® COMMUNICATIONS. UNIT CONTENTS GuySuCo's Mission Board of Directors Chairman's Statement Review of Operations 10th Anniversary Supplement Report of the Auditors ‘Statement of Net Deficit Balance Sheet Statement of Source and Application of Funds Notes to the Accounts ‘Statement of Employment & Community Costs f GUYANA SUGAR CORPORATION LIMITED 4 ; REPORT AND ACCOUNTS 1985 17-23 24GUYANA SUGAR CORPORATION LIMITED GUYSUCO’S MISSION The Mission of Guysuco is to transform a monocultural organisation into a diversified agro-industry, which will not only contribute to the Nation's foreign exchange earnings, bbut will maximise the benefits of the foreign exchange cost of the Corporation by utilising its resources to produce erops which will help the Nation in its import substitution pro- gramme, ‘Asan efficient agro-business, its Mission will be todemonstrate to the communities in which its operating units are located, the techniques developed for the cultivation of various crops. ‘As @ well-developed agro:business the Corporation will also continuously strive to refine its products and to utilise the by- products of its operations for vertical integration and expansion. {n its activities the Corporation will work for greater partici- pation and involvement of all the people who comprise its work force in achiaving its objectives which have been set in ‘consonance with the philosophy and aspirations of the Nation.y ‘GUYANA SUGAR CORPORATION LuMITED BOARD OF DIRECTORS ES Chairman HB Davis, CCH, MA, B Se. Vice Chairman Yesu Persaud, CCH, FCCA. Directors JS L Browman, DECIAF, M Sc, B Sc, DPA. B Chandra, DECIAF. EOS Hanoman, FCCA. 1A Mc Donald, MA. F Sukdeo, D Phil, MA, B Sc. WEH Tyrell JR Vieira, AA, Cl Agr. E. Secretary CJ LawrenceGUYANA SUGAR CORPORATION LIMITED CHAIRMAN’S STATEMENT @ “This issue of our Annual Report, the tenth, is indeed a very special one. It heralds the Guyana Sugar Corporation's tenth year of operation, with May 26, 1986, being the Corporation's centh anniversary. In addition, 1985 saw a major improvementin GuySuCo’s pre-interest financial results and, a the time of writing, developments hhave taken place which should ensure a fll turn-around in the finan- cial fortunes of this Company. The time has come when GuySuCo can truly be looked upon as an agricultural business rather than solely 2 sugar Corporation. It is my sincere hope that within the next three years, our Company will become a full-fledged agr- industrial enterprise, more in consonance with our mission. 1985 was a challenging year, heartening in many respects Sugar production in the first crop was the highest since 1978 benefitting from the very good harvesting conditions which pre- sailed, However, poor weather conditions, a high incidence of in- dustrial unrest and problems in two of our factories made the second crop a disappointing one. Generally, productivity ratios in both our felds and factories showed noticeable improvement throughout the year. ‘This year saw the Corporstion obtaining full benefit from the two welcomed local price increases in 1984, Though the world price remained very unremunerative and molasses prices continued to slide downwards rapidly, some benefit was derived from a strength- sning pound sterling, 4 ‘New guidelines on cost control established early in the year paid dividends as the year progressed and the presinterest results at the nd of the year attested to this fact. It is fai to say that there now pervades the industry, what could best be described as a most appro- priate psychology regarding “production” visa-vis “financial via bility”. This, | feel, more than anything else, will see us through the next decade as a prospering business. Production was 243,000 tons sugar compared with241,861 tons for 1984, Estates field production was 216,907 tons sugar compared with 215,167 tons in 1984. Farmers! production was 26,093 tons compared with 26,694 tons in 1984, “Sales for the year were $333.5M, an increase of $26.1M oF 8.5% over 1984, Gross foreign exchange earningsamounted to $293.5M compared ith $278.1M for the year 1984, an increase of 5.5% in Guyana Dollar terms. During the calendar year, foreign exchange eamed wae £55.9M and US 39.8M compared with £51.2M and US $11.0M in 1984, Operating deficit for the year was $77.6M, $24.6M or 24.1% Jess than that of 1984. Precinterest deficit for the year was $21.9M compared with $63.0M for 1984, an improvement of 652%. Interest ‘expense continued to be our major cost, $55.7M compared with '539.2M in 1984. Capital expenditure for the year amounted to $33.5M compared with $19.4M for 1984, an increase of $14.1M. Assets acquired from Plantation Versailles and Schoon Ord Limited accounted for $10.1M of this increase. $7.4M was obtained through Ginancing fom the IADB, while $6.8M was acquired through our retention facility. ‘As in 1984, while the level of expenditure in this area was lower than we would have liked, the equipment actually acquired was exucial to our operations and the benefits were immediately felt. Financing of our working capital needs was done through the local banking system, specifically via our overdraft facility. ‘The major problems we experienced in 1985 were the poor world sugar price, falling molasses prices, adverse weather conditions in the second crop and its effect on production and land rehabil- itation, the high incidence of strikes, the high level of borrowing at January 1, 1985 and the cost thereof, and finally the growing short- ‘age of labour iar certain key Geld operations. WE were able to satisfy all our market commitments. The tight- ened cost control regimen put in place early in the year significantly minimised some of the adverse effects of the low level of sugar production. ‘The shortage of labour in certain cultivation activites, most pronounced at Skeldon, La Bonne Intention and Dismond Estates, ‘once again posed a serious problem. Work on an appropriate systemGUYANA SUGAR CORPORATION LIMITED. CHAIRMAN'S STATEMENT Continued ‘of mechanisation, co complement the available pool of labour is pro- gressing, With effect from April 1985, the Corporation's responsibility for edible oil production was transferred to the National Edible Oil Company Limited. As a consequence, the assets at San Jan and Wauna Oil Palm Estates were transferred over to the new Company. Rice production and aquaculture development, however, con- tinued apace. In my statement last year, I indicated that we were looking very rminutely at the operations of our estates and at the utilisation of ‘our resources, In addition, we were shortly to initiate discussions with the State Planning Commission on a number of matters. ‘As a consequence of the foregoing, there will be further equity participation by the State, the existing loan will be converted into Convertible 2% Debentures and there is to be 2 further increase in the local selling price of suger. Further, 1986 will see the Corporation embarking on a number ‘of new initiatives. Marginal and uneconomical lands will be taken ‘out of cultivation, thereby improving the quality and quantity of inputs into the better yielding lands with consequential improvement in production and productivity. One sugar factory will be closed by the ond of 1986 and a second by mid 1987, both factories in the Demerara region. ‘The new year will also see accelerated activity in the area of diversification both in the use of land and sugar cane. This includes two projects which the Corporation views with great excitement. 1 refer here to the return of dairy farming and the produ 1967 - Eighteen Sugor Estates remain, 1974 & bad EEC, beet crop eves nominal Drees to record highs, SGuyana's sugar quota inthe U.S. - 80.000 World price touches lime peak of £650 per ton, 1998 + Natlontisation of Jette ‘usar Protocol of the Lome! Convention reoloces Commonwealth Suger Agrsement. and uabithes ACP sugar quotas THE GUYSUCO ERA 3975 - Nationlisation of the Booker holding Guyana and mersing of DernSuCo to exabiithe Guyane Sutar Conoration Limite, 1971 - Commisioning of the Sondaka Posing Stotlon st Skeldon. 1978 - Opening of he Verse Leonora/Uivugt Woternay, Frist intake of females at the Apprentice Training ee» tone ersios Foctory. Acqubition of the Guyana Agricultural Product Comoration and the formation of the Otter Crops Diston 1979. Extbishment of the Pradvetion Honours Ft Scheme, = UYANA Opening ofthe Ose Disgnstc Cente. 1900 - Reconstruction of the GuySuCo Appren tice Tesning Cente 1081 - Enabiinment of Workers” Councils and the fst electons to these bodies 1989 - Land Levelling Equiment commissioned by ‘the late President Bumhem at Monersin, Steldon. Commisonlog of Bagas Minister Hoyie a Alton € 1998 + Mechanical Tale at Olamond Pilot Pro: Feet nd introduction of Punt Oumper nd Mech ‘niet Horester and Planter. 1985 . Handing over of Wauna ond San Jon Palm Ot proletscevsoged by Guy Saco. Guyane sugar quota in the US. - 18.000 Word orice touches altsine tow of £65 ORGANIZATION STRUCTURE OF THE GUYANA SUGAR CORPORATION LIMITED. ‘PNBIDEL OF Tuk CooeERaTivE ReronUC oF GANA Wa.novre be TiO Con ame 8 Chm «ht Steer ‘ENC Ta > Ta Ohcor EO Hanan Fe Ce Di amr nc at im A. Sinai Fe Cicer ect) AES Aled Ro Be fob IRA Ga ie Prenat ch Ete@ curauasucan conponation uimireD REPORT OF THE AUDITORS TO THE MEMBERS OF GUYANA SUGAR CORPORATION LIMITED ‘We have examined the financial statements set out on pages 14 to 23 which are in agreement with the books ‘of the Company and have obtained all the information and explanations we have required. Our examination ‘was made in accordance with generally accepted auditing standards and included such tests and procedures ‘we considered necessary. {In our opinion, these financial statements give a true and correct view of the state of affairs of the Company ‘at 31 December 1985, and of the net deficit and source and application of funds for the year then ended. ‘THOMAS, STOLL, DIAS & CO. Member Firm TOUCHE ROSS INTERNATIONAL 77 Brickdam Georgetown Guyana 31 January, 1986 13GUYANA SUGAR CORPORATION LIMITED PROFIT AND LOSS ACCOUNT For the year ended 31 December, 1985 ew 1984 Gso00 307,405 | (102,334) 179 | (102,185) (305,401) (102,155) Notes ———— Gso00 Sales 2 333,450 Net Loss a (7,800) ‘Valuation surplus on disposal of fixed assets transferred from reserves 4 221 ‘Net Loss for year (77579) STATEMENT OF ACCUMULATED LOSSES Balance at 1 January (407,556) Net Loss for the year (77,579) Balance at 31 December (485,135) 4 (407,556)GUYANA SUGAR CORPORATION LIMITED BALANCE SHEET ‘As at 31 December, 1985 SS Notes 1984 eT Gso00 sooo ‘SHARE CAPITAL ‘Authorised 300,000,000 Ordinary shares oF $1.00 each 300,000 300,000 Issued and fully paid 273,536,775 Ordinary shares ‘of $1.00 each 273,537 273,837 Capital reserves 4 70,748 63.217 Accumulated losses (485,135) (407,556) Deficiency in shareholders’ funds (140,850) (65,802) Deferred liabilities 5 14,885 15,163 Non—current loans 6 143,635 145,344 94,705 Represented by: Fixed assets 7 182,773 136,363 Investments, a 2,814 265 Deferred receivables 9 3,954 3,763 Deferred cultivation costs 1,390 187 Net current liabilities 10 (143,260), (45,873) 17,671 94,705 Directors: HB. Davis E.0S. Hanoman 16GUYANA SUGAR CORPORATION LIMITED, STATEMENT OF SOURCE AND APPLICATION OF FUNDS For the year ended 31 December, 1985 1984 sooo Gso00 Gsoo0 sooo APPLICATION OF FUNDS Net Loss 77,800 102,334 Adjustments for items not involving the movement of funds Depreciation (14,098) Provision for ex-gratia pensions { 5871) Unrealised loss on exchange i Funds used in operations 56,232 80,354 Purchase of investments (net of redemption) 349 es Loan repayments 3.518 1,346 Deferred cultivation costs 1,203 js Purchase of fixed assets 33,450 19,421 Ex-gratia pensions paid 6.337 5,087 Deferred liabilities 278 = Deferred receivables — employees! loans « 8 106.176 ‘SOURCE OF FUNDS Receipts from the Sugar Industry Rehabilitation Fund 2.752 2.913 Refund of ex-gratia pensions ‘560 707 Loans received 4,845, 145,666 Deferred receivables 15 = Disposal of assets 792 85, Deferred cultivation costs = 885, INCREASE/IDECREASE) IN WORKING CAPITAL Inventories and unsold produce 28,486 Debtors and prepayments (23,030 Creditors and accruals (25,677) External payments deposits (2,433) MOVEMENT IN NET LIQUID FUNDS Cash on hand and at bank 15 Bank overdraft (69,950) ( 69,799) (92,453) 16 26,802 10,427 445,292) 4an 394 47,938 48,3321 GUYANA SUGAR CORPORATION LitaiTED NOTES ON THE ACCOUNTS a SIGNIFICANT ACCOUNTING POLICIES (2) Accounting convention ‘The accounts have been prepared under the historical cost convention, modified by the revaluation of certain fixed assers. (b) Fixed assets and depreciation Fixed assets vested on 26 May 1976 are stated at the book values of the predecessor owners (which were in excess of compensation price by $50,085,942) less provision for depreciation and amortisation computed on those values. [All fixed assets acquired after that date are stated at cost less provision for depreciation and amortisetion, “The excess of book values over compensation price referred to in the preceding paragraph, was set up as the oper ing balance of the valuation reserve. Depreciation is provided on the straight basis calculated to write off each asset over its estimated useful life 2s follows: Freehold buildings : ‘Over 50 years Leasehold properties (Over the lives of the ‘Land expansion costs : From 6 to 10 years, Plant and equipment From § to 16 years Motor vehicles : Over 4 years Alreraft : Over 3 years. ‘The value of ratoon crop is recognised only when reaped, thus all costs for this item have been written off at the balance sheet date. (c}_ Inventories and unsold produce Unsold produce is valued at estimated realisable value less deductions for sugar industry special funds contributions, shipping and solling expenses, where applicable. Consumable spares are valued at the lower of cost and net realisable value, (d) Deferred cultivation costs Cultivation costs related to newly developed land are written-off against revenue in the first year in which income is generated, {e)_ Research and development Research and development expenditure is charged against revenue in the year in which it is incurred, (6) Foreign currency transactions. Forsign currency transactions are recorded in Guyana currency at the rates of exchange ruling at the dates of such transactions. At the balance sheat date, foreign currency assets and liabilities are translated at the rates of exchange ruling at that date or as agreed by the Bank of Guyana and resulting gains and losses are recognised in the profit and loss secount. 7GUYANA SUGAR CORPORATION LIMITED NOTES TO THE ACCOUNTS cont'd - SS (a). Sates Sales represent the amounts earned from the sale of suger and molasses produced during the year, net of suger industry special funds contributions, shipping and selling expentes. Sales also include amounts earned from ‘the sale of other crops produced during the year, (h) Pension Scheme (i) The Company participetes in a contributory pension scheme for its employees. The contributions ‘re held in trustee administered funds which are soparate from the Company's finances, Employees who have retired and are nt members of the pencion scheme are paid ex-gratia pensfons which are recoverable from the Sugar Industry Price Stabilisation Funds. Any amounts not considered to be recoverable are provided for in the profit and loss account. 1984 Gso00 sooo 2. SALES ‘Sugar and Molasses 932,123 305,663, Other Crops. 1,327 1,742 333,450 307,405 Export Sales Levy Amount payable (provisional) 162,012 155,286 Remitted by Government (162,012), (155,286) 333,450 307,405 Under section 6 (1) of the Financial Administration and Audit Act, the Government of Guyana has agreed to remit GS162,011,609 (1984 - GS155,286323) of the Sugar Levy payable pending amendment of the Sugar Levy Act 1974, 1984 Gso00 Gso00 3. NET Loss ‘This amount is determined after the following items have been dealt with: Depreciation 12,845 ‘Audit fees 162 Loss on exchange 5.441 Interest expense - net 39,216 Research and development 1,187 * Provision for ex-gratia pensions 4,745 * This amount i Fund as the accounts of the Price Stabilisation Fund revealed that the amount recoverable from the Fund was greater than the balance in the Fund,& GUYANA SUGAR CORPORATION LIMITED NOTES TO THE ACCOUNTS cont'd Sugar Industry Rehabilitation Fund Valuation Total TT Gs000 ‘sooo Gso00 4, CAPITAL RESERVES Balance at 1 January, 1985 19,236 48,981 88,217 Receipts from Sugar Industry Rehabilitation Fund 2,752 - 2,752 Valuation surplus on disposal of fixed assets transferred to Income statement - (221) Balance at 31 December 1985 21,988 48,760 1984 Gso00 Gso00 5, DEFERRED LIABILITIES Guyana Agricultural Products Corporation 1,319 1,597 Demerara Sugar Company Limited 13,566 13,566 14,885 15,163 It is intended that these liabilities will be settled by the issue of ordinary shares to the shareholders of these companies Gs000 6 LOANS {a} Non-current- Repayable after one year “w iy Lloyds Bank Limited Loan 11. A Sterling loan repayable in sor annual instalments of £170,000 ending in 11986, Interest is at the rate of 7.25% per annum ‘on the outstanding balance = Government of Guyana This loan is to be repaid over seven (7) years with a three (3) year moratorium on the re- payment of the principal sum. Repayments of principal shall be made in ten (10) equal instalments commencing on 30 June 1987 and thereafter at six (6) monthly intervals. Interest 1s at the rate of 14% per annum 143,636 Less: ‘Amount repayable within one year 19 1984 s000 8,542 143,636 (6,834) 145,344GUYANA SUGAR CORPORATION LIMITED NOTES TO THE ACCOUNTS cont'd $e (b) Current - Repayable within one year Gso00 (Tennant Guaranty Limited Loan 11, AUS. dollar loan repayable in December 1982. Interest is payable at the rate of 7.25% per annum and an additional 1.5% per month on amounts due but unpaid 2,387 Loan 111. A US. loan repayable in equal half yearly instalments ending in September 1984. Interest is payable at the rate of 7.25% per annum and an additonal 1.5% per month, on amounts due but unpai 7.841 ‘Chase Bank International - Chicago ‘A.USS. dollar loan repayable in equal half yearly instalments ending in April 1983, Interest is payable at the rate of 9% per annum and an additional 1% per annum on amounts due but unpaid, 568 (iil) Lloyds Bank Li ted Loan 1. & Sterling loan repayable in ‘equal half yearly instalments ending in October 1983. Interest is payable at the rate of 7.5% per annum on the ‘outstanding balance 1,953 Loan 11. A Sterling loan repayable in equal half yearly instalments ending in 1986. Interest is at the rate of 7.25% per annum on the outstanding balance 10,352 {iv) Local insurance Companies and others 2,908 () Loans repayable within one year (per (a) above) - All external loans are guaranteed by the Government of Guyana, 20 1984 Gso00 2444 1728 1811GUYANA SUGAR CORPORATION LIMITED NOTES TO THE ACCOUNTS cont'd 7._ FIXED ASSETS Land Plant LAND AND BUILDINGS Expansion Machinery Total Freehold Leasehold State Lands Cost & Equipment Cost or Valuation Att January 1985 233,725 10,465 163,708 Additions 33,450 ‘927 21,988 Disposals (4,666) (477) (2,893) ‘At 31 December 1985 182,803 Comprising: Valuation 32.401 2.549 18,799 6,481 48,391 Cost 14,956 6 4a74 134,812 a7387 «2,635 «18,708 091s © "182,803 Depreciation At 1 January 1985 97,362 - 7,080 (86,847 Provision for the year 14,098 - 428 13,149 Retirements and disposals (1724) = (166) (1,508) ‘At 31 December 1985 709,736 7,402 98,488 Net Book Values: At 31 December 1885 152,773 19,799 3,513 84,315 At 31 December 1964 136,363 18,799 3,385 76,861 2GUYANA SUGAR CORPORATION LIMITED NOTES TO THE ACCOUNTS cont'd 1984 Gso00 Gso00 8. INVESTMENTS Lochaber Limited: 1,280 Ordinary shaes of $20.00 each + at cost 23 23 Cane Farming Development Corporation Limite: 18,500 'B’ Ordinary shares of $5.00 each (This Company is in liquidation and provision has bboen made for possible losses arising therefrom) 3 an Livestock Development Company Limited: 55,000 Ordinary shares of $1.00 each - at cost 50 50 Government of Guyana 7% equated annuity debentures repayable hall yearly ~ 1 Government of Guyane Defence Bonds 300 150 Emile Woolf College of Accountancy (Guyana) Limited 10,000 Ordinary shares of $1.00 each 10 10 National Bank of Industry and Commerce Limited: 200,000 stock units of $1.00 each 200 2 * Deposit on shares in National Edible Oil Ca. Lid. 2,200 - 265 * Represents part of purchase consideration for assets sold which would be settled by the isue of shares. These shares have not yet been issued. 9, DEFERRED RECEIVABLES “Sugar Industry Price Stabilisation Fund: Ex-gratia pensions less provision, Loans to employees + This amount represents ex-gratia payments made to pensioners and is recoverable from the Special Funds Committee in accordance with the Sugar Industry Special Funds Act, Chapter 69:03,e GUYANA SUGAR CORPORATION LIMITED. NOTES TO THE ACCOUNTS cont'd ————— 1984 Gs000 Gs000 10, NET CURRENT LIABILITIES Inventories 143,528 121,242 Unsold produce 32,732 26,532 Debtors and prepayments 21,523 44,553 “External payments deposits 9,663, 12,096 (Cath on hand and at bank Less: Creditors 64,771 64,010 Accruéd Interest 48,285 23,369 Loans repayable within one year (Note 6 (b)) 25,709 20,775 ‘Taxation 693 693 Bank overdraft (secured) 212,043 142,093 351,501 250,940 (143,260) (48,873) Represent moniat depotited with the commercial banks pending approval from the Central Bank to remit to overseas creditors. 11, FUTURE CAPITAL EXPENDITURE Expenditure authorised by the Directors ‘but not contracted 23,100GUYANA SUGAR CORPORATION LIMITED € STATEMENT OF EMPLOYMENT AND COMMUNITY COSTS 1983 1984 1985 om sm sM EMPLOYMENT COSTS Direct Employee Benefits Wages and Salaries 1744 assay? Incentive Payments 47 48 Other Employee Benefis 28 20.7 Labour Transport Costs 99 95 1938 COMMUNITY COSTS Central Government Taxation and Levies 18 19 4 Local Government Rates and Taxes 10 10 12 Local Sugar Sales Subsidy 39.1 313 - ‘Sugar Industry Special Funds 56 54 87 Community Services 10 13 16 409 20 Total 2428 252.7 2028 Number of Employees 28,403 28,104 27364 ‘Tons Sugar Produced 251.870 241,861 243,000 24