2011 FINANCIAL STATEMENTS CONTENTS PAGE CORPORATE VISION NOTICE OF ANNUAL GENERAL MEETING CURRENT COMPANY REGULATIONS OF P.B.C. CORPORATE INFORMATION CHAIRMAN’S STATEMENT REPORT OF DIRECTORS CORPORATE GOVERNANCE DIRECTORS’ PROFILE STATEMENT OF DIRECTORS AUDITOR’S REPORT STATEMENT OF COMPREHENSIVE INCOME BALANCE SHEET CHANGES IN EQUITY STATEMENT OF CASH FLOW NOTES TO THE FINANCIAL STATEMENTS ii 2011 FINANCIAL STATEMENTS PRODUCE BUYING COMPANY LIMITED CORPORATE VISION FOR THE YEAR ENDED 30TH SEPTEMBER 2011 Develop and maintain PBC as the most attractive dealer in cocoa, sheanut and any other cash crop in the West African sub-region MISSION Purchase high quality produce, store and deliver same to designated Take Over Centres internally and the export market in the most efficient and profitable manner. COMMITMENT Produce Buying Company’s traditional commitment to its stakeholders remains the same, that is to ensure: Farmer satisfaction Good return on shareholders’ investment Recruitment and retainment of a well-motivated workforce Support of projects and activities to benefit farming communities. CORE VALUES Integrity Reliability Confidentiality Discipline Team work Customer Satisfaction 1 2011 FINANCIAL STATEMENTS NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT the 11th Annual General Meeting of Produce Buying Company Limited will be held at the OSU EBENEZER PRESBYTERIAN CHURCH HALL, OSU, ACCRA on WEDNESDAY, 28TH MARCH, 2012 at 10:00 a.m. to transact the following business:- AGENDA 1. To receive and adopt the Report of the Directors, Auditors and the Financial Statements for the year ended 30th September, 2011 2. To declare Dividends for the year ended 30th September, 2011 3. To approve changes in Directorship · Mr. Tei Quartey – Retiring by rotation · Mr. Kofi Graham – Retiring by rotation · Hon. Kofi Yakah – Retiring by rotation 4. To re-elect the following Directors retiring by rotation · Mr. Kofi Graham · Hon. Kofi Yakah 5. To elect the following new Directors to replace and fill vacancies · Ms. Juliana Asante - Mrs. Cecilia Nyann (Deceased) · Hon. Sampson Ahi - Nana Kwame Nkrumah (Resigned) · Mr. Michael Owusu Manu – Mr. Tei Quartey (Retiring) 6. To appoint Auditors and to authorise the Directors to determine the remuneration. 7. To approve Non-Executive Directors fees 8. Any other business appropriate to be dealt with at an Annual General Meeting 2 2011 FINANCIAL STATEMENTS Special Resolution 1. To amend the Authorised Business of the Company’s Regulations 2. To change the name of the company from ‘Produce Buying Company Limited’ to ‘PBC Limited’ 3. To empower the Directors of the Company in accordance with section 204 of the Companies Act, 1963 (Act 179), to raise funds through equity, debt, convertible loans or through a combination of the aforesaid, in excess of the Company’s Stated Capital to the limit of the value of cocoa purchases for every year. DATED THIS 23RDTH FEBRUARY, 2012 BY ORDER OF THE BOARD EDEM AMA SEKYI COMPANY SECRETARY NOTE: A member of the Company entitled to attend and vote is entitled to appoint a Proxy to attend and vote instead of him/her. A proxy need not be a member of the Company. A form of Proxy is attached and for it to be valid for the purpose of the meeting, it must be completed and deposited at the offices of the REGISTRARS, NTHC LIMITED, MARTCO HOUSE, NO. D.542/4, OKAI MENSAH LINK, ADABRAKA, ACCRA, P. O. BOX KIA 9563, AIRPORT-ACCRA not less than 48 hours before the appointed time of the meeting. 3 2011 FINANCIAL STATEMENTS CURRENT COMPANY REGULATIONS OF PRODUCE BUYING COMPANY LIMITED 'The name of the Company is PRODUCE BUYING COMPANY LIMITED. 1. The nature of the businesses which the Company is authorised to carry on are: a. To acquire and take over as a going concern the activities and businesses of the Produce Buying Division of the Ghana Cocoa Marketing Board and all or any of its assets and liabilities of the said PRODUCE BUYING DIVISION OF GHANA COCOA MARKETING BOARD. b. To buy, collect, store, transport or otherwise deal in cocoa, coffee, shea nuts and shea butter produced in Ghana, and to sell same to the Ghana Cocoa Marketing Board. c. To carry out arrangements, financial or otherwise, and to contract with the Ghana Cocoa Marketing Board for the purchase of cocoa, coffee, shea nuts and shea butter. d. To appoint agents or enter into arrangements with any Company, Firm or any person or group of persons with the view to carrying on the business of the Company.' PROPOSED AMENDMENTS TO THE COMPANY REGULATIONS OF PBC LTD. 1. A change of the name of the Company from the “Produce Buying Company Ltd” to “PBC Ltd.” The essence for this venture is to capitalise on the vibrant and good fortune of the Company in its present state. Currently, the descriptive nature of the name describes only one activity of the company as being “produce buying.” With the current vision and strategy of the Company to secure its financial future by entering into ancillary fields of operation to compliment the core function of cocoa purchasing, it has become necessary to have a name, which highlights the PBC brand and also permits the Company to embrace other operations being undertaken by the company. 4 2011 FINANCIAL STATEMENTS 2. Regulation 1 - The nature of the businesses which the Company is authorized to carry on are: a) To acquire and take over as a going concern the activities and business of the Produce Buying Division of the Ghana Cocoa Marketing Board and all or any of the assets and liabilities of the said PRODUCE BUYING DIVISION OF GHANA COCOA MARKETING BOARD; b) To buy, collect, store, transport, process or otherwise deal in cocoa, coffee, sheanuts, and shea butter and any agricultural produce; c) To carry out arrangements, financial or otherwise for the purchase of cocoa and to sell same to the Ghana Cocoa Board; d) To carry out arrangements, financial or otherwise for the purchase and sale of Coffee, Shea Nuts, Shea Butter and other agricultural produce; e) To carry on business related and incidental to Agricultural Inputs, Supply and Services and Estate Development; and f) To appoint agents or enter into arrangements with any Company, Firm or any person or group of persons with the view to carrying on the business of the Company. These additions to the authorised business of the Company will permit PBC to broaden its operational field by permitting the Company to venture into processing, internal and external marketing of its traditional produce as well as other agricultural produce, the provision of agricultural inputs, supply and services and also real estate in the form of Office Buildings, Warehouses, Cocoa Sheds to name but a few. 5 2011 FINANCIAL STATEMENTS PRODUCE BUYING COMPANY LIMITED CORPORATE INFORMATION FOR THE YEAR ENDED 30TH SEPTEMBER 2011 BOARD OF DIRECTORS Dr. John Frank Abu - Chairman Kojo Atta-Krah - Managing Director Hon. Ernest Kofi Yakah (MP) - Director Mabel Oseiwa Quakyi (Mrs.) - Director Ebenezer Tei Quartey - Director James M. K. Ampiaw - Director Kofi Graham - Director Cecilia Nyann (Mrs.) - Director Nana Kwame Nkrumah I - Director Alhaji Yakubu Ziblim - Director Yaw Sarpong - Director A. T. D. Okine - Director Stephen Baba Kumasi - Director SECRETARY Edem Ama Sekyi(Mrs.) TOP MANAGEMENT Kojo Atta-Krah - Managing Director Joseph Osei Manu - DMD-Fin.& Admin. George Kwadwo Boateng - DMD-Operations AUDITORS Pannell Kerr Forster Chartered Accountants Farrar Avenue P. O. Box 1219 Accra SOLICITOR Edem Ama Sekyi(Mrs.) No. 106, Olusegun Obasanjo Road Dzorwulu Junction Accra REGISTERED OFFICE No. 106, Olusegun Obasanjo Road Dzorwulu Junction Accra BANKERS Barclays Bank of Ghana Limited Ecobank Ghana Limited Ghana Commercial Bank Limited SG-SSB Bank Limited Standard Chartered Bank Ghana Limited 6 2011 FINANCIAL STATEMENTS CHAIRMAN’S STATEMENT It is my pleasure to welcome you once again to the 11th Annual General Meeting of the Produce Buying Company Limited and to present to you the Annual Report and Statement of Accounts of your Company for the Financial Year ended 30th September, 2011. The strong operational foundation that has been laid by the Company since the last couple of years, has spurred the Company to continue to chalk great successes in its financial performances despite the numerous challenges that bedeviled the cocoa industry during the year under consideration. The Company was able to surmount a lot of the challenges and achieve another successful operational year through pragmatic measures taken by the Board and Management. COCOA PRODUCTION National cocoa purchases increased by 70.8% from 632,026 tonnes in 2009/10 to 1,011,880 tonnes during the year under review due mainly to good weather, central government interventions in the provision of fertilizer and other inputs to farmers as well as the mass spraying programme. Similarly, your Company increased tonnage purchased by 56% from 238,967 tonnes in 2009/10 to 374,858 tonnes during the year and achieved a market share of 37%. OPERATING RESULTS Dear Shareholders, the Company’s total revenue increased from GH¢632.902 million to Gh¢1.302 billion, a significant increase of 105.7% mainly due to increase in the quantity of cocoa purchased, producer price paid to farmers, buyers margin to LBCs as well as the freight earnings from our secondary evacuation activities. Correspondingly, the cost of sales grew by 109.6% from GH¢556.674 million of the previous year to GH¢1.167 billion due mainly to the increase in producer price and the jump in the quantity of cocoa purchased. 7 2011 FINANCIAL STATEMENTS The high cost of sales is also an indication of the huge sums of money that were needed and therefore sourced for the Company’s operational activities during the year which resulted in high finance cost. Finance cost which constituted about 25.6% of Gross Operational Earnings continues to pose a challenge to the Company’s financial performance.