2019 Annual Report - Jamaica Stock Exchange · National Insurance Fund Kingston 181,789,338 11.102% Mayberry Jamaican Equities Limited Kingston 18,344,740 1.120% MCG Employees Trust

2019

ReportAnnual

ExprEss CatEring LimitEd

1

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 AnnuAl RepoRt

Table ofContentsNotice of Annual General Meeting 2

Chairman’s Report 3

Director’s Profiles 4

Top 10 ShareHoldings 8

Corporate Governance 12

Management Discussion & Analysis 16

The Financials 20

Form of Proxy 49

Cover Photo courtesy of Debbie Ann Powell/Bigstock.com

2

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 AnnuAl RepoRt

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Express

Catering Limited (ECL) will be held at the Margaritaville Ltd.’s Board Room

#16, M19 Southern Cross Boulevard, Freeport, Montego Bay on Tuesday,

November 19, 2019 at 10:30am for the following purposes:

1. To receive the report of the Directors and Financial Statements for

the year ended May 31, 2019 and the report of the Auditors thereon.

2. To authorize the directors to fix the remuneration of the Auditors for the ensuing year. The Auditors, Messrs Mair Russell Grant Thornton,

Chartered Accountants, have signified their willingness to continue in office pursuant to section 154 of the companies act.

3. To fix the remuneration of the Directors for the year that commenced June 1, 2019.

4. To ratify the interim dividends and declare them final.

A member entitled to attend and vote at the meeting is entitled to

appoint a proxy to attend and vote in their stead. A proxy need not also be

a member.

By order of the Board,

Roland Clarke

Company Secretary

REGISTERED OFFICE

#16, M19 Southern Cross Blvd.

Freeport, Montego Bay, Jamaica, W.I.

Notice of Annual General Meeting

3

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 AnnuAl RepoRt

Chairman’s ReportDear Shareholders:

Thank you for your ongoing support and confidence this past year.

As the single post security food and beverage provider

at the Sangster International Airport in Montego Bay

Jamaica, Express Catering Limited has provided

food and beverage options for the over two million

passengers who traversed the airport during the

fiscal year.

Revenue was impacted by the upgrading works being

carried out by MBJ Airports Limited, operators of the

airport. Notwithstanding we were able to achieve an

increase in sales over the prior year. During the 1st

and 2nd fiscal quarters, the work which was aimed at extending the runway saw the closure of a number

of gates in the Eastern Concourse.

This resulted in flights being condensed into the

smaller Western Concourse.

The Western Concourse because of size constraints

has less food and beverage outlets which adversley

affected our sales as a result of less offerings during

this period. This also affected our cost of operations

as we still had to operate our outlets in the Eastern

concourse with less passenger throughput. Work still

continues but the majorioty of the gates in the Eastern

Concourse have been re-opened which has put our

revenues back on track providing an increase in sales.

Operationally we carried out major maintenance /

upgrades to our IT infrastructure as well as our facilities

such as the kitchen exhaust systems. We currently

employ over 309 persons on a ongoing basis with

additonal temporary staff for the peak periods.

Net profits earned for the year amounted to

US$3.73million with our shareholders receiving just

over US$7m in dividend payments during the fiscal year. These payments were made in September 2018

and January 2019.

For Fiscal 2019/20 we are projecting

increased revenues. There will be ongoing

works by MBJ Airports Ltd. which should

translate into improved modern facilities

for our customer experiences. This in turn

is expected to have a positive impact to

the company’s sales with the creation of a

unique and first world environment with a great sense of place.

We intend to continue to provide first class service along with expanded

quality offerings which has become synonymous with our company, reflecting improved growth.

We trust you will continue to share the

journey with us.

Best regards,

Herrick W. Dear

Chairman

6

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 AnnuAl RepoRt

Director’s ProfilesHerrick Winston Russell Dear C.L.S, J.P, C.D.NoN-ExEcutivE DirEctor aND chairmaNA Commissioned Land Surveyor, City Planner, Entrepreneur and Businessman, Winston Dear has dedicated

his life to the development of Montego Bay and Western Jamaica. Since 1966 he has been an integral part

of the life of Montego Bay and Jamaica and has played vital roles in Resort Development, Montego Freeport,

Rose Hall Development, Montego South Development, Ironshore and The Greater Montego Bay Development

Plan. Herrick was also instrumental in forming the Port Authorities, “Montego Bay Freezone” and lobbied for

the establishment of the current Montego Freeport Cruise Ship terminal, thereby earning the moniker of “City

Father. In the 1980’s he was deeply involved in the 807 garment industry and at the zenith of this industry

employed over 3000 workers. Under his watch, the Government established the earth station within the zone

which set the course for us to become the leading ICT center of Jamaica.

Herrick Winston Russell Dear currently sits on the Boards of the Urban Development Corporation, Express

Catering Limited, Margaritaville Caribbean Group Limited and Margaritaville (Turks) Ltd. He is a member of

the Montego Bay Chamber of Commerce and Industry and a member of the Tribunal, Ministry of Tourism. He

is also the Chairman of the Irwin High School in St. James. Herrick was appointed as a Justice of the Peace

for the parish of St. James in 1983 and, in 2010, the Government of Jamaica bestowed the Order of Distinction

on him. In 2017 the Government upgraded his honor to the rank of “The Order of Distinction in the rank of

Commander Class” CD.

He is married to Denise and together they have three children, eight grandchildren and one great-grandchild,

all living in Jamaica. With over 40 years sail boat racing and cruising experience (one of his most favourite things to do), Herrick holds a Coastal Masters Certificate from the Maritime Authority of Jamaica, and is entitled to use the title “Captain”.

7

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 AnnuAl RepoRt

Ian DearExEcutivE DirEctor aND cEoIan Dear is a Jamaican-born businessman with

more than 25 years experience in Caribbean tourism and real estate development. He is an original

founder and the current Chairman and CEO of

Margaritaville Caribbean Group Ltd. (MCG) with

locations in Jamaica, Grand Cayman, Grand Turk and

St. Thomas, USVI.

Ian’s relationships with key contributors to the

Caribbean tourism industry have resulted in long-

standing MCG partnership agreements with

Sangster International Airport, Carnival

Corporation and Royal Caribbean Cruises Ltd.

With Ian’s leadership expertise, Margaritaville

joined Wyndham Vacation Ownership, the

world’s largest vacation ownership company, to

open the Margaritaville Vacation Club resort, in

St. Thomas.

He believes in responsible corporate citizenship,

giving back to the community, and is dedicated to

ensuring our associates, and their families, have the

opportunity to learn, develop and thrive. In addition

to purchasing local goods and services, MCG provides

employment for more than 1,000 Jamaicans;

providing significant economic impact to the island. Although Margaritaville Caribbean Group supports

many charitable organizations, Ian is most proud

of the significant contributions his organization has made in scholarship funding since the 2006 launch of

its Margaritaville Scholarship Program which provides

financial assistance to the children of MCG associates.

A believer in development of both community and

country, Ian maintains active involvement in a number

of organisations. He currently serves as a Justice of

the Peace for the parish of St. James, since originally

being appointed in 1996. Ian is also the Chairman

of the Board of the Tourism Product Development

Company Limited (TPDCo.), and also a board member

of the Tourism Enhancement Fund (TEF). He has also

served as a member and board member for several

organizations to include the Jamaica Hotel and

Tourist Association, the Private Sector Organization

of Jamaica, Young President’s Association, the

Montego Bay Chamber of Commerce, the Jamaica

Cruise Council and the Attractions Association

of Jamaica. Ian attended Montego Bay Community

College and Cornwall College.

Ian is married to Carla and has 3 children,

Lauren, Jayson and Chloe, all raised in Montego

Bay, Jamaica.

Roland ClarkeExEcutivE DirEctor, SECRETARY AND CFO

Roland is a Chartered Accountant with over twenty

years of experience in Accounting and Finance

covering Retail, Manufacturing, and Telecom

logistics industries.

Roland joined Margaritaville Caribbean Group in

August 2010. Previously he was with Facey Commodity

Company Ltd. where he had direct responsibility for

the finance functions of the Telecoms Division. During this time he led implementation of financial systems for the group subsidiaries in Germany, Trinidad and

Tobago, Honduras, Panama and El Salvador. Roland

also spent 18 months in Trinidad and Tobago in the

capacity of Financial Controller, while performing other

corporate duties.

His experience also includes 10 years in various

accounting and finance roles with the ICD Group of companies in Jamaica.

Roland is a Fellow of the Association of Certified Chartered Accountants of England and holds a BSC.

(Hons.) in Accounting from the University of the

West Indies.

8

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 AnnuAl RepoRt

John G. BylesNoN-ExEcutivE DirEctorJohn G. Byles is a graduate of the Florida International

University where he attained a degree in Business

Administration, with focus in Finance and International

Business. Since then, his career has led him through

several fields in the Corporate Finance arena. He spent over fifteen years in the banking and finance sector, working with Business Leaders in several

growing and successful companies across dynamic

industries before joining the tourism field over fifteen (15) years ago.

John currently sits on the Boards of Margaritaville

(Turks) Ltd, Chukka Caribbean Adventures Group

of Companies, Billy Craig Insurance Brokers,

Express Catering Limited, Cargo Handlers Ltd.

and Margaritaville Caribbean Group Ltd. He is

also a member of the Cruise Council of Jamaica

and is the Chairman of the Destination Assurance

Council – Montego Bay Chapter. In the past, John

has also served on the Boards of the Jamaica

Tourist Board and Jamaica Promotions Corporation.

John brings to the Board his considerable

experience in brand delivery in the tourism

sector and management experience from the

finance industry. He is a committed husband and father of three (3), an avid polo enthusiast in his down

time and an active community development stalwart.

Tania Waldron-Gooden BSC, MBANoN-ExEcutivE DirEctorTania is the Director of Investment Banking at Mayberry Investments Limited. She was appointed to the board

of directors of Mayberry on October 30, 2017. She joined Mayberry as a management trainee approximately

12 years ago and has rotated through several departments including Research, Asset Management, Equity Trading and Corporate Finance. Tania holds a Bachelor of Science degree in Geology from the University of

the West Indies and a Master of Business Administration degree from the University of Sunderland in the UK.

Tania is also a director and mentor of three (3) junior market companies: Derrimon Trading Company Limited,

Main Event Entertainment Group Limited and Express Catering Limited.

10

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 AnnuAl RepoRt

Top 10 ShareHoldingsNAMES voLumE PERCENTAGE

Margaritaville St. Lucia Castries, St Lucia 1,134,221,961 69.265%Harriat P Maragh Kingston 191,306,010 11.683%National Insurance Fund Kingston 181,789,338 11.102%Mayberry Jamaican Equities Limited Kingston 18,344,740 1.120%MCG Employees Trust Montego Bay 11,794,200 0.720%MF&G Trust & Finance Ltd - A/C 57 Kingston 10,741,577 0.656%Konrad Berry Kingston 6,822,776 0.417%JMMB T1 Equity Fund (Jmd) Kingston 5,694,954 0.348%Mayberry Managed Clients Account Kingston 4,407,752 0.269%Jamaica Money Market Brokers Ltd Kingston 2,713,664 0.166%

1,567,836,972 95.746%Total Ordinary Stock Issued - 1,637,500,000Total Number Of Stock Holders - 1787

Directors ShareHoldings

NAMES DIRECT CONNECTED TOTAL PERCENTAGE

Herrick Winston Dear - - - 0.000%Tania Waldron-Gooden 164,466 - 164,466 0.010%Ian B. Dear - 1,134,221,961 1,134,221,961 69.265%John G. Byles - - - 0.000%Roland P Clarke 2,193,454 - 2,193,454 0.134%Harriat P. Maragh 191,306,010 191,306,010 11.683%

193,663,930 1,134,221,961 1,136,579,881 81.092%

Senior Managers ShareHoldings

NAMES DIRECT CONNECTED TOTAL PERCENTAGE

Roland P Clarke 2,193,454 - 2,193,454 0.134%Mark Sutherland 1,340,524 - 1,340,524 0.082%Alton Thelwell 425,089 - - 0.000%

3,959,067 - 3,533,978 0.216%

14

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 AnnuAl RepoRt

The management of Express Catering Limited

is responsible for the fairness and accuracy of the

financial statements. The financial statements and the accompanying notes were prepared in accordance

with the rules of the International Financial Reporting

Standards and include such estimates as management

deemed necessary to give a true and accurate view

of the financial affairs of the group.

Management has established a system of internal

controls over financial reporting that provides

reasonable assurance that assets are adequately safeguarded and transactions are recorded accurately,

in all material respects. Our internal controls

provide for appropriate segregation of duties and

responsibilities and there are documented policies

regarding utilization of our assets and proper financial reporting. We also maintain a strong audit program

that independently evaluates the adequacy of the design and effectiveness of these internal controls.

The Board of Directors provides oversight guidance

to the management of the company in fulfilling

their financial reporting duties and is assisted in their oversight responsibilities by the Audit Committee of

the Board. Currently the Board of Directors meets

on a quarterly basis and is prepared to revise the frequency should the need arise. The accompanying Management Discussion and Analysis were prepared

under the direction and guidance of the Board of

Directors.

Corporate GovernanceReport of Managements

Responsibility and Internal Controls

The Audit Committee of the Board of Directors

The Audit Committee of the Board of Directors

was established to assist the Board of Directors

in completing their oversight responsibility. The

committee is currently comprised of two members

who are both non-executive directors. The Audit

Committee has complete access to the financial

records of the group and has direct access to the Chief

Financila Officer, Vice President, Systems & Internal Controls and our External Auditors.

The Audit Committee meets on a quarterly basis to carry out their roles and responsibilities, inclusive of

the following;

8 Monitor the financial performance of the company against objectives.

8 Ensure that the company is compliant

with statutory and regulatory

reporting requirements. 8 Ensure that the company is compliant

with covenants relating to banking

and other creditor requirements. 8 Monitor and review the effectiveness

of the internal audit function.

8 Consider, approve and recommend

to the board the group’s annual

operating and capital budgets.

8 Review internal and external audit reports

8 Assess operational risks and make

recommendations to the board for decision.

The Corporate Governance Charter can be found at www.MargaritavilleCaribbean.com

15

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 AnnuAl RepoRt

The Audit Committee may be a mix of non-executive

and executive directors but will at all times be

comprised of at least two non-executive directors

and will be chaired by one of them. The members of

the committee for the year just ended were;

John Byles (Non-executive director) - Chairman

Tania Waldron (Non-executive director)

The board is very thankful to the Audit Committee

for their guidance and wish for them another

successful year.

Herrick DearChairman

Ian DearDirector

18

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 AnnuAl RepoRt

The discussion and analysis for Express Catering

Limited (ECL) that follows should be read in conjunction

with the audited financial statements and related financial statement notes found elsewhere in this report. The company reports on a 12 month basis from

June 1 to May 31. Financial data is reported in US$, the

functional currency of the company. The discussions

are on the results for the year ended May 31, 2019 and

comparative prior years.

Overview of Operations

ECL has been in operation since 2001, providing

food and beverage offerings to the approximately

4.5 million arriving and departing passengers that access the Sangster International Airport in Montego

Bay, Jamaica. It also provides offerings for the

approximately 5,000 staff that works there. ECL is a Jamaican registered company and a subsidiary

of Margaritaville St. Lucia, Inc. The ultimate parent

company is Margaritaville Caribbean Group Ltd (MCG),

a Bahamian registered company. MCG, through its

various subsidiaries and partnerships, own and operate

a diverse portfolio of restaurant and nightclub concepts

in Jamaica, Cayman Islands, Turks and Caicos and St

Thomas USVI. The group is the franchise operator of

the Jimmy Buffet’s Margaritaville Restaurant, Bar and

Retail Shops across the Caribbean.

ECL has been the dominant food and beverage

partner of MBJ Airports Limited since 2011 when

the company successfully negotiated a long term

contract to manage and supply the majority of food

and beverage offerings at the Sangster International

Airport. The Company, with lead brand Jimmy Buffet’s

Margaritaville, currently has exclusivity of food and

beverage offerings for the post security sections. It

also has a significant share of the pre-security food and beverage offerings.

With over 80% of travelers through the

airport originating from

the USA or Canada,

ECL conducts research

at most of the major

airports from these two

countries to ascertain the

most sought after food

and beverage offerings.

The findings determine the decision as to what

we offer. Currently, the

following international

franchises are operated

under the Express

Catering umbrella:

8 Jimmy Buffet’s

Margaritaville

8 American Dairy

Queen (DQ)

8 Auntie Anne’s

8 Cinnabon

8 Starbucks

8 Moe’s

8 Quiznos

8 Nathans Hot Dogs

8 Wendy’s

8 Domino’s

These are complimented

by a numb er of

proprietary and local

food and beverage

brands inclusive of

Bobsled Café, Tastee

Patties, Juici Beef Patties,

Viva Gourmet Grab N

Go and Groovy Grouper.

ECL is focused on

providing world class

food and beverage

experiences , while

ensuring that they

remain relevant to the

consumer demands.

During the year the

company employed

over 309 persons on a

continuing basis with

additional persons

brought on during

peak seasons to ensure

that customers are

adequately serviced.

ECL’s business model

is intricately tied to

Jamaica’s tourism

industry. As visitor

arrivals increase, so does

the company’s revenue

opportunity. The large

majority of stopover

visitors to the Island will

come into contact with

our brands, either on

arrival or departure. Total

Stopover Visitor data up

to calendar year 2018 is

listed below, showing

Management Discussion & Analysis

of Financial Condition and Results of Operations

19

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 AnnuAl RepoRt

a total of 2.47 million stopover visitors for calendar 2018, up 5.09% on the previous year. Stopover visitors enter the country through the two main International

airports in Kingston and Montego Bay. Approximately

81% or just over 2.0 million of the 2018 total arrived in Montego Bay through the Sangster International

Airport. The table illustrates growth in stopover visitors

for all the years but at varying rates.

Stopover Visitor Arrivals to Jamaica

Year Stopovers % increase

2011 1,951,752 1.56%2012 1,986,085 1.76%2013 2,008,409 1.12%2014 2,080,181 3.57%2015 2,123,042 2.06%2016 2,181,684 2.76%2017 2,352,915 7.85%2018 2,472,727 5.09%

Data from JTB Website

Statistics from the Sangster International Airport

indicate a total of 2.22 million passengers arriving

through the airport for calendar 2018 with the

difference being mainly resident Jamaicans who travel

abroad for business or pleasure. A similar 2.24 million passengers depart through this airport.

Jamaica is projecting 12,000 new hotel rooms over the

next five years (Budget debate 2019). At an average stay of one week, each hotel room will bring 104 additional stopover visitors for a total of over 1.2 million additional

stopover visitors. Express Catering expects 80% or just fewer than 1.0 million of these new stopover visitors to

access the Sangster’s International Airport.

Commencing in the

2018 calendar year, the

Sangster International

Airpor t has been

undergoing substantial

overall to improve the

capacity and ability to

service the growing

number of passengers.

This includes resurfacing

of runways as well as

repositioning of Jet

Bridges to accommodate

larger aircrafts. A request for proposal (RFP) was

recently circulated by

MBJ inviting qualified Construction companies

to bid for over 4,000 Sq. meters of refurbishing

work to establish a

central Food Court and

additional retail space, as

well as 2,700 Sq. meters of newly built retail

space. Work on this is

expected to commence

during the 2021 fiscal

year. ECL expects to

benefit significantly from these upgrading works.

Fiscal 2019 highlightsAn additional two

Starbucks outlets were

completed during the

year to take the total

to three in the Airport.

Revenue for the year

achieved US$ 17.3 million,

a US$ 1.6 million increase

over the prior year.

R e v e n u e s w e r e

negatively impacted by

the upgrading works

being carried out by the

operators of the airport.

Resurfacing of runway

works caused closure

of strategic departure

gates during the first

and, second quarters. The East Concourse,

where the major Food

Court is located saw a

number of gates closed

during the Quarters to

facilitate the upgrading

works. This means flights were diverted to the

West Concourse which

has fewer food and

beverage options due to

the design of the airport.

The medium term plan

is to redesign the Food

Court to be central to

both the East and West

concourses.

Major work on the

Kitchen Exhaust system

was completed during

the year. This cost

US$17.3milliontotaL rEvENuE achiEvED For thE yEar

20

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 AnnuAl RepoRt

upwards of US$70 thousand but brought much

needed relief for the kitchen team. Necessary IT

infrastructure works were completed during the year

as well to reduce the incidences of failure at the POS

processing.

The company declared and paid dividends of just over

US$7.0 million during the year.

Results of Operations for Fiscal 2018

Below is a summary of the operating matrix in

relation to revenues for the current and prior year.

The information was prepared from the statement of

profit or loss and other comprehensive income, found elsewhere in this report.

ECL Results of

Operations Matrix

2019 2018

% %Revenue 100.00% 100.00%Cost of sales -29.25% -29.32%Gross profit 70.75% 70.68%Administrative expenses -44.04% -42.06%Promotional expenses -0.28% -0.23%Depreciation and

amortisation-3.20% -3.26%

operating profit 23.23% 25.13%Finance income 0.00% 0.01%Finance costs -1.98% -2.17%Gain/(loss) on foreign

exchange 0.29% -0.28%

Profit before tax 21.55% 22.68%Income tax expense 0.00% -0.73%Profit for the year being total comprehensive

income for the year21.55% 21.95%

Revenues

Revenues improved by US$ 1.6 million to close at US$

17.3 million for the year. The growth was in part due

from the addition of the Starbucks locations as well as

the increase in passenger counts. A total of 4.54 million passengers accessed the Airport during the fiscal year of which 2.24 million were departing passengers. In the prior year a total 4.32 million accessed the airport with 2.17 million being departing passengers.

Total departing passengers is the major determinant

of revenues. Currently, departing flights are condensed into peak periods with the majority happening

between 11.00am and 3:00pm. This small window

poses an operational challenge because most of our

offerings are prepared fresh on the spot. This is both

an opportunity and a challenge that the company is

continuously working on improving. Various Grab N

Go items are being looked at to improve the offerings.

We also upgraded our packaged goods outlet during

the last quarter and so expect improved contribution in the 2020 fiscal year.

Cost of Sales and Expenses

Cost of Sales at 29.25% of revenue for fiscal 2019 showed improvements when compared to prior year

ratio of 29.32%. The company continues to benefit from the parent company’s bulk purchasing abilities

and is able to hold just-in-time inventory, thereby

reducing spoilage from excess inventory. In addition,

the company is leveraging the experience gained over

the many years in maintaining standards in usage of

raw materials.

The addition of the Starbucks line of products with

their higher standard cost for sandwiches did put

some pressure on the combined costs. The company

was however able to keep the cost ratio in line because

of variation of product mixes during the year.

US$7.0millionDiviDENDs PaiD out ovEr thE yEar.

21

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 AnnuAl RepoRt

The company had some challenges with Administrative

and Promotions expenses and also with Cost of Sales.

Actual combined Administrative Expenses increased

in nominal terms to support the increased revenue

but at a higher rate than prior year. US$ 7.67 million

was expended during the year at the rate of 44.31% of revenue, compared to of US$ 6.64 million at the rate of 42.29% of revenue. The company experienced higher cost ratios due to three main factors:

8 The East concourse was closed for some time

during first and second quarters, resulting in flights being condensed in the West concourse. With

the majority of our offerings located in the East

concourse, extra cost was incurred to temporarily

transfer resources to the West concourse so that

revenue levels could be maintained.

8 The company experienced a sizeable increase in

the cost for common area maintenance. This was

levied midway into the year. The company has not

experienced an increase in this category since 2011.

8 In addition, the three Starbucks locations, being

new, had some initial operational issues which

have since been resolved.

The planned revamping and addition of new retail

spaces in the airport is expected to commence during

the 2021 fiscal year. We expect some negative impact on revenue generation and operating costs but the

company will do all it can to mitigate the effects. The

expectation is that the benefits will be tremendous and will be good for the company ultimately.

Earnings, Earnings Per share (EPs) & DividendsNet Profits earned for the year was US$ 3.73 million, compared to US$ 3.45 million in the prior year. This provided earnings for shareholders of US 0.22 Cents

compared to US 0.21 Cents in the prior year.

Shareholders received a total of just over US$ 7.0

million or US 0.43 Cents per share in dividend during the year. US$ 6.0 million was paid in September 2018

and US$ 1.0 million was paid in January 2019. Amounts

were financed from prior year retained earnings as well as from current year profits

Balance Sheet Performance & Cash Flow

The company expended US$ 414 thousand on fixed and soft costs during the year. The completion of the 2

additional Starbucks locations along with the Exhaust

system upgrade and

refurbishment of one

Grab and Go location

were included in the

expenditure.

Balance due from

related companies had

a substantial pay down

of US$ 4.47 million while there was a temporary

increase in Receivables

of US$ 700 thousand

relating to a temporary

security deposit. At the

time of this report, the

deposit was received.

Liabilities incurred

in relation to the

construction of the

Starbucks locations

from the prior year were

paid down substantially.

In fact, the levels of

Payables are back to the

usual year end balances.

Future Outlook

The Jamaican tourism

product continues to

experience growth and

positive outlook into the

future. All participants

of the industry, including

The Ministry of Tourism,

hotels, travel planners,

a n d d e s t i n a t i o n

management companies

are anticipating a better

2020 than 2019. New

hotel rooms are expected

to be added during the

year and construction

will commence for even

more rooms. Express

Catering Limited serves

the stopover visitors both

on their way in and when

they are to return to

their countries of origin.

It is, therefore, expected

that the company will

have an improved year.

The key performance

indicators are reflecting the improved position

thus far when compared

to the prior year.

Cost of Sales and

Administrative Expenses

will continue to be

managed aggressively,

while the company seeks

ways to better leverage

the fixed and semi-

fixed costs. The nominal amounts for each

category will increase

to match the planned

increase in revenues.

We expect, however,

that the increase will be

at a slower rate than the

increase in revenue.

Some investment in fixed assets is expected, in

line with the upgrading

works planned by the

airport operator. That

is expected in the third

or fourth quarters but could be delayed to

the 2021 fiscal year. The expenditure is expected

to be financed internally.

The Financials

23

MAIR RUSSELL GRANT THORNTON Kingston: 3 Haughton Avenue Kingston 10. Jamaica T 1 876 926 2020/ 926 2022 F 1 876 754 3196 E [email protected] Montego Bay: 56 Market Street Montego Bay St. James Jamaica. T 1 876 952 2891/952 0798 F 1 876 971 5836 E [email protected] www.grantthornton.com.jm

Partners:

Sixto P. Coy

Karen A. Lewis

Chartered Accountants.

1 Mair Russell Grant Thornton (MRGT) is a partnership registered in Jamaica. Registered Office:3 Haughton Avenue Kingston 10. Jamaica.

MRGT is a member firm of Grant Thornton International Limited (GTIL). References to “Grant Thornton” are to the brand under which the Grant Thornton

member firms operate. GTIL and the member firms are not a worldwide partnership. Services are delivered by the member firms. GTIL and its member firms

are not agents of, and do not obligate one another and are not liable for one another's acts or omissions. Please see grantthornton.co.global for further

details. 2

twitter.com/GrantThornton

3

Independent auditor‟s report

To the Members of

Express Catering Limited

Report on the audit of the Financial Statements Opinion We have audited the financial statements of Express Catering Limited (“the Company”) which comprise the statement of financial position as at May 31, 2019, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended and notes to the financial statements including a summary of significant accounting policies.

In our opinion, the financial statements give a true and fair view of the financial position of the Company as at May 31, 2019, and of its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS).

Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor‟s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants‟ Code of Ethics for Professional Accountants (IESBA Code) and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters Key audit matters are those matters that in our professional judgement; were of most significance in our audit of the financial statements of the current period. These matters are addressed in the context of our audit of financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter. We have determined that there are no key audit matters to communicate in our report.

Other information

Management is responsible for the other information. The other information comprises the annual

report (but does not include the financial statements and our auditor‟s report thereon), which is

expected to be made available to us after the date of this auditor‟s report.

Independent Auditor’s Report

24

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 Audited FinAnciAlsMember of Grant Thornton International Ltd

To the Members of


Report on the audit of the Financial Statements

Other information (cont’d) Our opinion on the financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other

information identified above when it becomes available and, in doing so, consider whether the other

information is materially inconsistent with the financial statements, or our knowledge obtained in

the audit, or otherwise appears to be materially misstated.

When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and those charged with governance for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with IFRS and the Jamaican Companies Act, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company‟s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company‟s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor‟s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Independent Auditor’s Report (cont’d)

Chartered Accountants Member of Grant Thornton International Ltd.

25

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 Audited FinAnciAls

Member of Grant Thornton International Ltd

To the Members of


Report on the Financial Statements Auditor’s Responsibilities for the Audit of the Financial Statements (cont’d) As part of an audit in accordance with ISAs, we exercise professional judgment and maintain

professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit 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 Company‟s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management‟s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company‟s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor‟s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor‟s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that presents a true and fair view.

We communicate with the Board of Directors regarding, among other matters, the planned scope

and timing of the audit and significant audit findings, including any significant deficiencies in

internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with

relevant ethical requirements regarding independence, and communicate with them all relationships

and other matters that may reasonably be thought to bear on our independence, and where

applicable, related safeguards.



26

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d

2019 Audited FinAnciAlsMember of Grant Thornton International Ltd

To the Members of


Report on the Financial Statements Auditor’s Responsibilities for the Audit of the Financial Statements (cont’d) From the matters communicated with those charged with governance, we determine those matters

that were of most significance in the audit of the financial statements of the current period and are

therefore the key audit matters. We describe the matter in our auditors‟ report unless law or

regulation precludes public disclosure about the matter or when, in extremely rare circumstances,

we determine that a matter should not be communicated in our report because the adverse

consequences of doing so would reasonably be expected to outweigh the public interest benefits of

such communication.

The engagement partner on the audit resulting in this independent auditor‟s report is Sixto Coy.

Montego Bay, Jamaica

July 29, 2019 Chartered Accountants



27

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d


Express Catering Limited __________________________________________________________________

5

The notes on the accompanying pages form an integral part of these financial statements. Approved for issue by the Board of Directors on July 29, 2019 and signed on its behalf by: ____________________) Director ______________________) Director Ian Dear John Byles

Note 2019 2018 US$ US$ Assets Non-current Property, plant and equipment (3) 4,394,696 4,654,112 Intangible assets (4) 1,019,150 900,130 5,413,846 5,554,242 Current Inventories (5) 395,253 334,726 Trade and other receivables (6) 937,666 131,522 Owing by related companies (7) 1,526,144 5,998,558 Cash and bank balances (8) 258,152 392,136 3,117,215 6,856,942 Total assets 8,531,061 12,411,184 Equity and liabilities Equity Share capital (9) 73,861 73,861 Capital reserve (10) 43,490 43,490 Retained earnings 3,096,576 6,366,236 Total equity 3,213,927 6,483,587 Liabilities Non-current Preference shares (11) 3,500,000 3,500,000 Lease obligations (12) 29,261 7,972 Deferred tax liability (13) 89,150 89,150 3,618,411 3,597,122 Current Bank overdraft (14) 185,522 178,991 Trade and other payables (15) 1,460,746 2,051,198 Current portion of lease obligation (12) 17,450 8,461 Income tax payable 35,005 91,825 1,698,723 2,330,475 Total liabilities 5,317,134 5,927,597 Total equity and liabilities 8,531,061 12,411,184

EXPRESS CATERING LIMITED

Statement of Financial PositionMay 31, 2019

28

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



6

Note 2019 2018 US$ US$ Revenue 17,316,372 15,705,421 Cost of sales (5,065,453) (4,604,887) Gross profit 12,250,919 11,100,534 Administrative expenses (16) (7,625,785) (6,605,341) Promotional expenses (47,794) (35,931) Depreciation and amortisation (554,827) (511,804) Operating profit 4,022,513 3,947,458 Finance income (17) 440 812 Finance costs (17) (342,047) (341,131) Gain/(loss) on foreign exchange 50,565 (44,379) Profit before tax 3,731,471 3,562,760 Income tax expense (18) - (114,969) Profit for the year being total comprehensive income for the year 3,731,471 3,447,791 Earnings per share (19) 0.0022 0.0021

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


Statement of Profit or Loss and Other Comprehensive IncomeMay 31, 2019

29

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



7

Share

Capital Capital Reserve

Retained Earnings

Total US$ US$ US$ US$ Balance at May 31, 2017 73,861 43,490 4,428,722 4,546,073 Dividends (Note 20) - - (1,510,277) (1,510,277) Transaction with owners - - (1,510,277) (1,510,277) Profit for the year being total comprehensive income for the year

- -

3,447,791 3,447,791

Balance at May 31, 2018 73,861 43,490 6,366,236 6,483,587 Dividends (Note 20) - - (7,001,131) (7,001,131) Transaction with owners - - (7,001,131) (7,001,131) Profit for the year being total comprehensive income for the year

- -

3,731,471 3,731,471

Balance at May 31, 2019 73,861 43,490 3,096,576 3,213,927

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


Statement of Changes in EquityMay 31, 2019

30

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d


Express Catering Limited _______________________________________________________________

8

2019 2018 US$ US$ Cash flows from operating activities: Profit before tax 3,731,471 3,562,760 Adjustments for: Depreciation and amortisation 554,827 511,743 Interest expenses 342,047 341,131 Interest income (440) (812) 4,627,905 4,414,822 (Increase)/decrease in inventories (60,527) 5,665 Increase in receivables (806,144) (35,416) Decrease/(increase) in owing by related companies 4,472,414 (2,354,333) (Decrease)/increase in trade and other payables (590,452) 955,480 Cash generated from operations 7,643,196 2,986,218 Overdraft interest paid (6,759) (6,028) Income tax paid (56,820) (215,259) Net cash provided by operating activities 7,579,617 2,764,931 Cash flows from investing activities: Purchase of property, plant and equipment (211,194) (636,481) Purchase of intangible assets (203,237) (335,157) Interest received 440 812 Net cash used in investing activities (413,991) (970,826) Cash flows from financing activities Repayment of lease obligations (11,033) (14,792) Proceeds from lease obligations 41,311 - Interest and dividends on preference shares paid (335,288) (335,103) Dividends paid (7,001,131) (1,510,277) Net cash used in financing activities (7,306,141) (1,860,172) Decrease in cash and cash equivalents (140,515) (66,067) Cash and cash equivalents at beginning of year 213,145 279,212 Cash and cash equivalents at end of year (Note12) 72,630 213,145 The notes on the accompanying pages form an integral part of these financial statements.


Statement of Cash FlowsYear ended May 31, 2019

31

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d


Express Catering Limited _______________________________________________________________

9

1. Identification and nature of operations The company was incorporated under the Laws of Jamaica on June 26, 2001. Its registered office is Unit 16 M19 Southern Cross Boulevard, Montego Freeport, Montego Bay. Its main activities during the year were the operation of branded sports bars and restaurants at Sangster International Airport, Montego Bay. The company is a subsidiary of Margaritaville St. Lucia Inc, whose ultimate parent is Margaritaville Caribbean Group Ltd., a company registered under the Bahamas IBC Act of 2000. The company was listed on the Junior Market of the Jamaica Stock Exchange in July 2017.

2. Summary of significant accounting policies a Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and have been prepared under the historical cost convention as modified by the revaluation of certain financial assets and financial liabilities. The preparation of financial statements in accordance with International Financial Reporting Standards requires management to make estimates and assumptions that affect the amounts reported in the financial statements. These estimates are based on historical experience and management‟s best knowledge of current events and actions. Actual results may differ from these estimates and assumptions. There were no critical judgements, apart from those involving estimation, that management has made in the process of applying the company‟s accounting policies that have a significant effect on the amounts recognised in the financial statements.

The estimates and assumptions which have the most significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are discussed below. Depreciation and amortisation of property, plant and equipment and intangible assets Depreciation and amortisation are provided so as to write down the respective assets to their residual values over their expected useful lives and, as such, the selection of the estimated useful lives and the expected residual values of the assets requires the use of estimates and judgements. Details of the estimated useful lives are as shown in Note 2(c).

b Standards, interpretations and amendments to published standards effective in the current year

Certain new and amended standards and interpretations to existing standards have been

published and became effective during the current financial year. The company has assessed the relevance of all such new standards, interpretations and amendments and have adopted the following:

IFRS 9 ‘Financial Instruments’ IFRS 9 replaces IAS 39 „Financial Instruments‟ Recognition and Measurement. It makes major changes to the previous guidance on the classification and measurement of


Notes to the Financial StatementsYear ended May 31, 2019

32

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d


Express Catering Limited Notes to the financial statements May 31, 2019

10

financial assets and liabilities introduces an „expected credit loss‟ model for the impairment of financial assets that replaces the current incurred loss impairment model.

The standard introduces new requirements for the classification, measurement and recognition of financial assets and financial liabilities. It replaces the multiple classification and measurement models in IAS 39 with a single model that has only two classification categories: amortised cost and fair value. IFRS 9 introduces a new model for the recognition of impairment losses - the expected credit losses (ECL) model. There is a 'three stage' approach which is based on the change in credit quality of financial assets since initial recognition. In practice, the new rules mean that entities have to record an immediate loss equal to the 12-month ECL on initial recognition of financial assets that are not credit impaired (or lifetime ECL for receivables). Where there has been a significant increase in credit risk, impairment is measured using lifetime ECL rather than 12-month ECL. Receivables classified under financial asset are the most affected due to the new expected credit loss models. The company applies a simplified approach in calculating ECL. Management uses a provision matrix for the trade receivables reflecting past experience of losses incurred due to default as well as forward looking information in arriving at an assessment of impairment. The adoption of IFRS 9 resulted in changes in the accounting policies and disclosures arising from the adoption of consequential amendments to IFRS 7 Financial Instruments: Disclosures, these changes were applied for 2019 but have not been applied to the comparative information. No allowance for impairment over financial assets was recognised in opening retained earnings at June 1, 2018 on transition to IFRS 9, because the company has determined that the resulting change in impairment was not material. The adoption of IFRS 9 has impacted the following areas: • the classification and measurement of the company‟s financial assets. Management

holds financial assets to hold and collect the associated cash flows. Financial assets previously classified as loans and receivables under IAS 39 are non-accounted for at amortised cost as they meet the held to collect business model and contractual cash flow characteristics test in IFRS 9.

On the date of initial application, June 1, 2018, the financial instruments of the company were reclassified as follows:

Measurement Category Carrying Amount

Original (IAS 39)

Category

New

IFRS 9 Category

Closing Balance

May 31, 2018 (IAS 39)

Adoption

of (IFRS 9)

Opening Balance

June 1, 2018 (IFRS 9)

Current financial

assets:

Trade and other receivables

Loans and

receivable Amortised cost

131,522

-

131,522 Owing by related

company Loans and


5,998,558

-

5,998,558 Cash and cash

equivalents Loans and


392,136

-

392,136 Total financial

assets balances

6,522,216

-

6,522,216

Notes to the Financial Statements (cont’d)


33

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



11

IFRS 15 ‘Revenue from Contracts with Customers’ IFRS 15 replaces IAS 18 „Revenue‟, IAS 11 – „Construction Contracts‟, and several revenue related interpretations. IFRIC 15 defines a comprehensive framework for determining when and to what extent revenue can be recognised. In accordance with IFRS 15, an entity shall recognise revenue as a monetary amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services in question. According to the standard, revenue must be allocated to performance obligations based on relative transaction prices. A performance obligation is defined as a promise to transfer goods and/or services to customers. The revenue recognition takes place over time or at a point in time, with the transfer of control as the key criterion. The company‟s revenue stream, consists of the sale of food and beverage. In the sale of these goods, control of the goods is transferred when the physical possession of the product has been transferred to the customer, which typically occurs at delivery. Application of the standard did not have an impact on the revenue or results of the company. IFRIC 22 ‘Foreign Currency Transactions and Advance Consideration’ IFRIC 22 (effective for annual periods beginning on or after January 1, 2018). The interpretation clarifies that in determining the spot exchange rate to use on initial recognition of the related asset, expense or income on the derecognition of non-monetary asset or non-monetary liability relating to advance consideration, the date of transaction is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. The entity must determine the transaction date for each payment or receipt of advance consideration, if there are multiple payments or receipts in advance. The adoption of this interpretation had no impact on the company‟s financial statements.

c Standards, amendments and interpretations issued but not yet effective and have not been adopted early by the company At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been early adopted by the company. Information on those expected to be relevant to the company‟s financial statements are provided below.

Management anticipates that all relevant pronouncements will be adopted in the company‟s accounting policies for the first period beginning after the effective date of the pronouncement.

New standards, amendments and interpretations not early adopted or listed below have not been disclosed as they are not expected to have a material impact on the company‟s financial statements.

IFRS 16 ‘Leases’ IFRS 16 Leases‟, (effective for annual periods beginning on or after January 1, 2019). In January 2018, the IASB published IFRS 16 which replaces the current guidance in IAS 17. Under IAS 17, lessees were required to make a distinction between a finance lease and an operating lease. IFRS 16 now requires lessees to recognise a lease liability reflecting future lease payments and a „right-of-use asset‟ for virtually all lease contracts. There is an optional exemption for lessees applicable to certain short-term leases and leases of low-value assets. The company is assessing the impact of future adoption of the measurements on its financial statements.



34

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



12

IFRIC 23 ‘Uncertainty over Income Tax Treatment’ IFRIC 23 (effective for annual periods beginning on or after January 1, 2019). The IFRIC clarifies how the recognition and measurement requirements of IAS 12 „Income Taxes‟ are applied where there is uncertainty over income tax treatments. The IFRIC (IFRIC 23) explains how to recognize and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment. The company is currently assessing the impact that the interpretation will have on its 2019 financial statements. Amendments to IFRS 9, Financial Instruments’, on prepayment features with negative compensation

Amendments to IFRS 9 (effective for annual period beginning on or after January 1, 2019). This amendment confirm that when a financial liability measured at amortised cost is modified without this resulting in de-recognition, a gain or loss should be recognised immediately in profit or loss. The gain or loss is calculated as the difference between the original contractual cash flows and the modified cash flows discounted at the original effective interest rate. This means that the difference cannot be spread over the remaining life of the instrument which may be a change in practice from IAS 39. The adoption of this amendments is not expected to have an impact on the company.

d Property, plant and equipment

(i) Carrying amount

Property, plant and equipment are carried at cost less accumulated depreciation. (ii) Depreciation

Depreciation is provided on the straight line basis at such rates as will write off the cost of the various assets over the period of their expected useful lives. The useful lives approximate to forty (40) years for buildings, five to ten (5 - 10) years for furniture, fixtures, machinery and equipment, three (3) years for computers and five (5) years for motor vehicle.

Leasehold building and improvements are being amortised over twenty years.

(iii) Repairs and renewals

The costs of repairs and renewals which do not enhance the carrying value of existing assets are written off to profit or loss as they are incurred.

e Segment reporting

Operating segments are reported in a manner consistent with the internal reporting

provided to the chief operating decision-maker. The chief operating decision-maker, who

is responsible for allocating resources and assessing performance of the operating

segments, has been identified as the Chief Executive Officer who makes strategic

decisions. f Intangible assets

These represent amounts spent on the development of new products, processes and

systems which is being amortised over 6 years.



35

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



13

g Functional and presentation currency

Functional and presentation currency The financial statements are prepared and presented in United States dollars, which is the functional currency of the company.

Foreign currency translations and balances

(i) Foreign currency monetary balances at the end of the reporting period have been translated at the rates of exchange ruling at that date.

(ii) Foreign currency transactions are translated into the functional currency at the exchange rate ruling at the dates of those transactions.

(iii) Foreign exchange gains and losses resulting from the settlement of such

transactions and from the remeasurement of monetary items are included in profit or loss. Non-monetary items are not retranslated at year-end and are measured at historical rates except for those measured fair value which are translated using the exchange rates at the date when the fair value was determined.

h Revenue recognition

Revenue comprises revenue from sale of goods to customers. Revenue is measured at the fair value of consideration received and receivable, net of rebates and discounts and is recognised when customers are invoiced.

i Operating expenses

Operating expenses are recognised in profit or loss upon utilisation of the service or the

receipt on the goods or as incurred.

j Inventories

Inventories are stated at the lower of cost determined on the average cost basis, and net realisable value. Cost includes all supplier prices, freight and handling and other overhead costs directly related to goods sold. Net realisable value is the estimated selling price in the ordinary course of business less any related selling expenses.

k Cash and bank

Cash and bank comprise amounts held in current and savings accounts with financial institutions and cash on hand balances net of bank overdraft.

l Trade and other receivables

Trade and other receivables are classified as loans and receivables. These are initially recognised at original invoice amount (which represents fair value) and subsequently measured at amortised cost.

m Owing to related company

Amounts owing to related company are carried at cost.



36

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



14

n Financial instruments

Recognition and derecognition

Financial assets and financial liabilities are recognised when the company becomes a party to the contractual provisions of the financial instrument.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Classification and initial measurement of financial assets Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable). Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories: • amortised cost • fair value through profit or loss (FVTPL) The classification is determined by both: • the entity‟s business model for managing the financial asset • the contractual cash flow characteristics of the financial asset. All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. Subsequent measurement of financial assets Financial assets at amortised cost Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL): • they are held within a business model whose objective is to hold the financial assets

and collect its contractual cash flows • the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding

After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The company‟s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments as well as listed bonds that were previously classified as held-to-maturity under IAS 39. Financial assets at fair value through profit or loss (FVTPL) Financial assets that are held within a different business model other than „hold to collect‟ or „hold to collect and sell‟ are categorised at fair value through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply (see below).

Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.



37

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



15

Financial assets classified as available for sale (AFS) under IAS 39 (comparative periods) AFS financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets (FVTPL or held to maturity and loans and receivables). The company‟s AFS financial assets include listed equity securities, debentures, and the equity investment in the company. All AFS financial assets were measured at fair value. Gains and losses were recognised in other comprehensive income and reported within the AFS reserve within equity, except for interest income, impairment losses and foreign exchange differences on monetary assets, which are recognised in profit or loss. When the asset was disposed of or was determined to be impaired, the cumulative gain or loss recognised in other comprehensive income was reclassified from the equity reserve to profit or loss. Interest calculated using the effective interest method and dividends were recognised in profit or loss within finance income.

Impairment of financial assets IFRS 9‟s impairment requirements use more forward-looking information to recognise expected credit losses – the „expected credit loss (ECL) model‟. This replaces IAS 39‟s „incurred loss model‟. Instruments within the scope of the new requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss. Recognition of credit losses is no longer dependent on the company first identifying a credit loss event. Instead the company considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument. In applying this forward-looking approach, a distinction is made between:

• financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk („Stage 1‟) and • financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low („Stage 2‟). • „Stage 3‟ would cover financial assets that have objective evidence of impairment at the reporting date. „12-month expected credit losses‟ are recognised for the first category while „lifetime expected credit losses‟ are recognised for the second category.

Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

Previous financial asset impairment under IAS 39 In the prior year, the impairment of trade receivables was based on the incurred loss model. Individually significant receivables were considered for impairment when they were past due or when other objective evidence was received that a specific counterparty will default. Receivables that were not considered to be individually impaired were reviewed for impairment in groups, which are determined by reference to the industry and region of the counterparty and other shared credit risk characteristics. The impairment loss estimate was then based on recent historical counterparty default rates for each identified company.



38

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



16

Classification and measurement of financial liabilities

As the accounting for financial liabilities remains largely the same under IFRS 9 compared to IAS 39, the company‟s financial liabilities were not impacted by the adoption of IFRS 9. However, for completeness, the accounting policy is disclosed below.

The company‟s financial liabilities include borrowings, trade and other payables and derivative financial instruments.

o Trade and other payables Trade and other payables are obligations to pay for goods or services that have acquired

in the ordinary course of business from suppliers. Payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

p Income taxes

Income tax on the profit or loss for the year comprises current and deferred tax.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the date of the statement of financial position, and any adjustment to tax payable in respect of previous years. Deferred tax is accounted for using the liability method, providing for temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the corresponding basis used in the computation of taxable profit. In principle, deferred tax liabilities are recognised for all taxable differences and deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.

q Borrowings

Borrowings are classified as financial liabilities measured at amortised cost. Borrowings are recognised initially at fair value, being their issued proceeds net of transaction costs incurred. Subsequently, borrowings are measured at amortised cost using the effective interest method and any difference between net proceeds and the redemption value is recognised in profit or loss over the period of the borrowings. Interest expense is reported on the accruals basis and other borrowing costs, are expensed to profit or loss in the period which they are incurred and are reported in finance costs.

r Leased assets

Finance leases

Management applies judgement in considering the substance of a lease agreement and whether it transfers substantially all the risks and rewards incidental to ownership of the leased asset. Key factors considered include the length of the lease term in relation to the economic life of the asset, the present value of the minimum lease payments in relation to the asset‟s fair value, and whether the company obtains ownership of the asset at the end of the lease term.



39

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



16

o Trade and other payables

p Income taxes

q Borrowings

r Leased assets

The interest element of lease payments is charged to profit or loss, as finance costs over the period of the lease.


17

Operating lease The company pays property lease annually based on revenue. The amount incurred is

expensed in the period to which it relates. Associated costs such as insurance and maintenance are expensed as incurred.

s Impairment

The company‟s assets are subject to impairment testing.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.

Individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset‟s or cash-generating unit‟s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell and value in use, based on an internal discounted cash flow evaluation. All assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist.

t Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of shares are included in equity as a deduction from proceeds.


17

s Impairment

t Share capital



40

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d


Expr

ess

Cate

ring

Lim

ited

No

tes

to th

e fin

anci

al s

tate

men

ts

May

31,

201

9

18

3.

Pro

pert

y, p

lant

and

equ

ipm

ent

com

pris

e:

T

he

carr

yin

g am

oun

ts f

or

pro

per

ty, p

lan

t an

d e

quip

men

t fo

r th

e ye

ars

incl

uded

in

th

e fi

nan

cial

sta

tem

ents

as

at M

ay 3

1, 2019, ca

n b

e

an

alys

ed a

s fo

llo

ws:

Le

aseh

old

Impr

ovem

ent

Mot

or

Vehic

le

Ent a

nd P

R Eq

uipm

ent

Co

mpu

ter

Furn

iture

an

d Fi

xture

s

B

ar a

nd

K

itche

n

Equip

men

t

To

tal

US

$ US

$

US

$ US

$ US

$ US

$ US

$

Gr

oss

carry

ing

amou

nt

Ba

lance

as a

t Jun

e 1,

201

8 2,

819,

299

5

6,76

1 14

9,78

5 47

3,98

8 2,

655,

555

2,32

0,64

4 8,

476,

032

Addit

ions

41,7

13

-

17

,281

11

,332

11

8,37

5 22

,493

21

1,19

4 Ba

lanc

e as

at M

ay 3

1, 2

019

2,86

1,01

2 56

,761

16

7,06

6 48

5,32

0 2,

773,

930

2,34

3,13

7 8,

687,

226

Depr

ecia

tion

and

impa

irmen

t

Balan

ce a

s at J

une

1, 2

018

(1

,033

,808

)

(56

,138

) (1

27,4

63)

(350

,026

) (1

,194

,034

) (1

,060

,451

) (3

,821

,920

) De

prec

iation

(99,

319)

-

(3,4

03)

(40,

287)

(1

63,0

59)

(164

,542

) (4

70,6

10)

Bala

nce

as a

t May

31,

201

9

(1,1

33,1

27)

(56,

138)

(1

30,8

66)

(390

,313

) (1

,357

,093

) (1

,224

,993

) (4

,292

,530

) Ca

rryin

g am

ount

as

at M

ay 3

1, 2

019

1,72

7,88

5 6

23

36,2

00

95,0

07

1,41

6,83

7 1,

118,

144

4,39

4,69

6

Le

aseh

old

Impr

ovem

ent

Mot

or

Vehic

le En

terta

inmen

t an

d PR

Eq

uipm

ent

Co

mpu

ter

Furn

iture

an

d Fi

xture

s

B

ar a

nd

K

itche

n

Equip

men

t

To

tal

US

$ US

$

US

$ US

$ US

$ US

$ US

$

Gr

oss

carry

ing

amou

nt

Ba

lance

as a

t Jun

e 1,

201

7 2,

717,

519

5

6,76

1 14

7,49

6 44

9,81

0 2,

271,

617

2,19

6,34

8 7,

839,

551

Addit

ions

101,

780

-

2,

289

24,1

78

383,

938

124,

296

636,

481

Bala

nce

as a

t May

31,

201

8 2,

819,

299

56,7

61

149,

785

473,

988

2,65

5,55

5 2,

320,

644

8,47

6,03

2

De

prec

iatio

n an

d im

pairm

ent

Ba

lance

as a

t Jun

e 1,

201

7

(936

,368

)

(56

,138

) (1

24,1

79)

(313

,311

) (1

,064

,099

) (9

03,0

20)

(3,3

97,1

15)

Depr

eciat

ion

(9

7,44

0)

-

(3

,284

) (3

6,71

5)

(129

,935

) (1

57,4

31)

(424

,805

) Ba

lanc

e as

at M

ay 3

1, 2

018

(1

,033

,808

) (5

6,13

8)

(127

,463

) (3

50,0

26)

(1,1

94,0

34)

(1,0

60,4

51)

(3,8

21,9

20)

Carry

ing

amou

nt a

s at

May

31,

201

8 1,

785,

491

623

22

,322

12

3,96

2 1,

461,

521

1,26

0,19

3 4,

654,

112



41

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



19

4. Intangible assets These represents amounts spent on the development of new products, processes and systems and amounts paid for licenses and franchises are being amortised over 7 years.

Development

Cost Licenses and

Franchises

Total US$ US$ US$ Gross carrying amount Balance as at June 1, 2018 261,225 1,333,231 1,594,456 Additions 203,237 - 203,237 Balance as at May 31, 2019 464,462 1,333,231 1,797,693 Amortisation Balance as at June 1, 2018 (10,574) (683,752) (694,326) Amortisation - (84,217) (84,217) Balance as at May 31, 2019 (10,574) (767,969) (778,543) Carrying amount as at May 31, 2019 453,888 565,262 1,019,150

Development

Cost Licenses and

Franchises

Total US$ US$ US$ Gross carrying amount Balance as at June 1, 2017 26,689 1,232,610 1,259,299 Additions 234,536 100,621 335,157 Balance as at May 31, 2018 261,225 1,333,231 1,594,456 Amortisation Balance as at June 1, 2017 (10,574) (596,814) (607,388) Amortisation - (86,938) (86,938) Balance as at May 31, 2018 (10,574) (683,752) (694,326) Carrying amount as at May 31, 2018 250,651 649,479 900,130

5. Inventories

2019 2018 US$ US$ Food 135,280 113,185 Beverage 65,439 52,659 Gift Shop 59,318 77,740 Other 135,216 91,142 Total 395,253 334,726

6. Trade and other receivables

2019 2018 US$ US$ Receivables 68,585 42,659 Staff loan 10,042 2,696 Deposit 764,373 53,031 Other receivables 69,055 32,155 Prepayments 25,611 981 Total 937,666 131,522



42

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



20

7. Related party balances and transactions The company is related to the various companies in the Caribbean operating under the Margaritaville franchise, by way of common shareholders and directors.

i The statement of financial position includes balances arising in the normal course of

business, with related parties as follows: 2019 2018 US$ US$ Margaritaville Caribbean Limited - 3,500,000 Margaritaville Limited 1,526,144 6,449,308 Margaritaville St. Lucia - (3,950,750) 1,526,144 5,998,558

ii Related party balances are unsecured. Related party balances have no fixed repayment terms.

8. Cash and cash equivalents

2019 2018 US$ US$ Cash and bank balances 258,152 392,136 Bank overdraft (Note 14) (185,522) (178,891) Total 72,630 213,145

9. Share capital 2019 2018 US$ US$ Authorised Issued and fully paid: 1,637,500,000 ordinary shares (No par value) 73,861 73,861 73,861 73,861

On June 26, 2017, the company adopted new public company Articles of Incorporation and passed (amongst others) the following resolutions with the approval of its holding company, Margaritaville St. Lucia:

The sub-division of each Share into 250 units, for the purposes of pricing the Sale Shares in the Invitation and for the creation of liquidity in the trading market for the Shares following a successful listing on the Junior Market of the Junior Stock Exchange (JSE).

The conversion of each fully paid Share to stock for the purposes of the application proposed to be made to list the Shares on the Junior Market of the JSE.

10. Capital reserve The above represents net income earned two months prior to the date of incorporation as follows:

US$ Gross income 159,538 Less: Expenses 94,303 Taxation 21,745 43,490



43

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



21

11. Preference shares These represent 35,000 9.5% Cumulative Redeemable United States Dollars Indexed Preference Shares with an issue price of US$100. These are redeemable on December 19, 2023. Dividend payment dates are March 31, July 31, October 31, and December 31 each year.

12. Lease obligations

The company leased equipment which has been accounted for as a finance lease. Future minimum payments are as follows: 2019 2018 US$ US$ Within 1 year 21,054 9,643 1-5 years 31,987 8,698 53,041 18,341 Less amount representing interest (6,330) (1908)

46,711 16,433

Less: Current portion (17,450) (8,461) Total 29,261 7,972

Reconciliation of liabilities arising from financing activities:

2019 2018 US$ US$ Balance at beginning of year 16,433 31,225 Additional financing during the year 41,311 - Repayment (11,033) (14,792) Balance at end of year 46,711 16,433

13. Deferred tax liability Deferred taxes are calculated on all temporary differences under the liability method using a

tax rate of 25%. The movement on the deferred tax account is as follows: 2019 2018 US$ US$ Balance at beginning of year 89,150 88,190 Charge during the year (Note 18) - 960 Balance at end of year 89,150 89,150

Deferred tax balance arose on temporary differences in respect of the following:

2019 2018 US$ US$ Deferred tax on: Property and equipment 89,150 89,150 Deferred tax liability 89,150 89,150

14. Bank overdraft This represents the excess of unpresented cheques over bank balances at the end of year. The company does not operate an overdraft facility.



44

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



22

15. Trade and other payables 2019 2018 US$ US$ Trade payables 902,245 1,538,826 Accrued expenses 74,781 111,913 Other payables 483,720 400,459 Total 1,460,746 2,051,198

16. Expenses by nature Total direct, administrative and other operating expenses:

2019 2018 US$ US$ Direct expenses

Cost of inventories recognised as expense 5,065,453 4,604,887 Administrative expenses

Employee benefits (Note 21) 2,036,760 1,794,618 Rent 3,697,358 3,145,697 Franchise fees 563,708 481,133 Audit Fees 14,890 14,400 Other expenses 1,313,069 1,169,493 Total 7,625,785 6,605,341 Promotional expenses

Advertising 47,794 35,931 Depreciation and amortisation Depreciation 470,610 424,805 Amortisation 84,217 86,998 Total 554,827 511,804

17. (a) Finance income Finance income includes all income from financial assets and comprises:

2019 2018 US$ US$ Interest income from financial assets 440 812 Total 440 812

(b) Finance costs Finance costs includes all interest related expenses which have been included in the statement of profit or loss and comprises: 2019 2018 US$ US$ Preference dividends 332,500 332,500 Interest on loans and leases 2,788 2,786 Overdraft interest 6,759 5,845 Total 342,047 341,131



45

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



23

18. Income taxes The Company will not be liable to pay corporate income tax in its first 5 years on the Junior Market. It will be liable to corporate income tax at half of the usual rate in years 6 to 10 on the Junior Market. If the Company breaches any Junior Market requirements, it may be liable to repay the tax that was remitted.

i Income tax based on profit for the year and adjusted for tax purposes and computed at the rate of 25% comprises:

(i) 2019 2018

US$ US$ Current charge - 114,009 Deferred tax (credit)/charge - 960 Total - 114,969

ii Reconciliation of theoretical tax charge to effective tax charge:

2019 2018 US$ US$ Profit before tax 3,731,471 3,562,760

(ii) Tax at applicable tax rate of 25% 932,868 890,690 Tax effect of allowances and remission of tax (932,868) (775,721) Income tax charge for the year - 114,969

19. Earnings per share

Earnings per share is calculated by dividing profit for the year by the weighted average number of ordinary shares in issue for the year of 1,637,500,000 (2018 – 1,637,500,000).

20. Ordinary dividends

The Board declared dividends of US$0.0036645 and US$0.000611 per ordinary share to all shareholders on record as at June 14, 2018 and October 1, 2018 respectively. Dividends of 0.000917 per ordinary share was declared in the prior year.

21. Employee benefits

2019 2018 US$ US$ Wages and taxes 1,802,271 1,613,970 Medical and other staff benefits 234,489 180,648 Total 2,036,760 1,794,618

There were three hundred and nine (309) - (2018 - Three hundred and twenty one (321)) permanent employees at year end.



46

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



24

22. Risk management policies The company‟s activities expose it to a variety of financial risks in respect of its financial instruments: market (currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The company seeks to manage these risks by close monitoring of each class of its financial instruments as follows:

a Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. The company is exposed to market risk through it use of financial instruments and specifically to currency risk, interest rate risk and certain other price risk, which result from both operating and investing activities.

i Currency risk and sensitivity

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The currency giving rise to this is the Jamaican Dollar. The company has certain obligation in foreign currency. It is however able to manage this risk by maintaining a foreign currency bank account.

Net foreign currency at exposure at date of the statement of financial position was as follows: 2019 2018 US$ US$ Bank overdraft (185,522) (178,991)

Foreign currency sensitivity

The sensitivity analysis is based on the company's foreign currency financial instruments held at each reporting date.

If the value of the United States Dollar appreciated by 6% against the Jamaican

Dollar this would have a negative impact on earnings of approximately US$6,816 (2018 - US$11,424), while if the rate of the United States Dollar depreciated it by 1% would increase earnings by US$7,686 (2018 – 1% US$1,772).

ii Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due

to changes in the market interest rate. The company‟s cash and cash equivalents are subject to interest rate risk. However, the company attempts to manage this risk by monitoring its interest-earning assets closely and procuring the most advantageous rates under contracts with interest rates that are fixed for the life of the contract, where possible.

The company is exposed to interest rate risk as follows:

Financial assets/(liabilities) :

Range of

interest rates

Rate sensitive

within one year

Non-rate sensitive

within one year

Total % US$ US$ US$ Bank overdraft Jamaican Dollars (J$)

24.75-25.0

(185,522)

-

(185,522)

Bank balances 0.10-0.15 258,152 - 258,152



47

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



25

Interest rate sensitivity

A reduction in interest rates by 1% basis point would increase earnings by approximately $1,095 (2018 - $1,811).

iii Other price risk

Other price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by factors

specific to the individual instrument or its issue or factors affecting all instruments traded in the market. The company is not exposed to other price risk as it has no investment in equity instruments.

b 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 company faces credit risk in respect of its receivables and cash and cash equivalents held with financial institutions. It is the company‟s policy to deal only with credit worthy financial institutions and other counterparties, to control credit risk. Cash and cash equivalents Credit risk for cash and cash equivalents is managed by maintaining these balances with licensed financial institutions considered to be stable and creditworthy. Savings and current accounts held with commercial banks are insured under the Jamaica Deposit Insurance Scheme (JDIS) up to a maximum $600,000. Receivables The company applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for receivables. To measure expected credit losses on a collective basis, receivables are grouped based on similar credit risk and aging. The expected loss rates are based on the company‟s historical credit losses experienced over the two year period prior to the period end. The historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The company only grants credits to Airlines. The company experienced no credit losses over the past two years and does not expect to incur any credit loss based on its current business model. The maximum credit risk faced by the company is limited to the carrying amount of financial assets recognised at the end of the reporting period as summarised below:

2019 2018 US$ US$ Trade and other receivables 937,666 131,522 Cash and bank balances 258,152 392,136 Total 1,195,818 344,667



48

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



26

c Liquidity risk

Liquidity risk is the risk that the company will encounter difficulty in meeting its commitments associated with financial liabilities.

The company manages its liquidity risk by carefully monitoring its cash outflow needs for day-to-day business and maintaining an appropriate level of resources in liquid or near liquid form to meet its needs. The company maintains cash and savings deposits for up to 30-day periods to meet its liquidity requirements.

The company‟s financial liabilities comprise trade and other payables and borrowings. The contractual maturities (including interest where applicable) are as follows: May 31, 2019 Within Later than

12 Months 2-5 years 5 year US$ US$ US$ Bank overdraft 185,522 - - Trade and other payables 1,460,746 - - Lease obligations 21,054 31,987 - Preference shares - - 3,500,000 Total 1,667,322 31,987 3,500,000

May 31, 2018 Within Later than

12 Months 2-5 years 5 year US$ US$ US$ Bank overdraft 178,991 - - Trade and other payables 2,051,198 - - Lease obligations 9,643 8,698 Preference shares - - 3,500,000 Total 2,239,832 8,698 3,500,000

23. Fair value of financial instruments Fair value is the amount for which an asset could be exchanged, or liability settled, between knowledgeable willing parties in an arm‟s length transaction. Market price is used to determine fair value where an active market (such as a recognised stock exchange) exists as it is the best evidence of the fair value of a financial instrument.

Financial instruments that, subsequent to initial recognition, are measured at fair value are grouped into levels 1 to 3 based on the degree to which the fair values are observable, as follows:

Quoted prices (unadjusted) in active markets for identical assets or liabilities. (Level 1).

Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is derived from prices).

(Level 2).

Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs). (Level 3).

The company‟s assets and liabilities are measured at amortised costs and the carrying amounts for these are disclosed at Note 22.



49

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



27

24. Summary of financial assets and liabilities by category The carrying amount of the company‟s financial assets and liabilities are recognised at the end of the reporting period under review may also be categorised as follows:

2019 2018 US$ US$

IFRS 9 Amortised

costs

IAS 39 Loans and receivables

Financial assets measured at amortised costs Trade and other receivables 937,666 131,522 Owing by related companies 1,526,144 5,998,558 Cash and bank balances 258,152 392,136 Total 2,721,962 6,522,216 Financial liabilities Non-current liabilities At amortised cost Preference shares 3,500,000 3,500,000 Lease obligations 29,261 7,972 3,529,261 3,507,972 Current liabilities At amortised cost Bank overdraft 185,522 178,991 Trade and other liabilities 1,460,746 2,051,198 Current portion of borrowing 17,450 8,461 1,663,718 2,238,650

25. Segment information Management has determined the operating segments based on the reports reviewed by the

Chief Executive Officer (CEO) that are used to make strategic decisions.

The two operating segments are food and beverage which are normally priced together as a meal and therefore no segment reporting is disclosed in these financial statements.

26. Capital management, policies and procedures The company‟s capital management objectives are to ensure the company‟s ability to continue as a going concern and to provide adequate return to shareholders by pricing products commensurately with the level of risk and current market conditions.

The company is not subject to any externally imposed capital requirements.

27. Operating leases

The Company operates under a Concession Licence Agreement granted to it in December 2011 by MBJ Airports Limited which operates Sangster International Airport. This Concession Licence Agreement permits the Company to develop and use 31,570.70 square feet of space for food and beverage concessions at the post- security screening area.

The initial term ending March 2022 is, capable of extension for up to ten further years if the Company meets certain stated financial and customer number targets.

The Agreement provides for payment of a Licence Fee for the period December 2012 to 31 March 2022 as follows: (a) Minimum Annual Guaranteed Fee („MAG‟); and (b) Percentage Fee based on gross sales on food, beverage and merchandise sales. In the event of an extension of the Term MAG will increase by the rate of the Consumer Price Index.



50

Ex

pr

Es

s C

at

Er

ing

Lim

itE

d



Notes to the financial statements May 31, 2019

28

The Company also operates under a Food and Beverage Retail Space Sub- Licence Agreement with MBJ Airports Limited, which was granted to it by the latter as operator of Sangster Airport International. This licence is for 562.31 square feet of space at the pre-security screening area.

The original licence granted 2007 was extended to March 2022 (there is no written provision for further extension and this must be negotiated separately).

The Agreement provides for payment of a Licence Fee for the period December 2012 to 31 March 2022 as follows: (a) Minimum Annual Guaranteed Fee („MAG‟); and (b) Percentage Fee based on gross sales on food, beverage and merchandise sales.

www.gtjamaica.com

©2019 Mair Russell Grant Thornton. All rights reserved.

Mair Russell Grant Thornton is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide

partnership. Services are delivered by the member firms. GTIL and its member firms are not agents of, and do not obligate one another and are

not liable for one another‟s acts or omissions.

I/We, _______________________________________

[insert name]

of __________________________________________

_____________________________________[address]

being a shareholder(s) of the above-named Company,

hereby appoint:

____________________________________________

[proxy name]

of __________________________________________

_____________________________________[address]

or failing him, _________________ [alternate proxy]

of __________________________________________

_____________________________________[address]

as my/our proxy to vote for me for me/us on my/

our behalf at the Annual General Meeting of the

Company to be held at 11am on Thursday, October

10, 2019 at the Margaritaville Ltd. Board Room,

$100 stamp

to be affixed

#16, M19 Southern Cross Boulevard, Freeport,

Montego Bay and at any adjournment thereof.

This Form is to be used as instructed. Unless

otherwise instructed the Proxy Form will

be used as he/she thinks fit. Please tick the appropriate box.

Ordinary Business

FOR AGAINST

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Signed this _______________ day of __________________________________ 2019

Print Name: ____________________________________ Signature: ________________________________

NOTES: When completed, this Form of Proxy must be received by the Registrar of the Company, Jamaica Central Securities Depository, 40 Harbour Street, Kingston, Jamaica, W.I. not less than forty-eight (48) hours before the time for holding the meeting. The Proxy Form should bear stamp duty of $100.00 which may be adhesive and duly cancelled by the persons signing the proxy form. If the appointer is a Corporation, this Form of Proxy must be executed under its common seal or under the hand of an officer or attorney duly authorized in writing.

ExPrEss catEriNG LimitED

Form of Proxy

Documents

2019 Annual Report - Jamaica Stock Exchange · National Insurance Fund Kingston 181,789,338 11.102% Mayberry Jamaican Equities Limited Kingston 18,344,740 1.120% MCG Employees Trust