our solutions drive customer value
Transcription
our solutions drive customer value
YEARS CATERPILLAR IN SURINAME KERSTEN 2011 ANNUAL REPORT OUR SOLUTIONS DRIVE CUSTOMER VALUE 243 YEARS OF KERSTEN ANNUAL REPORT 2011 CONTENTS Message from the CEO 5 Report of the Supervisory Board 7 2011 In Perspective 8 2011 Operations: A Year in Review 10 Condensed Consolidated Financial Statements 23 Independent Auditor’s Report 32 Financial Performance in 2011 34 About C. Kersten en Co. N.V. 36 Our Solutions Drive Customer Value 39 243 YEARS OF KERSTEN ANNUAL REPORT 2011 Message from the CEO The year under review was one of great opportunities which were seized by deploying our distinctive advantages: our customers and partners, performance culture and capacity, liquidity and funding capabilities, balance sheet strength, product portfolio as well as our core values. Change is the only constant in a turbulent world. Our almost 244 years of history, during which we continuously reinvented our future, represents a proud legacy of leadership, learning, industry firsts, social responsibility, integrity and delivering value consistently and responsibly. We continue to expand the current core business while simultaneously inventing a new future by entering new markets and maintaining profitable growth. Significant challenges for the near future are to strengthen these competative advantages, keeping and attracting the right educated people, capturing more market share while keeping our company’s risk profile at moderate levels. The theme of this report, “Our Solutions Drive Customer Value” is appropriate for our performance in 2011. Kersten achieved record financial results. Our growth was driven by the deepening of our already solid relationships with valued partners, financiers, suppliers and customers. Our partners and suppliers increasingly share in our risks. “Change is the only constant in a turbulent world” We continued to offer the market unparalled solutions, driving our customers’ value and enabling them to take their businesses to the next stage. By offering compelling and differentiating value, we applied our unique capabilities to make them stronger by giving them the opportunity to profit from our competative advantages. Our sales growth was, inter alia, supported by tailored financial solutions offered to our customers which no other competitor could match. Our strategy is also geared towards identifying and capturing business opportunities beyond Suriname’s borders. In 2011 Kersten joined the CATERPILLAR-Newmont Alliance Team. We became the youngest CATERPILLAR dealer working together in a creative, innovative and productive way to achieve common goals that collectively benefit all three parties of the Alliance. The Alliance creates a secure base for growth in the heavy equipment business, however, we will offer other solutions of the group as well and, in this way, enhance the solidity of our revenue base. Against this background, I remain highly optimistic for 2012. Kersten is well positioned to maximize profitable growth through a disciplined execution and supported by a strong financial discipline and, most of all, a committed workforce. We will step up our efforts to hire and retain the right people and continue to build talent through leadership development, succession planning and strategic talent acquisition. We will keep on working diligently to realize our vision “To be the company in Suriname most respected for its people, excellence and core values”. Key to any of our operations is our social license to operate. This goal encompasses the issues of health, safety and social responsibility. I would like to take this opportunity to thank our partners, financiers, suppliers and customers for their unceasing trust and our employees for their continuing outstanding performance and unrelenting dedication. Shirley Sowma-Sumter Chief Executive Officer and Chief Financial Officer 4 5 243 YEARS OF KERSTEN ANNUAL REPORT 2011 Report of the Supervisory Board In compliance with the provisions of articles 9 and 12 of the Articles of Association we have the honour of submitting the annual report and accounts for the financial year 2011, as approved by us. The annual accounts have been audited by KPMG Accountants B.V. and their report is included herein. Pursuant to article 12 clause 12.6 of the Articles of Association, we recommend that you adopt the present annual accounts, and discharge the Board of Management of their responsibility in respect of the management carried out during the reporting period and that you discharge the Supervisory Board of its responsibility in respect of their supervision. We agree with the proposal of the Board of Management to pay out a dividend of USD 1,000,000 and to add USD 3,764,575 of the net profit of USD 4,764,575 to the general reserves. “The steps taken in the past year to improve our service to our customers proved to be mutually beneficial. “ Kersten again showed a good performance in 2011. The steps taken in the past year to improve our service to our customers proved to be mutually beneficial. Also the continuous development of our company made it possible to benefit from new commercial opportunities. Within the Motors and Heavy Equipment division, the successful introduction of the two new car brands, JAC and Mahindra, at Motors proved that these answered the demand for vehicles in these market segments. The growing activities in the mining sector translated into a rising need for CATERPILLAR products resulting in increased sales at Surmac. The Hospitality division is making good progress. Our call centre joint venture with Customer Management Contact Group B.V. is developing rapidly. The renovation and upgrading of Hotel Krasnapolsky will be completed according to plan and the move of Popeyes Louisiana Kitchen (Popeyes) to street level also proved to be a success. BergenDal attracts an increasing number of tourists from Suriname and abroad. BEM, within the Building and Construction division, is focussing on new products and services. An example of this is the “House in a Bag” concept. Vensur increased its production capacity considerably and introduced a second grade of cement. The construction division in general is facing fierce competition but we are confident that we will continue to increase our fair share of the markets. Incom showed again better results contributing to the continuing good performance of our Health Care division. In 2011, Medicare successfully outsourced its activities in order to better service its customers. Last but not least we would like to express our gratitude to all our employees for their continued commitment and devotion without which, we would not have been able to realize the excellent results. We thank them for their valuable contribution and unrelenting efforts. We also would like to thank our customers and suppliers for their continued confidence in us and compliment management with the results achieved. David A. Voûte Chairman 6 7 243 YEARS OF KERSTEN ANNUAL REPORT 2011 BENEFITS, OPPORTUNITIES AND RISKS imperative to improve the absorption capacity of our economy As a country rich in natural resources, conditions on international The bonanza in the gold and oil industries stimulated business activities in commodity markets dominantly affect the level of production, the general almost all other sectors of the economy, particularly in supply companies business climate, the net outcome of foreign transactions and, last but where actual sales and even more so orders for future delivery grew not least, the rate of inflation in Suriname. During a period of more than strongly. This tendency was accentuated by acceleration in the execution a decade, we are benefitting from structurally higher prices as a result of of public infrastructure projects. Consumption remained high, due to rapidly growing physical and investment demand. From time to time, this salary increases and a further expansion in bank lending. The trade and These measures, combined with higher salary payments to civil servants, In addition, according to the Multi-Annual Development Program 2011- tendency has been accentuated by uncertainties originating, inter alia, building sectors grew rapidly, while growth in the hospitality and tourism the doubling of public capital spending in order to improve the physical 2012, the government intends to strongly increase its investment in the from geopolitical tensions, as well as from economic and financial crises. industry was steadier. On the other hand, the agriculture, fishery and infrastructure, and the settlement of arrears in suppliers’ loans, resulted technical and social infrastructure. It is obvious, that this major investment forestry sectors could only modestly take advantage of higher global in an expansion of public expenditure by 33%. Expenditure exceeded push will give a strong extra impetus to the other sectors of the economy. During 2011, this market pattern again prevailed. Prices surged in the prices, due to structural and institutional weaknesses, as well as revenue by some 6%; thus, eventually, the positive effects of the revenue Benefitting from the opportunities created by the international commodity first half of the year as the world economy continued to recover from the insufficient competitive advantages. generating measures virtually perished. The resulting cash deficit boom, while taking due account of related risks and uncertainties, require was financed by drawings on foreign loans. Additionally, loans were wisely preparation and execution of the ambitious investment plans. A 2009 recession. Thereafter, a strong downward correction occurred due to a renewed cyclical weakening in the developed countries and less On balance, the estimated increase in gross domestic product contracted to finance on-going and future projects. As a result, total comprehensive and well-balanced package of policy instruments should buoyant growth in emerging market economies, particularly in China, the amounted to some 4.5%, about the same as in 2010. The growth of our government debt rose by 6% points to 39% of gross domestic product. be applied. In order to derive as much as possible benefits from these major consumer of raw materials. Simultaneously, prices were pushed economy compares favorably to the average of the Caribbean region. At first sight, this percentage appears to be quite low; however, the debt plans, the risk of taking excessive recourse on our limited implementation upwards by the social unrest in North-Africa and the Middle-East, the This development, and the reaching of an agreement to settle a long repaying capability of the government is accordingly weak. capacity should be mitigated. After all, a possible overheating of uncertainty ensuing from the public debt crises in Europe, and supply outstanding debt arrear with the USA, induced rating agencies to Future developments on the world’s commodity market appear to be our economy by exhausting our limited capacity to execute projects side constraints. Due to this mixture of factors, average commodity increase our country´s long-term foreign currency debt rating to “BB-“ quite promising on the long-run. As in the past, disturbing factors will may undermine monetary stability and eventually also the process of prices (deflated by the consumer price index in the USA) surged by from “B” with a stable outlook. The former rating was assigned earlier to undoubtedly occur from time to time due to inter alia cyclical fluctuations sustainable development. almost 30% on an annual basis. However, at the end of 2011 the the domestic currency debt. and changes in the geopolitical climate. It is still expected, that in particular increase was much less pronounced compared to a year earlier, i.e. 9%, due to the correction referred to above. gold and oil prices will continue to fluctuate around historical high levels. Simultaneously, we should aim at increasing the share of the domestic Much better operational results of the gold and oil companies were Demand will increase structurally, particularly in the fast growing emerging value added in the total production by broadening and deepening the reflected in corresponding higher transfers to the National Treasury. On market economies. On the other hand, supply side constraints will become linkages between the core sectors and local suppliers’ companies. This a cash basis, government revenue increased by a notable 40%, also as more pronounced due to increasing marginal production costs. implies that these companies should alertly increase their capability a result of a package income generating measures introduced at the 2011 In Perspective to deliver more goods and services to the core sectors at competitive beginning of 2011. The government take on fuels was increased by 40%, Companies engaged in exploiting Suriname’s natural resources are conditions. The government should create a favorable investment climate, while taxes on tobacco, alcoholic beverages, and casinos were also anticipating on the positive prospects, and are planning to invest a but should also endeavor to acquire a fair share of the operational results raised. The exchange rate of the Suriname dollar (SRD) was devaluated total of almost USD 3.5B; an amount roughly equal to the estimated of the foreign companies. The proceeds should be used to diversify and by 20% vis-à-vis the American dollar (USD), the currency used to settle present value of our annual gross domestic product. The search for gold strengthen our economy, to create safety nets for the financially weak, and the bulk of our foreign transactions. The latter measure was taken in and oil will be intensified; the oil refinery will be extended, while large to save part of the additional income for future generations. Policy makers order to broaden the tax base, and to restore tranquility on the foreign investments will be made to ensure the availability of sufficient local in both the private and public sectors should therefore be well-prepared to exchange markets by unifying the official and the informal exchange rate. bauxite to be able to continue to operate the alumina smelter efficiently. a wise preparation of the mixture of challenges and risks facing us. 2009E 2010E Real GDP growth (%) 3.1 4.4 almost 7% in 2010. At the end of 2011, the index was 15.2% higher than Overall fiscal balance (% of GDP) -3 total exports. Export earnings rose by 15% in US dollar terms, despite a year earlier. To some extent foreign factors, such as rising import prices Total public debt (% of GDP) roughly unchanged production volumes. Most other balance-of-payments for fuels and foodstuff, also contributed to the higher inflation. Almost accounts closed with a deficit. The banking sector´s international gold and overnight, a broad spectrum of goods and services became much more foreign exchange reserves increased by 15% measured in US dollar terms expensive. To alleviate the corresponding loss in purchasing power for to an equivalent of more than 5 months of imports of goods and services. the financially weak, the government increased some subsidies. The economy of Suriname benefitted from buoyant world markets prices. In The goals of these measures were, initially, largely reached. However, 2011, average prices of our major export products, gold and crude oil, rose the higher taxes and the devaluation caused a disquieting acceleration by about 30% and 40% respectively. Prices for alumina increased relatively in the inflation rate. The annual consumer price index rose to 17.7% from modestly, i.e. by 10%. These three products represent an ample 95% of SURINAME 2011P 2012P 2013P 2014P 2015P 2016P 5 5 5.5 7.7 5.6 5.4 -3.6 -1.7 -1.5 -1.2 -0.1 0.4 0.6 19 22 20 19 19 17 16 14 Gross international reserves (months) 5 4.4 4.6 5 5.7 6.3 7.5 7.5 Investment in % of GDP incl. informal sector 25 23 25 27 24 22 22 22 Sources: Central Bank of Suriname, International Monetary Fund 8 9 243 YEARS OF KERSTEN ANNUAL REPORT 2011 Technician Recruitment and Development Program trainees Motors and Heavy Equipment Surmac In 2011 Surmac developed important initiatives for growth and achieved the highest turnover of the group. By attracting agencies such as Wacker Neuson, AK Purifiers, 3M, Mecano International, DAF (for service and parts), Mast Explorer, Manitowoc Cranes and JLG Lift Equipment, our goal “To provide solutions that drive customer value” could further be attained. Surmac participated in the Trade Fair for entrepreneurs in the Gold Sector and the Consumer Fair of the Chamber of Commerce and Industries. A rental operation, SurmacRent, was launched and a Training Center for operators of heavy equipment opened. We celebrated 70 years CATERPILLAR dealership with pride by launching, inter alia, a credit facility of USD 20M for buyers of CATERPILLAR equipment. The Line of Credit has been utilized almost fully as at end 2011. We are delighted to note that the banking sector wants to be engaged more intensively in the financing of our customers by offering them innovative financing solutions. One of Suriname’s biggest challenges is to diversify our economy and to find other avenues for growth in order to avoid brutal slow-downs caused by declining commodity prices. Surmac faces the same challenge in solidifying our revenue base. We are in the process of diversifying our activities more among industries, customers and products. In 2011 Surmac pursued a winning strategy to make more inroad in several sectors including small-scale gold mining, construction, power generation and forestry. Gold mining companies placed large orders for heavy equipment - some are new to Suriname to be delivered within the next two years. We continued to unlock the potential of the small-scale gold mining sector. This was done by teaming with leading companies in this segment of the industry, providing the market unprecedented financing arrangements but, most of all, by offering product support 2011 Operations: A Year In Review capabilities even in very remote and inaccessible regions of the country to safeguard full compliance with our customers’ operational requirements. Given the impact of large capital projects on the labor market Suriname faces another major challenge, which is to develop the country’s human capital and maximize our absorptive capacity. Surmac needs to hire and retain the right people. In this context, we have launched a Technician Recruitment and Development Program in 2010, which is already beginning to bear fruit. It is critical to systematically upgrade the technical knowledge and skills of our workforce, customers and technical institutes. Next year we will execute a “Heavy Equipment Applied Technology Program” in collaboration with the Ministry of Education to achieve a closer alignment of the current technical curriculum with the newest technologies. As a CATERPILLAR dealer Surmac is required to continually create operating and business efficiencies and exhibit world-class, globally benchmarked operations, processes and capabilities. The current dealer facility requires an upgrade to support future customer requirements. By mid 2012 the design of a new facility will be finalized. Construction is scheduled to be completed in the first quarter of 2014. The new facility will guarantee customer service according to ongoing world-class product support requirements. In 2012, the further improvement of asset management systems as well as the leveraging of standardized and documented business practices will gain priority. In Nickerie the renovation of our branch was completed and the Massey Ferguson (MF) brand reintroduced. The USD 2M credit facility for the purchase of MF equipment which was launched in the fiscal year has been under-utilized thus far, to a certain degree, reflecting structural and institutional weaknesses and imbalances of the rice industry. 10 11 243 YEARS OF KERSTEN ANNUAL REPORT 2011 KERSTENLEASE:VEHICLESANDHEAVYEQUIPMENT Motors Although the earthquake in Japan in early 2011 had significant consequences for the WE MAKE IT MATCH lease import of vehicles, Motors was successful in the sale of new vehicles, namely to the government, the to a boost in construction activity in the near term and a rise in Suriname’s growth potential in the medium to long run. Some of our customers are construction and the mining sectors. Despite the heavy contraction in import of Japanese brands, Motors scored a higher turnover and volume than in 2010 and a growth in the market share of new vehicles. The JAC and Mahindra brands which were introduced in 2010 were able to fill the gap caused by the fall of Toyota imports. The market welcomed the important financial solution presented by Kersten Lease, the newly established lease company of Kersten. Motors opened a showroom in Nickerie and the facilities in Paramaribo were extended and underwent a facelift. Motors realized the second largest turnover growth within the Kersten Group in 2011 and an 18% growth in pre-tax result. Continuation of this growth is expected in 2012. Major private and public capital projects in mining, energy, transportation and housing will lead KERSTEN LEASE involved in these large investment projects. In 2012 investment will take place, in collaboration with our joint venture partner, Cementos Argos S.A. (Argos), in optimizing of production and storage and in the development of new business opportunities, such as aggregates and ready mix concrete. CKC MOTORS Kersten Lease is gespecialiseerd in het leasen en managen van voertuigen en zwaar materieel. Kersten Lease is een dochteronderneming van C. Kersten en Co. N.V., één van de grootste en oudste conglomeraten van bedrijven in Suriname. Simultaneously the human resources will be enhanced. Overall restructuring and investment programs are beginning to bear fruit. Kersten lease heeft een zeer divers en gerespecteerde klantenbestand, waaronder multinationals en lokale ondernemingen. Wij hebben de voordelen van leasen voor u op een rij gezet: • Gegarandeerd altijd een rijdende voertuig tot uw beschikking • Onderhoud gegarandeerd • Lagere “upfront” cash uitgaven • Altijd een nieuwe veilige voertuig ter beschikking Voor informatie kunt u terecht bij: Richard G.M. Tjon A Joe – Directeur Kersten Lease N.V. ([email protected]) | Tel: 471150 Danny William – Directeur C.K.C. Motors Company N.V. / Account Executive Kersten Lease N.V. ([email protected])| Tel: 402833 BEM and Spanbeton Although BEM and Spanbeton had no easy year as a result of the elevated competition and the associated price war, we are not dissatisfied with the recent developments and the indications of opportunities and a favorable prospect in 2012. Real turnover and sales volumes were higher in 2011 for both BEM and Spanbeton, despite the fierce competition. In terms of turnover, BEM was the fifth largest operating company in 2011. The results were slightly better than in 2010. Spanbeton scored a substantially better In 2012 an ongoing diversification of the product line, further development of the Toyota Customer Satisfaction concept and upgrading of the staff will result than in 2010. be implemented. The fuel-efficient JAC passenger car will be brought on the market in an effort to capture a larger part of the second hand market In the year under review new products were developed with a higher gross margin. One for small passenger cars. Also, the Toyota Prius Hybrid - the green car - will be introduced. The Prius is rated as among the cleanest vehicles sold of these products is the “House in a Bag” (HIAB). Against this background, our marketing in the USA based on smog-forming emissions. Motors will also offer newcomers in the mining industry onsite maintenance solutions to drive their efforts in 2012 will be stepped up. HIAB is a turnkey designed home. BEM guarantees efficiencies, leading to greater revenue, cost savings and profitability. construction within the budget and timeframe set and offers a series of models from which can be selected, varying from a low budget one bedroom home to more upscale luxury three bedroom bungalows. Next year BEM will focus on, inter alia, construction of houses for the consumer and the corporate market including in a Public Private Partnership with the government. BEM will also focus on capturing opportunities beyond Suriname’s borders Building and Construction and product development in collaboration with our partners, the Neal and Massy Group and Argos, in particular for the energy and mining sectors. Vensur In 2011 Vensur became the leader in the cement industry in Suriname with more than 50% of total market share. Vensur scored third in terms of turnover of the operating companies of the Kersten Group. The renovation of the factory was completed within the budget and timeframe Alginco Alginco further strengthened its position in the corporate market in refrigeration, water and electrical installations. The relationship set. This went unnoticed to the customers, other than that the quality of our products improved immensely. Vensur is now capable to produce all types with existing and large customers was extended and intensified and the orders became larger and more challenging in nature. The relationship with of cement of the highest quality and at par with international standards. The production capacity has been increased from 8 tons to more than 16 tons foreign suppliers was strengthened and firm arrangements have been made for more favorable payment terms and new and continuing training of per hour. Investment has also been made in storage and distribution and - as already mentioned - various qualities of cement can be produced. The senior and junior staff. As a result of the aforementioned, the staff has grown, both in terms of knowledge, efficiency and scope. Safety is important capacity of the conveying belt used for delivery of the raw material has been increased by 35%. The risk of demurrage has been decreased and we can gladly look back to a year without any significant accident. With these measures accompanied by other planned improvements, a sound considerably. Housekeeping, health and safety have been elevated to international standard through training, education and investment in PPE basis is laid for further sustainable growth of Alginco in 2012. The 2011 results showed a marked improvement. material. Turnover and profit growth were therefore exponential. 2011 Operations: A Year In Review 12 13 243 YEARS OF KERSTEN ANNUAL REPORT 2011 Hospitality Krasnapolsky According to the World Travel & Tourism Council direct contribution of Travel and Tourism to the economy of Suriname deteriorated significantly (in 2011 prices) from BERGENDALBergenDal recorded a significant increase in occupancy SUNNY LAND® TOURS, INC. SURINAME DISCOVERY 6 Nights from $1180* Exotic Suriname and Amazon SRD 345M in 2006 to SRD 195M in 2010. Key factors contributing to the downturn are the contraction in visitor exports in the corresponding period while, on the other hand, Hotel Rooms Nights Supply soared as casino owners added rooms to the industry to meet legal requirements to operate a casino. Although a slight reverse in this trend was noted in 2011 and direct contribution to Bergendal Resort luxurious indulgence Suriname, one of South America's smallest countries, is full of contrasts, natural beauty, lush rainforests and abundant wildlife. Discover it all on a six-night adventure, now discounted to only $980 per person, including all taxes and fees. March departures only. • Roundtrip air from Miami • 13 meals • 3 nights at the Hotel Krasnapolsky in Paramaribo • 3 nights at the Bergendal Eco and Cultural Amazon River Resort • Paramaribo and Suriname River tours • All transportation within Suriname, including airport transfers • Services of local tour representatives Now everyone can afford a trip to the jungle! the government and the mining sector. As a result the income from BOOK THIS DEAL FOR YOUR CLIENTS: 2012, the Central Bank of Suriname will host the first meeting of the performance again in 2012 with only SRD 203M in direct contribution, representing 2.1% decline compared to 2011. Tourism conferences and special functions shows an upward trend. In February Call 800-783-7839 Governors of the Inter-American Development Bank’s (IADB) Caribbean JOIN SURINAME YOURSELF! Visit HotFamTrips.com Trip Special Offer 50% Discount $590 Per Agent $200 Companion Supplement Country Department at BergenDal. During this meeting, Suriname and the economy went up with 6.3% to SRD 208M, this was only at 60% of the 2006 level. Given these developments, overall Travel and Tourism, amplified by the lingering economic recession in the Netherlands, is expected to continue its weak and a growing interest from the business community, especially the IADB will sign the contracts for two loans totaling USD 20M. The product package of BergenDal was further extended in 2011 with an 800 meter long Extreme Canopy in the Adventure Center. In 2011 operating expenses were decreased by approximately 6%. BergenDal, dedicated to continuing its tradition of providing exceptional guest experiences while Departures: Weekly Departures January to December 2012 Advantages: $200 Off regular published rates.Explore an untapped tourist destination Pay by check for these special discounted rates. Visit SurinameHotDeals.com for more information or call 800-783-7839. Must be booked by March 31. 2012. Offers are not combinable with any other advertised promotions. adhering to the principles of sustainable development, will continue to position itself as “One of the Faces of Suriname”. statistics show that only 11% of visitors use hotels, while 40% and 49% stay in independent homes and with family and friends; the latter because half of the tourists come from the Netherlands. Maximum average hotel occupancy, defined as Franchises Popeyes Louisiana Kitchen (Popeyes) realized an Total Hotel Room Nights Demand to Total Hotel Room Nights Supply, showed a consistent downward trend from almost exuberant growth in sales of 40% as opposed to 2010, to a certain 90% in 2006 to an estimated 48% in 2011 degree, thanks to the relocation of the restaurant early 2011 to the ground floor of Hotel Krasnapolsky. End 2011 the government relaxed its visa policy for tourist purposes and introduced the Tourist Card, an important and In 2011, Popeyes gained the first and second place for revenue growth in long advocated instrument for the promotion of tourism. In November Kersten concluded an agreement with Sunny Land the South American region and the Caribbean. At present, expansion of Tours USA, a tour operator in the USA. Sunny Land and our partner Surinam Airways (SLM) will approach the market in the the number of Popeyes restaurants in Paramaribo is subject of research. USA. One of the conditions for success in penetrating this, onto now, non-traditional tourist market is the availability of Rituals Coffee House and Pizza Boys experienced a more modest growth, sufficient and especially affordable airlift. SLM will expand the number of flights to the USA in April 2012. The first group however, their performance can be considered good. The franchises of visitors from the USA is expected in Suriname in January 2012. Penetration of the huge USA market will be beneficial initiated various successful sales promotions in collaboration with to the entire travel and tourism sector in Suriname. As known, this market is characterized by significantly higher spending Kirpalani’s Ltd. and it is foreseeable that these will be repeated in 2012. rates compared to those from other countries and a considerably higher percentage of hotel occupancy. In April 2012 a seminar will be organized of 25 travel agents of the USA together with SLM and Kersten on the theme of further strategies for penetrating the USA market. In 2012 efforts will be intensified in further promotion towards the French Guyanese market since a heightening of the competition from Suriname is observed. Our Hospitality Division can consider 2011 a fairly good year. On average, each property realized an almost 15% point higher occupancy, achieving a level far above the estimated maximum industry average for 2011 of 48%. The renovation of the hotel rooms in Hotel Krasnapolsky was completed by the end of 2011. In May 2012, the total renovation of the hotel shall be finished. Pretax result of Krasnapolsky improved considerably in 2011 as opposed to 2010. 2011 Operations: A Year In Review 14 15 243 YEARS OF KERSTEN ANNUAL REPORT 2011 Health Care Incom Incom’s medical segment is its core business with a contribution of more than 70% to total sales. In 2010 Medicare Medicare transferred a large portion of its group of eligible Incom became representative of Novartis International AG (Novartis). Novartis is one of the largest international recipients to SZF to continue the strategy of risk and cost mitigation, pharmaceutical manufacturers and a trendsetter in the field of, inter alia, oncology and dialysis. In 2011 Incom registered ongoing improvement of the medical care and higher insurance locally a few products of Novartis and tests were conducted for the Dialysis Center and the State Health Insurance coverage. After a year under SZF insurance, Medicare will evaluate Company in Suriname (SZF). SZF is the largest health care insurer in Suriname. In the year under review, agency this cooperation. The envisioned development for expansion of medical agreements were formalized with Pharmix Laboratories (Pvt.) Ltd., Hansel Pharmaceuticals (Pvt.) Ltd., Micro Labs Limited services was not realized in this fiscal year; this will be resumed in and FYNK Pharmaceuticals (Pvt.) Ltd. Of importance for the expansion of the medical branch are the constant growth 2012. We are currently in the process of finalizing a feasibility study for of the package of innovative products and the maintenance of a portfolio, which covers the national medical needs. the introduction of an endoscopic center for stomach, colon and throat In 2011, the healthcare industry was confronted with a financial crunch of the hospitals and also the policy of the SZF, examination. In 2012 the mining sector will be approached with creative who opted to provide more specialist care and, as an extension, to execute its own imports and distribution through its custom-made solutions regarding medical management to generate own chain of decentralized pharmacies. This resulted in the decline of the market share of other drugs importers. Due to greater efficiencies for this industry. Next year Medicare will relocate to long lead times of IDA Foundation, our largest supplier of generic drugs, Incom was forced to hold substantially higher the location where Incom and Surlab are presently housed so that the inventories of its generic medications in the year under review. Incom, as a representative of IDA Foundation, treaded entire Health Care Group will be in one location. beyond our borders for the first time in 2011. This policy will be continued in 2012. The projected collaboration with the Guyana-based company, Scientific Sales Meditron, will come into fruition. A biomedical department will be added to Incom. Meditron in Guyana concentrates on sales, marketing, maintenance and repair of medical instruments and Real Estate and Properties apparatus. Incom will continue to add agencies to its existing brand portfolio. Warenhuis Since late 2005 the Warenhuis building is leased to a third party. The financial results improved In the consumer segment Incom represents in comparison with 2010. a number of pesticides, household and body care products as well as perfumes. There is Neptune Financiële Dienstverlening (NFD) NFD holds a 40 year lease on 53.4 hectares of the increasing competition and a visible loss of Belle A Soir property in the district of Commewijne, to be developed for affordable housing with the IADB and DSB Bank purchasing power in the market. The turnover of N.V. as partners. The Belle A Soir project, which is adjacent to the Richelieu public housing project, was put on hold last the fastest moving product, Baygon, recorded year due to poor drainage of the area. Large public investments will be required to improve the infrastructure. Kersten is still an associated slight decrease. Next year, an in the starting blocks for the development of this project, however, discussions with the current administration to improve improved formula of Baygon will be introduced the infrastructure have not yet produced the desired results leaving the status quo of this project unchanged. with which the manufacturer targets to be the regional market leader again in 2013. Although Incom’s 2011 turnover was more or less the same as in 2010, through an excellent cost management and higher Kersten Communication Services gross profit margins a significantly higher pre-tax result was recorded. SNT Kersten N.V. (SNT Kersten) Surlab Sales and pre-tax results declined modestly compared with 2010. Surlab successfully developed Alcolado Glacial SNT Kersten is a joint venture of the hand sanitizers. In 2012 this new product will be introduced in collaboration with Curaçao Laboratories Ltd., the brand owner of largest customer contact organization in Glacial Alcolado. Surlab will continue with the planned product line extension and the entry into across border markets with its the Netherlands, Customer Management new products. Contact Group B.V., and C. Kersten and Co. N.V. Activities started in 2010, however the joint venture was formalized in late 2011. SNT Kersten, the principal tenant of Krasnapolsky, will offer its services to the Hospitality Division 2011 Operations: A Year In Review 16 in order to optimize the quality of customer contacts by Krasnapolsky and BergenDal. 17 243 YEARS OF KERSTEN ANNUAL REPORT 2011 KERSTENLEASE:VEHICLESANDHEAVYEQUIPMENT WE MAKE IT MATCH lease Holding Services Health, Safety, Environment and Community (HSE&C) Kersten Lease N.V. (Kersten Lease) Kersten Lease was launched in 2011 and at HSE The purpose of our healthy lifestyle program is to make a meaningful impact in improving the health of our employees and the quality of the end of 2011 lease contracts were signed with three of the largest companies in Suriname. The their life. In 2011 several actions were conducted which included medical surveys on, prevention and treatment of cardiovascular diseases, alcohol prospects for growth of this activity are substantial. and drug awareness, the CATERPILLAR Surmac-walk, celebrating 70 years CATERPILLAR dealership in Suriname, the Srefidensi Marathon and our Family Sports Day, held at BergenDal. Next year the emphasis will be on creating awareness and prevention of the most common cancers as well as CKC Corporate Facilities N.V. (CORFA) Since 1999 Kersten is involved in execution of alcohol and drugs policies. In March 2012 we will start by participating in breast cancer awareness and testing campaigns, which start the recruitment and selection of skilled workers from all over the world, in particular for our nationwide. CATERPILLAR dealership. Since 2011 these activities are done through a separate legal entity CKC MOTORS Kersten Lease is gespecialiseerd in het leasen en managen van voertuigen en zwaar materieel. Kersten Lease is een dochteronderneming van C. Kersten en Co. N.V., één van de grootste en oudste conglomeraten van bedrijven in Suriname. Kersten lease heeft een zeer divers en gerespecteerde klantenbestand, waaronder multinationals en lokale ondernemingen. Wij hebben de voordelen van leasen voor u op een rij gezet: • Gegarandeerd altijd een rijdende voertuig tot uw beschikking • Onderhoud gegarandeerd • Lagere “upfront” cash uitgaven • Altijd een nieuwe veilige voertuig ter beschikking under the name of CORFA, which is in charge of the recruitment, training and employment of local and foreign employees on a permanent or temporary contract. CORFA also offers expertise in areas as HR management and administration, work permits, pay rolling, sickness absence management, medical screening and labor law. CORFA facilitates companies in mitigating their risks and in focusing on their core business. The activities of CORFA were so far exclusively oriented towards Voor informatie kunt u terecht bij: Richard G.M. Tjon A Joe – Directeur Kersten Lease N.V. ([email protected]) | Tel: 471150 recruitment for companies of or dealing with the Kersten Group, such as Customer Management Danny William – Directeur C.K.C. Motors Company N.V. / Account Executive Kersten Lease N.V. ([email protected])| Tel: 402833 Contact Group B.V. and Krasnapolsky, however, as of next year, CORFA will expand to other businesses. This highly profitable activity shows favorable growth prospects. N.V. Handelmaatschappij S.M. Levie (Levie) After several years of almost stationary activities of Levie, the acquisition of new customers and cleanup of the database of existing customers was successfully implemented. Human Resources Shared Service Center (HR SSC) The HR SSC became operational in 2011. The HR SSC is a business unit of the holding company that supports the operating companies with various operational and administrative HR services. Kersten’s head office illuminated as endorsement of Breast Cancer Awareness Campaign In 2011 we continued our relentless commitment to zero harm. Our goal is to maintain a safe working environment. Safety performance is a precondition for growth. It should not in any way be subordinated to our growth and profit objectives. Protecting our employees, our most valuable asset, is one of our core values. It elevates maintaining a safe workplace to clearly a high priority. A safe workplace will also enhance our ability to recruit and keep highly qualified people. Minimizing our footprint on the environment and conserving our resources demonstrates our commitment to adhere to our social and environmental responsibilities. 5S quality improvement processes and Business Excellence Programs were implemented company-wide. With regard to the ISO 9001-2008 and 14000 certification process, activities were focused on preparing operating companies for 2011 Operations: A Year In Review 18 certification in 2012 and 2013. Overall there was a general improvement in housekeeping, the quality of buildings, shops, offices, warehouses and yards of all operating companies thru periodic inspections, reports and hands-on support. 19 243 YEARS OF KERSTEN ANNUAL REPORT 2011 Community Development At Kersten we often achieve success, inter alia, through close collaboration with partners Our dividends are intended to fund community projects of our ultimate who share a common vision, our values and complementary strenghts. A key priority of shareholder. In addition, Kersten contributes significant amounts and Kersten is to build winning collaborations in realizing corporate and community goals. devotes time and effort to improve the environment, prepare our youth for careers in several industries and enhance the communities we Cementos Argos S.A. (Argos) Since 2010 Argos and Kersten are joint work in. We are proud to be a driving force and binding factor in the venture partners. The collaboration has resulted in improving the soundness of our grouping of different stakeholders for these causes. In 2011, in this production process, product quality and, most of all, growth of our market share for context, specifically the following should be mentioned: cement. We continue to work on the development of new commercial initiatives to strengthen the foundation of our Building and Construction division. 1. Kersten Tourism Foundation (KTF) In October 2011 the Brokopondo Vocational & Training Center (BVTC) was officially The Neal and Massy Group (Neal and Massy) The Letter of opened after a long period of preparation as a result of lengthy Interest between Kersten and Neal and Massy, which was signed in 2010, was elevated discussions with the Ministry of Education. On behalf of Kersten, KTF to a Memorandum of Understanding. Growth opportunities have been identified for both “OUR PARTNERS SHARE OUR VISION AND VALUES AND HAVE COMPLEMENTARY STRENGTHS” is responsible for the material execution of the project. The BVTC is at par with international standards, so that the business community can rely on well-trained youths. KTF is funded by a number of donors including Kersten. Its mission is “To promote tourism, to eliminate Our strategic partners poverty and to promote economic development of the people of short as well as long term, especially in the areas of energy and mining. Commercial activities have been initiated such as the co-distributorship of PPE material of the world renowned brand 3M and the foundation has been laid for the new Kersten “Energy Division”. In this regard various business initiatives will be developed in 2012. the Brokopondo district”. Brokopondo has a population in excess Customer Management Contact Group B.V. In 2010 a joint-venture of 12,000 with over 60% younger than 16 years and profound and agreement was concluded with the Dutch communications services company, multiple social and economic problems. Non-enrollment, dropout Customer Management Contact Group B.V. under the name SNT Kersten N.V. This and crime rates as well as teenage pregnancies are extremely high. joint-venture enables us to enter into a new sector to achieve the so necessary diversification of our company. There are few educational and sustainable employment opportunities. Since 2008, KTF executed several supply chain strenghtening projects in Over 20 different donors, including KTF, the Dutch-based Zeister the district of Brokopondo as part of the BergenDal Ecotourism Project. Zendingsgenootschap and UTSN, as well as IAMGold/Rosebel Gold Funding is provided by Kersten and the Multilateral Investment Fund Surinam Airways (SLM) and Sunny Land Tours USA SLM Mines, contributed an estimated USD 850,000 and committed funds to of the Inter-American Development Bank Group. BergenDal, which is the national airline of Suriname with 50 years of experience in the airline business. secure the operations of the school until 2016. In addition, Kersten and impacts more than 10% of the population of Brokopondo in terms of Sunny Land Tours USA is a USA based tour company with over 40 years of experience IAMGold/Rosebel Gold Mines will make internships and jobs available. newly established businesses, sustainable employment, education and and with awards by the governments of numerous countries for its help in developing poverty alleviation, continues to provide continuous education, coaching travel and tourism to these countries. Kersten, SLM and Sunny Land Tours USA have In 2012 the main focus of the BVTC will be to recruit pupils from the sec- and employment opportunities. KTF has also committed itself to the joined forces in November 2011 to implement a strategy aimed at penetration in the ond grade of the LBGO (Junior Vocational School) for a technical voca- full restoration and rehabilitation of the old Village at BergenDal and so-far non traditional USA travel and tourism market. tional orientation. Also technical training will commence in 2012, among the preservation of its rich cultural and historical legacy. BergenDal is which a welding course for dropouts. There are also project proposals an integrated sustainable tourism project that combines in complete The Green Coalition In 2010 Kersten joined Suriname Conservation for training of mechanics and operators of heavy equipment. The ulti- harmony and for the first time in Suriname People, Planet, Profit and Foundation (SCF), a foundation established by Conservation International, and a growing mate goal of the BVTC is to become a regional training center, providing Poverty Reduction. number of local companies, organizations and the government of Suriname in promoting and implementing a “green economy” in Suriname. At the heart of the “green economy” vocational education in professions that are and will be in great demand 2. Stichting Lotjeshuis Suriname (SLS) SLS, a movement lays a heightened focus on sustainable development and sustainable foundation established in 1967, operates a shelter for children to legally entrepreneurship, two concepts that are embedded in our social license to operate. One of our challenges is to hire and retain the right people. This creates protect and provide professional care to neglected and malnourished In 2010 Kersten and SCF/Conservation International worked together on renewable also one of our biggest opportunities, which is to further connect our toddlers in Suriname. SLS is crucial for the care of children, who are energy and carbon lab initiatives which were put on hold due to the low feasibility. businesses to the communities we work in. KTF does not have any abandoned every year and whose parents are often disqualified by the project in execution momentarily. We have submitted projects in the court of their parental authority. In the fiscal year Kersten has contributed IAMGold/Rosebel Gold Mines Kersten sells heavy equipment, vehicles and small-scale gold mining industry that are pending approval from the to the operation of SLS. By leasing a newly renovated building owned by hospitality solutions to IAMGold/Rosebel Gold Mines. As of 2010 we have stepped up our government. The goal is to teach and to promote sustainable gold mining this foundation to accommodate our employees Kersten will continue to efforts to jointly strengthen the capabilities of several disadvantaged groups in the district techniques while simultaneously creating job opportunities. support this foundation in 2012 and thereafter. of Brokopondo by establishing the Brokopondo Vocational & Training Center in 2011. in the near future. The BVTC is unique in its kind in Brokopondo. 20 21 243 YEARS OF KERSTEN ANNUAL REPORT 2011 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (IN USD) 2011 2010 Revenue Cost of sale 99,110,203 70,197,293 64,814,546 42,354,038 Gross profit Other income Total income 28,912,910 261,191 29,174,101 22,460,508 810,129 23,270,637 Employee benefit expenses Depreciation Other operational expenses Total expenses 8,007,970 4,089,008 11,334,639 23,431,617 8,219,864 4,401,951 10,237,675 22,859,490 “Our solutions drive customer value” Income from operations 5,742,484 411,147 Financial income Financial expenses Net financial expenses 2,522,214 -2,587,247 -65,033 2,303,421 -2,258,362 45,059 Share of profit of associates Income before taxation Income taxes Profit from continuing operations 294,105 5,971,557 1,206,982 4,764,575 237,088 693,294 -615,709 1,309,003 Discontinued operations Profit (loss) from discontinued operations (net of income tax) Profit for the year 252,665 4,764,575 1,561,668 Condensed Consolidated Financial Statements 22 23 243 YEARS OF KERSTEN ANNUAL REPORT 2011 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IN USD) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (IN USD) ASSETS 12-31-11 12-31-10 ASSETS 2011 2010 Property, plant and equipment Intangible assets Receivables Investment property Deferred tax assets Other financial assets 45,128,548 241,061 1,086,481 6,907,218 1,795,639 3,251,972 45,170,937 289,316 1,019,815 10,570 1,672,151 3,446,440 Income from operations (including discontinued operations) Adjustments for: - Depreciation - Change in provisions - Foreign exchange differences 5,742,484 663,812 3,870,022 -151,912 2,245,548 4,776,172 404,313 888,006 Changes in working capital - Inventories - Trade and other receivables - Other current assets - Current loans and borrowings - Trade and other payables - Other current liabilities -16,156,232 -16,418,135 -3,712,113 7,714,769 17,796,057 5,843,991 -1,249,352 1,565,428 -773,841 3,143,959 5,470,359 -297,925 Cash generated from operations Interest received Interest paid Income tax paid 6,774,479 276,666 -2,587,247 -2,192,582 14,590,931 392,002 -2,258,362 -2,324,817 Total non-current assets 58,410,919 Inventories Trade and other receivables Income tax receivable Other current assets Cash and cash equivalents Assets classified as held for sale 26,837,330 26,580,707 250,677 7,306,165 5,927,185 0 10,681,097 10,162,572 171,004 3,594,053 8,983,361 6,539,229 Total current assets 66,902,064 40,131,316 Total assets 125,312,983 EQUITY AND LIABILITIES Equity Share capital Share premium reserve Retained earnings Equity attributable to equity holders Non-controlling interest Liabilities Loans and borrowings Deferred tax liabilities Employee benefits Other liabilities 26,345,758 16,964,117 30,498,054 480,935 1,541,070 10,804,542 9,249,348 12,701,997 606,710 173,374 4,960,551 60,288,718 83,139,356 125,312,983 Cash flows from operating activities Net investments in property, plant and equipment Proceeds from sale of property, plant and equipment In/decrease Investment Property Net investments in intangible assets In/decrease non-current receivables Proceeds from disposals of investments In/decrease non-current financial assets In/decrease non-current other liabilitiesReceipt of government grant 27,691,980 2,271,317 10,399,754 -5,730,967 1,760,732 -55,688 -110,873 -66,666 194,468 -135,000 - -5,006,805 3,723,177 617,097 -39,203 984,663 1,023,413 54,408 17,672 Cash flows used in investing activities -4,143,994 1,374,422 Disposal of partial interest in Vensur N.V. In/decrease non-current loans and borrowings In/ decrease non-current liabilities Dividends non-controlling interests -1,183,848 - -504,470 -7,224,769 35,000 -2,999,965 Cash flows from financing activities -1,183,848 -10,694,204 Net in/decrease of cash and cash equivalents Cash and cash equivalents at beginning of year Adjustment previous year -3,056,525 8,983,361 350 1,079,972 7,903,389 - 11,225,315 10,775,243 4,210,200 135,000 22,850,638 Total current liabilities Total liabilities Total equity and liabilities 37,702,807 218,182 420,050 36,877,199 37,515,431 187,376 10,041,467 8,625,108 4,184,063 0 Loans and borrowings Trade and other payables Short term provisions Income tax liabilities Other current liabilities Liabilities directly associated with assets classified as held for sale 91,740,545 42,173,627 Total non-current liabilities 218,182 420,050 41,643,435 42,281,667 108,040 Total equity 24 51,609,229 Cash and cash equivalents at end of year Cash and cash equivalents at end of year classified as assets held for sale Cash and cash equivalents at end of year financial position 5,927,185 5,927,185 8,983,361 8,983,361 54,037,738 91,740,545 25 243 YEARS OF KERSTEN ANNUAL REPORT 2011 Notes to the Condensed Consolidated Financial Statements Functional and presentation currency These consolidated financial statements are presented in United States Dollars (USD), which is the Company’s functional currency. All financial information is presented in USD except when otherwise indicated. Use of estimates and judgments The preparation of the consolidated financial statements in conformity with IFRSs require management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. Estimates significantly impact assets and liabilities from employee benefit plans, other provisions and tax and other contingencies. Actuarial assumptions are established to anticipate future events and are used in calculating pension and other postretirement benefit expense and liabilities. These factors include assumptions with respect to interest rates, expected investment return of plan assets, rate of increase in health care costs, turnover rates and life expectancy. 1. Corporate information The principal activities of C. Kersten en Co. N.V. and its subsidiaries (together “the Group”) are: Basis of consolidation 1. the trade in motor vehicles and heavy equipment including parts; The consolidated financial statements comprise the financial statements of C. Kersten en Co. N.V. 2. the production of and trade in medicines and other healthcare products; and its subsidiaries as at December 31 of each year. Subsidiaries are those companies over which 3. the production of and trade in cement and concrete products; the Company has control, defined as the power to govern the financial and operating policies 4. the trade in air-conditioning, machine building, electronic parts and systems; so as to obtain benefits from their activities. Subsidiaries are fully consolidated from the date 5. the leasing of land and buildings and of acquisition, being the date on which the Company obtains control, until the date of disposal 6. hospitality and franchises. when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. All inter-company Interest in joint venture Alexios N.V. balances and transactions, including unrealized profits arising from intra-group transactions, have On November 12, 2008 a share purchase agreement between the Company and Cementos Argos been eliminated upon consolidation. S.A., a corporation established in Colombia has been signed. This agreement has been settled on February 16, 2010. The Company sold on that date its ownership of 84.24% in Vensur N.V. 3. Changes in accounting policy and disclosures to Alexios N.V., domiciled in Suriname. At the same date the Company sold 50% of the shares From 1 January 2011 the Company has applied the following changes in accounting policy and in Alexios N.V. to Corporaciones e Inversiones del Mar Caribe S.A.S, a subsidiary company of disclosures: Cementos Argos S.A., domiciled in Medellín, Colombia. The principal activity of Alexios N.V. is 1. IFRS 3 Business Combinations (2008) administering the shares of Vensur N.V. as of that date. Due to the sale of the shares of Vensur 2. Improvements to IFRSs 2010 N.V. in 2010, the assets, liabilities and results are proportionately consolidated in the consolidated financial statements of the Group compared to full consolidation in previous years. New standards not yet adopted Other than those adopted as mentioned in note 3, a number of new standards, amendments to 2. Basis of preparation Statement of compliance standards and interpretations are effective for annual periods beginning after 1 January 2011, The consolidated financial statements for the year 2011 have been prepared in accordance with expected to have a significant effect on the consolidated financial statements, except for IFRS 9 International Financial Reporting Standards (IFRS) as issued by the International Accounting Financial Instruments, which becomes mandatory for the Company’s 2013 financial statements and Standards Board (IASB). could change the classification and measurement of financial assets. The Company does not plan and have not been applied in preparing these consolidated financial statements. None of these is to adopt this standard early and the extent of the impact has not been determined. Basis of measurement The consolidated financial statements have been prepared on a historical cost basis, unless otherwise indicated. 26 27 243 YEARS OF KERSTEN ANNUAL REPORT 2011 4. Summary of significant accounting policies Foreign currency transactions Inventories Inventories are valued at the lower of average cost and net realizable value. Transactions in foreign currencies are translated to the functional currency at the exchange rates on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies Trade and other receivables at the reporting date are translated to the functional currency at the exchange rate at that date. Trade receivables, which generally have 30 day terms, are recognized and carried at original Foreign currency differences are recognized in the statement of comprehensive income. Non- invoice amount less an allowance for any uncollectible amounts. monetary asset and liabilities denominated in foreign currencies that are measured a fair value are translated to the functional currency at the exchange rate at the date that the fair value was Cash and cash equivalents determined. Non-monetary assets and liabilities in a foreign currency that are measured based on Cash and cash equivalents in the consolidated statement of financial position comprise cash at historical cost are translated using the exchange rate at the date of the transaction. bank and in hand and short-term deposits with an original maturity of less than 3 months. Non-derivative financial instruments Interest-bearing loans and borrowings The Group only uses non-derivative financial instruments. Non-derivative financial instruments Interest-bearing loans and borrowings are measured at amortized cost using the effective interest comprise investments in equity, securities, trade and other receivables, cash and cash equivalents, method. Amortized cost is calculated by taking into account any issue costs, and any discount or loans and borrowings, and trade and other payables. premium on settlement. Property, plant and equipment Provisions Owned assets Provisions are recognized if, as a result of a past event, the Group has an actual obligation (legal or Property, plant and equipment are stated at cost less accumulated depreciation. For the valuation constructive) and it is probable that an outflow of resources embodying economic benefits will be of buildings, all significant parts with a cost that is significant in relation to the total cost, are required to settle the obligation and a reliable estimate can be made of the amount of the obligation. recognized separately. Pensions and other post-employment benefits Leased assets The cost of providing benefits under the plans is determined using the projected unit credit All leased assets are operational leases and are not recognized on the Company’s statement of actuarial valuation method, with actuarial valuations carried out at each year-end. financial position. Revenue Intangible fixed assets Revenue is recognized to the extent that it is probable that the economic benefits will flow to Intangible assets that have a finite useful life are amortized over the useful economic life and the Company and the revenue can be reliably measured. Net sales represent the invoiced value assessed for impairment whenever there is an indication that the intangible asset may be of manufactured products and services delivered to customers net of allowances and sales tax. impaired. The amortization period and the amortization method for an intangible asset with a finite Revenue is recognized when the significant risks and rewards of ownership of the goods have useful life are reviewed at least at each financial year end. passed to the buyer and can be reliably measured. Cost of sales is recorded in the same period as sales are recognized. Other revenues are recorded in the period in which they originate. Investment property Until the adoption of IFRS, investment properties are accounted at revaluated amounts. This Expenses value is considered as property’s deemed cost. Investment properties are measured initially at Expenses are determined based on the aforementioned accounting principles and allocated to the cost, including transaction costs. The carrying amount includes the cost of replacing part of an year to which they relate. existing investment property at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day to day servicing of an investment property. Subsequent to initial Income tax recognition, investment properties are stated at cost less depreciation. Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized Other financial non-current assets directly in equity or in other comprehensive income. Current tax is the expected tax payable or Other financial non-current assets are recorded at their historical cost, being the values at which receivable on the taxable income or loss for the year using tax rates enacted at the reporting date, they were acquired or lower realizable value. and any adjustments to tax payable in respect of previous years. The tax rates and tax laws used to calculate the amount are those that are enacted or substantively enacted at the balance sheet date. 28 29 243 YEARS OF KERSTEN ANNUAL REPORT 2011 - Health, Safety and Environment Discontinued operations The Group’s framework for Health, Safety and Environment includes policies, A discontinued operation is a component of the Group’s business that represents standards, guidance materials, tools and activities to support and assist their a separate major line of business that has been disposed of or is held for sale operating companies who manage environment, health and safety at their sites and or distribution, or is a subsidiary acquired exclusively with a view to resale. throughout key Group’s business operations. The Health, Safety and Environment Classification as a discontinued operation occurs upon disposal or when the standards and policies of the Group meet or exceed our national HSE regulations operation meets the criteria to be classified as held for sale, if earlier. whilst in compliance with the Inter-American Development Bank’s Environmental and Social Requirements and meeting World Bank HSE standards. Consolidated statement of cash flows The consolidated cash flow statement is prepared using the indirect method. Cash -I nformation management and security measures consists of current accounts with banks and cash in hand. Payments of interest and Information management is decentralized at Operating Company level. At holding income taxes are included in cash flows from operating activities. level coordinating measures and instructions are issued to assure univocal approach of information management and security measures. 5. R ISK MANAGEMENT AND INTERNAL CONTROL Within our group Risk Management and Internal Control systems are designed to - Insurance provide reasonable assurance that the Group’s business objectives are achieved. Our The insurance policy covers risks resulting from property damage, business interruption, group Risk Management and Internal Control framework is considered in balance employers’ liability and a number of other specific risks. The insurance risk process and with our risk profile, although such systems can never provide absolute assurance monitoring for all Operating Companies is managed centrally by C. Kersten en Co. N.V. that material errors, losses, fraud or violation of laws or regulations will not occur. - Internal Audit Risk profile and risk responsibilities The Internal Audit Department carries out operational audits for the main Operating Managing operational risk and other risks form an integral part of the Group business Companies based on the yearly Audit Plan. The Audit Plan is based on the risk profile operations. The Board of Management of the Group is responsible for the design, of Kersten. implementation and operation of the Group Risk Management and Internal Control framework. The Board of Management of the Group actively manages, to the extent - Audit Committee possible, the strategic, financial, compliance and operational risks facing the Group. The role of the Audit Committee is to advise the Board of Directors regarding internal control affairs based on the reports of the Internal Auditor and its own observation. Risk Management and Internal Control framework - Code of Conduct To ensure risks are identified and managed and that objectives are met in compliance Our Code of Conduct is based on Kersten’s core values. with applicable law and regulations, a risk assessment framework (RAF) is in place. It is intended to help each employee understand and This control framework is based on policy documents, standards and procedures. The follow relevant compliance and integrity rules, and main elements of the control framework, our control activities, and monitoring into know when to ask for advice. - Planning and control cycle Subsequent Events CKC BEM N.V. - Company objectives Strategic plans, budgets and forecasts are prepared at Against the background of a highly competitive core business with concrete products, BEM Company objectives form the basis risk for the group Risk Management and control fixed times during the year for all entities of the Group. is active in diversifying its product range. In August 2011, BEM launched its latest product framework. They are formulated and communicated to the organization by the Executive Financial results and other key performance indicators “House in a Bag” (HIAB) on the local “Building and Living” fair. HIAB is a turnkey designed Board. All operating companies must operate in accordance with these objectives. The are reviewed monthly. home. BEM guarantees construction within the budget and timeframe set and offers a se- our business practices are: ries of models from which can be selected, varying from a low budget one bedroom home company objectives are reviewed at regular intervals and amended where necessary. - A ccounting and reporting - Risk evaluation and monitoring instructions to more upscale luxury three bedroom bungalows. Apart from the local need for housing in Suriname, there is a trend that people of Surinamese origin living in the Netherlands A risk management infrastructure is in place, which includes periodical risk identification The accounting and reporting instructions consist of are looking for a home in Suriname for their retirement or as an investment. To reach that reviews and trough plan of the Group. Our business strategy is regularly evaluated by the instructions and guidelines for management reporting market, BEM not only participates in fairs in Suriname, but also in the Netherlands to Executive Board, Audit Committee and the Supervisory Board; this also includes financial, and external financial reporting. promote this newest product. With the introduction of HIAB, BEM realized a first and major strategic, compliance and operational risks. step towards diversification. In the meantime HIAB sales are projected to reach an amount of USD 2M in 2012 with a promising outlook for the years thereafter. 30 31 243 YEARS OF KERSTEN ANNUAL REPORT 2011 To the Board of Directors C. Kersten en Co. N.V. INDEPENDENT AUDITOR’S REPORT We have audited the consolidated financial statements of C. Kersten en Co. N.V. and its subsidiaries (the ‘Company’) for the year ended December 31, 2011, from which these condensed consolidated financial statements consisting of the condensed consolidated statement of financial position, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of cash flows and explanatory notes on page 23 up to and including page 31 were derived, in accordance with International Standards on Auditing. Management is responsible for the preparation of the condensed consolidated financial statements. In our auditors’ report dated April 22, 2012 we expressed an unqualified opinion on those consolidated financial statements from which these condensed consolidated financial Independent Auditor’s Report highlights were derived. In our opinion, the accompanying condensed consolidated financial highlights as of December 31, 2011 are consistent, in all material respects, with the consolidated financial statements from which they have been derived. For a better understanding of the Company’s financial position and the results of its operations for the period and of the scope of our audit, the condensed consolidated financial highlights should be read in conjunction with the consolidated financial statements from which they have been derived and our auditors’ report thereon. Suriname April 22, 2012 KPMG ACCOUNTANTS B.V. Nicole Baptista RA 32 33 243 YEARS OF KERSTEN ANNUAL REPORT 2011 Decline in Funded Debt, Improving Funded Debt to Equity, Declining Equity Ratio Financial performance in the year under review was outstanding. 80 30 Consolidated revenues achieved a 53% increase to almost USD 100M. The strong growth was driven by the performance of the divisions Motors and Heavy Equipment, Building and Construction and Other. Overall there was a compression of gross profit margins resulting from the shift in the composition of the products and services sold. We have been 70 25 60 20 50 40 15 driving operational efficiencies successfully by managing costs. Although major commercial initiatives were undertaken in 2011 due to the intro- 30 10 20 duction of a series of new products and services total operating costs were more or less stationary at the 2010 level. The operating expense margin was almost 24% of total revenues compared with 35% in 2010. Net profit respectively EBITDA were almost 60% and 26% above their 5 0 10 0 2008 2009 2010 2011 total funded debt (USD M) equity ratio (%) funded debt to equity (%) 4-year average. The equity ratio stood at 34% in 2011 from 41% in 2010. Rise in Cash Conversion Cycle Financial Performance in 2011 Our sales growth and product repertoire expansion was supported by 80 a considerable rise in the Cash Conversion Cycle. The number of Days 70 Working Capital increased from 40 days in 2010 to 79 days in 2011. 60 The increase in the accounts receivable and inventory cycle was not 50 adequately offset by the growth in the accounts payable cycle, although 40 suppliers’ credit was significantly raised. This is one of the factors result- 30 ing in a reduction in “Cash on Hand” from USD 9M at year-end 2010 to 20 approximately USD 6M at year-end 2011. Credit facilities offered to our 10 customers by banks and our suppliers have also supported our growth. 0 Our funding capabilities, one of our distinctive advantages, contribute 2008 significantly to our growth. 2009 2010 2011 cash conversion cycle (days) Higher Debt Service Coverage We deployed excess cash to finance our growth and create maximum value for our shareholders while improving balance sheet strength and debt service coverage. Our balance sheet with total assets of USD 600 500 125.3M at year-end 2011, up from USD 91.7M at year-end 2010, con- 400 tinued to show an even stronger debt service coverage. The Long Term 300 Debt (LTD) to EBITDA Ratio improved sharply from 209% in 2010 to 97% in 2011. The EBITDA Interest Coverage Ratio progressed as evidenced by the increase from 238% in 2010 to 402% in 2011 200 100 0 2008 2009 2010 2011 EBITDA interest coverage ratio (%) LTD to EBITDA ratio (%) 34 35 243 YEARS OF KERSTEN ANNUAL REPORT 2011 About C. Kersten en Co. N.V. C. Kersten en Co. N.V. is one of the largest privately-owned and diversified group of companies in Suriname. Our history represents a proud legacy of leadership, learning, industry firsts, social responsibility and integrity. For more than 243 years, we deliver value consistently and responsibly while continuously adapting to change. Our Vision Our vision is to be the company in Suriname most respected for its people, excellence and core values. Our Mission We are committed to be the best in our industries in Suriname while continuously protecting the environment and people and achieving superior shareholder value. Incorporation Date June 29, 1768 Corporate Headquarters About C. Kersten en Co. N.V. Address: Domineestraat 36-38, Paramaribo, Suriname Address: P.O.Box 1808, Paramaribo, Suriname Phone: +(597) 471150 Fax: +(597) 478524 Website: www.kersten.sr Leadership Supervisory Board Mr. David Voûte Chairman Mrs. Annemarie Hiralal-Norden Member Mr. David Roth Member Mr. Johan Stam Member Mr. Hugo Fernandes Mendes Member Board of Directors Mrs. Shirley Sowma-Sumter Chief Executive Officer Mr. Richard Tjon A Joe Chief Operations Officer Mr. Antoine Brahim Chief Commercial Officer Mrs. Shirley Sowma-Sumter Chief Financial Officer 36 37 243 YEARS OF KERSTEN ANNUAL REPORT 2011 Division Structure and Business Activities MOTORS AND HEAVY EQUIPMENT (Division Manager: Mrs. Shirley Sowma-Sumter) 1. CKC Motors Company N.V. and subsidiaries, Automotive sales, rental, lease and financing 2. CKC Machinehandel Surmac N.V. and subsidiary, Sale, product support, rental, lease and financing of construction, agriculture and mining equipment, diesel and natural gas engines, and industrial gas turbines Building and Construction (Division Manager: Mr. Antoine Brahim) 3. CKC Bouwmaterialen Exploitatie Maatschappij BEM N.V., Manufacturing of concrete products and building materials business 4. Algemene Installatie Maatschappij N.V. (Alginco), Electro-technical-, air-condition-, machine building-, electronic parts and systems sale, installation and finance 5. Vensur N.V., Cement production and trade of cement products 6. Spanbeton N.V., Production of pre-stretched concrete plates Hospitality (Division Manager: Mr. Richard Tjon A Joe) 7. CKC Hotel Maatschappij N.V., Hotel operation and franchises “We deliver value consistently and responsibly” 8. BergenDal, Eco- en Cultural River Resort N.V., Eco Resort and Adventure Center Health Care (Division Manager: Mr. Glenn Wormer) 9. CKC International Commodities N.V. (Incom), Trade in medicines, medical supplies and medical equipment as well as consumer products 10. Surinam Laboratories (Surlab) N.V., Production and trade of chemical products 11. CKC Medicare N.V., Health care services Real Estate and Properties (Division Manager: Mr. Richard Tjon A Joe) 12. CKC Warenhuis N.V., Lease of real estate 13. Neptune Financiële Dienstverlening N.V., Financial services Kersten Communication Services (Division Manager: Mr. Richard Tjon A Joe) 14. SNT Kersten N.V., Communication services Holding Services (Division Manager: Mrs. Shirley Sowma-Sumter) 15. N.V. Handelmaatschappij S.M. Levie, Registration of trademarks and intellectual property 16. Kersten Lease N.V., Lease company 17. CKC Corporate Facilities N.V. (CORFA), Temporary employment agency Community Development 1. Stichting C. Kersten en Co. Toerisme Ontwikkeling (Kersten Tourism Foundation), Community development 3 39