- Harel Mallac Group

Transcription

ANNUAL
REPORT
Dear Shareholder
The Board of Directors is pleased to present the Annual Report of The Mauritius Chemical
and Fertilizer Industry Limited (MCFI) for the year ended 31 December 2014, the contents
of which are listed below.
This report was approved by the Board of Directors at its meeting held on 11 May 2015.
Antoine L Harel
Beas Cheekhooree
ChairmanManaging Director
What’s inside
02
Vision, Mission and Values
03
Group Profile
04
24
Statement of Directors’ Responsibilities
24
Statement of Compliance
25
Market Segments
Certificate by Secretary
05
26
Corporate Information
Independent Auditors’ Report to the Members
06
27
Board of Directors
Statements of Financial Position
08
28
Senior Management Profile
Statements of Profit or Loss
10
29
Statements of Profit or Loss and
Chairman’s Statement
Other Comprehensive Income
12
30
Managing Director’s Report
Statements of Cash Flows
14
31
Corporate Governance Report
Statements of Changes in Equity
21
33
Statutory Disclosures
Notes to the Financial Statements
ANNUAL REPORT 2014
1
Vision
To be the leader in the fertilizer and chemical business in
the region and to diversify through new ventures
Mission
• To foster a quality culture and sustainable
development
• To satisfy the requirements of all our
stakeholders
• To create an environment conducive to
maximising the wealth of our Company
• To promote the development and welfare
of our staff while applying best practices
and high ethical standards
Values
• Passion
Generate desire for success
• Relationship
uild a strong bond with our partners and
B
with the community
• Integrity
Be honest and ethical in our dealings
• Development
romote a learning culture and embrace
P
change
• Excellence
urture creativity, share best practices and
N
deliver on promises
2
THE MAURITIUS CHEMICAL AND FERTILIZER INDUSTRY LIMITED
Group Profile
Operating since
1975
Sectors of activity
4
The Mauritius Chemical and Fertilizer Industry Limited (MCFI)
is a manufacturing company, operating an NPK complex fertilizer
plant and a blending plant for fertilizers in the Port area. It is a
public company and has been listed on the official market of The
Stock Exchange of Mauritius since 1989 and is a subsidiary of
Harel Mallac & Co. Ltd.
In addition to the production of fertilizers, MCFI has two trading
arms through two fully owned subsidiary companies, MCFI
(Freeport) Ltd. and MCFI International & Co. Ltd., which are
involved in the trading of commodities in Africa.
Coolkote Enterprises Ltd. is a fully owned subsidiary of MCFI since
01 September 2008. Its main activities consist of waterproofing
and specialty decorative coating applications.
MCFI has a contract to manage two companies, namely Chemco
Limited which trades in chemicals and general goods and
Bychemex Limited which specialises in textile chemicals.
Number of employees
115
OPERATING RESULTS 2014
754,9
TURNOVER (Rs’M)
PROFIT AFTER TAXATION (Rs’M)
29,4
MCFI holds 21.5% of the equity capital of Rehm-Grinaker
Construction Co. Ltd. and Rehm-Grinaker Properties Co. Ltd.
EARNINGS PER SHARE (Rs)
1.34
ANNUAL REPORT 2014
DIVIDEND PER SHARE (Rs)
0.90
3
Market Segments
59% 35% 1%
Blended and
Straight Fertilizers
Complex NPK
Fertilizers
Specialty
Fertilizers
Products
Straight Fertilizers:
Urea
MAP
DAP
MOP
CAN
TSP
Ammonium Sulphate
Products
Manufacturing and
formulation of
complex NPK fertilizers
with Ureaic, Nitrate and
Ammonical base as well as
with organic growth
promoters
Products
Soluble NPK + micro
Liquid NPK + micro
Technical Grade Fertilizer
Organic Plant Nutrients
Organo Mineral Fertilizers
Soil Conditioners
Plant Growth Promoters
Blended NPK:
Urea-based
Nitrate-based
End Uses
Various NPK grades for local
market and export
End Uses
Complete nutrition solutions
for plants:
vegetables, flowers, lawns, turf,
fruit trees, hydroponics,
ferti-irrigation, nursery and
household plants
End Uses
Complete fertilizer range for:
sugarcane, flowers and
ornamentals, vegetables and
fruit trees
4
5%
Mechanical
Application
Products
Mechanical application
of complex fertilizers for
sugarcane growers as per
their crop requirements
End Uses
Homogeneous and precise
application of complex
NPK in sugarcane field with
tractor-mounted controlled
applicators
Corporate Information
COMPANY SECRETARY
HM Secretaries Ltd.
18 Edith Cavell Street
Port Louis
AUDITORS
BDO & Co
BANKERS
Barclays Bank PLC.
Baroda Bank Ltd.
Habib Bank Ltd.
Hong Kong & Shanghai Banking Corporation Ltd.
State Bank of Mauritius Ltd.
The Mauritius Commercial Bank Ltd.
LEGAL ADVISERS
Ivan Collendavelloo Chambers
Etude Georges Robert
NOTARY
Mr Didier Maigrot
Notary Public
REGISTERED OFFICE
Chaussée Tromelin
Fort George
Port Louis
[email protected]
www.mcfi.mu
REGISTRY
Mauritius Computing Services Ltd.
18 Edith Cavell Street
Port Louis
BUSINESS REGISTRATION NUMBER
C06001461
ANNUAL REPORT 2014
5
Board of Directors
Antoine L Harel (57)
Chairman (Non-Executive)
Charles Harel (47)
Non-Executive Director
Antoine L Harel is a Fellow Member of the Institute of Chartered
Accountants in England and Wales and holds a BA (Hons) degree
in Accounting and Computing. He joined Harel Mallac & Co. Ltd. in
1987. In 1997, he was appointed Group CEO and is Chairman of the
Board since April 2005. He was President of the Mauritius Chamber of
Commerce & Industry in 1992/1993 and is a Director of The Mauritius
Chemical and Fertilizer Industry Limited since 2001 and Chairman
since 1 September 2007.
Holder of an MBA from the University of Birmingham and a National
Diploma in Management and Finance from Cape Technikon, South
Africa, Charles Harel joined the Harel Mallac Group in 1993. He held
various positions within the Group and was appointed Chief Executive
Officer of Harel Mallac in January 2014. He was appointed to the Board
of Directors of The Mauritius Chemical and Fertilizer Industry Limited
on 17 March 2009.
Other Directorships (listed Companies):
Compagnie des Magasins Populaires Limitée (Chairman), Harel Mallac &
Co. Ltd. (Chairman), Chemco Limited (Chairman), Bychemex Limited
(Chairman) and Les Gaz Industriels Ltd. (Chairman).
Beas Cheekhooree (53)
Executive Director
In office as from 13 October 2014
Beas Cheekhooree holds a Bachelor’s degree in Chemical Engineering
from the North East London Polytechnic, United Kingdom. He has over
25 years experience in textile and apparel sector and occupied various
senior management positions during the last 15 years in the textile
industry, in Mauritius and in India before joining the Harel Mallac Group
in 2012 as Managing Director of Harel Mallac Export Ltd., a company
forming part of the Chemical Arm of Harel Mallac and occupies this
position up to now. In October 2013, he was appointed General
Manager of MCFI Group of companies. Since October 2014 he is the
Managing Director of Harel Mallac Export Ltd., Harel Mallac (Tanzania)
Limited and MCFI Group of companies.
Bychemex Limited and Chemco Limited.
Allain Doger de Spéville (62)
Independent Director
Allain Doger de Spéville is a Notary Public and was first appointed
to the Board of Directors of The Mauritius Chemical and Fertilizer
Limited on 12 July 2006.
Harel Mallac & Co. Ltd., Compagnie des Magasins Populaires Limitée,
Guy Harel (66)
Guy Harel joined Harel Mallac Group in 1981 as Managing Director
of Fapcom Ltd. In 1983 he created Henkel Chemicals (Mauritius)
Limited and became its Managing Director in 1996. He was, since
the acquisition of the former by the Harel Mallac Group in 2007,
the Managing Director of Archemics Ltd. up to 31 December 2012.
He was appointed to the Board of The Mauritius Chemical and
Fertilizer Industry Limited on 29 May 2013.
Other Directorships (listed companies):
Vincent Labat (52)
Vincent Labat graduated as a Chemical Engineer. From 1996 to 2009, he
was the Managing Director of Les Gaz Industriels Ltd., a listed Company.
In 2010, he joined Medine Ltd. as Project Development Executive. In
July 2011, he was appointed as Managing Director of the Agriculture
Cluster. He is a Director of The Mauritius Chemical and Fertilizer
Industry Limited since 26 October 2006.
Other Directorship (listed Companies):
The Mauritius Oil Refineries Ltd (Chairman).
6
Harold Ng Kwing King (65)
Harold Ng Kwing King holds a BSc Hons degree in Chemical
Engineering, University of Leeds and he is a Senior Member of the
American Institute of Chemical Engineers. He joined The Mauritius
Chemical and Fertilizer Industry Limited in 1974 as Shift Engineer and
he subsequently assumed various positions as Assistant Production
Manager (1976), Production Manager (1978), Plant Manager (1980),
Deputy General Manager (1988) and Managing Director (2006 to
2010). He was also Managing Director and Board Director of several
Harel Mallac Group subsidiaries, i.e., Chemco Limited, Bychemex
Limited, Coolkote Enterprises Ltd., Harel Mallac Export Ltd., MCFI
International (Zambia) Ltd., Harel Mallac (Tanzania) Ltd. He is presently
a management, trade and logistics consultant in Hariseng Ltd. He was
appointed to the Board of The Mauritius Chemical and Fertilizer
Industry Limited on 17 December 2003.
Jean Yves Corson (55)
In office up to 21 July 2014
Jean Yves Corson, holder of a Maîtrise d’Economie d’Entreprise from
Université de Paris I, Panthéon Sorbonne, held various senior management
positions in France from 1986 to 1990 before returning to Mauritius
where he joined Noblesse Cie Ltée. He joined the Groupe Union in 1992
as Financial Manager and was appointed Corporate Planning and
Development Manager in 1999. He was appointed to the Board of
Directors of The Mauritius Chemical and Fertilizer Industry Limited on
14 December 2010.
Jean Yves Corson passed away on 21 July 2014.
Other Directorships (listed companies): None.
Michel Rivalland G.O.S.K. (61)
Michel Rivalland G.O.S.K. is a Fellow Member of the Chartered Association
of Certified Accountants. He joined the Board of Directors of The
Mauritius Chemical and Fertilizer Industry Limited on 1 June 2006 and
served as Managing Director from October 2006 to 30 June 2009. He
is currently an Executive Director of Harel Mallac & Co. Ltd.
Compagnie des Magasins Populaires Limitée, Harel Mallac & Co. Ltd.,
ANNUAL REPORT 2014
7
Senior Management Profile
Beas Cheekhooree
Managing Director
Romesh Raja Rai
Finance Manager
Beas Cheekhooree holds a Bachelor’s degree in Chemical Engineering
from the North East London Polytechnic, United Kingdom. He has
over 25 years experience in textile and apparel sector and occupied
various senior management positions during the last 15 years in the
textile industry, in Mauritius and in India before joining the Harel
Mallac Group in 2012 as Managing Director of Harel Mallac Export
Ltd., a company forming part of the Chemical Arm of Harel Mallac and
occupies this position up to now. In October 2013, he was appointed
General Manager of MCFI Group of companies. Since October 2014
he is the Managing Director of Harel Mallac Export Ltd., Harel Mallac
(Tanzania) Limited and MCFI Group of companies.
Romesh Raja Rai is an Associate Member of the Institute of Chartered
Accountants in England and Wales (ACA) and completed his articles
with Coopers and Lybrand (London). He joined the MCFI Group in
1988 as Finance Manager.
Eric de Maroussem
Sales Manager
In office up to 31 July 2014
Holder of a B.Com degree from the University of Natal, South Africa,
Eric de Maroussem has worked for Phoenix Beverages Ltd as Sales
Manager before joining Archemics Limited in 2007 as Head of Sales.
He joined the Company as Sales Manager in 2009.
Ranjit Jatooa
Operations Manager
Ranjit Jatooa is a qualified Agronomist and holds a Bachelor’s degree in
Agriculture and a Master’s degree in Crop Science from the University
of Mauritius. He joined Chemco Limited in 2005 as Sales Executive
in the Agribusiness Department and was promoted Product Manager
in 2007. He joined MCFI Ltd in 2009 as Sales Manager, role which he
fulfilled until his nomination as Operations Manager in April 2014.
Harold Lai Chuck Choo
International Sales and Project Manager
Holder of a BSc (Hons) degree in Chemical Engineering from Teesside
University, Harold Lai Chuck Choo was the Operations Manager since
October 2006 after serving as Technical Manager of the MCFI Group
since May 1988. He was the Acting Plant Manager at the Grays Refinery
Ltd from 1981 to 1988. He is a Senior Member of the American
Institute of Chemical Engineers and represents the Company in the
technical sub-committee of the International Fertilizers Association.
In April 2014, Harold moved from the operational activities to take
over as International Sales and Project Manager of the Company.
8
Christna Hosanee
Group Accountant
Christna Hosanee started his career at MCFI Ltd in 1978. He
was involved in the setting up of the computer department in the
mid-1980s and has held various positions across the organisation
amongst which, as IT Supervisor, and later, as the Accountant of sister
companies Chemco Limited and Bychemex Limited. He is a Fellow
member of the Association of Chartered Certified Accountants.
Ashok Varjangbhay
Managing Director of MCFI International (Zambia) Ltd.
Holder of a Bachelor’s degree in Chemical Engineering from IIT
Bombay, India, Ashok Varjangbhay was the General Manager of
Mauritius Jute and Textiles Ltd. from 1986 to 1995 prior to starting
Zebra Trading Ltd in Zambia. He is the Managing Director of MCFI
International (Zambia) Ltd since the start of its operations in 1999.
He is a member of the Engineering Institution of Zambia.
Ashvinath Geerjanan
Human Resources Manager
Holder of an MBA, Ashvinath Geerjanan, joined Harel Mallac Group
in September 2012. He has extensive experience in commercial
and industrial Human Resources Management, and is a certified
practitioner of Neuro Linguistic Programming (NLP). He manages the
daily HR related operations of MCFI Ltd, Bychemex Limited, Chemco
Limited, Coolkote Enterprises Ltd, Suchem Ltd and Archemics Ltd,
and also ensures smooth HR practice roll out to overseas businesses
of the chemical cluster.
ANNUAL REPORT 2014
9
Chairman’s Statement
The Group managed to improve its
Profit After Tax by 144%. Earnings
per Share also increased from
Rs0.55 in 2013 to reach Rs1.34 in
2014.”
Dear Shareholder
MCFI Group’s performance showed a marked improvement compared
to 2013. Despite a 7% decrease in turnover, the Group managed to
improve its Profit After Tax by 144%. Earnings per Share also increased
from Rs0.55 in 2013 to reach Rs1.34 in 2014 while Net Assets per
Share grew by 0.2% for the corresponding period.
These positive results were achieved amidst a taxing year for the
fertilizer cluster in Mauritius and in the wake of economic volatility
in African countries where growth rates slowed and local currencies
weakened against a strengthened US Dollar.
The local agricultural sector faced another challenging year
with sugarcane plantation registering a contraction of 1.7% in
2014. Revenue dropped as a result of falling sugar prices on the
world commodity market. Likewise, labour strikes and adverse
climatic conditions compounded the difficulties of the sector.
As explained above, this year has seen MCFI registering a
material drop in its local sales. This is a pattern which has been
identified over the last seven crop years. The drop in sugar
prices has compelled a few planters to stop their activities
and this trend is likely to continue. Furthermore, the price
competition on the local market is increasing with imports
from the Far East by local traders.
The Directors are well aware of the impact of the drop in sales on the
profitability of the fertilizer business and a reengineering plan is being
prepared so as to safeguard the interests of our shareholders.
Nonetheless, the shortfall in the domestic operations was partly
mitigated by a sizeable increase of 96% in the fertilizer exports to the
Sub-Saharan African region. This remarkable performance has given
new impetus to the Group’s African and regional export strategy.
10
144%
Our Profit After Tax rose by
Despite operating in an increasingly competitive environment, our
fellow subsidiaries Chemco Limited and Bychemex Limited showed
resilience. Chemco improved on its 2013 performance while
Bychemex registered a drop as a result of a sluggish textile industry.
Indeed, the textile sector had another subdued year with a sparing
sectoral growth rate of 1%, accrued pressure on margins and the
uncertainty surrounding the renewal of the African Growth and
Opportunity Act (AGOA) trade preference by the US Government.
The share of results of associate, Rehm-Grinaker, improved from a
loss in 2013 to an encouraging Rs3.9M profit in 2014 despite the
construction industry undergoing a contraction of 8.5% in 2014.
In line with its dividend policy, the Company declared a dividend of
Rs0.90 per share representing a total of Rs19.8M in December 2014.
to reach
29.4
Rs
Outlook
Two years ago, MCFI’s sustainability strategic intent led to the
development of a bio-fertilizer plant that would eventually be
launched in partnership with the Mauritius Cooperative Agricultural
Federation and the Indian Farmers Fertilizer Cooperative (IFFCO)
in 2015. We trust that this new plant, which is a testimony to our
commitment to a greener and more sustainable agro-industry, will
bring positive results and further consolidate our position as a key
operator in the fertilizer business.
Moreover, MCFI Ltd has broken new grounds in Ethiopia where it
will be engaged in training the management and technical staff of the
first five local fertilizer units being commissioned in the country. This
is expected to promote MCFI’s technical expertise in the fertilizer
business while increasing its visibility on the African continent.
In terms of future outlook, the performance of our fertilizer cluster
will likely depend on the health of our sugar industry as well as
national reforms in the agricultural sector. We will continue to
implement measures to consolidate our fertilizer business both
locally and in the region, namely Africa where the potential for
growth far outweighs the inherent challenges. Sustainability will
remain a cornerstone of our future expansion strategy across all our
companies and subsidiaries.
ANNUAL REPORT 2014
M
Acknowledgements
I would like to express my appreciation to my fellow colleagues
on the Board for their wise counsel over the last year, to our
Managing Director, Beas Cheekhooree, for his strong leadership
over this past year, as well as to the Senior Management Team
and all the employees of MCFI.
Jean Yves Corson, who served on the Board since 2010, passed
away in July 2014. He has, since his appointment to the Board,
served the Company with professionalism and discernment.
We are thankful for his valued contribution.
Before ending, I would like to acknowledge with thanks the
valuable support of our collaborators and the continuous trust
of our shareholders and customers.
Antoine L Harel
Chairman
11
Managing Director’s Report
Profit After Tax increased
from Rs12M in 2013 to
Rs29M in 2014”
Dear Shareholder
MCFI Group of companies improved its overall performance in
2014. Profit After Tax (PAT) increased from Rs12M in 2013 to
Rs29M in 2014 despite lower revenues from its fertilizer division
which constitutes 70% of the Group’s activities.
Revenue from fertilizer related activities fell from Rs540M
in 2013 to Rs490M in 2014, corresponding to a 9% drop in
turnover as a result of lower demand of fertilizer across our
local market. This drop was partly offset by a higher export
volume to Reunion and Africa.
In line with our 5-year strategic plan, a series of measures were
initiated in 2014 to turn MCFI Ltd and its subsidiaries into a more
resilient organisation with the agility to adapt to future market
dynamics. Subsequently, MCFI Group of companies delivered
a stronger performance during 2014 despite an increasingly
competitive business environment. The Group will continue to
focus on improving its operational efficiency, innovation of products
and services and strong financial management in order to reach its
objectives.
MCFI International (Zambia) Ltd
The challenges faced by the local sugar sector heavily impacted
our fertilizer operations in 2014. The continued reduction of the
price of sugar, which fell to around Rs12,000 per tonne, resulted
in a substantial drop in revenues for the operators. Subsequently,
the Group registered a lower turnover from the sale of fertilizer
to the local market.
Our subsidiary in Zambia had a difficult year in 2014.
The Zambian economy experienced one of its most difficult
years in recent history with a slowdown of its mining activities
following a drop in the price of copper. Manufacturing output
fell causing a drop in chemicals consumption in the country.
Our subsidiary registered a drop of 16% in turnover. The slide
of the local Zambian Kwacha against the US Dollar, coupled with
reduced manufacturing output, eroded a substantial chunk of our
subsidiary’s profits.
12
Our exports registered an exponential growth in 2014. Export
volume of granular fertilizer to the region and Africa increased
from 6,000MT in 2013 to 11,000MT in the course of 2014 as a
result of our export strategy. We managed to regain our market
share in Reunion as well as increase our exports to African
countries, especially Zambia. This helped our fertilizer business
mitigate its shortfall in our local market.
Exports volume increased from
6,000
MT
11,000
to reach
MT
Way forward
Despite the challenges inherent to the African territory, we remain
confident that our strategy will bring positive results in due course,
and we will persevere. We recently signed an agreement with a
local partner in Ethiopia for a landmark project which will see MCFI
engaged in training the management and technical staff of the first
five local fertilizer units being commissioned in the country.
Notwithstanding the continued downturn in the construction
sector, which showed a contraction of 8.5% in value added for
2014, our fellow subsidiary company, Coolkote Enterprises Ltd,
which specialises in waterproofing and coatings for buildings posted
improved results, with a turnover of Rs45M compared to last year’s
Rs38M. In an industry that faces recurrent issues linked to a culture
of delayed payments, Coolkote has set up stringent cost control
measures while reinforcing management supervision. This allowed
the company to minimise its losses compared to the previous year
and show steady progress towards renewed profitability.
Rehm-Grinaker Construction Co. Ltd, our associate company,
showed encouraging signs despite the on-going slowdown in the
construction industry and lack of large-scale projects. For the 12
months ended 31 December 2014, it posted a profit of Rs11.7M for
a corresponding turnover of Rs1.2Bn. Rehm-Grinaker Properties
Co. Ltd, which is also our associate company, recorded a profit of
Rs7.9M on a turnover of Rs14.4M for the same period. Therefore,
our share of profit from associates amounted to Rs3.9M in 2014.
MCFI’s two other fellow subsidiary companies, Bychemex
Limited and Chemco Limited, both service the textile sector that
unfortunately faced another year of mixed fortunes. The uncertain
renewal of the AGOA trade preference and fierce international
trade conditions put a lot of pressure on local textile operators,
thereby driving margins down. Bychemex suffered the most,
with results down on last year’s performance. Profit After Tax as
a percentage of turnover dropped from 2.3% to 1.0% over the
previous year. However, despite the challenging environment,
Chemco’s PAT improved by 12.0% over previous year.
Fertilizer business - Regional and African markets
The Group plans to continue its regional expansion in the Indian
Ocean and Africa for its fertilizer business. Strategic alliances
with major international players will be key to achieving this
objective. MCFI International Zambia will be a key component
of this expansion strategy in Africa. We will also reinforce our
marketing strategy in Madagascar.
Fertilizer business - Local market
Increased diversification into an eco-friendly range of fertilizers
will help mitigate the drop in demand of granular fertilizers
locally. As such, MCFI plans to start the operation of its biofertilizer unit in 2015 together with The Mauritius Cooperative
Agricultural Federation Ltd (MCAF). The Company also aims
to improve production efficiencies with a view to reducing
operational costs via a reengineering of its fertilizer operations.
Other developments - MCFI
MCFI Ltd has set up a dedicated team to work on a series
of projects with an objective to optimise as well as generate
more revenues from the plot of land it has on lease from
the Mauritius Ports Authority (MPA). The projects being
considered are intended to exploit the strategic location of
the plot and will be in line with the MPA’s port Master Plan.
The team expects to submit a comprehensive proposal to the
Board of MCFI during the course of this year for consideration.
Subsidiaries
Coolkote Enterprises Ltd intends to widen its customer base
by making its current range of products and services available
to the individual market segment. The Company will also
introduce a new service in the form of crack-injection as part
of its waterproofing package.
Further initiatives will be undertaken at Bychemex Limited and
Chemco Limited to improve efficiency across their operations.
New sectors of activities such as total water management
services will also be developed in line with the Group’s mission
of fostering sustainable development.
Beas Cheekhooree
Managing Director
ANNUAL REPORT 2014
13
The Mauritius Chemical and Fertilizer Industry Limited is committed to the highest standard of business integrity, transparency and professionalism
in all its activities to ensure that the Company and the Group are managed ethically and responsibly to enhance business value for all stakeholders.
THE BOARD OF DIRECTORS
The Board endeavours to exercise leadership, entrepreneurship, integrity and judgement in directing the Company, so as to achieve continuing
prosperity for the organization whilst ensuring both performance and compliance.
The Board also ensures that the activities of the Company comply with all legal and regulatory requirements as well as its constitution from which
the Board derives its authority to act.
The Board inter alia oversees the development and implementation of the Company’s corporate strategy and reviews performance objectives. It
ensures the succession plans for key individuals and effective communication with the Company’s stakeholders, promotes the Company’s Code of
Ethics and supervises financial and capital management. As such, it reviews and approves quarterly and annual financial reports, monitors financial
results and approves major capital expenditure, major acquisitions, divestitures and material commitments. The Board also oversees compliance
and risk management.
At 31 December 2014 the Board of Directors consisted of eight members, of whom two were independent directors. The Board is of the view
that having the Managing Director and the Finance Manager attending Board meetings satisfies the need for executive presence on the Board as
expressed in the Code of Corporate Governance. Non-executive Directors have free access to members of the senior management team. All
Directors have access to the Company Secretary. With a view to enhance the Board’s effectiveness, a Board’s performance review is carried out
yearly to assess the director’s appreciation of the Board’s performance, its procedures and practices. The results of the assessment are discussed
at the Corporate Governance Committee. This Committee makes recommendations to the Board on any remedial action that may be required.
The elected Directors hold office for one year but are eligible for re-appointment. Directors are elected or re-elected by separate resolutions.
The Board has three committees (as described below), which meet regularly under the terms of reference set by the Board. The Board entrusts
the day-to-day management of the Company to its Managing Director who ensures the smooth running of the organisation. The composition of
the Board of Directors and other directorships held by the Directors in listed companies are given on pages 6 and 7.
BOARD MEETINGS
The Board meets regularly during the year and for the period under review the Board met eight times. The Board meetings are conducted in
accordance with the Company’s constitution and the Companies Act.
Board meetings are organised in such a way that Directors receive all the information important to their understanding of the business to be
conducted at the Board meeting so that they can participate fully in the decision-making process.
At these Board meetings, the Company’s and Group’s budget, performance and forecast are reviewed and approved, reports from the General
Manager and Committees’ Chairpersons are received, strategic issues discussed and statutory matters approved. The Board may invite
management or external consultants to attend Board meetings whenever required.
BOARD COMMITTEES
Corporate Governance Committee
The Corporate Governance Committee consists of Mr. Antoine L Harel (Chairman) and of Messrs Allain Doger de Spéville and Vincent Labat.
The terms of reference of the Committee include the key areas that are the remit of a nomination and remuneration committee as contained in
the formal terms of reference approved by the Board of Directors. Its main responsibilities include establishing a formal and transparent procedure
for developing policy on executive and senior management remuneration, as well as determining specific remuneration packages for the Executive
Directors of the Company. The Committee fixes the fees of the Company’s non-executive and independent non-executive Directors. It oversees
the process regarding recommendation of potential candidates, ensures that proposed Directors meet the required criteria and standards, and
are not disqualified from being Directors. The Committee further monitors the balance and effectiveness of the Board. The Committee makes
recommendations to the Board on the nomination and remuneration of the Company’s representatives on the Board of subsidiary companies.
The Corporate Governance Committee makes recommendations for the election of Directors at the next Annual Meeting.
During the year under review the Committee met four times.
14
Audit and Risk Committee
The Audit and Risk Committee is chaired by Mr Vincent Labat and consists of two other members, namely Messrs Allain Doger de Spéville and
Michel Rivalland, G.O.S.K. The Committee fulfilled its responsibilities for the year under review, in compliance with its formal terms of reference
approved by the Board of Directors. The roles and responsibilities of the Audit Committee are to assist the Board in discharging its duties
relating to the safeguarding of assets, the operation of adequate systems and control processes, and the preparation of accurate financial reports
and statements, in compliance with all applicable legal requirements and accounting standards. The Committee also caters for issues relating
to risk management and provides a forum for discussing business risks and control issues and for formulating relevant recommendations for
consideration by the Board. The Board is satisfied that the Audit Committee has the required skills, knowledge and financial experience to
discharge its duties effectively. During the period under review the Committee met four times and fulfilled its responsibilities in compliance with
its terms of reference which were formally approved by the Board.
Strategic Committee
The Strategic Committee is chaired by Mr. Antoine L Harel and at 31 December 2014, its other members were Messrs Michel Rivalland, G.O.S.K and
Charles Harel. The Committee examines investment prospects and other strategic issues and makes its recommendations to the Board. During
the period under review the Committee met four times and performed its duties as per its terms of reference.
ATTENDANCE OF MEMBERS AT BOARD AND COMMITTEE MEETINGS HELD IN 2014
Antoine L Harel
Beas Cheekhooree
Jean Yves Corson
Allain Doger de Spéville
Charles Harel
Guy Harel
Vincent Labat
Harold Ng Kwing King
Michel Rivalland, G.O.S.K.
Board of
Directors
Corporate
Governance
Committee
Audit
Committee
Strategic
Committee
8/8
3/3
4/4
6/8
8/8
8/8
7/8
7/8
8/8
4/4
3/4
3/4
-
2/2
4/4
4/4
4/4
4/4
4/4
3/4
RISK MANAGEMENT
The Board regularly addresses and evaluates physical, human resources, business, financial, reputational, regulatory and compliance risks. During
the course of 2014, the internal audit function examined and evaluated the adequacy and effectiveness of control systems in place within the
Company and its subsidiaries, focusing on sales and account receivables, procurement and accounts payable, fixed assets, treasury management
as well as stock management. Reports were subsequently produced and submitted to the Audit Committee which reviewed them and, when
applicable, made relevant recommendations to the Board.
Since 2010, a risk management framework for the Company was adopted. This was followed by implementation of a continuous and dynamic
system of risk assessment through compliance checks and discussions with the management for enhanced risk mitigation strategies.The following
are some risks that were identified and control procedures that were implemented:
Physical and environmental risks
- F orce majeure (riots, cyclones and other natural calamities): Cyclone and fire procedures were adopted, insurance cover was subscribed to, and
business continuity and disaster recovery plans were identified.
- On site accidents relating to both employees and the general public: Health and safety as well as security procedures were adopted, the services
of an occupational physician consultant retained, and a full-time health and safety officer employed.
- Stock losses, fraud and theft: Stock control, supervision and control procedures were set up.
- Off site accidents by lorries carrying liquid chemicals or fertilizers: Drivers’ awareness on road safety measures was constantly maintained,
regular inspection of vehicles took place, and public liability insurance cover subscribed to.
Human resources risks
- Loss of key personnel: Retention policies have been adopted as well as formal performance assessment and reward system implemented.
- Reputation, image and business conduct: A Code of Ethics has been implemented and adequate reporting procedures have been set up.
- High risk jobs: Regular health surveillance is performed on employees in high risk jobs and adequate medical insurance cover subscribed to.
ANNUAL REPORT 2014
15
Technology risks
- IT crash/breakdown: Back up procedures as well as adequate restriction procedures have been established.
- Information theft: Users’ policies and control procedures have been introduced.
Internal Control
Internal control is a process designed to provide reasonable assurance regarding the achievement of organisational objectives with respect to:
- Effectiveness and efficiency of operations;
- Safeguarding of assets and data of the organisation;
- Reliability of financial and other reporting;
- Prevention of fraud and irregularities;
- Acceptance and management of risk;
- Conformity with the codes of practice and ethics adopted by the organisation;
- Compliance with applicable laws and regulations; and
- Supporting business sustainability under normal as well as adverse operating conditions.
The Board has set appropriate policies to ensure that the above-mentioned control objectives are achieved.
Three reviews were performed by the Internal Audit during the year covering all significant areas of the Company’s internal control.
Internal Audit
Internal audit is an objective assurance function reporting to the Board of Directors and management. Internal audit provides assurance as to
the adequacy and effectiveness of the risk management and internal control framework of an organisation. Internal audit assists the Board and
management to maintain and improve the process by which risks are identified and managed and helps the Board discharge its responsibilities to
maintain and strengthen the internal control framework. Internal Audit covers all significant areas of the Company’s internal control.
The Group Internal Auditor has examined the current control systems to check their suitability and effectiveness, and to ensure that they are being
adhered to. The Group Internal Auditor has unrestricted access to the Company’s records, management and employees. The Internal Auditing
department conducts its assignments based on a yearly plan, which is validated by the Audit Committee. Systems reviewed in 2014 at Company’s
and subsidiaries levels include procurement and creditors cycles, stock, sales and debtors’ cycles, treasury and fixed assets management control
and work in progress management and cover all significant areas of the Company’s internal control.
During the year under review the Harel Mallac Group Internal Auditor regularly submitted to the Audit Committee audit reports relating to the
Company and its subsidiaries for discussion and follow-up of the implementation of recommended actions.
COMPOSITION OF SUBSIDIARY COMPANIES’ BOARDS
The composition of the Boards of subsidiary companies is given on page 21.
GROUP STRUCTURE
The Directors recognise that the parent entity is Harel Mallac & Co. Ltd. and that the ultimate parent entity is Société Pronema. The Directors
common to the aforesaid entities are Mr. Antoine L Harel who is ‘co-gérant’ of Société Pronema and director of Harel Mallac & Co. Ltd.
Messrs Charles Harel and Michel Rivalland, G.O.S.K. sit on the Board of Directors of Harel Mallac & Co. Ltd.
SHAREHOLDERS HOLDING MORE THAN 5 PER CENT OF THE COMPANY
Shareholders directly or indirectly interested in 5 per cent or more of the ordinary share capital of the Company are detailed on page 23.
16
DIVIDEND POLICY
Dividends are distributed after considering the Company’s performance and profitability, gearing, investment needs, capital expenditure
requirements and growth opportunities.
The Board declared a dividend of Rs0.90 per share in December 2014.
Year
Dividend Paid
(Rs)
Dividend Cover
(Times)
Dividend Yield
(%)
2010
2011
2012
2013
2014
1.0
1.0
1.0
1.0
0.9
3.8
2.2
0.8
0.5
1.5
2.6
2.3
3.6
4.2
3.6
DAILY SHARE PRICE FROM JANUARY 2012 TO FEBRUARY 2015
MCFI Share Price v/s Semdex from January 2012 to February 2015
2,200
2,100
45
2,000
40
1,900
35
1,800
Semdex
MCFI Share Price (Rs)
50
30
1,700
25
1,600
20
Jan - 15
Feb - 15
Dec - 14
Nov - 14
Sep - 14
Oct - 14
Jul - 14
Aug - 14
Jun - 14
Apr - 14
May - 14
Mar - 14
Jan - 14
Feb - 14
Dec - 13
Nov - 13
Sep - 13
Oct - 13
Jul - 13
Aug - 13
Jun - 13
Apr - 13
May - 13
Mar - 13
Jan - 13
Feb - 13
Dec - 12
Nov - 12
Sep - 12
Oct - 12
Jul - 12
Aug - 12
Jun - 12
Apr - 12
May - 12
Mar - 12
Jan - 12
Feb - 12
1,500
SEMDEX
MCFI
DIRECTORS’ INTEREST IN SHARES
The direct and indirect interests of Directors in the ordinary shares of the Company and its subsidiaries are to be found on page 22.
DIRECTORS’ DEALINGS IN SHARES OF THE COMPANY
With regard to Directors’ dealings in the shares of the Company, the Directors confirm that they have followed the principles of the Model Code
on Securities Transactions by Directors as detailed in Appendix 6 of the Mauritius Stock Exchange Listing Rules. During the year under review
none of the Directors bought or sold any of the Company’s shares.
RELATED PARTY TRANSACTIONS
Related party transactions are detailed on pages 70 and 71.
SENIOR MANAGEMENT PROFILE
The profile of the senior management team is given on page 8.
COMPANY’S CONSTITUTION
The constitution of the Company does not provide any ownership restrictions or pre-emption rights. It is in agreement with the Companies Act
2001 and the listing rules of the Stock Exchange of Mauritius and does not contain any material clause that needs to be disclosed.
SHAREHOLDERS AGREEMENT AFFECTING THE GOVERNANCE OF THE COMPANY BY THE BOARD
The Company is not aware of any such agreement during the period under review.
ANNUAL REPORT 2014
17
THIRD PARTY MANAGEMENT AGREEMENT
The Company has a management contract with Harel Mallac & Co. Ltd. for management support services including but not limited to financial,
accounting, legal, internal audit and human resources fields. The agreement is renewable on a yearly basis.
DIRECTORS’ FEES
The directors, to the exception of the executive director and two of the non-executive directors are paid directors’ fees and fees in relation to
the Audit, Corporate Governance and Strategic Committees, and sittings on Boards of subsidiary companies.
DIRECTORS’ REMUNERATION
Directors’ remuneration is given on page 22. It has not been disclosed on an individual basis due to commercial sensitivity of the information.
REMUNERATION POLICY
The Company’s remuneration policy recommends that the Company provides competitive rewards for its senior executives and other senior
management staff, taking into account the Company’s performance and external market data from independent sources, in particular, where
available salary levels for similar positions in comparable companies.
The remuneration package consists of base salary, fringe benefits and an annual individual performance bonus. The remuneration package is
determined by the Board of Directors upon recommendations of the Corporate Governance Committee.
Directors and members of Board Committees may receive additional fees for their roles on such committees.
EMPLOYEE SHARE OPTION PLAN
No employee share option plan is available within the Group.
CODE OF ETHICS
The Board has adopted a Code of Ethics reflecting the Group’s values and corporate culture. The employees are expected to abide by the set
Code.
PROFILE OF COMPANY’S SHAREHOLDERS AS AT 28 FEBRUARY 2015
Size of the Shareholding
1-500
501-1,000
1,001-5,000
5,001-10,000
10,001-50,000
50,001-100,000
100,001-250,000
250,001-500,000
Over 500,000
Total
Number of Shareholders
Number of Shares Owned
903
142
314
63
54
13
6
5
2
1,502
164,615
111,137
749,919
447,312
1,052,736
904,385
1,027,840
1,499,110
16,049,364
22,006,418
%Holding
0.75
0.50
3.41
2.03
4.79
4.11
4.67
6.81
72.93
100.00
SUMMARY BY SHAREHOLDING CATEGORY AS AT 28 FEBRUARY 2015
Category of Shareholders
Individual
Insurance and assurance companies
Pension and provident funds
Investment and trust companies
Other corporate bodies
Total
18
Number of Shareholders
Number of Shares Owned
1,383
3
3
4
109
1,502
2,687,290
700,600
180,356
134,877
18,303,295
22,006,418
%Holding
12.21
3.19
0.82
0.61
83.17
100.00
SHAREHOLDER INFORMATION
Forthcoming Annual Meeting
A proxy form is enclosed for those shareholders unable to attend. Shareholders are requested to bring their ID cards or passports to the meeting,
as these are required for registration.
Schedule of Events
Publication of condensed audited results for previous year
Annual Meeting
Publication of condensed results for the 1st quarter
Publication of condensed results for the 2nd quarter
Publication of condensed results for the 3rd quarter
Dividend declaration & payment
March 2015
May/June 2015
May 2015
August 2015
November 2015
December 2015/January 2016
Shareholders’ Practical Guide
Issues
Change of address
If shares are deposited with CDS
Change of name
Acquisition or disposal of shares
Share transfers
Lost share certificate
Direct dividend credit
Action
Contact the Company’s secretariat
Contact personal broker
Contact personal broker
Forward the relevant form to the Company’s secretariat
SOCIAL, HEALTH AND SAFETY
In line with the philosophy of the Harel Mallac Group which considers Occupational Health and Safety as a foremost priority across all operations,
the goal of MCFI is to continuously improve the workplace environment while driving injuries, occupational illnesses and operational incidents as
close to zero as possible.
MCFI is fully committed to protect and enhance the health and safety of all its employees in the workplace through its on-going hazard and risk
assessment processes, control systems and preventive measures against any occupational diseases in compliance with OSHA 2005.
The numerous initiatives such as, the refresher Health and Safety Induction Training, awareness of Duties of Employers and Employees introduced
in 2014, have consistently inculcated safety-orientated behaviours; thereby leading to reduced incident rate across the Harel Mallac Group,
including at MCFI.
It is a fact that business operations involve potential risks but these risks can be substantially mitigated if managed properly. Henceforth, a
considerable amount of time, effort and money have been expended in identifying and eliminating potential hazards before they lead to incidents
- and our investment has been heftily rewarded.
The Harel Mallac Group places particular emphasis on changing employees’ behaviours to improve workplace safety.This approach is designed to
ensure that everybody takes responsibility for his or her own safety as well as their peers’ safety, whether in office, on customer’s site or while
driving.
The Group’s approach to occupational health and safety in 2015 will further enhance the workplace environment and inculcate ‘safety behavioural
attitude’ in all employees.
ANNUAL REPORT 2014
19
Corporate Governance
CORPORATE, SOCIAL AND ENVIRONMENTAL RESPONSIBILITY
As a member of the Harel Mallac Group, MCFI has actively endorsed and supported the causes of the Group’s corporate social responsibility
foundation, which is the ‘Fondation Harel Mallac’.
The ‘Fondation Harel Mallac’ is accredited by the National CSR Committee as a Special Purpose Vehicle (“SPV”) and MCFI has been actively
involved in the various activities of the foundation. As purported by the foundation in 2014, 80% of the foundation fund was split among three
main initiatives, namely the CSR Group Project, CSR to Employees and CSR to Community, with the aim of supporting projects that further create
and nurture lasting relationships with the Group’s stakeholders.
The foundation sponsored six MCFI employees’ children under the age of five, by contributing to their nurseries and kindergartens fees, as per
conditions imposed by the National Empowerment Foundation.
Over a third of the total CSR allocated budget was earmarked to provide support to the Shelter for Women and Children in Distress, and in
particular the NGO’s integrated program for education and support services consisting of remedial, computer and theatre classes.
The foundation also contributed to the community-based projects of the Association des Handicapés de Malherbes as well as that of L’Etoile du
Berger and L’Atelier Mo’zart. These three NGOs provide pedagogical support to children from vulnerable areas of Curepipe, Albion and Roche
Bois respectively.
It should be noted that 20% of the CSR fund of the ‘Fondation Harel Mallac’ has been carried forward to enable the latter to strengthen its support
capacity to the community in 2015. The MCFI Group was deeply involved in specific initiatives such as the donation of school supplies to children
of the Roche Bois community.
Furthermore, and in line with the philosophy of the Harel Mallac Group, it was decided that all employees willing to, would benefit from a solidarity
release of one workday during the year to assist an NGO supported by the foundation.
Donations for the year under review are detailed on page 23.
The Company also strives to improve the environmental impact of its activities by encouraging responsible use of resources in order to ensure
quality of life for future generations. The Company has embarked on significant programmes in the use of more environment-friendly products
and services, as well as the reduction of electricity and other resources in the conduct of its business.
20
The directors have the pleasure in submitting the Annual Report of The Mauritius Chemical and Fertilizer Industry Limited and its subsidiaries
together with the audited financial statements for the year ended 31 December 2014.
PRINCIPAL ACTIVITIES
The principal activities of the Group and the Company during the year have remained unchanged.
The main activities of the Company and its subsidiaries are as follows:
The Company The Mauritius Chemical and Fertilizer Industry Limited (MCFI)
Activities
Manufacturing of NPK complex, blending and trading of fertilizers
Subsidiaries
MCFI (Freeport) Ltd
MCFI International (Zambia) Ltd
MCFI International & Co. Ltd. - GBL I
Coolkote Enterprises Ltd
Trading as a freeport company
Trading of chemicals and general goods in Zambia
Trading company
Contracting of waterproofing works
DIRECTORS
The directors of the Company and its subsidiaries as at 31 December 2014 were as follows:
Directors
Allain Doger de Spéville
Alfred L Francis
Charles Harel
Antoine L Harel
Guy Harel
Vincent Labat
Michel Rivalland, G.O.S.K
Beas Cheekhooree
Jean Yves Corson
Binhoy Sahay
Ashok Vajangbhai
MCFI LTD
- Director at 31 December 2014 MCFI
(FREEPORT)
LTD
MCFI
MCFI
INTERNATIONAL INTERNATIONAL
& CO LTD
ZAMBIA
- Alternate Director at 31 December 2014
COOLKOTE
ENTERPRISES
LTD
- Ceased to act as director during the year ended 31 December 2014
DIRECTORS’ REMUNERATION AND BENEFITS
Remuneration and benefits received, or due and receivable from the Company and its subsidiaries were:
DIRECTORS SERVICE CONTRACTS
No director of the Company and its subsidiaries has any service contract that needs to be disclosed under section 221(2) of the Companies Act
2001.
The Company
Executive Director
- Full-time
- Part-time
Non-executive Directors
Subsidiary companies (excluding the directors who are also directors of the Company)
Executive Director (2014: 2 - 2013: 2)
-Full-time
-Part-time
Non-executive Directors
ANNUAL REPORT 2014
THE COMPANY
2014
2013
Rs’000
Rs’000
1,266
2,345
3,611
2,441
2,441
SUBSIDIARIES
2014
2013
Rs’000
Rs’000
-
-
2014
Rs’000
2013
Rs’000
3,005
95
3,100
3,858
90
3,948
21
DIRECTORS’ AND OTHER OFFICERS’ INTERESTS IN SHARES
The directors’ and other officers’ interests in the Company’s shares at 31 December 2014 were:
THE COMPANY
Direct
Indirect
Interest
Interest
819,282
800,251
3,750
-
Directors
Antoine L Harel
Charles Harel
The other directors hold no shares either directly or indirectly in the Company.
None of the directors have a direct or indirect shareholding in the equity capital of the subsidiary companies.
THE COMPANY
Direct
Indirect
Interest
Interest
150
-
Officers
Beas Cheekhooree
Harold Lai Chuck Choo
Romesh Raja Rai
Ashok Varjangbhay
CONTRACTS OF SIGNIFICANCE
There was no contract of significance to which the Company, or one of its subsidiaries has been a party and in which a director of the Company
was materially interested be it directly or indirectly.
MAJOR SHAREHOLDERS
At 28 February 2015, the following shareholder was interested in more than 5% of the ordinary share capital of the Company.
Shares
15,494,949
Harel Mallac & Co. Ltd.
Interest %
70.41
Except for the above, no person has reported any material holding of 5 % or more of the equity share of the capital of the Company.
DONATIONS
Donations made during the year
Political
Other
THE GROUP
2014
2013
Rs’000
Rs’000
588
13
25
THE COMPANY
2014
2013
Rs’000
Rs’000
588
13
24
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility
THE GROUP
2014
2013
Rs’000
Rs’000
212
-
THE COMPANY
2014
2013
Rs’000
Rs’000
212
-
THE GROUP
2014
2013
Rs’000
Rs’000
THE COMPANY
2014
2013
Rs’000
Rs’000
AUDITORS’ FEES
The fees payable to the auditors, for audit and other services were:
Audit fees payable to:
- BDO & Co
- BDO Zambia
Fees payable for other services provided by:
- BDO & Co
- BDO Zambia
Other services provided by auditors relate to fees for advisory services on fertilizer activities.
Other services provided by BDO Zambia in 2013 relate to taxation services.
22
703
410
650
397
495
-
495
-
700
62
60
700
-
-
Statement of Directors’ Responsibilities
Directors acknowledge their responsibilities for:
(i) adequate accounting records and maintenance of effective internal control systems;
(ii) the preparation of financial statements which fairly present the state of affairs of the Company as at the end of the financial
year and the results of its operations and cash flows for that period and which comply with International Financial Reporting
Standards (IFRS);
(iii) the selection of appropriate accounting policies supported by reasonable and prudent judgements.
The External Auditors are responsible for reporting on whether the Company’s financial statements are fairly presented.
The Directors report that:
(i) adequate accounting records and an effective system of internal controls and risk management have been maintained;
(ii) appropriate accounting policies supported by reasonable and prudent judgements and estimates have been used consistently;
(iii) applicable accounting standards have been adhered to. Any departure in the interest in fair presentation has been disclosed,
explained and quantified.
(iv) the Code of Corporate Governance has been adhered to. Reasons have been provided where there has not been compliance.
Approved by the Board of Directors on 9 March 2015 and signed on its behalf by:
Antoine L Harel
Beas Cheekhooree
Statement of Compliance
(Section 75 (3) of the Financial Reporting Act)
Name of PIE: Reporting Period: THE MAURITIUS CHEMICAL AND FERTILIZER INDUSTRY LIMITED
Year ended 31 December 2014
We, the Directors of The Mauritius Chemical and Fertilizer Industry Limited, confirm that to the best of our knowledge the
PIE has not complied with Sections 2.2.3 and 2.8.2 of the Code. As for the latter, it has been disclosed globally due to sensitivity
of the information.
Antoine L Harel
Beas Cheekhooree
9 March 2015
ANNUAL REPORT 2014
23
Certificate by Secretary
We certify to the best of our knowledge and belief that the
Company has filed with the Registrar of Companies all such
returns as are required of the Company under the Companies
Act 2001.
For HM Secretaries Ltd.
Secretary
9 March 2015
24
Value Added Statement
ANNUAL REPORT 2014
25
Independent Auditors’ Report to the
Members
This report is made solely to the members of The Mauritius Chemical
and Fertilizer Industry Limited (the “Company”), as a body, in accordance
with Section 205 of the Companies Act 2001. Our audit work has been
undertaken so that we might state to the Company’s members those
matters we are required to state to them in an auditors’ report and
for no other purpose.To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company
and the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Opinion
Report on the Financial Statements
Companies Act 2001
We have audited the group financial statements of The Mauritius
Chemical and Fertilizer Industry Limited and its subsidiaries (the
“Group”) and the company’s separate financial statements on pages
27 to 72 which comprise the statements of financial position at 31
December 2014 and the statements of profit or loss, statements of
profit or loss and other comprehensive income, statements of changes
in equity and statements of cash flows for the year then ended, and a
summary of significant accounting policies and other explanatory notes.
We have no relationship with, or interests in, the Company or any of
its subsidiaries, other than in our capacity as auditors, business advisers
and dealings in the ordinary course of business.
Directors’ Responsibility for the Financial Statements
Financial Reporting Act 2004
The directors are responsible for the preparation and fair presentation
of these financial statements in accordance with International Financial
Reporting Standards and in compliance with the requirements of the
Companies Act 2001, and for such internal control as the directors
determine is necessary to enable the preparation of the financial
statements that are free from material misstatement, whether due to
fraud or error.
The Directors are responsible for preparing the corporate governance
report. Our responsibility is to report the extent of compliance with
the Code of Corporate Governance as disclosed in the annual report
and on whether the disclosure is consistent with the requirements of
the Code.
In our opinion, the financial statements on pages 27 to 72 give a true
and fair view of the financial position of the Group and of the Company
at 31 December 2014, and their financial performance and their cash
flows for the year then ended in accordance with International Financial
Reporting Standards and comply with the Companies Act 2001.
Report on Other Legal and Regulatory Requirements
We have obtained all information and explanations we have required.
In our opinion, proper accounting records have been kept by the
Company as far as it appears from our examination of those records.
In our opinion, the disclosure in the annual report is consistent with
the requirements of the Code.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with International Standards on Auditing. Those Standards require that
we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditors’ judgement, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditors
consider internal control relevant to the company’s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the company’s
internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of
the financial statements.
BDO & CO
Chartered Accountants
Port Louis,
Mauritius.
9 March 2015
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
26
Rookaya Ghanty, FCCA
Licensed by FRC
Statements of Financial Position
For the year ended 31 December 2014
Notes
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments in subsidiary companies
Investments in associates
Investments in financial assets
Non-current receivables
Current assets
Inventories
Trade and other receivables
Short term loans
Cash and cash equivalents
Non-current liabilities
Borrowings
Deferred tax liabilities
Retirement benefit obligations
Current liabilities
Trade and other payables
Current tax liabilities
Borrowings
Dividends
THE COMPANY
2014
2013
Rs’000
Rs’000
5
6
7
8
9
10
136,172
115
15,485
12,309
359,026
523,107
132,460
115
12,877
16,120
304,026
465,598
115,485
14,268
38,174
12,309
359,026
539,262
118,311
14,268
38,174
16,120
304,026
490,899
11
12
13
30(b)
201,121
297,344
9,943
62,184
570,592
199,916
271,910
56,819
528,645
145,686
273,561
9,943
29,341
458,531
135,263
224,874
38,464
398,601
1,093,699
994,243
997,793
889,500
14
220,064
31,862
508,148
760,074
220,064
40,145
498,514
758,723
220,064
26,513
441,118
687,695
220,064
31,333
436,845
688,242
16
17
18
1,438
14,927
13,458
29,823
2,370
14,005
8,158
24,533
10,978
11,099
22,077
11,705
6,465
18,170
19
20(a)
16
21
281,794
1,398
804
19,806
303,802
143,541
6,518
38,922
22,006
210,987
268,215
19,806
288,021
128,077
33,005
22,006
183,088
333,625
235,520
310,098
201,258
1,093,699
994,243
997,793
889,500
TOTAL ASSETS
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Revaluation and other reserves
Retained earnings
Owners’ interest
THE GROUP
2014
2013
Rs’000
Rs’000
TOTAL LIABILITIES
TOTAL EQUITY & LIABILITIES
These financial statements have been approved for issue by the Board of Directors on 9 March 2015.
Antoine L Harel
Beas Cheekhooree
The notes on pages 33 to 72 form an integral part of these financial statements.
Auditors’ report on page 26.
ANNUAL REPORT 2014
27
Statements of Profit or Loss
Notes
Continuing operations
Revenue
Cost of sales
Gross profit
Other operating income
Operating expenses
Operating loss
Other income
Net finance income/(costs)
Share of result of associates
Profit before taxation
Income tax credit/(expense)
22
25
23
25
24
26
27
8
20(b)
THE GROUP
2014
2013
Rs’000
Rs’000
THE COMPANY
2014
2013
Rs’000
Rs’000
754,961
(615,114)
139,847
7,064
(170,491)
(23,580)
47,541
23,961
1,129
3,946
29,036
404
490,469
(422,618)
67,851
13,466
(125,211)
(43,894)
67,072
23,178
787
23,965
114
812,258
(658,883)
153,375
8,431
(166,902)
(5,096)
34,725
29,629
(596)
(7,727)
21,306
(9,242)
540,204
(458,165)
82,039
11,276
(118,721)
(25,406)
44,218
18,812
(347)
18,465
(1,785)
Profit for the year
29,440
12,064
24,079
16,680
Profit attributable to:
Owners of the parent
29,440
12,064
24,079
16,680
1.34
0.55
1.09
0.76
Earnings per share (Rs/share)
30
28
Statements of Profit or Loss and
Other Comprehensive Income
Notes
Profit for the year
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Gains on revaluation of building
Remeasurements of post employment benefit obligations
Share of other comprehensive income of associates
Items that may be reclassified subsequently to profit or loss:
Currency translation differences
Change in value of available-for-sale financial assets
Release to income on disposal of available-for-sale securities
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
THE GROUP
2014
2013
Rs’000
Rs’000
29,440
12,064
THE COMPANY
2014
2013
Rs’000
Rs’000
24,079
16,680
15
15
15
6,300
(4,301)
(1,338)
(538)
-
(3,981)
-
(609)
-
15
15
15
(8,105)
1,241
(2,080)
(8,283)
21,157
(3,615)
(1,099)
(5,252)
6,812
1,241
(2,080)
(4,820)
19,259
(1,099)
(1,708)
14,972
21,157
6,812
19,259
14,972
Total comprehensive income attributable to:
Owners of the parent
ANNUAL REPORT 2014
29
Statements of Cash Flows
Notes
Cash flows from operating activities
Cash generated from operations
Interest paid
Income tax (paid)/refunded
Net cash generated from operating activities
THE GROUP
2014
2013
Rs’000
Rs’000
THE COMPANY
2014
2013
Rs’000
Rs’000
114,660
(1,487)
(6,127)
107,046
164,867
(1,686)
(10,852)
152,329
92,280
(570)
(599)
91,111
141,273
(614)
197
140,856
(13,826)
796
5,169
(64,943)
25,285
(4,494)
(12,906)
205
100
(304,026)
21,191
(13,092)
363
5,169
(64,943)
25,399
(3,928)
(12,906)
53
100
(304,026)
21,191
524
(46,995)
495
(299,435)
524
(46,580)
9,000
495
(290,021)
Cash flows from financing activities
Payments on long term borrowings and finance lease
Dividend paid
Net cash used in financing activities
(1,424)
(22,006)
(23,430)
(862)
(22,006)
(22,868)
(22,006)
(22,006)
(22,006)
(22,006)
Net increase/(decrease) in cash and cash equivalents
36,621
(169,974)
22,525
(171,171)
Movement in cash and cash equivalents
At 1 January
Increase/(decrease)
Effect of foreign exchange rate changes
At 31 December
22,947
36,621
2,616
62,184
191,831
(169,974)
1,090
22,947
5,459
22,525
1,357
29,341
176,363
(171,171)
267
5,459
31(a)
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of investment in associates
Proceeds on sale of property, plant and equipment
Proceeds on sale of available-for-sale investments
Repayment of excess funds on application of shares
Loans granted
Interest received
Dividend received from:
- subsidiary
- available for sale investments
Net cash used in investing activities
31(b)
30
THE GROUP
Notes
Balance at 1 January 2014
Profit for the year
Other comprehensive income
for the year
Total comprehensive income
for the year
Dividends - 2014
Total transactions with
owners of the parent
21
Dividends - 2013
Total transactions with
owners of the parent
Balance at
31 December 2013
Revaluation
reserve
Rs’000
Actuarial
gains/
(losses)
Rs’000
Total
equity
Rs’000
220,064
24,609
10,840
3,367
-
498,514
1,329
758,723
-
-
-
-
-
29,440
-
29,440
-
6,300
(839)
(8,105)
(1,338)
-
(4,301)
(8,283)
-
6,300
(839)
(8,105)
(1,338)
29,440
(4,301)
21,157
-
-
-
-
-
(19,806)
-
(19,806)
-
-
-
-
-
(19,806)
-
(19,806)
220,064
30,909
10,001
220,064
24,609
11,939
6,982
-
508,456
1,867
773,917
-
-
-
-
-
12,064
-
12,064
-
-
(1,099)
(3,615)
-
-
(538)
(5,252)
-
-
(1,099)
(3,615)
-
12,064
(538)
6,812
-
-
-
-
-
(22,006)
-
(22,006)
-
-
-
-
-
(22,006)
-
(22,006)
220,064
24,609
10,840
3,367
-
15
Balance at
31 December 2014
Profit for the year
Other comprehensive income
for the year
Total comprehensive income
for the year
Share
capital
Rs’000
(Attributable to owners of the parent)
Availablefor-sale
fair value Translation
Other
Retained
reserve
reserve
reserves
earnings
Rs’000
Rs’000
Rs’000
Rs’000
(4,738)
(1,338) 508,148
(2,972) 760,074
15
21
498,514
1,329
758,723
ANNUAL REPORT 2014
31
THE COMPANY
Notes
Profit for the year
Other comprehensive income for the year
Dividends - 2014
Total transactions with owners of the parent
15
21
Balance at 31 December 2014
Profit for the year
Dividends - 2013
Total transactions with owners of the parent
Balance at 31 December 2013
15
21
Share
capital
Rs’000
Revaluation
reserve
Rs’000
Retained
earnings
Rs’000
220,064
19,256
-
-
-
-
-
220,064
19,256
10,000
441,118
220,064
19,256
11,938
442,171
-
-
(1,099)
(1,099)
16,680
16,680
-
-
-
220,064
19,256
10,839
32
Availablefor-sale
fair value
reserve
Rs’000
10,839
(839)
(839)
Actuarial
gains/
(losses)
Rs’000
Total
equity
Rs’000
436,845
1,238
24,079
24,079
(3,981)
(3,981)
(19,806)
(19,806)
(22,006)
(22,006)
436,845
(2,743)
1,847
(609)
(609)
1,238
688,242
24,079
(4,820)
19,259
(19,806)
(19,806)
687,695
695,276
16,680
(1,708)
14,972
(22,006)
(22,006)
688,242
1. GENERAL INFORMATION
The Mauritius Chemical and Fertilizer Industry Limited is a public company incorporated in Mauritius and listed on the Stock Exchange of
Mauritius. Its registered office is situated at Chaussée Tromelin, Fort George, Port Louis, Mauritius. Its main activity consists of manufacturing of
NPK complex, blending and trading of fertilisers.
These financial statements will be submitted for consideration and approval at the forthcoming Annual Meeting of Shareholders of the
Company.
2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently
applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The financial statements of The Mauritius Chemical and Fertilizer Industry Limited comply with the Companies Act 2001 and have been prepared
in accordance with International Financial Reporting Standards (IFRS).
The financial statements include the consolidated financial statements of the parent company and its subsidiaries (the “Group”) and the separate
financial statements of the parent company (the “Company”). The financial statements are presented in Mauritian Rupees and all values are
rounded to the nearest thousand (Rs’000), except where otherwise indicated.
Where necessary, comparative figures have been amended to conform with change in presentation in the current year. The financial statements
are prepared under the historical cost convention, except that relevant financial assets and liabilities are stated at their fair value.
(a) Standards, amendments to published Standards and Interpretations effective in the reporting period
Amendments to IAS 32, ‘Offsetting Financial Assets and Financial Liabilities’, clarify the requirements relating to the offset of financial assets and
financial liabilities. The amendment is not expected to have any impact on the Group’s financial statements.
Amendments to IFRS 10, IFRS 12 and IAS 27, ‘Investment Entities’, define an investment entity and require a reporting entity that meets the
definition of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss in its
consolidated and separate financial statements. Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure
requirements for investment entities. The amendment has no impact on the Group’s financial statements.
IFRIC 21, ‘Levies’, sets out the accounting for an obligation to pay a levy that is not income tax.The interpretation addresses what obligating event
that gives rise to pay a levy and when should a liability be recognised. The Group is not subject to levies so the interpretation has no impact on
the Group’s financial statements.
Amendments to IAS 36, ‘Recoverable Amount Disclosures for Non- financial Assets’, remove the requirement to disclose the recoverable amount
of a cash-generating unit (CGU) to which goodwill or other intangible assets with indefinite useful lives had been allocated. The amendment has
no impact on the Group’s financial statements.
Amendments to IAS 39, ‘Novation of Derivatives and Continuation of Hedge Accounting’, provide relief from the requirement to discontinue
hedge accounting when a derivative designated as a hedging instrument is novated under certain circumstances. The amendments also clarify that
any change to the fair value of the derivative designated as a hedging instrument arising from the novation should be included in the assessment
and measurement of hedge effectiveness. The amendment has no impact on the Group’s financial statements.
Annual Improvements 2010-2012 Cycle
IFRS 13 (Amendment), ‘Fair Value Measurement’ clarifies in the Basis for Conclusions that short-term receivables and payables with no stated
interest rates can be measured at invoice amounts when the effect of discounting is immaterial. The amendment has no impact on the Group’s
financial statements.
Annual Improvements 2011-2013 Cycle
IFRS 1 (Amendment), ‘First-time Adoption of International Financial Reporting Standards’ clarifies in the Basis for Conclusions that an entity may
choose to apply either a current standard or a new standard that is not yet mandatory, but permits early application, provided either standard is
applied consistently throughout the periods presented in the entity’s first IFRS financial statements.The amendment has no impact on the Group’s
financial statements, since the Group is an existing IFRS preparer.
ANNUAL REPORT 2014
33
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.1 Basis of preparation (Cont’d)
(b) Standards, Amendments to published Standards and Interpretations issued but not yet effective
Certain standards, amendments to published standards and interpretations have been issued that are mandatory for accounting periods beginning
on or after 01 January 2015 or later periods, but which the Group has not early adopted.
At the reporting date of these financial statements, the following were in issue but not yet effective:
IFRS 9 Financial Instruments
Defined Benefit Plans: Employee Contributions (Amendments to IAS 19)
Annual Improvements to IFRSs 2010-2012 cycle
Annual Improvements to IFRSs 2011-2013 cycle
IFRS 14 Regulatory Deferral Accounts
Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)
IFRS 15 Revenue from Contract with Customers
Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41)
Equity Method in Separate Financial Statements (Amendments to IAS 27)
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)
Annual Improvements to IFRSs 2012-2014 Cycle
Investment Entities: Applying the Consolidated Exception ( Amendments to IFRS 10, IFRS 12 and IAS 18)
Disclosure initiave (Amendments to IAS 1)
Where relevant, the Group is still evaluating the effect of these Standards, amendments to published Standards and Interpretations issued but not
yet effective, on the presentation of its financial statements.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies.The areas involving a higher degree of judgement
or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 4.
2.2 Investments in subsidiaries
Separate financial statements of the investor
In the separate financial statements of the investor, investments in subsidiary companies are carried at cost. The carrying amount is reduced to
recognise any impairment in the value of individual investments.
Consolidated financial statements
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that
control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.The consideration transferred for the acquisition
of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration
transferred includes the fair value of any assets or liability resulting from a contingent consideration arrangement. Acquisition-related costs are
expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially
at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interests in the
acquiree at the non-controlling interest’s proportionate share of the acquiree’s net assets.
The excess of, the consideration transferred, the amount of any non-controlling interests in the acquiree and the acquisition-date fair value of any
previous equity interest in the acquiree (if any), over the fair value of identifiable net assets acquired is recorded as goodwill. If this is less than
the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss
as a bargain purchase gain.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also
eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
34
2.2 Investments in subsidiaries (Cont’d)
Consolidated financial statements (Cont’d)
Transactions and non-controlling interests
The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling
interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is
recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
Disposal of subsidiaries
When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change
in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the
retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income
in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts
previously recognised in other comprehensive income are reclassified to profit or loss.
2.3 Investments in associates
Separate financial statements of the investor
In the separate financial statements of the investor, investments in associated companies are carried at cost.
The carrying amount is reduced to recognise any impairment in the value of individual investments.
Consolidated financial statements
An associate is an entity over which the Group has significant influence but not control, or joint control, generally accompanying a shareholding
between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method. Investments in associates are initially recognised at cost as adjusted by post
acquisition changes in the Group’s share of the net assets of the associate less any impairment in the value of individual investments.
Any excess of the cost of acquisition and the Group’s share of the net fair value of the associate’s identifiable assets and liabilities recognised at
the date of acquisition is recognised as goodwill, which is included in the carrying amount of the investment. Any excess of the Group’s share of
the net fair value of identifiable assets and liabilities over the cost of acquisition, after assessment, is included as income in the determination of
the Group’s share of the associate’s profit or loss.
When the Group’s share of losses exceeds its interest in an associate, the Group discontinues recognising further losses, unless it has incurred
legal or constructive obligation or made payments on behalf of the associate.
Unrealised profits and losses are eliminated to the extent of the Group’s interest in the associate. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset transferred.
Where necessary, appropriate adjustments are made to the financial statements of associates to bring the accounting policies used in line with
those adopted by the Group.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously
recognised in other comprehensive income are reclassified to profit or loss where appropriate.
Dilution gains and losses arising in investments in associates are recognised in profit or loss.
2.4 Property, plant and equipment
All property, plant and equipment is initially recorded at cost, some of which are subsequently shown at revalued amount less depreciation.
Historical cost includes expenditure that is directly attributable to the acquisition of theitems. Subsequent costs are included in the assets
carrying amount or recognised as a separate asset as appropriate, only when it is probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured reliably.
Increases in the carrying amount arising on revaluation are credited to other comprehensive income and shown as revaluation reserve in
shareholders’ equity. Decreases that offset previous increases of the same asset are charged against the revaluation reserve; all other decreases
are charged to profit or loss.
ANNUAL REPORT 2014
35
2.4 Property, plant and equipment (Cont’d)
Depreciation is calculated on a straight line method to write off the cost of each asset, to their residual values over their estimated useful lives,
as follows:
Years
Buildings
30 - 50
Plant and Machinery
5 - 25
Furniture, Fittings and Office Equipment
3 - 10
Forklifts and payloaders
5
Motor Vehicles
5
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable
amount.
Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amount and are taken into account
in determining operating profit. On disposal of revalued assets, amounts in revaluation and other reserves relating to those assets are transferred
to retained earnings.
2.5 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis. The cost of finished goods
and work in progress comprises purchase cost of raw materials, direct labour, other direct costs and related production overheads (based on
normal operating capacity). Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and
applicable variable selling expenses.
2.6 Foreign currencies
(i) Functional and presentation currency
Items included in the financial statements are measured using Mauritian rupees, the currency of the primary economic environment in which
the entity operates (“functional currency”). The consolidated financial statements are presented in Mauritian rupees, which is the Company’s
functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in profit or loss within ‘Net finance
income’. Foreign exchange gain and losses that relate to purchases and trade payables are presented in profit or loss within ‘Cost of sales’. All
other foreign exchange gains and losses are presented in profit or loss within ‘Other income’.
Non-monetary items, that are measured at historical cost in a foreign currency, are translated using the exchange rate at the date of the
transaction.
Non-monetary items, that are measured at fair value in a foreign currency, are translated using the exchange rates at the date the fair value was
determined.
Translation differences on non-monetary items, such as equities classified as available-for-sale financial assets, are included in the fair value reserve
in equity.
(iii) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional
currency different from the presentation currency are translated into the presentation currency as follows:
(a) a ssets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial
position;
36
2.6 Foreign currencies (Cont’d)
(iii) Group companies (Cont’d)
(b) income and expenses for each statement representing profit or loss and other comprehensive income are translated at average exchange
rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates of the transactions); and
(c) all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings are taken to
shareholders’ equity. When a foreign operation is sold, such exchange differences are recognised in profit or loss as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate.
2.7 Current and deferred income tax
The tax expense for the period comprise of current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to
items recognised in other comprehensive income or directly in equity.
Current tax
The current tax charge is based on taxable income for the year calculated on the basis of tax laws enacted or substantively enacted by the end
of the reporting period.
Deferred tax
Deferred income tax is provided in full, using the liability method, for all temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. However, if the deferred income tax arises from initial recognition of an asset
or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or
loss, it is not accounted for.
Deferred income tax is determined using tax rates that have been enacted or substantively enacted at the reporting date and are expected to
apply in the period when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary
differences can be utilised.
2.8 Intangible assets
Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see note 2.2) less
accumulated impairment losses, if any.
Goodwill is tested annually for impairment.
Goodwill is allocated to cash-generating units for the purpose of impairment testing.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the gains and losses on disposal.
2.9 Retirement benefit obligations
(i) Defined contribution plans
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal
or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to
employee service in the current and prior periods.
The Group operates a defined contribution retirement benefit plan for all qualifying employees. Payments to defined contribution retirement
plans are charged when employees have rendered service that entitle them to the contributions.
(ii) Defined benefit plans
A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit
that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
ANNUAL REPORT 2014
37
2.9 Retirement benefit obligations (Cont’d)
(ii) Defined benefit plans (Cont’d)
The liability recognised in the statements of financial position in respect of defined benefit pension plans is the present value of the defined benefit
obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent
actuaries using the projected unit credit method.
Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses arising from experience adjustments and changes
in actuarial assumptions, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), is recognised
immediately in other comprehensive income in the period in which they occur. Remeasurements recognised in other comprehensive income shall
not be reclassified to profit or loss in subsequent period.
The Group determines the net interest expense/(income) on the defined benefit liability/(asset) for the period by applying the discount rate used
to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability/(assets), taking into account any
changes in the net defined liability/(asset) during the period as a result of contributions and benefit payments. Net interest expense/(income) is
recognised in profit or loss.
Service costs comprising current service cost, past service cost, as well as gains and losses on curtailments and settlements are recognised
immediately in profit or loss.
(iii) Gratuity on retirement
For those employees who are not covered (or who are insufficiently covered) by the above pension plans, the net present value of gratuity on
retirement payable under the Employment Rights Act 2008 is calculated by a qualified actuary and provided for. The obligations arising under this
item are not funded.
(iv) Profit sharing and bonus plans
The Group recognises a liability and an expense for bonuses and profit sharing, based on a formula that takes into consideration the profit
attributable to the Group’s shareholders after certain adjustments.The Group recognises a provision where contractually obliged or where there
is a past practice that has created a constructive obligation.
2.10 Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash flows (cash-generating units).
2.11 Leases
Leases are classified as finance leases where the terms of the lease transfer substantially all risks and rewards of ownership to the lessee. All
other leases are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged
to profit or loss on a straight-line basis over the period of the lease.
Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum
lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are charged to profit or loss.
2.12 Financial assets
(a) Categories of financial assets
The Group classifies its financial assets in the following categories : available-for-sale financial assets and loans and receivables. The classification
depends on the purpose for which the investments were acquired. Management determines the classification of the financial assets at initial
recognition.
(i) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.
They are included in non-current assets unless management intends to dispose of the investment within twelve months of the end of the
reporting period.
38
2.12 Financial assets (Cont’d)
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They
are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are
measured at amortised cost less any impairment. They are included in current assets when maturity is within twelve months after the end of the
reporting period or non-current assets for maturities greater than twelve months.
The Group’s loans and receivables comprise cash and cash equivalents and trade and other receivables.
(b) Recognition and measurement
Purchases and sales of financial assets are recognised on trade-date (or settlement date), the date on which the Group commits to purchase or
sell the asset. Investments are initially measured at fair value plus transaction costs.
Available-for-sale financial assets are subsequently carried at their fair values. Loans and receivables are carried at amortised cost using the
effective interest method.
Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured
are measured at cost.
Unrealised gains and losses arising from changes in the fair value of financial assets classified as available-for-sale are recognised in other
comprehensive income.
When financial assets classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in profit or loss as
gains and losses on financial assets.
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities),
the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other
instruments that are substantially the same and discounted cash flows analysis.
(c) Impairment of financial assets
(i) Financial assets classified as available-for-sale
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is
impaired. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below
its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the
cumulative loss, measured as the difference between acquisition cost and the current fair value, less any impairment loss on that financial asset
previously recognised in profit or loss - is removed from equity and recognised in profit or loss.
If the fair value of a previously impaired debt security classified as available-for-sale increases and the increase can be objectively related to an
event occuring after the impairment loss was recognised, the impairment loss is reversed and the reversal recognised in profit or loss.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale are not reversed through
profit or loss.
(ii) Financial assets carried at amortised cost
For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective
rate. The carrying amount of the asset is reduced and, the amount of the loss is recognised in profit or loss. If a loan has a variable interest rate,
the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after
the impairment was recognised (such as an improvement in the debtor’s credit rating), the previously recognised impairment loss is reversed
through profit or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what
the amortised cost would have been had the impairment not been recognised.
2.13 Long term receivables
Long term receivables with fixed maturity terms are measured at amortised cost using the effective interest rate method, less provision for
impairment. Long term receivables without fixed maturity terms are measured at cost. The carrying amount of the asset is reduced by the
difference between the asset’s carrying amount and the present value of estimated cash flows discounted using the original effective interest
rate. The amount of loss is recognised in profit or loss. If there is objective evidence that an impairment loss has been incurred, the amount of
impairment loss is measured as the difference between the carrying amount of the asset and the present value (PV) of estimated cash flows
discounted at the current market rate of return of similar financial assets.
ANNUAL REPORT 2014
39
2.14 Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less provision for impairment. A provision
for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due
according to the original terms of receivables.
The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows. The
amount of provision is recognised in profit or loss.
2.15 Borrowings
Borrowings are recognised initially at fair value being the issue proceeds received, net of transaction costs incurred. Borrowings are subsequently
stated at amortised cost; any difference between proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over
the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve
months after the end of the reporting period.
2.16 Cash and cash equivalents
Cash and cash equivalents include cash in hand, other short-term highly liquid investments with original maturities of 3 months or less, and bank
overdraft. Bank overdraft is shown within borrowings in current liabilities in the statements of financial position.
2.17 Trade and other payables
Trade and other payables are stated at fair value and subsequently measured at amortised cost using the effective interest method.
2.18 Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as deduction, net
of tax, from proceeds.
2.19 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated
net of discounts, returns, value added taxes, rebates and other similar allowances and after eliminating sales within the Group.
(i) Sales of goods
Sales of goods are recognised when the goods are delivered and titles have passed, at which time all of the following conditions are satisfied:
- the Group has transferred to the buyer the significant risk and rewards of ownership of the goods;
- the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the
goods sold;
- the amount of revenue can be measured reliably;
- it is probable that the economic benefits associated with the transaction will flow to the Group; and
- the costs incurred or to be incurred in respect of the transaction can be measured reliably.
(ii) Rendering of services
Revenue from rendering of services are recognised in the accounting year in which the services are rendered (by reference to completion of the
specific transaction assessed on the basis of the actual service provided as a proportion of total services to be provided).
(iii) Other revenues are recognised as follows:
- Rental income - on an accruals basis in accordance with the substance of the relevant agreements;
- Interest income - on a time-proportion basis using the effective interest method;
- Dividend income - when the shareholder’s right to receive payment is established.
2.20 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in which the
dividends are declared.
40
2.21 Provisions
Provisions are recognised when the Company has a present or constructive obligation as a result of past events; it is probable that an outflow of
resources that can be reliably estimated will be required to settle the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the
reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows
estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money
is material).
2.22 Segment reporting
Segment information presented relate to operating segments that engage in business activities for which revenues are earned and expenses
incurred.
2.23 Alternative Minimum Tax (AMT)
Alternative Minimum Tax (AMT) is provided for, where a company which has a tax liability of less than 7.5% of its book profit pays a dividend.
AMT is calculated as the lower of 10% of the dividend paid and 7.5% of book profit.
2.24 Related Parties
Related Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the party
making financial or operational decisions.
3. FINANCIAL RISK MANAGEMENT
3.1 Financial Risk Factors
The Group’s activities expose it to a variety of financial risks: market risks (including currency risk, fair value interest risk, cash flow interest risk
and price risk), credit risk and liquidity risk.
The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse
effects on the Group’s financial performance.
A description of the significant risk factors is given below together with the risk management policies applicable.
(a) Market risk
(i) Currency risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarily with respect to
US dollar and Euro. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in
foreign operations.
Management has set up a policy to require the Group to manage their foreign exchange risk exposure on treasury.
The Group has an investment in foreign subsidiary, whose net assets are exposed to currency translation risk. Currency exposure arising from
the net assets of the Group’s foreign operations in Zambia is managed primarily through borrowings denominated in the relevant foreign
currencies.
ANNUAL REPORT 2014
41
3. FINANCIAL RISK MANAGEMENT (CONT’D)
3.1 Financial Risk Factors (Cont’d)
(a) Market risk (Cont’d)
(i) Currency risk (Cont’d)
Currency profile
The currency profile of the Group’s and the Company’s financial assets and liabilities is summarised below:
(a) THE GROUP
Mauritian rupee
US Dollar
Euro
Zambian Kwacha
South African Rand
2014
Financial
Financial
assets
liabilities
Rs’000
Rs’000
520,543
16,627
150,303
236,529
18,569
1,516
44,019
3,759
16,020
733,434
274,451
2013
Financial
Financial
assets
liabilities
Rs’000
Rs’000
500,574
54,711
44,525
66,133
51,100
3,992
47,825
16,791
22,725
644,024
164,352
(b) THE COMPANY
Mauritian rupee
US Dollar
Euro
585,154
68,603
23,081
676,838
35,513
218,975
5,927
260,415
536,685
33,854
8,124
578,663
63,257
66,133
14,242
143,632
The tables above exclude prepayments and accruals.
At 31 December 2014, if the rupee has weakened/strengthened by 5% against the following currencies with all other variables held constant,
post tax profit would have been as shown in the table, mainly as a result of foreign exchange gains/losses on translation of foreign currency
denominated financial assets and liabilities.
(a) THE GROUP
US Dollar
Euro
Zambian Kwacha
South African Rand
2014
Financial
Financial
assets
liabilities
Rs’000
Rs’000
+/+/6,388
10,052
789
64
1,871
160
681
9,048
10,957
2013
Financial
Financial
assets
liabilities
Rs’000
Rs’000
+/+/1,892
2,811
2,172
170
2,033
714
966
6,097
4,661
(b) THE COMPANY
2,916
981
3,897
US Dollar
Euro
9,306
252
9,558
1,439
345
1,784
2,811
605
3,416
(ii) Price risk
The market prices of the Group’s available-for-sale quoted investment securities are susceptible to future fluctuations.
To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio.
Sensitivity analysis
The impact of increases/(decreases) in the fair value of the investments on the Group’s equity, is summarised below based on the assumption that
the fair value has increased/(decreased) by 5%.
THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
Available-for-sale
42
615
806
(a) Market risk (Cont’d)
(iii) Cash flow and fair value interest rate risk
The Group’s interest-rate risk arises from long term borrowings. Borrowings issued at variable rates exposes the Group to cash-flow interestrate risk. Borrowings issued at fixed rates expose the Group to fair value interest-rate risk. The Group’s policy is to maintain borrowings, other
than finance lease obligations at floating rate. The impact on the Group’s interest rate risk would mainly be on variable rate borrowings.
Sensitivity Analysis
At 31 December 2014 and 2013, if interest rates on both fixed and variable rate borrowings had been 50 basis point higher/lower with all other
variables held constant, the impact on post-tax profit would not have been material.
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations,
and arises principally from the Group’s trade receivables. The amounts presented in the statements of financial position are net of allowances for
doubtful receivables, estimated by the Group’s management based on prior experience and the current economic environment. The Group has
policies in place to ensure that sales of products and services are made to customers with an appropriate credit history.
The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers.
The Group has policies that limit the amount of credit exposure to any company.
(c) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled
by delivery of cash or another financial asset.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate
amount of committed credit facilities. The Group aims at maintaining flexibility in funding by keeping committed credit lines available.
Management monitors rolling forecasts of the Group’s and the Company’s liquidity reserve on the basis of expected cash flow.
Forecasted liquidity reserve is as follows:
Net cash flows used in operating activities
Net cash flows generated from investing activities
Net cash flows used in financing activities
Decrease
Opening balance
Closing balance
ANNUAL REPORT 2014
THE
GROUP
2015
Rs’000
(19,000)
8,000
(22,006)
(33,006)
62,184
29,178
THE
COMPANY
2015
Rs’000
(25,069)
11,913
(22,006)
(35,162)
29,341
(5,821)
43
(c) Liquidity risk (Cont’d)
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the end of the
reporting period to the contractual maturity date.
GROUP
At 31 December 2014
Finance lease obligations
At 31 December 2013
Bank import loans
Bank overdrafts
Finance lease obligations
COMPANY
At 31 December 2014
At 31 December 2013
Bank overdrafts
Less than
1 year
Rs’000
Between
1 and 2
years
Rs’000
Between
2 and 5
years
Rs’000
1,131
281,794
1,158
-
450
-
3,992
33,872
1,640
143,541
1,452
-
1,455
-
268,215
-
-
33,005
128,077
-
-
3.2 Capital Risk Management
The Group’s objectives when managing capital are:
• to safeguard the Group’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for
other stakeholders, and
• to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the light
of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the
Group may adjust the amount of dividends paid to shareholders, or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the debt-to-adjusted capital ratio.This ratio is calculated as net
debt adjusted capital. Net debt is calculated as total debt (as shown in the statement of financial position) less cash and cash equivalents. Adjusted
capital comprises all components of equity (i.e., share capital, revaluation reserve, available-for-sale fair value reserve, translation reserve, actuarial
reserve and retained earnings).
44
3.2 Capital Risk Management (Cont’d)
During the year, the Company’s strategy, which was unchanged from 2013, was to maintain the debt-to-adjusted capital ratio at the lower end in
order to secure access to finance at a reasonable cost. The debt-to-adjusted capital ratios at 31 December 2014 and at 31 December 2013 were
as follows:
THE GROUP
2014
2013
Rs
Rs
THE COMPANY
2014
2013
Rs
Rs
Total debt (note 16)
Less: Cash and cash equivalents (note 31(b))
Net debt
2,242
(62,184)
(59,942)
41,292
(56,819)
(15,527)
(29,341)
(29,341)
33,005
(38,464)
(5,459)
Total equity/adjusted capital
760,074
758,723
687,695
688,242
N/A
N/A
N/A
N/A
Debt-to-adjusted capital ratio
There were no changes in the Group’s approach to capital risk management during the year.
3.3 Fair value estimation
The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. A market is
regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory
agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used
for financial assets held by the Group is the current bid price. These instruments are included in level 1. Instruments included in level 1 comprise
primarily quoted equity investments classified as trading securities or available-for-sale.
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation
techniques maximise the use of observable market data where it is available and rely as little as possible on specific estimates.
If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
Specific valuation techniques used to value financial instruments include:
- Quoted market prices or dealer quotes for similar instruments.
- Other techniques such as net asset value are used to determine fair value for the remaining financial instruments.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values.The fair value
of financial liabilities for disclosure purposes is estimated by discounting the future contractual cashflows at the current market interest rate that
is available to the group for similar instruments.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continuously evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
4.1 Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future.The resulting accounting estimates will, by definition, seldom equal the related
actual results. The estimates and assumptions, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are discussed below.
(a) Impairment of available-for-sale financial assets
The Group follows the guidance of IAS 39 on determining when an investment is other- than-temporarily impaired. This determination requires
significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which the fair value of an
investment is less than its cost, and the financial health of and near-term business outlook for the investee, including factors such as industry and
sector performance and operational and financing cash flows.
ANNUAL REPORT 2014
45
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D)
4.1 Critical accounting estimates and assumptions (Cont’d)
(b) Pension benefits
The present value of the pension obligations depend on a number of factors that are determined on an actuarial basis using a number of
assumptions. The assumptions used in determining the net cost for pensions include the discount rate. Any changes in these assumptions will
impact the carrying amount of pension obligations.
The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the
present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount
rate, the Group considers the interest rates of long term government bonds that are denominated in the currency in which the benefits will be
paid, and that have terms to maturity approximating the terms of the related pension obligation.
Other key assumptions for pension obligations are based in part on current market conditions. Additional information is disclosed in Note 18.
(c) Limitation of sensitivity analysis
Sensitivity analysis in respect of market risk demonstrates the effect of a change in a key assumption while other assumptions remain unchanged.
In reality, there is a correlation between the assumptions and other factors. It should also be noted that these sensitivities are non-linear and larger
or smaller impacts should not be interpolated or extrapolated from these results.
Sensitivity analysis does not take into consideration that the Group’s assets and liabilities are managed. Other limitations include the use of
hypothetical market movements to demonstrate potential risk that only represent the Group’s view of possible near-term market changes that
cannot be predicted with any certainty.
(d) Asset lives and residual values
Property, plant and equipment are depreciated over its useful life taking into account residual values, where appropriate. The actual lives of
the assets and residual values are assessed annually and may vary depending on a number of factors. In reassessing asset lives, factors such as
technological innovation and maintenance programmes are taken into account. Residual value assessments consider issues such as future market
conditions, the remaining life of the asset and projected disposal values. Consideration is also given to the extent of current profits and losses on
the disposal of similar assets.
(e) Depreciation policies
Property, plant and equipments are depreciated to their residual values over their estimated useful lives. The residual value of an asset is the
estimated net amount that the Group would currently obtain from disposal of the asset, if the asset were already of the age and in condition
expected at the end of its useful life.
The directors therefore make estimates based on historical experience and use best judgement to assess the useful lives of assets at the end of
their expected useful lives.
(f) Revenue recognition
The percentage completion method is utilised to recognise revenue on contracts. Management exercises judgement in assessing whether
significant risks and rewards have been transferred to the customer to permit revenue to be recognised.
(g) Fair valuation of buildings
The Group measures buildings at revalued amounts with changes in fair value being recognised in other comprehensive income. In preparing
these financial statements, the Directors have obtained from independent professional valuers the estimated fair value of the Group’s buildings
which is disclosed in the notes to the financial statements.These estimates have been based on the market data regarding current yield on similar
properties. The actual amounts of revaluation could therefore differ significantly from the estimates in the future.
(h) Estimated impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy in Note 2.8.These calculations
require the use of estimates (note 6).
46
5. PROPERTY, PLANT AND EQUIPMENT
(a) THE GROUP
Buildings
Rs’000
Plant and
Machinery
Rs’000
Furniture
and
Equipment
Rs’000
Forklifts
and
Payloaders
Rs’000
Motor
Vehicles
Rs’000
Total
Rs’000
COST OR VALUATION
At 1 January 2014
Additions
Disposals
Revaluation surplus
Exchange differences
At 31 December 2014
184,692
8,345
(907)
192,130
145,614
9,096
154,710
14,088
627
(202)
14,513
15,426
2,622
18,048
21,241
1,481
(2,179)
(603)
19,940
381,061
13,826
(2,179)
8,345
(1,712)
399,341
DEPRECIATION
At 1 January 2014
Charge for the year
Disposal adjustments
Revaluation surplus
At 31 December 2014
132,695
5,637
(1,244)
(127)
136,961
84,045
5,893
89,938
10,658
793
(159)
11,292
8,828
2,279
11,107
12,375
3,685
(1,871)
(318)
13,871
248,601
18,287
(1,871)
(1,244)
(604)
263,169
NET BOOK VALUES
At 31 December 2014
55,169
64,772
3,221
6,941
6,069
136,172
Buildings
Rs’000
Plant and
Machinery
Rs’000
Furniture
and
Equipment
Rs’000
Forklifts
and
Payloaders
Rs’000
(b) THE GROUP
Motor
Vehicles
Rs’000
Total
Rs’000
COST OR VALUATION
At 1 January 2013
Additions
Disposals
At 31 December 2013
185,471
(779)
184,692
143,861
1,753
145,614
13,588
664
(164)
14,088
15,426
15,426
18,544
3,860
(760)
(403)
21,241
376,890
6,277
(760)
(1,346)
381,061
DEPRECIATION
At 1 January 2013
Charge for the year
At 31 December 2013
127,300
5,488
(93)
132,695
78,598
5,447
84,045
9,643
1,137
(122)
10,658
6,327
2,501
8,828
9,953
3,385
(359)
(604)
12,375
231,821
17,958
(359)
(819)
248,601
NET BOOK VALUES
At 31 December 2013
51,997
61,569
3,430
6,598
8,866
132,460
ANNUAL REPORT 2014
47
5. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Buildings
Rs’000
Plant and
Machinery
Rs’000
Furniture
and
Equipment
Rs’000
Forklifts
and
Payloaders
Rs’000
COST OR VALUATION
At 1 January 2014
Additions
Disposals
At 31 December 2014
174,898
174,898
145,037
9,096
154,133
10,768
334
11,102
13,448
2,622
16,070
11,413
1,040
(1,350)
11,103
355,564
13,092
(1,350)
367,306
DEPRECIATION
At 1 January 2014
Charge for the year
At 31 December 2014
131,325
5,293
136,618
83,653
5,893
89,546
7,856
540
8,396
8,170
2,279
10,449
6,249
1,913
(1,350)
6,812
237,253
15,918
(1,350)
251,821
NET BOOK VALUES
At 31 December 2014
38,280
64,587
2,706
5,621
4,291
115,485
Buildings
Rs’000
Plant and
Machinery
Rs’000
Furniture
and
Equipment
Rs’000
Forklifts
and
Payloaders
Rs’000
COST OR VALUATION
At 1 January 2013
Additions
Disposals
At 31 December 2013
174,898
174,898
143,284
1,753
145,037
10,259
509
10,768
13,448
13,448
10,116
1,666
(369)
11,413
352,005
3,928
(369)
355,564
DEPRECIATION
At 1 January 2013
Charge for the year
At 31 December 2013
126,032
5,293
131,325
78,259
5,394
83,653
6,923
933
7,856
6,065
2,105
8,170
4,658
1,950
(359)
6,249
221,937
15,675
(359)
237,253
NET BOOK VALUES
At 31 December 2013
43,573
61,384
2,912
5,278
5,164
118,311
(c) THE COMPANY
(d) THE COMPANY
Motor
Vehicles
Rs’000
Motor
Vehicles
Rs’000
Total
Rs’000
Total
Rs’000
(e) Additions for the Group include Rs. Nil (2013: Rs1.7m) of assets leased under finance leases.
(f) Leased asset included above comprise of motor vehicles:
Cost - capitalised finance lease
Accumulated depreciation
Net book value
48
THE GROUP
2014
2013
Rs’000
Rs’000
4,777
(2,320)
2,457
4,777
(1,204)
3,573
THE COMPANY
2014
2013
Rs’000
Rs’000
-
-
5. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
(g) The buildings of one of the Group’s subsidiaries, MCFI International (Zambia) Ltd, were last revalued in 2014, on an open market basis by
Anderson & Anderson valuation surveyors. The revaluation surplus net of applicable deferred income taxes was credited in shareholders’ equity
(note 15).
Details of the Group’s buildings measured at fair value and information about the fair value hierarchy are as follows:
BUILDINGS
THE GROUP
THE COMPANY
2014
2014
2013
2013
Rs’000
Rs’000
Rs’000
Rs’000
16,889
38,280
55,169
Level 2
Level 3
Total
38,280
38,280
8,424
43,573
51,997
43,573
43,573
The directors are of opinion that the building stated under level 3, approximate its fair value.
There were no transfers between level 2 and 3 during the year.
(h) Depreciation expense has been charged to operating expenses for the Group and the Company.
(i) If the buildings were stated on the historical cost basis, the amounts would be as follows:
THE GROUP
2014
2013
Rs’000
Rs’000
4,086
(654)
3,432
Cost
Accumulated depreciation
Net book value
4,086
(572)
3,514
(j) Bank borrowings are secured by floating charges on the assets of the Group including property, plant and equipment.
6. INTANGIBLE ASSETS
THE GROUP
2014
2013
Rs’000
Rs’000
Goodwill
At 1 January and 31 December
115
115
Impairment tests for goodwill: goodwill is allocated to the Group’s cash generating units identified according to the country of operation and
business segment.
7. INVESTMENTS IN SUBSIDIARY COMPANIES - COST
THE COMPANY
2014
2013
Rs’000
Rs’000
14,268
At 1 January and 31 December
14,268
(a) The financial statements of the following subsidiary companies have been included in the consolidated financial statements.
Ownership Interest
Name of companies
Class of
shares
held
Direct
%
Country of
operation &
incorporation
Year end
Denominated
currency
Stated
capital
Indirect
%
Ordinary
31 December
Rs
10,000,000
100
-
Ordinary
31 December
ZK
5,000,000
-
100
Ordinary
Ordinary
31 December
31 December
Euro
Rs
451,431
25,000
100
100
-
Main
business
31 December 2014
and 2013
MCFI (Freeport) Ltd
MCFI International
(Zambia) Ltd
MCFI International &
Co Ltd
Coolkote Enterprises Ltd
ANNUAL REPORT 2014
Mauritius
Zambia
Mauritius
Mauritius
Trading freeport
company
Trading of
chemicals and
general goods
Trading
company
Waterproofing
49
8. INVESTMENTS IN ASSOCIATES-COST
THE COMPANY
2014
2013
Rs’000
Rs’000
(a) (In separate financial statements of the investor)
38,174
38,174
At 1 January
Additions
At 31 December
25,268
12,906
38,174
(b) The results of the following associated companies have been included in the consolidated financial statements:
THE GROUP
2014
2013
Rs’000
Rs’000
12,877
3,946
(1,338)
15,485
At 1 January
Additions
Share of profit/(loss) after tax
Other equity movements (note 15)
At 31 December
7,698
12,906
(7,727)
12,877
(c) Details of each of the associates at the end of the reporting period are as follows:
Year end
Place of
incorporation
and operation
Proportion
of ownership
interest Direct
%
Name
Nature of business
31 December 2014
Rehm Grinaker Construction Co Ltd
Rehm Grinaker Properties Co Ltd
Elcon System Technick (Mtius) Ltd
Construction
Property holding
Trading
30 June
30 June
30 June
Mauritius
Mauritius
Mauritius
21.50
21.50
50.00
31 December 2013
Rehm Grinaker Construction Co Ltd
Rehm Grinaker Properties Co Ltd
Construction
Property holding
Trading
30 June
30 June
30 June
Mauritius
Mauritius
Mauritius
21.50
21.50
50.00
50
8. INVESTMENTS IN ASSOCIATES (CONT’D)
(i) All of the above associates are accounted for using the equity method with the exception of Elcon System Technick (Mtius) Ltd which has been kept at cost, since
the latter is a dormant company.
(ii) For the purposes of applying the equity method of accounting, the financial statements of each associates, with the exception of Elcon System Technick (Mtius)
Ltd which is a dormant company, for the year ended 30 June 2014 have been used, and appropriate adjustments have been made for the effects of significant
transactions between that date and 31 December 2014.
(d) Summarised financial information
Summarised financial information in respect of each of the material associates is set out below.
Name
31 December
2014
Rehm Grinaker
Construction
Co Ltd
Rehm Grinaker
Properties Co Ltd
31 December
2013
Rehm Grinaker
Construction
Co Ltd
Rehm Grinaker
Properties Co Ltd
Current
assets
Rs’000
Noncurrent
assets
Rs’000
640,875
Total
comprehensive
income for the
year
Rs’000
Dividends
received
during the
year
Rs’000
(7,872)
4,186
-
6,296
1,649
7,945
-
2,243,456
22,174
-
22,174
-
11,355
16,240
-
16,240
-
Current
liabilities
Rs’000
NonCurrent
liabilities
Rs’000
Revenues
Rs’000
Profit
Rs’000
10,671
636,888
2,625
1,202,586
12,058
4,951
166,505
7,321
107,854
14,431
1,055,584
22,178
1,069,915
-
7,266
161,578
1,448
119,060
Other
comprehensive
income for the
year
Rs’000
The summarised financial information above represents amounts shown in the associates’ financial statements prepared in accordance with IFRS.
(e) Reconciliation of summarised financial information
Name
Opening
net
assets
1 January
Rs’000
Increase
in share
capital
Rs’000
7,847
-
12,058
48,336
56,183
-
6,296
18,354
(74,327)
60,000
22,174
32,096
(42,231)
60,000
16,240
38,414
31 December
2014
Rehm Grinaker
Construction Co Ltd
Rehm Grinaker
Properties Co Ltd
Total
31 December
2013
Rehm Grinaker
Construction Co
Ltd
Rehm Grinaker
Properties Co Ltd
Total
Profit
for the
year
Rs’000
Other
comprehensive
income for the
year
Rs’000
Closing net
assets 31
December
Rs’000
Ownership
interest
Rs’000
Interest in
associates
%
Goodwill
Rs’000
Carrying
value
Rs’000
(7,872)
12,033
2,587
21.50
-
2,587
1,649
(6,223)
56,281
68,314
12,100
14,687
21.50
-
12,100
14,687
-
7,847
1,687
21.50
-
1,687
-
48,336
56,183
10,392
12,079
21.50
-
10,392
12,079
(f) Aggregate information of associate that is not material:
2014
2013
Rs’000
Rs’000
Carrying amount of interests
Share of profit/(loss)
Share of other comprehensive income
Share of total comprehensive income
ANNUAL REPORT 2014
798
-
798
-
51
9. INVESTMENTS IN FINANCIAL ASSETS
The movement in investments in financial assets may be summarised as follows:
THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
Available-for-sale financial assets
At 1 January
Increase/(decrease) in fair value (note 15)
Disposal
At 31 December
16,120
1,241
(5,052)
12,309
17,319
(100)
(1,099)
16,120
(a) Equity securities at fair value:
- DEM
- Unquoted
Total available-for-sale financial assets
9,323
2,986
12,309
14,113
2,007
16,120
Level 1
Rs’000
Level 2
Rs’000
Level 3
Rs’000
Total
Rs’000
(a) THE GROUP AND THE COMPANY
At 31 December 2014
9,323
-
2,986
12,309
At 31 December 2013
14,113
-
2,007
16,120
(c) All available-for-sale financial assets are denominated in Mauritian Rupee.
(d) Available-for-sale securities comprise principally of DEM listed and unquoted investments.The fair value of DEM listed securities is based on
the stock exchange prices at the close of business at the reporting date. In assessing the fair value of unquoted available-for-sale securities, the
Group uses a variety of methods and makes assumptions that are based on market conditions existing at end of each reporting date.
(e) The table below shows the changes in level 3 instruments
At 1 January
Increase in fair value
Closing balance
2014
Rs’000
2,007
979
2,986
2013
Rs’000
2,107
(100)
2,007
10. NON-CURRENT RECEIVABLES
THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
Loans to related parties:
- Holding company
- Directors and key management personnel
358,026
1,000
359,026
303,026
1,000
304,026
Loan to holding company are repayable in 18 months and bears interest at a rate of 7% -7.5% p.a. The loan to directors and key management
personnel is not repayable within one year and carries interest at 7% p.a.
52
11. INVENTORIES
THE GROUP
2014
2013
Rs’000
Rs’000
Raw materials
Finished goods
Bags
Others
119,883
71,216
6,008
4,014
201,121
92,246
93,315
8,718
5,637
199,916
THE COMPANY
2014
2013
Rs’000
Rs’000
114,252
21,412
6,008
4,014
145,686
85,467
35,441
8,718
5,637
135,263
(a) The cost of inventories recognised as expense and included in cost of sales amounted to Rs612m (2013: Rs646m) for the Group and Rs416m
(2013: Rs450m) for the Company.
(b) Bank borrowings of the Company and its subsidiaries are secured by floating charges on the assets of the relevant Company including
inventories.
12. TRADE AND OTHER RECEIVABLES
THE GROUP
2014
2013
Rs’000
Rs’000
Trade receivables
Less provision for impairment
Other receivables and prepayments
Current tax receivables (note 20(a))
Due from customers for work performed but not yet invoiced - net
Amounts receivable from related companies
251,396
(5,724)
245,672
12,729
373
20,499
18,071
297,344
232,638
(5,224)
227,414
8,688
636
20,237
14,935
271,910
THE COMPANY
2014
2013
Rs’000
Rs’000
130,182
(346)
129,836
9,406
373
133,946
273,561
149,939
(1,753)
148,186
7,772
584
68,332
224,874
The carrying amount of trade and other receivables approximate their fair value.
At 31 December 2014, trade receivables and due from customers for work performed but not yet invoiced were impaired. The amount of
provision was Rs11.2m as at 31 December 2014 (2013: Rs8.9m) for the Group and Rs0.3m (2013: Rs1.8m) for the Company. The individually
impaired receivables mainly relate to independent customers, which are in unexpectedly difficult economic situations. It was assessed that a
portion of the receivables is expected to be recovered. The ageing of these trade receivables and due from customers for work performed but
not yet invoiced are as follows:
THE GROUP
2014
2013
Rs’000
Rs’000
Over 6 months
11,171
8,852
THE COMPANY
2014
2013
Rs’000
Rs’000
346
1,753
At 31 December 2014, trade receivables of Rs27.9m (2013: Rs55.4m) for the Group and Rs7.4m (2013: Rs23.9m) for the Company were past
due but not impaired. These relate to independent customers for whom there is no recent history of default. The ageing analysis of these trade
receivables and due from customers for work performed but not yet invoiced are as follows:
THE GROUP
2014
2013
Rs’000
Rs’000
3 to 6 months
Over 6 months
ANNUAL REPORT 2014
18,549
9,323
27,872
21,030
34,351
55,381
THE COMPANY
2014
2013
Rs’000
Rs’000
6,303
1,078
7,381
20,944
2,911
23,855
53
12. TRADE AND OTHER RECEIVABLES (CONT’D)
The carrying amount of trade and other receivables for the Group and the Company are denominated in the following currencies:
THE GROUP
2014
2013
Rs’000
Rs’000
Rupee
US Dollar
Euro
Zambian Kwacha
125,972
110,765
18,453
42,154
297,344
176,615
7,728
42,972
44,595
271,910
THE COMPANY
2014
2013
Rs’000
Rs’000
191,177
59,359
23,025
273,561
213,944
7,728
3,202
224,874
Movements on the provision for impairment of trade receivables and due from customers for work performed but not yet invoiced are as
follows:
THE GROUP
2014
2013
Rs’000
Rs’000
At 1 January
Provision for receivable impairment
Written off during the year
At 31 December
8,852
3,726
(1,407)
11,171
4,037
4,815
8,852
THE COMPANY
2014
2013
Rs’000
Rs’000
1,753
(1,407)
346
1,753
1,753
The other classes within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The Group does not
hold any collateral as security.
13. SHORT TERM LOANS
THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
Loan to related parties:
- Directors and key management personnel
Loan to other companies
1,000
8,943
9,943
-
Loan to directors and key management personnel is unsecured, repayable within one year and bears interest at 7%.
Loan to other companies is secured, repayable within one year and bears interest at 9%.
14. SHARE CAPITAL
THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
Authorised
30,000,000 ordinary shares of Rs10 each
300,000
300,000
Issued and fully paid
22,006,418 ordinary shares of Rs10 each
220,064
220,064
54
15. OTHER COMPREHENSIVE INCOME
Availablefor-sale
fair value
reserve
Rs’000
Translation
Reserve
Rs’000
Other
Reserves
Rs’000
-
-
-
-
-
-
-
-
-
1,241
THE GROUP
Notes
2014
Items that will not be reclassified to profit
or loss:
Gains on revaluation of building
Deferred tax relating to revaluation of property
Remeasurement of defined benefit obligations
Deferred tax relating to remeasurement of defined
benefit obligations
Share of other comprehensive income of associates
Items that may be reclassified subsequently
to profit or loss:
Increase in fair value of available-for-sale financial
assets
Release to income on disposal of available-for-sale
securities
Revaluation
reserve
Rs’000
5
17
18
17
8
9
9,589
(3,289)
-
6,300
(2,080)
(839)
(8,105)
(8,105)
(1,338)
Actuarial
(losses)/
gains
Rs’000
(5,060)
759
-
-
-
-
-
(1,338)
(4,301)
2013
Items that will not be reclassified to profit
or loss:
Deferred tax relating to remeasurement of defined
benefit obligations
Items that may be reclassified subsequently
to profit or loss:
Decrease in fair value of available-for-sale financial
assets
18
-
-
-
-
(629)
17
-
-
-
-
91
-
-
(3,615)
-
-
(3,615)
-
9
-
(1,099)
(1,099)
THE COMPANY
Notes
2014
Deferred tax relating to remeasurement of defined benefit obligations
Increase in fair value of available-for-sale financial assets
Release to income on disposal of available-for-sale securities
ANNUAL REPORT 2014
18
17
9
Availablefor-sale
fair value
reserve
Rs’000
-
1,241
(2,080)
(839)
(538)
Actuarial
(losses)/
gains
Rs’000
(4,683)
702
(3,981)
55
15. OTHER COMPREHENSIVE INCOME (CONT’D)
THE COMPANY (CONT’D)
Notes
2013
Deferred tax relating to remeasurement of defined benefit obligations
18
17
Decrease in fair value of available-for-sale financial assets
9
Availablefor-sale
fair value
reserve
Rs’000
-
(1,099)
(1,099)
Actuarial
(losses)/
gains
Rs’000
(716)
107
(609)
Revaluation reserve
The revaluation reserve relates to the revaluation of buildings.
Available-for-sale fair value reserve
Available-for-sale fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets that has been
recognised in other comprehensive income until the investments are derecognised or impaired.
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.
Other reserves
Other reserves represents the cumulative remeasurement of defined benefit obligation recognised on associates.
Actuarial (losses)/gains
The actuarial (losses)/gains reserve represents the cumulative remeasurement of defined benefit obligation recognised.
16. BORROWINGS
THE GROUP
2014
2013
Rs’000
Rs’000
Current
Bank loans
Bank overdraft
Obligations under finance leases (note 16(b))
THE COMPANY
2014
2013
Rs’000
Rs’000
804
804
3,992
33,872
1,058
38,922
-
33,005
33,005
Non-current
Obligations under finance leases (note 16(b))
1,438
2,370
-
-
Total borrowings
2,242
41,292
-
33,005
(a) The borrowings include secured liabilities for the Group (bank loans, bank overdraft and leases amounting to Rs3.2m (2013: Rs41.3m) and
for the Company (bank loans, bank overdraft and leases amounting to Rs.Nil (2013: Rs33.0m). The bank borrowings are secured over certain
buildings, inventories and current assets of the Group.The rates of interest on these facilities vary between 7.9% and 26% (2013: 7.15% and 26%).
Lease liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of default.
The leases have purchase options on termination. There are no restrictions imposed on the Group by lease arrangements.
56
16. BORROWINGS (CONT’D)
(b) Finance lease liabilities - minimum lease payments:
THE GROUP
2014
2013
Rs’000
Rs’000
Not later than 1 year
Later than 1 year and not later than 2 years
Future finance charges on finance leases
Present value of finance lease liabilities
The present value of finance lease liabilities may be analysed as follows:
Not later than 1 year
THE COMPANY
2014
2013
Rs’000
Rs’000
1,131
1,158
450
2,739
(497)
2,242
1,640
1,452
982
473
4,547
(1,119)
3,428
-
-
804
1,008
430
2,242
1,058
1,097
820
453
3,428
-
-
(c) The exposure of the Group’s and the Company’s borrowings to interest-rate changes and the contractual repricing dates are as follows:
(i) THE GROUP
6 months
or less
6-12
months
1-5
years
Over 5
years
Total
At 31 December 2014
Total borrowings
402
402
1,438
-
2,242
At 31 December 2013
Total borrowings
38,393
529
2,370
-
41,292
(i) THE COMPANY
6 months
or less
6-12
months
1-5
years
Over 5
years
Total
At 31 December 2014
Total borrowings
-
-
-
-
-
At 31 December 2013
Total borrowings
33,005
-
-
-
33,005
(d) The carrying amounts of borrowings of the Group and the Company are denominated in the following currencies:
THE GROUP
2014
2013
Rs’000
Rs’000
Rupee
Others
ANNUAL REPORT 2014
822
1,420
2,242
39,045
2,247
41,292
THE COMPANY
2014
2013
Rs’000
Rs’000
-
33,005
33,005
57
16. BORROWINGS (CONT’D)
(e) The effective interest rates at the end of the reporting period were as follows:
THE GROUP
2014
2013
%
%
Bank loans
Bank overdraft
Obligations under finance leases
7.90%
8-26%
7.90%
7.15-7.9%
8 - 26%
THE COMPANY
2014
2013
%
%
-
7.15%
-
(f) The maturity of non-current borrowings is as follows:
THE GROUP
2014
2013
Rs’000
Rs’000
After one year and before two years
After two years and before five years
1,008
430
1,438
1,097
1,273
2,370
THE COMPANY
2014
2013
Rs’000
Rs’000
-
-
The carrying amounts of borrowings are not materially different from the fair value.
17. DEFERRED INCOME TAX
Deferred income tax are calculated on all temporary differences under the liability method at 15% (2013: 15%).
There is a legally enforceable right to offset current tax assets against current tax liabilities and deferred income tax assets and liabilities when
the deferred income taxes relate to the same fiscal authority on the same entity. The following amounts are shown in the statements of financial
position:
THE GROUP
2014
2013
Rs’000
Rs’000
Deferred tax assets
(2,832)
17,759
14,927
(1,223)
15,228
14,005
THE COMPANY
2014
2013
Rs’000
Rs’000
(1,664)
12,642
10,978
(969)
12,674
11,705
(a) The movement on the deferred income tax account is as follows:
THE GROUP
2014
2013
Rs’000
Rs’000
At 1 January
Profit or loss (credit)/charge (note 20(b))
Charged/(credited) to other comprehensive income
At 31 December
14,005
(1,608)
2,530
14,927
14,456
(360)
(91)
14,005
THE COMPANY
2014
2013
Rs’000
Rs’000
11,705
(25)
(702)
10,978
11,043
769
(107)
11,705
The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same
fiscal authority on the same entity, is as follows:
58
17. DEFERRED INCOME TAX (CONT’D)
(b) THE GROUP
2014
Accelerated tax depreciation
Other temporary differences
Revaluation of building
Deferred tax assets
Net deferred tax liabilities
2013
Other temporary differences
At 1
January
2014
Rs’000
14,805
423
15,228
(1,223)
14,005
At 1 January
2013
Rs’000
Charged/
(credited)
to other
comprehensive
income
Rs’000
Credited
profit or
loss
Rs’000
(335)
(1,237)
(1,572)
(36)
(1,608)
(Credited)/
charged to
profit or loss
Rs’000
3,289
3,289
(759)
2,530
Credited to other
comprehensive
income
Rs’000
-
At 31
December
2014
Rs’000
14,470
(814)
3,289
16,945
(2,018)
14,927
At 31
December
2013
Rs’000
14,817
1,216
16,033
(12)
(793)
(805)
14,805
423
15,228
Deferred tax assets
Tax losses
(534)
(1,043)
(598)
1,043
(91)
-
(1,223)
-
14,456
(360)
(91)
14,005
THE COMPANY
2014
Deferred tax assets
At 1
January
2014
Rs’000
12,674
(969)
11,705
(Credited)/
charged to
profit or
loss
Rs’000
(32)
Credited
to other
comprehensive
income
Rs’000
At 31
December
2014
Rs’000
-
12,642
7
(702)
(1,664)
(25)
(702)
10,978
At 1 January
2013
Rs’000
Charged/
(Credited) to
profit or loss
Rs’000
Credited to other
comprehensive
income
Rs’000
12,620
54
-
Deferred tax assets
Tax losses
(534)
(1,043)
(328)
1,043
(107)
-
11,043
769
(107)
2013
ANNUAL REPORT 2014
At 31
December
2013
Rs’000
12,674
(969)
11,705
59
18. RETIREMENT BENEFIT OBLIGATIONS
THE GROUP
2014
2013
Rs’000
Rs’000
Amounts recognised in the statements of financial position
Defined pension benefits (note 18 (a) (ii))
Other post retirement benefits (note 18 (b) (ii))
Analysed as follows:
3,434
10,024
13,458
3,052
5,106
8,158
3,434
7,665
11,099
3,052
3,413
6,465
13,458
8,158
11,099
6,465
THE GROUP
2014
2013
Rs’000
Rs’000
Amounts charged to profit or loss
Defined pension benefits (note 18 (a)(vi))
Other post retirement benefits (note 18 (b)(i))
387
575
962
899
2,034
2,933
THE GROUP
2014
2013
Rs’000
Rs’000
Amounts charged to other comprehensive income
Defined pension benefits (note 18 (a)(ix))
Other post retirement benefits (note 18 (b)(v))
THE COMPANY
2014
2013
Rs’000
Rs’000
717
4,343
5,060
168
461
629
THE COMPANY
2014
2013
Rs’000
Rs’000
387
286
673
899
1,389
2,288
THE COMPANY
2014
2013
Rs’000
Rs’000
717
3,966
4,683
168
548
716
(a) Defined pension benefits
(i) The Group operates a defined benefit pension. The plan is a final salary plan, which provides benefits to members in the form of a guaranteed
level of pension payables for life and a benefit on death or disablement in service before retirement. The level of benefits provided depends on
members’ length of service and their salary in the final years leading to retirement.
The assets of the fund are held independently and administered by The Anglo Mauritius Assurance Society Ltd.
The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligations were carried out at 31 December 2014
by The Anglo Mauritius Assurance Society Ltd (Actuarial Valuer). The present value of the defined benefit obligations, and the related current service
cost and past service cost, were measured using the Projected Unit Credit Method.
(ii) The amounts recognised in the statements of financial position are as follows:
THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
Present value of funded obligations
Fair value of plan assets
Liability in the statements in financial position
60
5,687
(2,253)
3,434
4,579
(1,527)
3,052
18. RETIREMENT BENEFIT OBLIGATIONS (CONT’D)
(a) Defined pension benefits (Cont’d)
(iii) The reconciliation of the opening balances to the closing balances for the net defined benefit liability is as follows:
THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
At 1 January
Charged to profit or loss
Chared to other comprehensive income
Contributions paid
At 31 December
3,052
387
717
(722)
3,434
2,085
899
168
(100)
3,052
(iv) The movement in the defined benefit obligations over the years is as follows:
THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
At 1 January
Current service cost
Interest cost
Actuarial losses
Past service cost
At 31 December
4,579
128
324
656
5,687
3,568
124
313
87
487
4,579
(v) The movement in the fair value of plan assets of the year is as follows:
THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
At 1 January
Expected return on plan assets
Actuarial losses
Employer’s contributions
Cost of insuring risk benefits
At 31 December
1,527
107
(61)
722
(42)
2,253
1,483
125
(81)
100
(100)
1,527
(vi) Amounts recognised in profit or loss are as follows:
THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
Interest cost
Cost of insuring risk benefits
Past service cost
Total included in employee benefit expense (note 28)
128
217
42
387
124
188
100
487
899
The total included in employee benefit expense is included in operating expenses in the statements of profit or loss.
THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
(vii) Actual return on plan assets
ANNUAL REPORT 2014
46
44
61
(a) Defined pension benefits (Cont’d)
(viii) The fair value of the plan assets at the end of the reporting period is as follows:
THE GROUP AND THE COMPANY
2014
2014
2013
2013
Rs’000
%
Rs’000
%
Insured contracts
2,253
100%
1,527
100%
(ix) The amounts recognised in other comprehensive income are as follows:
THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
Losses on pension scheme assets
Experience loss on liabilities
Changes in assumptions underlying the present value of the scheme
61
656
717
81
69
18
168
(x) Cumulative actuarial gains/(losses) recognised
THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
At 1 January
Actuarial losses recognised for the year
At 31 December
648
(717)
(69)
816
(168)
648
(xi) Principal actuarial assumptions used for accounting purposes were:
THE GROUP AND
THE COMPANY
2014
2013
%
%
Discount rate
Expected return on plan assets
Future salary increases
Future guaranteed pension increase
7.00
7.00
5.00
0.00
7.00
7.00
5.00
0.00
(xii) Sensitivity analysis on defined benefit obligations at end of the reporting date:
31 December 2014
Discount rate (1% increase)
Future long term salary assumption (1% increase)
Increase
Rs’000
Decrease
Rs’000
123
126
-
An increase/decrease of 1% in other principal actuarial assumptions would not have a material impact on defined benefit obligations at the end
of the reporting period.
The sensitivity above have been determined based on a method that extrapolates the impact on net defined benefit obligation as a result of
reasonable changes in key assumptions occurring at the end of the reporting period. The present value of the defined benefit obligation has
been calculated using the projected unit credit method.
The sensitivity analysis may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in
assumptions would occur in isolation of one another as some of the assumptions may be correlated.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
The defined benefit pension plan exposes the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market
(investment) risk.
The funding requirements are based on the pension fund’s actuarial measurement framework set out in the funding policies of the plan.
62
(xiii) The assets of the plan is based on the reserves held for the Deferred Annuity policies for statutory purposes. This asset value is a notional
value and assumes that the scheme is on a going concern.
(xiv) The Company is expected to contribute Rs145,184 to the pension scheme for the year ending 31 December 2015.
(b) Other post retirement benefits
Other post retirement benefits comprise gratuities payable under the Employment Rights Act 2008.
(i) Amounts recognised in profit or loss
Interest cost
Past service cost
Total included in employee benefit expense (note 28)
THE GROUP
2014
2013
Rs’000
Rs’000
204
371
575
171
222
1,641
2,034
THE COMPANY
2014
2013
Rs’000
Rs’000
44
242
286
46
115
1,228
1,389
(ii) Movement in the liability recognised in the statements of financial position
THE GROUP
2014
2013
Rs’000
Rs’000
At 1 January
Total expense as above
Actuarial losses recognised in other comprehensive income
At 31 December
5,106
575
4,343
10,024
2,611
2,034
461
5,106
THE COMPANY
2014
2013
Rs’000
Rs’000
3,413
286
3,966
7,665
1,476
1,389
548
3,413
(iii) Amounts recognised in the statements of financial position
THE GROUP
2014
2013
Rs’000
Rs’000
Present value of plan liability
10,024
5,106
THE COMPANY
2014
2013
Rs’000
Rs’000
7,665
3,413
(iv) Movement in defined benefit obligations over the years is as follows:
THE GROUP
2014
2013
Rs’000
Rs’000
At 1 January
Interest cost
Actuarial losses
Past service cost
At 31 December
5,106
204
371
4,343
10,024
2,611
171
222
461
1,641
5,106
THE COMPANY
2014
2013
Rs’000
Rs’000
3,413
44
242
3,966
7,665
1,476
46
115
548
1,228
3,413
(v) Analysis of amount recognised in other comprehensive income
THE GROUP
2014
2013
Rs’000
Rs’000
Experience losses on liabilities
Changes in assumptions underlying the present value of the scheme
ANNUAL REPORT 2014
4,343
4,343
479
(18)
461
THE COMPANY
2014
2013
Rs’000
Rs’000
3,966
3,966
557
(9)
548
63
(vi) Cumulative actuarial gains recognised
At 1 January
Actuarial losses recognised for the year
At 31 December
THE GROUP
2014
2013
Rs’000
Rs’000
915
(4,343)
(3,428)
1,376
(461)
915
THE COMPANY
2014
2013
Rs’000
Rs’000
808
(3,966)
(3,158)
1,356
(548)
808
(vii) Principal actuarial assumptions used for accounting purposes
THE GROUP AND
THE COMPANY
2014
2013
%
%
7.00
5.00
Discount rate
Future salary increases
7.00
5.00
(viii) Sensitivity analysis on other post retirement benefit obligations at end of the reporting date:
31 December 2014
Increase
Rs’000
Discount rate (1% increase)
Future long term salary assumption (1% increase)
1,043
Decrease
Rs’000
882
-
19. TRADE AND OTHER PAYABLES
THE GROUP
2014
2013
Rs’000
Rs’000
Trade payables
Accruals
Other payables
Amounts payable to related companies
243,883
9,833
7,021
21,057
281,794
98,951
24,933
554
19,103
143,541
THE COMPANY
2014
2013
Rs’000
Rs’000
222,658
7,214
4,221
34,122
268,215
73,437
18,568
554
35,518
128,077
The carrying amounts of trade and other payables approximate their fair value.
20. TAX LIABILITIES
(a) Current tax liabilities
At 1 January
Current tax on adjusted profit for the year at 15% (2013 : 15%)
Transfer to/(from) other receivable
(Paid)/refund during the year
Foreign tax credit
Tax deducted at source
Exchange difference
(Over)/under provision on previous years assessment
At 31 December
Analysed as:Current tax assets (note 12)
Current tax liabilities
64
THE GROUP
2014
2013
Rs’000
Rs’000
THE COMPANY
2014
2013
Rs’000
Rs’000
5,882
4,363
899
(6,127)
(833)
(3,159)
1,025
9,794
8,236
(1,797)
(8,819)
(194)
(1,091)
(810)
563
5,882
(584)
899
(599)
(89)
(373)
1,016
(1,797)
1,177
(57)
(923)
(584)
(373)
1,398
1,025
(636)
6,518
5,882
(373)
(373)
(584)
(584)
20. TAX LIABILITIES (CONT’D)
(b) Income tax expense
Current tax on adjusted profit for the year at 15% (2013: 15%)
Withholding tax on dividend
(Over)/under provision on previous years assessment
Deferred tax movement (note 17)
Tax (credit)/charge
THE GROUP
2014
2013
Rs’000
Rs’000
4,363
(3,159)
(1,608)
(404)
8,236
803
563
(360)
9,242
THE COMPANY
2014
2013
Rs’000
Rs’000
(89)
(25)
(114)
1,016
769
1,785
(c) The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the basic tax rate of the Group as follows:
THE GROUP
2014
2013
Rs’000
Rs’000
Share of results of associates
Tax calculated at a rate of 15% (2013: 15%)
(Over)/under provision in previous year
Income not subject to tax
Expenses not deductible for tax purposes
Effect of different tax rate
Temporary differences not provided for
Utilisation of tax losses
(Over)/under provision of deferred tax in previous years
Tax losses for which no deferred tax recognised
Withholding tax on dividend
Foreign tax credit
Consolidation adjustments
Tax charge
29,036
(3,946)
25,090
3,764
(3,159)
(8,129)
1,998
696
10
(315)
(185)
5
614
(4,223)
8,520
(404)
21,306
7,727
29,033
4,355
563
(3,628)
203
3,704
109
940
874
803
(2,755)
4,074
9,242
THE COMPANY
2014
2013
Rs’000
Rs’000
23,965
23,965
3,595
(89)
(3,868)
380
(132)
(114)
18,465
18,465
2,770
(1,446)
90
940
(569)
1,785
21. DIVIDENDS
THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
At 1 January
Ordinary dividend of Rs0.90 per share (2013: Rs1.00)
Paid during the year
At 31 December
22,006
19,806
(22,006)
19,806
22,006
22,006
(22,006)
22,006
On 03 December 2014, the Directors declared a dividend for the year ended 31 December 2014 of Rs0.90 per ordinary share amounting to a
total dividend of Rs19.8m (2013: Rs22m).
ANNUAL REPORT 2014
65
22. REVENUE
The following is an analysis of revenue for the year:
Sale of goods
Rendering of services
THE GROUP
2014
2013
Rs’000
Rs’000
710,269
44,692
754,961
776,304
35,954
812,258
THE COMPANY
2014
2013
Rs’000
Rs’000
490,469
490,469
540,204
540,204
23. OTHER OPERATING INCOME
THE GROUP
2014
2013
Rs’000
Rs’000
Profit on disposal of property, plant and equipment
Management fees
Others
488
5,980
596
7,064
195
6,216
2,020
8,431
THE COMPANY
2013
2013
Rs’000
Rs’000
363
11,792
1,311
13,466
43
10,007
1,226
11,276
24. OPERATING LOSS
THE GROUP
2014
2013
Rs’000
Rs’000
Operating loss is arrived at after:
crediting
Profit on disposal of plant and equipment
Profit on disposal of available-for-sale investments
and charging
Cost of inventories consumed
Lease rentals - operating lease
Employee benefit expense (note 28)
Depreciation
- owned
- leased
THE COMPANY
2014
2013
Rs’000
Rs’000
488
2,197
195
-
363
2,197
43
-
612,415
4,721
72,170
646,026
4,721
73,233
415,912
4,721
54,751
449,557
4,721
45,891
17,171
1,116
16,960
998
15,918
-
15,675
-
25. EXPENSES BY NATURE
THE GROUP
2014
2013
Rs’000
Rs’000
Depreciation (note 5)
Impairment charges
Employment benefit expense (note 28)
Changes in inventories of finished goods and work in progress
Raw materials used and consumed
Transportation
Advertising costs
Other expenses
Total cost of sales and operating expenses
66
18,287
3,726
72,170
(22,099)
634,514
11,470
849
66,688
785,605
17,958
4,815
73,233
6,607
639,419
5,105
808
77,840
825,785
THE COMPANY
2014
2013
Rs’000
Rs’000
15,918
54,751
(14,029)
429,941
2,404
213
58,631
547,829
15,675
45,891
2,074
447,483
4,483
204
61,076
576,886
26. OTHER INCOME
THE GROUP
2014
2013
Rs’000
Rs’000
Dividend receivable
Interest receivable
Rental income
Net foreign exchange gains/(losses) (note 29)
Commission received
Others
565
2,197
25,612
16,491
2,106
283
287
47,541
494
20,598
14,115
(482)
34,725
THE COMPANY
2014
2013
Rs’000
Rs’000
23,590
2,197
25,725
15,318
32
210
67,072
9,494
20,679
14,115
(70)
44,218
27. NET FINANCE INCOME/(COSTS)
THE GROUP
2014
2013
Rs’000
Rs’000
Interest payable on:
- Bank overdraft
- Bank and other loans repayable not by instalments
- Finance lease
Net foreign exchange gains (note 29)
(872)
(78)
(537)
(1,487)
2,616
1,129
(620)
(423)
(643)
(1,686)
1,090
(596)
THE COMPANY
2014
2013
Rs’000
Rs’000
(570)
(570)
1,357
787
(498)
(116)
(614)
267
(347)
28. EMPLOYEE BENEFIT EXPENSE
THE GROUP
2014
2013
Rs’000
Rs’000
Wages and salaries including termination benefits
Social security costs
Pension costs - defined benefit plan (note 18(a)(vi))
Pension costs - defined contribution plan
Other post retirement benefits (note 18(b)(i))
65,261
2,193
387
3,754
575
72,170
66,299
1,939
899
2,062
2,034
73,233
THE COMPANY
2014
2013
Rs’000
Rs’000
48,852
1,579
387
3,647
286
54,751
40,364
1,319
899
1,920
1,389
45,891
29. NET FOREIGN EXCHANGE (LOSSES)/GAINS
The exchange differences (charged)/credited to profit or loss are included as follows:
THE GROUP
2014
2013
Rs’000
Rs’000
Cost of sales
Other income (note 26)
Net finance income/(costs) (note 27)
ANNUAL REPORT 2014
(2,064)
2,106
2,616
1,455
(482)
1,090
THE COMPANY
2014
2013
Rs’000
Rs’000
(257)
32
1,357
1,462
(70)
267
67
30. EARNINGS PER SHARE
THE GROUP
2014
2013
THE COMPANY
2014
2013
Net profit attributable to equityholders of the Company (Rs’000)
29,440
12,064
24,079
16,680
Number of ordinary shares in issue (in thousands)
22,006
22,006
22,006
22,006
1.34
0.55
1.09
0.76
Earnings per share (Rs)
31. NOTES TO STATEMENTS OF CASH FLOWS
(a) Cash generated from operations
Depreciation
Profit on disposal of property, plant and equipment
Provision for impairment of trade and other receivables
Provision for impairment of inventories
Investment income
Interest income
Interest expense
Changes in working capital:
- inventories
- trade and other receivables
- trade and other payables
- import loan - net
Cash generated from operations
(b) Cash and cash equivalents
Bank and cash balances
THE GROUP
2014
2013
Rs’000
Rs’000
THE COMPANY
2014
2013
Rs’000
Rs’000
29,036
18,287
(8,393)
(3,946)
240
(488)
(2,197)
3,726
591
(565)
(25,612)
1,487
21,306
17,958
(5,167)
7,727
2,833
(195)
4,815
(494)
(20,598)
1,686
23,965
15,918
(2,594)
(49)
(363)
(2,197)
(23,590)
(25,725)
570
18,465
15,675
(267)
2,188
(43)
(9,494)
(20,598)
614
(1,796)
(28,766)
137,048
(3,992)
114,660
33,555
39,518
85,097
(23,174)
164,867
(10,423)
(23,898)
140,666
92,280
31,402
68,302
62,195
(27,166)
141,273
THE GROUP
2014
2013
Rs’000
Rs’000
62,184
56,819
THE COMPANY
2014
2013
Rs’000
Rs’000
29,341
38,464
Cash and cash equivalents and bank overdrafts include the following for the purpose of the statements of cash flows.
THE GROUP
2014
2013
Rs’000
Rs’000
Bank overdraft
Cash and cash equivalents
62,184
62,184
(33,872)
56,819
22,947
(c) Non cash transactions
The principal non cash transactions are the acquisition of motor vehicle using finance leases (Note 5) in 2013.
68
THE COMPANY
2014
2013
Rs’000
Rs’000
29,341
29,341
(33,005)
38,464
5,459
32. SEGMENTAL INFORMATION - THE GROUP
(a) MCFI Ltd’s reportable segments namely Fertilizers, Trading and Contracting are strategic business units that offer different products and
services. They are managed separately because each business requires different technology and marketing strategies.
MCFI Ltd (Group) has 3 reportable segments : Fertilizers, Trading and Contracting.
The category “Others” includes dividend, interest receivable, rental and other income.
The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. Performance
is evaluated on the basis of profit or loss from operations before tax expense.
Intersegment sales and transfers are accounts for as if the sales or transfers were to third parties, that is, at current market prices.
2014
Fertilizers
Rs’000
Total segment revenues
Inter segment revenues
Revenues from external customers
529,522
529,522
Segment (loss)/profit
Other income/(loss) (note 26)
Net finance income/(costs) (note 27)
Share of result of associates (note 8)
(Loss)/profit before taxation
(Loss)/profit for the year
(15,100)
2,370
2,772
(9,958)
4,204
(5,754)
2013
Total segment revenues
Inter segment revenues
Revenues from external customers
Segment (loss)/profit
Other (expense)/income (note 26)
Net finance (cost)/income (note 27)
Share of result of associates (note 8)
(Loss)/profit before taxation
(Loss)/profit for the year
2014
Interest/dividend receivable
Interest expense
Material items of expenses
- Cost of sales
- Operating expenses
Depreciation
Investment in associates
Addition to non current asset
Segment assets
Segment liabilities
2013
Interest/dividend receivable
Interest expense
Material items of expenses
- Cost of sales
- Operating expenses
Depreciation
Investment in associates
Addition to non current asset
Segment assets
Segment liabilities
ANNUAL REPORT 2014
Fertilizers
Rs’000
559,806
559,806
(2,386)
(3,972)
(488)
(6,846)
912
(5,934)
Fertilizers
Rs’000
Trading
Rs’000
180,137
180,137
3,353
(264)
(1,180)
1,909
909
2,818
Trading
Rs’000
214,414
214,414
17,047
285
17,332
(6,643)
10,689
Trading
Rs’000
Contracting
Rs’000
45,302
45,302
(1,013)
(463)
2,592
1,116
69
1,185
Contracting
Rs’000
(7,997)
(393)
(7,727)
(16,117)
(66)
(16,183)
Contracting
Rs’000
(447)
(470)
(442,713)
(114,775)
15,918
13,092
565,566
280,779
(146,479)
(26,593)
1,633
798
220
113,009
45,148
(25,922)
(18,303)
736
2,587
514
32,575
7,698
Trading
Rs’000
Contracting
Rs’000
(627)
(739)
(320)
(467,066)
(107,617)
15,675
3,928
516,651
157,518
(170,625)
(27,188)
1,478
798
1,903
110,994
57,842
(21,192)
(20,337)
805
1,687
446
35,945
20,160
Total
Rs’000
-
(10,820)
45,435
1,354
35,969
(4,778)
31,191
Others
Rs’000
38,038
38,038
(570)
Fertilizers
Rs’000
Others
Rs’000
754,961
754,961
(23,580)
47,541
1,129
3,946
29,036
404
29,440
Total
Rs’000
(11,760)
38,697
26,937
(3,445)
23,492
Others
Rs’000
26,177
-
812,258
812,258
(5,096)
34,725
(596)
(7,727)
21,306
(9,242)
12,064
Total
Rs’000
26,177
(1,487)
(615,114)
(10,820) (170,491)
18,287
12,100
15,485
13,826
382,549 1,093,699
333,625
Others
Rs’000
21,092
(11,760)
10,392
330,653
-
Total
Rs’000
21,092
(1,686)
(658,883)
(166,902)
17,958
12,877
6,277
994,243
235,520
69
32. SEGMENTAL INFORMATION - THE GROUP (CONT’D)
(b) Secondary reporting format - geographical segments
Although the Group’s three business segments are managed in Mauritius, they operate in the following main geographical areas.
Revenue
2014
2013
Rs’000
Rs’000
387,518
70,000
31,940
261,329
4,174
754,961
Mauritius
Reunion
Madagascar
Zambia
Others
Total assets
2014
2013
Rs’000
Rs’000
501,057
22,943
26,508
246,024
15,726
812,258
981,857
111,842
1,093,699
Capital expenditure
2014
2013
Rs’000
Rs’000
13,605
221
13,826
883,248
110,995
994,243
4,374
1,903
6,277
Sales revenue is based on the country in which the customer is located. Total assets and capital expenditure are shown by the geographical area
in which the assets are located.
33. CONTINGENT LIABILITIES
As at 31 December 2014, the Group and the Company had given bank guarantees of Rs2.471m (2013:Rs4.555m) and Rs0.745m (2013: Rs0.795m)
respectively in the ordinary course of business.
34. RELATED PARTY TRANSACTIONS
Transactions
Balances
(a) (i) THE GROUP
2014
Holding company
Fellow subsidiaries
Associates
Associates of the
holding company
Enterprises in which
key management
personnel has
significant/substantial
interest
Directors and
key management
personnel
Remuneration
and benefits
Rs’000
Purchase
of goods
and
services
Rs’000
Sales of
goods
and
services
Rs’000
-
1,012
29,650
-
3
18,678
-
-
6,257
8,902
-
1,386
3,611
-
Management
services
and fees
(payable)/
receivable
Rs’000
Loans/
advances
to
related
party
Rs’000
(12,000)
5,980
-
Loans/
advances
refund
by
related
party
Rs’000
-
Interest
receivable
Rs’000
Amount
owed by
related
party
Rs’000
Amount
owed to
related
party
Rs’000
360,519
10,656
275
2,301
18,361
-
55,000
-
-
24,769
-
-
-
-
-
4,647
395
-
-
-
-
-
-
-
-
-
1,000
-
-
2,000
-
Transactions
Purchase
of goods
and
services
Rs’000
Remuneration
and benefits
Rs’000
2013
Holding company
Fellow subsidiaries
Associates
Associates of the
holding company
key management
personnel has
interest
Directors and
key management
personnel
70
Sales of
goods and
services
Rs’000
-
1,012
36,665
874
1
17,111
-
-
6,151
8,183
-
1,386
2,441
-
Balances
Management
services and
fees (payable)/
receivable
Rs’000
Loans/
advances
to related
party
Rs’000
(13,411)
5,866
-
Loans/
advances
refund by
related
party
Rs’000
Amount
owed by
related
party
Rs’000
Interest
receivable
Rs’000
Amount
owed to
related
party
Rs’000
112,056
-
-
20,322
-
305,286
9,270
-
3,150
15,952
-
-
-
-
-
3,405
1
-
-
-
-
-
-
-
-
-
-
-
-
1,000
-
34. RELATED PARTY TRANSACTIONS (CONT’D)
Transactions
Balances
Loans/
advances
to
related
party
Rs’000
Loans/
advances
refund
by
related
party
Rs’000
55,000
-
(b) (i) THE COMPANY
Management
services
and fees
(payable)/
receivable
Rs’000
Remuneration
and benefits
Rs’000
Purchase
of goods
and
services
Rs’000
Sales of
goods
and
services
Rs’000
-
1,012
9,965
-
3
152,711
10,777
-
-
1,386
-
-
3,611
-
-
-
2014
Holding company
Subsidiaries
Fellow subsidiaries
Associates
key management
personnel has
interest
Directors and
key management
personnel
(12,000)
5,812
5,980
-
Interest
receivable
Rs’000
Amount
owed by
related
party
Rs’000
Amount
owed to
related
party
Rs’000
-
24,769
114
-
360,519
119,402
7,404
4,647
2,301
30,735
691
395
-
-
-
-
-
1,000
-
-
2,000
-
Transactions
Purchase
of goods
and
services
Rs’000
Remuneration
and benefits
Rs’000
2013
Holding company
Subsidiaries
Fellow subsidiaries
Associates
key management
personnel has
interest
Directors and
key management
personnel
Sales of
goods and
services
Rs’000
-
1,012
4,490
5,391
874
1
83,630
12,233
-
-
1,386
-
2,441
-
-
Balances
Management
services and
fees (payable)/
receivable
Rs’000
Loans/
advances
to related
party
Rs’000
(13,411)
4,540
5,866
-
Loans/
advances
refund by
related
party
Rs’000
Amount
owed by
related
party
Rs’000
Interest
receivable
Rs’000
Amount
owed to
related
party
Rs’000
112,056
-
5,400
-
20,322
139
-
305,286
61,680
4,392
-
3,150
30,774
1,594
-
-
-
-
-
-
-
-
-
-
-
1,000
-
Remuneration and benefits
THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
Key management personnel compensation
Directors’ fees
3,611
2,441
TERMS AND CONDITIONS WITH RELATED PARTIES
The sales to and purchases from related parties are made in the normal course of business. Outstanding balances at the year-end are unsecured,
interest free (except for loan to holding company and to directors and key management personnel at 7 - 7.5% p.a.) and settlement occurs in
cash. No guarantees were provided or received for any related party receivables and payables. For the year ended 31 December 2014, the Group
has not impaired the receivables relating to amounts owed by each related party (2013: Rs.nil). The assessment is undertaken each financial year
through examining the financial position of each related party and the market in which it operates.
35. ULTIMATE HOLDING ENTITY
The Group is controlled by Harel Mallac & Co. Ltd incorporated in Mauritius which owns 70.4% of the Company’s shares. The remaining 29.6%
of the shares is widely held.
The directors recognise Harel Mallac & Co. Ltd. as the parent entity and the ultimate parent entity is Société Pronema. Both entities are constituted
in Mauritius.
ANNUAL REPORT 2014
71
36. OPERATING LEASE COMMITMENTS
The Company leases premises under non-cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal
rights. The future aggregate minimum lease payments under non-cancellable operating lease are as follows:THE GROUP AND
THE COMPANY
2014
2013
Rs’000
Rs’000
5,161
5,161
Not later than one year
Later than one year and not later than 5 years
5,161
5,161
10,322
The agreed lease period is up to 14 December 2015 with option of renewal for further periods of fifteen years.
37. EVENTS AFTER THE REPORTING PERIOD
Subsequent to the reporting date, the Company is in the process of entering into a shareholder agreement with Bio-Fertilizer Co. Ltd, a
company specialised in bio fertilizers, whereby, The Mauritius Chemical And Fertilizer Industry Limited will acquire 33.33% of the share capital of
Bio-Fertilizer Co. Ltd.
38. THREE-YEAR SUMMARY OF PUBLISHED RESULTS AND ASSETS AND LIABILITIES - THE GROUP
(a) Statements of profit or loss
2014
Rs’000
2013
Rs’000
2012
Rs’000
754,961
3,946
29,036
404
29,440
812,258
(7,727)
21,306
(9,242)
12,064
800,951
(18,335)
14,712
(7,247)
7,465
29,440
12,064
10,754
18,219
Profit attributable to:
- Owners of the parent
29,440
12,064
18,219
(b) Statements of profit or loss and other comprehensive income
Profit for the year
29,440
(8,283)
21,157
12,064
(5,252)
6,812
18,219
(3,412)
14,807
Total comprehensive income attributable to:
- Owners of the parent
21,157
6,812
14,807
0.90
1.34
-
1.00
0.55
-
1.00
0.34
0.49
Revenue
Profit for the year from continuing operations
Discontinued operations
Profit for the year from discontinued operations
Profit for the year
Dividend per share (Rs)
Earnings per share from continuing operations(Rs/share)
Earnings per share from discontinued operations (Rs/share)
(c) Statements of financial position
2014
Rs’000
ASSETS
Non-current assets
Current assets
Total assets
2013
Rs’000
2012
Rs’000
523,107
570,592
1,093,699
465,598
528,645
994,243
170,201
758,924
929,125
EQUITY AND LIABILITIES
Capital and reserves
760,074
758,723
773,917
LIABILITIES
Current liabilities
Total equity and liabilities
29,823
303,802
333,625
24,533
210,987
235,520
21,058
134,150
155,208
1,093,699
994,243
929,125
Total equity and liabilities
72
Member of the Harel Mallac Group
The Mauritius Chemical and Fertilizer Industry Limited
Chaussée Tromelin, Fort George
Port Louis
Mauritius
Tel: (230) 216 3990
Fax: (230) 242 5321
Email: [email protected]

- Harel Mallac Group

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