Notes to the Financial Statements

Transcription

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 2012, the contents of which
are listed below.
This report was approved by the Board of Directors at its meeting held on 28 March 2013.
Antoine L Harel Chairman Sébastien Lavoipierre
Managing Director
Contents
2
At a Glance
Financial Highlights
4
Our Business Segments
6
Corporate Information
8
Board of Directors
12
Senior Management Team
14
Chairman’s Statement
16
Managing Director’s Statement
22
Corporate Governance
32
Statement of Directors’ Responsibilities
33
Statutory Disclosures
37
Value Added Statement
39
Certificate by Secretary
41
Financial Statements
42
Independent Auditors’ Report to the Members
44
Statements of Financial Position
45
Income Statements
46
Statements of Comprehensive Income
47
Statements of Changes in Equity
49
Statements of Cash Flows
50
3
The Mauritius Chemical and Fertilizer Industry Limited • Annual Report 2012
1
At a Glance
Our Vision
To be the leader in the fertilizer and chemical
business in the region and to diversify through
new ventures
Our 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.
Group Profile
The Mauritius Chemical and Fertilizer Industry Limited (MCFI) is a manufacturing company,
operating a 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 1 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.
MCFI holds 21.5 per cent of the equity capital of Rehm Grinaker Construction Co. Ltd. and
Rehm Grinaker Properties Co. Ltd.
2
Financial Highlights
OPERATING RESULTS
Turnover (Rs ‘000)
Profit before taxation (Rs ‘000)
Earnings per share (Rs)
Dividend per share (Rs)
Dividend cover (times)
Profit after taxation (Rs’000)
2012
2011
800,951
25,656
0.84
1.00
0.84
18,381
690,404
64,980
2.20
1.00
2.20
48,340
929,125
17,994
(56,433)
894,386
69,820
(102,304)
STATEMENT OF FINANCIAL POSITION AND CASH FLOW
Total assets (Rs ‘000)
Capital expenditure (Rs ‘000)
Net cash used in operations (Rs ‘000)
FINANCIAL RATIOS
Net worth per share (Rs)
Profit before taxation to turnover (%)
Profit after taxation to shareholders’ interest (%)
Closing share price (Rs)
35.09
3.20
2.38
28.00
1.2
6
1.1
5
1
4
0.9
3
0.8
2
0.7
1
0.6
35.41
9.41
6.20
43.30
0
2008
2009
2010
2011
2008
2012
2009
2010
2011
2012
2011
2012
Earnings per share (Rs)
40
50
35
40
30
25
30
20
20
15
10
10
5
0
0
2008
2009
2010
Net worth per share (Rs)
2011
2012
2008
2009
2010
Closing Share Price (Rs)
3
BLENDED AND
STRAIGHT FERTILIZERS
COMPLEX NPK
FERTILIZERS
SPECIALTY
FERTILIZERS
Straight Fertilizers:
Urea
MAP
DAP
MOP
CAN
TSP
Ammonium Sulphate
Manufacturing and
Formulation of Complex
NPK fertilizers with
Ureaic, Nitrate and
Ammonical base as well
as with organic growth
promoters
Soluble NPK + micro
Liquid NPK + micro
Technical Grade Fertilizer
Organic Plant Nutrients
Organo Mineral Fertilizers
Soil Conditioners
Plant Growth Promoters
End Users
End Users
End Users
Complete Fertilizer
Range for:
Various NPK grades for
local market and export
Complete Nutrition
Solutions for plants:
Blended NPK:
Urea-based
Nitrate-based
Sugarcane
Flowers and Ornamentals
Vegetables and Fruit trees
4
Vegetables
Flowers
Lawns
Turf
Fruit trees
Hydroponics
Ferti-irrigation
Nursery and
Household plants
MECHANICAL
APPLICATION
SUPPORT AND
SERVICES
Mechanical Application
of complex fertilizers for
sugarcane growers as per
their crop requirements
Plant Nutrition Solutions
Soil Analytical Services
Leaf Analytical Services
R&D
End Users
End Users
Homogeneous and precise
application of complex
NPK in sugarcane field
with tractor-mounted
controlled applicators
Technical Support to customers
Tailor-made Nutritional Programme
Product Development as per
customer needs
5
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 Hugues 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
6
7
Board of Directors
Antoine L Harel (55)
Chairman (Non-Executive)
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.
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).
Christopher Boland (61)
Non-Executive Director
Christopher Boland is an Associate Member of the Institute of Chartered Accountants of
Australia. He has held various positions in Finance, Operations and General Management in
Australia and France within two multinational groups: Baker Hughes Corporation and Hexcel
Corporation. He joined the Harel Mallac Group in April 2007 as Group CEO.
Other Directorship (listed Companies):
Harel Mallac & Co. Ltd.
Jean Yves Corson (53)
Independent Director
Jean Yves Corson is holder of a Maîtrise d’Economie d’Entreprise from Université de Paris I,
Panthéon Sorbonne. He 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. Since 2010, he has held the function of Land Development Manager of
Compagnie de Beau Vallon Ltée and is a Director of The Mauritius Chemical and Fertilizer
Industry Limited since 13 August 2010.
Bychemex Limited and Chemco Limited.
8
Board of Directors (cont’d)
Allain Doger de Spéville (60)
Allain Doger de Spéville is a Notary Public and was first appointed to the Board of Directors of
The Mauritius Chemical and Fertilizer Industry Limited on 12 July 2006.
Other Directorship (listed Companies):
The Mauritius Oil Refineries Ltd (Chairman).
Charles Harel (45)
Charles Harel holds a National Diploma in Management and Finance from the Cape Technikon,
South Africa, as well as an MBA from the University of Birmingham, UK. In 1995, he joined the
Harel Mallac Group where he now leads the Property and Business Development Arm. He was
appointed to the Board of Directors of The Mauritius Chemical and Fertilizer Industry Limited
on 17 March 2009.
Compagnie des Magasins Populaires Limitée and Harel Mallac & Co. Ltd.
Vincent Labat (50)
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.
9
Sébastien Lavoipierre (40)
Executive Director
Sébastien Lavoipierre holds a BSc degree in Chemical Engineering from the University of Natal
Pietermaritzburg, South Africa and an MBA from Herriot Watt University, Edinburgh Business
School. He was Production Manager of Les Gaz Industriels Ltd from 1998 to 2003 and held
a senior management position at Ireland Blyth Limited from April 2003 to December 2006.
He was Project Manager of the MCFI Group from 2007 to 2008 and Business Development
Manager of the Harel Mallac Group in 2009. Sébastien Lavoipierre was appointed General
Manager of MCFI Group in May 2010 and was appointed to the Board of Directors of The
Mauritius Chemical and Fertilizer Industry Limited on 13 August 2010. He is also the Managing
Director of Bychemex Limited, Chemco Limited, Coolkote Enterprises Ltd. and Archemics Ltd.
Harold Ng Kwing King (63)
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, up to April 2010, the Managing Director of Chemco Limited,
Bychemex Limited and Coolkote Enterprises Ltd. He was the Managing Director of Harel Mallac
International Ltd from June 2010 to April 2012.
Rajendrasingh Rathacharen (69)
Rajendrasingh Rathacharen holds a Diploma in Industrial Psychology. He was a Junior Minister
until 1990. He was Chairman and General Manager of Rose Belle Sugar Estate from 2001 to
2003 and is currently Marketing Consultant at Chase Dervitt, Public Accountants and Business
Advisors.
Other Directorships:
None.
10
Michel Rivalland G.O.S.K. (59)
Michel Rivalland 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., Bychemex Limited and
Chemco Limited.
11
Senior Management Team
Eric de Maroussem
Sales Manager
Eric de Maroussem holds a B.Com degree from the University of Natal, Pietermaritzburg, South
Africa. He has worked for Phoenix Beverages Ltd as Sales Manager before joining Archemics
Limited in 2007 as Head of Sales. In 2009, he joined the Company as Sales Manager.
Ranjit Jatooa
Sales Manager
Ranjit Jatooa is a qualified Agronomist, holding a Bachelors degree in Agriculture and a
Masters 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 the Company in 2009 as Sales Manager.
Harold Lai Chuck Choo
Operations Manager
Harold Lai Chuck Choo holds a BSc (Hons) degree in Chemical Engineering from Teesside
University. He is the Operations Manager since October 2006 after serving as Technical
Manager of the MCFI Group since May 1988. He was 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.
Romesh Raja Rai
Finance Manager
Romesh Raja Rai is an Associate Member of the Institute of Chartered Accountants in England
and Wales (ACA). He was articled with Coopers & Lybrand (London) and after qualifying, he
joined DCDM in 1983 and left in 1988 to join the MCFI Group as Finance Manager. He was also
involved in the setting up of the Association of Mauritian Manufacturers (AMM) and was a
council member representing MCFI.
Ashok Varjangbhay
Managing Director of MCFI International (Zambia) Ltd.
Ashok Varjangbhay holds a Bachelors degree in Chemical Engineering from IIT Bombay, India.
He was the General Manager of Mauritius Jute and Textiles Ltd. from 1986 to 1995 and initially
started 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.
12
13
Chairman’s Statement
Dear Valued Shareholder
The last financial year ended 31 December 2012 has been a
challenging year for an export oriented business like MCFI
reflecting the difficult economic environment both in Mauritius
and in the region. As the pioneer Mauritius enterprise to have
exported into Africa, our international operations have now
become our core activity with 44 per cent of our Group
Turnover being generated internationally.
ECONOMIC OUTLOOK
The sluggish economic growth in Mauritius of 3.3 per cent is
commendable given the subdued global economic environment.
Our economy, particularly our exports of goods and services,
is vulnerable to the global financial climate which is
adversely impacted by the persisting downturn in
the euro area. This situation calls for prudential
management of the economy trying on the one
hand to trade off growth with inflation while
maintaining our country’s competitiveness on the
other. However, the economy of Zambia where we
are now well established continues its positive trend
with an economic growth of 6.7 per cent in 2012
primarily driven by both demand and favourable
prices of copper.
FINANCIAL PERFORMANCE
The financial performance of the Group has
been challenging but Turnover has been
commendable with an increase of 16 per cent
by Rs110.0 million to Rs801.0 million with
Rs354.0 million generated internationally. The
biggest growth has come from MCFI
International with a Turnover of Rs70.0 million
compared to Rs4.0 million in 2011.
The competitive pressure has adversely
impacted the Gross profit margin by
2 per cent. The drop in margin and an
increase in operating costs by 16 per cent
driven by the cost of running the NPK
14
Chairman’s Statement (cont’d)
fertilizer plant have contributed to an Operating loss of Rs8.8 million compared to an
Operating profit of Rs17.9 million in 2011.
The Operating loss has been mitigated by Other income of Rs40.0 million where the increase
over 2011 is due to a net gain of Rs5.0 million on disposal of our associate Societé d’Engrais et
de Produits Chimiques de Madagascar (SEPCM).
The overall Profit before taxation continues to be adversely impacted by our associate Rehm
Grinaker Construction Co. Ltd. which continues to be affected by the slowdown and difficult
conditions in the construction sector. Our profit for the year is Rs18.0 million compared to
Rs48.0 million in 2011 thus impacting our Earning per share which fell from Rs2.20 to Re0.84.
Nevertheless the Board has maintained the dividend at Re1.00.
The Company’s financial performance has been subdued with a 4 per cent growth in Turnover
from Rs464.0 million to Rs483.0 million; however an Operating loss of Rs37.0 million was reported
following a 3 per cent drop in Gross profit margin and a rise in operating costs of Rs17.0 million.
This Operating loss has been mitigated by the special income of Rs29.0 million resulting from
the disposal of our investment in SEPCM which has led to a Profit before tax of Rs40.0 million
being reported at par with 2011.
The share price is trading at a discount. As at 31 December 2012, it was trading at Rs28.00
compared to its Net assets value of Rs35.00.
OUTLOOK
We are confident that 2013 shall see an enhanced performance given that the NPK fertilizer
plant is now running efficiently with its teething problems nearly behind us and that order
level for MCFI International & Co. Ltd. is encouraging. Moreover, we are well poised to take
advantage of the growing economic activity in Zambia.
Directorate
Mr Rajendrasingh Rathacharen who first joined the Board in 2001 as Director will not stand
for re-election. On behalf of the Board members I would like to thank him for his valuable
contribution to the affairs of the Company during his mandate.
ACKNOWLEDGEMENT
On behalf of the Board I would like to thank all the staff of MCFI, be they in Mauritius or
in Zambia for their dedication, teamwork and commitment to customer service which have
enabled us to remain competitive. A special thanks to those staff who are consistently scouting
the region for business opportunities as we continue to develop our international operations.
I would also like to thank each of the directors who have served on the Board for the diligence
they have shown while discharging their responsibilities, as well as their support provided to
me as Chairman.
Antoine L Harel
Chairman
15
Managing Director’s Statement
Overview
2012 was a very challenging year. The fertilizer business was impacted on one hand by the
economic downturn, and on the other, by heightened competitive pressure.
Despite a difficult economic environment, it was a year of expansion and growth. Sales volume
increased by 13.6 per cent mainly due to the export of fertilizer and growth in our chemical
business in Zambia. The Group turnover registered a Rs110.5 million increase to reach Rs800.9 million.
The Group’s profit for 2012 stood at Rs18.3 million compared to the previous year figure of
Rs48.3 million. The reasons for this shortfall are two-fold: a decline in operating profit of Rs26.7 million
due to the increased costs of running the NPK plant on a full year basis; a reduction in interest
income of Rs7.0 million as a result of high working capital. In addition, the results of our associates
impacted negatively on Profit after Tax (PAT).
Our subsidiary in Zambia, MCFI International Zambia Ltd, has performed satisfactorily with
increased profitability. Profit before Tax was Rs17.9 million in 2012 compared to Rs12.9 million
for the previous year.
MCFI invested in Rehm Grinaker Properties Co Ltd for a total of Rs8.7 million representing 21.5 per cent
of the shareholding. The primary activity of this company is property development.
The share of loss from our associates, Rehm Grinaker Construction Co. Ltd. and Rehm Grinaker
Properties Co Ltd, was Rs18.3 million.
MCFI Ltd. disposed of its shareholding of 45.5 per cent in SEPCM in December 2012 for a total of
USD 1.1million. The exit from this investment netted a gain of Rs29.0 million.
On the operational side, a good safety record was maintained as a result of our proactively
managing risk and implementing established policies. We aim to achieve business excellence by
focusing on our performance, people and planet.
Composition of the MCFI Group
The MCFI Group consists of the following:
Subsidiaries: MCFI International & Co. Ltd, MCFI International (Zambia) Ltd, MCFI (Freeport) Ltd,
Coolkote Enterprises Ltd
Associates: Rehm-Grinaker Construction Co. Ltd. and Rehm-Grinaker Properties Co Ltd.
Fellow subsidiaries: Chemco Limited, Bychemex Limited and Compostage du Sud Ltée.
16
Managing Director’s Statement (cont’d)
“ The Group Turnover registered
a Rs110.5 million rise to
Rs800.9 million.”
17
Operations
Granular Fertilizers
Fertilizer demand and consumption has grown steadily in South and East Asia, and Latin America,
and was still displaying an upward trend in 2012. This situation has kept fertilizer raw materials
prices high. The export tax policy on fertilizers in China was maintained in 2012, impacting the
price and availability of fertilizer raw materials during the last quarter of the year. This issue was
addressed through the timely purchase of raw materials. The price level of Urea, DAP and MOP
in 2012 was maintained at about the same level as in the previous year.
The sugar industry remains locked in a financial crisis. Coupled with adverse weather conditions,
this has affected negatively the demand for fertilizers in the local market. Some small planters
are neglecting their sugar cane plantations due to low or no return on their small acreage lots.
We also face intense competition from local fertilizer traders who import fertilizers for direct
resale. This has put additional pressure on our margin. Despite the adverse conditions, local sales
volume increased by 6 per cent compared to 2011. Export sales also increased substantially by 16
per cent in 2012 compared to 2011. In 2012, an overall increase of 11 per cent in fertilizer output
was recorded compared to 2011.
NPK Complex Fertilizer
Much effort has gone into addressing the post commissioning teething challenges encountered
during last quarter of 2011 and first two quarters of 2012. In addition, new types of complex
fertilizers, including organo-mineral fertilizers, went into production. We are now confidently
looking forward to penetrating regional export markets.
Mechanical Application of Granular Complex Fertilizers
The contract agreement with CEAL to carry out the mechanical application of NPK Complex
Fertilizers directly to sugar cane fields entered its second year. This ‘Supply & Apply’ concept
with NPK Complex Fertilizers is now firmly established to compete with CMS Liquid Fertilizer.
We have increased our market share in this fertilizer segment with our fertilizer sales under
‘Supply & Apply’ increasing by 85 per cent compared to 2011. Further improvements in market
share are expected in 2013.
Safety, Health, Environment & Quality Management System (SHEQ)
We aim to achieve business excellence while constantly striving for the right balance between
Performance, People and Planet. To this end we have endorsed a Safety, Health, Environment
and Quality policy, are reviewing our objectives, and re-engineering our core business processes
to be in line with SHEQ policy.
18
Subsidiaries
Coolkote Enterprises Ltd.
Coolkote Enterprises Ltd is a company which specialises in waterproofing and coatings for building.
The company delivered another good performance driven by the successful completion of numerous
medium-size contracts such as Ambre Hotel, Citadelle Mall, SIT Knowledge Center and IRS Matala.
The Company generated a profit of Rs3.5 million compared to Rs4.0 million in the previous year.
Few signs of recovery in the property market are expected, causing a further slowdown in the
construction industry in 2013. Sluggish growth will negatively impact performance of the
company in 2013.
MCFI International & Co. Ltd.
MCFI International & Co. Ltd, holder of a category 1 global business licence, is the holding
company of MCFI International (Zambia) Ltd.
The main activity of MCFI International & Co. Ltd. is the export of fertilizer on the regional
market and the supply of chemicals to our Zambian subsidiary.
The company realised a profit of Rs4.8 million on a turnover of Rs70.6 million, compared to a
loss of Rs1.0 million on a turnover of Rs3.6 million in 2011.
International business represents 44 per cent of the Group’s turnover. With an aggressive marketing
of NPK fertilizers we are confident we can increase sales volume on the regional and African markets.
New avenues will be explored with a view to positioning ourselves as a major supplier of fertilizer.
MCFI International (Zambia) Ltd.
For the year ended 31 December 2012, the company realised a profit before tax of Rs17.9 million
on a turnover of Rs204.7 million (2011 – Rs12.9 million and Rs184.4 million, respectively).
The company delivered satisfactory results with a turnover increase of Rs20.3 million derived mainly
from growth in new products and markets. The PBT increased by 39 per cent to Rs17.9 million.
The strategic extension of our operations in the Copper Belt has been successful for the supply of
products to the mining sector and to the neighbouring Democratic Republic of Congo.
The Zambian economy has been very resilient in 2012 with a growth of 6.7 per cent in 2012.
The economy is highly dependent on the mining of copper. Prices for that metal increased
significantly over the last months. The outlook for 2013 looks promising. MCFI International
(Zambia) is expected to yield higher profits next year.
19
Associates
Rehm-Grinaker Construction Co. Ltd.
For the 12 months up to 31 December 2012, the company declared a loss of Rs124.5 million on
a turnover of Rs1.79 billion (2011-Loss Rs31.7 million and Turnover Rs2.8 billion).
During the year, the company encountered difficult trading conditions on three particular
projects, not envisaged at the time of tender. These projects will be seen through to completion,
thus impacting negatively on the performance in 2012. A further negative result is expected in
2013. The 36 per cent drop in turnover has also contributed to the disappointing performance.
The company has a healthy order book for 2013. However the contraction in the construction
industry registered in 2012 (-1.2 per cent approx.) is expected to persist through 2013. The
slowdown in the construction industry coupled with the competitiveness in that sector, will
affect contributions in the interim.
Rehm Grinaker Properties Co. Ltd.
For the 12 months to 31 December 2012, the company made a loss of Rs6.0 million on a turnover
of Rs10.2 million.
Rehm Grinaker Properties Co. Ltd., incorporated in July 2010 has three shareholders, Grinaker- LTA
Construction and Development Limited, TERRA Mauricia Ltd and Mauritius Chemical & Fertilizer
Industry Ltd. It currently owns two properties, one is located at Montebello (land only) acquired
in November 2010 and the other at Arsenal (land & buildings) acquired in December 2011. The
property at Arsenal is utilized by Rehm Grinaker Construction Ltd. for its operations.
Compostage du Sud Ltée
Compostage du Sud Ltée primary activity will be the production of organic fertilizer from
poultry waste and hotel waste. The implementation of the pilot plant has been delayed due
to the need of additional working capital and will be operational at the beginning of 2013.
Fellow Subsidiaries
Bychemex Limited
For the year ended 31 December 2012, the company realised a profit before tax of Rs 1.9 million
on a turnover of Rs63.0 million (2011 – Rs8.4 million and Rs69.0 million respectively).
Bychemex Limited is specialized in the trading of auxiliaries and specialty chemicals for the
textile industry in Mauritius and Madagascar. Our lack of competitiveness as a nation has made
export-led business out of Mauritius a more daunting challenge than anticipated. Some of the
20
major players have delocalised part of their production to Bangladesh and Madagascar in order
to maintain their competitive edge. The results have clearly been disappointing; the main reasons
for this decline in profits being the increase in competition and heightened pressure on margins.
This year has also been impacted by the volatile price of raw materials which eroded margins in
some of our business segments.
The textile manufacturing sector has successfully diversified its export on the South Africa
market which has become the second biggest after Europe. We are expecting to see positive
growth in the production capacities of some textile factories in 2013.
Chemco Limited
For the year ended 31 December 2012, the company realised a profit before tax of Rs13.4 million
on a turnover of Rs324.1 million (2011 – Rs29.6 million and Rs325.0 million respectively).
The core business of Chemco Limited is trading in Chemicals and General Goods. Our Business
segments are industrial chemicals, sugar chemicals, water treatment chemicals, laboratory
services and specific general goods (tyres and air conditioners). Despite difficult market
conditions company’s turnover remained the same compared to the previous year, but results
were disappointing. The general goods division performed well with a substantial increase in
sales of tyres and air conditioners. A new tyre center was launched with the aim to boost sales in
the corporate segment. The industrial chemicals division registered a fall in turnover due to lower
exports in conflict-torn Madagascar. On the other hand, the sugar chemicals and detergents
divisions performed well. A new division was created to offer services in water treatment ranging
from total water management services, desalination systems, potable water treatment, as well as
boiler and cooling tower water treatment. The Laboratory has been recommended for ISO 17025
in December 2012 and is now geared to providing clients with a testing service of exceptional
quality. Moreover its scope and portfolio of services will be expanded in 2013. The economic
downturn will continue to affect performance and earnings of the company in the coming
year. On the other hand, Chemco will continue to seek opportunities for growth in different
business segments.
Acknowledgement
I would like to thank the Chairman and fellow members of the Board of Directors for their
active collaboration, advice and support during the year under review.
I would also like to thank the managers and employees for their commitment and dedication
in carrying out their duties and responsibilities diligently.
Sébastien Lavoipierre
Managing Director
21
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 2012, the Board of Directors consisted of ten members, of whom four were
independent Directors. The role of the Managing Director and that of the Chairman are separated.
It is the Board’s view that having the Managing Director sitting on the Board and the Finance
Manager attending Board meetings is in line with the Code of Corporate Governance with regard
to the need for executive presence on the Board. Non-executive Directors have free access to
members of the senior management team. All Directors have access to the Company Secretary.
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 8 to 11.
BOARD MEETINGS
The Board meets regularly during the year and for the period under review the Board met seven
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.
22
Corporate Governance (cont’d)
BOARD MEETINGS (CONT’D)
At these Board meetings, the Company’s and Group’s budget, performance and forecast are
reviewed and approved, reports from the Managing Director 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. 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.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS HELD IN 2012
Board of
Directors
Committee
Audit
Committee
Strategic
Committee
Antoine L Harel
7/7
4/4
-
6/6
Christopher Boland
5/7
-
-
4/6
Jean Yves Corson
7/7
-
5/5
-
Allain Doger de Spéville
5/7
3/4
3/5
5/6
Charles Harel
6/7
-
-
Vincent Labat
7/7
4/4
5/5
-
7/7
-
-
-
Harold Ng Kwing King
6/7
-
-
Rajendrasingh Rathacharen
7/7
-
-
-
Michel Rivalland
7/7
-
4/5
6/6
23
Audit and Risk Committee
The Audit and Risk Committee is chaired by Mr Vincent Labat and consists of three other
members, namely Messrs Allain Doger de Spéville, Michel Rivalland and Jean Yves Corson. The
Committee fulfilled its responsibilities for the year under review, in compliance with its term
of reference. 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 five times.
Strategic Committee
The Strategic Committee is chaired by Mr Antoine L Harel and its other members are
Messrs Michel Rivalland, Christopher Boland 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 six times and performed its duties as per
its terms of reference.
RISK MANAGEMENT
The Board regularly addresses and evaluates physical, human resources, business, financial,
reputational, regulatory and compliance risks. During the course of 2012, 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:
24
RISK MANAGEMENT (CONT’D)
Physical and environmental risks
- Force 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.
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.
25
RISK MANAGEMENT (CONT’D)
Internal Control (cont’d)
The Board has set appropriate policies to ensure that the above mentioned control objectives
are achieved.
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.
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 Internal
Auditing department conducts its assignments based on a yearly plan which is validated by
the Audit Committee. Systems reviewed in 2012 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.
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 33.
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 Christopher Boland, Charles Harel and Michel Rivalland sit on the Board of Directors of
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 is detailed on page 35.
26
DIVIDEND POLICY
Dividends are distributed after considering the Company’s performance and profitability,
gearing, investment needs, capital expenditure requirements and growth opportunities.
Year
Dividend Paid
(Rs)
Dividend Cover
(Times)
Dividend Yield
(%)
2008
2009
2010
2011
2012
1.1
0.8
1.0
1.0
1.0
4.2
4.1
3.8
2.2
0.8
7.1
3.2
2.6
2.3
3.5
DAILY SHARE PRICE FROM JANUARY 2010 TO JANUARY 2013
2,200
50.0
2,100
45.0
2,000
40.0
MCFI
1,900
SEMDEX
35.0
1,800
30.0
1,700
25.0
20.0
1,600
Ja
A
N D
M J
M J
A
A
S
M A M J
S O
S O
D
D J
M
M
O
N
N
F
F
F
n- eb- ar- pr- ay- un- Jul- ug- ep- ct- ov- ec- Jan eb ar Apr ay un Jul- ug- ep- ct- ov ec Jan eb ar Apr ay un Jul- ug- ep- ct ov ec an10 10 10 10 10 10 10 10 10 10 10 10 -11 -11 -11 -1 -11 -11 11
11 11 11 -11 -11 -12 -12 -12 -12 -12 -12 12
12 12 -12 -12 -12 13
1
Month
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 34 to 35.
DIRECTORS’ DEALING 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.
27
RELATED PARTY TRANSACTIONS
Related party transactions are detailed on pages 92 to 94.
SENIOR MANAGEMENT PROFILE
The profile of the senior management team is given on page 12.
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.
THIRD PARTY MANAGEMENT AGREEMENT
The Company has a management contract with Harel Mallac & Co. Ltd.
DIRECTORS’ FEES
Executive directors are not remunerated for their responsibilities on the Company’s Committees
and for services at the level of the Board of wholly owned subsidiaries. Their remuneration
package is in accordance with market rates.
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 34. 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.
28
REMUNERATION POLICY (CONT’D)
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 receive additional fees for their roles on such
Committees. In addition to previous Accelerated Performance Schemes (APS), a further APS for
a selected group of managers was introduced in 2011 for the period 2011 to 2013 to achieve
significantly higher results.
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 MARCH 2013
Size of 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 % Holding
918
171,052
0.77
150
118,082
0.53
319
769,062
3.50
58
410,673
1.87
54
1,053,591
4.79
12
843,185
3.83
6
815,865
3.71
5
1,775,544
8.06
2
16,049,364
72.94
1,524
22,006,418
100.00
29
SUMMARY BY SHAREHOLDING CATEGORY AS AT 28 MARCH 2013
Category of
Shareholders
Individual
Insurance and Assurance Companies
Pension and Provident funds
Investment and Trust Companies
Other Corporate Bodies
Total
Number of
Shareholders
1,392
7
6
4
115
1,524
Number of
Shares Owned
2,292,267
1,413,393
354,951
134,877
17,810,930
22,006,418
%
Holding
10.42
6.42
1.61
0.61
80.94
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 1st quarter
Publication of condensed results for 2nd quarter
Publication of condensed results for 3rd quarter
Dividend declaration & payment
March 2013
May/June 2013
May 2013
August 2013
November 2013
December 2013 /January 2014
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
30
Action
Contact the Company’s secretariat
Contact personal broker
Contact personal broker
Forward the relevant form to the Company’s secretariat
SAFETY, HEALTH AND ENVIRONMENT
The Company complies with the Occupational Safety and Health Act 2005 and other legislative and
regulatory frameworks. It is committed to sustainable development and ensures that its operations
are conducted in a way that is respectful of the environment and of the society at large.
CORPORATE SOCIAL RESPONSIBILITY
The Company highly values its social role as a responsible corporate citizen, especially on the
educational needs of underprivileged and handicapped children. Through Fondation Harel Mallac,
a non-profit entity of the Harel Mallac Group, Rs427,318 was donated to fund different projects.
In 2012, Fondation Harel Mallac helped many NGOs and schools such as Xavier Barbe GS,
Les Amis de Zippy, Junior Achievement Mascareignes, Centre Technique St. Monfort,
l’Association des Parents de Déficients Auditifs (A.P.D.A), l’Association de Parents d’Enfants
Inadaptés de l’Ile Maurice (A.P.E.I.M), l’Atelier Mo’Zar, l’Adolescent Non Formal Education
Network (A.N.F.E.N) and Terrain for Interactive Pedagogy through Arts (T.I.P.A).
Other NGOs working in the environment, socio-economic and sports fields were helped.
They are: Mauritian Wildlife Foundation, Curepipe Starlight Sporting Club (CSSC), Mouvement d’Aide à
la Maternité (M.A.M), Rainbow Kids Day Care Centre and the Trust Fund for Excellence in Sports (TFES).
In 2013, the focus will still be on helping the underprivileged and handicapped children.
Donations for the year under review are detailed on page 35.
PROMOTING A BETTER ENVIRONMENT
We strive to improve the environmental impact of our activities by encouraging use of resources
to ensure quality of life for future generations. The Group has taken significant measures to
ensure 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.
31
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 28 March 2013 and signed on its behalf by:
Antoine L Harel Sébastien Lavoipierre
Chairman Managing Director
32
Statutory Disclosures
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 2012.
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
Activities
The Mauritius Chemical and Fertilizer
Industry Limited (MCFI)
Manufacturing of NPK complex, blending and trading
of fertilizers
Subsidiaries
MCFI (Freeport) Ltd
MCFI International (Zambia) Ltd
MCFI International & Co. Ltd - GBL 1
Trading as a Freeport company
Trading of fertilizers, 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 2012 were:
MCFI
LTD
MCFI
MCFI
(FREEPORT) INTERNATIONAL
LTD
& CO LTD
MCFI
INTERNATIONAL
ZAMBIA
COOLKOTE
ENTERPRISES
LTD
DIRECTORS
Christopher Boland
Jean Yves CORSON
Allain DOGER DE SPEVILLE
Alfred L FRANCIS
Charles HAREL
Antoine L. HAREL
Vincent LABAT
Sébastien LAVOIPIERRE
Harold NG KWING KING
Rajendrasingh RATHACHAREN
Michel RIVALLAND
Binhoy SAHAY
Ashok VARJANGBHAY
- Director at 31.12.2012
- Alternate Director at 31.12.2012
- Resigned during the year ended 31.12.2012
33
Statutory Disclosures (cont’d)
DIRECTORS’ SERVICE CONTRACTS
One of the Non-Executive directors of the Company had a five-month consultancy contract
with the Company which expired on 31 December 2012.
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.
DIRECTORS’ REMUNERATION AND BENEFITS
Remuneration and benefits received, or due and receivable from the Company and its
subsidiaries were:
- The Company
Executive Director
Full-time
Part-time
Non-executive Directors
Company
2012
2011
Rs’000
Rs’000
2,438
2,438
1,044
2,303
3,347
- Subsidiary companies
(excluding the directors who are also directors of the Company
2 Executive Directors (2011: 2)
- Full-time
- Part-time
Non-executive Directors
Subsidiaries
2012
2011
Rs’000
Rs’000
-
-
6,056
90
5,825
82
DIRECTORS’ AND OTHER OFFICERS’ INTERESTS IN SHARES
The Directors’ and Other Officers’ interests in the Company’s shares at 31 December 2012 were:
Directors
Allain Doger de Spéville
Antoine L Harel
Charles Harel
Harold Ng Kwing King
34
The Company
Direct Interest Indirect Interest
20,000
651,017
651,017
3,750
-
The other directors have 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 INTEREST INDIRECT INTEREST
OFFICERS
Harold Lai Chuck Choo
Romesh Raja Rai
Ashok Varjangbhay
150
-
-
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 SHAREHOLDER
At 28 March 2013, the following shareholder was interested in more than 5 per cent of the
ordinary share capital of the Company.
SHARES
INTEREST %
15,494,949
70.4
Except for the above, no person has reported any material holding of 5 per cent or more of the
equity share capital of the Company.
CORPORATE SOCIAL RESPONSIBILITY
THE GROUP
2011
2012
Rs’000
Rs’000
Donations made during the year
Political
Other
Corporate Social Responsibility
35
427
50
1,702
THE COMPANY
2011
2012
Rs’000
Rs’000
5
427
50
1,702
35
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
THE GROUP
2011
2012
Rs’000
Rs’000
THE COMPANY
2011
2012
Rs’000
Rs’000
616
328
630
210
475
-
450
-
150
90
30
-
42
-
Other services provided by BDO Zambia during the year relate to taxation and other
professional services.
Other services provided by the auditors during the year ended 31 December 2011 related to
taxation fees.
36
Value Added Statement
2012
Rs ‘000
%
2011
Rs ‘000
%
Turnover
Paid to supplier for materials & services
Value Added
800,951
722,764
78,187
Investment and other income
Total wealth created
47,939
126,126
100
69,286
141,447
100
81,166
64
62,159
44
22,006
1,713
23,719
19
22,006
217
22,223
16
7,275
6
16,640
11
11
100
14,091
26,334
40,425
141,447
29
100
690,404
618,243
72,161
Distributed as follows:
Employees Remuneration & Service benefits
Providers of capital
Dividends to shareholders
Interest paid on borrowings
Government taxes on earnings
Taxation
Retained in the Group to ensure future growth
Depreciation
Retained (loss) / profit
Total wealth distributed & retained
17,591
(3,625)
13,966
126,126
19%
Employees Remuneration &
Service benefits
6%
11%
Providers of capital
Government taxes on earnings
64%
Retained in the Group to ensure
future growth
37
38
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.
HM SECRETARIES LTD.
SECRETARY
28 March 2013
39
40
Financial Statements
Year ended 31 December 2012
41
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.
Report on the Financial Statements
We have audited the group financial statements of The Mauritius Chemical and Fertilizer Industry Limited (the “Group”)
and the Company’s separate financial statements on pages 44 to 95 which comprise the statements of financial position at
31 December 2012 and the income statements, statements of 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.
Directors’ Responsibility for the Financial Statements
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.
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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements on pages 44 to 95 give a true and fair view of the financial position of the Group
and of the Company at 31 December 2012, 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
Companies Act 2001
We have no relationship with, or interests in, the Company or any of its subsidiaries, other than in our capacity as auditors
and dealings in the ordinary course of business.
We have obtained all information and explanations we have required.
42
Independent Auditors’ Report to the
Members (cont’d)
In our opinion, proper accounting records have been kept by the Company as far as it appears from our examination of
those records.
The Financial Reporting Act 2004
The directors are responsible for preparing the Corporate Governance Report and making the disclosures required by
Section 8.4 of the Code of Corporate Governance of Mauritius (“Code”). Our responsibility is to report on these disclosures.
In our opinion, the disclosures in the Corporate Governance Report are consistent with the requirements of the Code.
BDO & CO
Chartered Accountants
Rookaya Ghanty, FCCA
Licensed by FRC
Port Louis,
Mauritius.
28 March 2013
43
Statements of Financial Position
At 31 December 2012
Notes
ASSETS
Non current assets
Property, plant and equipment
Intangible assets
Investments in subsidiary companies
Investments in associates
Investments in financial assets
Current assets
Inventories
Trade and other receivables
Short term investments
Bank and cash balances
Non current liabilities
Borrowings
Deferred tax liabilities
Retirement benefit obligations
Current liabilities
Trade and other payables
Current tax liabilities
Borrowings
Dividends
TOTAL EQUITY & LIABILITIES
THE COMPANY
2012
2011
Rs’000
Rs’000
5
6
7
8
9
145,069
115
7,698
17,319
170,201
144,596
115
37,777
24,341
206,829
130,068
14,268
25,268
17,319
186,923
131,312
14,268
22,301
24,341
192,222
10
11
12
29(b)
233,471
316,989
191,970
16,494
758,924
151,300
266,649
243,000
26,608
687,557
166,665
294,987
191,970
1,026
654,648
118,463
207,866
243,000
18,422
587,751
929,125
894,386
841,571
779,973
13
220,064
43,530
508,618
772,212
220,064
46,911
512,243
779,218
220,064
31,194
442,334
693,592
220,064
38,098
424,217
682,379
15
16
17
1,906
14,159
6,698
22,763
345
14,274
6,255
20,874
10,746
5,542
16,288
10,548
5,317
15,865
18
19(a)
15
20
57,952
9,794
44,398
22,006
134,150
64,880
7,076
332
22,006
94,294
65,886
43,799
22,006
131,691
59,723
22,006
81,729
929,125
894,386
841,571
779,973
TOTAL ASSETS
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Revaluation and other reserves
Retained earnings
Owners’ interest
THE GROUP
2012
2011
Rs’000
Rs’000
These financial statements have been approved for issue by the Board of Directors on 28 March 2013.
Antoine L Harel
Chairman
Managing Director
The notes on pages 50 to 95 form an integral part of these financial statements.
Auditors’ report on pages 42 and 43.
44
Income Statements
THE GROUP
Notes
THE COMPANY
2012
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
Continuing operations
Turnover
21
Cost of sales
Gross profit
Other operating income
22
800,951
690,404
482,592
463,554
(658,546)
(553,674)
(414,691)
(382,845)
142,405
136,730
67,901
80,709
11,757
22,055
14,189
21,182
(101,554)
(162,975)
(140,819)
(118,705)
Operating (loss)/profit
23
(8,813)
17,966
(36,615)
Other income
24
40,042
36,100
73,286
36,456
31,229
54,066
36,671
36,793
Net finance income
25
2,008
5,758
3,650
3,749
Share of loss of associates
8
(18,335)
(7,314)
-
-
14,902
52,510
40,321
40,542
(7,275)
(16,640)
(198)
(6,199)
7,627
35,870
40,123
34,343
10,754
12,470
-
-
18,381
48,340
40,123
34,343
18,381
48,340
40,123
34,343
Operating expenses
Profit before taxation
Income tax expense
19(b)
Profit for the year from continuing operations
337
Discontinued operations
Post tax profit from discontinued operations
8
Profit for the year
Profit attributable to:
Owners of the parent
Earnings per share from continuing
operations(Rs/share)
28(a)
0.35
1.63
1.82
1.56
Earnings per share from discontinued
operations (Rs/share)
28(b)
0.49
0.57
-
-
45
Statements of Comprehensive Income
THE GROUP
Note
Profit for the year
THE COMPANY
2012
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
18,381
48,340
40,123
34,343
Other comprehensive income:
Currency translation differences
14
3,523
(5,116)
Change in value of available-for-sale financial assets
14
(6,904)
3,468
(6,904)
3,468
Other comprehensive income for the year
(3,381)
(1,648)
(6,904)
3,468
Total comprehensive income for the year
15,000
46,692
33,219
37,811
15,000
46,692
33,219
37,811
Total comprehensive income attributable to:
Owners of the parent
46
20
Dividends
20
Dividends
220,064
Balance at 31 December 2011
-
14
-
-
220,064
Balance at 1 January 2011
Profit for the year
220,064
-
-
14
24,609
-
-
-
24,609
24,609
-
-
-
24,609
Rs’000
Rs’000
220,064
Revaluation
reserve
18,843
-
3,468
-
15,375
11,939
-
(6,904)
-
18,843
Rs’000
Availablefor- sale
fair value
reserve
3,459
-
(5,116)
-
8,575
6,982
-
3,523
-
3,459
Rs’000
Translation
reserve
512,243
(22,006)
-
48,340
485,909
508,618
(22,006)
-
18,381
512,243
Rs’000
Retained
earnings
(Attributable to owners of the parent)
Share
capital
-
Notes
Profit for the year
THE GROUP
779,218
(22,006)
(1,648)
48,340
754,532
772,212
(22,006)
(3,381)
18,381
779,218
Rs’000
Total equity
47
48
20
Dividends
20
Dividends
-
14
220,064
-
-
220,064
Profit for the year
220,064
-
-
14
19,256
-
-
-
19,256
19,256
-
-
-
19,256
Rs’000
Rs’000
220,064
Revaluation
reserve
Share
capital
-
Notes
Profit for the year
THE COMPANY
18,842
-
3,468
-
15,374
11,938
-
(6,904)
-
18,842
Rs’000
Availablefor- sale
fair value
reserve
424,217
(22,006)
-
34,343
411,880
442,334
(22,006)
-
40,123
424,217
Rs’000
Retained
earnings
682,379
(22,006)
3,468
34,343
666,574
693,592
(22,006)
(6,904)
40,123
682,379
Rs’000
Total equity
Statements of Cash Flows
THE GROUP
Notes
THE COMPANY
2012
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
Cash flows from operating activities
(49,866)
(87,661)
(65,825)
Interest paid
(1,713)
(217)
(1,319)
(103)
Income tax paid
(4,854)
(14,426)
-
(9,915)
(56,433)
(102,304)
(67,144)
(102,851)
(14,841)
(69,820)
(14,589)
(67,623)
(8,600)
-
(8,600)
Cash absorbed in operations
29(a)
Net cash used in operating activities
(92,833)
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of investment in associates
-
1,602
500
1,360
253
Proceeds on sale of available for sale investments
202
-
202
-
Repayment of excess funds on application of shares
100
-
100
-
16,926
26,385
17,035
26,531
Proceeds on sale of property, plant and equipment
Interest received
Dividend received from:
- associates
1,179
-
1,179
-
- subsidiary
-
-
2,000
-
- available for sale investments
Net cash used in investing activities
435
8
435
8
(2,997)
(42,927)
(878)
(40,831)
Cash flows from financing activities
(1,324)
(415)
Dividend paid
(22,006)
-
(22,006)
-
Net cash used in financing activities
(23,330)
(415)
(22,006)
-
Net decrease in cash and cash equivalents
(82,760)
(145,646)
(90,028)
(143,682)
Payments on long term borrowings and finance lease
-
-
Movement in cash and cash equivalents
At 1 January
269,608
415,834
261,422
405,104
Decrease
(82,760)
(145,646)
(90,028)
(143,682)
Effect of foreign exchange rate changes
At 31 December
29(b)
4,983
(580)
4,969
-
191,831
269,608
176,363
261,422
49
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 fertilizers.
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.
(a) 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). 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.
Standards, Amendments to published Standards and Interpretations effective in the reporting period
Disclosures - Transfers of Financial Assets (Amendments to IFRS 7). These amendments improve the disclosure requirements
in relation to transferred financial assets. The amendments are not expected to have any impact on the Group’s financial
statements.
Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (Amendments to IFRS1). These amendments
replace references to a fixed transition date with ‘the date of transition to IFRSs’ and set out the requirements for how
an entity resumes presenting financial statements in accordance with IFRSs after a period when the entity was unable
to comply with IFRSs because its functional currency was subject to severe hyperinflation. The amendments are not
expected to have any impact on the Group’s financial statements.
Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12), introduces a presumption that investment
properties that are measured using the fair value model in accordance with IAS 40 Investment Property are recovered
entirely through sale for the purposes of measuring deferred taxes. This presumption is rebutted if the investment
property is held within a business model whose objective is to consume substantially all of the economic benefits
embodied in the investment property over time, rather than through sale. This amendment is unlikely to have an impact
on the Group’s financial statements.
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 1 January 2013 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:
Amendments to IAS 1 Presentation of Items of Other Comprehensive Income (Effective 1 July 2012)
IFRS 9 Financial Instruments
IAS 27 Separate Financial Statements
IAS 28 Investments in Associates and Joint Ventures
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IAS 19 Employee Benefits (Revised 2011)
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
50
2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(a) Basis of preparation (cont’d)
Standards, Amendments to published Standards and Interpretations issued but not yet effective (cont’d)
Disclosures - Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7)
IAS 32 Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32)
Amendment to IFRS 1 (Government Loans)
Annual Improvements to IFRSs 2009-2011 Cycle
Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance
Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)
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.
(b) Investments in subsidiaries
Separate financial statements of the Company
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 over which the Group has the power to govern the financial and operating policies generally
accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when assessing whether the Group controls another
entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated 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.
51
(b) Investments in subsidiaries (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.
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.
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.
(c) Investments in associates
Separate financial statements of the Company
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 by 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.
(d) Property, plant and equipment
Property, plant and equipment is initially stated at historical cost/deemed cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. 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.
52
(d) Property, plant and equipment (cont’d)
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.
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.
(e) 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 but excludes borrowing costs. Net realisable value is the estimated selling price in the
ordinary course of business, less the costs of completion and applicable variable selling expenses.
(f) 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 Company 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 the income statement.
F oreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the
income statement within ‘Net finance income’. Foreign exchange gain and losses that relate to purchases and trade payables are presented in ‘Cost of sales’. All other foreign exchange gains and losses are presented in the income
statement within ‘Other income’.
53
(f) Foreign currencies (cont’d)
(ii) Transactions and balances (cont’d)
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.
on-monetary items, that are measured at fair value in a foreign currency, are translated using the exchange rates
N
at the date the fair value was determined.
T ranslation 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) assets and liabilities for each statement of financial position presented are translated at the closing rate at the
date of that statement of financial position;
(b) income and expenses for each income statement 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 the income statement 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.
(g) Deferred income 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.
(h) Intangible assets
Goodwill
Goodwill arises on the acquisition of subsidiaries and associates and represents the excess of the consideration transferred
over the Group’s interest in the fair value of the net identifiable assets, liabilities and contingent liabilities of the
acquiree.
54
(h) Intangible assets (cont’d)
Goodwill (cont’d)
Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. On disposal of a subsidiary
or associate, the attributable amount of goodwill is included in the determination of the gains and losses on disposal.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. Goodwill impairment are undertaken
annually or more frequently if events or changes in circumstances indicate a potential impairment.
(i) Retirement benefit obligations
(i) Defined benefit plans
A defined benefit plan is a pension plan that defines 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.
T he Group contributes to a defined benefit plan for certain employees which is a final salary pension plan. The cost
of providing benefits is determined using the Projected Unit Credit Method, so as to spread the regular cost over
the service lives of employees in accordance with the advice of qualified actuaries who carry out a full valuation of
plans every year. Cumulative actuarial gains and losses arising from experience adjustments, changes in actuarial
assumptions and amendments to pension plans in excess of the greater of 10% of the value of the plan assets or
10% of the defined benefit obligation are spread to income over the average remaining working lives of the related
employees. All actuarial gains and losses are recognised in the income statement.
ast-service costs are recognised immediately in income unless the changes to the pension plan are conditional on
P
the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service
costs are amortised on a straight-line basis over the vesting period.
(ii) 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.
T he Group operates a defined contribution retirement benefit plan for all qualifying employees. Payments to defined
contribution retirement plans are charged as an expense as they fall due.
(iii) Gratuity on retirement
For those employees who are not covered by the above pension plans, the net present value of gratuities 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. Cumulative actuarial gains and losses arising from experience adjustments, changes
in actuarial assumption and adjustments in excess of the greater of 10% of the retirement obligation are spread to
income over the average remaining lives of the related employees.
(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.
55
(j) Impairment of 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).
(k) Accounting for 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 the income statement 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 the income statement.
(l) 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.
(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.
F inancial assets are derecognised when the rights to receive cash flows from the investments have expired or have
been transferred and the Group has transferred substantially all risks and rewards of ownership.
vailable-for-sale financial assets are subsequently carried at their fair values. Loans and receivables are carried at
A
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.
56
(l) Financial assets (cont’d)
(B) Recognition and measurement (cont’d)
nrealised gains and losses arising from changes in the fair value of financial assets classified as available-for-sale
U
are recognised in other comprehensive income.
hen financial assets classified as available-for-sale are sold or impaired, the accumulated fair value adjustments
W
are included in the income statement as gains and losses on financial assets.
T he 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 capitalised earnings method.
(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.
Impairment losses recognised in the income statement 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 the income statement. 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.
I f 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.
(m) 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 the income statement.
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 of estimated cash flows discounted at the
current market rate of return of similar financial assets.
57
(n) 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 the income statement.
(o) 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 the income statement 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.
(p) Cash and cash equivalents
Cash and cash equivalents include cash in hand, short term investments and bank overdraft. Bank overdraft is shown
within borrowings in current liabilities in the statement of financial position.
(q) Trade and other payables
Trade and other payables are stated at fair value and subsequently measured at amortised cost using the effective interest
method.
(r) 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.
(s) 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) Sale 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.
58
(s) Revenue recognition (cont’d)
(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.
(t) 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.
(u) Provisions
Provisions are recognised when the Group has a present or constructive obligation as a result of past events which it is
probable will result in an outflow of economic benefits that can be reasonably estimated.
(v) Comparative figures
Comparative figures have been restated, whenever necessary to conform with changes in presentation or in accounting
policies in the current period.
(w) Segment reporting
Segment information presented relate to operating segments that engage in business activities for which revenues are
earned and expenses incurred.
59
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 investments in foreign subsidiary, whose net assets are exposed to currency translation risk.
t 31 December 2012, if the Rupee had strengthened/(weakened) by 5% against the US Dollar and the Euro with all
A
other variables held constant, the impact on post-tax profit would have been as follows:
THE GROUP
THE COMPANY
Strengthened
Weakened
Strengthened
By 5 %
By 5 %
By 5 %
Weakened
By 5 %
2012
Rs’000
Rs’000
Rs’000
Rs’000
US Dollar
1,891
(1,891)
1,740
(1,740)
Euro
2,152
(2,152)
(1,045)
1,045
US Dollar
1,099
(1,099)
1,096
(1,096)
Euro
2,135
(2,135)
2,035
(2,035)
2011
60
3. FINANCIAL RISK MANAGEMENT (CONT’D)
3.1 Financial Risk Factors (cont’d)
(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 COMPANY
Available-for-sale
2012
2011
Rs’000
Rs’000
866
1,217
(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 statement
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.
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 from operating activities
Net cash flows from investing activities
Net cash flows used in financing activities
Increase
Opening balance
Closing balance
GROUP
2013
Rs’000
70,014
2,220
(22,364)
49,870
191,831
241,701
COMPANY
2013
Rs’000
48,599
10,087
(22,006)
36,680
176,363
213,043
61
3.1 Financial Risk Factors (cont’d)
(c) Liquidity risk (cont’d)
The Group’s financial liabilities analyses below into relevant maturity groupings based on the remaining period at the end
of the reporting period to the contractual maturity date.
GROUP
Less
Between
Between
than 1 year
1 and 2 years
2 and 5 years
Rs’000
Rs’000
Rs’000
At 31 December 2012
43,799
-
-
Finance lease obligations
951
951
1,343
57,952
-
-
Bank borrowings
At 31 December 2011
Bank borrowings
-
-
-
Finance lease obligations
387
161
235
64,880
-
-
Bank borrowings
43,799
-
-
65,886
-
-
59,723
-
-
COMPANY
At 31 December 2012
At 31 December 2011
(d) Cash flow and fair value interest rate risk
As the Group has no significant borrowings, the Group’s post-tax profit and operating cash flows are substantially
independent of changes in market rates.
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.
62
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 price used for financial assets held by the Group is the current bid price.
The instruments are included at different levels as shown below:
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.
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) Estimated impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated
in Note 2 (j).
(b) 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 nearterm business outlook for the investee, including factors such as industry and sector performance and operational and
financing cash flows.
63
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D)
4.1 Critical accounting estimates and assumptions (cont’d)
(c) 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 17.
(d) 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.
(e) 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.
(f) 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.
(g) 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.
64
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D)
4.1 Critical accounting estimates and assumptions (cont’d)
(h) Impairment of assets
Goodwill is considered for impairment at least annually. Property, plant and equipment, and intangible assets
are considered for impairment if there is a reason to believe that impairment may be necessary. Factors taken into
consideration in reaching such a decision include the economic viability of the asset itself and where it is a component
of a larger economic unit, the viability of that unit itself.
Future cash flows expected to be generated by the assets or cash-generating units are projected, taking into account
market conditions and the expected useful lives of the assets. The present value of these cash flows, determined using an
appropriate discount rate, is compared to the current net asset value and, if lower, the assets are impaired to the present
value. The impairment loss is first allocated to goodwill and then to the other assets of a cash-generating unit.
65
66
(a)
5.
Rs’000
-
Transfer
At 31 December 2012
NET BOOK VALUES
58,171
127,300
18
Exchange differences
At 31 December 2012
-
5,504
Disposal adjustments
121,778
Charge for the year
185,471
At 1 January 2012
DEPRECIATION
At 31 December 2012
180
-
Disposals
-
65,263
78,598
-
-
5,952
72,646
143,861
-
-
-
5,865
137,996
Rs’000
Buildings
185,291
Plant and
Machinery
Additions
At 1 January 2012
COST/DEEMED COST
THE GROUP
PROPERTY, PLANT AND EQUIPMENT
3,945
9,643
24
(96)
1,176
8,539
13,588
36
-
(125)
830
12,847
Rs’000
Furniture
and
Equipment
9,099
6,327
-
-
1,958
4,369
15,426
-
1,156
-
6,171
8,099
Rs’000
Forklifts
and
Payloaders
8,591
9,953
(203)
(8,589)
3,001
15,744
18,544
(179)
-
(8,688)
5,128
22,283
Rs’000
Motor
Vehicles
-
-
-
-
-
-
-
-
(1,156)
-
-
1,156
Rs’000
Assets in
progress
Total
145,069
231,821
(161)
(8,685)
17,591
223,076
376,890
37
-
(8,813)
17,994
367,672
Rs’000
5.
Rs’000
185,291
At 31 December 2011
At 31 December 2011
63,513
121,778
At 31 December 2011
NET BOOK VALUES
(91)
-
Scrapped
-
5,500
Charge for the year
116,369
At 1 January 2011
DEPRECIATION
(1,141)
-
-
Disposals
Scrapped
-
65,350
72,646
-
-
-
2,746
69,900
137,996
-
-
-
62,030
75,966
Rs’000
Buildings
186,432
Plant and
Machinery
Additions
At 1 January 2011
COST/DEEMED COST
THE GROUP
PROPERTY, PLANT AND EQUIPMENT (CONT’D)
4,308
8,539
(116)
-
-
1,304
7,351
12,847
(188)
-
-
1,880
11,155
Rs’000
Furniture
and
Equipment
3,730
4,369
-
-
-
850
3,519
8,099
-
-
-
1,545
6,554
Rs’000
Forklifts
and
Payloaders
6,539
15,744
3
(146)
(2,636)
3,691
14,832
22,283
(133)
(146)
(2,636)
3,209
21,989
Rs’000
Motor
Vehicles
-
1,156
-
-
-
-
-
-
1,156
-
-
-
1,156
Rs’000
Assets in
progress
Total
144,596
223,076
(204)
(146)
(2,636)
14,091
211,971
367,672
(1,462)
(146)
(2,636)
69,820
302,096
Rs’000
67
68
(b)
5.
Rs’000
-
Transfer
At 31 December 2012
NET BOOK VALUES
At 31 December 2012
48,866
126,032
-
5,293
Charge for the year
120,739
At 1 January 2012
DEPRECIATION
174,898
-
Disposals
At 31 December 2012
-
65,025
78,259
-
5,907
72,352
143,284
-
-
5,822
137,462
Rs’000
Buildings
174,898
Plant and
Machinery
Additions
At 1 January 2012
COST/DEEMED COST
THE COMPANY
3,336
6,923
(96)
909
6,110
10,259
-
(126)
648
9,737
Rs’000
Furniture
and
Equipment
7,383
6,065
-
1,697
4,368
13,448
1,156
-
4,194
8,098
Rs’000
Forklifts
and
Payloaders
5,458
4,658
(7,478)
1,898
10,238
10,116
-
(7,577)
3,925
13,768
Rs’000
Motor
Vehicles
-
-
-
-
-
-
(1,156)
-
-
1,156
Rs’000
Assets in
progress
Total
130,068
221,937
(7,574)
15,704
213,807
352,005
-
(7,703)
14,589
345,119
Rs’000
5.
At 31 December 2011
54,159
120,739
At 31 December 2011
NET BOOK VALUES
-
5,293
Charge for the year
115,446
At 1 January 2011
DEPRECIATION
174,898
-
Disposals
At 31 December 2011
-
174,898
65,110
72,352
-
2,694
69,658
137,462
-
62,030
75,432
Rs’000
Rs’000
Additions
At 1 January 2011
COST/DEEMED COST
THE COMPANY
Plant and
Machinery
Buildings
3,627
6,110
-
931
5,179
9,737
-
1,536
8,201
Rs’000
Furniture and
Equipment
3,730
4,368
-
850
3,518
8,098
-
1,545
6,553
Rs’000
Forklifts and
Payloaders
3,530
10,238
(1,295)
2,434
9,099
13,768
(1,295)
1,356
13,707
Rs’000
Motor
Vehicles
-
1,156
-
-
-
-
1,156
-
1,156
Rs’000
Assets in
progress
Total
131,312
213,807
(1,295)
12,202
202,900
345,119
(1,295)
67,623
278,791
Rs’000
69
5.
(c)
Additions for the Group include Rs3.1m (2011: Rsnil) of assets leased under finance leases.
(d) Leased asset included above comprise of motor vehicles:
THE GROUP
THE COMPANY
2012
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
Cost - capitalised finance lease
Accumulated depreciation
Net book value
4,256
1,853
-
-
(1,766)
(1,205)
-
-
2,490
648
-
-
(e)
Depreciation charge has been charged to operating expenses for the Group and the Company.
(f)
Bank borrowings are secured by floating charges on the assets of the Group including property, plant and
equipment.
6.
INTANGIBLE ASSETS
THE GROUP
2012
2011
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
At 1 January and 31 December
70
2012
2011
Rs’000
Rs’000
14,268
14,268
Ordinary
Ordinary
Ordinary
Ordinary
MCFI (Freeport) Ltd
MCFI International (Zambia) Ltd
MCFI International & Co Ltd
31 December 2012 and 2011
Name of company
Class of
shares held
31 December
31 December
31 December
31 December
Year end
Rs
Euro
ZK
Rs
Denominated
currency
25,000
451,431
5,000,000
10,000,000
Stated
capital
100
100
-
100
Direct %
-
-
100
-
Indirect%
Mauritius
Mauritius
Zambia
Mauritius
Country of
operation &
incorporation
The financial statements of the following subsidiary companies have been included in the consolidated financial statements.
(a)
Proportion of voting
power held
INVESTMENTS IN SUBSIDIARY COMPANIES (CONT’D)
7.
Waterproofing
Trading company
Trading of chemicals
and general goods
Trading freeport
company
Main business
71
8.
(a)
INVESTMENTS IN ASSOCIATES
2012
2011
Rs’000
Rs’000
THE GROUP
Group’s share of net assets
37,777
32,565
Additions
8,600
-
Disposal
(29,629)
-
Share of loss after tax - attributable to continuing operations
(18,335)
(7,314)
10,754
12,470
At 1 January
Share of profit after tax - attributable to discontinued operations
Dividend
At 31 December
(290)
(1,179)
56
-
7,698
37,777
7,698
31,933
Made up as follows:
Share of net assets
Goodwill on acquisition
-
5,844
7,698
37,777
(b) THE COMPANY
22,301
22,301
Additions
8,600
-
Disposal
(5,633)
At 31 December
25,268
At 1 January
72
22,301
Trading
Rehm Grinaker Construction Co Ltd
Elcon System Technick (Mtius) Ltd
Mauritius
30 June
30 June
30 June
Mauritius
Mauritius
Madagascar
Mauritius
30 June
31 December
Mauritius
30 June
Year end
Place of
incorporation
and operation
1,609
1,264,312
137,791
1,609
164,424
Rs’000
Revenues
-
(31,752)
28,060
-
(6,064)
-
2,800,605
257,376
-
10,276
(124,532) 1,795,408
Rs’000
(Loss)/
profit
(e)
Losses not recognised amounted to Rs10.1m (2011: Rsnil) for Rehm Grinaker Construction Co Ltd. The accumulated losses not recognised were Rs10.1m (2011: Rsnil).
50.00
21.50
44.44
50.00
21.50
21.50
%
Proportion
of ownership
interest
Direct
(d) For companies with non-co terminous year end, management accounts for the year ended 31 December 2012 have been included in the consolidated financial statements.
13
1,174,258
86,751
13
132,328
1,053,208
Rs’000
Rs’000
978,854
Liabilities
Assets
Note 1: Société d’Engrais et de Produits Chimiques de Madagascar has been disposed during the year.
Trading
Construction
Chimiques de Madagascar (Note 1)
Société d’Engrais et de Produits
31 December 2011
Trading
Elcon System Technick (Mtius) Ltd
Construction
Property holding
Rehm Grinaker Properties Co Ltd
Rehm Grinaker Construction Co Ltd
31 December 2012
Business
Activity
Interest in associates:
(c)
Name
INVESTMENTS IN ASSOCIATES (CONT’D)
8.
73
9.
INVESTMENTS IN FINANCIAL ASSETS
THE GROUP AND
THE COMPANY
2012
2011
Rs’000
Rs’000
24,341
At 1 January
Repayment of excess funds on application of shares
(Decrease)/increase in fair value
-
(6,904)
3,468
(18)
Disposal
At 31 December
(a)
20,873
(100)
-
17,319
24,341
Equity securities at fair value:
- Listed
- DEM
- Unquoted
Total available-for-sale financial assets
-
209
15,212
21,925
2,107
2,207
17,319
24,341
Level 1
Level 2
Level 3
Total
Rs’000
Rs’000
Rs’000
Rs’000
At 31 December 2012
15,212
-
2,107
17,319
At 31 December 2011
22,134
-
2,207
24,341
(b) All available-for-sale financial assets are denominated in Mauritian Rupee.
(c)
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.
10. INVENTORIES
THE GROUP
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
Raw materials
133,329
138,688
106,523
Finished goods
86,708
7,711
46,708
7,711
6,644
3,674
6,644
3,674
Bags
Others
(a)
THE COMPANY
2012
105,851
6,790
1,227
6,790
1,227
233,471
151,300
166,665
118,463
The cost of inventories recognised as expense and included in cost of sales for the Group amounted to Rs635m
(2011: Rs537m) and Rs397m (2011: Rs367m) 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.
74
11. TRADE AND OTHER RECEIVABLES
THE GROUP
2012
2011
Rs’000
Trade receivables
Less provision for impairment
THE COMPANY
2012
2011
Rs’000
Rs’000
Rs’000
235,143
200,154
128,997
(4,037)
(4,757)
(1,753)
(1,753)
231,106
195,397
127,244
156,818
158,571
Receivable from disposal of associate
34,581
-
34,581
-
Other receivables and prepayments
30,867
34,429
11,704
15,011
Amounts receivable from related companies
20,435
36,823
121,458
36,037
316,989
266,649
294,987
207,866
The carrying amount of trade and other receivables approximate their fair value.
At 31 December 2012, trade receivables as shown below were impaired. The amount of provision was Rs4.0m as of
31 December 2012 (2011: Rs4.8m) for the Group and Rs1.8m (2011: 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 receivables is as follows:
THE GROUP
Over 6 months
THE COMPANY
2012
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
4,037
4,757
1,753
1,753
At 31 December 2012, trade receivables of Rs32.0m (2011: Rs21.1m) for the Group and Rs4.9m (2011: Rs20.0m) 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 is as follows:
THE GROUP
THE COMPANY
2012
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
3 to 6 months
26,139
19,777
4,072
Over 6 months
5,867
1,283
821
200
32,006
21,060
4,893
19,976
19,776
The carrying amount of trade and other receivables for the Group and the Company are denominated in the
following currencies:
THE GROUP
THE COMPANY
2012
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
177,914
173,649
158,755
155,964
US Dollar
34,581
17,670
42,910
17,882
Euro
69,258
34,020
93,322
34,020
Zambian Kwacha
35,236
41,310
-
-
316,989
266,649
294,987
207,866
Rupee
75
11. TRADE AND OTHER RECEIVABLES (CONT’D)
Movements on the provision for impairment of trade receivables are as follows:
At 1 January
Provision for receivable impairment
Unused amounts reversed
At 31 December
THE GROUP
2012
2011
Rs’000
Rs’000
4,757
11,599
(720)
1,753
(8,595)
4,037
4,757
THE COMPANY
2012
2011
Rs’000
Rs’000
1,753
4,845
1,753
(4,845)
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.
12. SHORT TERM INVESTMENTS
Short term investments have maturity dates within one year and bear interest rate in the range of 7% - 12% p.a.
(2011: 7% - 12% p.a.)
13. SHARE CAPITAL
THE GROUP AND
THE COMPANY
2012
2011
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
Revaluation
reserve
Rs’000
-
Availablefor- sale fair
value reserve
Rs’000
-
Translation
Reserve
Rs’000
3,523
-
(6,904)
(6,904)
3,523
-
-
(5,116)
-
3,468
3,468
(5,116)
14. OTHER COMPREHENSIVE INCOME
THE GROUP
Note
2012
Decrease in fair value of available-for-sale
financial assets
2011
Increase in fair value of available-for-sale
financial assets
76
9
9
14. OTHER COMPREHENSIVE INCOME (CONT’D)
THE COMPANY
Note
2012
Revaluation
reserve
Availablefor- sale fair
value reserve
Rs’000
Rs’000
Decrease in fair value of available-for-sale financial assets
9
-
-
-
(6,904)
-
(6,904)
2011
Increase in fair value of available-for-sale financial assets
9
-
-
-
3,468
-
3,468
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.
15. BORROWINGS
THE GROUP
Current
THE COMPANY
2012
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
Bank loans
27,166
-
27,166
-
Bank overdraft
16,633
-
16,633
-
599
332
-
-
44,398
332
43,799
-
1,906
345
-
-
46,304
677
43,799
-
Obligations under finance leases (note 15(b))
Non-current
Obligations under finance leases (note 15(b))
Total borrowings
(a) The borrowings include secured liabilities for the Group (bank loans, bank overdraft and leases amounting to
Rs46.3m (2011: Rs0.7m)) and for the Company (bank loans, bank overdraft and leases amounting to Rs43.8m
(2011: Rsnil). The bank borrowings are secured over certain land and buildings, inventories and current assets of the
Group. The rates of interest on these facilities vary between 4% and 26% (2011: 8.5% and 11%). 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 Company by lease arrangements.
77
15. BORROWINGS (CONT’D)
(b) Finance lease liabilities - minimum lease payments:
THE GROUP
THE COMPANY
2012
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
Not later than 1 year
951
387
-
-
Later than 1 year and not later than 2 years
951
161
-
-
779
161
-
-
564
74
-
-
3,245
783
-
-
(740)
(106)
-
-
2,505
677
-
-
Not later than 1 year
599
332
-
-
712
129
-
-
677
145
-
-
517
71
-
-
2,505
677
-
-
Future finance charges on finance leases
Present value of finance lease liabilities
The present value of finance lease liabilities
may be analysed as follows:
(c) The exposure of the Group’s borrowings to interest-rate changes and the contractual repricing dates are as follows:
6 months or
less
Total
At 31 December 2012
Total borrowings
43,799
43,799
(d) The carrying amounts of borrowings of the Group and the Company are denominated in the following currencies:
Rupee
17,285
677
15,779
-
Euro
28,020
-
28,020
-
999
-
-
-
46,304
677
43,799
-
Others
(e) The effective interest rates at the end of the reporting period were as follows:
THE GROUP
Bank loans (Euro)
Bank overdraft
Obligations under finance leases
78
THE COMPANY
2012
2011
2012
2011
%
%
%
%
2.1% - 2.3%
-
2.1% - 2.3%
-
7.4%
-
7.4%
-
8.5% - 26%
8.5% - 11%
-
-
16. DEFERRED INCOME TAX
Deferred income tax are calculated on all temporary differences under the liability method at 15% (2011: 15%).
Deferred income tax assets and liabilities are offset when the income taxes relate to the same fiscal authority.
The following amounts are shown in the statement of financial position:
THE GROUP
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
14,159
Deferred income tax liabilities
THE COMPANY
2012
14,274
10,746
10,548
At the end of the reporting period, the Group and the Company had unused tax losses of Rs6.9m. (2011: Rsnil)
available for offset against future profits. A deferred tax asset has been recognised in respect of Rs6.9m (2011:
Rsnil) of such losses. The tax losses expire on a rolling basis over 5 years.
The movement on the deferred income tax account is as follows:
THE GROUP
At 1 January
Exchange differences (note 19(b))
Income statement (credit)/charge (note 19(b))
At 31 December
THE COMPANY
2012
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
14,274
10,523
10,548
114
(211)
-
-
3,962
198
2,157
14,274
10,746
10,548
(229)
14,159
8,391
Deferred tax liabilities charged/(credited) in the income statements are attributable to the following items:
THE GROUP
2012
At 1
January
2012
Charged/
(credited)
to income
statement
At 31
December
2012
Rs’000
Rs’000
Rs’000
Accelerated tax depreciation
13,481
1,336
14,817
Other temporary differences
1,590
(374)
1,216
Deferred tax assets
Tax losses
Net deferred income tax liabilities
(797)
(34)
(831)
-
(1,043)
(1,043)
14,274
(115)
14,159
79
16. DEFERRED INCOME TAX (CONT’D)
At
1 January
2011
Rs’000
2011
Charged
to income
statement
Rs’000
At
31 December
2011
Rs’000
Other temporary differences
11,913
-
1,568
1,590
13,481
1,590
Deferred tax assets
Deferred tax asset not recognised
(1,097)
(293)
10,523
300
293
3,751
(797)
14,274
THE COMPANY
At
1 January
2012
Rs’000
2012
Charged/
(credited)
to income
statement
Rs’000
At
31 December
2012
Rs’000
11,345
1,275
12,620
Deferred tax assets
Tax losses
(797)
10,548
(34)
(1,043)
198
(831)
(1,043)
10,746
At
1 January
2011
Rs’000
2011
Charged/
(credited)
to income
statement
Rs’000
At
31 December
2011
Rs’000
9,130
2,215
11,345
Deferred tax assets
(739)
8,391
(58)
2,157
(797)
10,548
17. RETIREMENT BENEFIT OBLIGATIONS
THE GROUP
2012
2011
Rs’000
Rs’000
Amounts recognised in the statements of
financial position
Company’s pension benefits (note 17 (a) (ii))
Other post retirement benefits (note 17 (b) (ii))
80
2,823
3,875
6,698
2,660
3,595
6,255
THE COMPANY
2012
2011
Rs’000
Rs’000
2,823
2,719
5,542
2,660
2,657
5,317
17.
RETIREMENT BENEFIT OBLIGATIONS (CONT’D)
THE GROUP
2011
2012
Rs’000
Rs’000
Income statement charge/(credit)
Company’s pension benefits (note 17 (a)(v))
Other post retirement benefits (note 17 (b)(i))
263
280
543
213
(319)
(106)
THE COMPANY
2011
2012
Rs’000
Rs’000
263
62
325
213
117
330
(a)
Pension benefits
(i)
The assets of the fund are held independently and administered by The Anglo Mauritius Assurance Society Ltd.
(ii)
Amounts recognised in the statement of financial position
Present value of funded obligations
Fair value of plan assets
Unrecognised actuarial gains
Liability in the statement in financial position
(iii)
3,157
(1,402)
1,755
905
2,660
2012
Rs’000
3,157
110
302
(1)
3,568
2011
Rs’000
2,937
108
305
(193)
3,157
2012
Rs’000
1,402
133
(90)
100
(62)
1,483
2011
Rs’000
1,334
134
(8)
(58)
1,402
2012
Rs’000
110
302
62
(133)
(78)
263
2011
Rs’000
108
305
(134)
(66)
213
Movement in the fair value of plan assets
At 1 January
Expected return on plan assets
Actuarial losses
Employer’s contributions
Cost of insuring risk benefits
At 31 December
(v)
3,568
(1,483)
2,085
738
2,823
Movement in defined benefit obligations over the years is as follows
At 1 January
Current service cost
Interest cost
Actuarial gains
At 31 December
(iv)
THE GROUP AND
THE COMPANY
2011
2012
Rs’000
Rs’000
Amounts recognised in the income statements:
Interest cost
Cost of insuring risk benefits
Actuarial gains
Total included in employee benefit expense (note 26)
81
17.
(vi)
Movement in the liability recognised in the statements of financial position
THE GROUP AND
THE COMPANY
2012
2011
Rs’000
Rs’000
2,660
2,389
Total expense as above
263
213
Employer contributions
(100)
At 1 January
At 31 December
(vii)
Actual return on plan assets
(viii)
The assets in the plan were:
Insured contracts
(ix)
58
2,823
2,660
43
126
THE GROUP
2012
2012
2011
2011
Rs’000
%
Rs’000
%
1,483
100%
1,402
100%
Principal actuarial assumptions used for accounting purposes were:
THE GROUP AND
THE COMPANY
2012
2011
%
%
Discount rate
8.50
9.25
8.50
9.25
Future salary increases
6.50
7.25
Future guaranteed pension increase
0.00
0.00
(x)
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.
(xi)
The Company is expected to contribute Rs125,302 to the pension scheme for the year ending 31 December 2013.
(xii)
Amount for the current and previous four years are as follows:
Present value of defined benefit obligation
Fair value of plan assets
Deficit
Experience gains/(losses) on plan liabilities
Experience losses on plan assets
(b)
2012
2011
2010
2009
2008
Rs’000
Rs’000
Rs’000
Rs’000
Rs’000
(3,568)
(3,157)
(2,937)
(2,512)
1,483
1,402
1,334
1,205
1,420
(2,085)
(1,755)
(1,603)
(1,307)
(1,549)
1
193
(69)
512
(88)
(90)
(8)
(67)
(70)
(47)
Other post retirement benefits
Other post retirement benefits comprise gratuities payable under the Employment Rights Act 2008.
82
(2,969)
17.
(i)
Amounts recognised in the income statements
THE GROUP
2011
2012
Rs’000
Rs’000
Interest cost
Actuarial gain
Effects on curtailments
Total included in employee benefit expense
(note 26)
(ii)
168
225
(113)
-
223
320
(87)
(775)
50
125
(113)
-
50
154
(87)
-
280
(319)
62
117
Movement in the liability recognised in the statements of financial position
THE GROUP
2011
2012
Rs’000
Rs’000
3,595
280
3,875
At 1 January
Total expense/(credit) as above
At 31 December
(iii)
3,914
(319)
3,595
Present value of plan liability
Unrecognised actuarial gains
Liability in the statement in financial position
2,612
1,263
3,875
2,263
1,332
3,595
2,657
62
2,719
2,540
117
2,657
THE COMPANY
2011
2012
Rs’000
Rs’000
1,476
1,243
2,719
1,309
1,348
2,657
Movement in defined benefit obligations over the years is as follows
THE GROUP
2011
2012
Rs’000
Rs’000
At 1 January
Interest cost
Employees’ contribution
Actuarial gains
Effects of curtailments
At 31 December
(v)
THE COMPANY
2011
2012
Rs’000
Rs’000
Amounts recognised in the statement of financial position
THE GROUP
2011
2012
Rs’000
Rs’000
(iv)
THE COMPANY
2011
2012
Rs’000
Rs’000
2,263
119
149
126
(45)
2,612
2,979
173
217
154
(430)
(830)
2,263
THE COMPANY
2011
2012
Rs’000
Rs’000
1,309
50
126
(9)
1,476
1,485
50
154
(380)
1,309
Amount for the current and previous years are as follows:
2012
Rs’000
THE GROUP
Deficit
(2,612)
(2,612)
45
2011
Rs’000
(2,263)
(2,263)
430
2010
Rs’000
(2,979)
(2,979)
(146)
2009
Rs’000
(1,248)
(1,248)
(21)
83
17.
THE COMPANY
Deficit
(vi)
2012
Rs’000
(1,476)
(1,476)
9
2011
Rs’000
(1,309)
(1,309)
380
2010
Rs’000
2009
Rs’000
(1,485)
(1,485)
(59)
(1,248)
(1,248)
(21)
Principal actuarial assumptions used for accounting purposes
THE GROUP AND
THE COMPANY
2011
2012
%
%
8.50
6.50
Discount rate
Future salary increases
18.
TRADE AND OTHER PAYABLES
Trade payables
Accruals
Other payables
Amounts payable to related companies
19.
(a)
84
THE GROUP
2011
2012
Rs’000
Rs’000
THE COMPANY
2011
2012
Rs’000
Rs’000
22,445
18,186
3,363
13,958
57,952
3,960
11,296
3,013
47,617
65,886
23,818
18,905
3,751
18,406
64,880
4,670
14,603
3,313
37,137
59,723
TAX LIABILITIES
Current tax liabilities
At 1 January
Current tax on adjusted profit for the year at 15%
(2011 : 15%)
Paid during the year
Advance payments
Foreign tax credit
Tax deducted at source
Exchange difference
Tax provision on previous years assessment
Under/(over) provision on previous years assessment
Transfer to other receivables
At 31 December
(b)
9.25
7.25
Income tax expense
Current tax on adjusted profit for the year at 15% (2011 : 15%)
Tax deducted at source underprovided in previous years.
Prior years tax underprovision
Under/(over) provision on previous years assessment
Deferred tax movement (note 16)
Tax charge
THE GROUP
2011
2012
Rs’000
Rs’000
THE COMPANY
2011
2012
Rs’000
Rs’000
7,076
10,150
7,284
(4,854)
(620)
182
106
620
9,794
6,848
(11,228)
(3,198)
(572)
(662)
(392)
4,978
(25)
1,177
7,076
(620)
620
-
3,205
(6,716)
(3,199)
(572)
(611)
(251)
1,177
-
7,284
106
(115)
7,275
6,848
1,088
4,978
(25)
3,751
16,640
198
198
3,205
1,088
(251)
2,157
6,199
-
6,967
19.
TAX LIABILITIES (CONT’D)
(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
THE COMPANY
2012
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
Profit before taxation - attributable to
continuing operations
14,902
52,510
40,321
40,542
Profit before taxation - attributable to
discontinued operations
10,754
12,470
Share of results of associates
7,581
(5,156)
33,237
59,824
40,321
40,542
Tax calculated at a rate of 15% (2011: 15%)
Under/(over) provision in previous period
Income not subject to tax
Expenses not deductible for tax purposes
Tax deducted at source underprovided in
previous years.
Prior years tax underprovision
Effect of different tax rate
Temporary differences not provided for
Utilisation of tax losses
Effect of different year of assessment
Underprovision of deferred tax in previous years
Tax credit
Tax charge
20.
4,986
106
(483)
31
8,974
(25)
(1,969)
1,678
6,048
(6,551)
701
6,081
(251)
(1,366)
647
3,570
17
(174)
(392)
56
(442)
7,275
1,088
4,978
2,374
108
(566)
16,640
198
1,088
6,199
DIVIDENDS
2012
Rs’000
THE GROUP AND THE COMPANY
At 1 January
Ordinary dividend of Re1.00 per share (2011: Re1.00)
Paid during the year
At 31 December
22,006
22,006
(22,006)
22,006
2011
Rs’000
22,006
22,006
On 5 December 2012, the Directors declared a dividend in respect of the ended 31 December 2012 of Re1.00 per
ordinary share amounting to a total dividend of Rs22m (2011: Rs22m).
21.
Turnover
The following is an analysis of turnover for the year.
THE GROUP
2012
2011
Rs’000
Rs’000
Sale of goods
Rendering of services
758,794
42,157
800,951
648,252
42,152
690,404
THE COMPANY
2012
2011
Rs’000
Rs’000
482,592
482,592
463,554
463,554
85
22.
OTHER OPERATING INCOME
THE GROUP
2012
2011
Rs’000
Rs’000
Profit on disposal of property, plant and equipment
Management fees
Reversal of provision for impairment of trade receivables
Others
23.
1,473
7,417
2,867
11,757
500
10,793
8,595
2,167
22,055
Operating (loss)/profit is arrived at after:
crediting
Profit on disposal of plant and equipment
and charging
Cost of inventories consumed
Lease rentals - operating lease
Employee benefit expense (note 26)
Depreciation
- owned
- leased
THE COMPANY
2012
2011
Rs’000
Rs’000
500
1,231
253
635,169
6,975
81,166
537,135
4,471
62,159
396,876
6,975
54,092
366,991
4,471
39,746
17,036
555
13,720
371
15,704
-
12,202
-
OTHER INCOME
Dividend receivable
Profit on disposal of investment in associates
Profit on sale of investment in financial assets
Interest receivable
Rental income
Net foreign exchange losses (note 27)
435
4,953
184
19,405
15,639
(574)
40,042
413
26,385
12,522
(3,220)
36,100
THE COMPANY
2012
2011
Rs’000
Rs’000
9,574
28,949
184
19,514
15,639
(574)
73,286
413
26,532
12,522
(3,011)
36,456
NET FINANCE INCOME
THE GROUP
2012
2011
Rs’000
Rs’000
Interest payable on:
- Bank overdraft
- Bank and other loans repayable by instalments
- Bank and other loans repayable not by instalments
- Finance lease
Net foreign exchange gains (note 27)
86
253
14,609
4,845
1,475
21,182
1,473
THE GROUP
2012
2011
Rs’000
Rs’000
25.
1,231
11,278
1,680
14,189
OPERATING (LOSS)/PROFIT
THE GROUP
2012
2011
Rs’000
Rs’000
24.
THE COMPANY
2012
2011
Rs’000
Rs’000
(1,094)
(475)
(144)
(1,713)
3,721
2,008
(86)
(24)
(107)
(217)
5,975
5,758
THE COMPANY
2012
2011
Rs’000
Rs’000
(1,094)
(225)
(1,319)
4,969
3,650
(41)
(62)
(103)
3,852
3,749
26.
EMPLOYEE BENEFIT EXPENSE
THE GROUP
Wages and salaries including termination benefits
Social security costs
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
76,598
58,867
50,441
36,710
1,932
1,626
1,368
1,098
263
213
263
213
2,093
1,772
1,958
1,608
Pension costs - defined benefit plan (note 17(a)(v))
Pension costs - defined contribution plan
280
(319)
62
117
81,166
62,159
54,092
39,746
Other post retirement benefits (note 17(b)(i))
27.
THE COMPANY
2012
NET FOREIGN EXCHANGE GAINS/(LOSSES)
The exchange differences credited/(charged) to the income statement are included as follows:
THE GROUP
Cost of sales
Other income (note 24)
Net finance income (note 25)
28.
THE COMPANY
2012
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
3,040
-
(436)
-
(574)
(3,220)
(574)
(3,011)
3,721
5,975
4,969
3,852
EARNINGS PER SHARE
THE GROUP
(a)
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
From continuing operations
Net profit attributable to shareholders from
continuing operations
Number of ordinary shares in issue
Earnings per share
(b)
THE COMPANY
2012
7,627
35,870
40,123
34,343
Thousands
Thousands
Thousands
Thousands
22,006
22,006
22,006
22,006
Rs
Rs
Rs
Rs
0.35
1.63
1.82
1.56
10,754
12,470
-
-
Thousands
Thousands
Thousands
Thousands
22,006
22,006
22,006
22,006
Rs
Rs
Rs
Rs
From discontinued operations
Net profit attributable to shareholders from
discontinued operations
Number of ordinary shares in issue
Earnings per share
0.49
0.57
-
-
87
29.
NOTES TO STATEMENTS OF CASH FLOWS
THE GROUP
(a)
THE COMPANY
2012
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
Cash generated from operations
Profit before taxation attributable to continuing
operations
14,902
52,510
Profit before taxation attributable to discontinued
operations
10,754
12,470
-
-
Depreciation
17,591
14,091
15,704
12,202
(1,176)
(3,762)
(4,971)
Share of loss of associated companies continuing activities
18,335
7,314
(10,754)
(12,470)
-
-
444
(48)
225
388
(1,473)
(500)
(1,231)
(253)
(184)
-
(184)
-
(4,953)
-
(28,949)
(720)
(6,842)
Share of profit of associated companies discontinued activities
Movement in retirement benefit obligations
Profit on disposal of property, plant and equipment
Profit on disposal of available for sale investments
Profit on disposal of associates
Net provision for impairment of trade receivables
Investment income
Interest income
Interest expense
40,321
40,542
-
-
-
-
(3,092)
(435)
(413)
(9,574)
(413)
(19,405)
(26,385)
(19,514)
(26,532)
1,713
217
1,319
103
Changes in working capital:
- inventories
(82,172)
(36,513)
(48,200)
(52,842)
- trade and other receivables
(12,563)
(82,925)
(44,100)
(69,345)
- trade and other payables
(6,936)
(4,405)
6,163
6,409
- import loan - net
27,166
-
27,166
-
(49,866)
(87,661)
(65,825)
(92,833)
Cash absorbed in operations
(b)
Bank and cash balances, bank overdraft and short term investments include the following for the purpose of the
statement of cash flows.
THE GROUP
Cash and cash equivalents
Bank and cash balances
(c)
THE COMPANY
2012
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
16,494
26,608
1,026
(16,633)
Short term investments
191,970
243,000
191,970
243,000
191,831
269,608
176,363
261,422
-
(16,633)
Non cash transactions
The principal non cash transactions are the acquisition of motor vehicles using finance leases (note 5).
88
18,422
Bank overdraft
-
30.
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.
2012
Fertilizers
Trading
Contracting
Others
Total
Rs’000
Rs’000
Rs’000
Rs’000
Rs’000
Total segment revenues
553,197
204,780
42,974
-
Inter segment revenues
-
-
-
-
-
Revenues from external customers
553,197
204,780
42,974
-
800,951
Segment profit
(31,857)
19,344
3,700
-
(575)
-
-
40,617
3,589
Income tax expense
(194)
-
2,008
(18,335)
-
(18,335)
(28,843)
17,957
(14,829)
40,617
5,783
(6,765)
-
Profit from discontinued operations
Profit for the year
(23,060)
2011
(8,813)
40,042
-
-
Share of loss of associates (note 8)
(1,387)
800,951
(201)
10,754
21,946
(6,092)
(15,030)
14,902
(7,275)
-
10,754
34,525
18,381
Fertilizers
Trading
Contracting
Others
Total
Rs’000
Rs’000
Rs’000
Rs’000
Rs’000
Total segment revenues
463,554
188,046
42,459
-
Inter segment revenues
-
(3,655)
-
-
(3,655)
463,554
184,391
42,459
-
690,404
Revenues from external customers
694,059
Segment profit
3,933
9,920
4,113
-
17,966
(3,221)
-
-
39,321
36,100
3,770
1,949
39
-
5,758
-
-
(7,314)
-
(7,314)
4,482
11,869
(3,162)
39,321
52,510
(317)
(10,425)
-
(5,898)
(16,640)
-
12,470
-
-
12,470
4,165
13,914
(3,162)
33,423
48,340
Share of profit of associates (note 8)
Income tax expense
Profit from discontinued operations
Profit for the year
89
30.
SEGMENTAL INFORMATION - THE GROUP (CONT’D)
2012
Fertilizers
Trading
Contracting
Others
Total
Rs’000
Rs’000
Rs’000
Rs’000
Rs’000
-
Interest/dividend receivable
-
(1,319)
(235)
- Cost of sales
(480,092)
- Operating expenses
(119,151)
Interest expense
-
19,840
19,840
(159)
-
(1,713)
(158,684)
(19,770)
-
(658,546)
(24,174)
(19,650)
-
(162,975)
Material items of expenses
-
798
6,900
-
7,698
14,589
2,117
1,288
-
17,994
Investment in associates
Addition to non current asset
15,703
1,256
632
-
17,591
Segment assets
576,399
96,150
47,172
209,404
929,125
Segment liabilities
107,165
34,141
15,607
-
156,913
Depreciation
2011
Interest/dividend receivable
Fertilizers
Trading
Contracting
Others
Total
Rs’000
Rs’000
Rs’000
Rs’000
Rs’000
-
-
-
26,798
26,798
(103)
-
(114)
-
(217)
- Cost of sales
(382,845)
(149,277)
(21,552)
-
(553,674)
- Operating expenses
(101,638)
(22,159)
(17,022)
-
(140,819)
-
21,140
16,637
-
37,777
67,623
1,253
944
-
69,820
Interest expense
Material items of expenses
Investment in associates
Addition to non current asset
Depreciation
Segment assets
Segment liabilities
90
10,897
1,298
591
1,305
14,091
475,514
107,636
43,780
267,456
894,386
66,403
40,297
8,468
-
115,168
30.
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.
Sales
Total assets
Capital expenditure
2012
2011
2012
2011
2012
2011
Rs’000
Rs’000
Rs’000
Rs’000
Rs’000
Rs’000
Mauritius
446,823
386,514
832,975
809,253
15,879
68,567
Reunion
97,199
63,407
-
-
-
-
Madagascar
20,271
56,092
-
-
-
-
236,658
184,391
96,150
85,133
2,115
1,253
800,951
690,404
929,125
894,386
17,994
69,820
Zambia
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.
31.
CONTINGENT LIABILITIES
As at 31 December 2012, the Group and the Company had given bank guarantees of Rs3.436m (2011:Rs4.046m)
and Rs0.795m (2011: Rs1.185m) respectively in the ordinary course of business.
There is a civil court case with an ex-employee of a subsidiary of the Company, the outcome of which is not
known as at the date of the approval of the financial statements.
91
92
(a) (ii)
(a) (i)
32.
-
2,438
Associates
Enterprises in which key
management personnel has
significant/substantial interest
Directors and key management
personnel
-
3,347
Fellow subsidiaries
Associates of the holding company
Associates
personnel
Rs’000
Holding company
2011
Remuneration
and benefits
-
-
Associates of the holding company
THE GROUP
5,807
-
-
1,320
10,620
3,016
7,025
4,430
Rs’000
Purchase of
goods and
services
-
1,902
5,452
16,084
-
Rs’000
Fellow subsidiaries
Rs’000
Remuneration
and benefits
Purchase of
goods and
services
Holding company
2012
THE GROUP
RELATED PARTY TRANSACTIONS
4
3
-
-
52,461
7,990
36,919
Rs’000
Sales of
goods and
services
-
-
16,398
9,733
10,444
Rs’000
Sales of
goods and
services
-
-
-
-
10,793
(16,993)
Rs’000
Management
services and
fees (payable)/
receivable
Transactions
-
-
-
-
7,417
(13,911)
Rs’000
Management
services and
fees (payable)/
receivable
Transactions
700
-
-
-
-
40,000
Rs’000
Loans/
advances
to related
party
-
-
-
-
-
45,000
Rs’000
Loans/
advances
to related
party
700
-
-
-
-
15,000
Rs’000
Loans/
advances
refund by
related party
-
-
-
-
-
96,030
Rs’000
Loans/
advances
refund by
related party
50
-
-
-
-
17,228
Rs’000
Interest
receivable
-
-
-
-
-
18,466
Rs’000
Interest
receivable
1,000
-
17,882
1,848
15,174
243,919
Rs’000
Amount
owed by
related
party
-
-
1,363
-
14,681
2,362
Rs’000
Amount
owed to
related
party
-
806
-
3,719
5,913
3,520
Rs’000
Balances
1,000
-
-
5,015
13,801
192,589
Rs’000
Amount
owed to
related
party
Balances
Amount
owed by
related
party
(b) (ii)
-
-
2,438
Associates
personnel
-
3,347
Subsidiaries
Fellow subsidiaries
Associates
personnel
Rs’000
Holding company
2011
Remuneration
and benefits
6,691
-
Fellow subsidiaries
THE COMPANY
132
-
Subsidiaries
-
1,320
10,620
7,025
127
4,430
Rs’000
Purchase of
goods and
services
-
1,902
5,452
Rs’000
-
Rs’000
Purchase of
goods and
services
Holding company
2012
THE COMPANY
(b) (i)
Remuneration
and benefits
RELATED PARTY TRANSACTIONS (CONT’D)
32.
4
3
-
-
52,461
14,663
2,404
Rs’000
Sales of
goods and
services
-
-
16,398
9,956
2,373
Rs’000
Sales of
goods and
services
-
-
-
10,793
3,816
(16,993)
Rs’000
Management
services and
fees (payable)/
receivable
Transactions
-
-
-
7,417
3,861
(13,911)
Rs’000
Management
services and
fees (payable)/
receivable
Transactions
700
-
-
-
-
40,000
Rs’000
Loans/
advances
to related
party
-
-
-
-
-
45,000
Rs’000
Loans/
advances
to related
party
700
-
-
-
-
15,000
Rs’000
Loans/
advances
refund by
related party
-
-
-
-
-
96,030
Rs’000
Loans/
advances
refund by
related party
50
-
-
-
146
17,228
Rs’000
Interest
receivable
-
-
-
-
-
18,466
Rs’000
Interest
receivable
Rs’000
1,000
-
17,882
15,174
1,062
243,919
Rs’000
Amount
owed by
related
party
-
-
1,363
2,169
31,243
2,362
Rs’000
Amount
owed to
related
party
-
806
-
1,336
41,955
3,520
Rs’000
Balances
1,000
-
-
13,801
106,038
192,589
Amount
owed to
related
party
Balances
Amount
owed by
related
party
93
32.
RELATED PARTY TRANSACTIONS (CONT’D)
Remuneration and benefits
THE GROUP AND THE
COMPANY
2012
2011
Rs’000
Rs’000
Key management personnel compensation
-
1,044
2,438
2,303
2,438
3,347
Salaries and short-term employee benefits
Directors’ fees
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 at 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 2012, the Group has not impaired the receivables relating to
amounts owed by each related party (2011 :Rsnil). The assessment is undertaken each financial year through
examining the financial position of each related party and the market in which it operates.
33.
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.
34.
OPERATING LEASE COMMITMENTS
The Company leases premises under non-cancellable operating lease agreements.
The future aggregate minimum lease payments under non-cancellable operating lease are as follows:THE GROUP AND THE
COMPANY
Not later than one year
Later than one year and not later than 5 years
2012
2011
Rs’000
Rs’000
5,161
4,471
10,322
13,413
15,483
17,884
The agreed lease period is up to 14 December 2015 with option of renewal for further periods of fifteen years.
35.
EVENTS AFTER THE REPORTING PERIOD
There are no events after the end of the reporting period which the directors consider may materially affect the
financial statements for the year ended 31 December 2012.
94
36. THREE-YEAR SUMMARY OF PUBLISHED RESULTS AND ASSETS AND LIABILITIES - THE GROUP
(a)
Statement of comprehensive income
2012
2011
2010
Rs’000
Rs’000
Rs’000
Continuing operations
Turnover
800,951
Share of (loss)/profit of associates
(18,335)
690,404
610,464
(7,314)
14,459
14,902
52,510
87,967
Income tax expense
(7,275)
(16,640)
(11,824)
7,627
35,870
76,143
Profit for the year from continuing operations
Discontinued operations
Profit for the year from discontinued operations
10,754
12,470
7,817
Profit for the year
18,381
48,340
83,960
(3,381)
(1,648)
5,246
Total comprehensive income for the year
15,000
46,692
89,206
18,381
48,340
83,960
- Owners of the parent
15,000
46,692
89,206
1.00
1.00
1.00
Earnings per share from continuing operations(Rs/share)
0.35
1.63
3.46
Earnings per share from discontinued operations (Rs/share)
0.49
0.57
0.36
Profit attributable to:
- Owners of the parent
Total comprehensive income attributable to:
(b)
Statement of financial position
2012
2011
2010
Rs’000
Rs’000
Rs’000
ASSETS
Non-current assets
170,201
206,829
Current assets
758,924
687,557
719,319
Total assets
929,125
894,386
862,997
772,212
779,218
754,532
143,678
EQUITY AND LIABILITIES
Capital and reserves
LIABILITIES
22,763
20,874
17,502
Current liabilities
134,150
94,294
90,963
Total equity and liabilities
156,913
115,168
108,465
Total equity and liabilities
929,125
894,386
862,997
Non-current liabilities
95
Notes
96

Notes to the Financial Statements

Transcription

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