Annual Report 2015/16

Transcription

1 Annual Report 2015/16

2 Mission, Vision & Values Strategic Role To be a profitable national airline Core Objectives Sustained profitability Support inbound tourism and home originating market Grow with smart investments Deliver exceptional service with a Mauritian touch Create a culture that encourages innovation and efficiency and rewards creativity Mission Statement We are the National Airline of Mauritius proudly connecting our country to the world with exceptional Mauritian hospitality. Through innovative Employees determined to exceed the expectations of our Customers, we are committed to delivering sustained profitability in a socially responsible manner.

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4 Air Mauritius Annual Report 2015/16 Table of Contents 02 Key Results 04 Chairman s Message 06 Chief Executive Officer s Review 10 Glossary 12 Annual Report and Business Review 12 - Results for the year 12 - Overview of the Business 14 - The Board of Directors 22 - Corporate Governance 36 - Sustainability Report 40 - Enterprise Risk Management 50 - Remuneration Report 54 Management Discussion and Analysis 94 Certificate from the Company Secretary 94 Directors Disclosure Statement 95 Statement of Compliance 96 Directors Responsibility Statement 97 Independent Auditors Report 100 Financial Statements Statements of Financial Position Statements of Profit or Loss and Other Comprehensive Income Statements of Changes in Equity Statements of Cash Flows Notes to the Financial Statements 176 Translation of the Statements of Financial Position 178 Cascade Holding Structure 180 Directors in Subsidiaries 184 Shareholders Information 187 Notice of Meeting 189 Proxy Form

5 02 Air Mauritius Annual Report 2015/16 Key Results Group Financial Results 2015/ /15 Restated Revenue Eur m Gross profit Eur m Net profit / (loss) Eur m 16.5 (23.6) Attributable profit / (loss) to equity holders of the parent Eur m 16.3 (23.6) Total equity Eur m Earnings / (loss) per share Eur 0.16 (0.23) Key Financial statistics Gross profit margin % Net profit margin % 3.4 (5.1) Return on equity % 20.7 (59.4) Return on net assets % 10.9 (17.2) Interest cover Times 11.4 (11.5) Interest and lease cover Times 1.65 (0.03) Gearing ratio 0.7:1 1.7:1 Group Operating statistics Passengers carried '000 1,499 1,370 Seats offered '000 2,014 1,948 Revenue passenger kilometres (RPK) Million 6,612 6,186 Available seat kilometres (ASK) Million 8,400 8,399 Revenue tonne kilometres (RTK) Million Available tonne kilometres (ATK) Million 1,258 1,256 Passenger load factor % Revenue per ASK (RASK) Eur Cent Cost per ASK (CASK) Eur Cent

6 Chairman s Message

7 04 Air Mauritius Annual Report 2015/16 Chairman s Message The Company embarked on a programme to boost sales and enhance productivity in all areas of the business. I am particularly pleased to note that Air Mauritius has delivered results and is engaged on the path the Board and Management had set. Profitability was restored and many more passengers are choosing to travel with Air Mauritius. The number of passengers carried grew by 9.4% to attain record levels in spite of competition that had intensified significantly. Total equity of the Company nearly doubled to reach EUR 82.5M at the end of the year under review. The Group and the Company have declared profits of EUR 16.5M and EUR 15.4M respectively reversing from the significant losses of EUR 23.6M and EUR 23.7M respectively for the previous year. This is a major achievement. Clearly, Air Mauritius, like all airlines, has benefitted from more favourable fuel prices but the Company s efforts to overcome an environment that remains volatile and increasingly competitive, cannot be understated. More so, as the impact of lower fuel prices has been significantly mitigated by fiercer competition and also by a very weak Euro which remains the airline s leading revenue currency. The financial year under review has been one of transition with change impacting bottom line as well as affecting the organisation culture. When the new Board of Directors was set up in March 2015, our first task was to reinforce the governance structure and build a culture of productivity and accountability. In order to ensure a smooth transition, the Board worked in close collaboration with Management through various joint subcommittees that were set up to look into all the crucial areas that required urgent attention. The Company was facing some daunting challenges like an unprecedented competitive environment, overheads that had risen quite significantly in recent years and key markets not performing optimally. The massive losses that were incurred in the financial year that ended on March 31, 2015 had weakened the Company leaving it with a total equity of EUR 42.9 M. The foundation for enhanced connectivity between Africa and Asia, through the hubs in Mauritius and Singapore, was laid with the launch of the Air Corridor in March this year. Air Mauritius also took the first steps to extend its coverage of the African continent with the launch of 2 new destinations namely Maputo and Dar-es-Salaam. The results speak for themselves but are only the first steps along the road towards sustained growth. The operating environment will remain volatile and competitive pressures will continue to mount. New entrants now compete in a variety of segments including low cost as well as full service differentiated operators. Management is fully empowered to take action on the principles that have guided this year s respectable turnaround which are good governance, unreserved commitment, service excellence, team work, innovation and growth. I wish to seize this opportunity to thank all our shareholders for their trust, our faithful customers, the hardworking Air Mauritius employees, our industry partners, our airline partners, my fellow Board Members and the Government of Mauritius, our majority shareholder for their unflinching support. Dr Arjoon Suddhoo. FRAcS Chairman June 13, 2016

8 Air Mauritius Annual Report 2015/16 05 Chief Executive Officer s Review

9 06 Air Mauritius Annual Report 2015/16 Chief Executive Officer s Review airlines will make an aggregate return in excess of the cost of capital. After decades of capital destruction, that s a significant achievement. He further pointed out: Profitability is not evenly spread and individually, some of you are experiencing good times, while others face a world in crisis. How is Air Mauritius doing, as a commercial airline carrying the additional responsibility of a national socio-economic mission? The results presented in this Annual Report, address this question. For nearly 50 years, Air Mauritius has been providing the most dependable, vital life-line to Mauritius. During that time, the airline industry has grown and evolved remarkably as the whole world discovered the benefits to be derived from air transport and availed of it more and more for business, leisure or simply to re-unite with families and friends. In the early years, when capital and operational costs were high, airfares were even higher. The cost-benefit ratio stimulated travel demand as those who could afford readily paid the high fares. The resulting fat margins posted by incumbent airlines in turn attracted competition. The industry was then caught in a spiral as travellers kept demanding lower prices to travel more frequently. Fares went down year after year. This process has never stopped with new operators innovating to respond to market demand by providing basic service at lower costs resulting in an inexorable fall in yield for all. In order to survive and continue to prosper, any airline must stay alert to market dynamics and be prepared to review its business model and, indeed, to constantly re-invent itself. In reviewing the state of the industry at the IATA Annual General Assembly in June 2016, its Director General remarked It will be only the second year in our history and the second in a row in which During the year under review airlines worldwide have made an average profit of only USD per ticket sold, based on an average ticket price of USD 366. Air Mauritius made an average profit of USD on an average ticket price of USD 368. However, taking into account the mitigating effects of an exceptional EUR 26.6M hedging pay-out, and the unfavourable EUR/USD parity, the average profit per ticket and the return on cost of capital would have been much higher than the industry average for the year. Key operating performance indicators explain the performance. The number of passengers carried grew by 9.4% to reach an all-time high of 1,499,411. Passenger load factor grew by 5.1 % to 78.7%. Competitive pressure continued to mount with new entrants seeking to grab market share and existing operators flooding the market with extra capacity. Under such pressure, yield fell from EUR 274 to EUR 270 for the year 2015/16. Going forward, market forces will keep changing while exchange rates and fuel price will remain volatile. We need to review our governance structure and develop greater operational and commercial flexibility to enhance our resilience to keep pace with and react to the extremely dynamic market. Conventional full-service scheduled longhaul carriers of which we form part are today confronted with low-cost carriers hitherto limited to regional networks. Our Business Model will therefore have to be revisited.

10 Air Mauritius Annual Report 2015/16 07 We shall consolidate our historical European routes while extending our growth on the Chinese and Indian routes which grew by 13% and 12%, respectively. The Air Corridor, inaugurated in March 2016 provides additional travel options between Asia and Africa using the hubs in Mauritius and Singapore. Regional operations have also been quite robust. Antananarivo route grew by 8.4% and we are seeking air access greenlight for a daily flight by the end of 2016 and twice daily service eventually. Traffic on the route has grown to a level where we need to operate independently in Antananarivo rather than through a GSA however competently Rogers Aviation International Ltd represented Air Mauritius over the past years. Reunion traffic grew by 7.7% and Rodrigues by 26%. With a third ATR72, joining our fleet in July, additional frequencies and capacity will be offered on these routes. Our African network has been extended to include Maputo and Dar-es-Salaam. With these new additions, the Air Mauritius network now consists of 23 online destinations. CAPA (Center for Asia Pacific Aviation) ranked Air Mauritius among the Top 5 African airlines for weekly nonstop seat capacity to/from Asia Pacific, second to only Ethiopian Airlines and ahead of Kenya Airways and South African Airways. It adds: With the launch of Guangzhou, Air Mauritius will surpass Ethiopian Airlines with the largest Asian network for an African airline. With major partner airlines, we operate to hubs in Paris, Johannesburg, Nairobi, Mumbai, Kuala Lumpur, Singapore, Shanghai, Hong Kong and Perth from where we offer more than a hundred additional destinations. We shall maintain our efforts to expand our footprint by building new partnerships and serving new destinations. Amsterdam is being considered as a second hub in Europe. With KLM as a potential partner, we are planning to access potential markets in Germany, Eastern and Northern Europe. The arrival of our first A350 in September 2017, will be an important landmark in the upgrade of our products and services. These new aircraft will be equipped with full flat seats, a state-of-the-art entertainment system and internet connectivity, all of world class standards. In the same stride, the rest of our existing fleet will also be retro-fitted to the same level of cabin comfort. In an effort to keep diversifying our business base and revenue streams, we have launched a subsidiary to offer a full range of helicopter services to the leisure industry and to business. Air Mauritius Holidays is being strengthened and is now offering packaged airline tickets and hotel accommodation. Air Mauritius has therefore started the new financial year well-poised for further sustainable growth. I take this opportunity to acknowledge the significant contribution of all staff of the Air Mauritius Group who have continued to dedicate themselves fully to the achievement of the objectives set out by the Board of Directors Megh Pillay, C.S.K. Chief Executive Officer June 13, 2016

11 08 Air Mauritius Annual Report 2015/16

12 Air Mauritius Annual Report 2015/16 09 Glossary

13 10 Air Mauritius Annual Report 2015/16 Glossary Turnover Represents total revenue earned and loss derived, net of taxes, allowances and returns, from aircraft, helicopter, hotel, property rental, technical and traffic handling operations. Travelled Revenue Consists of gross revenue derived from the carriage of passengers, freight, mail and excess luggage. Profit after Tax Profit attributable to the equity holders. Gross profit margin Gross profit expressed as a percentage of turnover. Net profit margin Profit after tax expressed as a percentage of turnover. Earnings per share Profit after tax and non-controlling interest divided by number of shares issued. Net worth per share Total equity divided by number of shares issued. Return on Equity Profit after tax divided by shareholders interest. Interest Cover Profit before interest expense divided by interest payable. Interest and lease Cover Profit before interest and lease expense divided by interest and lease payable. Dividend Cover Profit after tax divided by proposed/paid dividend for the year. Return on Net Assets Profit after tax divided by total assets less current liabilities. Available seat-km (ASK) The product of seats offered and the distance flown (in kms). Revenue passenger-km (RPK) The number of passengers carried multiplied by the distance flown (in kms). Passenger load factor RPK expressed as a percentage of ASK. Available tonne-km (ATK) The product of capacity offered (in tonnes) and the distance flown (in kms). Revenue tonne-km (RTK) Multiplying revenue load carried (in tonnes) by the distance flown (in kms). Overall load factor RTK expressed as a percentage of ATK. Cargo tonne-km (CTK) Multiplying cargo tonnage carried by the distance flown. Revenue per ASK (RASK) Total operating revenue divided by ASK. Cost per ASK (CASK) Total operating costs divided by ASK. Unit costs Airline operating costs (excluding sales commissions and pool settlements) divided by system-wide available tonne kilometres. Cash Cash at bank, cash in hand and short-term deposits. EBITDA Earnings before Interest, Taxes, Depreciation and Amortisation. Gearing Ratio Total debt to equity. Debt includes interest-bearing loans and borrowings. Block Hours The time from which the aircraft departs from the gate to the time it arrives at the gate of its destination. Winter season Period between end of October to end of March. Summer season Period between end of March to end of October. Semdex An index of all listed share prices on the Stock Exchange of Mauritius. It indicates the movement of share prices from one trading session to another.

14 Air Mauritius Annual Report 2015/16 11 Annual Report and Business Review

15 12 Air Mauritius Annual Report 2015/16 Annual Report and Business Review The Directors have pleasure in presenting the Annual Report, Business Review and Financial Statements of Air Mauritius Limited (the Company ) and its subsidiaries (the Group ) for the year ended March 31, The Financial Statements are set out on pages 100 to 175. Results for the year The Group reported a profit of EUR 16.5M for the year ended March 31, 2016 compared to a loss of EUR 23.6M in the previous year. The Company posted a profit of EUR 15.4M for the year compared to a loss of EUR 23.7M for the previous year. The results for the year under review have been positively impacted by lower oil prices and an increase in passengers but tempered by the depreciation of the Euro, hedge payouts and a decrease in yield. The Brent oil price which averaged USD 90/BL during 2014/15, dropped to an average of USD 50/BL for 2015/16. However, the EUR/USD parity declined from an average of 1.27 for the financial year 2014/15 to an average of 1.10 for the financial year 2015/16. As far as operations of the Company are concerned, the number of passengers carried went up by 9.4% to reach a record level of 1,499,411. The number of seats offered increased by 3.4% and the Passenger Load Factor increased from 73.7% to 78.7%. Operating revenue increased by 5.4% from EUR 463.1M to EUR 488.3M whereas the operating expenses decreased by 1.8% to reach EUR 443.9M. Consequently, the gross profit increased from EUR 10.9M to EUR 44.4M. On July 06, 2015, a third destination to mainland China, Chengdu, was added to the network with a once weekly A340 flight. Furthermore, with the view to develop Singapore as the hub in Far East Asia to support the Air Corridor project initiated by Government, the Company introduced direct operations to Singapore on the basis of 3 weekly frequencies on the routing Mauritius-Singapore- Kuala Lumpur and vice versa, as from March 11, Overview of the Business Principal activities Air Mauritius Limited The main activities of the Group are the operation of international and domestic scheduled air services for the carriage of passengers, freight and mail and the provision of ancillary services for aviation. The domestic network comprises solely of operations to Rodrigues using turbo prop ATR72 aircraft. The Company is the leading scheduled international passenger airline in the Indian Ocean region. The Group s Head Office is in Port Louis, while its principal place of operations is SSR International airport, Mauritius. From this base, it serves 21 destinations touching four continents i.e Africa, Asia, Australia and Europe. The airline has a comparatively high proportion of point to point business with interline accounting for about 33.4% of its passenger sales revenues. The Company has interline outward billings with other carriers which amount to around 5.6 % of the airline passenger flown revenues. The Group also operates a worldwide air cargo business, solely in conjunction with its scheduled passenger services, using the belly hold capacity for cargo transshipment. Economic value is generated by the Group by meeting the demand for business and leisure travel, with leisure travel being the main passenger segment. The Company provides vital links for trade and investment, and feeds the tourism sector and the rest of the economy through its substantial leisure travel opportunities for individuals and families. In the financial year ended March 31, 2016, the Group earned EUR 490.8M in revenue as compared to EUR 465.7M for the previous year. 83% of this revenue was generated from passenger traffic, 9% from cargo and 8% from other activities. During the period under review, the number of passengers uplifted was 1,499,411 and 29,901 tonnes of cargo were uplifted across the network. At the end of March 2016, the Group had 12 fixed wing aircraft and 2 helicopters in operation.

16 Air Mauritius Annual Report 2015/16 13 Annual Report and Business Review Mauritius Estate Development Corporation Limited ( MEDCOR ). The subsidiary Mauritius Estate Development Corporation Limited (MEDCOR) is engaged in leasing out office and commercial space. Air Mauritius Limited holds 93.7% of the issued share capital of the company. MEDCOR recorded a profit after tax of MUR 28.9M (EUR 0.7M) as compared to MUR 31.2M (EUR 0.8M) for last year. Last year s result included a fair value gain on investment property of MUR 16M as compared to a fair value gain of MUR 0.5M for 2015/16. The office space stood at 99% occupancy level during the year. Pointe Coton Resort Hotel Co. Ltd Pointe Coton Resort Hotel Co. Ltd is in the business of providing hotel accommodations together with all related services in Rodrigues. Air Mauritius Limited holds 54.2% of its issued share capital. The company recorded a profit of MUR 11M (EUR 0.3M) compared to a profit of MUR 0.7M (EUR 17,000) for 2014/15. The occupancy rate of the hotel went up from 67% to 72% during the year. Objectives The Group aims to build a sustainable business with margins covering its cost of capital on a long term basis. It is working in partnership with all its key stakeholders to foster growth and harness business opportunities and also to effectively manage the risks associated with the business. Shareholders return For its shareholders, the Group s key responsibility is to generate a sustainable return on the capital employed in its business and to ensure it can invest for future growth. It seeks to return to shareholders a balance between capital growth and an income stream by way of dividend. The Group seeks to operate complementary businesses in its investments with the core being airline operations. Other stakeholders The Group also takes account of its responsibilities to other stakeholders including its employees, its customers and the communities affected by its operations, as well as having regard to the impact its business has on the environment. Group policies are benchmarked with best practice internationally in managing these stakeholder relationships. Airmate Ltd Airmate Ltd is a wholly owned subsidiary of Air Mauritius Limited and provides Call Centre and provision of Human Resources to its holding company. Airmate Ltd recorded a turnover of MUR 168.2M (EUR 4.3M) and a loss of MUR 2.8M (EUR 70,020) as compared to a turnover of MUR 177.9M (EUR 4.5M) and a profit of MUR 1M (EUR 25,000) for last year. Air Mauritius (S.A) (Proprietary) Limited In South Africa, the Group operates through a 100% owned subsidiary, Air Mauritius (S.A) (Proprietary) Limited which acts as an agent for Air Mauritius Limited. It operates on a cost reimbursement basis with its expenses being directly accounted for in the books of the parent company.

17 14 Air Mauritius Annual Report 2015/16 Annual Report and Business Review The Board of Directors The names and details of the current directors are set out below. Most directors served through the financial year with the exception of Mr Francois Woo Shing Hai, G.O.S.K. who resigned on July 30, 2015, Mr Andries Nathaniel Viljoen who resigned on August 29, 2015, Mr Rohit Nandan who resigned on August 31, 2015, Mr Etienne Rachou who resigned on December 18, 2015, Mr Muhammad Yoosuf Salemohamed who was appointed on July 30, 2015, Mr Ashwani Lohani who was appointed on October 30, 2015, Mr Patrick Roux who was appointed on January 22, 2016 and Mr Megh Pillay, C.S.K. who was appointed on March 15, Dr SUDDHOO Arjoon - Chairman Dr Arjoon Suddhoo was appointed to the Board and elected Chairman on March 09, After winning the national Laureateship in 1978, Dr Suddhoo started his higher education in England. He completed his Aeronautical Engineering course with First Class Honours at the University of Manchester and pursued his PhD in Aeronautics at the same University. He is also holder of an MBA with Distinction from the University of Liverpool. After his postdoctoral research at Manchester University, he was employed in 1986, as Research Scientist for Rolls-Royce Aerospace in UK. During his eight years in the Company, he worked in close collaboration with Cambridge and Oxford Universities and MIT. In 1993, Dr Suddhoo returned to Mauritius to be employed as Head of Research and Planning by the Tertiary Education Commission and subsequently, in 1998, he assumed the post of Executive Director of the Mauritius Research Council, where he is currently. Dr Suddhoo has also been the Chairman of Air Mauritius Limited for the period 2001 to He is a Fellow of the Royal Aeronautical Society, Fellow of the Mauritius Institute of Directors and Fellow of the Mauritius Academy of Sciences as well as Founding President and Fellow of the Aeronautical Society of Mauritius. PILLAY Megh, C.S.K. - Chief Executive Officer Mr Megh Pillay, C.S.K., is a seasoned business leader with a distinguished career as CEO of major State Owned Public Enterprises such as the Agricultural Marketing Board ( ), Mauritius Telecom ( ) and the State Trading Corporation ( ). He has also previously served as Managing Director (now CEO) of Air Mauritius ( ). He holds a Master s degree from the Louisiana State University at Baton Rouge, USA. He was appointed to the Board on March 15, 2016.

18 Air Mauritius Annual Report 2015/16 15 Annual Report and Business Review The Board of Directors (Cont d) ESPITALIER-NOËL Philippe Mr Philippe Espitalier-Noël was appointed to the Board on October 09, He is currently the Chief Executive of Rogers & Company Limited, one of the largest listed conglomerates in Mauritius. He holds a BSc in Agricultural Economics from the University of Natal in South Africa and an MBA from the London Business School. RIVALLAND Louis Mr Louis Rivalland is currently the Group Chief Executive of Swan General Ltd and Swan Life Ltd. He was previously part of the management team of Commercial Union in South Africa and conducted several assignments for Commercial Union in Europe. He then worked as Actuary and Consultant for Watson Wyatt Worldwide. He is a former President of the Joint Economic Council and of the Insurers Association of Mauritius. He has played an active role in the development of risk management, investments, insurance and pensions in Mauritius having chaired or been part of various technical committees in these fields. He holds a BSc (Hons) in Actuarial Science and Statistics, a Post Graduate Diploma in Strategy and Innovation from SAID Business School and is a Fellow of the Institute of Actuaries, UK. He was appointed to the Board on July 26, MAUNTHROOA Ramprakash Mr Ramprakash Maunthrooa is a Senior Adviser at the Prime Minister s Office. He is also the representative of the Prime Minister s Office on the Board of Investment. Mr Maunthrooa has served as Managing Director of the Board of Investment. He has also been the Director General of the Mauritius Ports Authority and thereafter served as Chairman of the organisation from 2000 to He has also worked as a freelance Consultant as a Port Specialist and subsequently as an Investment and Management Consultant both in Mauritius and in the region. He was appointed to the Board on February 05, 2015.

19 16 Air Mauritius Annual Report 2015/16 Annual Report and Business Review The Board of Directors (Cont d) FONG WENG-POORUN Kan Oye Mrs Kan Oye Fong Weng Poorun is presently Senior Chief Executive of the Ministry of Tourism and External Communications. She holds a BA (Hons) in Administration. She has a long career in the public service in different Ministries such as Ministry of Works ( ), Ministry of Health ( ), Ministry of Energy, Water Resources and Postal Services ( ), Ministry of Public Infrastructure and Public Safety ( ), Ministry of Agriculture, Fisheries and Natural Resources ( ) and Ministry of Housing & Lands ( ), the Prime Minister s Office (Home Affairs) ( ) where she was appointed Senior Chief Executive in March In January 2015 she joined the Ministry of Tourism and External Communications. She was conferred the Chevalier dans l Ordre National de la Légion d Honneur in July 2011 by the President of the Republic of France and the Citoyenneté d Honneur of Rodrigues in She is also a recipient of the Exemplary Women Leadership Award at the Africa India Partnership Summit She was appointed to the Board on February 05, MANRAJ Dev, G.O.S.K. Mr Dev Manraj, G.O.S.K. holds a Post-graduate Diploma in International Management from the International Institute for Management Development (IMD) from Switzerland and is a Fellow of the Association of Chartered Certified Accountants (FCCA). Mr Manraj has an extensive portfolio of experience, developed from the start of his career, predominantly within the public and semi-governmental spheres in Mauritius. In 2000, Mr Manraj also served as Advisor to the Prime Minister and as Senior Advisor in Mr Manraj has also served as Chairman of the State Bank of Mauritius (SBM), the State Insurance Company of Mauritius Ltd (SICOM), the Mauritius Offshore Business Activities Authority (MOBAA), Airports of Mauritius Co. Ltd and Business Parks of Mauritius Ltd (BPML). He has been actively involved in most of the major projects in Mauritius, including the Ebène Cybercity. He contributed in the setting up of the Financial Services Commission, the Mauritius Leasing Company Ltd, the National Transport Corporation and The State Investment Corporation Ltd amongst others. In addition, Mr Manraj was previously appointed Director of the Board of Investment (BOI), the Mauritius Sugar Authority and the Mauritius Broadcasting Corporation at different intervals in his career. He was appointed to the Board on March 09, 2015.

20 Air Mauritius Annual Report 2015/16 17 Annual Report and Business Review The Board of Directors (Cont d) SEEBALUCK Sateeaved, G.O.S.K. Mr Sateeaved Seebaluck, G.O.S.K. is presently the Secretary to the Cabinet and Head of the Civil Service. He holds a BA (Hons) Economics and a Diploma in Public Administration and Management. He joined the Civil Service in January 1976 as Economist at the Ministry of Economic Planning and was appointed Permanent Secretary in He served various Ministries and has been Chairman and Director of many Boards and Statutory Committees during his career. While serving at the Ministry of Environment, Mr Seebaluck pioneered Sustainable Development and organised the International Conference on Small Islands Developing States in He is recipient of several International Awards on the environment. In 2010, he was promoted Senior Chief Executive and was posted to the Ministry of Civil Service and Administrative Reforms. He was appointed to the Board on March 09, VEERASAMY Banoomatee Mrs Banoomatee Veerasamy is Acting Managing Director of The State Investment Corporation Ltd (SIC), the investment arm of Government. She has over 30 years experience as Director on a number of Boards where Government holds a stake. She has a strong background in strategic investment, having managed the SIC s portfolio of wholly and partly owned Government businesses. She is the Executive Director of Prime Partners Ltd, a fully owned subsidiary of the SIC, serving as Corporate Secretary to subsidiaries/associates of SIC and other companies. A qualified stockbroker, Mrs Veerasamy has managed Prime Securities Ltd and has assisted at the inception of the Stock Exchange of Mauritius (SEM), of which she was also a member. A Fellow of the ICSA, Mrs Veerasamy also holds a Masters degree in law from the University of London. She was appointed to the Board on March 09, 2015.

21 18 Air Mauritius Annual Report 2015/16 Annual Report and Business Review The Board of Directors (Cont d) HEIN Marc, G.O.S.K. Mr Marc Hein, G.O.S.K. founder and Head of Practice of Juristconsult Chambers is a graduate of Gray s Inn School of Law in London. Mr Hein started practicing law in 1980 at the Chambers of Sir Raymond Hein, Q.C. Mr Hein was elected to the Mauritius Parliament in 1983 and was a member of Parliament until Mr Hein was also Chairman of the Mauritius Bar Council in He established Juristconsult in 1992 which has been thriving since, as a leading business law firm. Mr Hein is currently the Editor of the Mauritius Business Law Review and represents local and international clients on numerous cross border transactions. Mr Hein was appointed as the first Enforcer of Global Finance Mauritius (GFM). He was also the Chairman of the National Economic and Social Council of Mauritius. From early 2012 to June 2014, Mr Hein was Chairman of the Board of the Financial Services Commission. He was appointed to the Board on April 10, MACKAY Daniel Mr Daniel Mackay has worked for 33 years at Air France SA where he has had various functions, including being a member of the Audit Committee and Strategic Committee. Mr Mackay has solid experience in Corporate Governance, Board of Directors and its Committees, good knowledge in human resources and in social skills related to the activities of global air transport. He was appointed to the Board on April 10, MUNGROO Bissoon, G.O.S.K. Mr Mungroo, G.O.S.K. is the President of the Association of Hotels de Charme de l ile Maurice, President of the Rashitriya Sanatan Dharma Mandir Sangathan and the Chairman and Managing Director of Manisa Hotel (Mauritius) and Le Flamboyant Hotel. He is the Managing Director of Mungroo & Sons Ltd (Transport), Gitanjali Co Ltd (Transport), the Director of ALTEO Milling Company and the Managing Director of Office Clean and DHR Training. He was appointed to the Board on April 10, 2015

22 Air Mauritius Annual Report 2015/16 19 Annual Report and Business Review The Board of Directors (Cont d) SALEMOHAMED Muhammad Yoosuf Mr Salemohamed started his career in a chartered accountants firm where he obtained training in Accounting and Auditing. He joined a vertically integrated textile manufacturing Company as accountant in 1975 and ended his career there as General Manager. He has been associated in various textile activities since 1975 to date. He is a past president of the Mauritius Chamber of Commerce and Industry, past Chairman of the Mauritius College of the Air, past president of the MEFPA. He has also been a Director of the Development Bank of Mauritius, a member of the Petroleum Pricing Committee and an adviser to the Ministry of Commerce and Industry. He is presently the Chairman of Enterprise Mauritius and a Board member of the Islamic Cultural Centre Trust Fund Board. He was appointed to the Board on July 30, 2015 LOHANI Ashwani Mr Ashwani Lohani is presently the Chairman & Managing Director of Air India. He earlier worked as the Managing Director & Commissioner Tourism, Government of Madhya Pradesh, CAO/IROAF, CME Northern Railway, DRM Delhi, Director of National Rail Museum, New Delhi, Director in the Ministry of Tourism Government of India, Chairman & Managing Director of India Tourism Development Corporation and other important assignments in railways. He is a life member of the Institute of Rolling Stock Engineers and the Museums Association of India and the Founder cum Working President of the Indian Steam Railway Society. He has written over a hundred articles and columns on a variety of subjects in magazines and newspapers of national repute. He was appointed to the Board on October 30, 2015

23 20 Air Mauritius Annual Report 2015/16 Annual Report and Business Review The Board of Directors (Cont d) ROUX Patrick Mr Patrick Roux is a graduate from the Ecole Nationale Supérieure des Télécommunications in Paris. He began his career at Air France in 1990, working in the Quality Management Department for all North American stations. In 1991, he was appointed to the position of Assistant to the Air France Regional Cargo Director for Scandinavia and Finland. In 1992, he joined the Revenue Management Team at Paris headquarters where he was in charge of implementing the first yield management tool. After having implemented the merger with Air Inter, he became, in 1998, Head of Pricing and Revenue Management for all short and medium haul flights. In November 1999, he became Head of the Air France CEO s Executive Cabinet, until 2002, when he became the worldwide Marketing Director of Air France. In 2008, his responsibilities were expanded when he was appointed Senior Vice-President of Marketing for Air France-KLM. In September 2010, he became Senior Vice-President Air France-KLM for the American Continent based in New York. In September 2013, he was appointed Senior Vice President Air France-KLM for Asia Pacific, and Senior Vice President Alliances Air France-KLM as from February 01, He was appointed to the Board on January 22, 2016 Resignation of the Directors The following Directors have resigned during the financial year: VILJOEN Andries Nathaniel (resigned on August 29, 2015) He was appointed as Chief Executive Officer as from August 30, 2012 and occupied the post till he left the Company on August 29, Mr Andries Nathaniel Viljoen was appointed to the Board on July 21, He had joined the Company in April 2009 as the Chief Financial Officer and Chief Information Officer and was appointed as Chief Executive Officer on August 30, 2012 and occupied the post till he left the Company on August 29, Apart from his degrees in the commercial and financial fields, he is also a Chartered Accountant (SA). Mr Viljoen is a seasoned airline executive with more than 33 years airline leadership experience. His experience includes the 15 years he spent with Comair/British Airways as Finance and Commercial Director and the 8 years he spent at South African Airways initially as Chief Financial Officer and then as President and Chief Executive Officer. NANDAN Rohit (resigned on August 31, 2015) Mr Rohit Nandan took charge of Air India Ltd as Chairman & Managing Director on August 12, He was appointed to the Board on August 12, He was earlier Joint Secretary, Ministry of Civil Aviation, Delhi and belongs to Service Cadre of IAS/Uttar Pradesh/1982 batch. Prior to Civil Aviation Ministry, he was holding the post of Principal Secretary, Rural Development Department, Government of Uttar Pradesh.

24 Air Mauritius Annual Report 2015/16 21 Annual Report and Business Review Resignation of the Directors (Cont d) WOO SHING HAI Francois, G.O.S.K. (resigned on July 30, 2015) Mr François Woo Shing Hai, G.O.S.K. was appointed to the Board on August 14, 2009 and is the Group Managing Director of Compagnie Mauricienne de Textile Ltée, industry leader in fashionwear manufacture. He received the prestigious award Entrepreneur of the Year Mr Woo Shing Hai was appointed by the Chairman of the World Bank and the Managing Director of the International Monetary Fund as adviser to the President of the Republic of Senegal. In year 2006, he was conferred the academic title of Honorary Fellowship in Management by the University of Mauritius. RACHOU Etienne (resigned on December 18, 2015) Mr Etienne Rachou was appointed to the Board on November 07, After graduating from the HEC Business School, he began his career in 1979 with the Air France Group. In 1987, he was appointed Vice President Sales, Air France for the Paris region. He became Air France Regional Manager for United Kingdom and Ireland in April 1996 before becoming Air France Senior Vice President, Europe & North Africa, on June 30, Mr Rachou was promoted Air France Senior Vice President, Africa & Middle East, on July 01, 2007 and he was made Senior Vice President Africa & Middle East, Air France-KLM on September 01, He was appointed Deputy Executive Vice President International & The Netherlands, Air France-KLM on January 01, 2010, and became a member of the Air France Executive Committee. As from July 2013, Mr Rachou became Head of the Alliances Air France and Project Manager Alliances, Air France/KLM Group.

25 22 Air Mauritius Annual Report 2015/16 Annual Report and Business Review Corporate Governance Corporate Governance involves balancing the interests of the stakeholders in a Company - these include its shareholders, management, customers, suppliers, financiers, government and the community at large. The Board is accountable to the Company s shareholders for good governance and is committed to ensure that the interests of all stakeholders are given due consideration. In line with the Report on Corporate Governance for Mauritius issued by the National Committee on Corporate Governance under the Financial Reporting Act 2004 (the Code ), the Board of Directors has put in place various committees to assist in the execution of its responsibilities and to ensure compliance with the provisions set out in the Code. Board of Directors The Board of Directors is led by the non-executive Chairman, Dr Arjoon Suddhoo, while the executive management of the Company is led by the newly appointed Chief Executive Officer, Mr Megh Pillay, C.S.K. The roles of the Chairman and the Chief Executive Officer are separate and recognised in terms of the Report on Corporate Governance for Mauritius. Role of the Board The role of the Board is threefold namely, to establish policies, to make significant and strategic decisions and to oversee the organisation s activities. The Board sets the Company s strategic targets, ensures that the necessary financial and human resources are in place for the Company to meet its objectives and reviews management performance. The Board also sets the Company s values and standards and ensures that its obligations to the stakeholders are understood and met. Board Meetings The Board of the Company met fourteen times during the year under review. The Board has defined specific terms of reference for its committees. A statement of the directors responsibilities in respect of the financial statements is set out on page 96 and a statement on going concern is given on page 113. Board Information All directors receive regular information about the Company s affairs to enable them discharge their duties at Board meetings. Independent professional advice is available to directors in appropriate circumstances, the cost of which is fully borne by the Company. Board and Director Appraisal The Board of the Company was reconstituted during financial year 2015/16 and it complied with the Company s policy to review and evaluate the performance of the Board. The results of the exercise were shared with the Board. However, no individual assessment of Board directors was undertaken. The Corporate Governance Committee will devise a process in order that the individual evaluation exercise be undertaken in financial year 2016/17. Roles and Functions of Chairman and Chief Executive Officer The Chairman s primary function is to preside over meetings of directors and to ensure the smooth running of the Board and to preside the Company s meetings of Shareholders. The function and role of the Chief Executive Officer is separate from that of the Chairman. His main functions are, interalia, to develop and recommend to the Board a long term vision and strategy for the Group, to devise business plans and budgets that support the Company s long-term strategy, to strive to consistently achieve the Company s financial and operating objectives and to ensure that the day-to-day business affairs of the Company are appropriately managed and monitored.

26 Air Mauritius Annual Report 2015/16 23 Annual Report and Business Review Corporate Governance (Cont d) Role of Non-Executive and Independent Non-Executive Directors There were 15 directors serving on the Board of Air Mauritius as at March 31, 2016 with the Chief Executive Officer as the only Executive Director. Non-executive and independent directors play a vital role in providing independent judgement in all circumstances. The non-executive directors are drawn from a diversity of business and other backgrounds, so as to bring a broad range of views and experiences to Board deliberations. Although the Board is presently composed of one executive director, it is of the view that the spirit of the Code is being respected in view of the attendance and participation of Senior Executives at all Board meetings and deliberations on matters such as strategy and investment. The Board acknowledges that the current practice is for the controlling shareholder to propose members of the Board for election by shareholders at the Annual Meeting of the Company. Four of these are independent directors as defined by the Code. In line with the Code, all directors stand for re-election on a yearly basis. Nominations to the various committees are also made on a yearly basis. Senior Executives of the Company are invited regularly to attend Board meetings and subcommittee meetings. External consultants are also invited to attend Board and sub-committee meetings as and when their expertise is required. Dealings in Company Shares No director dealt in Company shares during the year. Directors are notified of close periods on a quarterly basis. Details of Directors shareholding in the Company are given on page 51 of this Annual Report. Directors Remuneration Board directors are paid monthly fees for their services to the Company. Directors, who are also directors within the Group, receive fees from these subsidiaries. Details of the Directors fees and other remuneration are contained on page 50 of the Annual Report. Significant Contracts No contracts of significance or loans existed between the Company and its Directors during the year under review, with the exception of the service contract of the Executive Director which is summarised on page 50.The Company has a well-established procedure for the disclosure of interests including a Register of Interests for both Board and Management. Role and Function of Company Secretary The Company Secretary plays a key role in advising the Board in the application of Corporate Governance in the Company. He also ensures that the Company complies with its constitution and all relevant statutory requirements, codes of conduct and rules established by the Board. The Company Secretary ensures that papers for Board and Committee Meetings are distributed prior to the relevant meeting. All Board members have access to the Company Secretary for any further information they may require in the discharge of their responsibilities. The Company Secretary is the focal point of contact for institutional and other shareholders. The appointment and removal of the Company Secretary is a matter for the Board as a whole.

27 24 Air Mauritius Annual Report 2015/16 Annual Report and Business Review Corporate Governance (Cont d) Board Members and Board and Committee Meetings The following table shows the list of Board members and the number of Board and Committee meetings held during the year and the attendance of individual directors. Status Board CGC AC RMSC FC SC EXCO Chairman Dr Arjoon Suddhoo N 13/14 n/a n/a 9/9 7/7 8/8 11/11 Chief Executive Officer Mr Andries Nathaniel Viljoen (up to August 29, 2015) E 7/7 0/0 n/a 3/3 n/a 1/1 n/a Mr Megh Pillay, C.S.K. (as from March 15, 2016) E n/a 2/2 n/a n/a n/a n/a n/a Directors Mr Ramprakash Maunthrooa N 12/14 n/a n/a 8/9 8/8 8/8 10/11 Mr Dev Manraj, G.O.S.K. N 8/14 n/a 0/3 0/9 0/1 n/a 4/11 Mr Sateeaved Seebaluck, G.O.S.K. N 13/14 2/3 n/a n/a n/a 5/8 n/a Mr Philippe Espitalier Noël N 9/14 n/a 4/5 n/a 6/8 5/8 7/11 Mr Marc Hein, G.O.S.K. I 10/14 2/3 n/a n/a n/a 5/8 n/a Mrs Kan Oye Fong Weng-Poorun N 11/14 n/a 3/5 n/a 1/1 n/a 9/11 Mr Louis Rivalland N 12/14 n/a 5/5 7/9 n/a n/a n/a Mrs Banoomatee Veerasamy N 13/14 n/a 5/5 n/a 6/7 n/a n/a Mr Daniel Mackay I 9/14 2/3 4/5 n/a n/a n/a n/a Mr Bissoon Mungroo, G.O.S.K. I 12/14 2/3 n/a 9/9 n/a n/a n/a Mr Muhammad Yoosuf Salemohamed (as from July 30, 2015) I 9/9 3/3 n/a n/a 6/7 n/a n/a Mr Ashwani Lohani (as from October 30, 2015) N 0/5 n/a n/a n/a n/a n/a n/a Mr Patrick Roux (as from January 22, 2016) N 0/2 n/a n/a n/a n/a n/a n/a Mr Francois Woo Shing Hai, G.O.S.K. (up to July 30, 2015) N 1/5 0/0 n/a n/a n/a n/a n/a Mr Rohit Nandan (up to August 31, 2015) N 1/7 n/a n/a n/a n/a n/a n/a Mr Etienne Rachou (up to December 18, 2015) N 4/11 n/a n/a n/a n/a n/a n/a Mr Pankaj Srivastava (Alternate to Mr A Lohani and Mr R Nandan) N 0/14 n/a n/a n/a n/a n/a n/a Mr Radhakrishna Chellapermal (Alternate to Mr D Manraj) N 6/14 n/a 3/3 8/8 1/1 n/a 7/11 E = Executive Director I = Independent Director N = Non Executive Director n/a: Not a member Company Secretary: Fooad Nooraully Auditors: Ernst & Young and KPMG CGC Corporate Governance Committee FC Finance Committee AC Audit Committee SC Staff Committee RMSC Risk Management Steering Committee EXCO Executive Committee Attendance: Number of meetings attended / total eligible to attend

28 Air Mauritius Annual Report 2015/16 25 Annual Report and Business Review Corporate Governance (Cont d) Directorship of the Group The table below shows the Board memberships across the Group. Name of Directors Air Mauritius Holding Ltd Air Mauritius Limited MEDCOR Ltd Pointe Coton Resort Hotel Co Ltd Airmate Ltd Mauritius Helicopter Limited Air Mauritius Holidays Limited Dr Arjoon Suddhoo Chairman Chairman Chairman Chairman Mr Megh Pillay, C.S.K. (as from March 15, 2016) Mr Andries Nathaniel Viljoen (up to August 29, 2015) ü ü Chairman Chairman Chairman ü ü ü ü ü ü ü Mr Ramprakash Maunthrooa ü ü Mr Dev Manraj, G.O.S.K. ü ü Mr Sateeaved Seebaluck, G.O.S.K. ü ü Mr Philippe Espitalier-Noël ü ü Mr Marc Hein, G.O.S.K. ü Mrs Kan Oye Fong Weng-Poorun ü ü Mr Louis Rivalland ü ü Mr Daniel Mackay ü Mrs Banoomatee Veerasamy ü ü ü ü Mr Bissoon Mungroo, G.O.S.K. Mr Muhammad Yoosuf Salemohamed (as from July 30, 2015) ü ü Mr Ashwani Lohani (as from October 30, 2015) ü ü Mr Patrick Roux (as from January 22, 2016) ü ü Mr Rohit Nandan (up to August 31, 2015) ü ü Mr Etienne Rachou (up to December 18, 2015) Mr Francois Woo Shing Hai, G.O.S.K. (up to July 30, 2015) Mr Pankaj Srivastava (Alternate to Mr A Lohani and Mr R Nandan) Mr Radhakrishna Chellapermal (Alternate to Mr D Manraj) ü ü ü ü ü ü ü ü

29 26 Air Mauritius Annual Report 2015/16 Annual Report and Business Review Corporate Governance (Cont d) Board Committees The Board has six specific sub Committees, which meet regularly under the terms of reference set by the Board. Copies of these are also available on Specific responsibilities are assigned to sub-committees of the Board, namely, the Audit Committee, the Risk Management Steering Committee, the Corporate Governance Committee, the Executive Committee, the Staff Committee and the Finance Committee which act within the parameters of their clearly defined terms of reference. As and when necessary other committees have been set up by the Board on an ad-hoc basis to deal with specific issues of relevance to the Company. Each of the Committees has authority to take external advice as required. 1) AC Audit Committee 2) RMSC Risk Management Steering Committee 3) SC Staff Committee formerly known as the Senior Officers Remuneration and Selection Committee (SORSC) 4) CGC Corporate Governance Committee 5) FC Finance Committee 6) EXCO Executive Committee 1. Audit Committee (AC) Members: Louis Rivalland (Chairman), Philippe Espitalier-Noël, Dev Manraj G.O.S.K. (from April 10, 2015 to August 27, 2015), Daniel Mackay, Banoomatee Veerasamy, Kan Oye Fong Weng- Poorun Secretary: Fooad Nooraully In attendance: Megh Pillay, C.S.K. (CEO as from March 15, 2016), Andries Nathaniel Viljoen (CEO up to August 29, 2015), Indradev Buton (Officerin-Charge from August 29, 2015 to March 15, 2016) Vijay Seetul, Dindoyal Sookun, Nazir Shah Kodaruth, Ernst & Young and KPMG. All members of the Audit Committee are nonexecutive directors and included one independent Director of the Board. However, the non-executive Chairman of the Audit Committee was not an independent director as prescribed by the Code but had the professional knowledge, expertise and experience in accounting to head this committee. The Board considers that each member brings broad experience and professional knowledge of financial reporting to the Committee s deliberations. The Committee s main responsibilities include: To oversee the financial reporting process to ensure the balance, transparency and integrity of published financial information; To review the effectiveness of the Company s internal financial control; To evaluate the independence and to review the effectiveness of the internal audit function; To ensure that no unjustified restrictions are made on the internal audit function; To review the effectiveness of the independent audit process including recommending the appointment and assessing the performance of the external auditor; To review the Company s process for monitoring compliance with laws and regulations affecting financial reporting, its Code of Business Practice and Ethics and its Fraud Prevention Policy; To review the appropriateness of the Group s accounting policies and consider changes to them; and To review the significant accounting judgments and monitor the integrity of the annual and interim financial statements. Ultimate responsibility for the approval of the annual and interim financial statements rests with the Board. In appropriate circumstances the Committee may make recommendations to the Board to put to shareholders for approval at the annual meeting, for the appointment, reappointment and removal of the Company s external auditors.