The Flag & Crest. Mission Statement cesesesetsceeeneesenee 8 Corporate Information.................. Board of Directors ...........--ssssseen 5 Highlights... Chairman’s Statement ... Report of the Directors. Report of the Auditors... Report of the Auditor Genera! Consolidated Balance Sheet Consolidated Income Statement Consolidated Statement of Changes in Equity... Consolidated Cash Flow Statement...... 28 Notes to the Consolidated Financial Statements soseeeresnceesene 29 Ten Year Review.. 51The Flag & Crest The GUYSUCO flag is green and gold. The green on the flag represents the agricultural lands of Guyana while the gold symbolises Sugar and the Corporation's involvement in cultivation and research in sugar cane. The Crest of the Corporation shows gears, a machete, a wheel, the stalk of the sugar cane and cane arrow. The gears speak of the Corporation's machinery and the co-operative effort of the Industry which includes every category of worker. The machete symbolises the manpower needed in order to build the country's economy while the wheel is for industrial efficiency and progress. The stalk and cane arrow stand for the source of sugar and represent progress through breeding of new varieties of cane. 2 += Guyana Sugar Corporation inc |Mission Statement To be a world class sugar industry producing high quality sugar and added- value by-products, while ensuring customer satisfaction, employee development, environmental protection, and safe working practices. In so doing we will achieve growth and sustained profitability in any foreseeable marketing situation in order to contribute to the economic and social development of Guyana. Our Vision Working together to produce half a million tonnes of sugar. Tis fepot can also be viewed on the Corporation's websile ‘www.guysuco,com Annual Report 2006 +++ 3Corporate Information Board of Directors Ronald Alli, A.A ‘Chavesan Nicholas Jackson Chet Execute Dindyal Permaul Cchaeman, Carnal ender Comatee Rajendra Singh Caiman Rermunefaton Cortes Hubert Rodney ‘Charman, Lands Commitee Donald Ramotar Errol Hanoman Roger Speddy Auditors The 2006 Accounts were audited by the Auditor General in accordance with the: provisions of the Audit Act, 2004. Company Secretary Bibi Shabena All Guyana Sugar Corporation INC. Ogle Estate, East Coast Demerara, Guyana. Telephone: (582) 222-6030 Facsimile: (682) 222-6048 E-mail: paulb@guysuco.com 4 ++ Guyana Sugar Corporation ineBoard of Directors From top, tonight Ronald Alli, A.A. Roger Speddy Rajendra Singh Dindyal Permaul Donald Ramotar Hubert Rodney Errol Hanoman Nicholas Jackson Annual Report 2006 +++ 5HIGHLIGHTS 7 vv v v vvyvoy y =, Key Highlights Annet operating profit before pension provision and taxation of $3.9 billion ‘Turnover in 2006 increased to $32.4 billion, an improvement of 17% over 2005 The Corporation in 2006 contributed $3,748M from its operating cash flows to the Skeldon project The Corporation borrowed US$25M in 2006 for working capital requirements which was fully repaid by 31 December The Guyana National Action Plan was produced and submitted to the EU Delegation in March The first cut in price for sugar delivered to Europe was felt in July with a 5% reduction Mean annual rainfall was 2281, 1mm or 16% above the historical mean of 1966mm ‘The Link Canal at Skeldon was initiated in the middle of the year and is expected to be compieted towards the end of 2007 Move away from crawler in field haulage units to wheel type tractors yielding higher levels of productivity at lower costs EU 50kg Bagged Demerara Gold direct consumption sugars expanded from 900 tonnes to 1,777.5 tonnes in 2006 ‘Two new retail packaged sugars, Demerara Brown and Demerara White ‘were introduced towards the latter part of the year Demerara Gold sales increased from 3,857 tonnes in 2005 to 4,732 in 2006 ‘Another batch of 22 management trainees were recruited during the year ‘The Central Laboratory was rated, in a report from the International Plant Analytical Exchange, to be within the group of top performing labs drawn from institutions around the world Oracle EBS has been fully icensed after negotiating directly with the Oracle Corporation The domain demeraragold. com was registered with ICANN for exclusive Guysuco use ‘The SSMP contractor's Chinese worklorce grew from 69 at the start of the year to 287 by December ‘SSMP Pile fabrication and driving continued throughout 2006 and by the end of the year 3,188 of the eventual total of 3,374 piles had been driven 10 MW engine generators arrived by ship in the Berbice River and then travelled by barge to Skeldon + Guyana Sugar Corporation Ine,CHAIRMAN’S STATEMENT Ronald Alli The year 2006 rellected the versalily of the sugar industry with strong financial results ~ a net operating ppoft before pension provision and taxation of $3.9 bilion (2005 - $264 milion) on which taxation of $1.9 bilion (2005 - $678 milion) was incuted - although the production recovery was not strong given the poor ‘growing conditions in 2005 and the increased levels, of rainfall in Berbice in 2006 with sugar production ‘of 259,549 tonnes (2005 ~ 246,071 tonnes). The factors influencing the resuits for 2006 are more fully discussed by Management in this Report. 2006 was also a year thal saw significant change happening 10 the sugar industries of the World and of the ACP sugar producing countries in particular | was contirmed that Si Kills was one of the sugar ‘growing countries that could no longer survive in the: ‘changing world of EU reform. Change is the word on everyone's lips from the EU Commission, Fiji in the Pacific and all the way lo Guyana in the Caribbean. The frst change is the 5% cout that was felt in July that will ultimately result in a loss of price to the EU of 36%, Guyana is one of the countries that believe that it has. a fulure in sugar; it has developed a strong action plan that was submitted during 2006 to the EU for consideration. i inclides within it much of the Iramework to carry the industry forward over the next several years, {ts focused on increasing revenues, reducing costs and cushioning the impact of the culs on those alfected. The industry's plans to increase revenue are based on: + Expanding production in tine with new marketing opportunities to a level of ‘approximately 450,000 tonnes. + Adding value by producing direct. consumption brown and refined sugars, branding and, packaging for retail + Expanding activities into non-traditional areas of co-generation, distlery and ethanol production. Further, he industry is tooking to adapt tothe changes fo become more mechanised, automated and integrated and with the expanded production, these measures are recognised as significant contributors to cost reduction. The mechanisation will come from the development ‘of chopper harvester compatible fields in Skeldon, developed to supply the new factory under Construction with 350 tonnes of cane per hour, to the plans to convert Enmore Estate to fully mechanised estate over the next 5 years, This wil not only benelit the harvesting ofthe cane but will also accelerate the planting, tilage and other husbandry practices. The automation wil result in implementing solutions for process controls that are seen in other industries in the areas of juice management and pan boling, Automation of the vacuum pans, that will be capable ‘of consistently producing quality produecl, is currently being installed. Flow conirol of the juice to ensure better energy utilisation is also being introduced, ‘making life easier for the chemists in the factory The business practices are also being automated with the expansion of the e-business suite, Oracle®, from just @ financial package to full business integration. This will bring online HR, Marketing and Production all working together to bring better information for decision making to the Management ‘ol the Corporation 2006 has been an immense challenge, but the EU land the world sugar markels continue to change. GuySuCo will be positioning itself to take full AnnualReport 2006 +++ 7advantage of all of the technological advances in ‘sugar and business systems available. All aspects of the business need to change, night down to the altitude and work practices of every individual involved in the sugar industry, We need to consolidate on the improvements in 2006 so that we can continue to build a vibrant and sustainable sugar industry lor many years to come Chief Executive’s Overview Nick Jackson Chief Executive Oficer Financial overview ‘The operating profit belore defined benefit pension liability and taxation of $3.9 bilion compared to a net ‘operating profit of $264M in 2005. This represents 4 significant improvement on the 2005 result. Alter Dally Exchange Rates: U.S. Dollars per European Euro Eee eeees B +++ Guyana Sugar Corporation inc defined benefit pension jiabiliy and taxation, the net prollt for the year was $514M compared with a loss Of $1.9 billion in 2005, The defined benefit pension liability forthe year was $1.4 bikion and is a provision and does not represent an outlay of cash ‘Tumover in 2006 increased to $32.4 billion, an improvement of 17% over 2005, The increase was Parially due to significant increase in the Euro/SUS ‘exchange rate and improved prices oblained on our Caricom sales. ‘blal sugar sales increased 10 262, tonnes from 253,199 tonnes in 2005, of which 182,000, tonnes were said to Europe and 22,400 tonnes to the USA, Employment costs as @ proportion of total costs was 54% and was the same in 2005. The Corporation in 2006 contributed $3,748M from its operating cash flows to the Skeldon project, which is an increase of '$918M over the 2005 coniribution of $2,830M. Leading Punta with Cane EU Changes The Guyana National Action Pian was produced and submitted to the EU Delegation in March and was adjudged to be one of the best plans from the ACP ccouniries. Guyanawas subsequently awarded €5 66M for the year 2006 in accompanying measures. ‘The first cut in price for sugar dalivered to Europe was felt in July with a 5% reduction. General Operations ‘The year of 2006 was again a very tough year trom the Perspective of weather, where the mean annual rainfall was 2281.1mm or 16% above the historical mean of 196mm, Production was reduced to 259.5491 ‘against a January Latest Estimate of 279,018,Chopper Harvester Our safely standards improved with Albion factory winning the most improved factory award and Rose Hall winning the most improved Estate from within the Booker Tate managed estales worldwide. The Link Canal al Skeldon was initiated in the middle of the year and is expected 1o be completed towards the end of 2007, This wil ensure that the private cane farmers can transport their cane to the new factory, Information Systems have been very active during the year with the payroll for unionised workers being computerised and tested at Blairmont. There has been invesiment in upgrading and instaling redundant links belween esiates 10 ensure reliable and consistent communication, DDL Court Case Unfortunately the Cour ruled in favour of Demerara Distillers Limited (ODL) in he action with regard to the jont venture between GuySuCo and Angostura, The Corporation has appealed the decision; however, this is expected lo be a long drawn out process that could take 2-3 years to resoWve. Land Preparation -Tuage Operations Paul Worthington Director, Operations At best 2006 was always going Io be a year of consolidation following on from the floods of 2005, but with the Berbice estates receiving twice the ‘normal rainfall in January the year was always goin tobe ‘challenging’ The ellecis of the previous year's poor growing Conditions and ils effect on cane rool development had a significant elfect on cane yields which was neither reflected in the budgeled 315,171 tonnes sugar from a projected 3.5m tonnes of cane or even in the 2006 January Latest Eslimate of 279,018 trom 3.22m tonnes of cane Consequently the first crop never delivered to expectation with only 90,352Is from 1,0354MIc being produced compared with the expected LE production of 98.214is, In the second crop, despite an excellent performance in the first half of the crop when 68% of the sugar was produced, the elfects of indusvial action (strikes due to wage negoliations that cost 7,400Is) and decreasing turn out led to a production of 169, 1981s fram 1.936Mic compared to an LE of 180,806is. This gave an annual production of 259,549ts Irom 2 S75Mic Although cane quality was generally in line with expectations it was the lack of plant cane resulting {rom work not undertaken in 2005 due to rain and the larger than expected rataon yield declines that had the largest effect on production numbers, The budgeted industy cane yields were 73,78Ic/ha with the LE al 70.66Ic/ha but the final performances was closer to 63,07icha, This prompled a massive rehabillation programme and “back to basics" campaign which Annual Report 2006 +++ 9is expected to generate a second crop production 0% improvement in the 07 Weather palierns also disrupted the land preparation programmes throughout 2006 and only 79% (8.328ha) Of the planned 10,565ha was achieved and wilh only {90% (9,544ha) of planned replanting undertaken land taken oul of fallow as a short term poicy to maxim Con the land available to harvest in 2007 Despite these problems some notable achievements were made in terms of laying the foundations for a fundamental change in agriculural practices which ‘ould reverse the previous 4 year decline in the general indusiry's performance and bring the Estales bback im line wath the expectations of the Agriculture Improvement Plan (AIP), These included a) A review of the hectares under different cane varieties, the introduction of primary and econdary nurseries on the eslates to achieve the presence of tre stands of seed cane and a {ull review of the blocking systems used ) The fast track development of new varielies lke DB 9633 containing higher sucrose contents ©) A concerted effort to convert field layouts 10 sep mechanised harvesting J) Adelined move away from crawler infield haulage Units to wheel type tractors yielding higher levels of productiviy at lower costs. ) The removal of rats as @ pest from the Skeldon, Albion and Blairmont cuttvations ) The introduction of policies and systems that went back to basics that held Management accountable for the results achieved. Factory Operations - ling Train 10 +++ Guyana Sugar Corporation Ine With respect to factory operations, and despite st of the available capital funding in 2006 being targeted al agricullural infrastructural works and the move 10 wheeled type, rather than tracked, tillage equipment; there was a concerted effort made 0 improve the longer term maintenance planning within the factories, This was aimed at improv rellabilty, the commencement of replacing obsolete early PLC contiollers and providing the essential boller plant and miling spares re steam generation and recoveries, This work will also slart {0 position the factories to take off the expected higher car AP siarts to significantly improve cane quantities and belore the Factory Improvement Plan (FIP) comes into effect Spreading Fiter Mud One key aspect of the problems faced by the industry was the significant number of Serior Manager resignations and thei emigration from the country and the subsequent depletion of skills and competencies, In addilion, decreasing labour availabilty and especially decreases in labour productivity were experienced during the year. This has led management to move more quickly down the mechanisation route with land conversions, semi mechanised planting and harvesting including the quadrupling of the mechanical Cane Loader lleel planned by the start of 2008, 2006 was the reversal ol 4 years of progressive decline in the indusity and provided labour productivities and attendance improves in line with cane supplies then the potential of the Revised AIP can be realised However, the abilty to take olf future larger crops will be dependant on the cane being supplied to the factories in a timely manner. The year's performance, rere elfectively factories operate for around 70% of the available time, is unsustainable.trigating Plant Cane Initial indication shows that 2007 will be a better year than 2006 despite not achieving the field rehabilitation. programmes. However, the cane musi be delivered to the factories to reverse the decreasing trend in grinding hours per week. If not reversed i will not allow the delivety of the sugar projected within the AP Finance Paul Bhim Ouector, Finance Computerisation With the implementation of Oracle financials software across the industry in 2005, fine tuning of the system was carried oul in 2006. Additionally, Oracle fixed assels was implemented and fully integrated with linancials in 2008. Plans were also putin place for Low Value Purchase Orders lo be automated on Oracle financials and to be implemented in 2007. This would ensure thal there 1s visibility of all purchases across the industry, Data capture and input for the Accounts Payable system. which was previously centralized, fs now decentralised wth all locations industry given responsibilty for these key tasks. This has assisied in managing our cash flows and also faciitaled a quicker turnaround time for suppliers invoices, We continued to work with all the local banks and several foreign banks to ensure that our financing needs were satisfied, In Its regard the Corporation borrowed US$25M in 2006 for working capita Fequitements which was fully repaid by 3tst December. ING bank of the UK provided USS1SM wilh a consortium of local banks advancing a further US$10M. The Corporation's London brokers C. Czarnikow Sugar Limited, through their UK bankers, also provided short term working capital (7-14 days) which was secured againet bils of fading from its European shipments, Asfaras possible, the Corporation sought to maximise on the proceeds received {rom the sale of ils Euros for SUS. Working closely wilh two foreign banks, namely ING of the UK and Bank of Nova Scotia in Canada, the Corporation continued hedging 4 portion of ils Euro proceeds with simple forward hedges. Hedging ensures certamly of income and greally enhances planning in the organisation parlicularly when cash flows are limited, By hedging only @ portion of the Euro receipts, advantage can be taken on maximising the Corporation's USS proceeds received from the sale of the un-hedged portion, In the procurement area, the competitive tendering process aided in keeping the Corporation's material services casts down particuatly in a period when the cosis of some of the Corporation's key inpuls such as {el,feniisers and chemicals increased significantly, The Procurement Policy Manual was updated during the year to relect, as far as possible, compliance with the Procurement Act, 2003.Marketing & Trade Nisa Surujbally Director, Marketing and Trade Guysuco met its EU and US bulk sugar commitments and continued to supply direct consumption sugars in Cancom and locally in both bagged and packaged forms Highlights of the markets supplied in 2006: EU Sugar Protocol - 173,854 tonnes of bulk sugar. This included shortfall allocations of approximalely 3,000 tonnes for the 2005/2006 delivery year. GuySuCo's GuyEape Booth EU Special Preferential Sugars (SPS) - 6,885 tonnes. 5p 19 bulk sugat The SPS market was olficially closed cf June 30, 2006 and replaced by the Complementary ‘Quantiy (CO). A CO Monitoring Body has beer convened and @ formula derived for allocations of the CO. Guyana was grouped wath five other good performing countries (G6) which have an initial allocation of 100,000 tonnes to be shared equally ‘+ Guyana Sugar Corporation Inc EU 50kg Bagged Demerara Gold - The new mark which was developed in 2005 in the EU for direct consumption sugars expanded {rom 900 tonnes 10 4.7775 tonnesin 2006, The Corporations positioning itself to take advaniage of value added opportunities in the EU when new trading arrangements under nomic Parinership Agreement (EPA) comes into elect in 2008. US Quota - 22,400 tonnes of bulk sugar. Guyana benelted trom increased quota due to hurricane destruction of the US sugar crop. The initial quota of 13,953 tonnes was increased to 21,561 tonnes for the 2005/2006 delivery year. The 2008/2007 quota (estimated al 12,000 tonnes) is scheduled 0 be delivered in 2007, Caricom/Regional ~ Seles of direct consumption ‘sugar in 50kg bags in Caricom were relaively low ag compared to sales in previous years and amounted t0 32,022 tonnes, This was not a reflection of reduced demand bul rather of the mabally to supply. The assessed demand was in excess of 80,000 lonnes Bagged sugar was exported to filleen counties, ten Caricom states plus five of the smaller regional slatescreate a stir” Packaged Sugars - Two new retall packaged sugars, Demerara Brown and Demerara White, \were iniroduced towards the later part of the year in response to market demand. The packaged sugars ate manulactured in compliance with the Qually Management System of ISO 9001 2000, which tellects the Corporation's comment to high qualty standards and customer salistactton. Demerara Gold sales increased from 2,945 tonnes, in 2005 to 4,732 in 2006. Demand is outstnpping supply and the Corporation wil address expanding its capacity to produce packaged Genuine Demerara Cane Sugars with the upgrading of the Enmore factory and construction of an 80,000 tonne capacity packaging plant. This project is expected to be funded by the EU from the Accompanying Measures ‘sought in Guyana’s National Action Plan to mitigate the effect of the price cuts. Customer Satisfaction - Market research and inteligence are now integral elements of the Corporation's portiolio. In 2008, the Corporation commissioned and completed studies on its Shipping ‘and Logistics Operations, the quality of service provided to the Enmore local bagged customers and the perlormance of GuySuCo's local distributors of Demerara Gold. The lindings and recommendations of these studies have been laken on board to improve the qualiy of service to the Corporation's customers, Human Resources Jairam Petar Director, Human Resources Industrial Relations 204 strikes were recorded in 2006, which was the rd lowest for the past 6 years However, man days ‘and wages lost were the highest for the same 6 years, Agriculture piece rated workers continue to ‘demand exorbitant exras for obstacles that resulted in work stoppages and refusal to take up work. The participation in some of the strikes especially the strikes involving the protest action on all estates over the Corporation's wages oller for 2006, and the strikes. at Skeldon and Blairmont for a reduction in the weekly targets accounted for a total of 88,478 man days. The comparative analysis of the strikes for 2003, = 2006 is as follows: Alolal of 107 days pay, or anaverage of 13 per factory, were awarded as weekly production incentive to all qualified employees for both crops during the year. In addition, an average Annual Production Incentive (AP) of 10.47 days was awarded for the year. 202 160 204 226 533 622 833 1178 918 1274 1496 2040 The Corporation awarded a wage and salaries increase of 512% 10 all unionised workers for the year Annual Report 2008 +** 13Training and Development During the year, 18 cadeis retuned to the Con aller completing their degrees and diplomas University of Guyana (UG) and Guyana Sct Agriculture (GSA), respectively. One cadet r from an overseas cadelship, 8 awards were made for io atiend UG and GSA for 2006 ation 8sstalf graduated from the chology, UG. with a certiicate in General Engineering, 44 students fromthe sec educational institutions bens allachmenis at the Corporation's Hi estate tortiary and vo ted from w ct Ott CXC bursaries 10 a tune of $1,980,000 were awarded 10 qualified children of employees on the esta head office, A batch of 22 management trainees in cohort 2, ‘eoruited during the year, complemented the 22 in cohort 4 that were recruited in the previous year. 48 apprentices were enrolled al the GTC/PM, and 43 Graduated dunng the year. Personnel Mr. Michae! Haris left the organisation and My. daira Petam, formeriy IR Ditector, was appointed as Human Resources Director. The opportunity was taken to merge the two departments of IR. and HR under the ew leadership of Mc Petam, Staff Movement during the Year Details No. of Persons Appointments 24 Tanslers 21 Resignations 30 Other departure Including retirements 10 High stall tumover continues to pose a major challenge to the management of the human ‘ 3s function. Increased dependence on intern: motion and external recruitment to fil vacancies resulted in appointees being in ciiical positions ul the necessary experience and competencies, In the circumstance, greater emphasis on intemal managerial and technical training is being pursued to narrow the gaps in experience and comp: deliciencies In ist January 2006, the Corporation introduced iis detined contribution scheme for all new members of ‘senior managemen Management Te nee Induction orporation Inc. se» Guyana SugarAgriculture Research Dr Harold Davis Director, Agriculture Research Weather 2006 was a wel year following the very wet 2005. Mean annual infall was 2281.1 mm, 16% above the historical mean of 1966 mm. Individual Estate Annual Rainfall Annual Annual 50+ year Rainfall Rainfall Annual Estate 2006 = 2005_Rainfall ‘Skeldon 4938.1 16323 1610 Albion 20220 23499 «1688 Rosehall 21538 24040 1909 Biaitmont 18639 23998 1789 Enmore 23326 © 28259 ©1900 tel 21651 26891 1956 Wales 27598 33494 ©2214 Uitvegt 31657 260712651 Industry 22814 24847 ©1966 All estates experienced weather welter than normal weather, except Sketdon where ranlal was fess than the historical mean. A significant event was again (ike 200) intense rainfall during January that was {for most of the Berbice estates (415 mm) mare than twce the historical mean for the month, January ‘ainfall in Demerara was also very high al $82 mm, There were periods of looding in East Berbice where the drainage infrastructure could nol cope adequately with the inlensiy of rainlall, Drier weather from February o Apri permitted aleviation of waterlogged conditions. and faclialed tillage and operations in March and Apri, Mid-year rainall was heavy in May ‘and June. Fair weather that prevailed trom August was inlerupled by unseasonable showers in October that aistupted the progress of tlage towards the end of the season, Util estale experienced over 3m of rain and remained wet and waleriogged for the ‘greater part of the year. Considerable effon will be required to restore this estale 10 its former levels of productivly. Moderate rainiall was experienced in December Variety Development 352 crosses were achieved in the Demerara Crossing programme. Fuzz for 166 DB families were also imported from the WISCBS. Family selection that was inroduced into the ‘ARC procedures from 2005 has demonstrated the potential for identifying clones with previously ‘unattainable quality in Guyana conditions. Mean family brixes in stage 1 selections range trom 17 2° -24°. High Quality impors from the WI programme ‘expressed brix values ranging from 25? 0 27° in Guyana’s coastal environment. WI 8718 a MPC variely with libre contents approximately 19% -20% was advanced 0 commercial Stage IV evaluation. Ths variety also has been indicated to be above average POM% cane. Varieties Irom the © 98 and D 99 crossing programmes have been indicated to be potentially outstanding at Stage IV Sicter monitoring of the variely extension and programmes for distribution of varieties within individual estates has been implemented. Good y . were ‘Annual Report 2006 8Mobite Transporter progress has been made with establishment of secondary nurseries on all estates, to ensure thal bjectives are met for pure variely extension into seed fields. Commercial seed blocks planted from these have shown early indicators of good germination and rate of development Other Research Highlights, Engineering: A bile cane elevator and selt discharging tnlield trailer unit adapted from a North Queensland machine in collaboration with the designer and ARC/Booker Tate engineers was fabricated by EC! under ARC supervision and tested al Skeldon. The machines are linked in cane delivery and performed to the specification set and was several orders of magnitude faster than the previous operating mode based on a grab transloader. It could not, however, operate as a mobile unit as 2 result of the uneven nature of the dams. A stationary elevator powered independeniy rom the Waller was demonstrated to be a practical alternative. Units on this concept wil form the central cane delivery system for combine harvesting in Guyana. Pests & Diseases: Infield parasitism of Diatrea sp by Colesia flavipes was above 20% throughout the year. The early threal of potential rodent infestation (of near epidemic proportions at Skeldon was averted “Tp mechanism to Elevator 16 + ** Guyana Sugar Corporation Inc, by concerted action by the agriculture team with the advice and support from the ARC, Similar problems al Blarmont during the early monihs of the year were brought under control by the end of July, 2006.The level of awareness ofthe threat posed by rodenis and the importance of an integrated strategy involving surveillance, cultural and baiting has been raised across the indusity, Compilalion of a rodent control ‘manualincorparaiing the comibinedexperienceol ARC ‘members and estate management commenced Weeds: Introduction of imazapyr to chemical weed control at Uitviual/ Leonora has impacted positively fon the management of tanner grass in clogged infield drains and spread of the weed infield. Mr Dyncial Bishundial, Weeds Agronomist, suffered 2 Collecting Planting Material major coronary altack in March, 2006. His recovery has been slow but it is hoped that he will recover sulliciently to resume normal activilies. Mr, Bishundial is acknowledged to be one of Guyana’s leading scienlists in this subject matter Chemistry: The Central Laboratory performed 60,162 analyses on 13,586 samples, a significant increase on the 38,740 analyses in 2005. A robust ‘methodology has been developed for the analyses of lead and heavy metals in sugar, The 2005 Repon irom the International Plant Analytical Exchange was very favourable to the Central Laboratory The laboratory's repealabilly and accuracy on 10 elements placed it well within the group o! top performing participating drawn from institutions around the world, The unit resumed the evalualion of lead-free Octapol against lead sub-acetate to clarily process stream materials (juice, syrup and molasses) prior fo sugar analysis by HPLC. Unfortunately, this activity had to be curtaled because of dala acquisition and ouput handling problems. The laboratory, in collaboration with the Chemisity Department of the University of Guyana commenced the development ol its capabilly to determine the cellulose, hemicellulose and lignin content of bagasse from all the industry's commercial sugar cane vaneties, as well as "mullipurpose” and uel cane" varieties, as part of a wider study aimed al assessing indirect energy generation and bioluel potentialThe Central Laboratory commenced development of quality manual as part ofits quailty management system, in conformity with the ISO 17025 standard thal species the “General Requirements for the Competence of Testing and Calibration Laboratories’ ‘Technical assistance was sought from the Guyana ‘National Bureau of Standards (GNBS) as necessary. Environment: The Department concluded successful ‘negotiations wathe GuyananvironmentalProtection ‘Agency to reduce the rigour of the water quality monitoring requirement in the new Environmental Permit issued for the Agrochemical Waste Treatment Plant at the Arcralt Department, Ogle Aerodrome by the agency in 2006. The negolialions were based on a review ofthe water quality data obtained or the period 41998-2005, during which the fist pert was in elfect ‘The emergency response plan forthe treatment plant was completed, pursuant o the environmental permit, with the approval of the agency Ripener chemicals: During 2006 a third trial was established to evaluate Touchdown IQ (monopotassium glyphosale 50% SL) in pared ‘comparisons withthe regular Touchdown (glyphosate trimesium) and Roundup Ultra. Two triais were conducted simultaneously at Blairmont and Albion estates respectively during the 2nd crop. Theresults of the trials ndicated significant cane ripening response ‘at both locations lor all three ripener chemicals used. Roundup Ula consistently gave the highest response followed by Touchdown and then Touchdown 10. In bot tals it was observed that juice qualiy peaked at around 48-49 weeks. Based on the resulls obtained from all trials conducted so far, Roundup Ultra gave the greatest ripening response and would appear to bbe a more sulablo replacement for Touchdown than the new chemical Touchdown IO Plant growth regulators: Ethel impact field studies ‘commenced in the second quarter of the year. Cane ‘and sugar yield data were received for filds, which received application of Fihrel in the first crop of 2005. The objective of the study was to determine the ellectveness of Ehrel application in combating potential yield losses in older ratoon cycles, which ‘may have sulleted some form oi stress suchas insect damage and whose stalk population may have been ‘considerably reduced Land and soit management: Increased occurrence of potash deficiencies in foliar samples from Corentyne series soils has influenced the introduction of potash ferisertoal cycies growingon these sols. Monitoring ‘ofthe reduced ttlage evaluations continued with two trials at Le Resouvenic (LA), LBI and an observation area al Manarabisi (MAP), Skeldon. Unfortunately the tial areas aL BI were subjected to an extended period of looding in 2005, The LBI rials evaluated a range of reduced lage systems including no-til, srip-til and {ulkwadih tilage in reduced and conventional forms. There was no adverse effect on the soi’s physical structure as measured by soll dry buk density in the 15 cm topsot in the fustratoon cycte, The Duk densities in the inlerrons were signilicantly higher than within the rows. Pian and fist raloon cane yields were extremely low bul not significantly cilferent for the various trealments. Soil physical and chemical indices and growth data Irom cane crops folowing ‘cowpea fallow have been very encouraging. Information Systems E. Vijayan Director, Iniotmation Systems The key milestone for 2006 was the development of a long term Injormation Systems (IS) Strategy in tine ‘with the Corporation's vision and current operational scenario. This was approved by the Board of Directors in Apa. ‘AnnualReport 2006 +++ 17Based on the Strategy above, a ive year IS Implementation Pian (2006-2010) was formulated ‘and approved by the board in July. This document is a high level plan; but gives programme wise, cost wise and department wise breakdowns. Total estimated cost for the 5 year plan is USS 4.5M. The cost inciudes Oracle e-Business Suite (EBS) licensing and implementation costs, including hardware and network upgrade costs. Oracle EBS has been fully icensed alter negotiating irectly with the Oracle Corporation for phased interes ree payment scheduies. A business process fitness study a5 a prelude to implementing EBS has been finalised at highly lucrative rates by breaking the problem of only one company bidding for the business thereby making large savings. Some elements of the planned network upgrade are already in operation. The Corporation’s head office, located at its Ogee Estate, now has a redundant fink with the Information Systems Department, localed at Camp Street, Georgetown, and the West Demerara Estates (WDE) have been provided with much belter communication facilties as a result. It is also oteworthy that the network upgrade wil be done Using wireless Ethemel technology as opposed to the microwave links used by the Corporation so far, ‘educing the costs by a factor of four The preliminary in house work for implementing EBS is nearing completion as far as Accounts Receivable, Sales and Shipping and HR. Project Managers have been nominated for each of the modules. Preliminary work for an Agricultural Management ‘System (AMS) as an extension and replacement to the existing Field Reporting System s making smooth progress. Discussions were held with an overseas. vendor in November, who could be the potential designer/developer. Existing Microsolt exchange server mail software has been used to provide a "Public Folder" service. It is being used as a collaboration and document management solutions. lis usage is calching on and will be monitored to determine if this will avoid the purchase of a costly document management system. A performance management monitoring system for all depariments using the services of Information Systems has been developed based on user ‘complaints, response and resolution times. Pay Rollimplementation is 90% complete al Blarmont, the test site, and 45% complete on other estates Though not part of the ovginal plan, an electronic data lransfer system for dala exchange with NIS has been tested. Apart trom manpower savings, this 18 Guyana Sugar Corporation Inc ‘could result in a better service from NIS for retking ‘employees. Dala transfer to banks has also been tried at Blairmont. This will reduce the amount of transiation errors between all parties to the benefit of both the Corporation as well as the employees. The domain demeraragold.com was registered with ICANN for exclusive Guysuco use in June as part of the roll out of the branding for the retail products, Herdmanston House was provided witha wireless tink to the internat and GuySuCo's network. This low cost solution is a mariage between GT&T's DSL sevice ‘and the Corporation's wireless technology. Thus, DSL is accessed on wireless. ‘An Information Systems Department User Manual thas been developed and is avaitable online on the GuySuCo intranet. The Information Systems services were used extensively by extemal agencies, some examples of wich are + Support to Oifice of the President (Information Liaison) for formulation ofthe National Sirategy- ICT¢Devetopment + IS Director also undertook an IT Review of the GRA onbehatf of he Inter American Development Bank in November. + 1S Department was also involved in support of projects related to Cricket World Cup, 2007, ‘Communication Tower ISD, Camp StreetCompany Secretary/Legal Bibi Shabena Ali Company Secretary In 2006, the Corporation agreed tand sales valued al Gs2em, Inaneftor to ensure compliance with the Procurement Act, 2003, the Corporation, in January, 2006 embarked (ona fevision of sts Procurement Policy Manual Consultations were held on all the Estates and Head Office in an effort to ensure, inter alia, transparency across the industry. In the area of Trademark Registration, he Corporation continued its effor's to register the name “Demerara Gold” in the EU, North America and the Caribbean Region. Oppositions were filed in Canada and the United States of America, which are being defended by the Corporation. Unfortunately, in May, 2006, Demerara Distilers Limited (ODL) obiained from the High Court a Prohibitory Order against the Corporation. The order prohibits the Corporation trom entering into any joint venture partnership as it relates to the commitment or sale or supply of is molasses without frst offering same to DDL. The Corporation has since appealed the decision and is currently awaiting a date for the hearing of this appeat ‘Towards the end of 2006, the Corporation undertook a revision of its Disciplinary Procedures and Code fo ensure consistency with the Termination of Employment and Severance Pay Act, 1997. A Procedure for Document Control was also completed and approved by the Board of Directors. 2008 also saw the resignation of the Company Secretary, Mrs. Adreana De Souza ~ Pompey. Mrs. De-Souza ~ Pompey served in this capacity from 2001. The Corporation records it appreciation for her significant contributions over the years. Ms. Bibi Shabena Ali, formerly Assistant Company Secrelary, was appointed Company Secretary by the Board of Directors in September, 2006. Skeldon Sugar Modernisation Project Paul Hough Project Director Agriculture The clearing of bush and the constuction of drainage infrastructure in the new cane lands continued throughout 2008 in Blocks 2, 3, 10 and the conservancy. By the end of the year 64% of the new areas had been empoldered and 6} red These predominanily diy weather operalions were interrupted by the seasonal onset of the (wo rainy seasons 72% ol the new sidelines drains were completed and 81 navigation canals. This included the survey and partial construction of the link canal to connect the Moleson Creek latmers to the estale ‘navigation system The first length of canal revetment was started at the end of the year and a small length of trial road ‘Annual Report 2006 19surfacing was completed (4% of total). Road building ‘materials were stockpiled for future use. Land preparation and planting, which follow on trom the bush clearing and excavation works, continued in Block 2 with 19% of the total expansion planting, being completed by the end of 2006. Land Clearing at Skeldon Procurement activities for he provision of CDB funded Infrastructure and agriculture equipment continued throughout the year. Equipment with an aggregate value of US$ 8.3 m was detvered during the year and included drainage pipes, drainage and irigation pumps, hydraulic gales, actors, scrapers, vehicles, cane loaders and cane punts. This represents the delivery to dale of 58% of the project equipment lo be: funded by CDB. Factory ‘The contractor's Chinese worklorce grew trom 69 al the start of the year to 287 by December. These are housed in pre-labricaiad site accommodation units brought from China and assembled al site. There hhas been no significant negative impact on the local ‘community from the influx of a large learn of foreign workers and many traders and establishments, both in Corriverton and in Georgetown, have benefited trom supplying the workforce with foodstulfs and industrial supplies. A local Guyanese worktorce of around 100 thas been established! to support the skilled and semi- skilled Chinese workers, A stock of pretabricaled concrete piles that had been accumulated during the last quarter of 2005 was uses to stan pile drving inthe lst few weeks of 2008, Pile fabrication and diving continued throughout 2006 and by ne end ofthe year 3,188 ofthe eventual ota! 013,374 ples had been driven, The large quaniiles of sand, stone and cement required to fabricate the ples and the foundations presented a considerable supply and logistics challenge to the site works contractor at a time when there was a larger than normal volume Cf chil construction work proceeding in Guyana anc across the Caribbean region Process House under Gonstuetion May 2006 saw the first deliveries of new factory ‘equipment with the 10 MW engine generators arriving bby shipin the Berbice River and then traveling by barge to Skeidon, Further equipment amvals were offloaded at GuySuCo’s Providence wharl before being trucked to Skeldon. This required the movement of large volumes of equipment by the public roads and took place without any serious disruption or ineidert. Early in the year the first main factory structures were ‘erected to support the new boilers and this was soon followed by the diesel power house structures. By the end of 2006 erection work was in progress on all fronts and the boilers were in the advanced stages of construction. Throughout the year, he project team worked with the Community Development Carbon Fund of the World Bank to prepare the validation documentation toenable the project to be registered under the Clean Development Mechanism of the Kyoto Protocotfor the purposes of seling Certiied Emissions Reductions. ‘Steam Boilers under ConstructionREPORT OF THE DIRECTORS For the year ended Sist Dacemive, 2006, The Directors of Guyana Sugar Corporation Inc present thei report together wit the Audited Financial Statements forthe year ended 31st December, 2006. Principal Activity “The principal activity of the Corporation isthe growing (of sugar cane and the manulacture and sale of sugar ‘and molasses irom that cane. ‘TheChairman’s Statement descnbesthe development and operation of the Corporation during the year, including the preferential markets situation, the position at the end of the year and the proposed future developments. Results and Dividends The financial results of the Corporalion ate set out on pages 25-50. In accordance with the policy of the Corporation for many years, no dlvidends are dactared or payable, Directors The names of the Directors are sel out on page 42. Al the Directors are non-executive, except lor Mr. N. Jackson, Messis R, Spaddy and E, Henoman are both senior ‘execulves of Booker Tale Limiled, which manages the Corporation under a Corporate Management ‘Agreement for which both fixed and results-related fees are payable, Mr. N. Jackson is an executive of Booker Tae, seconded the Corporation. Apart from this, none of the Directors during the year hac any ‘material interestin any contractwhich iso signiicance in relation to the business of the Corporation. Directors’ Remuneration is set out in note 11.2.3 on page 42 of the Financial Statements Corporate Governance ‘The Board believes that its primary function Is 10 generale sustainable wealth for the shareholder as the key stakeholder in the business. The Guyana Sugar Corporation recognises the importance of, and is commited to, high slandards of corporate ‘governance. This reportby the Directors coversthokey flements regarding the application by the Corporation (ofthe principles of corporate governance. (a) The Board: The Board comprises seven non- executive directors (including the Chairman) and © ‘one executive drector, he Chef Executive. The Board considers thal each director 1s able to bring independent judgment to the Corporation's alfaitsinallmatters. The Board meetsnoless han ten imes a year and has adopted a schedule of matters reserved for i's decision. iis responsible for the strategic direction of the Corporation and receives information about the progress of the Corporation and its financial postion each moni. This information, together with papers required for each Board meeting, is circulated in a limely manner prior to each meeting. ‘The Board has established four Committees wilh defined terms of reference, namely the ‘Audit Committee, the Central Tender Committee, the Remuneration Committee and the Lands Commitee. The Audit Committee comprises tinee non executive dreciors, Representatives. of the Corporation's senior management attend meatings. The role of the Committee is to assist the Board in fuliling its obigations in relation to the integrly of financial statements, isk management and intemal control. The Audit Commitiee reviews and discusses, wih the Internal Auditor and External Auditor, the Group's tnlemal accounting controls, internal audit function, choice of accounting policies, {nlemal and exiernal audit programmes, statulory auditors’ repor, financial reporting and other related matters. The Central Tender Committee evaluates all lenders for the supply of materials and services ‘above predetermined levels. The Remuneration Committee approves remuneration of senior slaif and sets the policies for remuneration of ‘other staff, The Lands Committee epproves all land disposals and establishes policy issues concerning the Corporation's land holdings. Internal Control: The Board is responsible for the Corporation's system of internal contral and for reviewing ils effectiveness which is designed fo provide reasonable (but not absolute) assurance regarding the saleguarding of assets against unauthorised use, the maintenance of proper accounting records and the reliabilty of the financial information used within the Corporation, ‘The Board has delegated this responsibilty tothe Audit Committee. The said Committee conducts ‘an annual assessment of the effectiveness of ‘Annual Report 2006 +++ 21REPORT OF THE DIRECTORS For tne year ended 3tst December 2006, the system of internal control during the year. Key procedures have been established which are designed to provide an effective system of internal control. The tramework of the Corporation's system of Internal control includes: + an organisational structure with clearly defined lines of responsibility and delegation of authority + documented policies, procedures, and authorisation limits for all transactions including capital expenditure; +a comprehensive syslem of financial reporting. The Board approves the annual budget and aclual resulls are reported against budget each month. Any signilicant adverse variance is examined and remedial aciion taken. Revised profi forecasts for the year are prepared on a quarteriy basis; + an internal audit function which includes financial, agricultural and factory, The system of internal control is designed 10 ‘manage rather than eliminate risk as no system ‘of control can provide absolule protection against loss, The Directors are of the opinion, based ‘on information and explanations given by management and the internal audilors, and ‘on comments by the independent auditors on the results of their audit, that the Corporation's intemal accounting contiols are adequate and that the financial records may reasonably be ‘alied upon for preparing the financial statements and for maintaining accountability for assels and liabitties. Employees. Performance appraisals, stait development and training are provided al all levels and emphasis is placed on both technical and personal development. Guysuco is committed to equality of opportunity ‘amongst ils employees, Recruitment, terms of service and career development are based solely on abilly and performance, Pensions The Corporation's Senior Staff Pension Scheme is eslablshed under an itrevocable trust. The Guyana Sugar Corporation lnc. Pension Scheme Management _ Commitiee includes employee representatives. The Scheme is managed by Professionals. Bolh the Committee and the Managers are required to act al all times in accordance with the rules of the Scheme and to have regard to the best interesis of the members of the Scheme, The Management Committee controls the invesiment funds, which are managed by external fund managers. Guysuco is committed { ensunng that the Scheme is administered in accordance with the highest standards. In addition to the Senior Staff Pension Scheme, the Corporation pays an ex-gralia pension jo those unionised workers who satisfy the ‘qualification criteria for a pension, This scheme is not funded, ‘Material events after year-end During 2007 the European Union signaled its intention to denounce the Sugar Protocol in its market access offer It was anticipated thal the negotiations of the Economic Partnership Agreement (EPA) that would ‘come into elfect from January 1, 2008 would have been successtully concluded and a joint statement ‘on the Sugar Protocol thereatter declared, however, the mechanism that wil transpose the benefits of the ‘Sugar Protocol inlo the EPA is not yet finalised. ‘The resull is thal, whal was once a straight forward ACP Agreement for the gale of raw sugar will now be fragmented to bilateral commercial contracts, ‘The Corporation is therelore assessing al the options ‘going forward in what appears to be an open market for sugar rade in the European Union afte 2015. The Auditor General has audited the Financial Slatements. For the financial years 1899 to 2004 inclusive, this activity was sub-contracted lo Ram and McRae, while for the financial years 2005 and 2006 this activity was sub-contracted to Deloitte and Touche. BY ORDER OF THE BOARD {bi Shabona Al Company Secretary Regslered tice Opie Estate (Eas Coast DemeraraREPORT OF THE CHARTERED ACCOUNTANTS, DELOITTE & TOUCHE TO THE AUDITOR GENERAL ‘ON THE CONSOLIDATED FINANCIAL STATEMENTS OF THE ‘GUYANA SUGAR CORPORATION INC. FOR THE YEAR ENDED DECEMBER 31, 2006 Report on the Financial Statements We have audited the accompanying financial stalements of Guyana Sugar Corporation inc, which comprise the balance sheet as at 31 December 2006 and the income statement, statements of changes in equity and cashflows forthe year then ended, and a summary of significant accountng policies and other explanatory noes as set oul on pages 25 to 50. Directors Management's Responsibility fr the Financial Statements ‘The Directors/ Management are responsible forthe preparation and fair presentation of these financial statements in accordance with Inienational Financial Reporting Standards. This responsibilty includes: designing, implementing and ‘maintaining intemal contol relevant to the preparation and far prasentation of financial statements that ar tree from ‘material misstatement, whether due to fraud or error; selecting and applying appropriate accounting poicies; and making ascounting estimates that are reasonable in the circumstances. Aucitor’s Responsibility ‘Que responsibilty isto express an opinion on these financial statements based on our audit. We conducted our audit in ‘accordance with International Standards on Ausiting. Those standards require that we comply with ethical requirements, ‘and plan and perform the aucil to obtain reasonable assurance whether the financial statements are tree from material ‘misstatement, An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial stalements. The procedures selected depend on the aueiter's judgement, including the assessment of the risks of material misstatement of the nancial statements, whether due to traud or eror. in making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fat resentation of the financial statements, in order to design audit procedures that are appropriate inthe circumstances, but not forthe purpose of expressing an opinion on the effectiveness of the eniy’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating ‘the overall presentation ofthe financial statements. ‘We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. vn {nour opinion, the financial statements give a irue and far view, i all material respects ofthe financial postion of Guyana ‘Sugar Corporation Inc, as at 31 December 2006 and ofits financial performance and its cash flaws for the year then ended in accordance with Intemational Financial Reporting Standards. Report on Other Legal and Regulatory Requirements ‘The financial statements comply with the requirements ofthe Companies Act 1991 Sahn venti, DELOITTE & TOUCHE CHARTERED ACCOUNTANTS 10 October 2007 77 Bricktam, Stabroek, Georgetown, Guyana Annual Report 2006 + 23Huda free of Guyana P.O. Box 1002, 63 High Street, Kingston, Georgetown, Guyana ‘Tel: (592) 225.7592, Fax: (592) 226.7257 ‘up: /rwww.audit. gov. By REPORT OF THE AUDITOR GENERAL ‘TO THE MEMBERS OF GUYANA SUGAR CORPORATION INC. (ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006 Chartered Accountants, Deloitte & Touche, have audited on my behalf the financial statements of Guyana Sugar Corporation In. for the year ended 31 December 2008, as set out on pages 25 to 50. The audit was conducted in accordance with the Audit Act 2004. Responsibiities of Management and Auditors ‘The preparation ofthe financial statements, including assertions relating to their completeness, accuracy and val, and compliance ‘with applicable laws, regulations and contractual obligations, i the responsibilty of Management. My responsibilty is 1 express an independent opinion on the statements based on these assertions and to report my opinion to you. Basis of Opinion ‘The audit was conducted in accordance with generally accepted auciting standards, including those of INTOSAI. Those standards ‘equie that | plan and pertorm the audit o obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial slalements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as ‘well as evaluating the overal financial statement presentation. | believe that my auait provides a reasonable basis for my opinion, ‘As requiced by the Aucit Act 2004, 1 have reviewed the audit plan and procedures, work papers, report and opinion of the Chartered ‘Accountants. | have also had detailed discussions with the Chartered Accountants on all matters of significance to the audit and had carted out addtional examinations, as necessary, In arriving at my opinion. Opinion {nm opinion, the consolidated financial statements on pages 25 10 50 present fairy in all material respects, the financial position of the Guyana Sugar Corporation In. as at 31 December 2006, and of is financial performance and cash liows for the year then ended in conformity with International Financial Reporting Standards and the Companies Act 1991 Dee. D.Sharma ‘Auditor General (a9.) ‘Audit Office 653 Figh Steet Kingston Georgetown Guyana. 24 ++ Guyana Sugar Corporation IncASSETS Prepay ptr equ plant and equipment Beened axasset Investments Jnvestment in subsidiary ‘Total non current assets Current assets Inventories ‘Sanding cane Product stock Trade receivables Other receivables Cash and cash equivalents Total current assets TOTAL ASSETS EQUITY AND LIABILITIES, Sicseap c Revaluation reserve Other reserves Retained earnings Minority interest ‘otal equity ‘Non current abilities Deterred tax ability Borrowings: Employees retirement benefits ‘Total non-current llabilities Gurrent liabilities Trade payables ‘ther payables Fated pares 5 payable Borrowings Total current liabilities CONSOLIDATED BALANCE SHEET NOTES 53 4 10.2 2 4 104 TOTAL EQUITY AND LIABILITIES ‘The Board of Directors approved these financial statements for issue on Sth October 2007. = ‘AS AT DECEMBER 31, 2006 2006 2005 Restated 115,649 2005 107,815, 115,725 107,885 ‘Annual Report 2006 +++ 25Revenue 13 Cost of sales Gross profit Other income ‘Administrative expenses Marketing and distnbution expenses Operating protit Finance cost Employees reliement benefits 122 Income from subsidiary Profil/(ioss) etore tax 4 Teation 15 Prfi/(iss) forthe year ‘Attributable to: Equity holders of the parent ‘Minonty interest 53 Profil(less) for the year Eamings/(oss) per share 20 ) 2006, 2005 Restated SM SoM 32,495, 27,781 23,038, 22,170 9457 5.611 a2 347 (3,184) (2,671) (3,071) (2,871) 4074 416 (183) (152) (1,399) (1,452), 2,492 (1,188), (1,978) (678) 514 (1,866) 501 (1,867) 13 1 ‘514 (1,866) 0.05 (0.17) ‘The accompanying notes on pages 29 to 60 form an integral part ofthese nancial statements 26 s+ Guyana Sugar Corporation Inc,CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ASAT DECEMBER 31, 2005 NOTES Stated Revaluation Other Retained Total Capital Reserve Reserves Earnings Equity sm M sM sm M Balances at January 01, 2006 10,800 51,206, 118 (2.318) 59,806, Retained Profit forthe year - : - a6 476 Revahaton of investment : : (12) : (12) Balances at December 31, 2006 10,800, __51,206 106 (1.842) __60.270 Balances at January 01, 2005 10,800 51,206 & 2788 «64,879 Prior period aqustment 9 - : - 8238) (8.238) Balances at Janwary 01, 2005 as restated 10,800 51,206 Ca (452) 61,641 Loss for the year : a A (1,866) (1,858) Revaluation of investment : : at : 31 Balances at December 31, 2005 as restated 30,800 _ 51,206 118 __ 318) __59,008 ‘tributable to equity holders ofthe parent Notes Stated Revaluation Other Retained Minority Total Capital Reserve Reserves Earnings Total Interest Equity MSM sm ‘SM sM Mt SM 10,600 51,206 © 118 (2318) 59,808 47 59,853 : - - 50150 3 54 Revaluation of investment : (12) : (2) ~ (ta) Balances at December 31, 2008 10,800, 51,206, __106 (1.817) 60,205 60 60,355 Balances at January 01, 2005 10,800 51,208, 2787 64,880 60 64,940 Prior period eejustment 9 238) 238) Balances at Sanvary 01, 2005 a restated 10,800 61,206, 87 (ast) 61,642 eo 64,702 ‘Loss for the year - - = (1,867) (1,867) 1 (1,886) ‘Dividends paid 1o minority interest - - - + = 4 (14) Revaluation of investment : 3 : a : 3t Balances at December 31, 2005 as restated ‘Te accompanying notes on pages 29 to 50 form an integral part of these nancial statements ‘Annus! Report 2006 +++ 27~ 1_—™ Ar CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2006 CASH FLOWS FROM OPERATING ACTIVITIES Profit /{los) belore taxation ‘Adjustments for: Depreciation Loss on disposal of propery, plant and equipment Net interest {come trom subsidiary Operating profit before working capital changes Decrease/(Inerease) in inventories Increase in standing cane Decrease in product stocks ‘Decrease in accounts receivable and prepayments (Decrease)/increase in accounts payable and accruals Decrease in amounts due from retated parties ((ncrease}/decrease in amounts due to related parties: Increase in defined benelt pension habilty Cash generated from operations: Interest paid Taxes paid NET CASH FLOWS FROM OPERATING ACTIVITIES ‘CASH FLOWS FROM INVESTING ACTIVITIES Interest eceved Purchase of property, lant and equipment Dividends received from investments Dividends pad to minony interest Proceeds trom disposals NET CASH FLOWS FROM INVESTING ACTIVITIES ‘CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowing NET CASH FLOWS FROM FINANCING ACTIVITIES Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at bepinning ofthe period CASH AND CASH EQUIVALENTS AT END OF THE PERIOD CASH AND CASH EQUIVALENTS AS PER BALANCE SHEET 2006 2005 2008 2005 Restated Restated sm M SM ‘SM 2429 (1,188) 2492 (1,488) zou 1,734 20 1,738 25 5 26 5 213) 70 (213) 70 (@) () 2 4278 710 ag 715 (709) 261 (703) 261 (1428) (324) (1.467) (283) 4 183 4 183 ma 280 150 280 381.007 393 (1,007) 19) 95, 50) 152. 1398 de?) 4a 1540 agte 1545 (313) (100) (313) (100) (275) : (275) (20) 4223 1,440, 4226 1.425 526 (12,450) G96) (12,405) (8.961) : " (1192) 911) (11.876) 0.934) 2970 _ 14,805 2.920 14,805, 2970 _ 14,805 2920 _ 14,805, 7,394 (4,730) 7,298 4,194 11,563 267 6797 11,528 6833 11,563, 6797 _ 11,528 6,833 __ 11,563 “The accompanying notes on pages 291 50 form an negral part ofthese anc statements 28 +++ Guyana Sugar Corporation inc1 NOTES TO THE FINANCIAL STATEMENTS, FOR THE YEAR ENDED DECEMBER 31, 2006 Uncorporation and activities, Guyana Sugar Corporation Limited was incorporated on May 21, 1976 and is involved inthe cultivation of sugar cane and the ‘manufacture and sale of sugar and molasses. On February 28, 1996 the Corporation was continued under the Companies 1001 amt ts na changed vo Gyan Sugar Corporan Is. The Carporon's way ced by Govt of ana, ‘Summary of signticant accounting policies 21 Accounting convention ‘The financial statements have been prepared under the historical cost convention, as modified for the revaluation property, plant and equipment. investments, standing cane and product stock which ae stated at fair value. They have been prepared in accordance with international Financial Reporting Standards (IFRS) issued by the International ‘Accounting Standards Board (\ASB) and the requirements ofthe Laws of Guyana. Basis of preparation tn the current year, the Group adopted several revised and a new standards that are now effective and relevant to its operations. The adoption of the revised and new standards did not result in substantial changes to the Group's financial statements. Of relevance to the company ar ws 19 Employee Benefits ws 39 Financial Instruments, The effect of adopting IAS 19 and IAS 39 and amendments had no material fect on the company’s accounting policies Potential impact of changes in standards not yet effective: |FRS 7 ~ Financial Instruments Financial Instruments (effective for annual periods beginning on or after 1 January 2007. This standard wil replace IAS. ‘30, Disclosures in te financial statement of Banks and simiar Financial Institutions, and the disclosure requirements ‘of {AS 32, Financial instruments: Disciosuro and presentation. The standard wil introduce new disclosures to improve information about financial instrument IFAS 7 requires disclosure of qualtave and quantitative information about ‘exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquicity risk and market ris, including sensitivity analysis to market risk. IFRS 8 — Operating Segment ‘This becomes effective for period beginning on or after 1 January 2009. IFRS 8 replaces IAS 14 Segment Reporting. IFRS 8 requires an entity to report financial and descriptive information about is reportable segments, which are ‘operating segments or aggregations of operating segments that meet specific criteria, Operating segments are components of an entity about which separate financial information is availabe thats evaluated regularly by operating decision makers in deciding how to allocate resources and in assessing performance. Amendment was made to IAS 1 Presentation of Financial Statements as relates to Capital Disclosures which became effective 1 January 2007. This standard would require additional cisclosures on the Company's share capital. Other Standards and interpretations issued but not yet effective are not expected to have a material impact on the Company's financial statements when adopted. Annual Report 2006 29NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER $1, 2006 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (eon'e) 22 23 24 Basis of consolidation ‘The consolidated financial statements incorporate the financial statements made to December 31 each year of the Corporation and Lochaber Limited (the subsigiary), a company controled by the Corporation. Control is achieved by Virlue ofthe Corporation having the power to govern the financial and operating policies of the subsidiary through the Board of Directors. etal of the subsidiary are given in note 5.2. Intra group balances and transactions have been ceminated In preparing the consolidated financial statements, Property, plant and equipment Freehold land and buildings are stated at fai value as at January 1, 1999 determined by professional valuers, Factory, plant and equipment are stated at Directors’ valuation as at December 31, 2005 as further explained in Note 9. Freehold land and building and factory plant acquired subsequent to these valuation dates and ather property, plant and equipment are stated at cost. ‘Al assels with the exception of frehold land and workin-progress are depreciated on the Straight Line Method ‘calculated 0 wie off each asset over its estimated useful ife as follows: Freehold buildings - wooden ver 20 years Freshold buldings - others Over 33 years Land expansion costs ‘According fo tenure tant, machinery and equipment From 5 to 17 years ‘icralt (Over 5 and 10 years ‘Motor vehicles, Over 4 years All assets ae tested for possible impairment based on income generation and net realisable value, Depreciation Is Calculated from the month following acquisttion until the month of disposal Capital workin progress isnot depreciated ‘until the relevant assets are brought into use. Freehald and leasehold tand |n addition to 21,565 hectares of treenold land, the Group leasas from the Government of Guyana $5,173 hectares of {and on wihich it grows cane and for ancillary purposes. ‘The tenure ofthe teases are for fity (50) years. There is no intent by the Government of Guyana to pass tie to the Corporation for any ofthese leased lands, therefore they are al classified as operating leases in accordance with IAS 7, Taxation ‘Income tax expanse represents the sum of the tax currently payable and deterred tax. ‘The tax currently payable is based on taxable profit fr the year. Taxable profit ffs from profit as reported inthe income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes tems that are never taxable or deductible. The company’s iabity for curent tax i calculated using tax rates that have been enacted in Guyana at the balance sheet date. Deferred tax Is recognised on differences between the carrying amounts of assets and labifties in the financial statements and the corresponding tax bases used inthe computation of taxable profil, and are accounted for using the Balance Sheet Liability Method, Deferred tax lables are generally recognised for all taxable temporary differences and defered tax assets are ‘ecognised tothe extent that it is probable that taxable profs will be avaiable against which deductible temporary tterences canbe ullised. Such assets andiabiltis are not recognised il the temporary cifference arises from goodwill 10 from the intial recognition (other than ina business combination) of other assets anc liabilities ina transaction that atflects neither the taxable profit nor accounting prot. Guyana Sugar Corporation Inc.NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2008 2, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (coatay 25 26 27 28 29 240 2at ‘Taxation (core) “The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced tothe extent hat is ‘no longer probable that suficint taxable profits will be availabe {0 allow allo part of the asset tobe recovered.” Defered taxis calculated a the tax rates that are expected to apply inte period when the Kbit issetid othe asset realized. Defered taxis charged or credited to profit or loss, except when itrelates to ems charged or crdited directly to equity, in which case the deferred taxis also dealt with in equity. Deferred tax assets and abilities are offset when there isa legally enforceable ight to set off curont tax assets against current tax lables, and when they relate to income taxes levied by the same taxation authority, and the company intends to set its Current tax assets and liabilities on a net bass, (ventories Inventories are valued atte lower of weighted average cost and net reaisable value. Product stocks are valued at the lower of cost of production and estimated realisable value less deductions for sugar industry special funds contributions and shipping andseling expenses, where applicable. Where markets ae identified for sugar and molasses , the net realsable Value is used i itis lower than the cost of production, Production casts include al estates’ operations and administrative costs. Standing Cane ‘The value of standing cane is included in the financial statements as a biological asset. Standing cane is measured at fair value ess estimated point of sale cost. The fait valve of cane fs determined using the average cane farmers’ pice. This i determined using the weighted aggregale pice achieved inthe various markes for which sugar is supped, Research and development Research and development expenditure is charged against revenue inthe year in wich itis incurred Foreign currency transactions Foreign curency transactions are recorded in Guyana dollars af the rates of exchange ruling at the date of such transactions. At Uie balance sheet date, monetary assets and labities denominated in a foreign currency are andl ale ae of xchange rungs et dean reblog pander ae econ Int neo lement, Revenue Revenue represents the amounts earned from the sale of sugar and molasses during the year. Revenue is recognised ‘on an accrual basis when the product is shipped, or for domestic sales, when the product is collected. Employee retirement benefits ‘The Corporation participates in a contributory mul-employer pension scheme, Guyana Sugar and Trading Enterprises Pension Scheme (STEPS), a defined benefit scheme, forts quailying employees. The contbutions are held in trustee ‘administered funds which are separate (rom the Corporation’ finances. Employees who have relred and are not members ofthe pension scheme ae paid ex-gratia pensions and provided with ost retirement medical care, which are partly recoverable from the Sugar Industry Price Stabilisation Fund. Annual Report 2006 +++ 312 92 nN ARIA r~ 1 IF a= NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2006 ‘SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (eon) 2a 242 243 Employee retirement benefits (con'4) ‘The reirement benefit costs are assessed using the Projected Unit Crect method. Under this method, the cost of providing pensions is charged tothe Income Statement soas to spread regular costs over the service lives of employees, This is determined by professional actuaries. Actuarial gains and losses are recognised as income or expense when ‘cumulative unrecognised actuarial gains or losses exceed 10% ofthe defined benefit obligation andthe fi valu ofthe plan assets. These gains or losses are recognised by amorising them over the average remaining working etme of ‘employees, ‘Skeldon Sugar Modernisation Project (SMP) ‘All expenditure including borrowing costs relating tothe modernisation project has been charged to work in progress, ‘This will be capitalised on the commissioning ofthe factory in 2008. Use of Estimates ‘The preparation of financial stalaments in conformity with iterational Financial Reporting Standards requires ‘management to make estimates and assumptions tha affect the reported amounts of asots and lables at the date of the fanclal statements and the eported amounts of revenue and expenses: during the reporied period. Actual resuls could cfr trom those estimates. Majo areas of estimation () Wade and other receivables and other inventory On a requar basis, management reviews trade and other receivable and inventory to assess impairment. Based on information avalable 2s tothe tkely impairment in cash lows, decisions are taken in determining approprate provisions to be made for bad and doublul debts and obsolescence. (Other financial assets {n determining the fair value of investments in the absence of a market, the directors estimate the likeliiood of impairment by using discounted cash flows. (i) Useful ite of property, pant and equipment Management reviews the estimated useful lives of property, plant and equipment at the end of each year to determine whether the useful lives of property, plant and equipment should remain the same. (iv) Retirement benefit asse¥obligation ‘The provision for defined beneft asse¥/obligation are determined by the actuary based on the data provided by ‘management. The computation of the provisions by the actuary assumes that the data provided is not materially misstated. (Y) Standing cane Standing cane is measured at fair value. Appropriate allowances for estimated unrecoverable amounts are ‘recognized in profit or loss when here i objective evidence thatthe asset i impaired, The allowance recognised is based on management evaluation of cane maturity. Guyana Sugar Corpetation Inc.NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2006 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES toa) 2.14 Financial Instruments, Financial assets and labilties are recognized on the group's balance sheet when the group becemes a party to the ‘contractual provisions of the instrument. ‘Trade and other receivables ‘ade and other receivables are measured at inital recognition at fair value. Appropriate allowances for estimated unrecoverable amounts are recognized in proft and loss when there is objective evidence thatthe asset is impaired. ‘The allowance recognized is based on management's evaluation ofthe collectbilty of the receivables. Trade and other payables ‘Trade and other payables are measured at fair values. Investments Investments are recognized in the financial stalements to comply with Interational Accounting Standards No. 39 - Financial Instruments - Recognition and Measurement. ‘The group investments have been classified as “avaiable fr sale financial assets". Gains or losses on “availabe for sale financial assets are recognized through the statement of changes in equity until the asset is sold or otherwise disposed, at which time previously recognized gains or losses are transfered to the income statement forthe period. 215 Cash and cash equivalents ‘Cash and cash equivalents comprise bank overdraft and cash at bank and in hand. 246 Presentation currency ‘The financial statements have been presented in Guyana dollars, Annual Report 2006 +++ 3334 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2008 3a PROPERTY, PLANT & EQUIPMENT Builsings Land others sm ‘sM Cosvvauation Asal Jan 04 2006 43,803 10,699 Reclassification : 57 Additions : 29 Disposals - 46) ‘As at Dec 31 2006 43,803 10,779 Comprising: Cost - o Valuation 43803 _10,779 43.803, _ 10,779 Depreciation a AAs at Jan 01 2006 = 1.596 Charge fr the year = Retired on disposals : : As at Dec 31 2006 = 1799 Net book value As at Dec 31 2008 43,803 8,980 ‘As at Dec 31 2005 43,803 9,103. PROPERTY, PLANT & EQUIPMENT (Cost or valuation AAs al Jan 01 2006 43,803 10,711 Reclassification ST Additions : 29 Disposals - 6) As at Dec 31 2006 43,803 _ 10,791 Comprising: Cost Valuation Depreciation AAs a Jan 0% 2006 Charge for the year Retired on eisposals As at Dec 31 2006 Net book value As at Dec 31 2006 As at Dec 31 2005 ‘Guyana Sugar Corporation Ino. Plant, Land machinery Buildings expansion and ‘wooden cost equipment SM sm ‘su 3,685, 79 25,894 . - (7) - - 1,957 —— eon 3,685. 73 _ 27,099 3,685, 73, _27,090 3,685 73, _ 27,099 532 240 14,311 146 W 1,684 - (675) 678 35 _ 15,320 3,007 44 11,779 3153 55 11,583 3,685 73 25,803 7) : - 1,957 3,685 79 _ 27,098 391 3,204 (695) Work in progress sm 41,001 10,464 21,465, 21.465 21.465 i 11,001 11,001 10,464 Total sh 95,161 12,450 (701) 106,910 105,910 106,910 16,463 2.044 (675) |NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2006 PROPERTY, PLANT & EQUIPMENT (cours) 3a) 30) ‘Skeldon Modernisation Project Expenditure includes project management costs, the development of new cane areas and equipment. | no revaluation of land, buildings and equipment was done, the net book value of property, plant and equipment would have been approximately 6S29,697,000,000 (2005 - 6820, 132,000,000). LEASEHOLD LANDS Leasehold land represents 72% of land used to derive economic benefits by the Group. Since tie is not expected to be passed tothe group atthe end of the lease, these leases are classified as operating leases. These are subject to several |ypes of lease agreements, the status of which are as follows: Hectares Unexpired leases 19,364 Expired leases 7.561 Expired permissions ‘944 During the Presidents pleasure licenses 26,962 During the Presidents pleasure permissions 342 55,173 ‘The Group has received writen confirmation that the Government of Guyana is committed to renewing al leases for lands beneficially occupied by Guyana Sugar Corporation inc. Lease rentals wil be reviewed from time to time by the Commissioner of Lands and Surveys and must be approved by the Government of Guyana, Lease payment per hectare per annum has been as follows: s Prior to 1985 100 From January 01, 1985 to May 31, 1998 185 From June 01, 1998 247 A valuation propared by a professional valuer placed a value on these lands of $1,482,600 per hectare at January 01, 1999. Howaver, no active markets exis fr these lands, wrt 2006 2005 Recognised deferred tax assets/ibilles 2006 2005 are attributable tothe following items: Restated Restated sM M sm sM Deferred tax lability Property, plant and equinment 8527 6.900 8552 6.910 Standing cane 2162 1,684 10,689 8.564 Deferred tax assels Tax value of losses caried forward (ett) : Property, plant and equipment es 5 Inventories provision 1) (Wy Defined benefit pension abilty (6587) _ (6,107) (6.909) (6,108) 16911) __ (6.110) ‘Annual Report 2008 +++ 95,NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2006 4. DEFERRED TAX (cont Movement in temporary differences. Deterred tax liability ovary, at and euipment Delerred tax assets ‘Tax value of losses carried forward Inventories provision Defined benefit pension lability Movement in temporary dierences Deterred tax liability Property, plant and equipment ‘Standing cane Doterred tax asset “Tax value of losses carved forward Property, plant and equipment Inventories provision Detined benefit pension lability 5. INVESTMENTS SA Investments ‘Available for sale: Livestock Development Co. National Bank of Industry and Commerce Balance at Recognised Balance at Jan 01,2005 in income Dec 31,2008, 6,900 1,627 8527 1,664 498, 2,162 8564 2125 5 @it) ait) (1) - (1) (6,107) (490) _ (6597) (6,108) (201) __ (6,909) Balance at Recognised Balance at Jan 01,2006 in Income Dec 31,2006 6910 1,642 8552 498 2.162 3574 2140 10,714 en) ett) - 2) - (1) (490) __(6597) (6.110) aot) _ (6.911) sm M Mm sM 0.05 0.05, 0.05 0.05 66 18 66 78 66 78 66 78 {in determining the value of investment, rates from Guyana Association of Securities Companies and Intermediaries Inc. and current market rates were used. 96 +++ Guyana Sugar Corporation Inc.NOTES TO THE FINANCIAL STATEMENTS, FOR THE YEAR ENDED DECEMBER 31, 2008 ween ae om) 82 83 Investment in Subsidiary 2006 2005 sm M Lochaber Lid. 35 a ‘The Corporation holds 36.8% ofthe share capital of Lochaber Limited. The Corporation exercises dominant influence ‘over the financial and operating policies of Lochaber Limited through the membership of its Board. investment in the subsidiary is accounted for by using the equty method in the Corporation's own financial statements. ‘Minority interest 1006 2005 su M ‘Att January a 60 ‘Share of profit 8 1 Dividend paid (14) ‘At31 December 60 a7 «aes 64 2006 2005 2006 2005 Inventory categories. sm ™ sm sit Fuel 313 268 313 269 Spares 2,199 1,853 2199 1,853 Fecilizers and chemicals 566 364 566, 364 Other aa. 743 847 733, Gross inventories 3,925 3229 3,925 3,229 Less provision for slow moving and obsolete tems (423) (436) (42a) (436) Net inventories 3,502 2,793 3,502 2793 Provision for slow moving and obsolete items decreased by GS 13M which was due to obsolete Items being writen off during the year. ‘Annual Report 2006 +++ 37NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2008, 6. CURRENT ASSETS 63 ‘Standing Cane Standing cane is accounted {or in accordance with IAS 41. The difference between the openirg and closing balance is — = C= 2005 “ SM ou ai Balance as at January 4 4785 4431 4784 4,495 Adjustment to cost of sales 4.424 324 4.467, 269 Balance as al December 31 6179 4755, 6,251 4784 Standing Cane by = 2006 = 2006 2005 fopeiCase Movies| Hucines| Hacer Hectnes sM SM sm SM 1-5 Months 2120 -25,777 «anata 5777 : . 1 6 Months m2 1,247 742 4.247 mae 28 7 Months 4015 830 4015820 ae 85 8 Months 2015 2,820 2015 «2.829 «= 0k 294 9 Months 517% 4.578 52604578 1,504 1,179 1,530 10 Months 5787 5,165, 5aa2 5,165 2620 11 Months 2m 2.127 2706 ©2127 1,618 1,005 1,440 412 Months 458 156 464 156 _ 250 70283 45054 42,709 48426 42,709 617947556281 4,784 s s 8 s Farmers’ price per tonne of sugar 75816 66,980 75,816 66,980 2008 Product stock categories: sm M om o Sugar 925 1,165 925 1.165 Molasses a7 2a a 264 Livestock 1 i 1 ii 4413 147 1413 4ai7 ‘Amounts due from related parties Lochaber Limited 3 : 9 : ‘Guyana Sugar Corporation Inc,NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2006 2006 = 2005 2006 2005 2006 2005 ons 0005 sm SM M sm US Dolar Escrow) 33204 53,260 6624 10,699 6624 (10,699 US Dollar (Curent afc) 197 1,301 260 39 262 GaP 10251 86 4 86 Euro (531 125 : 125 14,110 6667 11,112 Guyana Dollar 418 166. 451 11,528 6833 11,563 Rate of conversion — Gsruss. 198.75 19950 © 199.75 esicaP 343.84 303.00 343.84 GS/EUR 236.32 268.08 © 236.32 ‘STATED CAPITAL ‘The Corporation has an authorised slated capital of 10,800,000,000 ata minimum issue price of $1 each and an issued staled ‘capital of 10, 799,571,775 ordinary shares. nese 2006 2005 2006 2005 94 Revaluation reserve SM sM M Mt 1. Revaluation of fixed assets 51,206 51,206, 51,208 _ 51,206 92 Other reserves 1.-Amounts received by he Corporation from the Sugar industry Special Funds for rehabiitation ‘work carried out on the Corporation's factories. 5 25 8 25 2. Monies received from the Government of Guyana for the purpose of financing projects inthe Corporation's diversification programme. 15 18 5 15 3. The value ofthe net assets of Guyana Agricultural Products Corporation and Demerara Sugar Company Limited which were acquired by the Government of Guyana and transferred to the Corporation. During 2002 $14M was capitalised as equity. 1 1 1 1 4, Adjustment of investments to reflect fair value ee 7 cy 7 et 9.3 Revaluation ‘The Corporation revalued its freehold land and buildings and factory plant and machinery as at January 01, 1999. The valualion of the land and buildings was undertaken by an independent value. The original valuation a at January 01, 11999 of plant and machinery was used as a basis for value in use calculation from 2001 to date, The valuation is ‘reviewed each year in ight of changes in markets, production levels and exchange rate movements. The value was not ‘revised for 2006 since there was no impairment.NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2006, 1 somone 2006 2005 2006 2005 10.1 Current sm su su SM a) Government of Guyana Drainage and Irigation financed by COB 30, : 50 - 2% Government of Guyana Debenture 144 144 14 144 194 144 194 144 102 Non Current a) Government of Guyana Drainage and Irigation financed by COB 907 887 907 887 'b) Government of Guyana SSMP 1,357 11,350 11,357 11,350 ¢) Government of Guyana SSMP financed by COB 2.064 1.183 2.064 1183, 4) Government of Guyana SSMP financed by EXIM Bank 4a77 2,195, 4a77 2.195, ‘otal foans 10505 15,585 18,505 __ 15,585 Repayments due in one year and included ‘in curent labile 194 144 194, 144 ‘Repayment due within 2-5 years 780 64g 700 649 Repayment due attr five years 11725 14,936 17725 14,936 1505 __ 15,585, 18,505 _ 15,585 a) °) Government of Guyana Drainage and Irigation financed by CDB ‘The loan from the Government of Guyana represents an on-lending of a loan from the Caribbean Development Bank for US85,050,000 to finance various drainage and irigation projects. Total funds received at Decemier 31, 2006 amounted to US$4,930,686.51 (2005 USS4,930,715). Interest is charged atthe rate of 3% per annum on the principal and is paid quartet. ‘The repayment of the loan starts 10 years aftr the date ofthe fst cisbursement and wil be pald in 34 equal semi annual installments. The frst disbursement was received in July 2002. Government of Guyana SSMP ‘This is an on - lending faclity from the Government of Guyana for USS5EM to finance the naw Skeldon factory. ‘The full amount was deposited in an escrow account with ING Bank. Interests charged ata rate of 3% per annum ‘on the principal and isto be paid on a semi-annual basis. ‘The repayment ofthe loan starts 5 years after the date of the fist cisbursement and will be paid in 34 equat instalments. The fst disbursement was received in March 2006. Government of Guyana SSMP financed by COB This is an on - lending facility trom the Government of Guyana for USS25M financed by CDB. These funds are to be used for the agricultural component ofthe new Skeldon factory. Drawdowns are made based on submission of contractors’ certificates. To date a drawdown of USS10.2M was made ‘The repayment ofthe oan starts 5 years after the date ofthe frst cisbursement and willbe paid in 24 equal semi annual instalments. The fist disbursement was received in May 2005,NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2008 10, BORROWINGS (cours) 102 Non Current (cours) 4) Government of Guyana SSMP financed by EXIM Bank ‘This is an on - lending facility from the Government of Guyana for USS35M financed by the Export and import Bank of China (EXIM). These funds are to be used for the Co-generation Facilty of the new Skeldon factory. Drawdowns are made based on submission of contractors’ certificates. To date @ drawdown of USS20.5M was made. ‘The repayment of the loan starts 5 years after the date ofthe first disbursement and wil be paid in 24 equal instalments. The fist disbursement was received in March 2008. 1 mur es 2006 2005 4 12 2006 2005 ‘Amounts due to Related parties om SM sm sm Lochaber a7 3 (18) : Booker Tate 251 175 251 175 Government of Guyana - Lease rentals 450 466 450 466 ‘Sugar incustry Labour Welfare Fund 856, 803, 856 803 1,604 1,475 1,839 1,444 ‘otal rent payable fr the lease lands to the Government of Guyana was G$1 10M (2005 $106M) whilst the amount paid ‘was GS127M (2005 $97M). ‘otal levies payable to Sugar Industry Welfare Fund was G$123M whist claims made by Guysuco for work done on behalf of the weltare was GS5M. No payment was made during the year. Related parties transactions 11.2.1 Booker Tate Limited Booker Tale Limited, a company incorporated in the United Kingdom, manages the Corporation under an ‘agreement dated March 26, 1996. Under this agreement Booker Tate receiv 2 fixed fee, a production incentive ‘ee and reimbursement of certain expenses. The agreement was renewed on March 04, 2004 and will continue to the later of December 31, 2005 or six months after the commissioning and integration of the Skeldon Factory. “The amounts paid to Booker Tate under the agreement were as follows: 2006 2005 2006 2005 om SM SM sM Fixed fee (£350,000 per annum) 136 131 136 131 Production incentive fee 65 65 65 65 Salaries, benefits and other expenses. 174 175, 174. 175 Totat Es 37 375, aut ‘Annual Report 2008 4aNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2008 ‘11. RELATED PARTIES 11.2 Related parties transactions cons) 11.2.2 Key Management Personnel (excluding Booker Tate) ‘The company’s key management personnel comprise its Directors, ts Chief Executive Officer and Managers. ‘The remuneration paid to key management personnel during the year was 2s follows: 2006 = 2005 2006 2005 om sm ou M ‘Short term employee benefit 205; 234 245 234 11.2.3 Directors’ tees and expenses 2006 2005 2006 2005 $000 $000 $000 $000» $000 $00 $000 S000 Foes Expenses Fees Expenses Fees Expenses Fees Expenses Directors Ronald Al (Chairman) 904247 903,012 9 4267903012 Donald Ramotar = 8403 BH - sad : DindyalPemaul = 84759 BH : a a) : Rajendra Singh 644,784 841,255 4 478d Bh 1,255 Hubert Rodney = 842,702 2,.082. e202 842.982 Michael Boast(t) — - - : 142 : : : 142 Nick Jackson : 884 : 380 - 84 = 380 Roger Speedy + 4780 - : + 4700 - : Barry Newton : : - 82 : - - 82 sro! Hanoman = 8702 + 9.464 + 8,702 - 426 24,021 426 17,287, 426824021426 _—17,287 (1), Resignation Alldirectos’ expenses have been incurred on corporate business, Directors' fees comprise those amounts paid to or on behaf of drectors in respect of services as director. Detined Benetit assot/iablity ‘The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation wore carried out as at 31 December 2003 by Bacon Woodrow & De Souza. The present valuation ofthe defined benefit obligation and the elated current service cost were measured by the actuaries at 31 December 2006 ‘using the Projected Unit Credit Method. 42° + +6 Guyana Sugar Corporation Inc.NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2006 j 142, EMPLOYEES RETIREMENT BENEFITS 1A 122 123 124 Post Retitement Medical SM ‘The amounts recognized in the Balance Sheet are as follows: Defined benetit obigation 573 Fair value of assets a Present value of unfunded contributions 513 Unvecognized toss 5 Defined benetitiabilty 513 Reconciliation of opening and closing defined benetit ability Defined benefit liability atthe beginning ofthe year 573 ‘Add net pension cost - ‘Less company ‘contibution/benefits paid : Net pension cost : Defined benefit ibiity al the end of the year 573 ‘The amounts recognized as staft costs in the Income Statement are as follows: Current service cost Interest on defined benefit obligation Expected retum on Pian Assets, ‘Amortized net (gainyloss ‘otal included in stat costs - ‘Actual return on Plan Assets ‘Expected return on Plan assets - ‘Actuarial gain on Plan Assets : ‘Actual return on Plan Assets : & STEPS Gralla Scheme Scheme SM SM 6747 17,155 (6965) (218) 17,155 438 198 220 18,053 217 16,650 26 4,780 213) (384) 3 1,396 220 18,055 726 381 1,054 (424) 26 4,780 Total SM 24,475 965) 17,510 1,396 16,846 77,448 6 637) 1,399 19,847 985, 1436 (aay 1,996 Post & Retirement STEPS Gratia Medical Scheme Scheme Total SM SM SM SM. $70 6,517 17,762 24,849 + (6545) "= (6545) 570 (28) 17,762 18,304 3245 (1,104) (56) 573-217 16,858. 17,448 573 167 15,255 18,996 ~ 267 1,805 2.071 = 217) (403) __(620) = 801,402 1,452 573-217 16,658 17.448 & - art - an = 474 - 474 = 845 - 845 ‘Annual Report 2006 43NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2008 42, EMPLOYEES RETIREMENT BENEFITS (costs) 13, 4a 425° Actuarial assumptions (i) Funded Scheme Discount rate Salary increases Pension increases Rate of return on Pension Plan assets (ii) Untunded Scheme Discount rate Salary increases Pension increases Rale of return on Pension Plan assets Reeve ereo Beer Feee Zooe Ree Zea 5 ‘There is no Pension Scheme forthe subsidiary company. 2006 2005 2006 2005 eso00 = Gs 000 e000 © $000 Experience History Defined benefit obligation 17,184.90 17,762.00 6,516.80 6,746.50 Fair Value Plan Assets (6,544.80) (6,964.60) (Surplus)/Dericit 2.00 (28.00) _ (218.10) Experience Aojustment on Pan Labilties 17,762.00 (28.00) (218.10) Experience Aojusiment on Pan Assets = : 7410 39.20 Expected Company Contributions in 2007 384.50 218.10 Data given to the actuaries included the Corporation's best possible estimations of details where precision was ‘not possible. This was required for them to calculate lablties according to IAS 19. The actuaries have caulioned ‘thatthe figures are subject to change after a more complete assessment is caried out ofthe scheme, nerewe 2006 2005 2006 2005 M SM SM sM Revenue by products Sugar 30404 25,694 30404 25,894 Molasses 2091 1.887 2,091 41887 Total Sales 32495 27.781 32495 __ 27.781 ‘Revenue by major markets 23.939 19.504 23939 19,508 Europe 1,899 202 1,899 202 North America 3504 5.318 350d 5,318 Caribbean 3154 2757 3154 _2.757 Guyana i 32.495 27,781 32495 27,781 All expenditure is incurred in Guyana, with the exception of marketing expenses and part of the management fee. All assets and labile are based in Guyana, withthe exception of foreign cash balances and same trade receivables and payables. The Directors therefore consider that segmentation of net profit and assets of geographic area would not be meaningful +++ Guyana Sugar Corporation incNOTES TO THE FINANCIAL STATEMENTS, FOR THE YEAR ENDED DECEMBER 31, 2006 14. PROFIT/(LOSS) BEFORE TAXATION ‘Mle charging - Employment Costs Wages and salanes Social securty contributions Employees retrement benefits Matertls and services purchased Research and development expense Directors toes & expenses Provision for stow moving and obsolete ies Depreciation Auditors remuneraton-auit services Inierest expense ‘Management fees and expenses Alter crediting ‘Net gain on exchange Interest income Gain/(oss) on disposal of property, plant and equipment 15. TAXATION Current year Comoration Tax Deterred Tax Property Tax Restated 2006 2005 MW M 2429 (1,188) 13,006 12,557 762 701 1,399 1,452 6a15 5,595 242. 223 24 12 423 436 2,084 4,734 7 6 282 100 5 amt a 2B 68 30 23 95) 2008 2005 sm 3M 487 : 1,324 565 1811 565 142 113 1,953, 678 Reconciliation of corporation tax expense and accounting profit: 2006 Mo % ‘Accounting (lss)/profit 2429 100.0 2005 M (1,188) % mH i000 2,492 2,492 13,906 762 1,399 oats 242 2,088 7 282 375 2005 Mm (1,188) 12,557 701 1.452 5,595 223, 436 1737 6 100 art 2006 2005 sm M 496 B 1,339 552, 1,635 565, 143 113, 4970 678. ‘Annual Report 2006 100.0 100.0 (1,187) +45NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER St, 2006 1 a ae 2006 2005 2006 2005 mM % SM & MH % SM ®% Corporation tax @35% 850 35.0 (416) (35.0) _872_—«35.0 (415) (85.0) ‘Add: Tax effect of expenses not SSS —E—E—EE deductible in determining taxable profits Depreciation for accounting purposes 607 St. 115 609 51.3 Defined benefit pension cost 808 42.8 490 508 42.8 Others 147 12.4 "1 159 13.4 846 71.2 2,088 861725 Deduct: Depreciation for tax purposes. (767) (31.6) (256) (80.5) (767) (30.8) (958) (80.7) Standing Cane (498) (205) 1109.3 (14) (205) 1109.3 79833 0 0 eo7 324 131.0 Loss relief (311)_ (12.8) 0 Oo ty (12a) Oo 00 4e7 204 o o 496 196 310 ‘No deferred tax liailty has been recognised in relation to capital gains taxes which would become payable on factory plant, ‘machinery and equipment should the revaluation surplus be realised upon cisposal ofthe revalued assets. This is because the Corporation does not inten to dispose of these assets other than in the normal course of business. 16. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES 2006 2005 2006 2005 om sm su SM Expenditure authorised by the Directors but not committed Routine expenditure 2.407 2250 2,407 2.250 ‘Skeldon Sugar Modernisation Project 14,100 19,000 17,100 19,000 Drainage & Irigation project 175 150 15 180 The capital expenciture wil be funded by a combination of facies on lent by Government of Guyana, provided by other suppliers of finance and from sett generated funds. Contrary to provious practice, the Commissioner of Internal Revenue in 2000 sought to assess the Corporation on additional ‘income for the years of assessment 1995, 1996 and 1997 arising from the remission of sugar levies by the Government of Guyana for the years 1994, 1995 and 1996. The Corporation does not accept this amended tax reatment and objected to the ‘computations on the grounds that the levies have been correctly treated for tax purposes. No provision has been made in the financial statements for taxation arising from any such computations as the Corporation has been advised thal they would be incorrect, 17. PENDING LITIGATION ‘There are several actions for which the liability ofthe Corporation, if any, has not been determined, The maximum potential lability atthe end of the year is estimated at $133M (2005 $1330), 46 +++ Guyana Sugar Corporation incNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31,2006 18, FINANCIAL RISK MANAGEMENT (a) Market Risk (i) Foreign currency risk ‘The financial statement at31 December include te following assets and labillies denominated in foreign currency stated inthe Guyana dollar equivalent. ac) 2006 2005 SM sm Assets US Dollar (Escrow) 6624 = 10,639 US Dollar (Current a/o) 39 262 GBP 4 86 Euro o 125 6667 14,112 bilities US Dollar 18,505 15,585 (11,838) (4473) (i) Interest rate risk Interest rate risk isthe risk thatthe value of financial instruments wil fluctuate due to changes in market interest rates. The group is exposed to various risks that are associated with the effects of variations in interest rates. This impacts directly on ts cash flows, ‘The group management continually monitors and manages these risks through the use of appropriate tools and implements relevant strategies to hedge against any adverse effects, Non - within Over interest ‘Year 1toSyears — Syears bearing Total Mm su sM sm M Assels Aavestments : - : 66 ‘Accounts receivable - - 1,328 ‘Cash and cash equivalents 6,833, 6839 6,833, : = 1ged 8227 Liabitties — ‘Accounts Payable - - > 3ds9 3,459 Loans 194 780 17,725 - 18699 Taxation : = = ant 2.012 194 780, 177255571 24.270 Interest sensitivity gap 6,639 (780) _ (17,725) Annual Report 2006 +++ 47NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 37, 2006, 18. FINANCIAL RISK MANAGEMENT (cons) 48 (a) Market Risk (cont i) Interest rate risk (oat) ‘within Over interest Year 1toSyears — Syears- bearing sm M sm sm Assets Investments : 8 ‘Accouns recevable > 2051 Cash and cash equivalents 11.563 : 2129 Labitites SS ‘Accounls Payable - - - 3068 ‘Loans 14 14,756 - Taraton : : _ 4751 144 83014755 __ 4.817, Interest sensitivity gap The Company's averag 2006 % Assets ‘Cash at Bank os2 abilities Loans 553 (i) Price risk 15,729 4751 029 Price risk is the risk that the value ofthe financial instruments will uctuate as 2 result of changes in market prices ‘Whether those changes are caused by factors specific to the individual secuty or its issuer or factors affecting all secur traded in the market. Management continually identifies, underwrites and diversities risk in order to minimize the total cost of carying such risk. Credit risk ‘The Group faces credit risk in respect ofits receivable and cash and cash equivalents. However, this risk is controlled by close monitoring ofthese assets by the Group. The maximum credit risk faced by the Group is the balance reflected in the financial statements. Guyana Sugar Corporation inc.18. NOTES 19, THE FINANCIAL STATEMENTS “OR THE YEAR ENDED DECEMBER 31, 2008 FINANCIAL RISK MANAGEMENT (cont) (c) Liquidity risk Liquidity risk is tho risk that the Group will encounter difcuty in raising funds to meet its commitments associated with financial instruments, The Group manages its iquidty risk by maintaining an appropriate level of resources in liquid or ‘ear liquid form. ‘The following table shows the distribution of assets and lablties by matuiy: ‘As at 31 December 2006 11012 210 Over ‘months Sears ‘S years. Total sm om sm Assets 19,561 - 66 (19,627 abies 7337) (70) _(17,725) _ (25,842) 12,224 (780) _(17,659) __ (6.215) ‘As at 31 December 2005 Assels 22,904 7 22,982 Liabilities (6,412) (830) (14,775) (22,017) teen _ tom) case, __ as ‘RESTATEMENT AND RECLASSIFICATION In 2006, adjustments were made for the prior years wich resulted in restatement of certain balances. The effect of the restatement is summarised below: 2005 2004 Deferred Retained Retained tax earnings earnings sm SM sm Deferred tax on standing cane (a) 3,328 (90) _ (8.238) (2) Correction of misstatement of defered tax calculation on standing cane. Company 98 restated Loss per share for 2005 was also restated (0.16) (0.40) (0.16) (017) ‘Annual Report 2006 +" 49NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2006 2 ers 50 2006 2005 MH SM Profit attibutabe to equity holders ofthe parent 476 (1.886) Ordinary share issued and fully paid 10,799,571,775 10,799,571,775 Eamnings/(oss) per share 0.08 0.17) 2006 2005 sM SM. Profit((oss) forthe year 14 (1.866) Orcinary share issued and fully paid 10,799,571,775 10,799,571,775 Eamings/(oss) per share 0.05 (0.17) POST BALANCE SHEET EVENT European Union Sugar Protocol ‘The European Union signalled its intention to denounce the Sugar Protocol in its market access offer It was anticipated that the negotiations ofthe Economic Partnership Agreement (EPA) that would come into effect from Janwary 1, 2008, would have bbeen successfully conciuded and a joint statement on the Sugar Protocol (SP) thereafter declared, however, the mechanism that wil ranspose the benefits of the SP into the EPA is not yet finalised, ‘The resultis that what was once a straightforward all ACP Agreement for the sale of raw sugar will now be fragmented to bilateral commercial contracts. ‘The Corporation is therefore assessing all the options going forward in what appears to be an open market for sugar trade in the European Union after 2015, ++ Guyana Sugar Corporation ine,HECTARES HARVESTED TONNES CANE MILLED (000) YIELDS: ESTATE - TONNES CANE / HECTARE "TONNES CANE /TONNE SUGAR ‘TONNE SUGAR / HECTARE PRODUCTION (TONNES) ‘SUGAR MOLASSES HOME CONSUMPTION (TONNE ‘SUGAR MOLASSES: EXPORT (TONNES): SUGAR MOLASSES: ‘SALES: DOMESTIC SUGAR ($M) AVERAGEPRICE / TONNES) EXPORT SUGAR ($M) AVERAGE PRICE / TONNE ($) AVERAGE PRICE / TONNE (USS) MOLASSES (SM) AVERAGE PRICE / TONNE (8) EXPENDITURE ($M) EMPLOYMENT COST MATERIALS AND SERVICES (LOSS) PROFIT BEFORE TAX ($M) (LOSS) PROFIT ‘BEFORE TAX AND LEVY (LOSS) / PROFIT AFTER TAX(SM) (LOSS) PROFIT AFTER ‘TAX BEFORE LEVY AVERAGE MID MARKET EXCHANGE RATE (G$/ USS) TEN YEAR REVIEW 1996 to 2005 1997 19968 «1999 «2000 «om ocz «2003 200M 2005 ‘Annual Report 2006, 51Printery Inc. ‘nfo sheithassan com