CABLE & WIRELESS JAMAICA LIMITED – DIRECTORS’ CIRCULAR APPENDIX 1 AUDITED FINANCIAL STATEMENTS OF CABLE & WIRELESS JAMAICA FOR PERIOD ENDED DECEMBER 31, 2016 & CONSENT LETTER FROM KPMG TO USE FINANCIAL STATEMENTS Consolidated Financial Statements of Cable & Wireless Jamaica Limited 31 December 2016 Consolidated Financial Statements of Cable & Wireless Jamaica Limited 31 December 2016 Table of Contents Page(s) Directors, senior management, officers and advisors 2 Independent auditors’ report 3-9 Income statements 10 Statements of comprehensive income 11 Statements of financial position 12 Statements of changes in equity 13-14 Statements of cash flows 15-16 Notes to the financial statements 17-57 1 Cable & Wireless Jamaica Limited 31 December 2016 Directors, Senior Management, Officers and Advisors Directors Mr. Mark Kerr-Jarrett J.P. Chairman Mr. Garfield Sinclair Mr. John L. M. Bell Dr. Carolyn Hayle Ms. Michelle English Ms. Rochelle Cameron Company Secretary Senior Management and Officers Garfield Sinclair Chief Executive Officer Ian Cleverly Chief Financial Officer Donovan White Vice President, C&W Business Rajesh Paul Commercial Director Stephen Price Senior Director, Retail Distributions & Operations Ronnie Thompson Senior Director, Customer Experience Carlo Redwood Vice President, Marketing Rochelle Cameron Vice President, Legal & Regulatory Carlton Baxter Vice President, Technology Suzzette Harriott Senior Human Resources Business Partner Kayon Wallace Director, Corporate Communications & Stakeholder Relations Advisors KPMG Auditors The Bank of Nova Scotia Ja. Ltd. Principal Bankers National Commercial Bank Ja. Ltd. Citibank N.A. Myers Fletcher & Gordon Attorneys-at-Law Grant Stewart Phillips & Company Registered Office 2-6 Carlton Crescent Kingston 10, Jamaica Telephone: 926-9700 Fax No. 968-9696 Website: www.discoverflow.com 2 KPMG Chartered Accountants P.O. Box 76 6 Duke Street Kingston Jamaica, W.I. +1 (876) 922-6640 [email protected] INDEPENDENT AUDITORS’ REPORT To the Members of CABLE & WIRELESS JAMAICA LIMITED Report on the Audit of the Financial Statements Opinion We have audited the separate financial statements of Cable & Wireless Jamaica Limited (“the Company”) and the consolidated financial statements of the Company and its subsidiaries (“the Group”) set out on pages 10 to 57, comprising the Group’s and Company’s statements of financial position as at December 31, 2016, the Group’s and Company’s statements of profit or loss and other comprehensive income, changes in equity and cash flows for the period then ended, and notes, comprising significant accounting policies and other explanatory information. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and the Company as at December 31, 2016, and of the Group’s and Company’s financial performance and cash flows for the period then ended in accordance with International Financial Reporting Standards (IFRS) and the Jamaican Companies Act. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. R. Tarun Handa Cynthia L. Lawrence W. Gihan C. De Mel Rajan Trehan Nyssa A. Johnson KPMG, a Jamaican partnership and a member firm of the KPMG network of independent member firms Norman O. Rainford Wilbert A. Spence affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Nigel R. Chambers Rochelle N. Stephenson 3 INDEPENDENT AUDITORS’ REPORT To the Members of CABLE & WIRELESS JAMAICA LIMITED Report on the Audit of the Financial Statements (continued) Material Uncertainty Related to Going Concern We draw attention to note 2.1 of the financial statements, which indicates accumulated losses of $48,807 million (31 March 2016: $47,859 million) and $49,252 million (31 March 2016: $48,303 million) for the Group and the Company, respectively, and stockholders’ net deficits of $29,890 million (31 March 2016: $28,138 million) and $31,010 million (31 March 2016: $29,179 million) respectively, as at the reporting date. This indicates the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern. Until the Group is able to sustain profitable operations, it remains dependent on its ultimate parent for continued financial support. The directors have received a letter from Cable & Wireless Communications Limited, indicating that it has the intent and ability to provide financial support to the Group for the foreseeable future. Our opinion is not modified in respect of this matter. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going Concern paragraphs, we have determined the matters described below to be the key audit matters to be communicated in our report: 1 Valuation of property, plant and equipment and intangible assets The key audit matter How the matter was addressed in our audit There is a significant risk that the Our audit procedures in response to carrying value of the Group’s this matter, included, among others: investment in property, plant and • Involving our own specialist to equipment may not be assess the controls over approval recoverable because of and execution of capital expenditure technological change, the projects, and the appropriate competitive and regulatory commissioning and transfer of environment, and challenging assets when they are ready for economic conditions that affect intended use by management. This the Group’s ability to generate involved interviews with officers of cash inflows from the number of the Group responsible for managing customers or the rates charged the projects and inspecting a to those customers. sample of documentation related to selected projects; 4 INDEPENDENT AUDITORS’ REPORT To the Members of CABLE & WIRELESS JAMAICA LIMITED Report on the Audit of the Financial Statements (continued) Key Audit Matters (continued) 1 Valuation of property, plant and equipment and intangible assets (continued) The key audit matter How the matter was addressed in our audit There is a significant risk that the • Enquiring of management whether carrying value of the Group’s there were indicators that the investment in property, plant and relevant assets may be impaired or equipment may not be that the estimated useful lives were recoverable because of not appropriate, in light of the technological change, the management’s plans for the competitive and regulatory business, the state and environment, and challenging performance of the assets, changes economic conditions that affect in technology and other external the Group’s ability to generate factors that might adversely affect cash inflows from the number of the Group’s ability to generate cash customers or the rates charged inflows from the assets; to those customers. • Inspecting documentary evidence related to management’s assessment of assets for evidence of impairment concerns; and • Physically inspecting a sample of assets to assess whether the condition and use of the assets suggest that they are impaired. Our sample was primarily selected on the basis of monetary value. 2 Recoverability of debtor balances The key audit matter How the matter was addressed in our audit The Group has significant Our procedures in this area included: overdue balances with corporate, • Testing the manual and automated government and residential controls over recording and ageing customers. There is significant receivables. Our testing of judgement involved in automated controls involved using determining the levels of our own Information Technology allowance for impairment on Audit specialists to test the design, these balances, because of the implementation and operating uncertainty involved in estimating effectiveness of automated the timing and amount of future controls; collections. 5 INDEPENDENT AUDITORS’ REPORT To the Members of CABLE & WIRELESS JAMAICA LIMITED Report on the Audit of the Financial Statements (continued) Key Audit Matters (continued) 2 Recoverability of debtor balances (continued) The key audit matter How the matter was addressed in our audit The Group has significant • Testing subsequent receipts for overdue balances with corporate, significant accounts and customer government and residential groups identified as overdue; and customers. There is significant • Assessing the Group’s allowance judgement involved in rates by testing historical collection determining the levels of data for Residential and allowance for impairment on Government customers with these balances, because of the balances with overdue amounts, uncertainty involved in estimating