169,345) (53,437) (59,114) 46,783 (13,429) Exceptional Item - - - - -

Profit (Loss) for the Financial Year 221,621 132,828 87,407 (29,845) 59,476 Other Comprehensive Income (5,216) (18,213) (42,307) Dividends/Capital Distribution 17,599 41,584 34,995 28,034 - Net Transfer of Capital Reserve - - - - -

Retained (Loss)/Profit for the year 204,022 91,244 47,196 (76,092) 17,169

Shareholders FundsCapital: Ordinary 467,656 467,656 467,656 467,656 467,656 Preference - - - - - Share Premium - - - - - Unissued Shares Reserves 656,882 748,126 795,322 719,230 736,399

1,124,538 1,215,782 1,262,978 1,186,886 1,204,055

Long Term Liability 217,155 199,717 173,605 309,765 369,032

Total Funds Employed 1,341,693 1,415,499 1,436,583 1,496,651 1,573,087

Represented by: Fixed Assets & Investments 964,939 929,228 941,710 983,437 1,297,184 Net Current Assets 376,754 486,271 494,873 513,214 275,903

1,341,693 1,415,499 1,436,583 1,496,651 1,573,087

Ordinary Shares in Issue (mls) Year end 357.5 357.5 357.5 357.5 357.5

cents cents cents cents centsDividends Per Ordinary Shares 5.0 11.6 9.8 7.8 -

Earnings Per Ordinary Shares 63.70 37.97 24.96 (8.52) 16.99

Shareholders FundsPer Ordinary Stock Unit 314.6 340.1 353.3 332.0 336.8

% % % % %Returns on Sales (Profit before tax as aPercentage of Turnover) 19.59 9.58 8.01 (4.30) 3.95

Gearing (Net Borrowing as aPercentage of Capital and Reserves) 8.6 5.8 2.5 18.2 24.2

Return on Net Assets (Profit After Taxas a Percentage of Net Assets) 16.52 9.38 6.08 (1.99) 3.78

Place $100.00 stamp here

FORM OF PROXY I/We ...................................................................................................................................................................... of ............................................................................................................................................................................ being a Member/Members of the above-named Company hereby appoint ................................................................of......................................................................................................... or failing him/her.............................................of.......................................................................................... As my/our proxy to vote for me/us on my/our behalf at the Sixty-sixth Annual General Meetingof the Company to be held on Wednesday, August 27, 2014 at 10:00 a.m. and at any adjournment thereof. I/We desire this form to be used for/against the resolutions as indicated below. Signed this ........................................... day of ................................................................ 2014 Signature: .................................................................................................................................................. Unless otherwise directed the proxy will vote, as he thinks fit. Please indicate by inserting an “X” in the spaces below how you wish your votes to be cast. If no indication is given yourProxy will vote for or against each resolution or abstain, as he thinks fit.

RESOLUTIONS

FOR

AGAINST

RESOLUTION 1

RESOLUTION 2 (a)

RESOLUTION 2b (i)

RESOLUTION 2b (ii)

RESOLUTION 2b (iii)

RESOLUTION 3

(For text of Resolutions please refer to Notice of Meeting)

NOTES: 1. An instrument appointing a proxy, shall, unless the contrary is stated thereon be valid as well for any

adjournment of the meeting as for the meeting to which it relates and need not be witnessed. 2. If the appointer is a corporation, this form must be under its common seal or under the hand of an officer or

attorney duly authorized in writing. 3. In the case of joint holders, the vote of the senior will be accepted to the exclusion of the votes of others,

seniority being determined by the order in which the names appear on the register. 4. To be valid, this form must be received by the Registrar of the Company at the address given below not less

than 48 hours before the time fixed for holding the meeting or adjourned meeting. 5. The proxy form should bear stamp duty of One Hundred dollars ($100.00) which may be in the form of

adhesive stamp duly cancelled by the person signing the proxy form.

REGISTRAR AND TRANSFER AGENTSJamaica Central Securities Depository

40 Harbour Street, Kingston

Rjr annual report 2014

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Transcript of Rjr annual report 2014