sugar energy property ANNUAL REPORT

Transcription

1 sugar energy property ANNUAL 20 REPORT 17

2 Dear Shareholder, The Board of Directors of Alteo Limited ( Alteo or the Company ) is pleased to present its Annual Report for the year ended June 30, This report was approved by the Board of Directors at its meeting held on September 20, 2017 and is also published in full on the Company s website ( On behalf of the Board of Directors of Alteo, I would also like to invite you to join us at the Annual Meeting of the Company, which will be held: Date: Thursday, December 14, 2017 Time: 10:00 am Place: Hennessy Park Hotel Ebony 2 Conference Room 65 Ebène Cybercity Ebène We look forward to seeing you. Yours sincerely, P. Arnaud Dalais Chairman

3 Alteo Limited Annual Report TABLE OF CONTENTS HIGHLIGHTS Alteo s Vision, Mission & Values 04 Alteo s Profile 06 Corporate Information 07 Group Structure 08 Our Activities 10 Directors Profiles 14 Executives Profiles 22 Chairman s Statement 28 CORPORATE GOVERNANCE Statement of Compliance 82 Certificate of Company Secretary 83 Corporate Governance Report 84 Statutory Disclosures CLUSTER REVIEW Financial Highlights 34 Interview with the CEO 36 Sugar Cluster 40 Energy Cluster 52 Property Cluster 60 Sustainability Report FINANCIAL STATEMENTS Independent Auditor s Report to the Members 114 Financial Statements 117 Notice of Annual Meeting 184 Proxy Form 185 Postal Vote 186

4 HIGHLIGHTS With a turnover of Rs 8.93 billion as at 30 th June 2017, Alteo is a regional group with well-established activities in the Sugar, Energy and Property sectors.

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6 4 Alteo Limited Annual Report 2017 ALTEO S VISION & MISSION OUR VISION To be a sustainable regional leader in the sugarcane industry, renewable energy and property OUR MISSION To responsibly create value through people development, strategic partnerships, innovative thinking, market focus and operational excellence ALTEO

7 Alteo Limited Annual Report ALTEO S VALUES Respect Creating the right environment to nurture respect in each other Integrity To be our highest possible selves in everything we do or say Spirit of Entrepreneurship The audacity to think big and dare to act Excellence Outperform to attain greatness beyond expected

8 6 Alteo Limited Annual Report 2017 ALTEO S PROFILE 33,600Ha of land in Mauritius and Tanzania (approx. 19,000Ha under cane cultivation) 3 Countries Mauritius, Tanzania & Kenya 3 Sugar Factories With a turnover of Rs 8.93 billion for 2017, Alteo is a regional group with well-established activities in the Sugar, Energy and Property sectors. 1 Sugar Refinery 3 Power Plants Employees 6,451 (September 2017) As the largest sugar producer in Mauritius, and with a strong presence in Africa, Alteo operates three sugar factories in Mauritius, Tanzania and Kenya. In 2016/17, the Group produced 300,000 tonnes of raw sugar and 167,000 tonnes of refined white sugar. In addition to its sugar activities, Alteo owns and operates three power plants (two in Mauritius, one in Tanzania) that export an average of 340 GWh to the grid annually. One of the Group s core objectives is to increase its activities in the Energy sector and to become an important player in renewable energy in Mauritius and Africa. Alteo is also continuing its expansion into the luxury real estate sector through Anahita, more specifically with the development of Anahita s northern parcels. Moreover, the Group is now developing a strategy to capitalise upon its substantial land asset base, through a variety of new real estate projects.

9 Alteo Limited Annual Report CORPORATE INFORMATION BOARD OF DIRECTORS P. Arnaud Dalais (Chairman) Jean-Claude Béga Jan Boullé Jean-Pierre Dalais Amédée Darga Jérôme de Chasteauneuf Jean de Fondaumière Patrick de L. d Arifat Fabien de Marassé Enouf Arnaud Lagesse Thierry Lagesse COMPANY SECRETARY Kate M. Li Kwong Wing SHARE REGISTRY & TRANSFER OFFICE If you are a shareholder and have queries regarding your account, wish to change your name or address, or have questions about lost share certificates, share transfers or dividends, please contact our Share Registry and Transfer Office: MCB Registry & Securities Limited 2nd Floor, MCB Centre 9-11, Sir William Newton Street Port-Louis Mauritius Tel: (230) Fax: (230) EXTERNAL AUDITORS BDO & Co Chartered Accountants 10, Frère Félix de Valois Street Port Louis Mauritius INTERNAL AUDITORS EY Level 9, Tower 1, NeXTeracom Cybercity, Ebene Mauritius BANKERS ABC Banking Corporation AfrAsia Bank Limited Barclays Bank PLC Bank of Baroda Banque des Mascareignes Ltée Bank One Limited SBM Bank (Mauritius) Ltd The Hong Kong and Shanghai Banking Corporation Ltd The Mauritius Commercial Bank Ltd BUSINESS REGISTRATION NUMBER C WEBSITE REGISTERED OFFICE Vivéa Business Park Saint Pierre Mauritius Tel: (230) Fax: (230)

10 8 Alteo Limited Annual Report 2017 GROUP STRUCTURE ALTEO LIMITED 20.96% 27.64% 51.40% CIEL AGRO & PROPERTY LIMITED IBL LTD OTHER SHAREHOLDERS

11 Alteo Limited Annual Report Sugar Energy Property 76.50% Alteo Milling Ltd 100% Alteo Planters Services Ltd 64.23% Refinest Limited 32.5% Alteo Refinery Ltd 32.5% 42.03% Alcohol & Molasses Export Limited 33.33% Trois Ilots Limited 65.10% Alteo Energy Ltd 61.72% Eastern Energy Company Limited 50.63% Consolidated Energy Co. Ltd % 100% Alteo Properties Ltd 100% Anahita Estates Limited 87.77% Anahita Golf Ltd 50% Anahita Residences & Villas Limited 50% Domaine de L Etoile Ltd 100% Island Fresh Ltd 60% Sucrière des Mascareignes Limited 100% Sukari Investment Company Limited 75% TPC Limited 100% Transmara Investment Limited 51% Transmara Sugar Company Limited

12 10 Alteo Limited Annual Report 2017 OUR ACTIVITIES ALTEO LIMITED Sugar ALTEO LIMITED (AGRICULTURAL ACTIVITIES) ALTEO MILLING LTD ALTEO REFINERY LTD SUCRIERE DES MASCAREIGNES LIMITED TPC LIMITED TRANSMARA SUGAR COMPANY LIMITED

13 Alteo Limited Annual Report Energy Property ALTEO ENERGY LTD CONSOLIDATED ENERGY CO LTD ALTEO PROPERTIES LTD ANAHITA ESTATES LIMITED ANAHITA RESIDENCES & VILLAS LIMITED ANAHITA GOLF LTD

14 12 Alteo Limited Annual Report 2017 OUR ACTIVITIES Kenya TRANSMARA SUGAR COMPANY LIMITED (KILGORIS) Estimated area of 6,000 hectares under cane cultivation by independent cane growers 619,000 tonnes of cane crushed (16/17 financial year) 64,000 tonnes of sugar produced (during 16/17 financial year) Tanzania TPC LIMITED (MOSHI) 16,000 hectares of land, including 8,000 hectares under sugar cultivation 1,073,000 tonnes of cane crushed to produce 112,000 tonnes of sugar for 2017 crop year A power plant exporting GWh to the national grid

15 Alteo Limited Annual Report Mauritius ALTEO GROUP (ST-PIERRE) Alteo Limited (Registered Office) Alteo Properties Ltd ALTEO (UNION FLACQ) Alteo Agri (cane growing) 18,600 hectares of land in the eastern region of Mauritius, including 11,200 hectares under sugarcane cultivation Alteo Milling Ltd 1,430,000 tonnes of sugarcane crushed to produce 127,000 tonnes of sugar Alteo Refinery Ltd 167,000 tonnes of refined sugar produced Alteo Energy Ltd A power plant of 41 MW capacity exporting 160 GWh annually to the national grid CONSOLIDATED ENERGY CO. LTD (BEAU CHAMP) A power plant of 28 MW capacity exporting 160 GWh annually to the national grid ANAHITA MAURITIUS (BEAU CHAMP) Luxury Property development on a 213 hectares site Anahita Residences and Villas Limited (Anahita Golf & Spa Resort): luxury accommodation, restaurants, bars, spa & other leisure activities Anahita Golf Ltd (Four Seasons Golf Club at Anahita): 18-hole championship golf course, restaurant & bar, golf academy

16 14 Alteo Limited Annual Report 2017 DIRECTORS PROFILES 1. Jean-Pierre Dalais Non-Executive Director 2. Jan Boullé Non-Executive Director 3. Jean-Claude Béga Non-Executive Director 4. Fabien de Marassé Enouf Executive Director 5. P. Arnaud Dalais Non-Executive Chairman 1 2

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18 16 Alteo Limited Annual Report 2017 DIRECTORS PROFILES Jean DE FONDAUMIÈRE Independent Non-Executive Director 2. Amédée DARGA Independent Non-Executive Director 3. Thierry LAGESSE Non-Executive Director 4. Jérôme DE CHASTEAUNEUF Non-Executive Director 5. Patrick DE L. D ARIFAT Executive Director 6. Arnaud LAGESSE Non-Executive Director

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20 18 Alteo Limited Annual Report 2017 DIRECTORS PROFILES P. ARNAUD DALAIS Non-Executive Chairman (Born in 1955) JEAN-CLAUDE BÉGA Non-Executive Director (Born in 1963) JAN BOULLÉ Non-Executive Director (Born in 1957) Appointed in: 1984 and appointed as Chairman of the Board on June 24, 2015 Professional Journey: P. Arnaud Dalais acted as Group Chief Executive of Alteo from November 1991 until June 2015 and is currently the Chairman of the Board. Under his leadership as Group Chief Executive since November 1991, the Company has gone through an important development both locally and on the international front. He has led his team to successfully conclude the amalgamation of ex-flacq United Estates Ltd with and into ex-deep River Beau Champ Limited which has since been renamed Alteo Limited. He is also the Chairman of the CIEL Group and as such, chairs the Boards of CIEL Limited and CIEL Textile Ltd. He plays an active role at the level of the Mauritian private sector and has assumed the Chairmanship of a number of organizations including the Joint Economic Council from 2000 to Since 2015 he is the Chairman of Business Mauritius, the new private sector supreme institution issued from the merger of the Joint Economic Council and the Mauritius Employers Federation. Directorships in other listed companies: - CIEL Limited (Chairman) - CIEL Textile Limited (Chairman) - Sun Limited Appointed in: 2012 Professional Journey: Jean-Claude Béga is a Fellow of the Association of Chartered Certified Accountants. He joined GML in 1997 and has been nominated as Group Head of Financial Services and Business Development of IBL Ltd on 1st July Jean-Claude Béga is the Non-Executive Chairman of Mauritian Eagle Insurance Company Limited, DTOS Ltd, The Bee Equity Partners Ltd and Anahita Estates Limited and serves as Director of a number of companies including Phoenix Beverages Limited, Lux Island Resorts Limited, AfrAsia Bank Limited and Anahita Residences & Villas Limited. Directorships in other listed companies: - Lux* Island Resorts Ltd - Phoenix Beverages Limited - Mauritian Eagle Insurance Company Limited (Chairman) - The Bee Equity Partners Ltd (Chairman) - Phoenix Investment Company Ltd Appointed in: 2012 Professional Journey: Jan Boullé is an Ingénieur Statisticien Economiste, (France) and holds a diploma of 3ème cycle de Sciences Economiques, Université Laval, Quebec, Canada. Prior to this nomination, he worked for Constance Group from 1984 to 2016 and occupied various executive positions and directorships. His latest position being Group Head of Projects and Development. He has been appointed as the Non-Executive Chairman of IBL Ltd on the 1st July 2016 and is also a member of the Board of Directors of several major companies of IBL Group. Directorships in other listed companies: - IBL Ltd (Chairman) - Phoenix Beverages Limited - The Bee Equity Partners Ltd - Phoenix Investment Company Ltd.

21 Alteo Limited Annual Report JEAN-PIERRE DALAIS Non-Executive Director (Born in 1964) Appointed in: 2014 AMÉDÉE DARGA Independent Non-Executive Director (Born in 1951) Appointed in: 2012 Professional Journey: Jean-Pierre Dalais is the Group Chief Executive of CIEL since January Throughout his career with CIEL, Jean-Pierre has been focusing on the management and development of CIEL s operations in Mauritius and internationally. He has been instrumental in the expansion of the Group s Finance, Healthcare and Hotels & Resorts clusters. Before joining CIEL in 1990 as General Manager of Aquarelle, Jean-Pierre worked at Arthur Andersen. Jean-Pierre holds an MBA from the International University of America, San Francisco, USA. Directorships in other listed companies: - Sun Limited (Chairman) - CIEL Limited - CIEL Textile Limited - Phoenix Beverages Limited (Alternate Director) Professional Journey: Amédée Darga is a Fellow of the Royal Society of Arts. He is also a Fellow of the Institution of Engineers of Mauritius. He is the Managing Partner of Straconsult, a Social Science Researcher, the Chairman of SEATINI (Southern & Eastern Africa Trade Information Network Initiative), and Chairman of the Mauritius Africa Business Club. Amédée Darga has served as Minister of Housing, Lands, Town and Country Planning for 2 years and previously occupied numerous positions such as Mayor of Curepipe. He was a Member of Parliament from 1976 at the age of 26. He is a regular resource person to the United Nations on matters of governance and economic development. Directorships in other listed companies: - CIM Financial Services Ltd

22 20 Alteo Limited Annual Report 2017 DIRECTORS PROFILES JÉRÔME DE CHASTEAUNEUF Non-Executive Director (Born in 1966) Appointed in: 2014 JEAN DE FONDAUMIÈRE Independent Non-Executive Director (Born in 1953) Appointed in: 1996 PATRICK DE L. D ARIFAT Executive Director (Born in 1958) Appointed in: 2012 Professional Journey: Jérôme de Chasteauneuf is a Chartered Accountant of England and Wales and holds a BSc Honours in Economics from the London School of Economics and Political Science, UK (1989). He joined the CIEL Group in 1993 as Corporate Finance Advisor and became Head of Finance of the CIEL Group in He has been closely involved with the Sugar industry by acting as Head of Finance of DRBC (now Alteo Limited) for a number of years. Jérôme de Chasteauneuf is also the Managing Director of CIEL Corporate Services Ltd and an Executive Director of CIEL Limited. Directorships in other listed companies: - CIEL Limited - CIEL Textile Limited - Harel Mallac & Co. Ltd - Sun Limited - The Medical & Surgical Centre Limited Professional Journey: Jean de Fondaumière is a Chartered Accountant of Scotland. He worked in Australia for eleven years and he retired as the CEO of the Swan Group at the end of 2006 after fifteen years. He is a past Chairman of The Stock Exchange of Mauritius and his former directorships include companies operating in the African, Indian Ocean and Asia Pacific regions. Jean de Fondaumière holds a portfolio of directorships in Mauritius for companies operating in commerce, finance, power generation, Sugar and tourism. Directorships in other listed companies: - Constance Hotels Services Ltd - Constance La Gaité Company Ltd - Hotelest Ltd - LUX* Island Resorts Ltd - United Investments Ltd Professional Journey: Patrick de L. d Arifat holds a BSC degree in Economics and Accountancy from City University, London. He started his career with the Mauritius Chamber of Agriculture in 1982 and in 1991 he was appointed Director of the Mauritius Sugar Producers Association. He has chaired that same association for four years and that of the Mauritius Sugar Syndicate for two years. He joined CIEL Agro-industry as Chief Executive Officer in July Patrick de L. d Arifat has, throughout those years, been closely associated with the policy formulation and implementation of the modernization process of the Sugar industry in Mauritius and in the region. Directorships in other listed companies: - Constance La Gaiete Company Limited (appointed as Non-Executive Director on 12 May 2017) - Rogers and Company Limited (resigned on 14 March 2017)

23 Alteo Limited Annual Report FABIEN DE MARASSÉ ENOUF Executive Director (Born in 1977) ARNAUD LAGESSE Non-Executive Director (Born in 1968) THIERRY LAGESSE Non-Executive Director (Born in 1953) Appointed in: 2015 Appointed in: 1995 and acted as Chairman of the Board from August 13, 2013 to June 24, 2015 Appointed in: 1983 Professional Journey: Fabien de Marassé Enouf holds a Bcom (Accounting and Finance) from Curtin University, Australia, and qualified as a member of the Institute of Chartered Accountants in England and Wales in He joined the Corporate Finance practice of PwC Mauritius in As Senior Manager at PwC, he has advised clients across a variety of sectors on business valuations, M&A and finance raising projects and has regularly been involved in stock market related transactions. Fabien de Marassé Enouf joined Alteo in January 2014 as Chief Finance Executive. Directorships in other listed companies: - No Directorship in other listed companies. Professional Journey: Arnaud Lagesse holds a Master s in Management from the Université d Aix-Marseille and graduated from the Institut Supérieur de Gestion de Paris. He attended a Professional Development Program at INSEAD, Fontainebleau (France), an Advanced Management Program (AMP180) from Harvard Business School, United States, and a Breakthrough Executive Program with Egon Zender/Mobius in Portugal. Arnaud Lagesse started his career at IBL Ltd (formerly known as GML) in 1993 as Finance and Administrative Director, before being appointed Chief Executive Officer in August Ten years later, following the amalgamation of GML Investissement Ltée and Ireland Blyth Limited on 01 July 2016, he was then appointed as Group CEO of the newly formed entity, IBL Ltd. Arnaud Lagesse was President of the National Committee on Corporate Governance in Mauritius, of the Chamber of Agriculture, of the Mauritius Sugar Producers Association and of the Sugar Industry Pension Fund. Mr Lagesse is the Chairman of Fondation Joseph Lagesse since July Directorships in other listed companies: - The United Basalt Products Ltd - Lux Island Resorts Ltd (Chairman) - Phoenix Beverages Limited (Chairman) - Phoenix Investment Company Ltd - BlueLife Limited (Chairman) - IBL Ltd Professional Journey: Thierry Lagesse holds a Maîtrise des Sciences de Gestion from the University of Paris Dauphine. He was the Non-Executive Chairman of IBL Ltd, Alteo Limited, Phoenix Beverages Limited and The United Basalt Products Ltd up to August 13, 2013 and acts as Director of several other companies quoted on the Stock Exchange of Mauritius Ltd. He is the Executive Chairman and founder of Palmar Group of Companies and Executive Chairman of Parabole Réunion SA. Directorships in other listed companies: - IBL Ltd - Lux Island Resorts Limited - Phoenix Beverages Limited - The United Basalt Products Ltd - The Bee Equity Partners Ltd. - Phoenix Investment Company Limited.

24 22 Alteo Limited Annual Report 2017 EXECUTIVES PROFILES ROBERT BAISSAC CEO of TPC Limited Robert Baissac holds a BSc (Hons) in Agriculture from the University of Natal, Pietermaritzburg, South Africa. He joined the Group in 1984 as Assistant Agronomist of Deep River Beau Champ Ltd and was then appointed Agronomist in charge of diversification in In 1987, he joined Mon Trésor Mon Désert S.E as Agronomist and in 1991, was appointed Field Manager of Compagnie de Beau Vallon Ltée. Since 2000, Robert Baissac is the CEO of TPC Limited in Tanzania. PATRICK DE L. D ARIFAT Chief Executive Officer Refer to page 20

25 Alteo Limited Annual Report FABIEN DE MARASSÉ ENOUF Chief Finance Executive Refer to page 21 ARNAUD D UNIENVILLE Designate COO Agricultural Activities (Mauritius) Appointed on July 1, 2017 Arnaud d Unienville holds a Masters in Business Administration from the University of Surrey, UK. Arnaud has more than 30 years of experience in the sugar industry in several African countries. Arnaud was Directeur Technique de Sucrivoire in Ivory Coast from 2000 to 2005 and has spent 10 years working as Directeur du Parc Materiel and Directeur Technique Machinisme Agricole for the SOMDIAA Group. Arnaud joined Alteo Group since 1 st July 2017 as Designate COO Agricultural Activities and works closely with the Christian Marot s team.

26 24 Alteo Limited Annual Report 2017 EXECUTIVES PROFILES SÉBASTIEN LAVOIPIERRE COO Industrial Activities (Mauritius) STÉPHANE ISAUTIER Development Executive of Sucrière des Mascareignes Limited Stéphane Isautier holds a Master s degree in Agronomy from the Institut National Agronomique, Paris (1993). Stéphane thereafter spent 5 years in the audit department of Arthur Andersen Paris, where he acquired a strong financial and corporate background. Over the last seventeen years, Stéphane pursued his career in the sugar industry and occupied various executive functions in cane and beet sugar processing units successively in Vietnam, Czech Republic, Reunion Island, Mozambique, Brazil and France. Stéphane joined Alteo in February 2015 as Development Executive and will henceforth lead the Group s initiatives to become a regional player in the cane and sugar industry. Sébastien Lavoipierre holds a BSc. in Chemical Engineering from the University of Natal (South Africa) and an MBA from Heriot Watt University, Edinburgh Business School. He joined Les Gaz Industriels in 1998 as Production Manager and then held a senior management position at Ireland Blyth Limited from 2003 to He was the Project Manager of the MCFI Group from 2007 to 2008 and Business Development Manager of the Harel Mallac Group in In 2010, he was promoted to the position of Managing Director of the Chemical arm of the Harel Mallac Group. Sébastien joined Alteo in August 2013 where he is currently the Chief Operations Officer of the Industrial Activities in Mauritius.

27 Alteo Limited Annual Report JEAN-ROBERT LINCOLN Group Agricultural Development Executive PATRICE LEGRIS CEO of Alteo Properties Ltd Jean-Robert Lincoln holds a BSc in Crop Science from Natal University, South Africa (1983), a Certificate in Sugar Agriculture from the South African Sugar Association (1984), a Certificate in Agricultural Water Management from Cranfield University, UK (1990), and an MBA from the University of Surrey, UK (1997). He joined the Company in Initially involved with sugarcane operations in Mauritius, he occupied various responsibilities within Agronomy and Research & Development (R&D). He has, over the last 20 years, been playing a more active role in evaluating and developing agricultural opportunities abroad and is currently Group Agricultural Development Executive. Jean-Robert also represents the Mauritius Chamber of Agriculture on the R&D Committee of the Mauritius Sugarcane Industry Research Institute (MSIRI). Patrice Legris holds a Masters in Economic and Social Administration from Sorbonne Paris, as well as a Diploma in Personnel Management from the University of Mauritius. CEO of Alteo Properties Ltd since April 2012, Patrice was previously CEO of l AHRIM (Association des Hoteliers et Restaurateurs de l Ile Maurice) and former director of the Mauritius Sugar Producers Associations (MSPA).

28 26 Alteo Limited Annual Report 2017 EXECUTIVES PROFILES CHRISTIAN MAROT COO Agricultural Activities (Mauritius) Christian Marot holds a Masters in Business Administration from University of Surrey, England. He joined Deep River- Beau Champ Ltd in 1983 as Section Manager and occupied successively the positions of Assistant Field Manager (1987) and Field Manager (1991) until his nomination as General Manager in As from July 2012, Christian is the Chief Operations Officer of the Agricultural Activities of the Company. DAVID MARTIAL Communications and Development Executive David Martial holds a Master in Communication from the University of Nice-Sophia Antipolis, France. He started his career at the Mauritius Commercial Bank (MCB) before being appointed Group Communication Manager of CIEL in 2006, overlooking its corporate communication strategy. From 2006 to 2010, he was involved in many projects & investments of the CIEL Group in different sectors such as agro-industry, textile, investment and property, including the initial development phases of Anahita. David thereafter pursued his career in the tourism and hospitality sector at the Mauritian hotel groups Sun Resorts and Veranda Leisure Hospitality (VLH) as Group Marketing Manager and Head of Marketing & Business Development respectively. From 2012 to 2016, he was the Managing Partner of Hospitality Plus, a company specialised in digital marketing and reservations solutions for the hospitality and travel sector in Africa and the Indian Ocean region. David joined Alteo in September 2016 to manage the Group s communication strategy and to evaluate new business development opportunities in Mauritius.

29 Alteo Limited Annual Report FREDERICK NORTH-COOMBES CEO Transmara Sugar Company Limited Frederick North-Coombes holds a BSc in Mechanical Engineering from the University of Cape Town in South Africa. He started his career in 1995 as Factory Superintendent at Union Saint Aubin Milling Company Ltd in Mauritius. Frederick joined the Group in 2006 as Mechanical Project Engineer in TPC and later on as Assistant Factory Executive in TPC. He counts a fruitful experience of 18 years in the sugar industry and 10 years at TPC, both in the Industrial and Garage departments. Frederick was appointed as the Chief Executive Officer of Transmara as from 1 st May SOPHIE STRAUSS Human Resources Executive Sophie Strauss holds a Masters in Human Resource Management from the University of Guildhall in the UK and has a Fellow Membership of the Chartered Institute of Personnel and Development. She joined the Group in August 2015 after spending 10 years with the Nestlé Group based in the UK. She was appointed as the Head of Human Resources for Nestle Waters UK in Prior to this, her role was Lead Human Resources Business Partner in the beverage category. Before her time in FMCG, Sophie spent 7 years with Compass Group Plc based in the UK - focusing on HR management in contract catering and the food retail sector in both railway stations and airports. Her operational experience and expertise lends itself to the focus required in terms of the overall human resources strategy for the Group.

30 28 Alteo Limited Annual Report 2017 CHAIRMAN S STATEMENT P. ARNAUD DALAIS CHAIRMAN

31 Alteo Limited Annual Report We saw substantial growth in turnover, EBITDA and profit after tax relative to the previous financial year. Dear shareholder and Alteo stakeholder, It is my pleasure to once again present Alteo s annual report following what has been, in many ways, an encouraging year for the Group. PERFORMANCE FOR FY 2016/17 Alteo posted strong results for the 2017 financial year. We saw substantial growth in turnover, EBITDA and profit after tax relative to the previous financial year. This commendable performance was mainly driven by our Sugar cluster, and in particular our Tanzanian and Kenyan sugar operations. Profits made from the sale of land also boosted the Group s results. During the financial year, Alteo saw strong growth in its share price and paid out a slightly higher dividend to shareholders. OUTLOOK FOR FY 2018 The performance of our sugar operations in Mauritius will be affected by the recent removal of sugar production quotas for the European market, exerting downward pressure on prices, and by lower sucrose in our crop. The impact of these factors will however be mitigated by the recent export sector support measures put into place by the Mauritian Government. The volume of our sugar production in Kenya and Tanzania is also expected to be lower compared to the record year we have just experienced. On the other hand, we anticipate an increase in revenue for our Energy activities. The cluster will benefit from higher tariffs following the contractual indexation as from January Finally, our Property cluster is expected to benefit from the first sales of Anahita s Northern parcels and the improved performance of Anahita Golf & Spa Resort following its refurbishment. A NEW PHASE OF MATURITY AND GROWTH Alteo is now at a crossroads in its development. Since its creation out of the 2012 merger of FUEL and DRBC, the Group has focused on strengthening its teams and driving efficiencies across its corporate headquarters and some of its operations. Having successfully achieved this, the Group is now in a position to explore new avenues for growth while continuing to improve efficiency and control costs. This is particularly important given the challenges now facing the Mauritian sugar industry.

32 30 Alteo Limited Annual Report 2017 CHAIRMAN S STATEMENT It is therefore the Board and Management s intention to: Pursue operational excellence across all of its clusters, by improving efficiency and introducing cost-control measures, including by accelerating the mechanisation of our agricultural activities in Mauritius; Continue to diversify into the production of value-added products; Generate further added value from cane by-products (bagasse and molasses) in order to diversify and maximise the Group s income from its activities; and Expand its sugar production in markets with strong growth potential (that is, with high levels of local consumption and shortfalls in production), particularly in East Africa. We also intend to derive long-term value from the Group s Mauritian land assets. Alteo is now developing a strategic blueprint for the east coast, involving a wide variety of different real estate projects. The latter will take into account Alteo s needs for cane cultivation as well as the region s existing infrastructure and its social, recreational, commercial and residential requirements. GOVERNANCE, COMPLIANCE AND REPORTING This year also marked a turning point in Alteo s governance. We notably finalised the Group s vision, mission and values. The intention was to celebrate Alteo s fifth anniversary by sending a strong message to our stakeholders about the Group s values Respect, Integrity, Spirit of Entrepreneurship and Excellence and our desire to be a responsible employer and business. Alteo also strengthened its compliance by creating a new Code of Ethics and Business Conduct. This code is based on Alteo s core values and was established in consultation with a wide range of stakeholders. Its contents will guide our strategy and decisionmaking as we pursue sustainability and growth. The Code of Ethics has now been finalised and will be disseminated to Alteo employees by end We will conduct a series of presentations to communicate our vision, mission and values, as well as the contents of our Code of Ethics and Business Conduct, to staff both locally and in the region. The Board will also present a restructuring project to our Shareholders. This will involve the separation of Alteo s agricultural and land holding from its investment and capital allocation activities. The aim is to create a more efficient group structure, able to meet our strategic objectives in Mauritius and internationally. An Information Memorandum containing an explanation of the project and its rationale will be circulated to Alteo s Shareholders shortly. Alteo s values, Code of Ethics and HR strategy reflect the Group s commitment to sustainable growth. In line with these convictions, Alteo is now moving towards integrated reporting. The aim is to present a more transparent, holistic and joined-up picture of our Group s strategy and business models, of the risks and opportunities we face, and of our prospects. Integrated reporting requires us to report on how we engage with our stakeholders and explain the value that we create, including in terms of sustainability and impact. This transition towards integrated reporting will take time. We expect to complete this journey within the next few years. As a result of these efforts, and in light of Alteo s development strategy, I am confident that the Group is ideally placed to pursue sustainable growth. ACKNOWLEDGEMENTS I would like to thank my fellow Directors for the care they have taken in discharging their duties this year. I would also like to thank Alteo s Chief Executive Officer, Patrick d Arifat, the Group s management team and all of our employees for the hard work they have accomplished this year, and which has allowed us to position our business for the future. P. Arnaud Dalais Chairman

33 Alteo Limited Annual Report TURNOVER (IN RS BILLION) 2016/ / / / / Alteo s Turnover in Rs Billion

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36 34 Alteo Limited Annual Report 2017 FINANCIAL HIGHLIGHTS Rs 8,929m TURNOVER +14% compared to ,000Tn SUGARS PRODUCED +7% compared to 2016 Rs 2,913m EBITDA +22% compared to GWh ENERGY EXPORTED +13% compared to 2016 Rs 1,074m PROFIT AFTER TAX +34% compared to 2016 Rs 370m PROPERTY SALES -57% compared to 2016

37 Alteo Limited Annual Report EVOLUTION OF NET DEBT, EBITDA AND NET DEBT/EBITDA ,773 3,797 2, ,976 2, ,091 5,567 2,395 5, , Jun 2013 Jun 2014 Jun 2015 Jun 2016 Jun 2017 DEBT EBITDA DEBT/EBITDA EARNINGS PER SHARE Rs 1.53 PRICE/ EARNINGS (PE) 22x DIVIDEND YIELD 2.4% DIVIDEND PER SHARE Rs 0.82

38 36 Alteo Limited Annual Report 2017 INTERVIEW WITH THE CEO How would you summarise Alteo s 2016/17 financial year? 2016/17 has been a year of transition. Five years ago, FUEL and DRBC successfully merged to create Alteo. Since then, the Group has worked to consolidate its teams both within its corporate headquarters and its operations and to improve the efficiency of its operations and internal processes. Alteo has worked hard to develop a strategy and corporate culture that emphasise operational excellence, integrity and a strong spirit of entrepreneurship. This process is now largely complete, and Alteo is moving into a new phase of maturity, growth and development. We are now ideally placed to pursue our vision of becoming a regional leader in the Sugar, Energy and Property sectors. How did Alteo perform against its strategic objectives? Alteo had an excellent year 2016/17 overall. The performance of our Sugar segment improved considerably relative to last year. This was the result of record production levels at TPC Limited and Transmara Sugar Company Limited following efforts to improve efficiency and capacity, and of higher sucrose levels in our Mauritian and Tanzanian sugar crops. In Kenya, the substantial investments made in both 2015/16 and 2016/17 to optimise Transmara s potential in the medium term (including by increasing the factory s crushing capacity and efficiency, enhancing management information systems, and improving transport and cane logistics) have started to bear fruit. Our Energy segment performed slightly better than last year off the back of a higher offtake. However, it was affected by an increase in the price of coal, one of its key inputs. Our Property segment saw lower turnover as a result of a drop in the real estate inventory available for sale. What are Alteo s strategic priorities for 2017/18 and in the medium term? With the abolition of sugar quotas for the European market in September 2017, the Mauritian sugar industry faces a challenging set of circumstances. Alteo is no exception. We must now adapt our Mauritian sugar activities to these new market conditions. Alteo will therefore continue to focus on improving operational efficiency and on controlling costs across all its sugar operations. In Mauritius, we will continue to diversify into higher value-added products, such as refined sugar and specialty sugars, and to accelerate the mechanisation of our activities. In Tanzania, we will place greater emphasis on improving agricultural practices including optimising irrigation and pest control. We will also increase our rates of sugar recovery from the cane at the mill, making our production more efficient. In Kenya, Alteo will pursue its strategy of increasing and stabilising the potential for cane production in its catchment area. We will achieve this by building long-term relationships with the local out-grower community that supplies Transmara with sugarcane, including by providing assistance to help them increase their efficiency and cane yields. In addition, high average sugar prices in the markets in which we operate allowed us to increase our revenue across the board.

39 Alteo Limited Annual Report Alteo has worked hard to develop a strategy and corporate culture that emphasise operational excellence, integrity and a strong spirit of entrepreneurship. PATRICK D ARIFAT Chief Executive Officer

40 38 Alteo Limited Annual Report 2017 INTERVIEW WITH THE CEO We are now ideally placed to pursue our vision of becoming a regional leader in the Sugar, Energy and Property sectors. Tanzania EBITDA BY COUNTRY Rs 1,260m Rs 1,882m Kenya Mauritius Rs 363m Rs 485m Rs 546m Rs 771m EBITDA BY CLUSTER Sugar Rs 2,104m Rs 2,692m Energy Property Rs 256m Rs 254m (Rs 35m) Rs 37m

41 Alteo Limited Annual Report Across the Group, Alteo intends to diversify further by extracting higher added value from the byproducts of its sugar operations, including molasses, bagasse and cane trash. We also have ambitions in the domain of renewable energy and are currently co-promoting a solar energy project in Mauritius. We hope to bring these projects to fruition within the next few years. This process also feeds into the regionalisation strategy that I mentioned in Alteo s annual report last year. Thanks to our teams specialist expertise and know-how in the sugar industry, we are now actively exploring other investment opportunities in promising markets in East Africa in particular. In Mauritius, we are embarking upon the creation of a strategic masterplan for Alteo s property assets in the eastern part of the island. The aim is to maximise the potential of the Group s assets and to develop them sustainably over the long term. What is the financial outlook for Alteo in 2017/18 and in the medium term? Our Mauritian sugar activities are likely to be affected by lower sugar prices following the removal of production quotas on the European market and anticipated sugar surpluses on the world market. However, the impact of these developments should be mitigated by measures recently announced by the Mauritian Government to support the country s export sector. Production volumes can also be expected to decline in Kenya and Tanzania compared to the record results of 2016/17. In Kenya, Transmara is likely to be temporarily affected by a lower sugarcane supply due to a shortage of mature canes following the harvest of a backlog of over-mature cane in 2016/17. In Tanzania, TPC is expected to return to more usual production levels in 2017/18. Alteo s Energy cluster is expected to see increased revenues during the next financial year. In Mauritius, energy tariffs for Alteo Energy Ltd are due to be adjusted upwards in 2017/18 in line with increasing coal prices, which should lead to higher revenue. Alteo also intends to launch a new thermal power plant project to replace our existing production facilities and a jointventure solar project in Mauritius. In the Property segment, the development and sales of the first serviced plots and off-plan villas within Anahita s northern phase should generate higher revenue than that of 2016/17. The cluster s results are also expected to improve following the refurbishment of Anahita Golf & Spa Resort, which will increase our inventory of available rooms. Last year, you spoke about Alteo s commitment to sustainability. What actions have you taken this year? In order to grow sustainably, it is crucial for Alteo to build respectful, lasting relationships with all of our stakeholders. Our sustainable development also requires investing in the places in which we operate, through community engagement and CSR activities environmental conservation and protection and efforts to create local jobs. I particularly salute the excellent and impactful community outreach work achieved by TPC and FT Kilimanjaro, the NGO it co-funds, in the past years. In Kenya, Transmara continues to work with local NGOs on income generation, health, education and infrastructure projects. In Mauritius, Alteo contributed to a large number of community and infrastructural projects. To grow sustainably, Alteo must also continuously improve its governance. This year, with the help of our teams and of our Board of Directors, we invested considerable time and effort in finalising Alteo s new Vision, Mission and Values, as well as a Code of Ethics and of Business Conduct. The latter is explained in greater detail in the Governance section of this report. Together, these elements will guide and shape the way Alteo does business in the years to come. You ve spoken at length about the importance of Alteo s human potential for the Group s future growth. What role does HR play in your strategy? The development of a group-level human resources strategy is a crucial part of Alteo s strategy and one of our Group s main priorities. As I mentioned last year, we have filled a number of key positions at Group level and within our operations over the past few years. We now have solid expertise and know-how in each of our main professions Sugar, Energy, and Property as well as within our corporate headquarters in Mauritius. Our next challenge is to continue to train and develop our staff including via a leadership development programme for senior managers introduced this year to enable each of our employees to flourish. Only with the support of our people can Alteo achieve its goal of becoming an entrepreneurial, dynamic, ambitious and responsible regional leader that is both profitable and sustainable.

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44 42 Alteo Limited Annual Report 2017 SUGAR Union Flacq Moka Tanzania Kenya CLUSTER OVERVIEW Material companies Mauritius Alteo Limited Alteo Milling Ltd Alteo Refinery Ltd Tanzania TPC Limited Kenya Transmara Sugar Company Limited 19,200 Ha under cane cultivation Alteo s Sugar cluster consists of companies engaged in the following activities: Mauritius Alteo Limited: Agricultural activities including planting and harvesting of sugar cane and other food crops Alteo Milling Ltd: Sugar cane milling Alteo Refinery Ltd: Sugar refining Tanzania TPC Limited: Planting, harvesting and milling of sugar cane. Kenya Transmara Sugar Company Limited: Sugar cane milling and extension services to sugar cane outgrowers. MACROECONOMIC CONTEXT Alteo s Sugar cluster was positively affected by relatively high world sugar prices during 2016/17. This was mainly the result of the world sugar market being in deficit for two consecutive seasons. According to the International Sugar Organisation, the world sugar market is likely to return to a surplus situation in 2017/18 with global production expected to rise to a new record of million of tonnes, a 6.9% increase compared to the previous season. World sugar prices have already dropped in anticipation of these market conditions. Alteo also benefitted from strong domestic prices in the Tanzanian and Kenyan sugar markets, both of which are deficit markets, though the Kenyan market experienced considerable volatility. This is explained in greater detail below.

45 Alteo Limited Annual Report Abolition of EU sugar quotas Sugar production quotas for the EU market were abolished from September 30, 2017 onwards (that is, as of the end of the 2016/17 marketing year), under the terms of the Common Agricultural Policy (CAP) Reform agreed by the EU member states in In the short term, this structural change in the EU market will lead to a significant increase in EU beet sugar production, turning the EU from a deficit to a surplus market. For Mauritian and other traditional ACP producers, this means a much more competitive EU market in terms of both access and prices, as the premium prices we previously enjoyed are eroded. Surplus EU production is also likely to result in exports to the world market, contributing to an already unfavourable global situation. The Mauritian sugar industry must therefore improve its efficiency and control its cost base in order to compete in these challenging markets conditions, which are likely to persist into the short to medium term. Volatility in the Kenyan sugar market The Kenyan market experienced highly volatile sugar prices and disruptions to domestic supply chains in 2016/17 as a result of a fall in domestic sugar production during the year. This decline in production was due to a drought in the sugar cane belt combined with a lack of cane development. This lower availability of raw material, coupled with the absence of enforceable cane protection regulation, led to cane poaching, whereby sugar millers secured cane from outgrowers outside of their traditional production catchment area. As a result of this fall in domestic production and of low sugar stocks, sugar prices rose to historically high levels in the second half of the financial year 2016/17. To minimise the impact of this price rise on the population s cost of living, the government temporarily suspended duty on sugar imports from 12th of May to the end of August Approximately 400,000 tonnes of brown sugar were thus imported from exporting countries including Brazil, out of a total annual sugar consumption of around 900,000 tonnes. The market quickly reacted to this influx of imported sugar and prices settled back to the level observed a year before. 301,000 Tonnes Of sugar produced per year: (Mauritius, Tanzania, Kenya)

46 44 Alteo Limited Annual Report 2017 SUGAR CLUSTER STRATEGY In response to the challenging set of circumstances facing the sugar industry, Alteo is embarking upon an in-depth review of its sugar businesses model and operational structures. It is adopting a cluster level strategy consisting of: Improving the efficiency of its processes and operations while controlling production costs, in the aim of being more competitive in the face of volatile prices; Creating new revenue streams by adding value to sugar cane by-products and innovating with new products, for instance by: -- Using bagasse and cane trash (both sugarcane by-products) as a renewable energy source and input for our Energy sector; -- Moving towards value-added products such as refined and premium direct consumption sugars; and -- Increasing the revenue stream from our molasses through the production of industrial and potable alcohol. Regional diversification: investing in growth markets, particularly in East African sugar deficit countries; and Lobbying national regulators to help shape policies that will ensure the sugar industry s sustainability. MAURITIUS OVERVIEW OF ACTIVITIES Alteo has a total of 18,600 hectares of land including 11,200 ha under cane in Mauritius. We also operate a sugar mill with a crushing capacity of 400 tonnes of canes per hour. Our factory processes about 9,000 tonnes of cane per day for seven months of the year, equivalent to an annual crushing capacity of 1,450,000 tonnes. Out of an average annual raw sugar production of 150,000 tonnes, 110,000 tonnes are sent for refining while 40,000 tonnes are direct consumption premium sugars. The mill sources sugarcane from Alteo s own sugar cane cultivation (50%), other corporate planters (20%) and smallholding planters (30%). Our sugar refinery, which operates year-round, refines plantation white sugar into white sugar for direct consumption. Our product is marketed exclusively by the Mauritius Sugar Syndicate. The refinery has a capacity of 170,000 tonnes per annum and produces EEC grade II and bottler s grade sugars. It also is food safety-accredited to international standards, including BRC 7. The refinery sources its feedstock from Alteo s sugar factory, other domestic millers and imported sugar. 167,000 Tonnes of refined sugar per year (Mauritius)

47 Alteo Limited Annual Report STRATEGY Alteo s sugar operations in Mauritius will face a challenging set of conditions in the European sugar market in the aftermath of the beet production liberalisation in September In line with the wider strategy for Alteo s sugar cluster, our Mauritian sugar business is undertaking a restructure of its operations to better meet the challenges of the future, while continuing to improve efficiency and reduce production costs. To achieve our objectives and ensure our business continued profitability, our immediate priorities are to: Improve efficiency and achieve operational excellence at all levels; Continuously enhance our sustainability practices; Adopt integrated mechanisation practices, from planting to harvesting. At present, 63% of our area under cane is mechanically harvested, while only 20% of planting is mechanised. The objective is to achieve a harvesting mechanisation rate of 75% within the next five years, thereby reducing our dependency on expensive manual operations; Implement new and more efficient irrigation projects and increase the total area under irrigation; Intensify our planter s assistance programme to ensure that out-growers maintain sugar cane production and thereby guarantee our raw material supply in the future; Streamline industrial processes and costs of production; Develop new value-added premium sugars and achieve higher prices for our sugars; Optimise revenue from sugar cane by-products such as bagasse, cane trash and molasses; Explore new opportunities to generate revenue from marginal land (i.e. woody biomass for the generation of electricity); and Continue to lobby the Mauritian government to obtain support for the industry and ensure its continued sustainability. PERFORMANCE REVIEW Turnover (MUR 000) EBITDA (MUR 000) Profit after tax (MUR 000) Sugar Mauritius Alteo Limited 1,077,603 1,037,310 (30,009) 14,401 (147,833)* (199,719) Alteo Milling Ltd 582, , ,008 99,605 71,298* 4,332 Alteo Refinery Ltd 415, , , ,232 84, ,692 Others 219, ,165 76, ,374 (43,365) 85,906 Total 2,295,360 2,052, , ,613 (35,305) (7,789) * Profit after tax for Alteo and AML is shown net of consolidation adjustments including dividends from subsidiary/associated companies and the impairment of an investment held in Compagnie Usinière de Mon Loisir Ltée respectively.

48 46 Alteo Limited Annual Report 2017 SUGAR Alteo s Mauritian sugar business posted a 12% increase in turnover in 2016/17 off of the back of a rise in production of raw sugar, to 90,500 tonnes (2015/16: 89,500 tonnes). This higher production was driven by improved sucrose level compared to the previous year, and a better average price at Rs 15,571 per tonne (2015/16: Rs 15,166 including a Rs 2,000 financial support from the Sugar Insurance Fund). Turnover was also boosted by an almost twofold increase in the production of special sugars which reached 50,000 tonnes (2015/16: 27,000 tonnes) and the introduction of a new refiner service fee structure. All components of the service fee are now recognised on a gross basis as opposed to a net basis, in line with the terms of the new refiner service agreement which came into effect on the 1st of January However, our Mauritian sugar business EBITDA and profit after tax were negatively affected by an unfavourable movement in the standing crop valuation. This is due to lower sucrose levels being anticipated for the 2017 crop. The Mauritian sugar business results were also positively affected by the following exceptional items: Gains on the sale of land by Alteo Limited amounting to Rs 181m; and The recognition of Rs 60m of deferred income arising from the valuation of Land Conversion Rights obtained against past capital expenditure on mill expansion. A new brine recovery and nano-filtration system to reduce the amount of effluent generated. This facility will allow us to recycle and reduce the chemicals used in the regeneration of resins, in line with our sustainability commitments and our efforts to increase efficiency. OUTLOOK As explained above, the liberalisation of the European sugar market is likely to negatively impact prices for the sector as a whole. However, the export sector support measures recently announced by the Mauritian Government should mitigate this adverse impact. On the production side, the performance of the 2017 crop so far indicates that sugar cane production will be satisfactory, though average sucrose level will be lower. We therefore expect a lower turnover across our Mauritian sugar business for the 2017/18 financial year, with a drop in production levels compared to last year. Our business immediate priorities will be to carefully manage cash flows and contain costs. We will also actively explore new export markets via the Mauritian Sugar Syndicate s newly resourced marketing arm and continue to engage with the Mauritian Government to ensure our industry s sustainability. These gains were partly offset by a Rs 92m impairment of the carrying value of the sugar milling equipment of Deep River Beau Champ Milling Co Ltd and Compagnie Usinière de Mon Loisir Ltée which are not in operation anymore. Key investments in the refinery during the year under review included: The construction of conditioning silos to develop a wider range of dry special sugars; A new fully automated bagging facility, capable of bagging sugar in 1 tonne bags and allowing us more flexibly to distribute sugar to European and regional markets; and 50,000 Tonnes of special sugars (Mauritius)

49 Alteo Limited Annual Report RISKS AND MITIGATING ACTIONS Risk Actions taken to mitigate End of sugar quotas in EU: volatility in sugar prices -- Efforts to improve efficiency and control costs Brexit: depreciation of the pound and reduced competitiveness of sugar exports; lower demand for our products; possibility of the UK intensifying domestic sugar beet production and importing from non ACP origins Reduction in sugar yield due to adverse climatic conditions (low extraction rate) -- Regional market diversification: explore new export markets -- Diversification into higher value-added sugar products -- Lobbying to review regulatory framework. -- Regional market diversification -- Marketing efforts via the Mauritian Sugar Syndicate -- Ongoing selection of new cane varieties with higher sucrose content Continuous increase in labour cost -- Reduction of our dependency on manual operations by increasing mechanisation -- Increasing the efficiency of machinery Reduction in sugar cane supply from planters -- Intensify our planters assistance programme

50 48 Alteo Limited Annual Report 2017 SUGAR TANZANIA OVERVIEW OF ACTIVITIES Our Tanzanian business is active in sugar cane growing and processing and the sale of sugar, electricity and molasses to the domestic market. We operate on 16,000 ha of land, more than 8,000 ha of which are under sugar cane cultivation. We cultivate all of our sugar cane ourselves without sourcing from out-growers. All of our sugar cane is irrigated and manually harvested. We also produce electricity to power our factory processing and irrigation network; and we export surplus energy to the Tanzanian national grid. Within the last five years, the business has increased cane yields by 18%, crushing capacity by 17% and sugar production by 30%. Starting in 2013/14, the business also embarked upon a continuous programme of investment. This included: Enhancing our farming system to safeguard our future supply of sugar cane, by improving land preparation techniques, manuring practices and the efficiency of our irrigation; Improving our crushing capacity and constantly investing in new factory machinery to improve efficiency; Introducing new IT systems (in business intelligence, human resources management and hospital management) and reinforcing internal controls and processes within our head office; and Upgrading our hospital facilities and providing training to improve the health and safety of our employees as well as the health of the people living in our area of operations. PERFORMANCE REVIEW STRATEGY Tanzania is a sugar deficit market. There is scope for selling more sugar in the country. The population is increasing, as is sugar consumption, while no new producers are coming online. Our Tanzanian sugar business strategy is therefore to continue to concentrate on the domestic market. Our strategic priorities include: 1) Improving efficiency and controlling costs, including the cost of manual operations, by: Continuing to invest in the fields and factory; Increasing sugar production by extending area under cane by 400 hectares, including into less productive lands. This will require soil reclamation, improving irrigation and other cultural practices and Investing in mechanical harvesting. 2) Diversifying into new and value-added products: Generation of electricity from biomass production on marginal lands and cane trash collection. Trials are being undertaken in order to identify the best tree species for biomass production on marginal lands. Investments have now been approved and equipment purchased for the harvest and preparation of biomass. We will also carry out tests for trash collection after mechanical harvesting; Finalise the technical and financial studies with a view to making an investment decision for the setting up a distillery, in order to maximise revenues from our molasses; and Investigate avenues with strategic partners for solar energy production, within the framework being established by the Government of Tanzania. Turnover (MUR 000) EBITDA (MUR 000) Profit after tax (MUR 000) Sugar Tanzania TPC Limited 2,936,285 2,402,995 1,977,845 1,447,518 1,032, ,635 Others - - (95,815) (72,070) 14,031 (7,286) Total 2,936,285 2,402,995 1,882,030 1,375,448 1,046, ,349

51 Alteo Limited Annual Report Our Tanzanian sugar business performance in 2016/17 has been very good overall. Our production grew 15% due to a record sugar cane crop. During the 2016/17 season, a total of 1,072,155 tonnes of cane were harvested compared to 968,617 tonnes of cane the year before. The sucrose content of the cane also improved, from 11.8% last year to 12.5% this year. This record crop was the result of a large quantity of cane (115,000 tonnes) not having been harvested in 2015/16 and being crushed in this financial year instead. Due to reduced rainfall days during the harvest and a short off-crop period in 2017, we also benefitted from a longer crushing period during the year under review. Our ongoing investments in factory capacity also allowed us to increase the amount of cane crushed per hour, from 170 tonnes last year to 185 tonnes this year. As a result of such enhanced production, of positive domestic market conditions and of relatively high world sugar prices, we also posted strong financial results. Profit after tax grew by 41%. Our technical performance at the factory was negatively affected by a number of issues including a 49-hour stoppage in the factory due to a boiler breakdown at the beginning of the crop. 2016/17 saw the continuation of our investment programme in the fields via the upgrading and converting of irrigation systems. We also drilled new boreholes to ensure the availability of water for our operations. At the factory, we installed a vertical crystalliser and massecuite reheater to increase our extraction rates. OUTLOOK Next year is likely to be a return to normal production due to the less favourable rainfall and irrigation water availability for the current crop. A likely increase in the incidence of Yellow Sugarcane Aphids may also have an impact on cane and sugar yields. While we expect better average sugar prices for the Tanzanian market, a key risk is that large quantities of sugar from the Southern African Development Community, previously exported to the EU, could flood the domestic market, putting downward pressure on sugar prices. To mitigate these risks, we will continue our investments both at field and factory levels so as to bring our production costs further down and increase efficiency. In line with our strategy, we intend to increase our area under cane by 400 hectares and begin to experiment mechanical harvesting. We also anticipate further phases of investment in our crushing capacity to bring us in line with the availability of sugar cane. We are aiming for a crushing capacity of 205 tonnes per hour by June 2018 and of 220 tonnes per hour by June RISKS AND MITIGATING ACTIONS Risk Uncontrolled sugar imports from the world market or surplus producers in the region after liberalisation of European sugar production quotas Uncertainty about energy policies with regard to independent power producers Actions taken to mitigate -- Constantly engaging with the Sugar Board of Tanzania and the Government on issues of sugar imports policies -- Constantly engaging with the Sugar Board of Tanzania and the Government on issues related to energy policy Substantial increase in the incidence of yellow sugarcane aphid Lack of water for irrigation due to prolonged drought or disputes with other water users -- Initiating trials and keeping abreast of new developments to control yellow sugarcane aphid -- Investing in new boreholes to secure irrigation water supply and in irrigation systems to increase water use efficiency Climate events (floods) -- Maintaining a clear flood path to allow water to pass through in shortest possible time with minimum damage to fields and infrastructure Country risk: social or political instability -- Business Continuity Plan in place to promptly react to crisis situations

52 50 Alteo Limited Annual Report 2017 SUGAR KENYA OVERVIEW OF ACTIVITIES Alteo s Kenyan sugar business is active in sugar milling and produces for the Kenyan sugar market. It also markets by-products including molasses and bagasse briquettes. We operate the factory in Kenya s Transmara region and have a sales office in Nairobi. Our business sources its sugar cane entirely from out-growers located within a 30km radius of our factory. We also provide a wide range of services to the sugar cane farmers community. STRATEGY The Kenyan sugar market is a deficit one, with shortfalls sourced from neighbouring SADC and COMESA countries. The domestic market is expected to continue to grow as a result of both population increases and rising per capita consumption. Our Kenyan sugar business immediate priority is to maximise the efficiency of our activities and control costs in order to lessen our exposure to price volatility and competition from other producers on the Kenyan market. In order to achieve this target, cane development of the out-grower community remains a key priority. We aim to assist such farmers in establishing an additional 4,500 ha under cane cultivation every year over the next three years, a target established based on a study of available land and its suitability for cane production. We are constantly improving our services to farmers and are decentralising our agricultural activities to work more closely with out-growers. The aim is to stabilise and ensure the long-term sustainability of our cane supply. In the longer term, our business is also exploring the possibility of expanding further into value-added activities, via a bagasse co-generation power plant and a distillery. Our Kenyan sugar business performed well overall in 2016/17, despite the fluctuations in domestic sugar prices outlined above. Sugar production increased by 7% to 64,100 tonnes during the 2016/17 season. A total of 619,000 tonnes of cane were harvested, compared to 568,000 tonnes last year. The cane sucrose content stood at 12.4%, in line with last year s 12.3%. The increase in sugar output, coupled with higher average selling prices, resulted in a 32% rise in profit after tax. During the year under review, our business pursued its investment strategy to improve services to farmers and opened its two first regional agricultural offices. Our sugar cane loading and haulage systems were progressively upgraded via the introduction of equipment that is better adapted to the local conditions. Efforts were also made to optimise our garage infrastructure and management. PERFORMANCE REVIEW Turnover (MUR 000) EBITDA (MUR 000) Profit after tax (MUR 000) Sugar Kenya Transmara Sugar Company Limited 1,969,839 1,420, , , ,460 82,312 Others - - (19,801) (315) (55,332) (47,358) Total 1,969,839 1,420, , ,280 53,128 34,954

53 Alteo Limited Annual Report Despite these positive results, our business was affected by the reduced availability of cane during the second half of the financial year. This decrease in sugar cane was the result of our limited cane development prior to 2015, itself caused by insufficient factory crushing capacity till end 2015 resulting in a frustrated out-grower community. This problem is likely to be aggravated in the coming financial year for the reasons outlined in the macro-economic context above. OUTLOOK The projected reduced cane availability is hence expected to have a negative impact on our 2017/18 performance. In addition, the volatile nature of the sugar market in Kenya, as described in the market outlook section above, presents potential challenges for our business; particularly the eventuality of additional tariff-free sugar imports into the country. To mitigate these risks, and in line with our strategy, we aim to: Open another three agricultural regional offices and recruit an additional regional manager to strengthen services we provide to out-growers; and Continue to focus on our cane development programme and place an additional 4,500 ha under cane cultivation next year. RISKS AND MITIGATING ACTIONS Risk Actions taken to mitigate Uncontrolled sugar imports -- Constantly engaging with the Kenyan Sugar Directorate on issues related to sugar imports policies -- Close monitoring of the local market Lack of supply of sugar cane -- Building long-term, trust-based relationships with local farmers by providing extension services through decentralisation of agricultural activities Change in national production capacity: -- Continuous investment to increase efficiency and bring down production costs -- Increase in sugar crushing capacity in the region and country-wide -- Privatisation of state-owned factories Country risk: social and political instability -- Business Continuity Plan in place to promptly react to crisis situations -- Political insurance cover

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56 54 Alteo Limited Annual Report 2017 ENERGY Union Flacq Beau Champ TPC OVERVIEW OF ACTIVITIES Material companies Alteo Energy Ltd Consolidated Energy Co. Ltd TPC Limited (energy operations) Helios Beau Champ Ltd 3 power plants in Mauritius and Tanzania Alteo s Energy cluster consists of: Alteo Energy Ltd (AEL), which operates a bagasse/ coal power plant at Union Flacq, Mauritius. The company supplies steam and electricity to Alteo s sugar mill and refinery and exports 160 GWh on average annually to the national grid. It generates more than half of its production from bagasse, a sugar cane by-product that is a renewable source of energy. Consolidated Energy Co. Ltd (CEL), which operates a coal power plant at Beau Champ, Mauritius. It exports its entire annual production of 160GWh on average to the national grid. TPC Limited (TPC) operates a power plant supplying steam and electricity for its sugar processing requirements, electricity for the totality of its irrigation network needs and also supplies some 25 GWh to the national grid. For financial reporting purposes, this activity is aggregated with TPC s sugar operations. Helios Beau Champ Ltd (Helios), which is due to begin the construction of a photovoltaic farm at Beau Champ, Mauritius, in 2017/18. Its estimated production of 16 GWh per year will be exported to the national grid in its entirety.

57 Alteo Limited Annual Report MARKET ANALYSIS / OPERATING CONTEXT Mauritius and the East African region are seeing steady growth in demand for electricity. In Mauritius, electricity consumption increased 4% between 2015 and Of the energy produced and consumed in Mauritius in 2016, 36.5% was generated from petroleum products, 41.6% from coal and 21.8% from renewables, of which a majority from bagasse. 41.6% Coal 21.8% Renewables 36.5% Diesel & Fuel Oil The Government of Mauritius has announced plans to increase the proportion of Mauritius energy produced from renewables to 35% by The national energy strategy places particular emphasis on wind, solar energy, biomass and waste-to-energy projects. Responding to Government tenders, in particular via joint ventures with international firms, represents a crucial avenue for growth for Alteo s Energy cluster. In East Africa, a large proportion of the population still does not have access to electricity. Only 25% of the Kenyan population is connected to the national grid, a figure that drops to 5% in rural areas. Demand for electricity across the African continent is therefore projected to triple by 2030 as national economies continue to grow. In addition, East African nations are making a concerted effort to move towards renewable energy. Tanzania and Kenya have created incentives, including tax exemptions, to encourage private investors to produce energy from solar and other renewable sources. These represent further growth opportunities for Alteo s Energy cluster the more so taking into consideration the availability of bagasse from Alteo s existing sugar cane operations in these countries. 16.3% Bagasse 1.0% Photovoltaic 0.6% 0.6% Wind Landfill gas 3.3% Hydro Energy sources used in electricity production, 2016 [Source: National Statistics Mauritius]

58 56 Alteo Limited Annual Report 2017 ENERGY STRATEGY The Energy cluster aligns with Alteo s overall strategy of innovation and of further diversification into valueadded by-products. The cluster grew out of our use of bagasse to produce power for Alteo s sugar milling activities. Alteo Energy Ltd s Union Flacq installation was initially set up in 1984 and expanded in Following the consolidation of Alteo s sugar cane milling operations at Union Flacq, and ahead of the termination of the plant s existing Power Purchase Agreement in 2018, we aim to develop a more efficient power plant by The new project will export an estimated 420 GWh of electricity, of which more than 50% will be from renewable energy sources. The plant will be powered by the substantial quantities of biomass available to the Energy cluster, a mix of bagasse and cane trash, and will reduce our coal consumption by 25%. The amount of green energy generated will more than double the existing power plant s output. We have recently invested in equipment in order to collect cane trash from fields and start combustion trials. It is also intended that the new plant will be equipped with state of the art flue gas cleaning equipment which will meet stringent environmental norms. Building on its expertise in this area, the Energy cluster is increasingly specialising in renewable energy and developing biomass to replace fossil fuels. We are exploring wind and solar power projects in each of the countries that we operate in. This will allow us to take advantage of national policies and incentive programmes regarding renewable energy in Mauritius, Kenya and Tanzania. In Tanzania, we are also carrying out trial production and harvesting of woody biomass to power our boilers during the off crop. 392 GWh exported to the grid in Mauritius and Tanzania in financial year 2017

59 Alteo Limited Annual Report PERFORMANCE REVIEW Turnover (Rs 000) EBITDA (Rs 000) Profit after tax (Rs 000) Energy Cluster Alteo Energy Ltd 625, , , ,896 71,686* 109,942 Consolidated Energy Co. Ltd 689, , ,986 57,554 55,777 14,535 Subtotal 1,314,840 1,068, , , , ,477 Consolidation adjustments (112,330) (60,591) Total 1,202,510 1,007, , , , ,477 * Profit after tax for AEL is shown net of consolidation adjustments including the impairment of an investment held in Compagnie Usinière de Mon Loisir Ltée

60 58 Alteo Limited Annual Report 2017 ENERGY AEL s results were negatively impacted by the increase in coal prices on the world market in financial year Production at our Union Flacq power plant reached GWh compared to GWh in the previous year. This increase in production was due to higher demand from the sugar refinery. Exports to the grid were 1.5% lower. The availability of the plant was 99.2% on average, slightly higher than in the previous year. The ratio of KWh produced per tonne bagasse or coal was at par with last year. The strong growth in turnover and profit after tax for CEL is due to its greater energy generation and the higher tariffs it received compared to last year. Production reached GWh this year, 25% higher than the previous year, due to a lower number of maintenance days. The availability of the plant was 98.1%, slightly lower than last year s availability, due to some minor downtimes. The ratio of KWh produced per tonne of coal was also affected by the lower efficiency of the turbine and stood at 1,490 compared to 1,510 last year. In Beau-Champ, our coal power plant is due to cease its activities in December 2018, following the expiration of its Power Purchase Agreement (PPA). Alteo will continue to work closely with the CEB in order to develop our solar photovoltaic project, Helios Beau-Champ, along with our partner Quadran, a leading French green energy provider. Construction is due to begin in early 2017/18, subject to the release of all the relevant permits. We will continue to improve the efficiency of our Kenyan and Tanzanian co-generation plants. The intention is to eventually be able to export more energy to the grid, using cane trash and other locally produced biomass as fuel. We are also closely monitoring the creation of a regulatory framework for solar projects in Tanzania. Our objective is to be well-placed to respond to a tender for such a project in the foreseeable future. TPC s energy operations generated a turnover of Rs 66m for financial year 2017 against a turnover of Rs 67m for the previous year. This is treated as a marginal contribution to the costs of TPC s sugar operations and hence is aggregated within TPC s results. OUTLOOK The prospects for the next financial year are positive overall. The cluster should benefit from an increased contribution from Alteo Energy Ltd, following an anticipated favourable tariff adjustment through the indexation mechanism. Negotiations with the authorities with regard to the new power plant at Union Flacq were ongoing at the time of writing. The terms of the new Power Purchase Agreement are expected to be finalised in the first quarter of next year. We also expect a Government decision regarding a national biomass framework, which will clarify the biomass remuneration structure and incentivise biomass production.

61 Alteo Limited Annual Report RISKS AND MITIGATING ACTIONS Risk Actions taken / Link to strategy Mechanical issues resulting in downtime -- Preventive maintenance -- Investment in a new, more efficient power plant Price of inputs -- Increase usage of bagasse, cane trash and other biomass instead of coal -- Increase renewable energy sources including solar and wind Renewal of power purchase agreements with national utility companies -- Working closely with national utility companies to develop projects that align with each country s energy policy -- Responding to tenders in partnership with international energy industry leaders Lower availability of bagasse and cane trash -- Work in collaboration with relevant authorities to establish biomass framework to incentivise biomass production -- Diversification into other types of renewals including solar and wind Air emissions and sustainability of coal-based production -- Install flue gas treatment as part of new projects which will meet stringent environmental norms -- Environmental monitoring reports submitted to national regulator -- Increasing use of bagasse, cane trash and woody biomass as alternative fuels -- Diversification into other renewals including solar and wind

62 PROPERTY CLUSTER

63

64 62 Alteo Limited Annual Report 2017 PROPERTY Moka Anahita Material companies (Mauritius) Alteo Properties Ltd Anahita Estates Limited Anahita Golf Ltd Anahita Residences and Villas Limited 213 hectares of freehold land (Anahita) OVERVIEW OF ACTIVITIES Alteo s Property cluster consists of four businesses active mainly in the luxury real estate and hospitality sectors in Mauritius: Anahita Estates Limited (AEL): Promotes, markets and sells villas, apartments and serviced land within the Anahita Integrated Resort Scheme (IRS) on the east coast of Mauritius; Anahita Residences and Villas Limited (ARVL): Operates Anahita Golf & Spa Resort and offers property management services to Anahita homeowners; Anahita Golf Ltd (AGL): Owns the 18-hole championship golf course, pro-shop and golf club house located at Anahita, managed by Four Seasons; and Alteo Properties Ltd (APL): Develops the Property cluster s strategy and masterplans, including Anahita and other land projects of Alteo. Over the past five years, the Property cluster has successfully positioned Anahita as one of Mauritius best-known and most highly-regarded IRS developments. AEL has sold approximately 70 % of its available units as off-plan villas and as plots of serviced land. 40% of sales in the recent years have been to existing homeowners or their acquaintances, indicating a high level of client satisfaction. In addition to Anahita, the Property cluster is also working on developing Alteo s 227-hectare Beau Rivage estate, as well as residential projects at Piton, Trou d Eau Douce, Providence, Bel Air and Bonne Mère.

65 Alteo Limited Annual Report MARKET ANALYSIS / OPERATING CONTEXT In Mauritius, competition has rapidly increased in the luxury real estate segment this year in a context of political and economic uncertainty in some key markets, particularly France and the UK. 35 Property Development Schemes (PDS), whose units can be purchased by foreigners, were approved in 2016/17. 8 Smart Cities have also been approved for development, which will lead to the construction of a significant amount of housing aimed at foreign investors. These recent developments have made it more challenging to sell properties in the luxury segment. In the tourism segment, tourist arrivals grew by 10.8% in 2016 and by 6.7% in the first semester of 2017, positioning the industry as among the fastest growing in Mauritius. Improved air links between Mauritius and new tourist markets in Turkey and Asia are also shoring up the tourism sector s performance, despite the loss of the AirAsia link to Kuala Lumpur in March However, the hospitality sector in Mauritius continues to be fiercely competitive, putting downward pressure on room prices, while average spend per tourist remains relatively low. Golf tourism has seen steady growth in Mauritius over the past 10 years. However, competition is increasing: nine 18-hole golf courses are currently in operation on the island with another two in the pipeline. STRATEGY In keeping with Alteo s group-wide strategy, the Property cluster aims to add long-term value to its assets to guarantee its sustainability and profitability. Its assets consist of substantial land holdings along the east coast of Mauritius. Real estate development, marketing and sales In light of the growing number of luxury real estate projects in Mauritius, APL has chosen to focus on quality and long-term development. As one of the only IRS projects on freehold land along the coast, Anahita remains among Mauritius most prestigious and exclusive IRS estates, set apart by its careful planning, exacting building specifications that take client needs into account, and attractive hospitality and project management services. The objective is to sell the remaining Anahita units within the next five years while maintaining current levels of client satisfaction and safeguarding the estate s harmony and standing. This year, we reinforced Anahita s hospitality offer with new restaurants, a spa and other amenities and strengthened the services we offer to homeowners, to make the estate more attractive to investors and holidaymakers alike. Hospitality and golf Within the cluster s hospitality activities, the aim is to develop a world-class resort that provides property management services to Anahita homeowners and outstanding, memorable holidays to those visiting the Resort.

66 64 Alteo Limited Annual Report 2017 PROPERTY Our golf course is a key selling point and we will continue to promote it to Anahita homeowners and visitors. We will also seek to attract local golfers and players from other hotels in the country, including by organising regular international golf competitions such as the increasingly high-profile AfrAsia Bank Mauritius Open. Strategic masterplan In addition to the masterplan being developed for Alteo s Beau Rivage estate, the Property cluster intends to develop a strategic masterplan to derive value from all its real estate assets along the east coast. The aim is to guide the Group s sustainable development of the region. The strategic masterplan will link existing developments at Anahita and our Beau Rivage estate with new residential, commercial and industrial projects, taking into account local needs and the land required for the Group s agricultural activities. It will also integrate the Government s planned road infrastructure upgrading projects in the east of Mauritius. This is a long-term strategy that is focused on meeting the needs of the local Mauritian market. Alteo intends to preserve the pristine nature of the east coast while improving its inhabitants quality of life.

67 Alteo Limited Annual Report kilometres of coastline (Anahita) 225units sold out of 320units (Anahita) Turnover (Rs 000) PERFORMANCE REVIEW Overall, the Property cluster had a challenging 2016/17 financial year. Turnover and profitability were both lower than for the previous year. EBITDA (Rs 000) Profit after tax (Rs 000) Property Cluster Anahita Estates Limited 369, ,965 (35,803) 11,351 (82,676) (28,259) Anahita Golf Ltd 115, ,839 13,501 (1,890) (12,940) (27,097) Alteo Properties Ltd 74,036 72,369 (13,013) (11,263) (14,207) (11,876) Share of results of ARVL (16,986) (8,299) Others , Subtotal 559,611 1,102,174 (35,315) (1,802) (118,405) (75,530) Consolidation adjustments (34,257) (135,817) Total 525, ,357 (35,315) (1,802) (118,405) (75,530)

68 66 Alteo Limited Annual Report 2017 PROPERTY Real estate development, marketing and sales The cluster s results were affected by the limited inventory available for sale following the completion of the southern and central phases of Anahita, and with the delivery of most of our Amalthea residences by January We therefore recorded lower turnover in the last two quarters of the financial year compared to the same period last year. Following the launch of Anahita s high-end Northern phase during the previous financial year, we secured the first reservations with deposits of villas and serviced plots of land and reached break-even point for the development in February Infrastructure works on the Northern parcels therefore began in March To date, of the 53 units available, 4 have been sold and 22 have been reserved with a deposit. The turnover linked to these sales will be recognised in the next financial years as follows: a) gradually as villa construction progresses and b) upon signature of sales deeds after completion of infrastructure works for serviced plots of land. Hospitality and golf Our Property cluster s profitability was affected by the closure for refurbishment and extension of Anahita Golf & Spa Resort and the construction of a new spa during the first quarter of the financial year. We also received fewer referrals from tourist operators due to ongoing construction work on our Amalthea residences within Anahita. As of December 2016, the resort inventory increased by 24 suites. We received positive feedback on this new category of rental units within Anahita in the final quarters of the year. The performance of our golf also improved relative to 2015/16. This was the result of an increased number of rounds and of cost-containment measures implemented by Management. A new Director of Golf joined the business in November 2016 and brought new impetus to its operations. OUTLOOK The outlook for 2017/18 is positive overall. Real estate development, marketing and sales The rate of sales and reservations with deposit for Anahita s northern parcels is encouraging. The development and early first sales of these units will be accounted for in 2017/18 and should lead to an increase in the cluster s revenue, positively impacting results. We are currently marketing the northern parcels to targeted segments of our key markets and are confident that this will help us achieve our sales targets for the year. Hospitality and golf Our hospitality segment s results are expected to improve in 2017/18. This is due to the recent increase in inventory, the refurbishment of the restaurants and the opening of Anahita s new spa. Our golf business will continue its development under the leadership of its new Director. We are confident that the notoriety of the golf events organised in the past few years and the increasing number of Anahita homeowners and resort s clients will allow the golf to put in a stronger performance in the coming years. We will also take part in the Golf Coast initiative, which seeks to market all of the golf courses on the east coast together. Other projects Finally, a master planner is currently being recruited to guide the Group s development strategy. Over the next few years, we intend to finalise our strategic masterplan for the east coast and begin to develop portions of land earmarked for non-agricultural purposes. We are confident that this will support Alteo s sustainability and profitability as a Group in the long term.

69 Alteo Limited Annual Report RISKS AND MITIGATING ACTIONS Risk Fierce competition for real estate sales in the IRS/ RES/ PDS luxury segments Actions taken / Link to strategy -- Long-term vision for Anahita: Emphasis on quality and unique offer -- Focus on quality of construction and work with the most professional teams -- Roadshows, marketing campaigns and event sponsorship to promote Anahita in new client markets -- Special attention paid to Anahita homeowners Indebtedness level: cash-flow management -- Strict operational cost containment measures implemented -- Robust monitoring of cash flow -- Focus on reducing debt levels in the short term Macroeconomic volatility and uncertainty in certain key markets (e.g. UK with Brexit) Foreign exchange risk affecting the competitiveness of Mauritius as a destination -- Market diversification into different (non-irs/res) types of real estate products -- Market positioning in the high end segment with a focus on quality as opposed to price competitiveness -- Foreign exchange hedging to mitigate the direct financial impact of currency fluctuations Air connectivity -- Ongoing communication with the relevant authorities through the Association des Hôteliers et Restaurateurs de l Ile Maurice (AHRIM) regarding air access and tourism policies Increasing competition from sharing economy business models such as Air BnB and holiday property rental sector in Mauritius -- Ongoing investment in services and experiences to remain as attractive and competitive as possible, e.g. opening of new spa and restaurant and refurbishment of existing F&B facilities -- Restructuring of the sales and marketing department and review of the strategy to maximise direct sales and use of digital technology

70 SUSTAINABILITY DIVID REPORT SUSTAIN REP

71 ER ABILITY ORT

72 70 Alteo Limited Annual Report 2017 SUSTAINABILITY: A KEY PART OF ALTEO S STRATEGY At Alteo, we recognise that our business can only continue to develop and flourish if its growth is sustainable. Sustainability is not only the ethical thing to do it is a crucial strategic imperative. By compelling us to improve our approach to work, it also drives innovation and efficiency, contributes to our bottom line and improves outcomes for all of our stakeholders. Alteo s approach to sustainability is a holistic one. We aim to place sustainability considerations at the heart of our strategy and of our vision, mission and values. We make each of our business decisions in the aim of maintaining our Group s ability to create value in the long term, while avoiding growth that would deplete natural resources or harm our stakeholders (employees, partners and clients, as well as the communities in which we operate). SUSTAINABILITY AT THE HEART OF ALTEO S MISSION, VISION AND VALUES Alteo s values Respect, Integrity, Spirit of Entrepreneurship and Excellence (RISE) reflect our desire to build long-term, trust-based relationships with all of our stakeholders. We believe that these relationships are integral to our ability to deliver on our mission to responsibly create value through people development, strategic partnerships, innovative thinking, market focus and operational excellence; and our vision to become a sustainable regional leader in the sugarcane industry, renewable energy and property.

73 Alteo Limited Annual Report Alteo defines sustainability as follows: Financial and business sustainability: Continuously improving our financial performance to ensure our businesses ongoing ability to create wealth; People (HR): Ensuring our people s continued ability to develop in their roles and within the organisation; Safety, Health and wellness: Guaranteeing our people s wellness and wellbeing at work; Governance: Continuously monitoring and ensuring compliance with good governance, ethics and transparency policies as well as assessing the social and environmental impact of our activities; Environmental sustainability: Protecting natural resources by developing more environmentally friendly products (including renewable forms of energy) and minimising our use of natural resources (including water) and artificial inputs; Social impact and community engagement: Positively affecting each of our stakeholders and creating trust while taking into consideration the wellbeing and wellness of the communities in which we operate; and Intellectual capital and systems: Ensuring the continued competitiveness of our businesses by keeping our IT systems and use of technology cutting-edge. 1. PEOPLE (HR) Mauritius * Kenya Tanzania Number of employees 1,991 1,113 3,028 Number of men 1,876 (94%) 1,040 (93%) 2,262 (75%) Number of women 115 (6%) 73 (7%) 766 (25%) Number of new recruits 153 (8%) 162 (15%) 334 (11%) Number of leavers 307 (15%) 103 (9%) 336 (11%) Years of service (most employees) > 20 years = 60% (1,192) 1-5 years = 72% (802) > 20 years = 53% (989) * Excluding Anahita Residences and Villas Limited and Anahita Golf Ltd. Our approach Alteo strongly believes that its people are core to its ability to deliver on its strategy and to the Group s long-term sustainability. We are committed to attracting, developing and retaining capable, engaged and productive employees while ensuring their work environment is safe and healthy. Alteo aims to: Engage and motivate its employees by seeking feedback and ideas from them and ensuring the conditions in which they can innovate, receive coaching and work autonomously are adequately provided; Enable its people by becoming a learning organisation, offering routes for development (including tailored programmes) and focusing on the mandatory and functionalised training required within the Group;

74 72 Alteo Limited Annual Report 2017 SUSTAINABILITY: A KEY PART OF ALTEO S STRATEGY PERCENTAGE OF MALE VS FEMALE EMPLOYEES 6% Women employed in Mauritius 94% Men employed in Mauritius 25% Women employed in Tanzania 75% Men employed in Tanzania 7% Women employed in Kenya 93% Men employed in Kenya EMPLOYEES BY COUNTRY PERCENTAGE OF NEW RECRUITS 49% 33% 8% Mauritius 92% 15% Kenya 85% 18% 11% Tanzania 89% Mauritius Kenya Tanzania

75 Alteo Limited Annual Report Continue to focus on attracting, growing and retaining the right talent by: Capitalising on the Alteo brand and what it represents today to attract the talent that we need to develop sustainably; Recognising individuals and team contribution; Creating career paths and succession plans; Considering greater flexibility in the workplace and improving the work/life balance of employees; and Measuring and rewarding performance based on objectives and behaviours anchored in a performance management system. In 2016/17, Alteo introduced a number of new initiatives, including: Leadership Development Centres (LDC) to build greater leadership skills and identify development areas for Alteo s senior managers (two centres per year, involving individual assessments, onthe-job coaching sessions and group projects to drive the potential and visibility of each participant); A Training Needs Analysis (TNA) in Mauritian agricultural and industrial operations. The aim is to identify the skillsets that we need to develop in order to deliver on our strategy; A Sicorax Performance Management System, currently at pilot stage, that has been rolled out to all Alteo employees and management team members in Mauritius in a pilot year; and A pilot coaching programme rolled out to the executive team and senior managers to support their personal development needs within the Group. In 2017/18, we are also committing to: An Accelerated Leadership Programme (ALP) pilot, which will aim to create a pool of future Alteo managers with more readiness to take on work challenges; A new e-learning platform offering bite-sized digital learning to our employees; A Job Evaluation project to support a new grading structure; A recognition scheme linked to the Group s values; and Group HR and payroll system enhancements. Connecting with employees This year, Alteo rolled out the Group s vision, mission and values across our Mauritian operations. In 2017/18, Alteo will roll out the Group s Code of Ethics and Business Conduct and all related policies and procedures to its employees in Mauritius and regionally via a series of roadshows. As reported last year, the Group has invested in the development of platforms to better communicate with our employees, including a new Group intranet. This year, this tool was designed and rolled out based on feedback from our employees. It now provides employees with information regarding policies and procedures, company news and departmental reference documents as well as the contact details of every employee. 2. SAFETY, HEALTH AND WELLNESS Our approach Alteo is deeply committed to providing a healthy, safe and secure working environment to all of our employees. We believe we have a duty of care towards our people. Our ambition is to become an employer of choice, recognised both by prospective employees and within the industry for our unfailing drive to improve health and safety in our industry.

76 74 Alteo Limited Annual Report 2017 SUSTAINABILITY: A KEY PART OF ALTEO S STRATEGY Safety & Health Number of employees Categories Mauritius Kenya Tanzania Fatalities Serious injuries Significant injuries Minor injuries Alteo is committed to improving our safety and health procedures and keeping them up to date with applicable regulations. The Group has been working on implementing a Group Safety & Health policy with support from the Safety & Health Officers based in Mauritius. Our operations in Tanzania and Kenya will also contribute to this initiative. This year, in Mauritius, Alteo commissioned a Safety & Health Audit from the National Occupational Safety Association (NOSA) of South Africa. The results from the audit will be taken into consideration with regard to the Group Safety & Health Policy. The Group also: Purchased smaller trailers and larger, more powerful tractors in TSCL to improve safety and stability when it comes to its cane haulage system; Invested in defensive driving training for tractor drivers at TSCL; Improved TPC s on-site hospital equipment, infrastructure and IT systems; Conducted various Occupational Safety & Health Training and awareness sessions to empower personnel and reduce the risk of incidents; Worked with the Mauritian police to provide employees with road safety awareness training; Organised a Safety & Health Week at Union Flacq to commemorate the World Day for Safety & Health; and Conducted a vaccination campaign in response to the outbreak of the AH1N1, H3N2 flu in collaboration with the Mauritian Ministry of Health & Quality of Life. Wellness In the medium-term, the Group aims to continue to take preventative measures including: Reviewing our fire prevention and firefighting equipment as well as personal protective equipment (PPE) for our employees; Continuing to focus on road safety awareness for our employees and in our communities; Revisiting the no smoking policy and its application in all of Alteo s workplaces; Providing facilities such as access to ambulances and health insurance for our employees; Reviewing our Health Surveillance Programme and considering which medical tests should be provided; Developing wellbeing activities including nature walks, runs and cycling; and Undertaking regular workplace ergonomic assessments. 3. GOVERNANCE Alteo believes that robust governance is crucial to the Group s ongoing ability to create value for our shareholders and build stakeholder trust. Our governance arrangements ensure that Alteo s

77 Alteo Limited Annual Report decision-making and managerial processes adhere to ethical and regulatory frameworks and provide transparency. This also allows us to monitor the impact of our activities on society and the environment. Our governance arrangements are detailed in full in the Corporate Governance section of this report. This year, Alteo invested substantial time and effort in rolling out its new vision, mission and values. These were established following a thorough internal alignment exercise and based on feedback from Alteo s employees, clients and partners. The resulting values are being presented to all Group employees and we are in the process of embedding them into the Group s way of working. Alteo also defined a new Code of Ethics and Business Conduct built upon this vision, mission and values, as well as upon a legal framework endorsed by the Mauritius Institute of Directors (MIoD). The Code sets out the Group s values and principles as well as the standards that Alteo expects from its people and commits to with its partners and clients when doing business. It is now being finalised and will be communicated to all Alteo employees by the end of ENVIRONMENT This approach is both reflected in and supported by Alteo s strategy to improve operational efficiency, in part by minimising our use of energy, water and other inputs, and by controlling outputs and effluents. As reported last year, we are currently investing in a data collection and analysis system. This will allow us to collate environmental indicators to better assess and report on our impact across our businesses. It will also allow us to put a more robust environmental management strategy into place. Water Management Alteo s operations derive most of their water for agricultural and industrial purposes directly from riparian water rights in Mauritius, Tanzania and Kenya. Much of the land we operate on is located along rivers. Water is also indirectly sourced from the public distribution system. Water usage is directly linked to the climatic zones in which we operate, and monitoring water usage allow us to asses the efficient use of irrigation systems and waters. Alteo recognises that access to a reliable water supply is critical to its business operations and at the same time is sensitive to water scarcity. To that end, the Group is continuously improving its water management plan. Our approach Alteo is committed to continually assessing and mitigating the impact of its operations on the environment and communities in the areas in which it operates. Across the Group, our environmental sustainability strategy consists of: Managing our energy usage across each of our clusters, notably by positioning ourselves as a key player in the renewable energy sector, using renewables such as bagasse and cane trash to power our factories; Minimising our use of water; Minimising our use of inputs (process chemicals and pesticides, herbicides and fertilisers); and Controlling our wastewater, waste and emissions.

78 76 Alteo Limited Annual Report 2017 SUSTAINABILITY: A KEY PART OF ALTEO S STRATEGY Water consumption River abstraction in m 3 Sugar Mauritius 8,432,323 7,416,090 Sugar Tanzania 126,360, ,626,530 Sugar Kenya 186, ,170 Energy - Mauritius 2,533,260 1,356,270 Total river abstraction in m 3 137,511, ,583,060 Boreholes in m 3 Sugar - Tanzania 36,742,734 38,552,054 Total boreholes in m 3 36,742,734 38,552,054 Public distribution in m 3 Sugar - Mauritius 3,884 5,299 Energy - Mauritius 9,179 6,180 Property - Mauritius 115, ,825 Total public distribution in m 3 128, ,304 Re-used wastewater in m 3 Sugar Tanzania 700,000 n/a Sugar Kenya 7,641 n/a Energy - Mauritius 4,049,420 n/a Total Re-used wastewater in m 3 4,757,061 n/a Energy Management Alteo is committed to recording the sources of the energy used and produced by its operations in the aim of reducing the Group s energy consumption. Alteo produces and uses renewable energy during the crop season in Mauritius, Tanzania and Kenya to reduce its dependency as far as possible on fossil fuels. The Group is continuing to pursue its journey towards renewable energy production as part of its commitment to build climate resilience and to derive revenue from exports of electricity to the national grid. Chemical Input Management In line with our vision of promoting sustainable operations, the Group began to collect data about its use of input materials in 2015/16. The input materials used by the Group are relevant to the extent that they affect biogeochemical cycles. Measuring our use of these inputs allows us to assess how effectively we are using these raw materials.

79 Alteo Limited Annual Report Energy consumed and produced (in GWh) Mauritius Tanzania Kenya Energy Consumed Energy Produced Waste and Emission Management Wastewater Management Alteo is currently reviewing the Group s wastewater management strategy in order to maintain high water quality standards for treated water. Grey water can be used for both irrigation and a number of other applications and will help reduce the pressure on water resources. In the short term, the different clusters are due to install water meters to record water consumption and wastewater emitted and treated, and to monitor the Group s water footprint with greater accuracy and precision. The Group s industrial site in Mauritius is equipped with a wastewater treatment plant. Wastewater monitoring is undertaken at this site. Anahita is also equipped with a state-of-the-art wastewater treatment plant, with treated water re-used to irrigate the estate s gardens and golf course. While our industrial sites in Tanzania and Kenya are not equipped with wastewater treatment plants, decantation and sedimentation ponds are used prior to water being discharged into natural waterways. Waste Management Most of the by-products of our Sugar cluster s production are re-used as follows: Bagasse is a renewable source of energy and is used for renewable energy production; Molasses are exported to produce alcohol and renewable fertilisers or processed into animal feed; Filter mud is re-injected into the fields and is a valuable source of nutrients for both the soil and the sugarcane; Cane trash is used for pest control and weed control and can be a potential source of renewable energy; and The bottom ashes resulting from bagasse burning are applied to fields as a nutrient supplement. Air emissions The primary air pollutants emanating from the Group s industrial sites are constantly controlled and monitored. They are in compliance with the environmental regulations and norms applicable in each of the countries in which the Group operates.

80 78 Alteo Limited Annual Report 2017 SUSTAINABILITY: A KEY PART OF ALTEO S STRATEGY 5. COMMUNITY ENGAGEMENT Our approach At Alteo, we believe we are responsible for supporting and giving back to the communities living in our areas of operation. Our continued growth depends in part upon building trust-based relationships and goodwill with our stakeholders. Our community engagement and CSR activities are both core to our corporate social responsibility approach and a reflection of our Group values. Our Alteo s CSR activities are delivered via a network of CSR operations in Mauritius, Kenya and Tanzania: CSR activities in Mauritius focusing on education, health, environment, sports, arts and culture; Anahita Centre for Excellence (ACE), a social fund for investing in socio-economic development projects in the vicinity of Anahita; Tanzanian NGO FTK Kilimanjaro, which we cofund and whose mission is to implement socioenvironmental projects in the region of Lower- Moshi; CSR activities in Kenya and active engagement with local out-growers, contributing to the wellbeing, health and sustainability of local communities in the vicinity of Transmara. CSR Mauritius and ACE In 2016/17, total funding allocated via Alteo s CSR budget and Anahita Centre for Excellence amounted to Rs 6,000,000 and Rs 5,788,292 respectively. Alteo invested in activities in the priority areas defined by the Group: Sports; Health, with a special focus on supporting people with disabilities; Education and employability; and Environment. The key projects this year were: The funding of Fondation Ciel Nouveau Regard and Fondation Joseph Lagesse, Ciel and IBL s Special Purpose Vehicles to implement socioenvironmental projects throughout the island;

81 Alteo Limited Annual Report Lakaz Lespwar Olivia, an NGO managed by Caritas Mauritius, which offers continuous support to children and adults from vulnerable families in the region of Olivia to help them emerge from poverty and integrate socially; Faucon Flacq Sports Club, a regional sports club in the region of Flacq; and Contributions to a number of local NGOs active in the promotion of education among vulnerable groups. Tanzania Alteo s community engagement activities in Tanzania are driven by NGO FT Kilimanjaro (FTK). FTK is a joint initiative between the Dutch FEMI Foundation and TPC Ltd. FTK works mainly for communities based near the TPC estate and in the surrounding villages, namely Mtakuja, Mikocheni, Chemchem, Londoto and the Lower Moshi region. FTK works on the principle of community-based adaptation and engagement. It manages projects only until the community and local authorities have acquired the skills and techniques to take over and sustain the initiatives. The NGO s key objectives are to: Improve quality and access to education; Improve quality and access to health care services; Increase earned income by local communities; and Improve basic infrastructure (e.g. roads, water, electricity, housing). FTK s total expenses in Tanzania for the year were Tsh 1,473,750,000 (equivalent to approximately Eur 647,000). Total programme expenses were Tsh 1,290,360,000 (equivalent to approximately Eur 566,000). are held in each cane supply area, during which issues pertaining to the wellbeing and good functioning of the villages are discussed. TSCL is also active within the local community and has contributed to several projects such as road infrastructure upgrading, water supply initiatives, health infrastructure funding and access to education. 6. INTELLECTUAL CAPITAL AND SYSTEMS Our approach Alteo believes that investing in its intellectual capital and internal systems is a key part of its sustainability approach. Maintaining robust internal systems and embracing new technology allows us to maintain our competitive edge, effectively control costs, improve the Group s security, efficiently share information, report more transparently and improve accountability. The Group has invested heavily in internal controls and systems to improve the efficiency and performance of its operations, create and enforce Group-wide policies, and create robust internal processes and standards. As a result, the Group is well-placed to continue its growth in the future. Areas in which our performance has improved following investment in internal systems and processes include: Cane cultivation; Accounting and finance; Human resources; Communications; and Sales and marketing. Kenya TSCL has developed an extensive CSR policy and is actively engaged with local growers through a number of initiatives. Regular barazas, or public meetings,

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84 82 Alteo Limited Annual Report 2017 STATEMENT OF COMPLIANCE (SECTION 75(3) OF THE FINANCIAL REPORTING ACT 2004) Name of Public Interest Entity: ALTEO LIMITED Reporting Period: 01 July 2016 to 30 June 2017 We, the Directors of Alteo Limited, confirm that, to the best of our knowledge, Alteo Limited has complied with all its obligations and requirements under the Code of Corporate Governance ( the Code ) in all material aspects, except for Section (Remuneration of Directors) of the Code where the remuneration paid to each Director on an individual basis has not been disclosed due to the market sensitivity of the information. Patrick de L. d Arifat Director Jean de Fondaumière Director September 20, 2017

85 Alteo Limited Annual Report CERTIFICATE OF COMPANY SECRETARY In my capacity as Company Secretary of Alteo Limited (the Company ), I hereby confirm that, to the best of my knowledge and belief, the Company has filed with the Registrar of Companies, for the financial year ended June 30, 2017, all such returns as are required for a company under the Companies Act Kate M. Li Kwong Wing Company Secretary September 20, 2017

86 84 Alteo Limited Annual Report 2017 CORPORATE GOVERNANCE REPORT 1. GOVERNANCE STRUCTURE The governance of Alteo ( Alteo or the Company ) is principally guided by the provisions of the Mauritius Companies Act 2001 and the Mauritius National Code of Corporate Governance (the Code ). As a public company whereby its shares are listed on the Official List of the Stock Exchange of Mauritius Limited (the SEM ), Alteo is also governed by the Listing Rules of the Stock Exchange of Mauritius. The Board of Directors of Alteo (the Board ) has taken cognisance of the new National Code of Corporate Governance which has been published in July 2016, and commits itself to apply the guidelines therein, as far as practicable, as from the reporting year ending 30 th June The Board of Directors is aware of its responsibility to maintain a high standard of corporate governance to ensure protection and transparency of the interests of Alteo s shareholders and all its stakeholders at large and of its role to provide entrepreneurial leadership to the Company and the Group within a framework of prudent and effective controls which enables risk to be assessed and managed. As such, the Board has set up an Audit & Risk Committee and a Corporate Governance, Nomination, Remuneration & Ethics Committee to assist the Board to fulfil its obligations in that respect. The Board also recognises the need to adapt and improve the principles and practices in light of their experience, regulatory requirements and investor expectations. 2. BOARD OF DIRECTORS BOARD COMPOSITION Alteo is headed by a highly skilled Board, which is collectively accountable for the success of the Company and for the overall corporate governance of the Group. Alteo is managed by a unitary Board of 11 members, which is composed of 2 Independent Non-Executive Directors (as defined in the Code), 2 Executive Directors and 7 Non-Executive Directors. DIRECTORS PROFILES The profiles of all the current Directors of Alteo together with the list of their directorships in other listed companies are provided on pages 18 to 21. Directors are elected by the shareholders at the annual general meeting and are up for election every year. The composition of the Board is reviewed by the Corporate Governance, Nomination, Remuneration & Ethics Committee, in its role as Nomination Committee, to ensure that the Board has the appropriate combination of expertise and experience, and collectively possesses the necessary core competencies for effective functioning and informed decision-making. The said Committee is also responsible for identifying and recommending potential Directors to the Board. ROLE AND FUNCTION OF THE BOARD The key functions of the Board include inter alia: providing direction for the Group; assuming responsibility for leading and controlling the Company and meeting all legal and regulatory requirements; monitoring the effectiveness of the Group s governance practices and making changes as needed; overseeing the conduct of the Company s business, to evaluate whether the business is being properly managed at all levels; reviewing and, where appropriate, approving risk policy, financial statements, annual budgets, business plans and Committees reports;

87 Alteo Limited Annual Report overseeing major capital expenditure, acquisitions and divestments; ensuring the precision and integrity of the Company s accounting and financial reporting systems, including the independent audit; overseeing the process of disclosure and communication; selecting, compensating and monitoring key executives and overseeing management succession planning; and ensuring that the appropriate systems of control are in place to prevent any malpractices. ACCESS TO INFORMATION & ADVICE AND DIRECTOR INDUCTION In performing their functions, the Board members have unrestricted access to the records of the Company. They also have the right to seek independent professional advice at the expense of the Company to enable them to discharge their responsibilities at their utmost abilities. On appointment to the Board and any Committees, Directors receive a complete induction pack and are invited to meet members of the management team in order to rapidly acquire a comprehensive view of the Company s current operations practices, acceptable risks level and medium and long term strategy. Furthermore, the Board considers that its members should be continuously developing themselves. To this effect, the Board believes that its members should not be prohibited from serving on boards of other organisations provided that each Director has a duty to act in the best interests of the Company and is expected to ensure that his other responsibilities do not impinge on his responsibilities as a Director of Alteo. The Board also acknowledges the requirement to ensure that all Non-Executive Directors are fully aware of the annual workload to be committed to Alteo. As a consequence, an estimate of the amount of work which shall be dedicated annually to the Company is communicated to each newly appointed Non-Executive Director to the Board of Alteo. The Directors of Alteo hereby confirm that they are aware of their legal duties and that they perform their responsibilities, duties and powers to the extent permitted by law. CHAIRMAN AND CHIEF EXECUTIVE OFFICER During the year under review, the duties and responsibilities of the Non-Executive Chairman and Chief Executive Officer ( CEO ) have been kept separate to ensure proper balance of power, increased accountability and greater capacity of the Board for independent decision-making. The positions of Non-Executive Chairman and Chief Executive Officer are held by Mr P. Arnaud Dalais and Mr Patrick de L. d Arifat respectively. BOARD MEETINGS The Board of Directors of Alteo generally meets once every quarter and at any additional times as the Group s business requires. A quorum of 7 Directors is currently required for a Board meeting of Alteo and in case of equality of votes, the Chairman does not have a casting vote. A Director of Alteo who has declared his interest shall not vote on any matter relating to the transaction or proposed transaction in which he is interested, and shall not be counted in the quorum present for the purpose of that decision.

88 86 Alteo Limited Annual Report 2017 CORPORATE GOVERNANCE REPORT During the financial year ended June 30, 2017, the Board met 4 times with an attendance rate of 93%. The particulars of attendance at the Board meetings are given on page 90. Some decisions have also been taken by way of resolutions in writing, agreed and signed by all the Directors then entitled to receive notice of the meeting. Some of the main considerations and decisions of the Board throughout the year under review, were as follows: the reports and the recommendations of the Audit & Risk Committee and of the Corporate Governance, Nomination, Remuneration & Ethics Committee; the annual financial statements at June 30, 2016 and the relevant abridged audited consolidated results for publication; the Annual Report 2016; the convening of the Shareholders Annual Meeting 2016; the unaudited quarterly & three months consolidated results at September 30, 2016 for publication; the review of the operations; considered a proposed restructuring of Alteo Limited; the opportunity of raising funds through further issuance of Notes; the declaration and payment of an interim dividend for the year ended June 30, 2017; the unaudited quarterly & half-yearly consolidated results at December 31, 2016 for publication; the unaudited quarterly & nine months consolidated results at March 31, 2017 for publication; the declaration and payment of a final dividend for the year ended June 30, 2017; and the operating and capital expenditure budgets for 2017/2018. The minutes of the proceedings of each Board meeting are recorded by the Company Secretary and are entered in the Minutes Book of the Company. The minutes of each Board Meeting are submitted for confirmation at its next meeting and these are then signed by the Chairman and the Company Secretary. 3. BOARD COMMITTEES In line with the Code, and in order to facilitate effective management, the Board has set two committees, namely: (i) an Audit & Risk Committee and (ii) a Corporate Governance, Nomination, Remuneration & Ethics Committee. These Committees operate within defined terms of reference (as approved by the Board), and independently to the Board. The Chairmen of the above mentioned Board Committees report on the proceedings of the Committees at each Board meeting of the Company and the Committees regularly recommend actions to the Board. The Board Committees are authorised to obtain, at the Company s expense, professional advice both within and outside the Company in order for them to perform their duties.

89 Alteo Limited Annual Report The key responsibilities of Alteo s Committees and composition are as follows: Audit & Risk Committee Core responsibilities -- monitoring of the integrity of the financial statements of the Company and the Group and any formal announcements relating to the Company s financial performance, before submission to the Board; -- recommendation to the Board of the condensed unaudited quarterly financial statements; -- review of the effectiveness of the Company s internal control and risk management systems; -- monitoring and review of the effectiveness of the Company s internal audit function; -- approval of the appointment and/or termination of the internal auditors; -- monitoring and supervision of the effective function of the internal audit; -- monitoring of the objectivity and independence of the external auditors; -- recommendation to the Board on the appointment, re-appointment, removal of the external auditors and their fees; and -- reviewing of the external auditors management letter; and conduct of investigations into any matters within its scope of responsibilities. Corporate Governance, Nomination, Remuneration & Ethics Committee -- making recommendations to the Board on all corporate governance provisions to be adopted so that the Board remains effective and follows prevailing corporate governance principles; -- in its role as Nomination Committee, reviewing the structure, size and composition of the Board, identifying and recommending to the Board possible appointees as Directors, making recommendations to the Board on matters relating to appointment or reappointment of Directors and succession plans for Directors whilst assessing the independence of the Independent Non- Executive Directors; -- in its role as Remuneration Committee, determining and developing the Company s and Group s general policy on executive and senior management remuneration and making recommendations to the Board on all the essential components of remuneration whilst determining the adequate remuneration to be paid to Directors and senior management; and -- in its role as Ethics Committee, helping to define the code of conduct underpinning corporate behaviour applicable to senior management and employees, making recommendations or giving an opinion on initiatives aimed at promoting best practices in this area, and ensuring that the Group s values and rules of good conduct are respected.

90 88 Alteo Limited Annual Report 2017 CORPORATE GOVERNANCE REPORT Members Chairman Audit & Risk Committee 4 members consisting of 2 Independent Non-Executive Directors and 2 Non- Executive Directors namely: -- Jean de Fondaumière -- Jean-Claude Béga -- Amédée Darga -- Jérôme de Chasteauneuf Jean de Fondaumière, Independent Non- Executive Director Corporate Governance, Nomination, Remuneration & Ethics Committee 4 members consisting of 1 Independent Non-Executive Director and 3 Non-Executive Directors namely: -- Jean de Fondaumière -- P. Arnaud Dalais -- Jérôme de Chasteauneuf -- Arnaud Lagesse Jean de Fondaumière, Independent Non- Executive Director Quorum 2 members 2 members Attendees (when deemed appropriate) Patrick de Labauve d Arifat (Chief Executive Officer and Executive Director); Fabien de Marassé Enouf (Chief Finance Executive and Executive Director); Internal auditors (EY); External auditors (BDO & Co) Patrick de Labauve d Arifat (Chief Executive Officer and Executive Director) Fabien de Marassé Enouf (Chief Finance Executive and Executive Director) Number of meetings during the year under review 5 meetings with an attendance rate of 100% 3 meetings with an attendance rate of 83% Main decisions during the year under review -- reviewed and recommended to the Board for approval, the audited financial statements as at June 30, 2016; -- reviewed and recommended to the Board for approval, the unaudited quarterly and three months consolidated results at September 30, 2016 for publication; -- examined the reports of the internal auditors on internal control systems arising from the fieldwork performed by them and ensured that their recommendations be implemented; -- examined the management letter submitted by the external auditors and followed up on their recommendations; -- approved the corporate governance section of the Annual Report 2016; -- recommended to the shareholders the re-election of the other Directors of the Company through separate resolutions; -- reviewed the remuneration and benefits of the Executive Directors and of the key management personnel, after taking into consideration the market norms and practices, their performance and additional responsibilities and the Company s results; -- reviewed the exercise carried out on the Group s Mission, Vision and Values;

91 Alteo Limited Annual Report Main decisions during the year under review (Continued) Audit & Risk Committee -- reviewed and recommended to the Board for approval, the unaudited quarterly & half-yearly consolidated results at December 31, 2016 for publication; -- reviewed the implications of IFRS 9 on Alteo Limited together with the external auditors; -- reviewed a case of fraud at Anahita Residences & Villas Limited; -- reviewed and recommended to the Board for approval, the unaudited quarterly & nine months consolidated results at March 31, 2017 for publication; -- reviewed the issue of the requirement to have a rotation of Auditors as per the change in the Financial Reporting Act; and -- The Committee met on September 13, 2017 to recommend to the Board the approval of the annual financial statements at June 30, 2017 and the relevant abridged audited consolidated results for publication. Corporate Governance, Nomination, Remuneration & Ethics Committee -- reviewed the Board and Board Committees fees for the year ended June 30, 2017; -- reviewed and finalised a Code of Ethics which would be applied by the Company and the Group; and -- reviewed and approved the present corporate governance section.

92 90 Alteo Limited Annual Report 2017 CORPORATE GOVERNANCE REPORT BOARD AND BOARD COMMITTEES ATTENDANCE A Director of Alteo is expected to spend the time and effort necessary to properly discharge his responsibilities. Accordingly, he is expected to regularly prepare for and attend meetings of the Board and all Committees on which he sits, with the understanding that, on occasion, he may be unable to attend a meeting. A Director who is unable to attend a meeting is expected to notify either the Company Secretary or the Chairman of the Board or the Chairman of the appropriate Committee, in advance of such meeting. The attendance record of the Directors for the year ended June 30, 2017 is set out below: Directors Category Board of Directors Audit & Risk Committee Corporate Governance, Nomination, Remuneration & Ethics Committee Annual Meeting of Shareholders (held on December 15, 2016) P. Arnaud Dalais NECB 4 out of 4 2 out of 3 yes Jean-Claude Béga NED 4 out of 4 5 out of 5 yes Jan Boullé NED 3 out of 4 no Jean-Pierre Dalais NED 4 out of 4 yes Amédée Darga INED 4 out of 4 5 out of 5 yes Jérôme De Chasteauneuf NED 4 out of 4 5 out of 5 3 out of 3 no Jean de Fondaumière INED 4 out of 4 5 out of 5 3 out of 3 no Patrick de L. d Arifat ED 4 out of 4 5 out of 5* 3 out of 3* yes Fabien de Marassé Enouf ED 4 out of 4 5 out of 5* yes Arnaud Lagesse NED 2 out of 4 1 out of 3 no Thierry Lagesse NED 4 out of 4 yes * In attendance not a member ED = Executive Director INED = Independent Non-Executive Director NECB = Non-Executive Chairman of the Board NED = Non-Executive Director

93 Alteo Limited Annual Report SENIOR MANAGEMENT The profile of all the current Senior Management team of Alteo are provided in pages 22 to INTERESTS DIRECTORS AND OFFICERS INTERESTS IN SHARES OF ALTEO LIMITED Written records of the interests of the Directors and their closely related parties in shares of Alteo are kept in a Register of Directors Interests. Accordingly, as soon as a Director becomes aware that he is interested in a transaction, or that his holdings or his associates holdings have changed, this is reported to the Company in writing. The Company Secretary then ensures that the Register of Interests is updated accordingly. All new Directors are required to notify in writing to the Company Secretary their direct and indirect holdings in shares of Alteo. According to Alteo s Constitution, a Director is not required to hold shares in the Company. Moreover, pursuant to the Securities Act 2005, Alteo is classified as a reporting issuer with the Financial Services Commission ( FSC ) and makes every effort to follow the relevant disclosure requirements. The Company keeps a Register of its insiders and the said register is updated with the notification of interest in securities submitted by the Directors, the Officers and the other insiders of Alteo. The interests register is available to shareholders upon written request to the Company Secretary. The Directors and Officers of Alteo having direct and/or indirect interests in the ordinary shares of the Company at June 30, 2017 were as follows: Direct interest Indirect interest Directors No. of shares % % P. Arnaud Dalais 632, Jean-Claude Béga Jan Boullé Jean-Pierre Dalais 18, Amédée Darga 1, Jérôme De Chasteauneuf Jean de Fondaumière Patrick de L. d Arifat Fabien de Marassé Enouf Arnaud Lagesse Thierry Lagesse 35,

94 92 Alteo Limited Annual Report 2017 CORPORATE GOVERNANCE REPORT Direct interest Indirect interest Officers No. of shares % % Robert Baissac 7, CEO of TPC Limited Stéphane Isautier Development Executive of Sucrière des Mascareignes Limited Sébastien Lavoipierre Chief Operations Officer, Industrial Activities Patrice Legris CEO of Alteo Properties Ltd Jean-Robert Lincoln Group Agricultural Development Executive Christian Marot Chief Operations Officer, Agricultural Activities David Martial Communications and Development Executive Frederick North-Coombes CEO Transmara Sugar Company Limited Sophie Strauss Human Resources Executive , None of the Directors and Officers had any interest in the equity of subsidiaries of Alteo. DIRECTORS AND OFFICERS DEALINGS IN ALTEO S SHARES The Directors of Alteo use their best endeavours to abide by the absolute prohibition principles and notification requirements of the Model Code on Securities Transactions by Directors as stipulated in Appendix 6 of the Listing Rules of the SEM. Alteo has set up a procedure whereby any Director wishing to deal in the shares of the Company should first notify the Chairman of the Company and receive a dated written acknowledgement prior to any dealings. In his own case, the Chairman of the Company should first notify the Board at a Board meeting and receive a dated written acknowledgement prior to dealing. The Directors and Officers of the Company are strictly prohibited from dealing in the shares of Alteo at any time when in possession of unpublished pricesensitive information, or for the period of one month prior to the publication of the Company s quarterly and yearly results and to the announcement of dividends and distributions to be paid or passed, as the case may be, and ending on the date of such publications/ announcements.

95 Alteo Limited Annual Report Moreover, Directors and Officers of Alteo are required to observe the insider trading laws at all times even when dealing in securities within permitted trading periods. The Directors and Officers of Alteo have also been made aware of their responsibilities in disclosing to the Company any acquisition or disposal in the Company s securities, as per the Securities Act 2005 and the Listing Rules of the SEM. DIRECTORS AND OFFICERS INDEMNITIES AND INSURANCE A Directors and Officers liability insurance policy has been subscribed to by the Company. The policy provides cover for the risks arising out of the acts or omissions of the Directors and Officers of the Company. The cover does not provide insurance against fraudulent, malicious or wilful acts or omissions. BOARD AND BOARD COMMITTEES FEES The Directors fees are approved by the Board following recommendation of the Corporate Governance, Nomination, Remuneration & Ethics Committee. The Board has decided to maintain the same fixed fees payable to the Non-Executive Chairman as well as the Independent and Non-Executive Directors for the current year. The Directors and members of the Board Committees are aware of their duty to consistently attend Board meetings and Board Committee meetings. 6. STATEMENT OF REMUNERATION PHILOSOPHY The Board has delegated to the Corporate Governance, Nomination, Remuneration & Ethics Committee the responsibility of determining the adequate remuneration to be paid to the Non- Executive Chairman of the Board, the Independent Non-Executive Directors, the Non-Executive Directors, the Executive Directors and the senior management staff. The Group s underlying philosophy is to set remuneration at an appropriate level to retain, motivate and attract high calibre personnel and Directors, and to reward them in accordance with their individual as well as collective contribution towards the achievement of the Company s objectives and performance, whilst taking into account current market conditions and/or other factors which may be determined from time to time.

96 94 Alteo Limited Annual Report 2017 CORPORATE GOVERNANCE REPORT The Board (except for Executive Directors) and Board Committees fees at June 30, 2017 were as follows: Board Service Annual Chairman s fixed fee Rs 825,000 Annual Independent and Non-Executive Director s fixed fee Rs 275,000 Audit & Risk Committee Service Chairman s fee Rs 275,000 Member s fee Rs 165,000 Corporate Governance, Nomination, Remuneration & Ethics Committee Service Chairman s fee Rs 137,500 Member s fee Rs 82,500 DIRECTORS REMUNERATION AND BENEFITS For the remuneration and benefits received, or due and receivable, by the Directors of the Company and its subsidiaries as at June 30, 2017, please refer to page 104 of the Statutory Disclosures. RETIREMENT BENEFIT OBLIGATION The details of the total amount of provisions booked or otherwise recognised by the Company for payment of pensions are provided in the Notes to the Financial Statements. EMPLOYEE SHARE OPTION PLAN Alteo has no Employee Share Option Plan.

97 Alteo Limited Annual Report SHAREHOLDERS HOLDING STRUCTURE The holding structure of Alteo as at June 30, 2017 is as follows: CIEL AGRO & PROPERTY LIMITED ( CIEL ) IBL LTD OTHERS 20.96% 27.64% 51.40% ALTEO LIMITED The shareholders holding more than 5% of the share capital of Alteo at the date of reporting are: IBL Ltd with 27.64% made up of 88,033,272 shares; and CIEL Agro and Property Limited with 20.96% made up of 66,755,354 shares. COMMON DIRECTORS The names of the common Directors are as follows: Directors ALTEO CIEL IBL P. Arnaud Dalais * * Jan Boullé * Jean-Pierre Dalais Jérôme De Chasteauneuf Arnaud Lagesse Thierry Lagesse *Chairman In accordance with the Listing Rules of the SEM, at least 25% of the shareholding of Alteo is in the hands of the public.

98 96 Alteo Limited Annual Report 2017 CORPORATE GOVERNANCE REPORT The table below shows the Share Ownership Spread, Shareholder Category Profile and Major Shareholders as at June 30, 2017: Number of shares Number of shareholders Number of shares held % holding shares , ,000 shares , ,001-5,000 shares 968 2,549, ,001-10,000 shares 439 3,200, ,001-50,000 shares ,217, , ,000 shares ,971, , ,000 shares ,652, , ,000 shares 61 20,771, Over 500,000 shares ,721, Total 3, ,492, The breakdown of category of shareholders is as follows: Category Number of shareholders Number of shares held % holding Individuals 3,282 85,947, Insurance and Assurance companies 21 14,385, Investment and Trust companies 86 14,308, Pensions and Provident funds 62 16,247, Other Corporate Bodies ,604, Total 3, ,492, SHAREHOLDERS AGREEMENT To the best knowledge of the Company, there has been no such agreement with any of its shareholders for the year under review.

99 Alteo Limited Annual Report SHAREHOLDERS COMMUNICATION The Board places great importance on an open and transparent communication with all shareholders. The Board also endeavours to keep the shareholders regularly informed on matters affecting the Company. Alteo communicates to its shareholders through its Annual Report, publication of unaudited quarterly and audited abridged financial statements of the Group, dividend declaration, press announcements and the Annual Meeting of Shareholders to which all shareholders are encouraged to attend. The Company s website is also an important means of effectively communicating with all stakeholders, keeping them abreast of developments within the Alteo Group. Indeed, all publication of unaudited quarterly and audited abridged financial statements of the Group as well as dividend declaration and press announcements are uploaded on the Company s website in a timely manner. The Annual Meeting of shareholders provides an ideal opportunity for shareholders to raise and discuss matters with the Board of Directors and the management team relating to the Company and to the Group s strategy and goals. The external auditors are also present at the meeting to answer any queries. In accordance with the Alteo s Constitution, the quorum for a meeting of the shareholders of the Company is at least 5 members present in person or proxy together holding shares representing at least 30% of the total voting rights. In case of equality of votes at a Shareholders meeting, the Chairman of the meeting is not entitled to a casting vote. SHAREHOLDERS CALENDAR The Company has planned the following forthcoming events: November 2017 Publication of first quarter results to September 30, 2017 December 2017 Mailing of the Annual Report for the year ended June 30, 2017 December 2017 December 2017 January 2018 Declaration of an interim dividend* Annual Meeting of the Shareholders Payment of the interim dividend February 2018 Publication of half-year results to December 31, 2017 May 2018 Publication of third quarter results to March 31, 2018 June 2018 July 2018 Declaration of a final dividend* Payment of the final dividend September 2018 Publication of abridged end-of-year results to June 30, 2018 * Subject to the approval of the Board of Directors.

100 98 Alteo Limited Annual Report 2017 CORPORATE GOVERNANCE REPORT DIVIDEND POLICY There is no formal dividend policy which has been determined by the Board and dividend payments are determined by the profitability of the Company, its cash flow, its future investments, its ability to meet future expenses, its growth opportunities and its visibility on the medium and long term. Dividends are normally declared and paid twice yearly. Directors ensure that the Company satisfies the solvency test for each declaration of dividend and SHARE PRICE INFORMATION a certificate of compliance with the solvency test is signed by all Directors when a dividend is declared by the Board. An interim dividend of Rs 0.37cs per share and a final dividend of Rs 0.45cs per share were declared during the financial year under review. The said dividends were paid on or around January 13, 2017 and July 20, 2017 respectively. The share price of Alteo increased by 24.54% from Rs at July 1, 2016 to Rs at August 30, 2017 with the Semdex increasing by % for the same period. 130 Alteo v/s Semdex July 2016 Aug Sep Oct Nov Dec Jan Feb Semdex Mar Apr May 2017 June 2017 July 2017 Aug Alteo 8. INTERNAL CONTROL, INTERNAL AUDIT AND RISK MANAGEMENT INTERNAL AUDIT FUNCTION The role of the Internal Audit Function is to provide to management, the Audit & Risk Committee and the Board of Directors independent objective assurance and advice aiming at identifying cost efficiencies, providing strategic insights that improve business performance and focus on the risks that matter most. It also plays a key role in the maintenance of a sustainable and fit for purpose risk management framework, which provides the right balance between risk, cost and value, in line with Alteo s overall business strategy and risk appetite. The Internal Audit function is outsourced to Ernst & Young Ltd ( EY ). As internal auditors, they have unrestricted access to the records, management and employees of all operating units within the Group. They report to the Audit & Risk Committee and maintain an open and constructive line of communication with management at all times. This kind of collaboration results in multiple benefits for the organisation, including enhanced efficiency, and the ability to make informed decisions on how to manage risks.

101 Alteo Limited Annual Report The Internal Audit coverage is determined through a systematic and collaborative risk based approach which involves members of the Audit & Risk Committee and senior management of each cluster of the Group in the identification of risk areas and the levels of risk within each of them. The overall audit plan is approved by the Audit & Risk Committee and regularly reviewed in light of changes to the risk landscape. In line with its mandate to be a value adding partner to the business, EY discusses its findings with management and provides advisory support in the development of risk mitigation action plans. Regular follow-ups are performed by EY to assess the status of implementation of these action plans. Reports detailing all internal audit findings are submitted to the Audit & Risk Committee and all high risk areas are presented by EY through face to face meetings with the Audit & Risk Committee members on a periodic basis. The areas reviewed by the internal auditors during the financial year 2016/2017 were as follows: Alteo Limited - Financial Close process (Agriculture & Industry Clusters) - Human Resources management and Payroll processing (Agriculture & Industry Clusters) - Garage Operations (Agriculture Cluster) TPC Limited - Sales and Debtors Management - Store Management - Budgeting and Monitoring Cycle Anahita Residences and Villas Limited (Property Cluster) Anahita Golf Ltd (Property Cluster) INTERNAL CONTROL The Board is satisfied that a continual process for identifying, evaluating and managing significant risks has been in place for the financial year and up to the date of this Annual Report. The effectiveness of the internal control systems is reviewed by the Audit & Risk Committee and the Board receives assurance from the Audit & Risk Committee, which derives its information from regular internal and external audit reports. To date, no material financial problems have been identified that would affect the results reported in these financial statements. The Board confirms that if significant weaknesses had been identified during this review, the Board would have taken the necessary steps to remedy them. RISK MANAGEMENT The Board maintains full control and direction over appropriate strategic, financial, operational and compliance issues and has put in place an organisational structure with formally defined lines of responsibility, delegated authorities and clear operating processes. The systems that the Board has established are designed to safeguard both the shareholders investment and the assets of the Group. The Board of Alteo has empowered the Audit & Risk Committee to ensure that the Risk Management and Internal Control framework and systems are adequate to promote transparency and good governance practice across the various lines of activity of the Company. In discharging its responsibility towards the Board members, the Audit & Risk Committee relies upon the reports of the internal auditors and of the management to provide assurance on the effectiveness of the Internal Control framework. In its effort to further strengthen the Alteo risk management framework to better respond to the risks in its changing environment, the Audit & Risk Committee mandated EY to conduct a Business

102 100 Alteo Limited Annual Report 2017 CORPORATE GOVERNANCE REPORT Risk Identification and Assessment exercise across the Group in This exercise covered all activity clusters and culminated in the establishment of a Group Risk Register which summarises the following for the priority areas within each cluster: Associated exposure (corresponds to the inherent risk); Mitigating controls in respect of each of these areas, if any; Associated residual risk (which factors in the likelihood, impact and controllability of the risk); Actions to be taken in order to address aspects which are not sufficiently covered including details relating to who will be the responsible person, timeframe for implementation and other relevant information such as key performance indicators that will indicate successful mitigation of the risk; and Acceptance level for each risk (unacceptable, needs improvement and acceptable). Priorities were identified according to the following four risk quadrants of the EY Risk Radar: Quadrant 1: Cost Competitiveness This quadrant relates to market risks as well as costcutting and pricing pressure faced by businesses. Market risks present immediate challenges in the current economic context, particularly in view of the limited diversification of the Alteo group revenue. The volatility of the world sugar prices and the need for the Group to readjust to reduced sugar prices and reduced market access means that improving efficiency has become key to sustainability as well as the internal capacity to look for diversified markets and investment opportunities. Alteo has also put in place a dedicated strategic development team consisting of resources with complementary backgrounds, i.e. agricultural, industrial, project management and project finance. This ensures that existing operations as well as ongoing projects are appropriately managed. Quadrant 2: Stakeholder Confidence Government involvement in business, particularly with regard to regulation and compliance, is expanding. Shareholders business awareness has increased, emphasising the need to provide more detailed and transparent information. Other local stakeholders welcome innovative ways to do business which comply with the green ethics that protect national interest, social goals and the environment. Internal stakeholders provide for the engine of the organisation. All these stakeholders are regarded as business partners that have to be carefully managed. Companies of the Group need to ensure compliance with regulatory requirements as well as environmental and Health & Safety norms, both locally and internationally in order to acquire and maintain stakeholders confidence. Quadrant 3: Customer Reach Organisations need to prioritise their overall customer reach and cultivate enriched and sustainable client relationships. This is especially relevant for Alteo s property cluster, as demand for its products is highly sensitive to changes in the global market dynamics. The following measures are expected to positively impact on the trading activities of the property cluster, namely: customer reach efforts are on-going through business partners (increased network of brokers and connectors); Mix of products offered by Anahita Estates Limited (different sizes of villas, land for sale, customization of villa through building package); and Products are being developed based on market feedback solicited from existing and prospective buyers, brokers and other partners. Quadrant 4: Operational Agility How well the organisation is adapting to the ever changing landscape of the Cane Industry is a direct result of the organisation s operational agility.

103 Alteo Limited Annual Report It relates to people, processes and systems in place to run the business. It also relates to the ability of the Group to maintain updated and relevant systems to meet Group objectives and to clearly communicate its HR strategies impacting on the recruitment and retention of talented staff. Alteo has embarked on a human development strategy targeting key personnel at the corporate level. RISK REGISTER AND RISK MONITORING FRAMEWORK Appropriate framework and tool are in place which allow management to closely monitor the risks identified in the risk register. The Audit & Risk committee is apprised on the status of these risks accordingly. EXTERNAL AUDIT BDO & Co was re-appointed as external auditors of the Company for the financial year ended June 30, 2017 at the last Annual Meeting of the shareholders of the Company held on December 15, The audit fees of BDO & Co for the Company for financial year ended June 30, 2017 amounted to Rs 1,338, OTHER GOVERNANCE MATTERS COMPANY S CONSTITUTION Alteo s Constitution is in conformity with the provisions of the Companies Act 2001 and the Listing Rules of the SEM. There are no clauses of the Constitution deemed material enough for special disclosure. A copy of Alteo s Constitution is available on the Company s website ( and can also be obtained upon request in writing to the Company Secretary at the registered office of the Company, Vivéa Business Park, Saint Pierre. COMPANY SECRETARY Ms Kate M. Li Kwong Wing, Senior Legal & Corporate Affairs Officer of Alteo, acts as Company Secretary of Alteo Limited. All Directors have access to the advice and services of the Company Secretary who is responsible for providing detailed guidance to the Chairman and the Directors as to their fiduciary duties, responsibilities and powers. The Company Secretary also ensures that the Company is at all times complying with its Constitution, terms of reference, applicable laws, rules and regulations. Moreover, the Company Secretary assists the Chairman and the Board in implementing and strengthening good governance practices and processes with a view to enhance long-term stakeholders value. The Company Secretary also administers, attends and prepares minutes of all Board meetings, Board Committee meetings and Shareholders meetings. The Company Secretary is also the primary channel of communication between the Company and its shareholders as well as the regulatory bodies. MANAGEMENT AGREEMENTS The following agreements have been entered into by Alteo, namely: service agreements with two related companies, namely Ciel Corporate Services Ltd and IBL Management Ltd, for the provision of legal, financial, secretarial services and administrative support to the companies of the Alteo Group; and a treasury agreement with Azur Financial Services Limited and IBL Treasury Ltd, for the provision of cash management services, treasury advisory services and foreign exchange & money market brokerage services to the Alteo Group;

104 102 Alteo Limited Annual Report 2017 CORPORATE GOVERNANCE REPORT a management agreement for the provision of administrative, financial, legal and technical services to four of its subsidiaries namely Alteo Energy Ltd, Consolidated Energy Co. Ltd., Alteo Milling Ltd and Deep River-Beau Champ Milling Ltd; and a management agreement for the provision of managerial and administrative services to Alteo Refinery Ltd which owns the refinery. No major agreements, other than those in the ordinary course of business, were contracted by the Company during the year under review. RELATED PARTY TRANSACTIONS For details on related party transactions, please refer to the Notes to the Financial Statements. Furthermore, in compliance with the Listing Rules of the SEM, shareholders of the Company are informed of related party transactions through the issue of cautionary announcements and circulars. Alteo has a Conflict of Interest and Related Party Transactions Policy which is adopted by the Company and the Group. the implementation of safety standards in all its operations across the Group. Please refer to Alteo s Sustainability Report for further details. SOCIAL CONTRIBUTION The Company is fully committed to Corporate Social and Environmental Responsibility ( CSER ) activities. For more details on Alteo s CSER activities, please refer to Alteo s Sustainability Report. ENVIRONMENT AND SUSTAINABILITY Alteo believes that growth should not be at the expense of the environment and remains sensitive to the climatic change to which the globe is subject to. Please refer to Alteo s Sustainability Report for further details. CHARITABLE DONATIONS AND POLITICAL CONTRIBUTIONS The amounts of charitable and political donations are disclosed on page 104 of the Statutory Disclosures. ETHICAL BUSINESS CONDUCT The Alteo Group, together with its employees, is committed to the highest standards of ethical and professional integrity. This commitment, which is actively endorsed by the Board and the management team, is based on a fundamental belief that business should be conducted honestly, fairly and legally whilst preserving the environment. As such, Alteo has finalised a Code of Ethics which will apply to all Directors, officers, employees and suppliers of the Group. Jean de Fondaumière Kate M. Li Kwong Wing Chairman of the Company Secretary Corporate Governance, Nomination, Remuneration & Ethics Committee September 20, 2017 HEALTH AND SAFETY POLICY The Alteo Group aims to act as a good employer in providing and maintaining a safe and healthy work environment for all its employees. The objective of Alteo is the optimisation of work efficiency and the prevention of accidents at work, through

105 Alteo Limited Annual Report STATUTORY DISCLOSURES YEAR ENDED JUNE 30, 2017 (Pursuant to Section 221 of the Companies Act 2001 and Section 88 of the Securities Act 2005) The Directors are pleased to present the Annual Report of Alteo Limited (the Company ) for the year ended June 30, NATURE OF BUSINESS The main activities of the Company consist of sugar cane growing and milling and other agricultural activities. The main activities of the Group consist principally of: Sugar cane growing and milling and other agricultural activities; Sugar refining activities; Operating a bagasse and coal based power generation plant for the supply of electricity to the National Grid of the Central Electricity Board; and Property development, hospitality and leisure. DIRECTORS The persons who held office as Directors of the Company as at June 30, 2017 are: P. Arnaud Dalais (Chairman) Jean-Claude Béga Jan Boullé Jean-Pierre Dalais Amédée Darga Jérôme De Chasteauneuf Jean de Fondaumière Patrick de L. d Arifat Fabien de Marassé Enouf Arnaud Lagesse Thierry Lagesse AUDITOR S REPORT AND ACCOUNTS The auditor s report is set out on pages 114 to 116 and the statements of profit or loss and other comprehensive income are set out on page 118. DIRECTORS SERVICE CONTRACTS Messrs Patrick de L. d Arifat and Fabien de Marassé Enouf have a service contract with the Company with no expiry terms. Messrs Christian Marot, Sébastien Lavoipierre, Neel Madhun and Dominique Rousset, Directors of subsidiary companies, have a service contract with the Company with no expiry terms. Mr Patrice Legris, Director of a subsidiary company, has a service contract with Alteo Properties Ltd with no expiry terms. Mr Jean-Luc Harel, alternate Director of a subsidiary company, has a service contract with the Company with an expiry term. Mr Patrick Koenig Director of a subsidiary company, has a service contract with the Company with no expiry term. The Directors of the subsidiaries are disclosed on pages 106 to 109.

106 104 Alteo Limited Annual Report 2017 STATUTORY DISCLOSURES YEAR ENDED JUNE 30, 2017 (Pursuant to Section 221 of the Companies Act 2001 and Section 88 of the Securities Act 2005) DIRECTORS REMUNERATION AND BENEFITS Remuneration and benefits received from the Company and its subsidiaries were as follows: THE COMPANY THE SUBSIDIARIES Directors of the Company Rs'000 Rs'000 Rs'000 Rs'000 Executive Directors 42,814 39, Non-Executive Directors - 3, Independent Non-Executive Directors - 1, Directors of the Subsidiary companies Executive Directors 21,027 18, Non-Executive Directors ,799 6,722 The emoluments of the Directors have not been disclosed on an individual basis due to the market sensitivity of such information. Donations THE GROUP THE COMPANY Donations made during the year Rs'000 Rs'000 Rs'000 Rs' Political Charitable 4,862 6, ,938 Auditors' Fees THE GROUP THE COMPANY Rs'000 Rs'000 Rs'000 Rs'000 Audit fees paid to: BDO & Co 6,176 5,161 1,338 1,300 The Board expresses its appreciation and thanks to all those involved for their contribution during the year. Approved by the Board of Directors on September 20, 2017 and signed on its behalf by: Patrick de L. d Arifat Director Jean de Fondaumière Director

107 Alteo Limited Annual Report STATUTORY DISCLOSURES YEAR ENDED JUNE 30, 2017 STATEMENT OF DIRECTORS RESPONSIBILITIES IN RESPECT OF THE PREPARATION OF FINANCIAL STATEMENTS 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 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) International Financial Reporting 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 in all material aspects and reasons have been provided for non-compliance. ON BEHALF OF THE BOARD Patrick de L. d Arifat Director Jean de Fondaumière Director September 20, 2017

108 106 Alteo Limited Annual Report 2017 STATUTORY DISCLOSURES YEAR ENDED JUNE 30, 2017 (Pursuant to Section 221 of the Companies Act 2001 and Section 88 of the Securities Act 2005) Directorships of Subsidiary Companies as at June 30, 2017: Alteo Energy Ltd Alteo Milling Ltd Alteo Planters Services Ltd Alteo Properties Ltd Alteo Refinery Ltd Anahita Centre for Excellence Limited Anahita Estates Limited Anahita Golf Ltd Compagnie de la Vigie Limitée (in liquidation) AH SUE William AH SUE Carine Barbara BAISSAC Robert BÉGA Jean-Claude BOULLÉ Jan CALLY Devendra DALAIS Jean-Pierre DALAIS P. Arnaud DAUMOO Bhagwat Parsadsing DE CHASTEAUNEUF Jérôme, * * * DE L. D'ARIFAT Patrick DE MARASSE ENOUF Fabien DUVAL Alexis GOVINDEN Thierry Désiré Laval HAREL Jean-Luc * ISAUTIER Stéphane ISINIKA-MODAMBA Emma KOENIG Patrick LABRO Philippe LAGESSE Arnaud LAGESSE Stephane * LAGESSE Thierry LAVOIPIERRE Sébastien LECLEZIO Hubert LEGRIS Patrice MADHUN Neel Kamal MAFURU Lawrence

109 Alteo Limited Annual Report Compagnie Usinière de Mon Loisir Ltée Consolidated Energy Co. Ltd Deep River-Beau Champ Milling Company Ltd Eastern Energy Company Limited Island Fresh Ltd Refinest Limited Schoenfeld Co. Ltd Sena Development Ltd (in liquidation) Société Beauregard Sucrière des Mascareignes Limited Sukari Investment Company Limited TPC Limited Transmara Investment Limited Transmara Sugar Company Limited Usinest Limited * * * * * * *

110 108 Alteo Limited Annual Report 2017 STATUTORY DISCLOSURES YEAR ENDED JUNE 30, 2017 (Pursuant to Section 221 of the Companies Act 2001 and Section 88 of the Securities Act 2005) Directorships of Subsidiary Companies as at June 30, 2017: Alteo Energy Ltd Alteo Milling Ltd Alteo Planters Services Ltd Alteo Properties Ltd Alteo Refinery Ltd Anahita Centre for Excellence Limited Anahita Estates Limited Anahita Golf Ltd Compagnie de la Vigie Limitée (in liquidation) MALDE Jatin MALDE Mayur MALDE Mukuntkumar MALDE Shantilal MAROT Christian RAMSURRUN Kessordath REY Clément RIBET Jean ROUSSET Dominique SEEAM Kamless SEMWAZA Henry SHAH Mahul SHAH Paras SHAH Shashikant SHAH Yogeshchandra SUKARI Investment Company Limited SUMPUTH Sachin Kumar THIEBLIN Xavier TEELUCKDHARRY Prem * Alternate Director

111 Alteo Limited Annual Report Compagnie Usinière de Mon Loisir Ltée Consolidated Energy Co. Ltd Deep River-Beau Champ Milling Company Ltd Eastern Energy Company Limited Island Fresh Ltd Refinest Limited Schoenfeld Co. Ltd Sena Development Ltd (in liquidation) Société Beauregard Sucrière des Mascareignes Limited Sukari Investment Company Limited TPC Limited Transmara Investment Limited Transmara Sugar Company Limited Usinest Limited * * * * * *

112 110 Alteo Limited Annual Report 2017 STATUTORY DISCLOSURES YEAR ENDED JUNE 30, 2017 (Pursuant to Section 221 of the Companies Act 2001 and Section 88 of the Securities Act 2005) The following changes occurred during the year under review: Island Fresh Ltd Mr Hubert Leclezio has resigned as Director on April 25, Mr Patrick Koenig was appointed as Director on April 25, Anahita Estates Limited Mr Jérôme de Chasteauneuf was appointed Alternate Director to Messrs P. Arnaud Dalais and Jean-Pierre Dalais on August 24, Anahita Golf Ltd Mr Jean-Claude Béga has resigned as Director on January 25, Mr Jan Boullé was appointed as Director on January 25, Mr Jérôme de Chasteauneuf was appointed Alternate Director to Messrs P. Arnaud Dalais and Jean-Pierre Dalais on August 24, Anahita Properties Ltd Mr Jean-Claude Béga has resigned as Director on January 25, Mr Jan Boullé was appointed as Director on January 25, 2017.

113 Alteo Limited Annual Report

114 112 Alteo Limited Annual Report 2017

115 Alteo Limited Annual Report FINANCIAL STATEMENTS