AL REPORT 2003 - Jamaica Stock Exchange

jse_quarklayout3.0of a viable securities market
that facilitates the mobilization of
capital to finance the growth and
development of the nation.
Members of the JSE Council 6
Directors’ Report 7
The Management Team 14
Corporate Highlights 16 - 17
Financial & Statistical Highlights 18
Statement of Cash Flows 25
Notes to the Financial Statements 48
Adoption of International Reporting Standards 53
Members of the Jamaica Stock Exchange 59
Historical Highlights 1969 – 2003 60
Corporate Information 61
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Notice is hereby given that the 27th Annual General Meeting of the Jamaica Stock Exchange will be held at the Jamaica Stock Exchange, 40 Harbour Street, Kingston, on Thursday June 24, 2004, commencing at 1 p.m. for the following purposes:
1. To appoint Directors/Council Members. 2. Directors/Council members retire at the Annual General Meeting and are eligible for re-appointment.
The following persons are eligible for election to the ten seatholders seats:
* Mr. Roy Johnson Retiring * Mr. Christopher Berry Retiring * Mr. Patrick Hylton Retiring * Mr. Hugh Croskery Retiring * Mrs. Rita Humphries-Lewin Retiring * Mr. Curtis Martin Retiring * Mr. Ed McKie Retiring • Mr. Mark Walters Retiring * Mr. Don Wehby Retiring * Mr. Leo Williams Retiring Retiring Directors eligible for election to the three non-seatholders seats are:
* Miss. Caryl Fenton * Mr. Alvaro Casserly * Mr. John Issa
3. To accept the nominees of the Ministry of Finance and Planning and the Governor of the Bank of Jamaica.
4. To elect the nominees of the Private Sector Organization of Jamaica (PSOJ); the Institute of Chartered
Accountants of Jamaica (ICAJ) and the Jamaican Bar Association (JBA).
5. To fix the remuneration of the Auditors or to determine the manner in which such remuneration is to be fixed.
To consider, and (if thought fit) pass the following Resolution:
“ That the Directors be and are hereby authorized to fix the remuneration of the Auditors at a figure to be agreed with them.” 6. To receive, and if approved, adopt the Audited Financial Statements for the year ended December 31, 2003,
together with the Directors’ and Auditors’ Reports. To consider and (if thought fit) pass the following Resolution:
"That the Audited Financial Statements for the year ended December 31, 2003, and the Report of the Auditors be adopted." 7. To fix the fees of the Directors or to determine the manner in which such fees are to be fixed. To consider and
(if thought fit) pass the following Resolution:
“That the Directors be and are hereby authorized to fix their fees for the fiscal period 2004/2005.” 8. To transact any other ordinary business of the company.
DATED THIS 10th DAY OF MAY 2004 BY ORDER OF THE BOARD
---------------------------------- Marlene J. Street Secretary (Pro tem)
Note: (1) A member may appoint its Seat-holder or any other person to act as its representative. The person so authorised shall be entitled to exercise the same powers as the member which he represents. • Mark Walters resigned effective June 22, 2004.
NOTICE OF 27TH ANNUAL GENERAL MEETING
OUR CORPORATE OBJECTIVES
stock market commencing operations in
February 1969.
of the stock market and the stock exchange in Jamaica.
• To ensure that the stock market and its broker members
operate at the highest standards practicable.
• To develop, apply and enforce the rules designed to
ensure public confidence in the stock market and
its broker-members.
market business.
information and maintain local and international
relationships which can enhance the development
of the Jamaica stock market.
The Directors submit herewith the Statement of Consolidated Revenue, Expenses, Profits, Assets and
Liabilities of the Jamaica Stock Exchange and its wholly owned subsidiary, the Jamaica Central Securities
Depository for the year ended December 31, 2003.
Operating revenues for the year were $104.9 million compared to $38.4 million for 2002, an increase of
173.1 %. Investment and other income were $56.1 million compared to $38.2 million for 2002, an increase
of 46.9 %.
Total expenses for the year were $101.2 million, an increase of 43.3 % over 2002’s $70.6 million. The net
profit before taxes was $59.8 million compared to a profit of $6.0 million in 2002.
Total assets of the company and its subsidiary as at December 31, 2003 were $647.7 million compared to
$542.6 million for the corresponding 2002 period. These figures include Compensation Fund assets of
$280.6 million and $331.5 million for 2002 and 2003 respectively.
Shareholders’ equity increased from $516.3 million to $598.4 million (15.9 %).
The Auditors, Deloitte & Touche have signified their willingness to continue in office.
On behalf of the Board:
Roy L. Johnson Chairman
May 4, 2004
The Financial Statements for the year ended December 31, 2003 have been prepared in accordance with the International Financial Reporting Standards (IFRS). The comparative figures for the year ended December 31, 2002, have been re-stated in accordance with these standards.
DIRECTORS’ REPORT
BACK (L-R)
Mr. John Issa - Non-seatholder, Mr. Wain Iton - General Manager / Secretary, JSE, Mr. Don Wehby - Chairman, First Global
Stockbrokers Ltd., Mr. Johnathan Brown - Representative, Ministry of Finance & Planning, Mr. Mark Walters - Vice President,
DB&G Ltd., Mr. Curtis Martin, Director, Capital & Credit Securities Ltd., Mr. Christopher Berry - Chairman, Mayberry
Investments Ltd., Mr. Alvaro Casserly - Non-seatholder.
FRONT (L-R)
Mrs. Rita Humphries-Lewin - CEO/Chairman, Barita Investments Ltd., Mrs. Faith Stewart - Representative, Bank of Jamaica,
Mr. Leo Williams - Managing Director, JMMB Securities Ltd., Mr. Roy L. Johnson - Chairman, JSE, Seatholder VM Wealth
Management Ltd., Ms. Caryl Fenton - Non-Seatholder, Mr. Hugh Croskery - Chairman / Managing Director, Paul Chen Young
& Co.Ltd., Mr. Ed McKie - Chairman, M/VL Stockbrokers Ltd.
JAMAICA STOCK EXCHANGE COUNCIL
Roy L. Johnson CHAIRMAN
The Jamaica Stock Exchange continued on its clear mission to provide a fair, efficient, ethical and transparent
market during 2003 and we are pleased with the results obtained. The market registered impressive growth of
49% confirming the high level of confidence issuers and investors have displayed in the operations and
potential of the market to meet their investment goals. The deliberate strategy of the Exchange to admit new
members who would bring to the market a wider client base has brought renewed vibrancy and attracted new
listings. During the year two new listings were added and at the end of 2003 there were 42 companies listed
with indications from other firms of their intention to go public shortly.
FINANCIAL PERFORMANCE
For the year ended Dec. 31, 2003, the JSE achieved the best operating results ever reported. Operating
revenues were $92.2 million exceeding the previous year’s $32.2 million by $59.9 million, an increase of 186%
to yield a surplus in operations before taxation of $62 million (Compared to $14 million for 2002.)
Investment and other income increased from $36.6 million (2002) to $53.6 million in 2003 (a 46% increase).
Surplus before taxation inclusive of investment income on the Compensation Fund was $118.7 million for
2003 against $50.3 million in 2002 (136% increase). Losses for the Exchange’s wholly owned subsidiary JCSD
were considerably reduced having recorded $8.1 million in 2002 and $2.3 million in 2003. Net surplus was
$77.3 million against $25.8 million, a satisfying 200% increase. The Exchange, having lost its taxable status
in1996 paid over to the Government $39 million in taxes and $20.1 million in fees to the Financial Services
Commission. The Exchange continues to discuss with the FSC the high level of fees being charged.
CORPORATE GOVERNANCE
During 2003 the Council continued to respond to the need in the market place to promote good corporate
governance and respond to the challenges of positioning the Exchange to take advantage of opportunities for
market development.
A Corporate Governance Working Committee has reviewed the Exchange’s internal governance structure and
made recommendations to improve both internal management functions as well as to enable the Exchange to
discharge its public responsibilities in an atmosphere of transparency. To this end, the Exchange has
implemented guidelines on the release of corporate information by listed companies to improve disclosure and
transparency.
REGIONAL STOCK MARKET
I am pleased that the JSE has been able to stimulate greater resolve and movement towards a Caribbean Stock
Market in the context of an inevitable Caribbean Single Market and Economy. We have participated in several
meetings and have proposed a possible model for consideration by stakeholders. Transactions in cross border
trading between Trinidad & Jamaica were estimated at US$67million, for 2003.
REGULATORY ISSUES
The Jamaica Stock Exchange continues to meet regularly with the Financial Services Commission to discuss
regulatory issues and other areas of concern such as investor protection, mergers and take-overs. Rules are
being continuously reviewed to ensure that we meet international standards and also respond to the demands
of modern securities trading.
THE JAMAICA CENTRAL SECURITIES DEPOSITORY LTD.
The Jamaica Central Securities Depository (JCSD) has had a remarkable positive impact on the equities
market. There was no experience of failed settlements since its 1998 inception and during 2003 the
CHAIRMAN’S REVIEW
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Depository smoothly handled a higher level of transaction activity boosting confidence in the market. During the
year, the Trinidad & Tobago Depository became operational and both itself and the JCSD were able to facilitate an
unprecedented level of cross-border trading which augurs well for the future. The JCSD continues to encourage
shareholders to deposit their holdings with the depository. As at the end of December 31, 2003, the JCSD had 8.7
billion stock units valued at J$60.7 billion on deposit. We are particularly pleased that the last two listings were
handled by the JCSD through the process of electronic upload and were fully de-materialised.
FIXED INCOME PROJECT:
One of the strategic objectives of the JCSD is the implementation of a central depository for the clearance and
settlement of fixed income transactions in the market. In furtherance of our objective, the JCSD commenced the
development of the Fixed Income Software on June 5, 2003 with the signing of a contract with Polaris Software Lab.
Ltd. This company has a CMMI level certification, which is the highest level of certification in the software industry.
We have committed US$1.096 million to the project and spent in excess of US$0.267 million in 2003. We expect
that the project will be completed by the first quarter of 2005.
THE FUTURE
We are currently actively pursuing and promoting de-materialization to reduce the cost companies incur in making
public offerings to investors, as has happened with the Initial Public Offerings of CCMB and JMMB. Recognizing
the challenges that face stock exchanges in emerging markets, active consideration has been given to meeting market
needs by providing a more efficient, liquid, lower cost and investor friendly environment. We have identified the
strategic directions for the future and are engaged in the internal structural strengthening of the Exchange to
transform it into a more market-focussed entity.
MANAGEMENT & STAFF
We wish to record our thanks to the management and staff of the Exchange for their performance during the
past year.
GENERAL MANAGER’S REPORT
The year under review, 2003 was one of the best ever in the history of the Jamaica Stock Exchange. Among
other milestones, it was a year which saw impressive financial and market growth compared to the previous
year:
MACRO ECONOMIC PERFORMANCE
Tight monetary and fiscal policies were used in an attempt to contain inflation and devaluation of the Jamaican
Dollar. Despite these efforts the inflation rate was in double digits at the end of 2003 at 14.1% and the Jamaican
Dollar devalued. Up to the end of the first quarter of 2003 the yield on 182-Days Treasury Bills was 33.47% and in
the ensuing months this trended down to close the year 2003 at 22.05%.
MARKET ACTIVITY
There was increased activity on the market and evidence of the vibrancy in the Secondary Market is represented in
the performance of the Indices in 2003. For the year the JSE Index grew by 48.88% to close at 67,586.72 points.
There was also growth in the All Jamaican Composite and JSE Select Indices. The All Jamaican Composite grew by
20.56% to close at 55,629.64 points and the JSE Select grew by 17.07% to close at 1,697.87 points. Market
Capitalization as at the end of the year was $512.88 billion. When compared to last year, this represents an increase
of 75.46%.
During this period 35,954 transactions crossed the floor. When compared to the corresponding period, 2002 this
represents an increase of 33.17%. A total of 4.29 billion units (Ordinary and Block Trades) crossed the floor. This
was 167.38% greater than the previous year’s total trades. Total traded value was $24.24 billion, an increase of
217.37% when compared to 2002.
These increases have positively impacted the JSE’s operating income which at $101.8 million has shown a 139%
increase over the previous year and contributed to the JSE, having one of the most financially profitable year.
LISTINGS
By the end of the first half of the year, two new companies, namely Jamaica Money Market Brokers Limited and
Capital and Credit Merchant Bank were listed on the Jamaica Stock Exchange through Initial Public Offerings.
Amidst this, there were acquisitions and mergers viz.
(a) First Caribbean International’s acquisition of the minority shares of First Caribbean Jamaica;
(b) The merger of Island Life Insurance Company with Life of Jamaica resulting in the de-listing of Island Life
Insurance Company.
The JSE began the year with forty-one listed companies and ended with forty two companies listed. There was one
de-listing and two new listings.
TECHNOLOGY, PRODUCT AND SERVICES
The JSE implemented measures to ensure that it kept abreast of current technology, understood the needs of the
market and provided protection for investors. To this end, during 2003:
i) The JSE migrated its system to a Virtual Private Network (VPN) System – which facilitated a more secure
connection for users logging on to our network.
ii) Amendments were made to the JSE Rules in keeping with the Jamaica’s adaptation of the International Financial
Reporting Standards (IFRS).
iii) Further amendments were made to its rules to provide greater protection for minority shareholders and for the
arbitration of complaints.
iv) The market was provided with guidelines relating to the release of company news allowing for greater transparency for
the investing public.
CORPORATE ACTIONS
Of the forty-two (42) companies that are listed on the Jamaica Stock Exchange, thirty-three (33) companies paid
dividends and seven (7) issued Bonus Shares.
TOP TEN ADVANCING
RBTT Financial Holdings Limited 130.00 150.00 345.00
JMMB Limited 110.84 4.15 8.75
Guardian Holdings Limited 90.00 170.00 323.00
Pegasus Hotel 78.95 1.90 3.40
National Commercial Bank Jamaica 64.23 8.89 14.60
Goodyear (Jamaica) 58.82 4.25 6.75
Hardware & Lumber 54.47 6.15 9.50
CMP Industries 49.50 2.00 2.99
Bank of Nova Scotia (Jamaica) 44.65 15.79 22.84
TOP TEN DECLINING
Cable & Wireless (Jamaica) (23.42) 1.06 0.81
Gleaner Company (18.83) 1.54 1.25
Seprod (14.29) 7.58 6.50
Courts (Jamaica) (12.50) 3.20 2.80
Carreras Group (2.75) 35.99 35.00
BONUS SHARES
Courts Jamaica 1:2 26/05/2003 21/05/2003
D B & G Limited 1:1 10/12/2003 08/12/2003
Gleaner 2:11 30/05/2003 28/05/2003
CORPORATE SERVICE
As part of the continuing thrust towards contributing to the country’s development, in September, the JSE
pledged one million dollars towards the construction of an eight-bed Intensive Care Unit and the opening of the
two new operating theatres for the University Hospital of the West Indies. Finally, market efficiency continues to
be the foremost focus of the JSE and to this end new measures to provide for adjustments to our Rules are being
implemented to address the needs of the general public, which we serve.
Marlene J. Street -(Acting) General Manager
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portfolios as well as other communication needs of the JSE.
Michael Gillett Chambers - Assistant General Manager, Information Technology & Systems - Manages the development of the
information technolgy needs of the JSE.
Wain Iton - General Manager / Secretary - Responsible for the management of the Jamaica Stock Exchange.
Wentworth Graham - Manager, Market Operations & Trading - Manages the marketing operations and trading department.
Marlene J. Street - Deputy General Manager - Responsible for the finance and compliance portfolios of the Exchange as well
as the day-to-day administration of the JSE.
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Roy L. Johnson, Board members and Wain Iton, JSE General Manager. At right is Mark Thwaites Chairman of the TTW and Fund
Raising Committe. (6). INVESTOR OUTREACH SEMINAR: Scores of residents of Ocho Rios and its environs turned
out to the JSE’s Investor Outreach Seminar on October 9, 2003 at the Jamaica Grande Hotel. The purpose of the seminar was to familiarize prospective and existing investors with the recent developments in the stock market and the JSE as well as to facilitate interaction between stockbrokers and clients. Members of the Headtable (l-r): Mrs. Pauline Haughton, President of the St. Ann Chamber of Commerce; JMMB’s Leo Williams; Curtis Martin, JSE’s Deputy Chairman; Johnathan Brown, Council Member and
DB& G’s Mark Walters. (7). Johnathan Brown thanks Mrs. Pauline Haughton, President of the St. Ann Chamber of Commerce with a
spray of orchids. (8 to 10). QUESTION TIME: Audience members get a chance to quiz the JSE’s team about shareownership
and other issues. (11). OVER ALL WINNER: Justin Nam, Financial Analyst of Dehring, Bunting & Golding (centre) is
congratulated by principals of DB&G Ltd., Mark Walters (left) and Peter Bunting for emerging the overall winner in the JSE’s Market Research Competition. The occasion was the Awards Ceremony on December 4, 2003. Justin won cash prizes as well as tickets to New York courtesy of Air Jamaica.
JSE CORPORATE HIGHLIGHTS 2003
(1). JMMB LISTS: Donna Duncan-Scott, Managing Director, Jamaica Money Market Brokers Ltd. (forefront) proudly holds the
JSE’s Rule Book at the JMMB listing ceremony on January 2, 2003. (2). GOING PUBLIC SEMINAR: Owners and
shareholders of private and family-owned companies in Jamaica got a chance to learn more about the process of going public on the Jamaica Stock Exchange at a seminar at the Hilton Kingston Hotel on February 20, 2003. Here speakers at the seminar pose for a snap-shot before the start of the programme. From (l-r): Wain Iton, Roy Johnson; Lance Hylton, Partner, Myers, Fletcher & Gordon and Mr. Keith King, Director, Corporate Investment Banking RBTT Financial Group, Trinidad & Tobago.
(3). A CROSS SECTION of the audience at the “Going Public” seminar. (4). CCMB ON BOARD: Ryland T. Campbell,
(Chairman/CEO) Capital & Credit Financial Group. gently places the strip with his company’s name at the May 26, 2003 listing
ceremony. (5). JSE GIVES TO UHWI: Hon. R. Danny Williams, (second left) points to the new vision of the eight-bed intensive
care unit and the two new operating theatres for the University of the West Indies Hospital. The JSE contributed one million dollars last September to the fund-raising project which is being chaired by Mr. Williams. Others looking on are: (L-R) Alvaro Casserly;
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FINANCIAL STATEMENTS
Consolidated Income and Expenditure Account IV
Consolidated Statement of Changes in Equity V
Consolidated Statement of Cash Flows VI
Notes to the Financial Statements VII
The Jamaica Stock Exchange Limited and Its Subsidiary Consolidated Balance Sheet at December 31, 2003.
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We have audited the accompanying balance sheet of The Jamaica Stock Exchange Limited as of December 31,
2003 and the related income and expenditure account, statement of changes in equity and cash flows for the year
then ended and have received all the information and explanations which we considered necessary. These
financial statements are the responsibility of the directors and management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with International Standards on Auditing. Those standards require that
we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by the management, as well as evaluating the overall financial statements presentation. We
believe our audit provides a reasonable basis for our opinion.
In our opinion, proper accounting records have been kept and the financial statements, which are in agreement
therewith, present fairly in all material respects the state of the company’s affairs as at December 31, 2003 and
of the results of its operations, its changes in equity and its cash flows for the year then ended in accordance with
International Financial Reporting Standards and comply with the provisions of the Jamaican Companies Act.
Chartered Accountants Kingston, Jamaica, April 16, 2004
AUDITORS' REPORT TO THE MEMBERS Of THE JAMAICA STOCK EXCHANGE LIMITED
STATEMENT I
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STATEMENT III
The Jamaica Stock Exchange Limited Balance Sheet at December 31, 2003.
Directors
The notes on Statement VII form an integral part of the financial statements. The financial statements on Statements II to VII were approved and authorized for issue by the Board of Directors on April 16, 2004 and are signed on its behalf by:
2003 2002 Notes $’000 $’000
ASSETS Non-current assets Property, plant and equipment 3 44,467 45,623 Intangible assets 4 3,037 4,716 Investments in subsidiary 5 23,500 14,304 Investments in securities
Compensation Fund 6a 137,195 96,313 Other 6b 97,642 105,203
Long-term receivable 7 400 - Retirement benefit asset 8 1,952 2,744
308,193 268,903
Current assets Accounts receivable and prepayments 9 25,995 13,816 Investments in securities
Compensation fund 6a 194,322 184,291
Other 6b 101,157 39,234 Cash and bank deposits 10 15,007 33,386
336,481 270,727 Total assets 644,674 539,630
EQUITY AND LIABILITIES Shareholders’ Equity Share capital 11 2 2 Reserves
Share premium 8,040 8,040 Capital reserve 12 54,900 54,900
Capital redemption reserve fund 100 100 Other reserve 13 1,257 767 Contingency reserve 14 311,372 271,598 Revenue reserve
Income and expenditure account 15 222,730 180,908 598,401 516,315
Non-current liabilities Long-term liability 16 - 684 Deferred tax liability 17 28,742 14,129
28,742 14,813
Income tax payable 10,213 1,020 17,531 8,502
Total equity and liabilities 644,674 539,630
The Jamaica Stock Exchange Limited and Its Subsidiary Consolidated Balance Sheet at December 31, 2003.
STATEMENT II
The notes on Statement VII form an integral part of the financial statements.The financial statements on Statements II to VII were approved and authorized for issue by the Board of Directors on April 16, 2004 and are signed on its behalf by:
Directors
ASSETS Non-current assets Property, plant and equipment 3 44,944 46,093 Intangible assets 4 13,029 7,871 Investments in securities
Compensation fund 6(a) 137,195 96,313 Other 6(b) 97,642 105,203
Long-term receivable 7 400 - Retirement benefit asset 8 3,051 3,977 Deferred tax asset 17 1,363 1,056
297,624 260,513
Current assets Accounts receivable and prepayments 9 29,280 16,229 Investments in securities
Compensation fund 6(a) 194,322 184,291 Other 6(b) 108,412 39,694
Cash and bank deposits 10 18,057 41,902 350,071 282,116
Total assets 647,695 542,629
EQUITY AND LIABILITIES Shareholders’ Equity Share capital 11 2 2 Reserves
Share premium 8,040 8,040 Capital reserve 12 54,900 54,900 Capital redemption reserve fund 100 100
Other reserve 13 1,257 767 Contingency reserve 14 311,372 271,598 Revenue reserve
Income and expenditure account 15 222,730 180,908
598,401 516,315 Non-current liabilities Long-term liability 16 - 684 Deferred tax liability 17 30,105 15,185
30,105 15,869 Current liabilities Accounts payable and accruals 18 9,859 9,842 Income tax payable 9,330 603
19,189 10,445
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STATEMENT V
The Jamaica Stock Exchange Limited and Its Subsidiary Consolidated Statements of Changes In Equity Year Ended at December 31, 2003.
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STATEMENT IV
The Jamaica Stock Exchange Limited and Its Subsidiary Consolidated Income and Expenditure Account at December 31, 2003.
2003 2002
other income 3,698 (32,189)
COMPENSATION FUND
SURPLUS BEFORE TAXATION 19 116,377 42,177
Taxation 21(a) ( 39,064) (16,424)
NET SURPLUS OF THE GROUP FOR THE YEAR 22 77,313 25,753
The notes on Statement VII form an integral part of the financial statements.
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STATEMENT VII.1
The Jamaica Stock Exchange Limited and Its Subsidiary Notes To The Financial Statements Year Ended at December 31, 2003.
1. GROUP IDENTIFICATION
(a) COMPOSITION OF THE GROUP
The group comprises the Jamaica Stock Exchange Limited (parent) which is incorporated in Jamaica and its wholly-owned subsidiary, Jamaica Central Securities Depository Limited, (subsidiary) which is also incorporated in Jamaica. The registered offices of both companies are situated at 40 Harbour Street, Kingston, Jamaica.
(b) PRINCIPAL ACTIVITIES
NAME OF COMPANY PRINCIPAL ACTIVITY
The Jamaica Stock Exchange The operation of a stock exchange and Limited the development of a stock market in
Jamaica.
Jamaica Central Securities To establish and maintain a Central Depository Limited Securities Depository (CSD)in Jamaica
to transfer ownership of securities “by book entry”, including shares, stocks, bonds or debentures of companies and other eligible securities.
2 SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PREPARATION
Jamaica adopted International Financial Reporting Standards as its national accounting standards, effective for accounting periods beginning on or after July 1, 2002. The financial statements for the year ended December 31, 2003 have therefore been prepared in accordance and comply with IFRSs. The Group has opted for early adoption of IFRS 1, first-time adoption of International Financial Reporting Standards, and has applied the provisions of that standard in the preparation of these financial statements. The effect of adopting IFRSs on the equity and net surplus as previously reported is detailed in Note 26.
The financial statements have been prepared under the historical cost basis, except for revaluation of available- for-sale investments.
REPORTING PERIOD
The parent and subsidiary company prepared financial statements for the year ended December 31, 2003.
REPORTING CURRENCY
(b) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include financial statements of the Jamaica Stock Exchange Limited and its wholly-owned subsidiary Jamaica Central Securities Depository Limited. All the inter-group balances, transactions and unrealised profits have been eliminated.
STATEMENT VI
The Jamaica Stock Exchange Limited and Its Subsidiary Consolidated Statements of Cash Flows Year Ended at December 31, 2003.
2003 2002
$’000 $’000
Net surplus 77,313 25,753
Depreciation 3,925 5,162
Deferred tax adjustment 12,226 ( 673)
Loss on disposal of property, plant and equipment 1,072 -
Unrealised foreign exchange gains (net) ( 12,111) ( 4,111)
Write-off of shares in Eastern Caribbean Securities Exchange 503 -
Net amortization of discount on held-to-maturity
investments ( 102) ( 36)
87,199 31,900
Accounts receivable and prepayments ( 13,051) ( 3,814)
Income tax recoverable - 754
Accounts payable and accruals ( 743) ( 7,025)
Income tax payable 8,727 603
Cash provided by operating activities 82,132 22,418
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of investments in securities
Compensation Fund ( 57,373) ( 87,658)
Acquisition of intangible assets ( 9,623) ( 3,753)
Proceeds on disposal of property, plant and equipment 239 625
Long-term receivables ( 400) -
CASH FLOWS FROM FINANCING ACTIVITIES
Lease financing - ( 1,531)
NET (DECREASE) INCREASE IN CASH AND BANK DEPOSITS ( 23,845) 15,702
OPENING CASH AND BANK DEPOSITS 41,902 26,200
CLOSING CASH AND BANK DEPOSITS 18,057 41,902
The notes on Statement VII form an integral part of the financial statements.
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2 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(f) INVESTMENTS IN SECURITIES (CONT’D)
Held-to-maturity securities are those which the group has the interest and ability to hold-to-maturity. These
are initially recognized at cost (including transaction costs). Any premium or discount are amortised using the
effective interest rate method over the life of the bond.
Originated debt securities include those where money is provided to the issuer, either directly or through an
intermediary, other than those that are originated with the intent to be sold immediately or in the short-term,
which are recorded as trading securities. They are initially recorded at cost, which is the cash given to originate
the debt including any transaction costs and subsequently measured at amortised cost using the effective
interest rate method.
Available-for-sale securities are those intended to be held for an indefinite period of time and which may be
sold in response to needs for liquidity or changes in interest rates, foreign exchange rates or equity prices.
They are initially recognized at cost (including transaction costs) and subsequently re-measured at fair value
based on quoted bid prices or amounts derived cash flow models. Unrealised gains and losses arising from
changes in fair value of available-for-sale securities are recognized in equity, until the security is disposed of, or
is determined to be impaired at which time the cumulative gain or loss previously recognized in equity is
included in net surplus or deficit for the year.
(g) RETIREMENT BENEFIT COSTS
The group operates a defined benefits pension plan for its employees.
The cost of providing benefits is determined using the Projected Unit Credit Method, with independent
actuarial valuation being carried out each year. Unrecognised actuarial gains and losses at the beginning of the
year are amortised over the expected average remaining working lives of the participating employees. Past
services cost is recognized immediately to the extent that the benefits are already vested, and otherwise
amortised on a straight-line basis over the average period until the amended benefit becomes vested.
The retirement benefit asset recognized in the balance sheet represent the present value of the defined benefit
obligations as adjusted for unrecognized actuarial gains and losses, unrecognized past service costs and as
reduced by the fair value of plan assets.
Retirement benefit asset resulting from this calculation is limited to the total of any accumulated unrecognized
net actuarial losses and past service cost, and the present value of any economic benefits available in the form
of refunds from the plan or reductions in contributions to the plan (IAS 19 paragraph 58). If there is no
change or a decrease in the present value of the economic benefits, the entire net actuarial gains of the current
period after deduction of past service cost of the current period are recognized immediately provided the
resulting asset is determined in accordance with IAS 19 paragraph 58.
STATEMENT VII.3
2 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(c) USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and any adjustments that may be necessary would be reflected in the year in which actual results are known.
(d) PROPERTY, PLANT AND EQUIPMENT
All property, plant and equipment held for use in the supply of services, or for administrative purposes, are recorded at historical or deemed cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
Depreciation is calculated on the straight-line basis on cost over the estimated lives of assets. Annual depreciation rates are based on the following estimated useful lives.
Buildings - 40 years
Office equipment - 5 years
Computer hardware - 5 years
Motor vehicles - 5 years
No depreciation is provided on land.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the
sales proceeds and the net carrying amount of the asset and is recognized in income.
(e) INTANGIBLE ASSETS
These consist of computer software. Computer software are measured initially at purchase cost and amortised
on a straight-line basis on cost over the estimated useful lives which are 3 – 5 years.
(f) INVESTMENTS IN SECURITIES
The group classifies investments in securities into the categories held to maturity, originated debt and
available-for-sale securities. Management determines the appropriate classification of investments at the time
of purchase.
Investments are recognized on a trade-date basis and are initially measured at cost, including transaction costs.
STATEMENT VII.2
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(k) ACCOUNTS PAYABLE
(l) INCOME
(i) PARENT
Income from operation of the parent is cess levied on investors. The amounts are based on a percentage of the volume of business done through brokers on the Exchange.
(ii) SUBSIDIARY
Incomes from operations of the subsidiary are service fees levied on participants of the CSD which include brokers and institutional investors. The service fees comprise membership fees, account maintenance fees and user fees.
(m) COMPENSATION FUND
(i) COMPENSATION FUND RECEIPTS
These are contributions by members of the Stock Exchange, based on a percentage of the volume of business done by them through the Exchange, for maintaining the Contingency Reserve Fund. However, during the year there were no contributions by the members as the council was of the view that the reserve was adequate for the specific purpose. (See Note 2(l)(ii)).
(ii) CONTINGENCY RESERVE
This fund is created out of surplus for the purpose of providing some protection to the investing public against losses. Provisions in respect of the fund are in accordance with Sections 27 to 35 of The Securities Act. The Council has decided to transfer each year from income and expenditure account to the fund an amount equivalent to the total of compensation fund receipts (Note 2(l)(i)) and compensation fund investment income net of the charge for income tax related to such receipts and investment income. The amount of the fund is invested as detailed in Note 6(a).
(n) FOREIGN CURRENCIES
Transactions in foreign currencies have been converted to Jamaican dollars at the rates of exchange ruling at the dates of those transactions. Assets and liabilities denominated in foreign currencies are translated to Jamaican dollars at exchange rates current at balance sheet date. All exchange gains and losses are credited to, or charged against, income of the year.
STATEMENT VII.4
(h) ACCOUNTS RECEIVABLE
These amounts, which are expected to be settled within a year of inception, are stated at their nominal value as
reduced by appropriate allowances for estimated irrecoverable amounts where necessary. The allowance for
irrecoverable amounts is determined by reference to past default experience.
(i) CASH AND BANK DEPOSITS
For the purposes of the cash flow statement, cash and bank deposits comprise cash at bank and in hand and bank
deposits having an original maturity of three months or less.
(j) TAXATION
Income tax expense represents the sum of tax currently payable and deferred tax.
The tax currently payable is based on taxable surplus for the year. Taxable surplus differs from the net surplus as
reported in the income and expenditure account balance. It excludes items of revenue or expenses that are taxable
or deductible in other years and it further excludes items that are never taxable or deductible. The company’s
liability for current tax is calculated using tax rates that have been enacted at balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets
and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable
profits and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally
recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is
probable that taxable surplus will be available against which deductible temporary differences can be utilized.
Such assets and liabilities are not recognized if the temporary differences arise from the initial recognition of assets
and liabilities in a transaction that affects neither the tax surplus nor the accounting surplus.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is
no longer probable that sufficient taxable surplus will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates currently enacted, which rates are expected to apply in the period when
the liability is settled or the asset realized. Deferred tax is charged or credited in the income and expenditure
account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also
charged or credited in equity.
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STATEMENT VII.7
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(o) FINANCIAL INSTRUMENTS
Financial instruments include contracts that give rise to both financial assets and financial liabilities. Financial
assets include investments in securities, accounts receivable and cash and bank deposits. Financial liabilities
include long-term liability and accounts payable.
Property, plant and equipment, intangible assets, retirement benefit assets, prepayments, deferred taxes, accruals
and income tax payable are treated as non-financial instruments.
(p) IMPAIRMENT
At each balance sheet date, the group reviews the carrying amounts of its assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount
of the asset is estimated in order to determine the extent of the impairment loss (if any).
Recoverable amount is the greater of net selling price and value in use. In assessing the value in use, the estimated
future cash flows are discounted to their present value using pre-tax discount rate that reflects current market
assessments of the time value of money and risk specific to assets.
If the recoverable amounts of an asset is estimated to be less than its carrying amount, the carrying amount of the
asset is reduced to its recoverable amount. Impairment losses are recognized as an expense immediately, unless the
relevant asset is land or buildings at a revalued amount, in which case the impairment loss is treated as
arevaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal
of an impairment loss is recognized as income immediately, unless the relevant asset is carried at a revalued
amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
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STATEMENT VII.9
6 INVESTMENTS IN SECURITIES
2003 2002
$’000 $’000
Investment Debentures
(US$40,200) 2,429 2,032
(US$10,400) 628 -
Government of Belize guaranteed mortgage notes
– 2009 (US$50,393) (2002: US$56,879 ) 3,044 2,875
MAN-IP Multi-strategy Series 3 Limited Bonds
– 2005 (US$250,000) 15,104 12,639
Originated debt
Interest receivable 24,466 8,155
Other receivables 58 28
137,195 96,313
STATEMENT VII.8
4 INTANGIBLE ASSETS
COST
Additions 1,532 8,091 9,623 1,532 1,532
Disposals ( 9,076) - ( 9,076) ( 8,096) ( 8,096)
At December 31 13,117 9,146 22,263 5,561 5,561
Amortisation
Charge for the period 3,447 - 3,447 2,480 2,480
Disposals ( 8,058) - ( 8,058) ( 7,365) ( 7,365)
At December 31 9,234 - 9,234 2,524 2,524
Carrying amount
5 INVESTMENT IN SUBSIDIARY
Advances 12,044 560
subsidiary company (43,544) (41,256)
STATEMENT VII.11
6 INVESTMENTS IN SECURITIES (CONT’D)
(b) OTHER (CONT’D)
THE GROUP THE COMPANY
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Shares in the Eastern Caribbean
Securities Exchange - 503 - 503
4,075 3,843 4,075 3,843
206,054 144,897 198,799 144,437
97,642 105,203 97,642 105,203
The movement for the year on available-for-sale investment is as follows:
THE GROUP AND THE COMPANY
2003 2002
$’000 $’000
Write-off ( 503) -
7 LONG-TERM RECEIVABLE
This represents motor vehicle loans granted to employees. The loans are repayable by monthly instalments
and are for a period of 5 years. These loans carry an interest rate of 10% per annum. The current portion
of these loans, due within twelve months from the year-end, is included in other receivable.
STATEMENT VII.10
6 INVESTMENTS IN SECURITIES (CONT’D)
(a) COMPENSATION FUND (CONT’D)
2002 2002
$’000 $’000
are as follows:
Closing balance 20,450 14,025
In 2002 the company had investments amounting to approximately $1.6 million held in an escrow account specifically for stockbroking clients of the Stock Exchange which were not included in these financial statements.
(b) OTHER
Fixed Rate Local Registered Stocks 45,373 42,848 45,373 42,848
Investment Debentures
Series Z 400 - -
(US$236,700) 14,300 - 14,300 -
Limited Bonds – 2005
(US$50,000) 3,020 - 3,020 -
STATEMENT VII.13
8 RETIREMENT BENEFIT SCHEME (Cont’d) Amount included in the balance sheet in respect of the scheme is as follows:
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Fair value of plan assets 34,421 27,576 22,028 19,027
Assets not recognized due to
limitation in paragraph 58
Net asset in balance sheet 3,051 3,977 1,952 2,744
Movements in the net liability in the current period were as follows:
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Amount charged to income (1,785) (2,787) (1,337) (1,821)
Contributions paid 859 959 545 618
At December 31 3,051 3,977 1,952 2,744
Key assumptions used:
Future pension increases 0.0% 0.0%
STATEMENT VII.12
8 RETIREMENT BENEFIT SCHEME
The group operates a defined benefit pension plan for its employees. The scheme is funded by employee
contributions of 5% of pensionable salary, with an option for additional voluntary contributions of up to 5%
of pensionable salary. The companies in the group contribute such funds as necessary to meet the obligations
of the scheme. The pension benefits are determined on a final salary basis at 11/2% of final pensionable salary
times pensionable years of service.
The disclosures below are based on independent actuarial valuation carried out during the year.
Amounts recognised in income in respect of the scheme are as follows:
THE GROUP
2003 2002
$’000 $’000
Internal cost 532 1,038
Recognised gains (3,787) (5,800)
Total included in staff costs (Note 20) 1,785 2,787
Actual return on plan assets 6,374 6,338
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STATEMENT VII.15
12 CAPITAL RESERVE
This comprises net realised gains in relation to four shares repurchased by the company at par in compliance
with Article 9 of the Articles of Association and the subsequent sale of these shares to four new members of
the Stock Exchange during 2001.
13 OTHER RESERVE
This reserve represents the fair value adjustment relating to available-for-sale investments in
securities – other (NOTE 6(B). The balance is as follows:
2003 2002
$’000 $’000
1,257 767
2003 2002
$’000 $’000
account comprises:
Income tax charge for year at 33 1/3% 10,517 11,740
Deferred tax adjustment 10,588 250
21,105 11,990
35,491 24,161
STATEMENT VII.14
9 ACCOUNTS RECEIVABLE AND PREPAYMENTS
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Interest receivable 17,521 5,256 16,908 5,134
Prepayments 3,208 2,590 1,593 1,054
Other 1,655 6,220 1,614 6,068
29,879 16,697 26,509 14,200
29,280 16,229 25,995 13,816
The directors consider that the carrying amount of accounts receivable approximates their fair value.
10 CASH AND BANK DEPOSITS
These comprise cash and bank deposits with maturity of within three months of the date of the original
deposit held by the group. Bank deposits include interest bearing deposits totalling $14.6 million (2002: $17
million) including foreign currency deposits amounting to $4.4 million (2002: $15.4 million).
Interest on the local currency deposits ranged between 18% to 21.75% (2002: 16.25% to 16.5%) per annum
and the interest on foreign currency deposit ranged from 7% to 7.5% (2002: 8.5% to 9%) per annum.
11 SHARE CAPITAL
2003 2002
Authorised: 20 ordinary shares
(Issued and fully paid:
STATEMENT VII.17
17 DEFERRED TAX
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Deferred tax liabilities (30,105) (15,185) (28,742) (14,129)
Net position at December 31 (28,742) (14,129) (28,742) (14,129)
2003 2002
$’000 $’000
Charged to income for the period 12,226 ( 673)
Charged to other reserve 245 185
Charged (credited) to
At December 31 28,742 14,129
The following are the deferred tax asset and deferred tax liabilities recognized by the Group during the year:
Deferred Tax Asset
Asset arising from tax loss for the year 1,067 1,067
2,123 2,123
Restriction on recognition of asset of subsidiary ( 453) ( 453)
At December 31 1,363 1,363
STATEMENT VII.16
14 CONTINGENCY RESERVE (CONT’D)
This reserve comprises: THE GROUP AND THE COMPANY
2003 2002 $’000 $’000
Investment before fair value adjustment 315,831 271,343 Fair value adjustments 15,686 9,261 Investments in securities (see Note 6(a)) 331,517 280,604 Income tax payable ( 405) ( 1,966) Deferred tax liability ( 19,740) ( 7,040)
311,372 271,598
15 REVENUE RESERVE – PROFIT AND LOSS ACCOUNT
Reflected in the financial statements of the: 2003 2002 $’000 $’000
Parent company 266,274 222,164 Subsidiary ( 43,544) ( 41,256)
222,730 180,908
16 LONG-TERM LIABILITY
Future minimum payments for finance lease obligations as at December 31 are:
THE GROUP AND THE COMPANY 2003 2002 $’000 $’000
2003 - 2,766 2004 820 692 Total minimum lease payments 820 3,458 Less: Future lease charge 60 149 Lease obligation (US$13,530)
(2002 - US$65,461) 760 3,309 Less: Current portion (Note 18) 760 2,625
- 684
STATEMENT VII.19
18 ACCOUNTS PAYABLE AND ACCRUALS
2003 2002 2003 2002
$’000 $’000 $’000 $’000
Current portion of finance lease
obligation (NOTE 16) 760 2,625 760 2,625
9,859 9,842 7,318 7,482
The directors consider that the carrying amount of accounts payable approximates their fair value.
19 SURPLUS FOR THE YEAR BEFORE TAXATION
(a) The following are included in the determination of the surplus for the year before taxation:
2003 2002
$’000 $’000
Interest income 42,821 27,487
Other 7,389 7,802
Other 2 703
56,596 36,151
Staff cost 37,978 33,531
STATEMENT VII.18
1 7
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STATEMENT VII.21
21 TAXATION (CONT’D)
(a) (CONT’D)
The charge for the year can be reconciled to the surplus per the income statement as follows:
2003 2002
$’000 % $’000 %
Surplus before taxation 116,377 42,117
- Tax at the domestic income tax rate of 33 1/3% (2002: 33 1/3%) ( 38,792) (33.3) (14,059) (33.3)
- Tax effect of current year’s tax loss of the subsidiary ( 1,067) ( 0.9) ( 2,006) ( 4.8)
- Net increase (decrease) in deferred tax liability of the subsidiary 307 0.3 ( 689) ( 1.6)
- Tax effect of expenses that are not deductible in determining taxable profit ( 500) ( 0.4) ( 60) ( 0.1)
- Tax effect of tax exempt income 752 0.6 585 1.4
- Tax effect of other permanent differences 236 0.2 ( 195) ( 0.5)
Tax charge for the year ( 39,064) (33.5) (16,424) (38.9)
(b) Tax losses of the subsidiary amounting to $46.2 million (subject to agreement with the
Commissioner, Taxpayer Audit and Assessment) are available for set-off against future taxable profits of the
subsidiary.
Reflected in the financial statements of the:
2003 2002
$’000 $’000
77,313 25,753
STATEMENT VII.20
19 SURPLUS FOR THE YEAR BEFORE TAXATION (CONT’D)
(b) Compensation fund expenses for 2002 include approximately $1.4 million with respect to claims made
against stock brokerage firms in liquidation.
20 STAFF COSTS
employed during the year 27 28 21 21
$’000 $’000 $’000 $’000
in respect of these employees:
Salaries and other benefits 33,799 28,672 25,480 21,884
Statutory contributions 2,394 2,072 1,845 1,566
Retirement benefit charges 1,785 2,787 1,337 1,821
37,978 33,531 28,662 25,271
2003 2002
$’000 $’000
39,064 16,424
Income tax is calculated at 33 1/3% of the estimated assessable surplus for the year.
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STATEMENT VII.23
24 FINANCIAL INSTRUMENTS (CONT’D)
(a) FAIR VALUE (CONT’D)
THE COMPANY
2003 2002
Other 198,799 200,932 102,553 105,923
Finance lease obligations ( 760) ( 760) ( 3,309) ( 3,201)
The fair values have been determined using available market information and appropriate valuation
methodologies.
(b) INTEREST RATE RISK
Interest rate risk is the potential impact of changes in market interest rates on the fair value of assets and
liabilities on the balance sheet and on the annual interest income and expenses in the income and expenditure
account. Interest rate risk mainly arises through interest bearing assets and liabilities.
The interest profile of the financial assets of the Group and the Company at balance sheet date was as follows:
THE GROUP
One Year Five Years Five Years
$’000 $’000 $‘000 $’000
194,519 79,598 33,695 307,812
129,807 41,203 35,044 206,054
Total interest bearing
STATEMENT VII.22
23 NATIONAL HOUSING TRUST CONTRIBUTIONS
Contributions amounting to $4,015 made up to July 1979 (and expensed) are refundable during the years 2001 – 2004.
24 FINANCIAL INSTRUMENTS
(a) FAIR VALUE
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. A market price, where an active market (such as a recognised stock exchange)
exists, is the best evidence of the fair value of a financial instrument.
Where an active market does not exist, the fair values have been estimated using present value or other estimation
techniques based on market conditions existing at balance sheet date.
The values derived using these techniques are significantly affected by underlying assumptions concerning both the
amount and timing of future cash flows and the discount rate used. The fair values of the group’s financial
instruments, where determinable, made use of the following methods and assumptions:
(i) The fair values of cash and bank deposits, accounts receivable and accounts payable approximates their
carrying values due to their short-term nature.
(ii) The fair value of long-term receivable has not been estimated due to its special nature as described in Note 7.
(iii) The fair value of investments in securities which differed from the carrying values are as follows:
THE GROUP
2003 2002
Other 206,054 208,187 103,013 106,383
Finance lease obligations ( 760) ( 760) ( 3,309) ( 3,201)
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STATEMENT VII.25
(b) INTEREST RATE RISK (CONT’D)
Interest bearing financial liabilities of the Company at balance sheet date, relate substantially to
lease financing obligations (Note 16) at an interest rate of 6.7%.
(c) CREDIT RISK
Financial instruments contain an element of risk that the other obligators may be unable to meet the terms of
agreements. Direct credit risk represents risk of loss resulting from the obligators’ default in relation to assets
on the balance sheet. In respect of cash and bank deposits and investments in securities, the group minimizes
this risk by seeking to limit its obligators to substantial financial institutions. In respect of accounts
receivable the risk is minimised by discontinuing services and also by making adequate provisions for
uncollectible amounts.
(d) CURRENCY RISK
The group and the company incurs foreign currency risks on transactions that are denominated in
currencies other than Jamaican dollars.
The following foreign currency balances are included in these financial statements:
2003 2002
Cash and bank deposits 72 306
Long-term liability – lease obligation ( 13) ( 65)
Net exposure 1,616 1,342
In addition the subsidiary had capital commitments as at the balance sheet date of US$483,000 as detailed in
Note 25.
STATEMENT VII.24
The Jamaica Stock Exchange Limited and Its Subsidiary Notes To The Financial Statement Year Ended at December 31, 2003.
(b) INTEREST RATE RISK (CONT’D)
THE GROUP
$’000 $’000 $‘000 $’000
Average interest yield (2003) 25.1% 20.0% 32.6% 25.0%
Interest bearing financial liabilities of the Group at balance sheet date relate substantially to lease financing
obligations (NOTE 16) at an interest rate of 6.7%.
THE COMPANY
$’000 $’000 $‘000 $’000
194,519 79,598 33,695 307,812
122,552 41,203 35,044 198,799
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STATEMENT VII.27
26 ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
As at January 1, 2003, the group adopted IFRS. Below are reconciliations of equity as at January 1, 2002 and December 31, 2002 and of the Income and Expenditure Account for the year ended December 31, 2002:
(i) Reconciliation of equity at January 1, 2002: THE GROUP
Previous Effect of Notes GAAP transition to IFRS IFRS
ASSETS $’000 $’000 $’000 Non-current assets Property, plant and equipment (a) 58,007 ( 7,039) 50,968 Intangible assets (a) - 7,039 7,039 Investment in securities
Compensation Fund (c) 253,953 (139,095) 114,858 Other (c) 103,996 ( 72,987) 31,009
Retirement benefit assets (d) - 5,805 5,805 Deferred tax assets (i) - 1,744 1,744
415,956 (204,533) 211,423 Current assets
Income tax recoverable 754 - 754 Accounts receivable and prepayments 12,415 - 12,415 Investments in securities
Compensation fund (c) - 149,027 149,027 Other (c)(e) 76,669 40,014 116,683
Cash and bank deposits (e) 2,436 33,570 36,006
92,274 222,611 314,885
Total assets 508,230 18,078 526,308
EQUITY AND LIABILITIES Shareholders’ Equity
Share capital 2 - 2 Share premium 8,040 - 8,040 Capital reserve 54,900 - 54,900 Capital redemption reserve 100 - 100 Other reserve (f ) - 399 399 Contingency reserve (g) 241,263 6,621 247,884 Revenue reserve (h) 178,432 884 179,316
482,737 7,904 490,641 Non-current liabilities
Long-term liabilities 3,100 - 3,100 Deferred tax liabilities (i) 6,411 10,174 16,585
9,511 10,174 19,685 Current liabilities
Accounts payable and accruals 15,982 - 15,982
15,982 - 15,982
STATEMENT VII.26
The Jamaica Stock Exchange Limited and Its Subsidiary Notes To The Financial Statement Year Ended at December 31, 2003.
(e) MARKET RISK
Market 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 security or its issuer or factors affecting all
securities traded in the market. The Group has no exposure to market risk as there are no traded securities.
(f) LIQUIDITY RISK
Liquidity risk, also referred to as funding risk, is the risk that the group will encounter difficulty in raising funds to
meet commitments associated with financial instruments. Liquidity risk may result from an inability to sell a
financial asset quickly at, or close to, its fair value. Prudent liquidity risk management implies maintaining sufficient
cash and cash equivalents, and the availability of funding through an adequate amount of committed facilities. Due
to the dynamic nature of the underlying business, the management of the group maintains an adequate amount of
its financial assets in liquid form to meet contractual obligations and other recurring payments.
(g) CASH FLOW RISK
Cash flow risk is the risk that future cash flows associated with a monetary financial instrument will fluctuate in
amount. The group manages this risk through budgetary measures, ensuring, as far as possible, that fluctuations in
cash flows relating to monetary financial assets and liabilities are matched, to mitigate any significant adverse cash
flows.
statements (US$483,000) 29,000 -
These commitments are in respect of the computer software development project of the subsidiary.
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STATEMENT VII.29
26 ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) (CONT’D)
(ii) Reconciliation of equity at December 31, 2002:
THE GROUP Effect of
ASSETS $’000 $’000 $’000
Intangible assets (a) - 7,871 7,871
Investment in securities
Other (c) 102,553 2,650 105,203
Retirement benefit assets (d) - 3,977 3,977
Deferred tax (i) - 1,056 1,056
427,135 (166,622) 260,513
Investments in securities
99,325 182,791 282,116
EQUITY AND LIABILITIES
Contingency reserve (g) 264,941 6,657 271,598
Revenue reserve (h) 180,956 ( 48) 180,908
508,939 7,376 516,315
7,318 8,551 15,869
Income tax payable (j) 361 242 603
10,203 242 10,445
STATEMENT VII.28
(i) Reconciliation of equity at January 1, 2002: (CONT’D)
THE COMPANY Effect of
Previous transition Notes GAAP to IFRS IFRS
ASSETS $’000 $’000 $’000 Non-current assets Property, plant and equipment (a) 54,140 ( 4,562) 49,578 Intangible assets (a) - 4,562 4,562 Investments in subsidiary (b) - 16,884 16,884 Investment in securities
Compensation Fund (c) 253,953 (139,095) 114,858 Other (c)(e) 118,102 ( 87,553) 30,549
426,195 (205,817) 220,378 Current assets
Income tax recoverable 698 - 698 Accounts receivable and prepayments 10,588 - 10,588 Investments in securities
Compensation fund (c) - 149,027 149,027 Other (c)(e) 66,863 49,360 116,223
80,282 222,151 302,433
TOTAL ASSETS 506,477 16,334 522,811
Share capital 2 - 2 Share premium 8,040 - 8,040 Capital reserve 54,900 - 54,900 Capital redemption reserve 100 - 100 Other reserve (f ) - 399 399 Contingency reserve (g) 241,263 6,621 247,884 Revenue reserve (h) 178,432 884 179,316
482,737 7,904 490,641 Non-current liabilities
Long-term liabilities 3,100 - 3,100 Deferred tax liabilities (i) 6,411 8,430 14,841
9,511 8,430 17,941 Current liabilities Accounts payable and accruals 14,229 - 14,229
14,229 - 14,229 Total equity and liabilities 506,477 16,334 522,811
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Notes to the Reconciliations of Equity at January 1, 2002 and December 31, 2002:
(a) Certain assets reclassified as intangible assets.
(b) Reclassification of investment in subsidiary.
(c) Under IFRS, certain investments of the company are classified as current assets.
(d) Adjustments relating to the recognition of the status of the retirement benefit plan.
(e) Deposits with an original maturity of three months or less reclassified to cash and
bank deposits.
(f) Fair value adjustment for certain available-for-sale investments.
(g) Adjustments to the current tax provision in relation to the compensation fund were
made resulting in the net effect of the adjustments of certain items.
(h) The net effects of the adjustments relating to the items at the transition date have
been included in the opening reserve.
(i) Adjustments are made for the deferred tax effects of transactions in the same year
that such transactions enter into the determination of net profit, regardless of when
they are recognized for tax purposes. The deferred tax is calculated at current rates.
(j) Adjustments to the current tax provisions were made resulting from the net effects of
the adjustment of certain items at the transition date.
STATEMENT VII.31
(ii) Reconciliation of equity at December 31, 2002: (CONT’D)
THE COMPANY Effect of
ASSETS $’000 $’000 $’000 Non-current assets
Property, plant and equipment (a) 50,339 ( 4,716) 45,623 Intangible assets (a) - 4,716 4,716 Investments in subsidiary (b) - 14,304 14,304 Investment in securities
Compensation Fund (c) 270,618 (174,305) 96,313 Other (b)(c) 115,624 ( 10,421) 105,203
436,581 (167,678) 268,903
Current assets Accounts receivable and prepayments 13,816 - 13,816 Investments in securities
Compensation fund (c) - 184,291 184,291 Other (c)(e) 72,979 ( 33,745) 39,234
87,936 182,791 270,727
Total assets 524,517 15,113 539,630
Share capital 2 - 2 Share premium 8,040 - 8,040 Capital reserve 54,900 - 54,900 Capital redemption reserve 100 - 100 Other reserve (f ) - 767 767 Contingency reserve (g) 264,941 6,657 271,598 Revenue reserve (h) 180,956 ( 48) 180,908
508,939 7,376 516,315
7,318 7,495 14,813
Current liabilities Accounts payable and accruals 7,482 - 7,482 Income tax payable (j) 778 242 1,020
8,260 242 8,502
STATEMENT VII.30
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BARITA INVESTMENTS LTD. CEO/CHAIRMAN RITA HUMPHRIES-LEWIN 15 St. Lucia Way, Kingston 5 Phone: 926-2681-2/2686 Fax: 929-8432 e-mail: [email protected]
CAPITAL & CREDIT SECURITIES LTD. GENERAL MANAGER DEVON BARRETT 18 Trafalgar Road Kingston 10 Phone: 946-1770 Fax: 978-8005 e-mail: [email protected]
DEHRING BUNTING & GOLDING LTD. VICE PRESIDENT MARK WALTERS 7 Holborn Road, Kingston 10. Phone: 960-6699/968-3365 Fax: 960-3984 e-mail: [email protected]
EDWARD GAYLE & CO. LTD. ACTING MANAGING DIRECTOR PATRICK HYLTON 32 Trafalgar Road, 3rd Floor Kingston 10 Phone: 960-7108-8592 Fax: 960-7649 TOLL FREE: 1-888-EDGAYLE e-mail: [email protected]
FIRST GLOBAL STOCKBROKERS LTD. CHAIRMAN DON WEHBY 1 St. Lucia Way Kingston 5 Phone: 926-1275 Fax: 926-1279/929-6436 e-mail: [email protected]
MEMBERS OF THE JAMAICA STOCK EXCHANGE
JMMB SECURITIES LTD. MANAGING DIRECTOR LEO WILLIAMS 6 Haughton Terrace Kingston 10 Phone: 920-5039/4720 Fax: 960-8106 e-mail: [email protected]
M/VL STOCKBROKERS LTD. CHAIRMAN ED MCKIE 2-6 Grenada Crescent, Kingston 5 Phone: 960-1570/926-4319 Fax: 960-1571 e-mail: [email protected]
MAYBERRY INVESTMENTS LTD. CHAIRMAN CHRISTOPHER BERRY 1 1/2 Oxford Road, Kingston 5 Phone: 929-1908-9 Fax: 929-1501/920-2103 e-mail: [email protected]
PAUL CHEN YOUNG & CO. LTD. CHAIRMAN/MANAGING DIRECTOR HUGH CROSKERY 24-26 Grenada Crescent, Kingston 5 Phone: 929-3261/3264/3455/3400 Fax: 929-4825 e-mail: [email protected]
VICTORIA MUTUAL WEALTH MANAGEMENT LTD. GENERAL MANAGER DAVID WAN 52 – 60 Grenada Crescent, Kingston 5 Phone: 960-5000-3 Fax: 960-4972 e-mail: [email protected]
STATEMENT VII.32
(iii) Reconciliation of the consolidated income and expenditure account for the year ended December 31, 2002:
Effect of Previous transition
Notes GAAP to IFRS IFRS
Surplus on operations before taxation (a) 7,854 (1,828) 6,026 Surplus from compensation fund
before taxation (b) 35,426 725 36,151
SURPLUS BEFORE TAXATION 43,280 (1,103) 42,177
Taxation (c) (17,078) 654 (16,424)
NET SURPLUS FOR THE YEAR 26,202 ( 449) 25,753
Notes to the Reconciliation of net surplus for the year ended December 31, 2002:
(a) Adjustments for retirement benefit costs.
(b) Relates to adjustments for premium on bonds previously written-off now amortised using effective interest rate method over the life of the bonds.
(c) This reflects the net effects on the deferred and current tax adjustments.
27 COMPARATIVE INFORMATION
Where necessary, comparative figures have been reclassified and/or restated to conform to changes in the current year.
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40 Harbour Street P.O. Box 1084 Kingston.
Telephone: (876) 967-3271-4 922-0806 / Fax: (876) 922-6966
BANKERS National Commercial Bank Cnr. Duke & Barry Streets
Kingston.
WEBSITE ADDRESS www.jamstockex.com
E-MAIL ADDRESS [email protected]
JAMAICA STOCK EXCHANGE
NO. OF LISTED COMPANIES
* Six (6) active Brokers.

AL REPORT 2003 - Jamaica Stock Exchange

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Transcript of AL REPORT 2003 - Jamaica Stock Exchange