ANNUAL REPORT 2016...We are cognizant that we operate in a market space that is in constant flux...

ANNUAL REPORT 2016

C e l e b r a t i n g a S o l i d F o u n d a t i o n . B u i l d i n g f o r G r o w t h .

L I M I T E D

Caribbean Flavours and Fragrances Limited

is dedicated to providing its customers with

Flavours and Fragrances of the highest quality

and functionality. We will maintain consistency

in our batches through internal and external

quality systems. We endeavour to ensure that

our customers, our employees and all our

stakeholders are satisfied by our daily efforts

to “Tease The Senses”.

Mission Statement

TABLE OF CONTENTS


Chairman’s Report

Notice of Annual General Meeting

6 Year Statistical Review

Directors’ Report

Board of Directors

Disclosure of Shareholdings

Management Discussion & Analysis

Celebrating a Solid Foundation - Our Team

Management Team

Operations Team

Corporate Governance

Corporate Social Responsibility

Financials

Form of Proxy

2

4

5

6

8

10

12

16

18

19

20

22

25

CHAI

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2

My Fellow Shareholders

During the financial year 2015/2016, Caribbean Flavours and

Fragrances Limited reported net profit of $74.07 million dollars

which represents a 28.13% year-over-year growth when compared

to the $57.72 million dollars reported in the previous reporting

period.Revenues for the year increased to $362.50 million dollars,

which represents a positive growth of 18.15% over that reported in

the 2014/2015 financial year.The revenue and net profit generated

were driven by the efforts of the management team through the

execution of the annual operational plan approved and monitored

by the Board of Directors.

This increase in profit accelerated the growth in retained earnings

to an accumulated position of $220.15 million dollars over the

past four (4) years since listing on the Junior Stock Market of the

Jamaica Stock Exchange.

The consistently strong financial and operational performance

over the four (4) year period, has resulted in our earnings per

share increasing to 0.82 cents from the 0.46 cents reported in

2013. The stock price also experienced a similar upward trend,

moving from the initial public offering price of $2.25 to a peak at $10.00. The share price was $6.56 at the end

of this financial year.

We remain excited with the prospects outlined in the current five (5) year Strategic Plan developed and signed

off during this financial year. We are confident that our continued efforts of strengthening the Board of Directors

and management team, expanding into new markets, improving the research and development capabilities of

the company and the overall strengthening of the human resources of the company, will continue to grow and

increase stakeholder value.

Notwithstanding the challenges that are being experienced in the Jamaican and wider Caribbean economies

that we sell to, the improvements in the fiscal accounts are encouraging. We know that a more vibrant local and

regional economy will only lead to increased economic growth in the foreseeable future.

In preparation for the full certification of our facilities to International Standards, the Company has modernized

its laboratory with International Standard fixtures.

In the 2014/2015 period we welcomed Derrimon Trading Company Limited as a major shareholder of the company.

As a consequence, the following changes have taken place in the managerial structure of the Company:

• Mr. Derrick Cottrell was appointed Managing Director on January 1, 2016.

• Mr. Ian Kelly was appointed the Chief Financial Officer on January 1, 2016.


Both gentlemen are from the Derrimon Group and bring with them many years of experience and a proven track

record, which will certainly be of tremendous benefit to the Company here forward.

At the same time, Mr. Anand James, our founder, continues to serve in the capacity of Technical Consultant and

a member of the Board of Directors. We are pleased to acknowledge that the Company continues to benefit from

his wealth of experience and expert knowledge developed as one of the long-time leaders in the flavours and

fragrances industry.

During the reporting period, Mr. Carlton Samuels was appointed to the Board of Directors effective November

2015, and we are excited by the energy and knowledge that Mr. Samuels has brought to our deliberations.

I wish to say a very special thank you to our valued customers, dedicated members of staff, fellow Directors and

stakeholders for your continued support.

Howard Mitchell

Chairman

3C e l e b r a t i n g a S o l i d F o u n d a t i o n . B u i l d i n g f o r G r o w t h .

“The consistently strong financial and operational performance over the four (4) year period, has resulted in our earnings per share increasing to 0.82 cents from the 0.46 cents reported in 2013.”

“The Company has modernized its laboratory with International Standard fixtures.”

Net Profit of $74.07 Million

NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of Caribbean Flavours and Fragrances Limited (“the Company”) will be held at 10.00 a.m. on November 23, 2016 at the Knutsford Court Hotel, 11 Ruthven Road, Kingston 10, for the shareholders to consider, and if thought fit, to pass the following resolutions:

Ordinary Resolutions

1. RECEIPT OF THE AUDITED ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2016

THAT the annual report and audited accounts of the Company for the financial year ended 30 June 2016 presented to the meeting and initialed by the Directors for the purposes of identification, be and are hereby received.

2. RETIREMENT AND RE-APPOINTMENT OF DIRECTORS

TO reappoint the following Directors of the Board, who, being the longest serving have retired by rotation prior to the reading of the resolution in accordance with the Articles of Incorporation of the Company, and, being eligible, have consented to be re-appointed and to act on reappointment:

(a) Derrick Cotterell(b) Ian C. Kelly

3. DIRECTORS’ REMUNERATION

THAT the Board be and is hereby approved to fix and agree the remuneration of the Directors.

4. AUDITORS RE-APPOINTMENT AND REMUNERATIION

THAT the Board be and is hereby approved to re-appoint McKenley & Associates as the auditors of the Company, and to fix and agree their remuneration.

Dated this 3rd day of October 2016 by order of the Board of Directors.

Ian KellyCompany Secretary

Note: A form of proxy accompanies this Notice. A shareholder who is entitled to attend and vote at the Annual General Meeting of the Company may appoint one or more proxies to attend in his/her place. A proxy need not be a shareholder of the Company. The proxy form should bear stamp duty of $100.00, before being signed. The stamp duty may be paid by adhesive stamps, which are to be cancelled by the person signing the proxy. All completed original proxy forms must be deposited together with the power of attorney or other document appointing the proxy, at the registered office of the Company, at least forty-eight (48) hours before the Annual General Meeting.

NOTI

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TING

4 C e l e b r a t i n g a S o l i d F o u n d a t i o n . B u i l d i n g f o r G r o w t h .

6 YEAR STATISTICAL REVIEW


INCOME STATEMENT

Revenues

Gross Profit

Total Operating Expenses

Profit before Taxation

Net Profit

BALANCE SHEET

Average Total Assets

Average Working Capital

Total Assets less Current Liabilities

IMPORTANT RATIOS

Gross Profit Margin

EBITDA Margin

Profit before Taxation Margin

Current Ratio

Quick Ratio

Debt-to-Equity

2011

(J$ ‘000)

179,411

60,914

58,596

2,363

(939)

98,824

3,716

37,174

33.95%

3.29%

1.32%

1.07

0.49

0.18

2014

(J$ ‘000)

255,362

101,635

55,690

51,188

47,394

136,883

110,905

156,710

39.80%

22.69%

20.44%

8.22

6.28

0.00

2012

(J$ ‘000)

193,874

79,385

72,940

6,458

4,284

112,428

6,794

39,557

40.95%

5.78%

3.33%

1.11

0.60

0.11

2015

(J$ ‘000)

306,807

113,452

61,390

57,716

57,716

203,896

176,580

202,281

36.98%

17.64%

18.81%

7.60

5.40

0.00

2013

(J$ ‘000)

229,892

92,283

59,346

50,388

38,832

107,979

37,786

70,314

40.14%

23.05%

21.92%

3.63

2.02

0.03

2016

(J$ ‘000)

362,500

134,695

72,196

74,070

74,070

262,228

224,967

273,354

37.16%

17.49%

20.43%

14.85

10.99

0.00

DIRE

CTOR

S’ R

EPOR

T


The Directors of Caribbean Flavours and Fragrances (CFF) are pleased to present their report for the

financial year ended June 30, 2016. This is the third report since our historic listing on the Junior Market

of the Jamaica Stock Exchange in 2013.

The Statement of Comprehensive Income shows profit after tax of J$74.070 million net of adjusted

taxation. This outcome represents an 18.152% increase over the previous period ending June 2015.

Our company continues to make major strides in the areas of product innovation with new product

development and enhancements of mature products. Improvements in both our business processes and

production facilities have also been realized. These gains add to positive outcomes from our continued

program of diversification of revenue streams, operational and stock management efficiencies, as well

as, the deepening of our relationships with existing and new customers.

We remain excited about growth and growth prospects in the fragrance and food industry. We are

committed to provide our professionals with the tools, training and exposure that enable quality service

delivery to our customers. We will continue to invest in our people, by providing them with both technical

and customer delivery training; and thereby solidifying CFF’s competitive advantage in this market space.

The laser focus on service delivery and customer satisfaction remains the centerpiece of our business.

We are cognizant that we operate in a market space that is in constant flux where not only a rapid

response to needs determines success but also proactive responses predicated on actionable data and

information. We continue to work closely with our customers to build a database that will facilitate

continued research and development in anticipation of their future needs.

Directors

The Directors of the Company as at June 30, 2016 are Messrs. Howard Mitchell, Anand James, Clive

Nicholas, W. “Billy” Heaven, Carlton Samuels, Derrick Cotterell and Ian Kelly. The mentor of the Company

continues to be Mrs. Tania Waldron-Gooden.

Auditors

The auditor of the Company, McKenley & Associates of 12 Kingslyn Avenue, Kingston 10, Jamaica has

expressed their willingness to continue in office. The Directors recommend their reappointment.

Our sincere thanks to all of our stakeholders, customers, staff, shareholders and service providers for

having the faith in us and for continuing to have us as their partners for the supply of top quality flavours

and fragrances.

FOR and on behalf of the Directors

Howard Mitchell

Left to Right: Anand James, Derrick Cotterell, Ian Kelly, Clive Nicholas, Carlton Samuels, Tania Waldron-Gooden. Missing from the picture is W. “Billy” Heaven.


Deepening of relationships with existing and new customers.

Improvements in business process and production

facilities.

Major strides in product innovation.

ANAND JAMES Executive Director

Anand James is a founding shareholder and served as the Managing Director of the Company up to December 31, 2015. Mr. James has a Bachelor of Arts degree from the University of Guyana, and a Master of Arts degree from the University of the West Indies. He is a qualified teacher and worked in the management function of the Company’s predecessor, Bush Boake Allen (Jamaica) Limited prior to its voluntary winding up in 2000.

Mr. James spearheaded the purchase of the assets of that entity and the founding of the current Company in 2001. He has over 20 years’ combined experience in the Company. He is also a Director of Spurtree Spices Jamaica Limited, AMJ Agro Processors Guyana Inc., and Anjoja Limited.

DERRICK COTTERELL Managing Director, Executive Director

Derrick has the responsibility of being Chairman and CEO of Derrimon Trading Company Limited Derrick has the responsibility of being Chairman and CEO of Derrimon Trading Company Limited and Managing Director of Caribbean Flavours and Fragrances Limited effective January 1, 2016. Derrick has over 20 years’ experience in the fields of Sales, Marketing and General Management.

He also serves as a director of the Governor General of Jamaica’s “I Believe Initiative” which seeks to improve the lives of young Jamaicans.

Derrick is a graduate of the University of the West Indies and Florida International University, from which he attained a Bachelor of Science degree in Management Studies and a Master of Business Administration respectively.


HOWARD MITCHELL, JPChairman, Non Executive Director

Mr. Mitchell has spent more than 30 years as a practicing Attorney–At–Law. He is an alumnus of the Institute of Management Development (Switzerland) and currently serves as a company director on several boards, including Corrpak Jamaica Ltd. (Executive Chairman), Financial Services Commission (Chairman), Island Grill/Chicken Mistress Ltd. (Chairman), TM Traders Ltd. (Chairman), Health for Life and Wellness Foundation Ltd. (Chairman), CariMed, Kirk Distributors Limited, Walkerswood Group, Mustard Seed Foundation, Casino Gaming Commission , The G. Raymond Chang Foundation and St. Georges College Endowment Fund.

IAN KELLY Corporate Secretary, Executive Director

Ian is the Chief Financial Officer at Derrimon Trading Company Ltd and an Executive Director at Caribbean Flavours and Fragrances Limited. He is an experienced financial and risk manager with senior level experience in the areas of treasury, corresponding banking, corporate finance, securities trading and asset management.

He is a Certified Public Accountant – (CPA) and holds a Bachelor of Science Degree in Accounting, a Master of Science degree in Accounting from The University of the West Indies, and Executive Development Training Program from the Wharton Business School at The University of Pennsylvania.

Ian presently served as a member of the Clarendon College Board of Governors and served as the Chairman of Wigton Windfarm Ltd, Director of Jamaica Free Zone Limited, Director of Postal Corporation of Jamaica and serves as the Chairman of the Audit Committee for both Jamaica Free Zone and Postal Corporation of Jamaica during the period January 2012 – April 2016.

BOAR

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8

TANIA WALDRON-GOODENMentor

Mrs. Tania Waldron-Gooden is the Senior Vice President of Corporate Finance, Research & Special Projects at Mayberry Investments Limited. As the Mentor of the Company, she is responsible for providing the Board with support in establishing proper procedures, systems and controls for its compliance with the Junior Market Rule requirements for financial reporting, good corporate governance, and the making of timely announcements.

Mrs. Waldron-Gooden joined Mayberry Investments Limited as a Management Trainee approximately seven years ago. She rotated through the Research, Asset Management, Equity Trading, Corporate Financing, Risk & Compliance and Information Technology departments.

Prior to joining Mayberry Investments, Mrs. Waldron-Gooden worked at Capital & Credit Financial Services limited in the area of Pension Fund and Client Portfolio Management. She holds a BSc. (Hons.) in Geology from the University of the West Indies (Mona). She also holds an M.B.A from the University of Sunderland (U.K.). She has completed the Jamaica Securities Course as well as the Canadian Securities Course administered by the Canadian Securities Institute.

CLIVE NICHOLAS, CD, CANon Executive Director

Mr. Clive Nicholas is a Tax Consultant and Chartered Accountant who retired as the Director General for Tax Administration after over forty (40) years of combined service to the Income Tax Department, the Revenue Board, the General Consumption Tax Department and the Ministry of Finance and Planning. He is also a graduate of Harvard Law School and was awarded the Order of Distinction (Commander Class) for his services to Jamaica.

Mr. Nicholas is a member of the Integrity Commission, a Director of the Financial Sector Adjustment Company Limited, Financial Institutions Services Limited, Land Taxation Relief Board, Kingston College Development Trust Fund, Caribbean Flavours and Fragrances Ltd, Public Accountancy Board, Marjoblac Limited, and a trustee of the Jamaica Church Pension Scheme. He has also served as a Director of Container Services Limited and a Commissioner of the Betting Gaming and Lotteries Commission.

He is currently the Chairman of the Land Taxation Relief Board, Kingston College Development Trust Fund Audit Committee and Interim Chairman of Caribbean Flavours and Fragrances Limited.


W. “BILLY” HEAVEN, OD, JPNon Executive Director

Mr. Heaven is the Chief Executive Officer of the CHASE Fund, a post he assumed in 2003. Prior to this he served as a Small Medium-sized Enterprise (SME) consultant and Executive Director of the National Development Foundation of Jamaica. Mr. Heaven has worked as an Accountant, Management Accountant and Financial Controller with local and multinational corporations.

Mr. Heaven is the Deputy Chairman of the Board of Directors for the Jamaica Civil Aviation Authority; Chairman of the Audit Committee and member of the Procurement Committee. He is Vice President of the Courtney Walsh Foundation, Director of the Heart Institute of the Caribbean and member of the Audit Committee of the Edna Manley College of the Visual and Performing Arts. Recently, he was elected President for the Jamaica Cricket Association. He is also a member of the Man and Biosphere Committee of the Jamaican National Commission of UNESCO and a member of the Development Committee, Bustamante Hospital for Children. He is a member of the Task Force that advises the Government on rural development.

CARLTON SAMUELSNon Executive Director

Mr. Samuels is an international consultant with an extensive body of work in areas of strategy and governance with focus on ICT4D and technology in education. He is also an adjunct in Information Science in the Department of Library and Information Studies at The University of the West Indies, Mona.

Carlton has served on several high-level international panels. He was formerly a Vice-Chair of ICANN’s At-Large Advisory Committee (ALAC) and a founding Director of the Caribbean Internet Forum.

He has held several senior executive positions in private sector and academic environments, most recently as CIO and University Director of IT at The University of the West Indies. He serves on several Boards and Committees related to education, library and information. These include HEART/NTA, JAMLIN, Kingston High School and Tivoli Gardens High School. He is a past Chair of the National ICT Advisory Council of Jamaica and serves on the ICT Council for Public Sector ICT Governance and Operations.

DISC

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TOP 10 SHAREHOLDERS FOR CARIBBEAN FLAVOURS & FRAGRANCES LTD.

AS AT JUNE 30, 2016

Name Joint Holder

DERRIMON TRADING CO. LTD.

ANAND JAMES

JOAN JAMES

MAYBERRY MANAGED CLIENTS ACCOUNT

IAN KELLY

LLOYD BADAL

Client Total Ownership Dionne Sutherland-Badal

KONRAD BERRY

HOWARD MITCHELL

MANWEI INTERNATIONAL LTD.

ANTHONY JAMES

Volume

44,078,122

11,689,604

11,689,604

2,903,708

2,322,814

2,019,382

2,019,382

1,768,214

1,444,395

975,828

820,700

Percentage

49.02%

13.00%

13.00%

3.23%

2.58%

2.24%

2.24%

1.97%

1.60%

1.08%

0.91%


DIRECTORS AND CONNECTED PARTIES REPORTAS AT JUNE 30, 2016

DIRECTORS

ANAND JAMES

IAN KELLY

HOWARD MITCHELL

CLIVE NICHOLAS

CARLTON SAMUELS

WILFORD HEAVEN

DERRICK COTTERELL

SENIOR MANAGERS

ANAND JAMES

IAN KELLY

DERRICK COTTERELL

JANICE LEE

RHONDE MCPHERSON

CONNECTED PARTIES

JOAN JAMES (WIFE OF DIRECTOR ANAND JAMES)

IAN KELLY (DIRECTOR OF DERRIMON TRADING CO. LTD.)

ANTHONY JAMES (SON OF DIRECTOR ANAND JAMES)

DERRICK COTTERELL (DIRECTOR OF DERRIMON TRADING CO. LTD.)

NUMBER OF SHARES HELD

11,689,604

2,322,814

1,444,395

100,000

50,000

0

0

11,689,604

2,322,814

0

0

0

11,689,604

2,322,814

820,700

0


OUR PROGRESS

Caribbean Flavours and Fragrances Limited continues to be the choice supplier of quality fragrances and flavours in Jamaica and the other markets in which we serve. Our evolution since 2001 from the then Bush Boake Allen Jamaica Ltd. which was part of a multinational company operating in over forty countries in the world, continues to serve a select and diverse group of customers within our operating environment.

Our mission is grounded in the development, production and supply of quality flavours, fragrances and other innovative solutions to customers in our various market segments. We remain committed to Jamaica and the continued positive growth of the various sectors that we serve. So we continue to build on the rich tradition of manufacturing and providing the highest quality flavours and fragrances by sourcing unique oils and other inputs and blending for customized flavours and fragrances for our various market sectors.

This business has experienced significant growth over the past fifteen (15) years. This financial year was quite special, as we have deepened our reach in many of the existing markets that we serve and expanded our footprints in our newest market, the Dominican Republic. We remain excited by these prospects of increasing and expanding our reach in the areas of fragrances and are now poised to accelerate the growth of this aspect of the business.

The focus of increasing our product offerings of flavours and fragrances to our various business partners continued. We provided our customers in the local, regional and international markets with new and trending options in both the fragrances and flavours lines, thereby allowing them a wider selection for their own production. The opening of our newly retrofitted state-of-the-art laboratory is our statement for enabling our product development and research team to provide new and exciting options for our customers. In the period under review, the capabilities of the product development team have been enhanced through investments in training and other exposure to new food technologies.

We continue to serve our customers in Jamaica, Barbados, St. Kitts, Trinidad and Tobago, Guyana, Grenada, Canada and the Dominican Republic. With Cuba now being accessible, we will be taking the necessary exploratory steps to identify business partners and opportunities in that territory in the areas of flavours and fragrances.

Our business model remains wholesale. Both local and overseas manufacturers continue to account for the lion’s share of our business. We treasure the fact that our products play a major role in supporting the manufacturing process of many of our partners. We will continue to support the major manufacturers with raw material to produce some of the most popular carbonated, non-alcoholic and alcoholic beverages, baked goods, soaps and other household cleaners. We are planning on extending our operations into the extraction space in order to provide raw materials from agricultural products such as ginger and coffee.

Our mandate to produce the highest quality products and to be able to supply our customers on a timely basis continues during this financial year. We continue to positively improve our logistics management process and strengthen the relationship that exists between ourselves and our many service providers. This ensures greater efficiencies in our

MAN

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DISC

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ANA

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CFF has modernized its laboratory with International Standard fixtures to be in compliance with International certification regulations.


production cycles, reduction in our transportation costs and ultimately faster turnaround time to our customers. Notwithstanding the movement in the foreign exchange rates, the savings achieved from these cost savings initiatives allowed CFF to absorb some of these major input costs rather than passing them on to our customers. We will continue to improve business to ensure that efficiencies are achieved at all levels.

Looking Ahead - Strategic Planning

The industries that we serve continue to experience change and as such, we must position our organization to ensure that we remain relevant and are able to respond quickly to new needs. With this in mind, we will continue to be working closely with our customers to ensure we are always meeting their needs whilst keeping them at the pinnacle of our strategic planning process. For the financial year 2016/17 some of the strategic initiatives include:

• Establishing four (4) divisions focusing on flavours, fragrances, trading of commodities and extractions.• Establishing a presence and growth targets for all major strategic markets in order to broaden the revenue based on products and country.• Continue to nurture strategic alliances in order to deepen our relationships in the markets that we serve namely Jamaica, Dominican Republic, Trinidad and Tobago, Barbados, Guyana, Haiti, OECS and new markets such as Cuba.• Continuous improvement of our supply chain management to ensure that efficiency is achieved throughout the entire organization. This includes timely deliveries of products and availability of raw materials and finished products. • Explore new opportunities for the extraction of unique Jamaican and Caribbean flavours and fragrances and develop the associated competences.• Increase training of the team whilst improving investing in R&D to enhance our positioning strategy of being a proactive and trendy organization.

We remain mindful of our human capital and the role they play in the successful implementation of our various strategies. Therefore, strategic coaching and mentorship programs have been implemented with our international partners geared at improving the learning curve of our people. These programs, as well as the exposure of our people to the various trades, are geared at improving our knowledge base in the areas of flavours and fragrances and food management.

Financial Performance Highlights For the reporting period ended June 30, 2016, Caribbean Flavours and Fragrance Limited once again exceeded many of the financial objectives, which were established by the Board of Directors. The successful implementation of the Annual Business Plan in a timely manner, along with the requisite monitoring from its Board and Board Committees, ensured growth in all revenue segments of the business. The Board and management continue to remain focused on innovation and new product development, implementation of new strategies geared at revenue enhancement, new market penetration and effective implementation of the new Strategic and Business Plans.

Revenue

Revenue generated by the company for the reporting period ending June 30, 2016, was $362.500 million; representing an 18.15% improvement over the $306.807 million reported for the similar reporting period in 2015. This growth in revenue was instructive despite the generally challenging economic environment, but can be directly attributable to a combination of strategies which involves:

• Focused marketing of our products and services to existing and new customers, resulting in the deepening of these relationship and new product sales. • Greater alliance and improvement in the purchasing of raw materials and finished goods.• Continuous improvement and shorter turn around within our supply and logistics chains process.• Increased inventory levels that are being held within our warehouses for the major fast moving inventory.

We remain cognizant of the financial cost associated with carrying high levels of inventory. However these decisions were taken based on the faster moving inventory items which has long supplier lead time, inventory items which ensures that the Company maintains its competitive advantage and special orders for some of our major customers. The benefits from these decisions are twofold, ensuring that there continues to be growth whilst ensuring that we have happy customers. Our revenue growth was influenced strongly during this reporting period from increased sales in the fragrances category.

Gross Profit Gross profit of $134.695 million, for this reporting period, translates to a $21.243 million or 18.73% growth over the $113.452 million reported in the comparative 2015 period. This positive year-over-year growth and improvement in the gross profit, continues to be a step in the right direction. We will continue to implement new initiatives which are aimed at reducing our annual average cost of sales, logistic costs and the modality of how we move our raw material from source points to our warehouses. The improvement in gross profit was also positively influenced by the implementation of improved purchasing strategies.

Operating Expenses We continue to manage our operating expenses in order to achieve a below budget annual performance and in many instances, just above the recorded levels of inflation. The management of each expense item on a line by line basis, ensures that costs, which will not add immediate or future value to the Company’s growth or a general improvement in efficiencies, are deferred unless justified.

For this reporting period, the total administrative expenses record was $67.183 million, a $7.926 million or a 13.38% average increase over the $59.257 million recorded for the similar period in 2015. The major year-over-year area of increase was staff costs of $7.211 million, moving from $23.288 million in 2015 to $30.499 in 2016. This increase was directly attributable to a decision taken by the Board to increase the staff complement, bolstering the management team as well as reviewing and improving the compensation packages of some critical job positions within the laboratory and production departments. Both the office expenses and repairs and maintenance categories grew by $0.614 million and $0.657 million respectively during the reporting period. Whilst not significant, the growth in the business and the use of the machinery in the production process, are the main factors for these increases. While there were many other year-over-year increases in operation costs, general movements in these costs were in line with budget and came out below inflation.


MIL

LION

S

OPERATING EXPENSES

60914

79385

92283101635

113452

134695

MIL

LION

S

GROSS PROFIT

-

95,000

190,000

285,000

380,000

2011 2012 2013 2014 2015 2016

REVENUE

MIL

LION

S

2011

2011

2012

2012

2013

2013

2014

2014

2015

2015

2016

2016


Net Profit The net profit of $74.070 million reported by the Company for this period represents a $16.324 million or 28.13% growth over the $57.716 million reported for the same period in 2015. The improvement in the bottom line growth is positively influenced by the careful management of the Company’s operating cost, positive growth in revenue and further gains from purchasing and logistics management. This performance in Net Profit has positively influenced the Earnings Per Share, which stood at $0.82 cents up by $0.18 cents or 28.13% from the $0.64 cents reported in 2015. The net profit to gross profit margin for this period was 55% increasing from the 50.80% reported in 2015.

Risk Management

Risk management continues to form a critical and pivotal role in the daily operations of our business. At every level of our operations, the full evaluation of our risk is done to ensure that standards are maintained, as well as, ensuring that product quality is achieved and maintained. From the receipt of raw materials to our stores, implementation of monthly and full quarterly cycle counts of the inventory owing to the inventory balance, enhancements of the disbursement procedures for fragrances, internal auditing of our cash and cashiers daily lodgment, ratio analysis conducted on the monthly and quarterly financial statements, testing of each production batch and further tests at the completion of the manufacturing process ensures that the various enterprise risk is measured and managed.

The management team is required to manage the daily operation and enterprise risk of the Company within the policy framework established by the Board of Directors. In addition to the various reviews, which continue to be done by the management team, the oversight given by the internal and external audit team, complements the work being done by the Audit Committee to ensure that our corporate governance objective for effectively managing risk is met.

In supporting our continued growth, we continue to strengthen the internal controls of the Company based on the findings of both the internal audit and external audit management letters. We continue to place high levels of focus on the areas of cash sales, credit sales, aging accounts receivables and management of the inventory process.

We continue to institute robust internal measures to increase the security of our assets, the safeguarding of proprietary trade secrets, client relationship and the data protection infrastructure, that will enable us to have business continuity in the event of any catastrophic occurrence. The Company will continue to manage its risks to protect its employees, assets and the interests of its stakeholders.

(25,000)

-

25,000

50,000

75,000

2011 2012 2013 2014 2015 2016

NET PROFIT


CELE

BRAT

ING

A SO

LID

FOUN

DATI

ON -

OUR

TEA

M

International Flavours & Fragrances visits CFFJose Ricardo Udes Santos, IFF Account Manager Flavors and Mariel de Juambelz, IFF Account Manager with Rhonde McPherson and Melissa Campbell from CFF.

CFF Board members meet with representatives from IFF.

Our Directors know how to have a good time

CFF at the JMA/JEA Expo

Tribute to Guylene Opal Gayle In 1991 a young woman by the name of Guylene Brown joined the family at the then multinational company Bush Boake Allen Jamaica. Little did Guylene knew that she would spend the next 23 years being an integral part of the team. Guylene worked with that company for a period of ten years and in 2001 when the company ‘s ownership was changed and renamed Caribbean Flavours and Fragrances, Guylen nee Brown now Gayle had grown from being a clerk to the Customer Service Manager.

Mr. James the former Managing Director recalled that he often travelled and did not worry about the business as Mrs. Gayle along with his competent staff carried on, offering exceptional customer service. Mrs. Gayle became the face of Caribbean Flavours and Fragrances Limited.

Guylene Gayle was not only a diligent and loyal co-worker, she was a dependable member of staff and always the first to be at work. She had an outstanding relationship with all her customers.

Guylene we celebrate your life and your dedication to our family and the memories you have left still lives on in our hearts.

Guylene died on October 6, 2015 leaving husband Maxwell, daughter Makayla and all her extended family at CFF.

She will be remembered by her co-workers as a jovial person and a loyal friend and as a foundation member of the Caribbean Flavours and Fragrance Limited Family.


The team in a motivational session.

Janice Lee presenting Principal of End Time Basic School Miss Mae Parlin with a gift basket for Teacher’s Day.

Mr. Anand James discusses with Sheren Omsby flavour usage.

Our Team is the foundation that builds and fosters our continued growth.

Ebonie Banjo assists a customer to choose the most suitable flavour.

ROMARIO DANVERSWarehouse Clerk

MAN

AGEM

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TEAM


ANAND JAMES Technical Consultant

IAN KELLYChief Financial Officer

DERRICK COTTERELLManaging Director

JANICE LEE General Manager

JENOY LEGISTERWarehouse Clerk

EASTON FISHERCompounder

JOAN BENNETT-SIMMONDSPacker

JERMAINE CHAMBERSWarehouse Coordinator

RONALD SMITHCompounder

OPERATIONS TEAM


RECHAL TURNERProduction Supervisor

CHRISTOPHER CARLESSAccountant

RHONDE MCPHERSONQuality Manager

ANDREW FERGUSONDriver

EBONIE BANJOCashier

DELVIA CLARKEAdministration Officer

SHERENE ORMSBYCustomer / Sales Clerk

MELISSA CAMPBELLQuality Assurance Officer

CORP

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Caribbean Flavours and Fragrances Limited continues to practice its commitment to upholding the highest standard of ethical conduct and good corporate governance in its daily operations. The Board of Directors ensures that we conduct our business in the right way for our shareholders, customers and the communities that we serve. The fundamental objective of good governance is to ensure transparency and accountability aimed at protecting our shareholders’ and stakeholders’ value. The Company continues to practice the Codes of Corporate Governance that have been issued by the Jamaica Stock Exchange and the Financial Services Commission.

Our Board mandate includes the overseeing and promoting of the highest standard of corporate governance within our company, whilst examining the soundness of the company’s policies, business practice, strategies and the effectiveness of its internal controls and operating risk management framework. These objectives are geared at ensuring transparency, in an effort to protect our various stakeholders’ and shareholders’ value. At Caribbean Flavours and Fragrances Limited, the operating policies and procedures are reviewed by the Board of Directors as well as other deliberations on matters at the meetings of the two (2) sub-committees. The Board’s two (2) sub-committees are as follows:• Audit Committee• Compensation Committee

The Board continues to see its primary role as assessing the strategic direction of the company through:• Effective and sound leadership• Ensuring compliance and adherence to the policies and procedures• Ensuring responsibility, accountability and clear authority with an effective management team• Safeguarding stakeholder’s value.• Ensuring that all regulatory and statutory obligations are adhered to on time.

The Directors of the Company are experienced professionals with diverse skill sets and knowledge from various professions, and guarantee that decisions made are in the best interest of all stakeholders and the Company’s long term success. The Management and Staff of the Company are expected to exercise the highest standard of ethical conduct and the adherence of Company policies and procedures; thereby, ensuring compliance with the rules of the Jamaica Stock Exchange Junior Market and the laws and regulations of Jamaica.

Board Composition At the beginning of the financial year 2015/2016 the Board consisted of seven (7) members, four (4) of which were independent members. These include:1. Howard Mitchell Chairman (Independent) 2. Wilford (Billy) Heaven (Independent) 3. Clive Nicholas (Independent)4. Carlton Samuels (Independent)5. Anand James Managing Director - (Retired December 31, 2015)6. Derrick Cotterell Managing Director - (Appointed January 1, 2016)7. Ian Kelly Company Secretary

The Company also has an external Mentor, Mrs. Tania Waldron-Gooden, as required by the Jamaica Stock Exchange Junior Market Rules, who assists with monitoring of the various rules and regulations. The Board met on seven (7) occasions during the year 2015/2016 in which it reviewed the strategic and operational performance of the business. These activities are geared at improving shareholder value and ensuring that long-term viability is maintained whilst improving shareholders value. The table below outlines the Directors’ attendance:

Name of Directors No. of Meetings Attended Howard Mitchell - Chairman 7Clive Nicholas 7 Wilford “Billy” Heaven 7 Anand James 7 Carlton Samuels 3Derrick Cotterell 7 Ian C. Kelly 7

In carrying out its work the Board was assisted by the following Board Committees:

Audit Committee The Audit Committee comprises the following Directors and attendances to meetings are outlined in table below:

Audit Committee Members No. of Meetings Attended Clive Nicholas - Chairman 5 Wilford “Billy” Heaven 4Ian C. Kelly 5

The Committee had five (5) meetings during the 2015/2016 financial year, in which it carried out the following functions:

• Reviewed the integrity of the monthly, quarterly and annual financial statements; • Reviewed the formal announcements relating to the Company’s financial performance to the Jamaica Stock Exchange; • Reviewed and recommended budgets for approval by the Board of Directors; • Reviewed the effectiveness of internal controls and risk management systems and other matters that fall within its mandate, as well as inventory cycle counts and the findings from these periodic counts;• Reviewed operational reports and controls implementation;• Reviewed the independence, objectivity and effectiveness of the relationship with the external auditor; • Made recommendation to the Board of Directors in relationship to the re-appointment of the external auditor, as well as remuneration and other terms of engagement.

There were no known reported incidence of fraud or any irregularities that was identified either by our internal controls or from the work done by our external Auditors.

McKenley and Associates served as external Auditor during this financial year and was responsible for the auditing of the financial operations during the year ended June 30, 2016. They met all the timelines for the auditing and submission of the required statements, in order to comply with the rules of the Jamaica Stock Exchange.

Compensation Committee The composition of this Committee is outlined as follows:

• Wilford “Billy” Heaven Chairman • Clive Nicholas Member• Howard Mitchell Member• Anand James Member

The Committee is charged with the responsibility for providing advice to the Board on all matters relating to the remuneration of the Executive Director and Senior Managers. The committee met once during the year, and its recommendations were submitted to the Board of Directors and recommendations accepted.

Howard MitchellChairman


At Caribbean Flavours and Fragrances Limited we are committed to working with the adjoining communities within which we operate, to improve and enhance the lives of persons, improve physical infrastructure and foster a closer working relationship with our chosen charities.

Caribbean Flavours and Fragrances Limited remains steadfast and committed to support early childhood education. We are of the view that a clean and safe facility not only motivates and improves the staff morale, but also improves learning.

The following projects were supported during this financial year:

• The adoption of the End Time Basic School in the Water House area which was fully repainted on Labour Day, as well as, the refurbishing of the full rest rooms facilities and the full retrofitting of the school’s kitchen with kitchen supplies. We continue to make our presence felt through the monthly supplies of toiletries.

• Our continued involvement with the Melbourne Cricket Club was deepened during the year. We once again partnered with them on their annual 5K walk as well as, providing financial assistance with the hosting of their annual summer camps.

• Back to school treat organized by the Scorner Youth Movement within the Water House community.

• Hosting of students from Jamaica College for a full tour of our facilities.

We remain dedicated to ensuring that we serve all our various stakeholders and our community involvement remains another proud moment for Caribbean Flavours and Fragrances during this financial year.

CORP

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CIAL

RES

PONS

IBIL

ITY


End Time Basic School Teacher’s Day

Caribbean Flavours and Fragrances Limited remains steadfast and

committed to support early childhood education.


Melbourne Cricket Club 5k Walk

Labour Day Project

Jamaica College takes a tour of CFF facilities

L I M I T E D

Independent Auditors’ Report Statement of Comprehensive Income 1

Statement of Financial Position 2

Statement of Cash Flows 3

Statement of Changes in Shareholders’ Equity 4

Notes to the Financial Statements 5 - 33

FINANCIAL STATEMENTS


Ind

ep

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ud

itors’ R

ep

ort to

the

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ers

To the Members of Caribbean Flavours and Fragrances Limited

eport Report on the Financial Statements We have audited the accompanying financial statements of Caribbean Flavours and Fragrances Limited ( CFFL ) which comprise the statement of financial position as at 30 June 2016, and the statement of comprehensive income, changes in

equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management is responsible for the preparation of 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 controls as management determines is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards of Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether or not the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financijudgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the preparation of 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

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 financial statements.

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

To the Members of Caribbean Flavours and Fragrances Limited

eport Opinion In our opinion, the financial statements give a true and fair view of the financial position of Caribbean Flavours and Fragrances Limited as at 30 June 2016 and of its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, and comply with the provisions of the Jamaican Companies Act.

Report on other Legal and Regulatory Requirements We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit.

In our opinion, proper accounting records have been maintained, so far as appears from our examination of those records, and the financial statements, which are in agreement therewith, give the information required by the Jamaican Companies Act in the manner so required. Chartered Accountants Kingston, Jamaica 24 August 2016

CARIBBEAN FLAVOURS & FRAGRANCES LTD.

STATEMENT OF COMPREHENSIVE INCOMEYEAR ENDED 30 JUNE 2016

Caribbean Flavours and Fragrances Limited Page 1 Statement of Comprehensive Income Year ended 30 June 2016

Note 2016

2015

Revenue 3 362,500 306,807 Cost of sales (227,805) (193,355) Gross profit 134,695 113,452 Bad debt recovered - 94 Impairment of fixed asset - Selling and distribution costs 4 (5,013) (2,133) Administrative expenses 5 (67,183) (59,257) Operating profit 62,499 52,156 Finance income 6 11,571 5,581 Finance cost 6 - (21) Profit before tax 74,070 57,716 Taxation 7 - - Net profit being total comprehensive income for year 74,070 57,716

Earnings per share 8 $0.82 $0.64

1


STATEMENT OF FINANCIAL POSITION30 JUNE 2016Caribbean Flavours and Fragrances Limited Page 2

Statement of Financial Position 30 June 2016

Note 2016 2015 $ $ Non-Current Assets

Property, plant and equipment 9 2,997 1,358 Current Assets Inventories 10 71,751 62,873 Receivables 11 39,445 60,914 Taxation recoverable 4,464 4,085 Investments 12 52,803 50,000 Cash and cash equivalents 13 124,632 53,488 293,095 231,360 Current liability Payables 14 19,741 30,437 Net Current Assets 273,354 200,923 276,351 202,281

Share capital 15 56,200 56,200 Retained earnings 220,151 146,081 276,351 202,281 Approved for issue by the Board of Directors on 24 August 2016 and signed on its behalf by:

.. .. Clive Nicholas Director Carlton Samuels Director

2


STATEMENT OF CASH FLOWS30 JUNE 2016Caribbean Flavours and Fragrances Limited Page 3

Statement of Cash Flows 30 June 2016

*restated for comparative purposes. Amount was not shown in prior year.

Note 2016

2015

Cash flows from operating activities: Profit for the year 74,070 57,716 Items not affecting cash: Interest income 6 (6,521) (4,264) Interest expense 6 - *21 Depreciation 9 918 675 Loss on disposal of fixed assets 1 - 68,468 *54,148 Changes in operating assets and liabilities - Inventories (8,878) (21,123) Receivables 21,469 (13,021) Payables (10,696) 9,613 Taxation recoverable (379) 129 1,516 (24,402) Cash provided by operating activities 69,984 *29,746 Cash flows from investing activities Purchase of fixed assets (2,558) (713)

Purchase of investment (2,803) (50,000) Interest received 6,521 4,264 Net cash provided by/(used in) investing activities 1,160 (46,449) Cash flows from financing activities Repayment of loan Interest expense

- (693) *(21)

Dividend paid 18 - (8,992) Net cash used in financing activities - *(9,706) Increase/(decrease) in cash and cash equivalents 71,144 (26,409) Cash and cash equivalents at beginning of year 53,488 79,897 Cash and cash equivalents at end of year 13 124,632 53,488 Represented by: Cash on hand 718 3,167 Bank balances 123,914 33,321 Fixed deposits - 17,000 124,632 53,488

3


STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY30 JUNE 2016

Caribbean Flavours and Fragrances Limited Page 4

30 June 2016

Share Capital

Retained Earnings

Total

Balance at 30 June 2013 5,620 58,956 64,576 Issue of shares 50,580 - 50,580 Net profit as previously reported - 50,547 50,547 Prior year tax charge - (3,153) (3,153) Net profit as restated - 47,394 47,394 56,200 106,350 162,550 Dividend paid - (8,993) (8,993) Balance restated as at 30 June 2014 56,200 97,357 153,557 Net Profit - 57,716 57,716 Dividend paid - (8,992) (8,992) Balance at 30 June 2015 56,200 146,081 202,281 Net Profit - 74,070 74,070 Balance at 30 June 2016 56,200 220,151 276,351

4


NOTES TO THE FINANCIAL STATEMENTS30 JUNE 2016

Caribbean Flavours and Fragrances Limited Page 5 Notes to the Financial Statements 30 June 2016

1. IDENTIFICATION AND PRINCIPAL ACTIVITIES

) is incorporated under the Companies Act of Jamaica and domiciled in Jamaica. Its principal activity is the manufacture and distribution of flavours, mainly for the beverage, baking and confectionary industries. Its registered office is located at 226 Spanish Town Road, Kingston 11. These financial statements are presented using Jamaican dollars, which is considered the functional currency of the primary economic environment in which the Company operates.

Stock Exchange. 2. STATEMENT OF COMPLIANCE, BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING

POLICIES

(a) Statement of compliance

The financial statements of Caribbean Flavours and Fragrances Limited have been prepared in accordance and compliance with International Financial Reporting Standards (IFRS) and their interpretations adopted by the International Standards Board and comply with the provisions of the Jamaican Companies Act.

New, revised and amended standards and interpretations that became effective during the year. At the date of authorization of these financial statements, certain new, revised and amended standards and interpretations came into effect during the year and as at 1 January 2016. Management has assessed the relevance of all such new standards, interpretations and amendments and determine that the majority of the standards did not have a significant effect on the amounts and disclosures in these financial statements. The principal standards that became effective included improvements to IFRS 2010-2012 and 2011-2013 cycles. These cycles contained amendments to certain standards and interpretations that were effective 1 January 2016 and the main amendments applicable to the Company are as follows:

IFRS 13, Fair value Measurement is amended to clarify that issuing of the standard and consequential amendments to IAS 39 and IFRS 9 was not intended to prevent entities from measuring short-term receivables and payables that have no stated interest rate at their invoiced amounts without discounting, if the effect of not discounting is immaterial.

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2. STATEMENT OF COMPLIANCE, BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance (continued)

New, revised and amended standards and interpretations that became effective during the year (continued):

IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets.

The standards have been amended to clarify that at the date of revaluation (i) the gross carrying amount is adjusted in a manner that is consistent with the revaluation of

the carrying amount of the asset and the accumulated depreciation ( or amortisation) is adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset after accounting for impairment losses or;

(ii) the accumulated depreciation (or amortisation) is eliminated against the gross carrying amount of the asset.

(iii) the gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount of the asset and the accumulated depreciation ( or amortisation) is adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset after accounting for impairment losses or;

(iv) the accumulated depreciation (or amortisation) is eliminated against the gross carrying amount of the asset.

(v) revenue based methods of depreciation cannot be used. Such methods are not suitable because they reflect factors other than the consumption of economic benefits embodied in the assets.

IAS 24 Related Party Disclosures has

to the reporting entity, either directly or through a group entity. For related party transactions that arise when key management personnel services are provided to a reporting entity, the reporting entity is required to separate the amounts that it has recognised as an expense for those services that are provided by a management entity;

compensation paid to individuals providing the key management personnel services.

IAS 1 Presentation of financial statements has been amended to clarify or state the following:

(i) the order of notes to the financial statements is not prescribed (ii) specific criteria is now provided for presenting subtotals on the statement of financial

position and in the statement of profit or loss and other comprehensive income (OCI) (iii) the presentation in the statement of OCI of items of OCI arising from joint ventures and

associates should be accounted for according to the equity method and follows IAS1 (iv) approach of splitting items into those that may be reclassified to profit or loss and those

that will never be reclassified (v) Specific single disclosures that are not material do not have to be disclosed (vi) Line items in the financial statements should be disaggregated if this provides useful

information to users.

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2. STATEMENT OF COMPLIANCE, BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

(a) Statement of compliance (continued) New, revised and amended standards and interpretations that became effective during the year (continued):

Amendments to IAS 27 Equity Method in Separate Financial Statements, allow the

use of the equity method in separate financial statements, and apply to the accounting for subsidiaries, associates and joint ventures.

Amendments to IFRS 10 Consolidated Financial Statements, was adjusted to confirm

that the exemption from preparing consolidated financial statements is available to a parent entity that is a subsidiary of an investment entity.

IFRS 12, Disclosure of Interest in Other Entities, was amended to clarify that the

relevant disclosure requirements in the standards apply to an investment entity in which all of its subsidiaries are measured for fair value through profit or loss.

The adoption of these amendments by the management of the Company did not result in any change to the presentation and disclosures in the financial statements for the year ended 30 June, 2016 Improvements to IFRS 2012-2014 cycle, contain amendments to certain standards and interpretations and are effective for accounting periods beginning on or after 1 January 2016. The main amendments include:

IFRS 5 Non- Current Assets Held for Sale and Discontinued Operations IFRS Financial Instruments: Disclosures IFRS 7 has also been amended to clarify that the additional disclosures required by

Disclosures: Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7) are not specifically required for inclusion in condensed interim financial statements for all interim periods.

IAS 34, interim Financial Reporting has been amended to clarify that certain disclosure, if they

interim

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(a) Statement of compliance (continued)

New, revised and amended standards and interpretations issued but not yet effective:

At the date of authorization of the financial statements, certain new and revised and amended standards and interpretations were in issue but were not yet effective for the current year and which the Company has not early adopted. Management has assessed all such new standards, amendments and interpretation with respect to its operations and has determined that as a small and medium size (SME) entity, the majority of the standards will The principal standards included

IFRS 15, Revenue from Contracts with Customers, effective for accounting periods beginning on or after 1 January 2018 replaces IAS 11 Construction Contracts, IAS 18 Revenue, IFRS 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfer of Assets from Customers and SIC -31 Revenue- Barter Transactions Involving Advertising Services. It does not apply to insurance contracts, financial instruments or lease contracts which fall in the scope of other IFRSs

IFRS 9 Financial Instruments, which is effective for accounting periods beginning on or

after 1 January 2018, replaces the existing guideline in IAS 39 Financial; Instruments: Recognition and Measurement. IFRS9 principal focus includes revised guidance on the classification and measurement of financial assets and liabilities, including a new expected credit loss model for calculating impairment of financial assets and the new general hedge accounting requirements.

IFRS 16 leases, which is effective for accounting periods beginning on or after 1 January

2019, eliminates the current dual accounting model and off balance sheet operating leases. Instead, there is a single method to account for leases where assets will be reflected on the balance sheet similar to current finance lease accounting.

Lessor accounting remains similar to current practice as the lessor will continue to classify leases as finance and operating leases. Finance lease accounting will be based on IAS 17 lease accounting, with recognition of net investment in lease comprising receivable and residual asset. Operating lease accounting will be based on IAS 17. The Company is assessing the impact that the foregoing standards and amendments will have on its financial statements when they become effective and are adopted.

8





(b) Basis of preparation

The financial statements of Caribbean Flavours and Fragrances Limited have been prepared in accordance with and compliance with International Financial Reporting Standards (IFRS) under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Although these estimates are based on

estimates. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are noted below:

(c) Critical accounting estimates and judgments

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual events. 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.

(i) Allowances for losses

In determining amounts recorded for allowance for losses in the financial statements, management makes judgments regarding indicators of impairment, that is, whether there are indicators that suggest there may be a measurable decrease in the estimated future cash flows from accounts receivable and other financial assets. For example, a decrease in cash flow may result from repayment default and adverse economic conditions. Management also makes estimates of the likely estimated future cash flows from impaired financial assets, including the net realizable value of underlying collateral, as well as the timing of such cash flows. The adequacy of the allowance depends on the accuracy of these judgments and estimates.

(ii) Depreciable assets Estimates of the useful life and the residual value of property, plant and equipment are required in order to apply an adequate rate of transferring the economic benefits embodied in these assets in the relevant periods. The Company applies a variety of methods in an effort to arrive at these estimates from which actual results may vary. Actual variations in estimated useful lives and residual values are reflected in profit or loss through impairment or adjusted depreciation provisions.

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(c) Critical accounting estimates and judgments (continued)

(iii) 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 Company recognizes 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 originally recorded, such differences will impact the income tax in the period in which such determination is made.

(iv) Post-employment benefits Accounting for some post-employment benefits requires the use of actuarial techniques to make a realizable estimate of the amount of benefit that employees have earned in return for their service in the current and prior periods. The Company does not operate a defined benefit contribution pension scheme and therefore no judgment or estimate was required in this regard. The Company has implemented an individual retirement account (IRA) plan operated at a reputable financial institution for some categories of staff. The Company is only responsible to match

(v) Accruals

Amounts accrued for certain expenses are based on estimates and are included in payables and accruals.

(vi) Net realizable value of inventories.

Estimates of net realizable value are based on the most reliable evidence available, at the time the estimates are made, of the amounts the inventories are expected to realize. These estimates take into consideration fluctuations of price or costs directly relating to events occurring after the end of the year to the extent that such events confirm conditions existing at the end of the year.

(vii) Fair value estimation

Fair value is the amount for which an asset could be exchanged or a liability settled between

transaction. A number of assets and

at fair value.

-financial assets and liabilities utilizes market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorized into different levels based on how observable are the inputs used in the valuation techniques.

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(d) Critical accounting estimates and judgments (continued)

(viii) Fair value estimation (continued)

The fair value hierarchy is: Level 1 Quoted unadjusted prices in active markets for identical assets or liabilities Level 2 Observable direct or indirect inputs other than level 1 input Level 3 Unobservable inputs that are not derived from market data The classification of an item into the above level is based on the lowest level of inputs used that has a significant effect on the fair value measurement of the item. Transfer of items between levels is recognized in the period that they occur. The fair value of financial instruments traded in active markets, such as available-for-sale investments, is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in level 1 and comprise equity instruments traded on the Jamaica Stock Exchange (JSE).

(e) Going concern

The preparation of the financial statements in accordance with IFRS assumes that the Company will continue in operational existence for the foreseeable future. This substantially means that the statements of profit or loss and comprehensive income and financial position assume no intention or necessity to liquidate or curtail the scale of operations. This is referred to as the going concern concept. Management believes that the preparation of the financial statements on the going concern basis continues to be appropriate as there are no pending matters that may disrupt or curtail the operations of the Company.

(f) Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation. Depreciation on assets under construction does not commence until they are complete and available for use. Depreciation on all other property, plant and equipment is calculated on the straight-line basis at annual rates estimated to write-off the carrying value of the assets over the period of their estimated useful lives. Land is not depreciated. The annual rates are as follows:-

Leasehold property & improvements 10% Buildings 2 1/2% Plant and machinery, furniture and fixtures, office equipment 10% Computer equipment 33 1/3% Motor vehicles 25%

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(f) Property, plant and equipment (continued)

fe are reviewed periodically for impairment. Where an

estimated recoverable amount, it is written down immediately to its recoverable amount. Gains and losses on disposal of property, plant and equipment are determined by comparing the proceeds with the carrying amount and are recognized in other income in the statement of comprehensive income. Repairs and maintenance expenditure are charged to statement of comprehensive income during the financial period in which they are incurred.

(g) Inventories

Inventories are valued at the lower of cost, determined principally on a weighted average cost basis and fair value less costs to sell. Cost is determined as follows: Finished goods: costs of product plus all indirect costs such as labour and appropriate allocations

for overhead expenses to bring the product to a saleable condition. Work-in-progress: cost of product, labour plus appropriate allocations for overhead expenses. Goods-in-transit : cost of goods translated at the year- end exchange rate.

(h) Foreign currency translations

Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions.

Monetary items denominated in foreign currency are translated to Jamaican dollars using the closing rate at the reporting date. Non-monetary items measured at historical cost denominated in a foreign currency are translated using the exchange rate as at the date of initial recognition; non-monetary items in a foreign currency that are measured at fair value are translated using the exchange rates at the date when the fair value is determined. Exchange differences arising from the settlement of transactions at rates different from those at the dates of the transactions and unrealized foreign exchange differences on unsettled foreign currency monetary assets and liabilities are recognized in profit or loss.

(i) Trade receivables Trade receivables are carried at anticipated realisable value. A provision is made for impairment of trade receivables when it is established that there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited in the statement of comprehensive income.

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(j) Revenue recognition

Revenue is recognized in the statement of comprehensive income to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue from the sale of goods is recognized when the significant risk and rewards of ownership of goods have been passed to the buyers and the amounts of revenue can reliably be measured. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, and other sales taxes or duty. Rental, other income and interest income are recognized as they accrue unless collectability is in doubt. Dividend income is recognized when the right to receive payment is established.

(k)Current and deferred Income taxes

Current

Current tax charges are based on taxable profits for the year, which differ from the profit before tax reported because taxable profits exclude items that are taxable or deductible in other years, and

tax rates that have been enacted at the reporting date. Deferred tax

Deferred tax is the tax that is expected to be paid or recovered on the 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. Deferred income tax is determined using tax rates that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred tax is charged or credited to statement of income, except where it relates to items charged or credited to other comprehensive income or equity, in which case deferred tax is also dealt with in other comprehensive income or equity.

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(l) Financial instruments

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

The Company classifies its financial assets in the following categories: loans and receivables and investments available for sale and held to maturity categories. The classification depends on the purpose for which the financial assets are acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date. Loans and receivables These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market; they are principally through the provision of goods and services to customers (e.g. trade receivable) but also incorporate other types of contractual monetary assets. They are included in current assets and include short term investments, accounts receivable, other receivables and cash and cash equivalents. Investments (i) Available-for-sale

These are non-derivative financial assets 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.

(ii) Held-to-maturity

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Company management has the intention and ability to hold to maturity. Where the Company is required to sell other than an insignificant amount of held-to-maturity assets, the entire category would be compromised and reclassified as available-for-sale. At the date of the statement of financial position, the Company held no investments in these categories.

Financial liabilities

measured at amortized cost using the effective rate interest method. At the date of the statement of financial position, the following items were classified as financial liabilities: bank overdraft, current portion of long term loans and accounts payables and accruals.

14





(m) Borrowing and borrowing costs

Bank and other borrowings are recognized initially at fair value, net of transactions costs incurred. Borrowings are subsequently stated at amortized cost. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalized during the period of time that is required to complete and prepare the asset for its intended use. Capitalization of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in the statement of comprehensive income in the period in which they are incurred.

(n) Dividends

Dividends on ordinary shares are recognized in stockholderbecome legally payable. Interim dividends are due when declared and approved by the directors while final dividends are approved by shareholders at the Annual General Meeting.

Dividends for the year that are declared after the reporting date are disclosed in the subsequent events note.

(o) Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as an interest expense.

(p) Cash and cash equivalent

Cash and cash equivalent are carried at the statement of financial position date at cost. For the purpose of the cash flow statement, cash and cash equivalents comprise cash at bank and in hand and short term deposits with original maturities of three months or less, net of bank overdraft.

15





(q) Impairment of non-current assets

Property, plant and equipment and other non-current assets are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of the assets exceeds its recoverable amountvalue in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identical cash flows.

Calculation of recoverable amount and reversal of impairment An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company makes an estimate of the recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the

nt since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation. Such reversal is recognized in the income statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.

(r) Employee benefits

(i) Employee benefits include current or short term benefits such as salaries, statutory

contributions paid, annual vacation and sick leave and non-monetary benefits such as medical care. Entitlement to annual leave and other benefits are recognized when they accrue to employees.

(ii) The Company does not operate a pension scheme (iii) The Company does not have a formal profit-sharing or bonus plan in place for permanent

employees. (s) Related parties

A related party is a person or entity that is related to the entity that is preparing the financial statements; referred to in IAS

(a)

that person: (iv) Has control or joint control over the reporting entity; (v) Has significant influence over the reporting entity; or (vi) Is a member of the key management personnel of the reporting entity or of a parent of

the reporting entity.

16





(s) Related parties (continued)

(b) An entity is related to a reporting entity if any of the following conditions apply:

(i) The entity and the reporting entity are members of the same group. (ii) One entity is an associate or joint venture of the other entity. (iii) Both entities are joint ventures of the same third party (iv) One entity is joint venture of a third entity and the other entity is an associate of the third

entity. (v) The entity is a post-employment benefit plan for the benefit of the employees of either the

reporting entity or an entity related to the reporting entity. (vi) The entity is controlled or jointly controlled by a person identified in (a) above. (vii) A person identified in (a) (i) has significant influence over the entity or is a member of the

key management personnel of the entity.

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

(t) Earnings per share

The earnings per share is computed by dividing the profit attributable to the ordinary shareholders by the number of ordinary shares issued.

(u) Segment reporting

An operating segment is a component of a company that engages in business activities from which it may earn revenues and incur expenses; whose operating results are regularly reviewed

f Operation Decision Maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available.

Based on the information presented to and reviewed by the CODM, the entire operations of the Company are considered as one operating segment.

(v) Share Capital

Ordinary shares are classified as equity. Incremental costs directly attributed to the issue of ordinary shares are recognized as a deduction from equity.

(w)Trade and other payables

Trade and other payables are stated at amortized cost.

(x) Comparative balances

When necessary, comparative figures are reclassified to conform to the changes in presentation in the current year.

17




3. REVENUE RECOGNITION

Revenue comprises the fair value of the consideration received or receivable for the sale of goods in net of General Consumption Tax,

returns and discounts. The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company and specific criteria have been met in

cribed below:

Sale of goods

Sales are recognised upon delivery of products, customer acceptance of the products and collectivity of the related receivables is reasonably assured.

Dividend income

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

Interest income

Interest income is recognised in profit or loss for all interest bearing instruments on an accrual basis using the effective yield method based on the actual purchase price. Interest income includes coupons earned on fixed income investments.

4. SELLING AND DISTRIBUTION COSTS

Selling and distribution costs include the cost of monthly electronic and print costs along with the operating expenses of the two (2) motor vehicles owned by the Company which are used by the salesmen for islandwide delivery of the Company

2016

2015

Advertising and promotion Bad Debt expense

3,500 878

1,346 -

Motor vehicle expenses 635 787 5,013 2,133

18




5. ADMINISTRATIVE EXPENSES

6. FINANCE INCOME AND COSTS

2016

2015

Audit fee 1,500 1,440 Bank charges 794 628 Depreciation 918 675 Donations and subscriptions 754 593 Entertainment 18 458 Insurance 1,591 1,514 Rent 7,740 7,200 Legal and professional fees 1,990 4,083 Motor vehicle 442 709 Office and general 2,273 1,659 Asset and other taxes 282 240 Printing and stationery 342 401 Repairs and maintenance 2,412 1,758 Staff costs (Note 16) 30,499 23,288 Security 1,255 573 Telephone and postage 1,691 1,381 Travelling 2,756 1,925 Utilities 2,496 2,252

1,430 980 6,000 7,500

67,183 59,257

2016

2015

Finance income - Interest income 6,521 4,264 Net foreign exchange gains 5,050 1,317 11,571 5,581 Finance costs - Loan interest incurred - (21)

19




7. TAXATION Taxation is based on profit for the year adjusted for taxation purposes and comprises:

The tax effect of difference between treatment of items for financial statements and taxation purposes is as follows:

No account is taken of deferred taxation during the year ended 30 June 2016 because the Company was granted a remission from income tax as a result of listing on the Junior Market of the Jamaica Stock Exchange (JSE), effective 2 October 2013.

Remission of income tax By notice dated 13 August 2009, the Minister of Finance and the Public Service, issued and gazetted the Income Tax (Jamaica Stock Exchange Junior Market) (Remission) Notice, 2009. The Notice effectively granted a remission of income tax to eligible companies that were admitted to the Junior Market of the Jamaica Stock Exchange (JSE) if certain conditions were achieved after the date of initial admission.

Effective 2 October 2013 Junior Market of the JSE and is therefore not subject to income tax for the year ended 30 June 2016. The Company is entitled to a remission of income taxes for ten years in the following proportion: Years 2014 - 2018 100% of standard rate Years 2019 - 2023 50% of standard rate

2016

2015

Current taxation - - - -

2016

2015

Profit before tax 74,070 57,716 Taxation at 25% 18,518 14,429 Difference between depreciation and capital allowances (75) 68 Expenses not allowed for tax purposes 71 60 Unrealized foreign currency conversion gain - - Remission of income tax (18,514) (14,557) Current taxation NIL NIL

20




7. TAXATION (continued) Remission of income tax (continued) Provided the following conditions are met: (i) the Company remains listed for at least 15 years and is not suspended from the JSE for any

breaches of its rules.

(ii) the Subscribed Participating Voting Share Capital of the Company does not exceed J$500 million

(iii) the Company has at least 50 Participating Voting Shareholders

The financial statements have been prepared on the basis that the Company will have the full benefit of the tax remissions. Government of Jamaica (GOJ) new taxes Effective 1 January 2014, the Government of Jamaica enacted new tax measures to change the tax incentive regimes applicable to various industries. Given the current tax position of the Company, as disclosed in note (i) above, these new tax measures have resulted in changes in the income tax and

of the tax remission period. Some of these changes are as follows:

Tax compliant entities are able to claim up to 30% of econtributions (Employment Tax Credit (ETC)) against income tax for the year. Unused ETC , cannot be carried forward or refunded

The maximum capital allowances on private motor vehicles, which were previously limited to J$3,200, increased to a maximum of US$35,000.

No initial allowances are given on the purchase of buildings; however, all other capital expenditure on buildings and other assets continue to attract initial allowances.

A Minimum Business Tax of $60,000 was enacted, payable in two installments, June 15 and September 15 of each year by registered companies. This tax can be set-off against income tax liability for the financial year but cannot be carried forward if unused in the respective year.

8. EARNINGS PER SHARE

Earnings per share are calculated by dividing the profit for the year by the 89,920,033 ordinary shares in issue.

21

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23




10. INVENTORIES

There were no inventory write-downs for the current or the previous year. 11. RECEIVABLES

The aging of trade receivables and related impairment was:

12. INVESTMENTS

(i) This represents an amount loaned to a related entity, Derrimon Trading Company Limited. The amount was repaid during the year.

in the prior year. (ii) This represents a private placement arranged by Mayberry Investments Limited and matures in

February 2017. (iii) This represents a repurchase agreement amounting to US$301,773 and maturing in July 2016.

Inventories comprise:

2016

2015

Raw materials 49,972 40,391 Finished goods 6,118 8,783 Resale goods 15,661 13,699 71,751 62,873

2016

2015

Trade 38,121 53,746 Less: provision for bad debts (655) (501) 37,466 53,245 Prepaid purchases 1,690 6,606 Prepaid insurance 289 321 Other 742 39,445 60,914 Movement during the year in the allowance for doubtful debts account

Balance at 30 June 2015 and 30 June 2014 Increase in provision Balance at 30 June 2016 and 30 June 2015

501 154 655

501 -

501

2016 $

Impairment

2015 $

Impairment

Current & past due 31 to 60 days 35,264 51,419 Past due 61 to 90 days 1,630 1,156 Past due over 90 days 1,227 655 1,171 501 38,121 655 53,746 501

2016

2015

(i) 8.25% : Derrimon Trading Company Limited - 50,000 (ii) 11.75% :Derrimon Trading Company Limited 15,000 - (iii)1.35% : NCB Capital Markets 37,803 - 52,803 50,000

24




13. CASH AND CASH EQUIVALENT

2016

2015

Cash on hand 718 3,167 J$ bank balances 65,523 9,227 US$ and other foreign currency bank balances 58,391 24,094 Fixed deposits - 17,000 124,632 53,488

The weighted average effective interest rate on Jamaican dollar (J$) fixed deposits was 4.75% in 2015. There were no fixed deposits as at 30 June 2016.

14. PAYABLES

15. SHARE CAPITAL

2016

2015

Trade 12,789 15,670 General Consumption Tax (GCT) 3,649 6,223 Audit fee 1,395 1,335 Statutory contributions 467 554 Vacation leave 630 500 Customer deposits - 4,733 Other 812 1,422 19,742 30,437

2016

2015

Authorized: 91,452,000 ordinary shares of no par value

Issued and fully paid: 89,920,033 ordinary shares of no par value 56,200 56,200

25




16. STAFF COSTS

The average number of persons employed full-time by the Company during the year is as follows:

2016

2015

Casual labour 896 3,231 Redundancy 334 441 Salaries and wages 21,050 14,002 Statutory contributions 2,003 1,781 Travelling allowance 1,379 699 Staff welfare & training 2,920 2,166 Health and group life insurance 1,787 968 Vacation leave 130 - 30,499 23,288

2016

2015

Full time 15 14 Part time 3 2 18 16

26




17. FINANCIAL INSTRUMENTS

(a) Financial risk management

The Company has exposure to credit risk, market risk and liquidity risk from its use of financial instruments in the ordinary course of business. Derivative financial instruments are not used to reduce exposure to fluctuations in interest and foreign exchange rates.

(i) Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The maximum exposure to credit risk at the reporting date is represented by the carrying amount of each relevant financial asset.

Cash and cash equivalents, The Company limits it exposure to credit risk by:

Placing cash resources with reputable financial institutions who they consider to be stable

and have minimal risk of default and Investing in liquid securities with credit worthy institutions.

Trade receivables

influenced mainly by the individual characteristics of each customer. Management has a credit policy in place under which each customer is analysed for credit worthiness prior to being offered credit. The Company does not require collateral in respect of trade and other receivables. At the reporting date there were no significant concentrations of credit risk in respect of the five (5) major customers that comprise over 58 % (2015-47%) of the trade receivables balance. At 30 June 2016, amounts receivable from these customers aggregated approximately $21,770,875 (2015 - $25,364,052)

Due to related parties At the reporting date there were significant amounts receivable and paid in respect to amounts due from and to related parties. There were no chang

27




17. FINANCIAL INSTRUMENTS (continued)

(a) Financial risk management (continued)

(i) Credit risk (continued)

Exposure to credit risk: The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The allowances for doubtful debts are based on the ageing of the receivables, with write-offs made if attempts to collect fail and the amount is deemed uncollectible by management.

(ii) Liquidity risk

Liquidity risk, also referred to as funding risk, is the risk that the Company 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 marketable securities, and the availability of funding through an adequate amount of committed credit facilities. Liquidity risk is managed by the Company by maintaining committed lines of credit and by efficiently managing the C At the end of the reporting period, the Company was not exposed to any liquidity risk as current assets significantly exceeded current liabilities.

2016

2015

Cash and bank balances 124,632 36,488 Accounts receivable 37,466 53,245 Fixed deposits - 17,000 162,098 106,733 The aging of trade receivables at reporting date was: Current: below 30 days 29,742 41,748 Past due 31-60 days 5,522 9,671 Past due 61-90 days 1,630 1,156 More than 90 days 1,227 1,171 38,121 53,746 Provision for doubtful debt (655) (501) 37,466 53,245

28






(ii) Liquidity risk (continued)

2016 Carrying

Amount

Contractual Cash Flows

6 months or less

6-12 months

1-2 Years

2-5 Years

Accounts payable 19,741 19,741 19,741 - - - Long-term liabilities - - - - - - Total financial liabilities 19,741 19,741 19,741 - - -

2015 Carrying

Amount

Contractual Cash Flows

6 months or less

6-12 months

1-2 Years

2-5 Years

Accounts payable 30,437 30,437 30,437 - - - Long-term liabilities - - - - - - Total financial liabilities 30,437 30,437 30,437 - - -

(iii) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate as a result of changes in market prices. These arise mainly from changes in interest rates and foreign exholdings of financial instruments.

(iv) Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. Subject to normal conditions, the Company materially contracts financial liabilities at fixed interest rates for the duration of the term. Interest- bearing financial assets is primarily represented by cash and cash equivalents. Interest- bearing financial liabilities are represented by bank overdrafts and long term loans. At the reporting date, there were no bank overdrafts or long term loans.

29



Caribbean Flavours and Fragrances Limited Notes to the Financial Statements 30 June 2016


(a) Financial risk management (continued) (iv) Interest rate risk (continued)

Financial instruments are subject to interest as follows:

2016

2015

Fixed rate instruments:

Financial assets 176,717 100,321 Financial liabilities - -

176,717 100,321

At the statement of financial position there were no variable rate instruments:

Cash flow sensitivity analysis for variable rate instruments An increase or decrease in basis points in interest rates at the reporting date would not have increased/ (decreased) profit for the year because there were no variable instruments held by the Company at 30 June 2016 (2015-nil%).

(v) Foreign currency risk

Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to

Exposure to currency risk At 30 June 2016 the Company incurred foreign currency risk primarily on cash and cash equivalents, purchases and receivables that are denominated in a currency other than the Jamaican dollar. The principal foreign currency exposures of the Company are denominated in United States dollars (US$). Exposure to foreign currency risk on US$ denominated balances were as follows: 2016

2015

Cash and cash equivalent 397 159 Accounts receivable Investments

31 301

87 -

Accounts payable (88) (159) US$ 641 87

Equivalent to J$ 80,772 10,128 30



Caribbean Flavours and Fragrances Limited Notes to the Financial Statements 30 June 2016



(v) Foreign currency risk (continued)

Exposure to foreign currency risk on Euro ( ) denominated balances were as follows: 2016

2015

Cash and cash equivalent 59 49 Equivalent to J$ 8,312 6,360 Exchange rates in terms of the Jamaican dollar ($) to the United States dollar (US$) and Euro

were as follows: US$

At 30 June 2016 126.01 140.49 At 30 June 2015 116.98 130.45 Sensitivity Analysis Changes in the exchange rates of the Jamaican dollar ($) to the Unites States dollar (US$) and the E would have the effects on profit as described below:

Increase/(decrease) in profit for the year

2016

2015

10% (2015:10%) strengthening of the US$ against the J$

8,908

1,649

1% (2015 : 1%) weakening of the US$ against the J$

(891)

(165)

The analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2016 as that of 2015.

(b) Capital management

The Company manages the adequacy of capital by managing the returns on equity and borrowed funds to protect against losses on its business activities so as to be able to generate an adequate level of return for its stockholders. As a condition of its long term loans, the Company is required

g the year.

31





(c) Fair value of financial instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The following methods and assumptions have been used:

(i) The fair values of cash and cash equivalents, accounts receivable, due from related parties

and accounts payable are assumed to approximate their carrying values due to their relatively short-term nature.

(ii) Long term loans, if any, approximate their fair values as these loans are carried at amortised cost reflecting their contractual obligations and the interest rates are reflective of market rates for similar loans.

18. DIVIDENDS During the prior year the Company paid a Dividend of 10 cents per share to stockholders on 18 June 2015. This dividend was approved as final on 25 November 2015 at the Annual General Meeting.

19. COMMITMENTS AND CONTINGENCIES

Apart from commitments to financial institutions, the management and directors of the Company were not aware of any significant claims, disputes and legal proceedings against the Company that could result in any material contingent liability.

20. RESTATEMENTS

Interest expense was noted also included in the financial statements for comparative purposes in the year ended 30 June 2016.

21. RELATED PARTIES TRANSACTIONS AND BALANCES

(a) The statement of comprehensive income includes the following related party transactions

2016

2015

Key management compensation: Salaries

6,000,000

7,500,000

Rental expense: Paid to a company connected to a Director

7,740,000

7,200,000

Directors fees: Management charges 1,430,000 980,000 Interest income: Paid from a related company

6,472,542

2,695,890

32




22. EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION DATE

As at 24 August 2016 the date these financial statements were approved and signed, management was not aware of any material subsequent event that should be disclosed to stakeholders.

33


NOTES


NOTES CARIBBEAN FLAVOURS & FRAGRANCES LTD.

FORM OF PROXY

A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a Proxy to vote on his/her behalf. A Proxy need not be a member. A suitable form of Proxy is below.

The Proxy must be signed and deposited, duly stamped with duty at the Stamp Office, at the registered office of CARIBBEAN FLAVOURS AND FRAGRANCES LIMITED at 226 Spanish Town Road, Kingston 11, Jamaica, W.I. not less than 48 hours prior to the meeting.

I/We, ________________________________________________________________________

(Name(s) of Shareholder(s))

of, __________________________________________________________________________

(Address(es) of Shareholder(s))

in the parish of ______________________, being a member(s) of Caribbean Flavours

and Fragrances Limited

hereby appoint, _____________________________________________________________

(Name of Proxy)

of, __________________________________________________________________________

(Address of Proxy)

or failing him, ________________________________________________________________

(Name of Alternative Proxy)

of, __________________________________________________________________________

(Address of Alternative Proxy)

as my Proxy/our Proxy to vote on my/our behalf at the Annual General Meeting

to be held on November 23, 2016.

This form is to be used IN FAVOUR of resolutions numbered_____________________

This form is to be used AGAINST resolutions numbered__________________________

Signed this _________ day of ____________ 2016.

_________________________________________________________________

Signatures(s) of Shareholder(s)

C e l e b r a t i n g a S o l i d F o u n d a t i o n .B u i l d i n g f o r G r o w t h .

L I M I T E D

Caribbean Flavours & Fragrances Limited, 226 Spanish Town Road, Kingston 11, Jamaica(876) 923-5111 | 923-8777 | 937-0366 | 923-5256

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www.caribbeanflavoursjm.com

ANNUAL REPORT 2016...We are cognizant that we operate in a market space that is in constant flux...

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Transcript of ANNUAL REPORT 2016...We are cognizant that we operate in a market space that is in constant flux...