Pegasus Hotel Jamaica Limited_Annual Report

7/31/2019 Pegasus Hotel Jamaica Limited_Annual Report

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PEGASUS HOTELS OF JAMAICA LIMITED

ANNUAL REPORT 2011

CONTENTS

Front Inside Cover Hotel Facilities

02 - 05 List o Directors and Management

06 - 09 Corporate Governance10 Disclosure o Shareholdings

11 - 12 Notice o Forty-Third Annual General Meeting

13 - 15 Chairmans Statement

16- 22 Report o Directors

23 - 26 Management Discussion and Analysis

27 - 28 Historical Background

AUDITED FINANCIAL STATEMENTS

30 - 31 Auditors Report to the Members

32 Statement o Comprehensive Income

33 Statement o Financial Position

34 Statement o Changes in Stockholders Equity

35 Statement o Cash Flows

36 - 61 Notes to the Financial Statements

UNAUDITED FIRST QUARTER FINANCIALS

63 Prot and Loss Account

64 Balance Sheet

65 Statement o Changes in Stockholders Equity

66 Statement o Cash Flows

67 Major Groups Hosted During the Period

69 Proxy

Back Inside Cover Upcoming Activities or the New Period


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DIRECTORS

02ANNUAL REPORT 2011

Rev. Denzil Barnes, M.A. (Theology), B.Sc. (Econ); A.C.I.B.

Rev. Barnes is a Minister o Religion and currently serves as Diocesan Secretary at the Diocese oJamaica and the Cayman Islands (Anglican); and Vice-Chairman o Nuttall Memorial Hospital Boardand a member o the Board o Governors o the United Theological College. He spent thirty years inbanking retiring as General Manager o Operations and Risk Management at National CommercialBank.

Christopher D. Bovell, C.D., MA, LL.M.

Mr. Bovell, Attorney-at-Law, is currently a Consultant with the law rm DunnCox. He is a Directoro Grace Kennedy Limited, and is the Chairman o Allied Insurance Brokers Limited and BarnettLimited.

Alston Douglas, Engineer

Mr. Douglas is an Engineer and a businessman who also serves on the Board o AeronauticalTelecommunications Limited, Spectrum Management Authority, and the National Solid Waste

Management Authority.

Kevin Hendrickson, BBA

Mr. Hendrickson is the Owner and Managing Director o The Holiday Inn Sunspree Resort, TheKnutsord Court Hotel, The Courtleigh Hotel & Suites and Yummy Bakery.

Dr. The Hon. John J. Issa, O.J., C.D., J.P., LL.D., B.Sc.

Dr. Issa is the Executive Chairman o SuperClubs International and its subsidiaries; Vice-Chairmano the Gleaner Company Limited; Director o GraceKennedy Limited, Globe Insurance Company oJamaica Limited and Bloody Bay Hotel Development Limited. He has served as Chairman o theJamaica Tourist Board, as President o The Jamaica Hotel & Tourist Association, and as a Senatorrom 1983 to 1989.


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DIRECTORS


Nicola Madden-Greig, EMBA, B.Sc.

Mrs. Nicola Madden-Greig is the Group Director o Marketing & Sales at The Courtleigh Hotel &Suites/The Knutsord Court Hotel, Kingston and The Holiday Inn Sunspree Resort, Montego Bay.She holds an Executive Masters in Business Administration rom the Mona School o Businessand a Bachelors Degree in Hospitality Management rom the Florida International University,Miami, Florida. She is the Second Vice President o the Jamaica Hotel and Tourist Association andChairperson o its Kingston Chapter. She is also a Member o the Joint JHTA/JTB Marketing Sub-committee, a Board Member o the Tourism Product Development Company and Chairperson o theTourism Product Development Company Finance Sub-committee.

Nejma Jackie-Douglas, FCCA

Mrs. Jackie-Douglas is currently the Group Financial Controller o The Courtleigh Hotel& Suites, Knutsord Court Hotel and The Holiday Inn Sunspree Resort. She is a Fellow o theAssociation o Certied Chartered Accountants and a member o the Association o AccountingTechnicians.

Matthew Lyn, BBA

Mr. Lyn is the Divisional Manager o Pork at Caribbean Boilers (Jamaica) Limited. He is a membero the Board o Continental Baking Company Limited and also serves on the Youth Committee o theJamaica Chamber o Commerce.


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DIRECTORS


Milton Samuda, LL.B. (Hons)

Mr. Samuda is the Managing Partner o Samuda & Johnson, Attorneys-At-Law, and heads the rmsCommercial Department. He is the President o the Jamaica Chamber o Commerce and a Directoro the RJR Communications Group. Mr. Samuda also serves as Chairman o Television JamaicaLimited (TVJ), Sabina Park Holdings, the Institute o Law and Economics and Wolmers Trust.He is a Director on the Board o Berger Paints Jamaica Limited, National Outdoor AdvertisingLimited, Strategic Corporate Interventions Limited, the Advisory Board o the Spanish JamaicanFoundation, the Jamaica Tourist Board, the Advisory Board o the Jamaica Intellectual PropertyOce, the National Education Trust o the Ministry o Education, the Advisory Board o the Schoolo Business Administration University o Technology, OMS Associates Limited and other privatecompanies and agencies.

Eric George Stultz

Mr. Stultz is the General Manager o Baking Enterprises (1988) Limited.


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DIRECTORS


ATTORNEYS

DunnCox Hylton & Hylton48 Duke Street 31 Upper Waterloo RoadKingston Kingston 10Jamaica, W.I. Jamaica. W. I.

COMPANY SECRETARY REGISTRAR FOR THE COMPANYMarlene McLean, M.Sc., B.Sc. N.C.B. Jamaica (Nominees) Limited81 Knutsord Boulevard 32 Traalgar Road

P.O. Box 333, Kingston 5 P.O. Box 314, Kingston 10Jamaica, W.I. Jamaica, W.I.

AUDITORS BANKERSPricewaterhouseCoopers The Bank o Nova Scotia Ja. LimitedScotiabank Centre Duke & Port Royal StreetsDuke Street, P.O. Box 372 KingstonKingston, Jamaica, W. I. Jamaica, W.I.

EXECUTIVE MANAGEMENT

Eldon Bremner, M.Sc. - General ManagerNancy McLean, M.Sc. - Hotel ManagerHeadly OConnor, BBA, MBA - Financial ControllerDean Elliott, H.N.D. (Mech. Eng.) - Director o EngineeringPrudence Simpson, BBA, EMBA - Director o Sales & MarketingFern Lewis-Hue, BBA - Human Resources & Training

ManagerCharmaine Blackwood, M.Sc. - Front Oce Manager

Loraine Tait, B.Sc., M.Sc. - Reservations & InormationTechnology Manager

Latoya Wright-Gabbidon, B.S., A.S. - Executive HousekeeperGene Dawkins - Internal Auditor


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CORPORATE GOVERNANCE GUIDELINES

The Board o Directors is committed to world best corporate governance practices and principlesas a normal part o doing business. Good corporate governance serves the best interest o all

stakeholders including shareholders, investors and users o the Hotels services and acilities andpositions the Board to making inormed decisions to manage risks; comply with applicable laws andregulatory requirements and enhance shareholders value.The corporate governance system embraced by the Board o Directors oers the company betteraccess to external nance as it promotes a higher degree o condence in investors thus potentiallylowering the cost o capital; adds value to the company through more ecient management andimproved productivity; better risk management systems that will not only avert corporate risks butis better able to cope with corporate crisis. These oregoing actors enhance company value andshare perormance.

THE BOARD

Composition

The Board o Directors presently comprises ten (10) directors all o whom are non-executivedirectors. Six (6) directors are nominated by the majority shareholder, Quivin Holdings Limited,two (2) elected by the shareholders o the company other than the majority shareholder, and, two

(2) are co-opted annually by the nominated and elected Directors. All the members o the Boardhave an impressive record o experience, training and skills in their respective eld o expertisewhich include accounts, law, hotel entrepreneurship and engineering and they exercise careulevaluation in giving direction and management to the company. The Chairman o the Board, Mr.Milton Samuda, was appointed on November 29, 2010 rom the pool o nominated directors.

At each annual general meeting all elected directors retire rom oce but are eligible or re-election. Notice o a nomination o a person (other than a director retiring at the general meeting)or election to the Board, must have served on the Board at least seven (7) but not more than

ourteen (14) days beore the general meeting. The Pegasus has no maximum age limit or memberso the Board.


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Director Education

New directors are provided with an induction package which contains inormation on thecompany, their duties and responsibilities. They are aorded the support and expertise o allBoard members and the Company Secretary to gain the required knowledge to eectively serve thecompany in the shortest possible time rame ater their appointment or election.

Duties and Responsibilities

Duties and responsibilities o the Board include the ollowing:-- To oversee and approve the strategic direction o the company- To approve annual operational plans and budgets- The establishment and oversight o the companys risk management ramework by

providing written principles or overall risk management, as well as written policiescovering specic areas, such as oreign exchange risk, interest rate risk, creditrisk and investment o excess liquidity

- To oversee the integrity o the companys internal controls- To monitor and review the companys nancial perormance and reporting- To ensure compliance with applicable rules and requirements as a public company

listed on the Jamaica Stock Exchange and with the regulations o the FinancialServices Commission being an issuer o securities to the public

The Chairman is principally responsible or the eective operation and chairing o the Board andor ensuring that inormation that it receives is sucient to make inormed decisions.

Because in-depth knowledge o the particulars o the companys business is vital or each Directorin making inormed and objective decisions, management is to allow direct involvement and reviewo operational activities. The Directors have complete access to the leadership o the company.Each Board member is expected to commit sucient time or preparing and attending meetings othe Board and its Committee.

The Board has put in place Directors and Ocers Liability Insurance in respect o legal actions

against its Directors and Ocers.


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The Company Secretary

The directors o a public company have a statutory duty under the Companies Act, 2004 to takeall reasonable steps to ensure that the secretary o the company has the requisite knowledge andexperience to discharge the unctions o a secretary. This duty is underpinned by the principles ogood governance that sees the Company Secretary as playing a signicant role in the operation andunctioning o both the Board and the company. That is, the Company Secretary is responsible orensuring that the Board processes and procedures are appropriately ollowed; that the company isin compliance with ling requirements under relevant statutes, rules and regulations and supporteective decision-making and governance.

The Company Secretary is also responsible or ensuring that new Directors receive appropriateinduction into the company and receive all relevant inormation. All Directors have access tothe Company Secretarys advice and services and there is also a ormal procedure or Directors tocollectively obtain independent proessional advice in the course o their duties, i necessary, atthe companys expense. The Company Secretary is appointed by, and can only be removed by theBoard.

Audit Committee

The company has an Audit Committee comprising three (3) directors comprising Reverend DenzilBarnes Chairman, Matthew Lyn and Eric Stultz, all o whom are considered by the Board to beindependent directors and possess relevant accounting experience.

The Audit Committee assists in managing and monitoring risks and oversees how managementmonitors compliance with the companys risk management policies and procedures and reviews theadequacy o the risk management ramework in relation to the risks aced by the company.

Remuneration of Directors

The articles provide that the remuneration o Directors is xed by the company in general meeting.No remuneration policy has yet been approved by members in general meeting. In keeping with

the articles which provide that Directors may be paid or traveling, hotel and other expensesincurred in attending directors and general meetings, the Board has authorized the opening oan expense account with the Hotel or each Director with a limit o J$100,000.00 per annum.Amounts incurred in excess o the limit are discounted by ty per centum and are or the accounto the individual director


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Disclosure

In keeping with the best standard corporate governance principles and practice, the Company iscommitted to providing timely, accurate and balanced disclosure o nancial results, signicantdevelopments and other material inormation about the company to shareholders and its respectiveregulators. Further, any dealings in the companys shares by any Director must be promptlyreported to the Company Secretary who is obliged to disclose such inormation on a regular basis tothe Jamaica Stock Exchange.

A Director who has an interest in the company or in any transactions with the company whichcould create or appear to create a confict o interest must disclose such interest to the company.These would include:-

- Any interest in contracts or proposed contracts with the company- General disclosure o interest in a rm, which does business with the company


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DIRECTORS STOCK UNITS

31-MARCH-2011 30-JUNE-2011

John J. Issa 9,175,530 9,175,530

Eric Stultz 15,500 15,500

Kevin Hendrickson 10,000 10,000

Christopher Bovell 2,517 2,517

EXECUTIVE MANAGEMENT STOCK UNITS

Eldon Bremner Heathcliffe Bremner

Teisha Bremner

Janira Bremner

Nil15,750

15,750

7,875

Nil15,750

15,750

7,875

Charmaine Blackwood 14,571 14,571

TEN (10) MAJOR STOCKHOLDERS STOCK UNITS

Quivin Holdings Limited 71,865,384 75,313,468

Middle East Ventures Limited 19,840,103 19,840,103

John J. Issa 9,175,530 9,175,530

Harry Maragh 2,987,699 2,987,699

Capital Finance Limited 2,140,385 2,140,385

Pelican Securities Limited 1,168,945 1,168,945

G. Raymond Chang Limited 896,877 896,877

Karl P. Wright 716,810 716,810

Harriat Maragh 713,516 713,516Trading A/C Sagicor Life Jamaica Ltd. - 562,098

.



DISCLOSURE OF SHAREHOLDINGS


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NOTICE OF FORTY-THIRD ANNUALGENERAL MEETING

NOTICE is hereby given that the Forty-Third Annual General Meeting oPegasus Hotels of

Jamaica Limited will be held at the Jamaica Pegasus Hotel, 81 Knutsord Boulevard, Kingston 5,Jamaica, W. I., on Monday, 26th September, 2011 at 3 oclock in the aternoon when the ollowingwill be transacted:

1. Audited Accounts for the Year Ended March 31, 2011

To receive and adopt the accounts or the year ended March 31, 2011, together with the Reportso the Directors and Auditors thereon. To consider and, (i thought t) to pass the ollowingresolutions:

(i) THAT the Audited Statements or the period ended March 31, 2011 andthe Report o the Directors thereon be and are hereby taken as read.

(ii) THAT the Reports o the Directors and Auditors and the Audited Financial

Statements or the year ended March 31, 2011 now submitted to the meetingbe and are hereby adopted.

2. Election of DirectorsIn accordance with Article 80 (1) (b) o the Articles o Incorporation o the Company, Dr. The Hon.

John J. Issa and Mr. Christopher Bovell having been appointed at the last Annual General Meeting,retire at this Annual General Meeting, and being eligible oer themselves or re-election.To consider and (i thought t) pass the ollowing resolutions:

(i) THAT Dr. The Hon. John J. Issa be and is hereby re-elected a Director othe Company or the ensuing year.

(ii) THAT Mr. Christopher Bovell be and is hereby re-elected a Director o the

Company or the ensuing year.


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NOTICE OF FORTY-THIRD ANNUALGENERAL MEETING

3. Remuneration of Auditors

To authorize the Directors to x the remuneration o the Auditors and to consider and i thought tpass the ollowing resolution:

THAT the Directors be and are hereby authorized to x the remunerationo the Auditors.

4. To transact any other business which may be transacted at an Ordinary

General Meeting

DATED THIS 5TH DAY OF SEPTEMBER, 2011

.........................................................MARLENE MCLEANCOMPANY SECRETARY

NOTE:- A member entitled to attend and vote is entitled to appoint a proxy to attend and voteinstead o him. A proxy need not be a member o the Company. A orm o proxy isenclosed and i it is used it should be completed in accordance with the instructions onthe orm and returned so as to reach the Companys Registrar at the address shown onthe orm not less than orty-eight (48) hours beore the time xed or the meeting.


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CHAIRMANS STATEMENT

Dear Shareholders,

I am pleased to present my rst report to you as Chairman o Pegasus Hotels o Jamaica Limited. Asyou know, the Company had a change in majority ownership a ew months beore the end o theyear under review and I along with several new directors was appointed on November 29, 2010 toreplace directors who had been appointed by the previous majority shareholder.

This year has been a challenging one or your Company and you are no doubt concerned about thecontinued declines in revenue. Even as we continue to ace the challenges o the global recessionyou may rest assured that your board is working assiduously to restore shareholder value.

Financial Results

As you will see rom the audited Financial Statements, we suered a net loss or the year underreview (April 1, 2010 to March 31, 2011) o ($42.0M) compared to $8.3M net prot (restated) or theprevious year. In an eort to increase occupancy and maintain present customer base, we revisedour rate strategies to compete aggressively with the competition. Whereas restaurants showedan increase in revenue, banqueting revenue declined or the period. The cost control initiatives,including energy conservation helped to contain the losses.

Possible Lease of Hotel

The possibility o leasing the Hotel and assuming the role o a real estate company has also beenconsidered and on March 28, 2011, the Board o Directors unanimously resolved to enter intoa lease o the Hotel to Surrey Hotel Management Limited (a company owned by the majorityshareholder) on terms to be negotiated by the parties. A copy o the resolution passed by theBoard was sent to the Jamaica Stock Exchange.The Board has been attempting to secure the best terms or the Company and submitted a counteroer to the proposed Lessee. As at the time o writing negotiations were ongoing.

Refurbishing and Upgrading Projects

The planned comprehensive reurbishment o the three (3) luxury suites o the Hotel was notdone this year. However, the suites were enhanced with sot urnishings and other necessaryreplacements. This will remain until we embark on the ull reurbishing programme or the suites.


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CHAIRMANS STATEMENT

Financing

The company acquired no new loans during the period under review, and repaid $57M o thepresent loan leaving a balance o $91.3M. Net current liabilities decreased rom ($111.7M)(restated) in 2009/2010 to ($35.5M) in 2010/2011. The long term Government o Jamaica IndexBonds amounting to $13.1M is classied as non-current assets. Shareholders equity improvedmarginally rom $4.3B to $4.4B.

Taxation

Your Hotel was granted incentives or ten (10) years under The Approved Extension (JamaicaPegasus Hotel) Order, 2009 eective March 31, 2009. The benets are: waiver o GeneralConsumption Tax (GCT) and Custom Duties or ten (10) years on a schedule list o items, andcorporate tax relie or ten (10) years arising rom prots earned rom the hotels extensions whichare the subject o the Order. It was nally conrmed that the apportionment method be used andaccordingly, or the nancial year ended 31 March 2011, the Hotel received a 20.24% relie.

Dividends

During the year, no dividends were paid to shareholders, and your Directors are not recommendinga payment at this time.

Changes in Majority Shareholding

On November 29, 2010, Quivin Holdings Limited acquired the majority shares in the company(59.81%) rom the Government o Jamaica (held by National Hotels & Properties Limited, a whollyowned subsidiary o the Urban Development Corporation (UDC)).

On December 28, 2010, Quivin Holdings Limited made an oer to purchase the additional48,300,589 shares in Pegasus Hotels o Jamaica Limited (PHJL) at a price o J$13.14 per share. Theoer opened on January 19, 2011 and closed on April 28, 2011. At the close o the oer on April28, 2011, the total amount o shares owned by Quivin Holdings Limited in PHJL was 62.7%.


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CHAIRMANS STATEMENT

Changes in Board Composition

Consequent on the change in majority shareholding, there have also been a number o changes inthe composition o the Board since the last Annual General Meeting. Former directors Joy Douglas,Daniella Gentles, Dahlia Kelly, Robert Russell, Michael Subratie and Desmond Young demittedoce and in their place the Board now benets rom the services o Mrs. Nejma Jackie-Douglas,Mrs. Nicola Madden-Greig, Mr. Kevin Hendrickson, Mr. Eric Stultz, Mr. Matthew Lyn.

Future

Your Board is aware that the years ahead will be challenging. We anticipate increased competitionamidst the continuing challenge o an extended recession period. We will thereore encourageinnovation and energy as we continue to upgrade both plant and equipment and to aggressivelymarket the services o the Hotel at home and overseas.

We look to the uture with condence and will work hard to retain the support o our many loyalpatrons and to recruit new patrons and supporters. We thank our patrons and business partnersor their continued patronage. We are grateul to our hardworking Management and Sta. Wecontinue to rely on the oversight and condence o our shareholders. As a team, we will keep thePegasus as Kingstons Preerred Hotel.

...MILTON J. SAMUDACHAIRMAN

15 AUGUST 2011


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REPORT OF THE DIRECTORS

The Directors are pleased to submit their Forty-Third Annual Report, together with the AuditedAccounts o the Company or the year ended 31 March, 2011.

FINANCIAL STATEMENTS

The gross prot or the year under review is $620.774M earned rom total sales o $989.879M.Ater accounting or administrative, other operating expenses & income, nance income & costsand taxation, our net loss is ($42.006M). The balance in the Capital Reserve Account as at 31 March2011 is $4.376B.

Five Year Historical Review

2011 2010 2009 2008 2007

(Restated)

Revenue $989.879M $965.977M $1.003B $676.291M $738.015MOperating (Loss)/ ($58.993M) $12.296M $54.527M $61.796M $ 45.342MProt

Net Prot/(Loss) ($42.006M) $8.276M $43.46M $39.015M $ 41.080MNet Current ($35.541M) ($111.696M) ($18.58M) $81.46M $128.798M(Liabilities)/Assets

Earnings/(Loss) ($0.35) $0.07 $0.46 $0.32 $0.34Per Stock UnitClosing Stock $11.00 $15.00 $15.00 $16.00 $10.50Unit Price

P/E Ratio -31.43 214.29 32.60 50.00 30.88

Price to Book 0.30 0.42 0.47 0.57 0.44Value Ratio

(Shown in Graph Overleaf)


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-80,000

-60,000

-40,000

-20,000

0

20,000

40,000

60,000

80,000

2011 2010 2009 2008 2007(JA$'000's)

Operatng Profit/(Loss)

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

2011 2010 2009 2008 2007(JA$'000's)

Net Current (Liabilites)/Assets

-50,000

-40,000

-30,000

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

2011 2010 2009 2008 2007(JA$'000's)

Net Profit/(Loss)

Financial PerformanceFive Year Summary

2011

2010

2009

2008

2007

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2011 2010 2009 2008 2007

(JA'000's)

Revenue


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-0.40

-0.30

-0.20

-0.10

0.00

0.10

0.20

0.30

0.40

0.50

0.60

2011 2010 2009 2008 2007

JA$

Earnings/(Loss) Per Stock Unit

-50.00

0.00

50.00

100.00

150.00

200.00

250.00

2011 2010 2009 2008 2007

JA$

P/E Rato

-50.00

0.00

50.00

100.00

150.00

200.00

250.00

2011 2010 2009 2008 2007

JA$

5-Year Stock Market Data

Earnings/(Loss) Per Stock

Unit

Closing Stock Unit Price

P/E Rato

Price to Book Value Rato

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

2011 2010 2009 2008 2007

JA$

Closing Stock Unit Price

0.00

0.10

0.20

0.30

0.40

0.50

0.60

2011 2010 2009 2008 2007

JA$

Price to Book Value Rato


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SHARE OWNERSHIP

On November 29, 2010, Quivin Holdings Limited acquired the Government o Jamaicas 59.8%shares in the company. On December 28, 2010, Quivin Holdings Limited made an oer to purchasethe additional 48,300,589 shares in PHJL at a price o J$13.14 per share. The oer opened onJanuary 19, 2011 and closed on April 28, 2011. At the close o the oer on April 28, 2011, the totalamount o shares owned by Quivin Holdings Limited in PHJL was 62.7%.

DIVIDENDS

No dividends were paid during the reporting period and at this time the directors are notrecommending a payment.

GOVERNANCE

Sale of Majority Shares

On November 29, 2010, Quivin Holdings Limited, a St. Lucian registered company wholly owned

by Kevin Hendrickson, purchased 71,865,384 shares in Pegasus Hotels o Jamaica Limited romNational Hotels and Properties Limited, and became the majority shareholder with 59.81% o thetotal shares.

Directors

On November 29, 2010, National Hotels and Properties Limited exercised its powers under Article80(1)(a) o the Articles o Incorporation and removed Joy Douglas, Daniella Gentles, Dahlia Kelly,Robert Russell, Michael Subratie and Desmond Young rom the Board o Directors. Messrs.Milton Samuda, Kevin Hendrickson, Lance Hylton, Matthew Lyn, Eric Stultz and Mrs. Jacqueline

Hendrickson were appointed in their stead.

On March 23 and 25, 2011, Mrs. Jacqueline Hendrickson and Mr. Lance Hylton resigned asDirectors o the Company and Mrs. Nejma Jackie-Douglas and Mrs. Nicola Madden-Greig wereappointed in their stead.


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The Directors as at March 31, 2011 are:Rev. Denzil BarnesMr. Christopher BovellMr. Alston DouglasMr. Kevin HendricksonDr. The Hon. John J. IssaMrs. Nejma Jackie-DouglasMr. Matthew LynMrs. Nicola Madden-Greig

Mr. Milton Samuda (Chairman)Mr. Eric Stultz

In accordance with Article 80(1)(b) o the Articles o Incorporation o the Company, the electeddirectors, Dr. The Hon. John J. Issa and Mr. Christopher Bovell retire at the Annual GeneralMeeting and being eligible are recommended or re-election. Under Article 80(1) (c) o the Articleso Incorporation o the Company, Rev. Denzil Barnes and Mr. Alston Douglas were co-opted toserve on the Board.

Amendments to the Articles of Incorporation

At an Extra-Ordinary General Meeting o the company held February 24, 2011, by specialresolution, the Articles o Incorporation were amended to read as ollows:-

(a) Up to six (6) nominated directors (one o whom shall be designated chairman othe Board) shall be appointed and removed by the Majority Shareholder.

(b) Two (2) elected directors shall be elected by the shareholders o the company otherthan the Majority Shareholder in accordance with the provisions o Regulation 99.

(c) Up to two (2) co-opted directors may be co-opted annually by the nominated andelected Directors.

For purposes o this Article 80, the term Majority Shareholder means any single shareholder whichis registered as the owner o ty percent (50.0%) or more, ordinary voting shares o the company.


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Audit Committee

On November 29, 2010, Mrs. Dahlia Kelly and Mr. Michael Subratie resigned as members o theAudit Committee. On February 1, 2011, Messrs. Matthew Lyn and Eric Stultz were appointedmembers o the Audit Committee which now comprises: Rev. Denzil Barnes - Chairman, Mr.Matthew Lyn and Mr. Eric Stultz.

The Audit Committee now comprises three non-executive directors, considered by the Board to beindependent and has at least one member possessing relevant nancial experience. It will be seen

rom the directors biographical details appearing on pages 2 to 4, that the other members o thecommittee bring to it a wide range o experience rom positions at the highest level.

During the period under review the Committee met two (2) times where the quarterly reports orthe Jamaica Stock Exchange, reports on the various departments rom the Internal Auditor andthe audit plan or the year were discussed. The Internal Auditor, General Manager and FinancialController attended these meetings on the invitation o the committees Chairman.

The main roles and responsibilities o the Audit Committee are set out in written terms o reerenceand include:

Monitoringtheintegrityofthecompanysnancialstatements,includingitsannual

and interim reports, ormal announcements relating to its nancial perormance andreviewing signicant nancial reporting issues

Reviewingthecompanyssystemsofnancialcontrolandriskmanagement

Monitoringandreviewingtheeectivenessofthecompanysinternalauditfunction

Management

Mr. Glenroy Scott demitted oce as Director o Engineering at the end o February 2011. On July15, 2011, Mr. Dean Elliot was appointed to replace him.


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Auditors

PricewaterhouseCoopers have expressed their willingness to continue as Auditors o the Companyand a resolution will be proposed authorizing the Directors to x their remuneration.

BY ORDER OF THE BOARD

......................................................

MARLENE MCLEANCOMPANY SECRETARY

DATED THIS 15TH DAY OF AUGUST 2011


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MANAGEMENT DISCUSSION AND ANALYSIS

The Jamaica Pegasus is a business oriented hotel that primarily provides accommodation andcatering services or local and international clientele.

Core BusinessOver the past 38 years, the Pegasus as it is ondly called, has earned the enviable reputation orproviding superb hospitality in accommodation and catering services and has been home to manyand varied guests including corporate, royalty, dignitaries and heads o state, celebrities and sportsicons. The Pegasus is a constant buzz o activity or Jamaicans.

There are three (3) categories o accommodation i.e. Royal Suites, Deluxe Suites and Deluxe Rooms.

The hotel operates two (2) Restaurants and Bars and provides conerences and meeting acilities.Local clients may apply or membership or the tennis and swimming pool acilities. Several ocesincluding an airline and the American Chamber o Commerce are located at the hotel which is alsothe meeting place or Rotary, Kiwanis and other service clubs.

Long Term VisionOur vision is to ultimately become the most reputable and the preerred business hotel in theregion. We aim to increase shareholders value by generating more avourable return on investmentand ensuring a healthy working environment.

Strategies for GrowthThe hotel employs a number o strategies or growth and shareholder value creation. These includebut are not limited to:

- Direct selling activities- Oering competitive rate packages- Advertising

- Participating in overseas sales trips, trade shows and tourism promotions- Continuing to host a superior, eective and user riendly website- Promotions on our active social media networks- Email blast to our client database- Hosting social/marketing events to showcase catering acilities


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The extended depressed economic climate has prompted the hotel to revisit all o its practices. ThePegasus has upgraded its inormation systems to ensure eciency and eectiveness, re-emphasized

tighter control o systems and procedures, and is exploiting every revenue opportunity.

Performance DriversThe hotels two main drivers are occupancy levels and average room rates. These are critical inensuring value or investors. Combined, they must thereore be consistently above the breakevenpoint in order to adequately achieve protability.

Historical and orecast reports are used to monitor occupancy levels and room rates, catering andother revenue sources, as well as operating expenses.

Comparisons are made against budget and previous year perormance and the variances are used asindicators or management to make inormed decisions.In order to successully execute the companys strategies the hotel secures low interest loans or itsmajor projects. Working capital and normal capital expenditure, payment o dividends and loansare nanced by the hotel operational cash fow. The hotel also ensures there is an adequate cashreserve.Our most valuable resource (employees) consists o a highly qualied and experienced Executive

Management team and the most proessional, experienced workers in the hospitality industry.

Capability to Deliver ResultsThe Pegasus has an excellent credit rating with loan organizations and as such is able to accessnancing easily.

Strict systems and control procedures are in place which adequately manage all risks and providedisclosures necessary or the running o an ecient and competitive business. These are revieweddaily and periodically to ensure currency in the industry.

ResultsWhile there was a decline in revenues because o the decreased occupancy levels and room rates,we were able to honour our commitments and still maintain a good cash balance.


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Future

From all indications, there is still a level o uncertainty in the international economic arena.Domestically however, the indicators show that we will improve over last year and will realize

higher room rates and occupancy levels. As such, we are orecasting a net prot or the year ahead.

Assumptions normally considered or preparation o budget and orecast include:- Rate o exchange- Infation- Growth in occupancy- Energy conservationOur accounting rigidly adheres to the most current International Financial Reporting Standards

(IFRS) requirements.

RISKS

Credit Risk

Credit risk is the risk o nancial loss resulting rom ailure o customers or clients to honour their

contractual obligations. This is the most important risk or the companys business. The companyobserves standard procedure that involves the regular analysis o the companys receivables o itsguests, customers and investment activities.

Liquidity Risk

Liquidity risk is the risk that the company is unable to meet its payment obligations associatedwith its nancial liabilities when they all due. Prudent liquidity risk management requiresmaintaining sucient cash and marketable securities, the availability o unding through anadequate amount o committed credit acilities and the ability to close out market positions.


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The companys liquidity management process includes:

( i) Monitoring uture cash fows and liquidity on a daily basis;( ii) Maintaining a portolio o highly marketable and liquid assets that can easily be liquidated

as protection against any unoreseen interruption to cash fow;(iii) Maintaining committed lines o credit; and( iv) Optimising cash returns on investments.

Market Risk

The company is exposed to market risks in which the air value/uture cash fows o its nancialinstruments will fuctuate because o changes in the market. The company monitors market risk by

monitoring the price movement o nancial assets on the local and international markets.

Currency Risk

Currency risk is the risk that the air value o uture cash fows o a nancial instrument willfuctuate because o changes in oreign exchange rates. The Hotel monitors and manages its oreigncurrency balances in order to maximize returns and reduce potential losses. This is attributable toits oreign currency takings and the US Bond Investment.

Interest Rate RiskInterest rate risk is the risk that the value or uture cash fows o a nancial instrument willfuctuate because o changes in market interest rates. The standard operating procedure o thecompany ensures that the maturity o interest bearing instruments and liabilities is constantly andcareully monitored. The company has little exposure to interest rate risk as its investments andborrowings are at xed rates o interest.


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HISTORICAL BACKGROUND

Pegasus Hotels o Jamaica Limited (PHJL), owners and operators o The Jamaica Pegasus wasincorporated on 19 June 1968. It started out as a joint venture between British Airways Overseas

Corporation (now British Airways), Trusthouse Forte and the people o Jamaica through theJamaica Stock Exchange.

By agreement dated 25 October 1968, British Airways Associated Companies Limited, TrusthouseForte International Limited and International Finance Corporation subscribed urther share capitaland International Finance Corporation and Barclays Bank International provided urther loans.By a Management Agreement dated 25 October 1968, the Company appointed Forte (Holdings)Limited as Manager o the Hotel or an initial term o seven (7) years commencing 15 April 1973and a urther ourteen (14) years commencing 15 April 1980.

The Hotel was partially opened rom 5-11 May 1973 to accommodate the Inter AmericanDevelopment Bank Convention and commenced ull operation on 7 July 1973. It was ociallyopened by the Hon. David Coore, Deputy Prime Minister and Minister o Finance and Planning on5 September 1973.By Memorandum o Agreement dated 8 April 1976, signed by all parties thereto, the shareholderso British Airways Associated Companies Limited and Trusthouse Forte International Limited weretranserred to the Government o Jamaica in 1980.

On 15 April 1980 the Company became a subsidiary o National Hotels and Properties Limitedwho had acquired 59.8% o the ordinary stock units. National Hotels and Properties Limitedis a wholly owned subsidiary o the Urban Development Corporation, which is owned by theGovernment o Jamaica.By a management agreement dated 30 May 1994, Forte (UK) Limited was responsible or themanagement o the Hotel. The agreement was or a period o three (3) years commencing 1April 1994, with an option to continue or a urther term o three (3) years, subject to certainperormance criteria being met.


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HISTORICAL BACKGROUND

In 1997, Forte was taken over by Granada PLC. By Management Agreement dated 29 September1997, Meridien, SA became responsible or the management o the Hotel which was rebranded Le

Meridien Jamaica Pegasus. The agreement was or a period o ve (5) years commencing 1 April1997, with an option to continue or a urther term o ve (5) years, subject to certain perormancecriteria being met.By mutual agreement, Meridien, SA did not seek to renew their management contract and in 2002,the Board took the decision or the Company to manage the Hotel under its brand name TheJamaica Pegasus.On November 29, 2010, Quivin Holdings Limited acquired the Government o Jamaicas 59.8%shares in the company. On December 28, 2010, Quivin Holdings Limited made an oer to purchase

the additional 48,300,589 shares in PHJL at a price o J$13.14 per share. The oer opened onJanuary 19, 2011 and closed on April 28, 2011. At the close o the oer on April 28, 2011, the totalamount o shares owned by Quivin Holdings Limited in PHJL was 62.7%.


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MAJOR GROUPS HOSTED DURING THEPERIOD UNDER REVIEW


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FORM OF PROXY

I/We...............................................................o................................................................being a member/members o the above-named company hereby appoint......

or ailing him/hero........

as my/our Proxy to vote or me/us on my/our behal at the 43rd Annual General Meeting o the

Company to be held at Jamaica Pegasus Hotel, 81 Knutsford Boulevard, Kingston 5 in the Parish

oSaint Andrew on Monday, 26th September, 2011 and at any adjournment thereto.

Dated this.......................day o........................................2011..............................................................

(Signature o Member/Members)This Form is to be used as instructed. (Please tick appropriate box). Unless otherwise instructedthe Proxy Form will be used as he/she thinks t.

NOTES: -1. On a poll, votes may be given either personally or by proxy.

2. To be eective, this proxy must reach the Companys Registrar at N.C.B. Jamaica (Nominees)

Limited, 32 Traalgar Road, Kingston 10, Jamaica, W. I., not less than orty-eight (48) hours beore thetime appointed or holding o the meeting.

3. To this orm o proxy must be axed a one hundred dollar ($100.00) stamp in payment o stamp duty.4. To be eective this orm o proxy must be signed by the appointer or his attorney duly

authorized in writing, or, i the appointer is a corporation, either under seal or under the hand o an ocer orattorney duly authorized

Pegasus Hotel Jamaica Limited_Annual Report

Documents

Transcript of Pegasus Hotel Jamaica Limited_Annual Report