Annual Report 2012 ALTEO ANNUAL REPORT

Transcription

1 Annual Report 2012 ALTEO ANNUAL REPORT

2 Dear Shareholder, The Board of Directors of Alteo Limited (formerly known as Deep River-Beau Champ Limited) is pleased to present its Annual Report for the year ended June 30, This report was approved by the Board of Directors at a meeting held on September 13, On behalf of the Board of Directors of Alteo Limited, we invite you to go through the Annual Report and join us at the Annual Meeting of the Company which will be held: Date: Tuesday, December 18, 2012 Time: hours Place: Hennessy Park Hotel Ebony Conference Room 65 Ebène Cybercity Ebène We look forward to seeing you. Yours sincerely, Thierry Lagesse Chairman 2 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

3 Contents 04 Chairman s Statement 06 Notice of Annual Meeting 08 Group Structure (prior Amalgamation) 10 Group Structure (post Amalgamation) 12 Corporate Information 14 Executives Report Corporate Social & Environmental Responsibility Corporate Governance 80 Statutory Disclosures 85 Statement of Directors Reponsibilities 86 Company Secretary s Certificate 87 Independent Auditors Report to the Members 88 Statements of Financial Position 89 Income Statements 90 Statements of Comprehensive Income 91 Statements of Changes in Equity Statements of Cash Flows Notes to the Financial Statements Proxy Form 152 Postal Vote 2 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

4 Chairman s Statement During the year, the Company changed its accounting policy in respect of its investments in subsidiaries and joint ventures which are now carried at fair value in the separate financial statements, as opposed to cost last year. This has led to a positive fair value movement in the other comprehensive income of Rs. 4,869M for subsidiaries and Rs. 79M for joint ventures. In April 2012, the Company proceeded with a bonus issue of 177,637,365 ordinary shares in the ratio of 19 ordinary shares for every 1 ordinary share held. An interim dividend of Rs per share (on 8,826,794 ordinary shares and 533,206 preference shares), and a final dividend, post bonus issue, of Rs per share (on 186,986,700 ordinary shares) were declared during the financial year ended June 30, PROSPECTS Dear Shareholder, As you are aware, following the approval by the respective shareholders of DRBC and FUEL in June 2012, the latter company has, on July 20, 2012, been officially amalgamated with and into DRBC which has been renamed Alteo Limited ( ALTEO ). The ultimate objective of ALTEO is to be a competitive regional reference in the cane industry and its numerous derivatives, in renewable energy production, in sustainable property development and in leisure and hospitality industries. The Board of ALTEO is confident that this initiative will generate a new dynamism which will boost shareholder value in the years to come, both in terms of share price appreciation and dividend yield. Considering that the amalgamation of FUEL into ALTEO took place after the financial year end, the financial figures presented in the present report relate only to the operations of DRBC and of its subsidiaries. FINANCIAL RESULTS For the year under review, the Deep River-Beau Champ Group registered slightly improved results, mainly led by the sustained performance of the sugar operations in Tanzania which posted yet another record year. Sugar operations in Mauritius were again adversely affected by a reduced crop and by the effect of an uncompetitive Mauritian Rupee on the sugar price. Our hospitality activities registered improved results in the face of a very competitive market environment. The property sector, for its part, continued to suffer from the economic downturn in our traditional markets. Group turnover for the year stood at Rs. 3,673M, up 13% on the previous year figure of Rs. 3,263M. The greater part of this increase is attributable to TPC Ltd, our sugar operation in Tanzania which posted a record year, reaching 91,000 tons of sugar (2011: 86,000 tons) and sustained prices. On the local front, the increase in sugar prices and energy exports to the grid just helped to mitigate the lower sales value of villas handed over during the year as no new phases of the IRS project were launched due to the slowdown experienced in the property sector. Movements in the standing crop valuations at year end showed an increase from Rs. 186M in 2011 to Rs. 362M in 2012, due to the expected higher sugar prices and production both in Mauritius and Tanzania. Operating profit for the Group reached Rs. 1,401M compared to Rs. 1,060M in 2011, a 32% increase. Finance costs rose from Rs. 176M in 2011 to Rs. 190M as a result of an exchange loss of Rs. 27M due to the appreciation of the Tanzanian shilling. An improved performance from joint ventures is to be noted due to better results registered in the hospitality sector making up for the continued downturn in the life sciences activities. Group profit after tax showed an increase of 5.6% over previous year despite the inclusion in the 2011 figures of the profit on sales of a non-core investment and the revaluation of land assets classified as investment property. The 2012 performance is mainly attributable to the higher profitability of our Tanzanian operations which helped to offset the loss registered in the property development sector. However, profit attributable to the shareholders of the Company fell from Rs. 310M in 2011 to Rs. 168M in 2012 owing to the high minority interest in the significantly more profitable Tanzanian operations. Sugar and Energy In Mauritius, following the amalgamation of DRBC and FUEL, the actual combining of the sugar cane growing, sugar milling and energy production operations is being initiated and should show an important increase in turnover for both the Company and the Group. Moreover, we expect that the combined activities will start to yield positive results in the later part of the financial year. An average 2012 sugar crop is expected over the overall operations as the drought conditions which affected the drier non irrigated regions, proved to be beneficial to the humid and super humid regions. Sugar prices are not expected to show an improvement on those of the 2011 crop as sustained EU prices are negatively impacted by the relative strength of the Mauritian Rupee to the Euro. On the energy front, assuming coal import prices remain at their present level, the operations of both facilities at Union Flacq and Beau Champ should show improved results. In Tanzania, the operations are expected to witness an average crop and prices which, together, should ensure a fair profitability level. Hospitality It is expected that the hospitality activities at Anahita will continue to register an improved performance for the coming year, despite the difficult market environment. Property The property environment should remain challenging due to the prolonged adverse financial and economic circumstances in our traditional markets. However, the expected launch beginning of 2013, of a new product offering, should ensure renewed dynamism to our operations. Social Responsibility DRBC Group continued to be very active during this financial year on the social and environmental fronts and contributed Rs. 4.97M to a number of socio-economic development, education, and training, childcade and health projects. Going forward, ALTEO will continue to fulfill its various commitments as well as those of FUEL through GML Fondation Joseph Lagesse and CIEL Group Fondation Nouveau Regard as well as contributing directly to a number of other initiatives. Appreciation I would like to express my gratitude to my colleagues of the Board of Directors for their assistance and guidance throughout the year and the management and staff for their valuable contribution during the year. A special note of thanks to the Directors of DRBC who resigned following the amalgamation with FUEL, namely Messrs. J. Cyril Lagesse, Robert Lagesse, Jean-Claude Harel, Maurice P. Dalais, and Roger Espitalier Noël. I wish to thank them for their contribution to the affairs of the Company and seize that opportunity to welcome Messrs Amédée Darga, Jean-Claude Béga, Jan Boullé and Patrick de L. d Arifat who have been appointed on the Board of Alteo on July 20, Thierry Lagesse Chairman September 13, ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

5 Notice of Annual Meeting to Shareholders Notice is hereby given that the Annual Meeting ( the Meeting ) of Shareholders of Alteo Limited ( the Company ) will be held at Hennessy Park Hotel, Ebony Conference Room, 65 Ebène Cybercity, Ebène on Tuesday, December 18, 2012 at hours to transact the following business in the manner required for the passing of ORDINARY RESOLUTIONS: Agenda 1. To consider the Annual Report 2012 of the Company. 2. To receive the report of Messrs. BDO & Co, the auditors of the Company. 3. To consider and adopt the Group s and Company s audited financial statements for the year ended June 30, To re-elect, on the recommendation of the Corporate Governance Committee, as Director of the Company to hold office until the next Annual Meeting, in accordance with Section 138(6) of the Companies Act 2001, Mr. G. Christian Dalais 1 who offers himself for re-election To re-elect, on the recommendation of the Corporate Governance Committee, as Directors of the Company to hold office until the next Annual Meeting, the following persons 1 who offer themselves for re-election (as separate resolutions): 5. Mr. Thierry Lagesse 6. Mr. Jean-Claude Béga 7. Mr. Jan Boullé 8. Mr. Patrick de L. d Arifat 9. Mr. P. Arnaud Dalais 10. Mr. Amédée Darga 11. Mr. Jean de Fondaumière 12. Mr. Louis Guimbeau 13. Mr. Arnaud Lagesse 14. To re-appoint Messrs. BDO & Co as auditors for the ensuing year and to authorise the Board of Directors to fix their remuneration. 15. To ratify the remuneration paid to the auditors for the financial year ended June 30, BY ORDER OF THE BOARD Nathalie Gallet, ACIS Per NAVITAS CORPORATE SERVICES LTD Company Secretary November 15, 2012 Notes: (i). (ii). (iii). (iv). (v). (vi). (vii). A shareholder of the Company entitled to attend and vote at this meeting may appoint a proxy of his/her own choice to attend and vote on his/her behalf. A proxy need not be a member of the Company. The instrument appointing a proxy or any general power of attorney shall be deposited at the Share Registry and Transfer Office of the Company, MCB Registry & Securities Ltd, Raymond Lamusse Building, 9-11, Sir William Newton Street, Port-Louis, not less than twenty-four (24) hours before the start of the meeting and in default, the instrument of proxy shall not be treated as valid. Postal votes shall be deposited at the Share Registry and Transfer Office of the Company, MCB Registry & Securities Ltd, Raymond Lamusse Building, 9-11, Sir William Newton Street, Port-Louis, not less than forty-eight (48) hours before the start of the meeting and in default, the postal vote shall not be treated as valid. A proxy form and a postal vote are included in this Annual Report and are also available at the registered office of the Company. For the purpose of this Annual Meeting, the Directors have resolved, in compliance with Section 120(3) of the Companies Act 2001, that the shareholders who are entitled to receive notice of the meeting shall be those shareholders whose names are registered in the share register of the Company as at November 20, The minutes of the Annual Meeting held on December 20, 2011 are available for consultation by the shareholders during office hours at the registered office of the Company, 13, St Clément Street, Curepipe. The minutes of the Annual Meeting to be held on December 18, 2012 will be available for consultation and comments during office hours at the registered office of the Company, 13, St Clément Street, Curepipe from February 4 to 15, Footnote 1: The profiles and categories of the Directors proposed for re-election are set out at pages 63 to 66 of the Annual Report ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

6 Group Structure as at June 30, 2012 (Prior Amalgamation) 100% Commercial and Industrial Enterprises Ltd 100% World Tropicals Ltd 67.55% Microlab Ltd 39.24% The Beau Champ Holding Company Limited 6.99% Constance La Gaiété Company Limited 99.99% Ferney Aquaculture Limited 50% Novelife Limited 50% Flagstone Property Management Ltd 100% Anahita World Class Sanctuary Ltd 14.38% Sugar World Ltd 33.33% Trois Ilots Limited 28.51% Medical & Surgical Centre Limited 50.01% Noveprim Limited 50% Chamouny Farming Ltd 49.9% Les Campêches Ltée 23.03% Other Shareholders ALTEO LIMITED 64.23% Refinest Limited 61.72% Eastern Energy Company Limited 13.13% Consolidated Energy Co. Ltd 65.19% Usinest Limited 50% CIEL Properties Ltd 60% Sucrière des Mascareignes Limited 50.63% 93% Noveprim Europe Limited 32.5% FUEL Refinery Limited 80% Deep River-Beau Champ Milling Company Ltd 80% Contance La Gaiété Milling Company Limited 100% Anahita Residences and Villas Limited 100% Anahita Centre for Excellence Limited 37.5% Bluefrog Limited 100% Sukari Investment Company Limited 75% TPC Ltd 37.73% Deep River Investment Ltd 50% CIEL et Nature Limitée 100% Anahita Estates Limited 50% Anahita Hotel Limited 39% 61% Anahita Golf Ltd 100% Anahita IRS Forty Limited 33.3% Fondation Nouveau Regard 8 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

7 Group Structure as at August 31, 2012 (Post Amalgamation) 100% Commercial and Industrial Enterprises Ltd 100% World Tropicals Ltd 46.45% Other Shareholders 10.84% GML Investissement Ltée 6.99% Constance La Gaiété Company Limited 99.99% Ferney Aquaculture Limited 50% Novelife Limited 64.23% Refinest Limited 32.5% FUEL Refinery Limited 61.72% Eastern Energy Company Limited 13.13% Consolidated Energy Co. Ltd 65.19% Usinest Limited 50% CIEL Properties Ltd 60% Sucrière des Mascareignes Limited 50% CIEL et Nature Limitée 32.5% 50.63% 67.55% Microlab Ltd 50% Flagstone Property Management Ltd 100% Anahita World Class Sanctuary Ltd 14.38% Sugar World Ltd 33.33% Trois Ilots Limited 28.51% Medical & Surgical Centre Limited 50.01% Noveprim Limited 50% Chamouny Farming Ltd 93% Noveprim Europe Limited 80% Deep River-Beau Champ Milling Company Ltd 80% Contance La Gaiété Milling Company Limited 100% Anahita Residences and Villas Limited 100% Anahita Centre for Excellence Limited 37.5% Bluefrog Limited 100% Sukari Investment Company Limited 75% TPC Ltd 21.75% The Beau Champ Holding Company Limited* 100% Anahita Estates Limited 50% Anahita Hotel Limited 33.3% Fondation Nouveau Regard 100% 32Cane Planting Societies 65.10% F.U.E.L. Steam and Power Generation Company Limited 65.10% F.U.E.L. Sugar Milling Company Limited 39% 61% Anahita Golf Ltd 100% Anahita IRS Forty Limited 95.40% Société de Gérance Mon Loisir 91.35% Société Beauregard 50% Compagnie Usinière de Mon Loisir Ltée 100% FSMC Planters Services Co Ltd 85.72% Compagnie de la Vigie Limitée 20.96% Deep River Investment Ltd 100% Schoenfeld Co. Ltd 100% Island Fresh Ltd 99.99% West East Limited 57.15% Sena Development Ltd 99.88% Trianon Estates Limited 100% Société Gonin 100% Société Ducomet 16.33% Forward Engineering and Development Company Limited 10 ALTEO ANNUAL REPORT 2012 *It is to be noted that at a Special Meeting held on July 17, 2012, the shareholders of The Beau Champ Holding Company Limited have approved the voluntary winding-up of that company and the distribution of the shares held by The Beau Champ Holding Company Limited in ALTEO to its shareholders.

8 Corporate Information Board & Committees BOARD OF DIRECTORS Thierry Lagesse - Chairman Jean-Claude Béga as from July 20, 2012 Jan Boullé - as from July 20, 2012 Patrick de L. d Arifat Chief Executive Officer - as from July 20, 2012 Bernard P. Dalais up to August 17, 2011 G. Christian Dalais Maurice P. Dalais up to July 20, 2012 P. Arnaud Dalais Group Chief Executive Amédée Darga as from July 20, 2012 Roger Espitalier Noël as from September 15, 2011 and up to July 20, 2012 Jean-Claude Harel - up to July 20, 2012 Jean de Fondaumière Louis Guimbeau Arnaud Lagesse J. Cyril Lagesse up to July 20, 2012 Robert Lagesse up to July 20, 2012 Didier Merven up to September 5, 2011 Adolphe Vallet up to September 15, 2011 BOARD COMMITTEES Audit Committee Jean de Fondaumière - Chairman Jean-Claude Béga Amédée Darga as from August 6, 2012 Louis Guimbeau Corporate Governance Committee Jean de Fondaumière - Chairman Louis Guimbeau as from August 6, 2012 Thierry Lagesse P. Arnaud Dalais - up to August 6, 2012 COMPANY SECRETARY Navitas Corporate Services Ltd as from July 20, 2012 CIEL Corporate Services Ltd - up to July 20, 2012 MANAGEMENT TEAM P. Arnaud Dalais Group Chief Executive Patrick de L. d Arifat Chief Executive Officer Jérôme De Chasteauneuf Head of Finance Robert Baissac CEO of TPC Ltd Jean-Luc Harel COO Sugar Milling & Energy Activities Jean-Robert Lincoln Group Agricultural Development Executive Christian Marot COO Agricultural Activities REGISTERED OFFICE ALTEO - BEAU CHAMP ALTEO - UNION FLACQ 13, St Clément Street Beau Champ Union Flacq Curepipe Grand River South East Mauritius Mauritius Mauritius Tel: BRN: C Tel: Fax: Tel: Fax: Fax: Website: COMPANY SECRETARY Navitas Corporate Services Ltd 13, St Clément Street Curepipe Mauritius SHARE REGISTRY & TRANSFER OFFICE If you are a shareholder and have inquiries 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 Raymond Lamusse Building 9-11, Sir William Newton Street Port-Louis Mauritius Tel: Fax: EXTERNAL AUDITORS BDO & Co BANKERS Barclays Bank PLC Bank of Baroda Banque des Mascareignes Ltée Bank One Limited State Bank of Mauritius Ltd The Hong Kong and Shanghai Banking Corporation Ltd The Mauritius Commercial Bank Ltd INTERNAL AUDITORS Ernst & Young 12 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

9 Sugar Industry EXECUTIVES REPORT Amalgamation of FUEL with and into DRBC As mentioned in the Chairman s Statement, the amalgamation project of FUEL with and into DRBC was successfully negotiated during the year under review and was concluded just after the financial year end. The actual combining of the sugar cane growing, sugar milling and energy production operations is being phased in and will during the year start translating into synergetic gains The pooling of the resources of DRBC and FUEL into Alteo Limited ( Alteo ) stems from the declared objective of ensuring the competitiveness of their ongoing operations in an increasingly liberalized environment and of being in a stronger position to take advantage of new development opportunities. The creation of ALTEO will give a significant added impetus not only to the operations in which the two companies have been traditionally engaged but also to their more recently developed lines of activity, whilst opening the way to a number of new exciting avenues, both locally and in the region. 14 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

10 Cane Growing Review of Operations Deep River-Beau Champ Limited 2011 Crop During the 2011 crop, a total of 279,310 tons of cane was harvested, 1.6% above the initial estimate of 275,000 tons, but 5.8% below the long term average of 296,400 tons. Cane productivity during the first half of the harvest lagged behind the estimate by 5.5 tons per hectare, representing a shortfall of approximately 8,500 tons. The reduced cane yield occurred mainly in the humid and sub-humid regions and is attributed to the low rainfall registered during the period September to December 2010, which reached no more than 25% of the long term mean. Fortunately, this dry spell did not cause any adverse effects on late maturing varieties under irrigation in these same regions. Moreover, climatic conditions were favourable in the super humid regions and resulted in higher cane yields which compensated for the deficit in the humid and sub-humid regions. Cane ripening, for its part, was adversely affected due to delayed cane growth. As a result, the extraction rate for crop 2011 fell to 10.21% from an initial estimate of 10.70%. Investment in de-rocking and land preparation programmes, in view of furthering mechanical harvest in the dry rocky regions, continued on some 22 ha to reach a total extent of 430 ha. In the rock free areas, the land preparation has now been completed but minor additional investment is usually required during plantation process to upgrade field layout in order to improve drainage of excess water in the super humid regions. The total area suitable for mechanical harvest has thus now reached 2,615 ha: i.e 67% of the area under cane and representing a cane production potential of 233,000 tons, or 75% of total cane harvested. Refurbishment of the 18-year old centre pivot No. 3 at Trois Ilots was completed in December The estate irrigation system consisting of centre pivots, drip, solid set, portable set and drag line now covers an area of 864 ha as follows: Irrigated Area (Ha) Centre PIVOT Drip Solid Set 203 Portable Set Drag Line 16 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

11 CANE GROWING 2011/2012 Financial Results The selling price of sugar for the 2011 crop year reached Rs. 16,020 per ton as compared to Rs. 13,536 for crop year 2010, an increase of 18%. Table 1 shows the past trend in the selling price of sugar and molasses along with the estimate for crop year Molasses price continued its downward trend and fell to Rs. 1,982 representing a 26% fall from the previous year s price of Rs. 2,689 per molasses ton. The sugar tonnage accruing to the company rose slightly whereas that of molasses remained at the same level. The effect on sugar revenue was a rise of Rs. 52M to Rs. 357M, whereas molasses revenue fell by Rs. 5M. This fall was offset by the receipt of a similar amount from the newly introduced Bottlers and Distributors Contribution on Potable Alcohol. Turnover, therefore, rose by Rs. 52M in 2012 as compared to In addition, the Sugar Insurance Fund Board declared an event year on the grounds of drought conditions that prevailed during the latter half of 2010 and the company received Rs. 24M as compensation. The selling price of sugar and molasses ( ) Crop years 2012(est.) (Rs. per tons) Sugar 16,000 16,020 13,536 14,612 17,427 18,620 Molasses 2,600 1,982 2,689 3,016 2,181 1,361 Operating income rose by Rs. 44M, after including the non-cash impact of a positive Standing Crop Valuation movement of Rs. 23M. Operating expenses rose to Rs. 529M increasing by Rs. 74M, of which Rs. 34M were due to expenses of a nonrecurring nature as the company had to incur professional fees related to the business combination with FUEL of Rs. 7M; payments on early termination of contract of Rs. 15M and a write-off of an amount receivable from a subsidiary of Rs. 12M. In addition the company s retirement benefit liability also increased by Rs. 6M when compared to the previous year. The remainder of the increase in operating expenses is explained by the higher cane harvest tonnage, increases in the price of Fuel and fertilisers and a fall in the discount received on the Sugar Insurance Premium. The company incurred an operating loss of Rs. 31M when compared to the previous year s loss of Rs. 1M. The company realised a net loss after tax of Rs. 70M as compared to a net profit of Rs. 292M in 2011, mainly as a result of an impairment in Novelife Ltd and World Tropicals Ltd address up to Rs. 221M. Moreover, in 2011 the company had recognised gains in fair value of investment properties for the first time on reclassifying part of its land-based assets and these amounted to Rs. 92M last year, there were no such gains in Similarly, in 2011, the company had recorded a surplus of Rs. 93M on the disposal of part of its non-core investments in other companies. Additions to fixed assets amounted to Rs. 55M up from Rs. 44M last year Crop The 2012 harvest has been estimated at 280,000 tons from 3,480 ha under cultivation, which in terms of cane productivity is 3 tons per hectare higher than the 2011 harvest. The dry conditions that prevailed during the earlier part of the elongation period were very detrimental to cane growth in the sub-humid regions which will be harvested during the first half of the season. These same weather conditions were however favourable for good re-growth in the super-humid regions. The rainfall recorded as from March 2012 was well distributed and coupled with higher temperatures and good solar radiation regimes have been beneficial to ratoons harvested late in However, climatic conditions have not been conducive to sucrose accumulation and ripening, and the extraction rate for the coming crop has been estimated at 10.70%. Total sugar production should reach 29,425 tons of which 22,952 tons would stand for the share to accrue to the Company. Est Area Harvested (Hectare) 3,480 3,602 3,506 Cane Yield per Hectare (tons) Total Canes Harvested (tons) 280, , ,262 Sugar Produced per Hectare (tons) Sugar Produced (tons) 29,966 28,512 28,835 Share of Sugar Produced (tons) 23,369 22,240 22,483 Extraction /13 Financial Results The major challenge facing the industry remains the performance of the Euro since the sugar price depends on it. The company expects the sugar price for crop year 2012 to remain at Rs. 16,000 per ton of sugar. Despite the dry conditions the company is expected to realise a harvest of 280,000 tons with an accruing sugar share of 23,369 tons. The molasses price is estimated at Rs. 2,600 per ton and the Bottlers and Distributors Contribution on potable alcohol at Rs. 300 per ton of sugar. With the change in regulations brought by the amendments to the Sugar Insurance Fund Act, the company is not expected to receive any compensation. Additionally, the 70% discount on the SIFB premium for the crop year 2011 will be reduced to 50% for the subsequent years. Along with other increases in expenses the company is expected to sustain a small operating loss of Rs. 3M. After accounting for dividend income less finance charges on investments and amortisation of VRS costs, the company is expected to realise Rs. 153M as profits before taxation. Future Prospects Further to the amalgamation of DRBC and FUEL, the agricultural activity of ALTEO, in Mauritius, will comprise some 13,000 hectares of sugar cane cultivation producing some 850,000 tons of cane under one focused management structure. The combination of the most experienced human and best physical resources of DRBC and FUEL will enable a more rapid implementation of better adapted technology and cultural practices whilst achieving significant efficiency gains through cost streamlining and improved productivity. In addition to obvious cost reductions in administrative overheads and their amortisation on a much larger production base, the optimisation of agricultural and transport equipment, the extension of mechanisation of agricultural activities and more efficient irrigation methods will, in particular, result in a lower cost of production of sugar cane. Moreover, the significant area under production will justify and accelerate the introduction of appropriate technologies on a larger scale. Those technologies include a GPS guidance system combined with a Geographical Information System. Such developments will greatly improve decision making, generate operational efficiencies and optimise the yield potential. 18 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

12 Sugar Manufacturing Review of Operations Deep River-Beau Champ Milling Limited 2011 Crushing Season Extraction rate attained 10.25%, this figure is 0,25% lower than rate recorded in Extraction as from crop 2008 to 2011 The crop under review lasted from June 11 to December 3, i.e. 143 crushing days compared to 148 in Total cane crushed amounted to 678,453 tons of which 279,213 tons came from estate lands. Daily crushing rate stood at 4,744 TD compared to 4,871 TD for the previous crop. Overall Time Efficiency was 88.1 and Mechanical Time Efficiency (M.T.E) averaged 95.9; these figures were slightly better than those attained in Corrective measures taken during 2011 intercrop have proved their worth in pushing M.T.E above the 95 % mark. Total sugar production was of the order of 69,533 tons, made up of 43,579 tons of Plantation White Sugar ( PWS ) 15,815 tons of Demerara Sugars, and 10,139 tons of sugars of the Muscovado family. Production of direct consumption sugars thus reached an all-time record of 25,954 tons. Extraction Crop Week 20 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

13 SUGAR MANUFACTURING (Cont d) Reduced Overall Recovery was 86,70, i.e. 0,10% higher than the industry average of 86,60. The PWS production process was fine-tuned further in 2011 and yielded better results than in the past. Average colour content of sugar delivered to FUEL Refinery was 497 IU and this was very similar to value obtained the previous crop. It appears that a colour of 500 IU is being the best that could be obtained under conditions prevailing at DRBC. It is worth pointing out that DRBC is producing, in the same factory, sugars ranging in colour from 500 IU to 45,000 IU. During the 2012 intercrop, the factory has consolidated its ongoing programme of improvements in the field of Food Safety. The enclosing of the bagging area for Demerara Sugars was completed. The production capacity of Muscovado Sugars has also been increased, in a first stage, by 50%. This entailed the installation of a second production line since the existing equipment was already operating at its maximum limit (10,000T). The project has been designed so that, in future, a further production capacity increase to 100% can easily be achieved through the addition of a fourth centrifugal only. Moreover the recent investment has been designed in such a way as to facilitate its eventual transfer. To-date orders for Muscovado Sugars for 2012 have already outreached last year s production by some 27% thus confirming the validity of the implementation of the said project. The replacement of the ageing tubes on the Evaporator no. 3 was completed during current intercrop; this will reduce steam consumption on the evaporator station and also reduce downtime during maintenance on Sundays. The replacement of coupling box on mill no.1 has been successfully carried out. The new acquisition which has been in operation elsewhere has given entire satisfaction since its installation at the start of the present crop. The proposed rehabilitation of the C Massecuite Reheater could not be carried out due to poor state of its internals. The complete unit had to be replaced and the new equipment was commissioned at the start of crop So as to satisfy ever-increasing environmental norms, existing Waste Water Treatment Plant was upgraded by the installation of a Highly Charged Aerobic Reactor, modification of existing ponds and covering of Heavy Wash Pond to contain odour emissions. Milling Operation Data Estimated Canes Year 2012 Year 2011 Year 2010 Estate Canes 280, , ,262 Planters & Metayers 390, , ,649 Total cane crushed 670, , ,911 Extraction rate at 98.5 Pol 10,60 10,25 10,61 Total sugar produced 71,020 69,572 76,499 Special sugar produced 28,000 25,954 22,278 Sugar accruing to Miller 15,624 15,303 16,855 Days operation Hours operation per day 22 21, Cane manipulated per day 4,855 4,744 4,871 Fibre % Cane ,11 16, /2012 Financial Results With the sugar price for crop 2011 finalised at Rs. 16,020 per ton, sugar proceeds rose by Rs. 17M when compared to the previous year despite a 9% fall in accruing sugar tonnage. The company also received a compensation from the Sugar Insurance Fund Board due to adverse weather conditions. With regards to speciality sugars, the company recorded a 48% rise in income due to increased production from 22,278 tons in 2011 to 25,993 tons in 2012 and to an additional premium on such types of sugar. Operating income therefore rose from Rs. 300M last year to Rs. 345M; a 15% increase. The rise in operating expenses and finance charges was contained to 5%; from Rs. 279M to Rs. 294M for The company therefore realised a net profit of Rs. 40M as compared to last year s results of Rs. 18M. Crop 2012 Initial estimates of cane production for crop 2012 stand at 670,000 tons. When compared to an average harvest of 780,000 tons, this underperformance is explained by adverse conditions affecting cane growth and the gradual abandonment of cane fields by small planters. On the other hand the production of speciality sugars will witness an increase in line with the investment in equipment to 28,000 tons in aggregate. According to estimates the sugar price is expected to be at Rs. 16,000 per ton. No compensation is expected from the Sugar Insurance Fund Board for the coming year. Future Prospects The creation of ALTEO, in the context of the forthcoming closure of the Deep River-Beau Champ sugar factory, will greatly facilitate the smooth transition to the establishment of one major sugar producing operation in the East which is in line with government policy. FUEL sugar factory is ideally situated to minimise cane transport costs and already has the capacity to process some 1M tons of cane. With the closing down of the DRBC factory, the canes from the combined factory areas will add up to some 1,3M tons. Further to the Amalgamation, it is projected to increase the capacity of FUEL factory to some 350TCH in order to be in a position to crush the greater part of such cane throughput. This should result in the production of some 130,000 tons of sugar. Reduced Overall Recovery ,70 86,36 In the context of this expansion investment plan, emphasis will be put on: Bagasse % Cane 31,0 31,9 31,8 - milling technology to achieve higher calorific value bagasse for energy production; kwh/t.cane 27,7 27,62 27,69 - process steam savings resulting in optimum internal thermal consumption; - further process automation with a view to reducing costs and improving sugar recoveries; and - an integrated approach to environmental issues. 22 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

14 Sugar Refining Review of Operations FUEL Refinery Limited 2011/12 Review As mentioned in the previous report, an additional conditioning unit that would enable the refinery to operate at 100% of its capacity was commissioned at the beginning of the 2011 harvest. This additional investment of some Euros 3.0M has now resolved the sugar caking problem, encountered at delivery. The table below summarizes the operational and financial results for the year compared to those of the Business Plan. All parameters are on target. However, the Company remains in a difficult cash situation mainly as a result of the additional investment in the second conditioning silo. Year Actuals Business Plan Budget Production (tons) 151, ,680 Sales (euros) 7,388,005 7,466,000 Operating Profit (euros) 3,183,842 2,962,000 Profit before tax (euros) 2,195,098 1,981,000 For the first time during the year under review, the activity has received, through the Mauritius Sugar Syndicate, 20,650 tons of imported non originating sugars for refining, thus supplementing the availability of 144,000 tons locally produced plantation white sugars. The production of white sugar resulting from such imported raw material is destined mainly to the domestic market but also to the EU market within the regulatory maximum blend mix. Future Prospects It is expected that Fuel Refinery Limited will receive sufficient domestic Originating Sugars and imported Non Originating Sugars to supplement the 110,000 tons production of Plantation White Sugar of F.U.E.L Sugar Milling Company Limited and Deep River-Beau Champ Milling Ltd, to reach a refined sugar production of 160,000 tons for the next financial year. A number of options to alleviate the shortage of steam and electrical energy during power plant maintenance are being investigated. At the same time, effluent and sugar losses management are under continuous scrutiny, and an investment towards mitigating peaks and troughs in steam consumption of the refinery is under study. 24 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

15 Energy Review of Operations During crop period 2011, the 3,8 MW alternator rotor was re-insulated on site and that of the 24,6 MW unit had its block system replaced during maintenance period Both interventions were carried out by an outside service provider. Annual Overall Process Efficiency measured by the ratio of unauthorized stoppages to allowable outages stood at 99.4 % compared to 98.7 % the previous year. This figure is the highest attained since One noticeable intervention during maintenance period 2012 was the replacement of the lower bank of tubes of the Economizer and the addition of a set of tubes on the superior bank of the equipment. This has resulted into a gain in efficiency of 3% on bagasse combustion and 1% on that of coal. During the 2013 maintenance shutdown period, the most significant maintenance activity will be carried out on the boiler, namely, the thermal isolation of the grit collector and the replacement of casing and cladding of space above combustion chamber of the boiler. 2011/2012 Financial Results Energy export to the national grid, in 2012, resumed its usual trend as the Company reverted to its normal maintenance shutdown of 45 days as compared to 90 in the previous year. As a result, turnover rose from Rs. 119M to Rs. 352M. Consolidated Energy Co. Ltd ( CEL ) 2011/12 Review Crop season 2011 started on June, 11 and lasted for 143 days ending on December 3. Total cane processed was 678,453 tons against a budget of 680,000 tons Bagasse % Cane averaged 31.9 and compares favorably with an estimate of 30 %. Electricity supplied to the grid was budgeted at 230 kwh per ton bagasse and attained 212 kwh, i.e. a reduction of 7.8 %.This is due to the fact that there was no surplus bagasse available after end of crop Mill electricity consumption was kwh compared to the previous crop. In the same vein, a slight increase in steam consumption per ton cane was observed, 450 to 453Kg. This situation may be explained by a lower daily throughput at the mills. During the financial period under review, CEL power plant supplied 42.4 GWh to the grid while burning bagasse, compared to a budget of 46.5 GWh. This shortfall is mainly due to two weeks delay in start of crop Electricity generation burning coal during the intercrop, amounted to 81.6 GWh. This figure was 0.5 % lower that budget of 82 GWh. For the year under review, CEL supplied a total of 124 GWh instead of GWh as per budget. The ratio of kwh from coal combustion, supplied to the grid reached 1,490 kwh/ton, thus returning to values more in line with those observed in the past. Operating expenses rose to Rs. 364M for The increase of Rs. 122M was due to the increase in coal consumption costs. With the increase of such costs the company sustained a loss of Rs. 8M as compared to Rs. 12M in The cost of coal amounted to Rs. 229M for 55,990 tons of coal consumed whereas last year the plant had consumed 24,813 tons of coal for Rs. 105M. The landed coal cost per ton for 2012 was therefore Rs. 4,085. While this cost compares favourably to the previous year s cost of Rs. 4,240 per ton, it should be noted that, due to the power purchase agreement in place, for every kwh exported from coal the Company receives on average Rs whereas the cost to produce the same amount of electricity from coal is around Rs This deficit on the export of energy from coal, despite a significant increase in efficiency for the year under review, explains in large measure the loss making position of the company. Capital expenditure was contained at Rs. 28M when compared to Rs. 42M in /2012 Financial Results The Company is expected to realize a meagre profit of Rs. 2M. The cost of coal is expected to decrease to Rs. 3,880 based on an average FOB price of coal of $95 and with the US dollar at Rs. 30. The Company is expected to generate and sell 119 GWh to the national grid of which 73 GWh from coal. It is to be noted that the power purchase agreement requires the Company to provide a minimum of 110GWh. Future Prospects Following the closure of DRBC milling factory scheduled after the 2013 crop and the ensuing expansion of the sugar factory at Union Flacq, the FUEL Steam and Power Generation Company Limited (FSPG) will benefit from the significant additional availability of bagasse and will thus be in a position to produce a much higher proportion of its production from the renewable source of energy. This development will not only ensure a healthy income stream to the operations in the short to medium term but will place FSPG in an ideal position to envisage in the years to come the setting up of a new higher efficiency power plant. 26 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

16 Regional Development EXECUTIVES REPORT 28 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

17 TPC Review of Operations tpc ltd ( tpc ) 2011/2012 Season Cane Production During the 2011/2012 season a total of 824,162 tons of cane were produced from a harvested area of 7,282 hectares. This was a record cane production for TPC, surpassing the previous season record by 3% and the budget by almost 14%. All the available cane could however not be harvested before the end of the crushing season due to the yields being unexpectedly high. It is estimated that about 37,000 tons of cane have been carried over to the next season. Excellent cane yields of tons per hectare for an average cane age at harvest of months were achieved. Such an increased cane production resulted from the continued replacement of old varieties as well as the improvements in fertilisation and irrigation. Sucrose content averaged 12.75% which saw a slight decrease compared to the figure reached during the previous season. The area re-planted during the 2011/2012 season amounted to 1,735 hectares, mainly with varieties from South-Africa and Reunion Island. A total of 568,998 tons of cane and 57,800 tons of sugar were produced from newly introduced varieties. The program of replacement of the obsolete hop-along irrigation system by the semi-solid system is progressing satisfactorily and the last 2 blocs totalling hectares should be completed early in the 2012/2013 financial year. The trial to evaluate the performance of drip irrigation in saline and sodic soils has produced promising results with average yields of 159 tons per hectare achieved. This was about 20 tons per hectare more than the furrow irrigated control portion of the experiment. Extensive canal lining works were carried out during the rainy season, concrete lining was used for the main canals and HDPE for the secondary canals; the objective is to increase the volume of water reaching the fields by reducing seepage in canals. About 45% of main canals have been lined to date and only 7% of secondary canals. A detailed soil survey was carried out on a portion of about 600ha of less productive land in the southern part of Kahe area to evaluate if there is a potential for expanding cane production. Sugar Production The amount of cane crushed per hour for the 2011/2012 season, at tons, was slightly higher than the previous year (157.8) but slightly lower than budget (160.0) mostly due to poorer cane quality towards the end of the season. Mill extraction at 95.9% was negatively impacted by higher fibre and lower sucrose than past years average while boiling house recovery at 84.5% and total losses at 2.4% cane were better than the previous season but slightly below budget. Factory time efficiency was higher than the previous season but lower than the budget due to mainly mechanical breakdowns, while overall time efficiency was better than budget and the previous season mainly due to less rainy days. Finally, a record sugar production of 86,139 tons was achieved beating the previous record of the previous season and the budget by 8,400 tons mainly due to more cane crushed and better factory recoveries. Other Activities Over and above the production of electricity for irrigation and other internal requirements, power export to the national grid amounted for 13.4 GWh by the end of June This achieved export is lower than the budget due to the instability of the national grid which prevented TPC from exporting as much power as it could have had. Industrial relations continued to be cordial during the course of the year. The annual wage negotiation between the workers union, TASIWU and management was successfully conducted and an agreement was signed on May 30, 2012 granting a substantial salary increase of 19% to the employees on the back of an equivalent inflation rate, year on year to March ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

18 TPC Ltd (Cont d) Financial Results Monthly sales of sugar for the financial year were all above the budget due to strong demand and higher production save for June subsequent to the market being under pressure of imported sugar entering Tanzania and TPC sales territory as from April A total of 89,136 tons of sugar was sold for the financial year against an original budget of 80,892 tons. Prices in local currency were higher than the original budget by 13.2% fuelled by high sugar prices on the world market and strong demand. The molasses sold during the financial year amounted for 36,690 tons, higher than the original budget by over 33% as a result of increased production and strong demand from local players. Sales in local currency increased by 29% during the year under review; however due to the reduced parity of the Tanzanian shilling to the USD the sales increase in USD was 25% reaching USD 75.1M. Cost of Sales increased by 19% (increase of 23% in local currency) and Other Expenses by 15% (increase of 19% in local currency). Finance Costs increased by 54% or USD 0.5M mainly as a result of exchange losses incurred in relation to foreign currency positions held. These increases in costs coupled with a favourable valuation impact on Consumable Biological Assets of USD 11.8M resulted in net profit Before tax increasing to USD 47.9M, a USD 16.4M or 52% increase on prior year. With the tax charge increasing by USD 5.1M the Net Profit after Tax showed an increase of USD 11.4M or 51% to USD 33.5M for the year. In terms of cash flow generation the company showed a marginal increase in the year end cash position of USD 0.2M which resulted in the closing cash balance of USD 2.3M. This increase in cash came via an increase in Net Cash from Operating Activities of USD 33.1M, of which USD 10.3M was used in Investing Activities, USD 2.5M in loan repayments and a further USD 20.1M in dividends. Total Assets reflected an increase of USD 20.4M largely as a result of increases in the biological assets valuation and investments in fixed assets. On the liability side the Non-Current portion increased by USD 3.2M due to deferred tax increase partly offset by lower loan balance Offcrop The lower than average rainfall received during the long-rains season between March and May 2012 which could not be compensated for through irrigation during this particular time due to major lining and maintenance works being undertaken, will certainly have a negative impact on productivity and cane quality. On the factory side, a second bank of economizer supplied by ISGEC has been installed. The erection of the continuous vacuum pan (CVP) was complete for start-up. Mill No. 1 electrification was completed a few days before the start-up of the crop; the commissioning went smoothly and the power absorbed is better than expected. Outlook 2012/2013 A higher crop, of 852,793 tonnes, compared to last season has been estimated for the 2012/2013 season and sugar production has been budgeted to the level of 90,828 tonnes. The new season started on time on June 12 and is planned to end on March 14. For the first few weeks of the season cane yields and quality have been lower than budget as the effect of poor rain and lack of irrigation between March and May 2012 (during which time the irrigation pumps are maintained and canals lined) had a higher impact on cane productivity and quality than expected. Sugar prices and sales volumes in the first 12 weeks of production have been lower than estimated due to high competition with imports. TPC has lowered its price twice on July 5 and August 6, bringing its actual selling price at 5.7% lower than budgeted. It is expected that once the imported sugar has been absorbed by the local market, which should be the case by end-december 2012, sugar prices and volumes should normalize towards budgeted figures. ALTEO S Regional development Future Prospects Building upon the success story of TPC and on the improved knowledge of the dynamics of the sugar industry and markets, one of the major objectives of ALTEO will be to pursue the expansion of its sugar operations in the region. The increased sugar consumption in Africa driven by population growth and economic development has led to sustained commodity (including sugar) prices, and in particular in deficient sub-regions. This is coupled with a rising demand for energy which most often cannot be met from traditional sources. Such an environment is highly conducive to the setting up of sugar cum energy operations in the appropriate locations. The proposed merger will greatly facilitate such new ventures in the regions through the availability of the equipment and the human resources of Mon Loisir and DRBC sugar factories after their respective closures. Potential projects have already been identified in the East African region and investigations are underway in parallel with discussions with potential strategic partners. 32 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

19 Property Development & Tourism EXECUTIVES REPORT 34 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

20 Anahita Hotel Limited ( AHL ) The Four Seasons Resort Mauritius at Anahita ( Four Seasons Resort ) has maintained a positive growth trend despite unfavourable prevailing conditions for 5-star resorts on the island. The resort s average annual occupancy rate showed a 10 point increase to 60%. Moreover, the realisation of positive EBITDA of Rs M represents a net improvement of 8.7% for the hotel as compared to the previous year. Four Seasons is a well established brand with a solid reputation on the international scene and the Four Seasons Resort Mauritius at Anahita is the leading hotel within its local competition set of 5-star hotels. In the last year, the Resort has been rated No1 by its guests through Trip Advisor from among the top 25 hotels in Africa and the resort s Italian restaurant, Aquapazza, was recognized by the UK s Daily Meal as one of the top 100 hotel restaurants in the world. Looking ahead, Four Seasons Resort is expected to perform well by securing an occupancy level superior to that of the previous year. Anahita Irs Forty Limited ( IRS FORTY ) IRS Forty is a 100% subsidiary of AHL and is the promoter of the 45 exclusive private residences completed in the summer 2008, located at and managed by Four Seasons Resort Mauritius at Anahita. Homeowners benefit from Four Seasons world-renowned, personalised and attentive service and rental management expertise, and are benefiting from improved yields resulting from year round rental service. At the financial year s end, only 4 private residences remained to be sold from the already-constructed inventory, following which renewed interest developed resulting in 1 sale during the month after the end of the financial year. A number of leads are also in the pipeline for the other remaining properties. The resale market remains strong and improvement in capital gains is being achieved, showing a positive and upbeat trend which is likely to attract increasing investor market interest. 36 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

21 Anahita Estates Limited ( AEL ) Anahita continues to provide a safe investment case due to its location in Mauritius, which is a popular tourist destination with a secure political and economic profile and good return potential. Moreover, as Anahita Mauritius enters its 5 th year of existence it is well placed to take its position at the pinnacle of a new wave of landmark property developments in the Mauritian landscape. The year ended June 2012 witnessed an uptake in sales momentum with the sale of 5 plots of serviced residential land, 2 Lunea villas out of the remaining 3 which have already been constructed, and 1 off-plan (VEFA) villa at Solaia. Additionally, the secondary market for villas and apartments within the resort has been very active. In financial year ended June 2012, 3 villas and 5 plots of land were handed over while, in the year 2011, 6 villas of higher value were delivered. This explains the reduction in turnover for the year under review. The decrease in gross profit for the year ended June 2012 is also the result of a more aggressive amortisation policy of the deferred expenditure. A higher proportion of soft marketing and infrastructure cost incurred in prior years was released to the Income Statements. This prudent approach is dictated by the ongoing difficult market condition. The product diversification strategy of incorporating serviced residential land for sale triggered signs of positive market absorption. Along with the decision of the Board of Investment ( BOI ) in July 2012 to reduce the price threshold for the sale of land from $500,000 to $350,000, the sale of serviced land offers buyers an optimal forecast of an attractive investment opportunity for development and profitability or a leisure lifestyle purchase within a 5-star residential estate. It also allows the promoter to offer prices which are aligned with current market rates for this type of product. Anahita Golf Limited ( AGL ) Four Seasons Golf Club Mauritius at Anahita ( the golf course ) maintained its trend of positive growth for the year ended June 30, The 60 Lifetime Golf Memberships were sold out, reaffirming the golf course as a prime golf destination in Mauritius. The management s price strategy to slightly reduce its rate per round resulted in an increase in the number of rounds played, as well as in its food and beverage and pro-shop revenues. Improved operating performance and proactive marketing and management initiatives, combined with increased occupancy levels from both resorts, contributed to the increase in player rounds. AGL, in which Alteo Limited has an effective holding of 80.5%, is showing a positive outlook with turnover growth of 9% and a loss reduction of Rs. 3M. The overall outlook for the year ahead is positive, resulting primarily from a number of golfing events scheduled during the summer months, which are expected to bring additional international visibility to the golf course. Indeed, landmark events such as the annual AfrAsia Golf Masters, together with strategic sponsorships of professional golfers Nicolas Colsaerts (European Tour) and Hennie Otto (Sunshine Tour) are strengthening the golf course s visibility on the international golf scene. Plans are in the making for the development of a second annual international tournament scheduled to be held for the first time during May Secondary market transaction values on resales still enjoy robust growth momentum, particularly for prime ocean front real estate which confirms Anahita s prime position on the Mauritian market. Diversification of the product offering remains a priority this year, in order to seize the opportunity of sustained sales and meet buyers and investors expectations. Whilst single detached homes prevail as the most popular choice, town homes and duplexes are gaining greater traction. Further to positive market feedback in respect to price points, architecture and amenities obtained through a survey carried out in early 2012, the design and development of a more affordable product is well on track for a pre-launch in December On the construction front, with the initial stages of development at Anahita having been completed since early 2008, more than one third of its planned properties is now fully operational. Construction works concluded during financial year end of June 30, 2012 include: - Infrastructure works at The Fairways Lakeside; - Construction and delivery of a villa at Solaia. Ongoing works for completion during the next financial year include: - Construction and delivery of a villa at Solaia; - Water feature at The Fairways Lakeside; - Green recreational landscaped areas forming Solaia Park within Solaia. Construction activity shall regain momentum in the following financial year with the construction of the new product diversification mentioned above. 38 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

22 CIEL Properties Limited ( CPL ) Since 2011, CPL has successfully diversified its revenue stream through a broader client base and wider service offering comprised of development management, asset management, accounting and financial advisory and sales and marketing services. The development of Anahita Mauritius however remains the main revenue stream of CPL. In response to poor market demand in 2011, a strategy of lowered real estate product pricing was adopted to foster market absorption pace. The company profitability has been affected but remains positive at MUR 2.5M with a robust outlook for the next financial year with synergies involved in the creation of Alteo Limited and further projects in the pipeline. Mr. Patrice Legris replaced Mr. Timothy J. Redman in March 2012 as CEO of Ciel Properties Limited. Mr. Legris brings with him an acute knowledge of the tourism industry. His strong business and marketing insight will be essential to drive robust performance for the company whilst supporting Anahita s real estate products. Anahita Residences and Villas Limited ( ARVL ) Operated by Anahita Residences and Villas Limited (ARVL), Anahita The Resort (ATR) is the administrator of the property rental program at Anahita Mauritius and manages the hotel facilities and amenities at La Place Belgath, the lively waterfront village. With its revised positioning as a 5-star resort in October 2010, ATR is well integrated within the Mauritian hotel industry and has obtained the esteem and trust of the international travel industry. Through its focussed marketing strategy and a proven ability to take advantage of key opportunities, ARVL has continued to show resilient performance despite the very unfavourable impact of the current economic climate on the island tourism industry. Strong occupancy growth of 34% has led to solid turnover growth from Rs. 147M last year to Rs. 186M this year. The strategic decision to reduce the resort s average room rates yielded good results, leading to a reduction of its previous year s loss situation from Rs. 52M to Rs. 31M. Marketing efforts to improve the capture rate of bookings made on the website were important in increasing occupancy rates and shall be strengthened for the next financial year through the resort s updated website which went on line at the start of July Its integrated booking engine is anticipated to generate 25% of total bookings by offering optimal visibility of the resort via the web. Property Development FUTURE PROSPECTS On top of the significant land holdings which will be destined to remain under sugar cane cultivation for the foreseeable future, ALTEO Limited will hold substantial other property assets with tremendous development synergies and potential in the short, medium and long term. These include: - The already developed Anahita World Class Sanctuary and the adjacent Beau Rivage Domain with a combined foot print of some 400 hectares in a unique environment on the East coast; - Some 250 hectares of prime development land adjoining Anahita on which conversion permits have already been obtained, including the site of the present DRBC sugar factory which will become available in the very near future; - Substantial holdings with development permits in the second and third phases of the Mont Piton development after the very successful completion of the first phase; - Ongoing residential and commercial developments around the main existing urban areas at Trou d Eau Douce, Providence, Bonne Mère and Bel Etang; and - Additional land conversion rights for the equivalent of no less than 300 hectares. Looking ahead, Anahita The Resort is showing promising signs of further establishing its position within the east coast local tourism scenery. Reservation levels for the end of the year are indicating that the peak period occupancy level should bring in additional revenues, thereby contributing to the strengthening of the cash position of the company. Conclusion In conclusion, the past year has seen improvement in the occupancy levels at Anahita The Resort and Four Seasons Resort with a knock-on effect for Anahita Golf. Combined with AEL s strategy to maintain a marketing presence on the local and international scenes and some hopeful signs of an increase in sales levels, homeowners at Anahita Mauritius are beginning to see more activity creation within the estate and to feel a stronger sense of investor confidence. The vision of a sanctuary where a buoyant yet peaceful lifestyle may be enjoyed is coming to life. 40 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

23 Other Activities EXECUTIVES REPORT 42 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

24 Horticulture Local sales went up marginally to Rs. 12M, against Rs. 11.3M the previous year. Total operating costs for the year went down to Rs. 66M from Rs. 68M last year, so that the financial year ended with a net loss of Rs. 12M and a cash deficit of the same level. World Tropicals ltd The year under review proved to be a difficult one for this activity. Adverse conditions prevailed both at supply and trade levels on the export market. Poor climatic conditions in the first semester and further withdrawal of out-growers had a negative impact on supply, with the result that the number of units exported for the year dropped by 10% to 3.1M stems. At the same time, the global economic climate did not stimulate much enthusiasm on our diversified markets, Japan, still recovering from the last Tsunami, was affected the most - Revenue fell by Rs. 3.4M (18%), compared to the previous year. Europe, Middle East, Far East, Australia and Oceania were not spared either with exports on these markets dropping down by Rs. 5M (16%) on a year to year. New markets with sales of Rs. 1.7M, were explored in North America, Russia and the Netherlands. Locally, Mascafleurs on the retail side managed to improve its performance slightly despite declining sales observed in the hotel industry. Financial Performance Revenue for the year amounted to Rs. 53M. The downturn recorded on the international markets and supply lead to a reduced export turnover of Rs. 41M compared to Rs. 47.7M in year 2010/2011. Future Prospects In view of the anticipated further cessation of business by out-growers in the first semester of the next financial year, the company has initiated an important replantation program, upgrading and diversifying the existing product range and markets. Growing conditions being favourable, improved results are expected as from the second quarter onwards, as enhanced in-house production mitigates reduced outgrower supplies. Structural reforms have also been implemented at administrative and operational level in order to bring costs downward. Pending no major further deterioration on our export markets, the company is expected to improve its performance significantly in the next financial year. Microlab The continued downsizing of the anthurium cultivation has again had a negative impact on the company. Turnover for the year fell to Rs. 4.2M against Rs. 4.4M for the previous year. Cost excluding Consumable Biological Assets (CBA) was monitored at Rs. 5.3M compared to Rs. 5.6M in the previous year. Positive movement in CBA of Rs. 531K was recorded for the year compared to a negative Rs. 77K in 2010/11. In that vein, research is ongoing and the company will soon be launching new propagated vegetative material to stimulate turnover growth. Contact at international and regional levels have also been initiated and should give results in the medium to longer term. 44 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

25 Health Care & Life Science Novelife Limited ( Novelife ) It is to be recalled that through Novelife Limited, a joint venture company with CIEL Investment Limited, Alteo holds an interest in the healthcare and life sciences sector. Novelife holds a 28.5% stake in Medical and Surgical Centre Limited ( MSCL ), the holding company of Fortis Clinique Darné, a 50.01% stake in Noveprim Limited and a 93% stake in Noveprim Europe Limited. Medical and Surgical Centre Limited Continued focus to increase medical programs and enhance patient centricity has lead to satisfactory financial results in the financial year ending March 31, The Group achieved a 16.2% growth in turnover to Rs M, compared to Rs M in financial year 2010/2011. At the same time, net profit increased by 10.7% from Rs. 29.9M in financial year 2010/2011 to Rs. 30.9M in financial year 2011/2012. This profit figure excludes the one time exceptional expense of Rs. 7.2M on the demolition of the ex-mandarin Hotel. The company has for the first time paid an interim dividend of Rs per share during financial year 2011/2012 and had approved a final dividend of Rs per share. The results for the first three months of its financial year (June 30, 2012) show that MSCL continues to perform better than budget. Noveprim Limited ( Noveprim ) As anticipated in last year s report, Noveprim posted a significant loss as a result of a stock write down in the wake of increasing competition from Asia and the difficult general market environment which have dimmed the prospect of future sales. Noveprim thus recorded for the year to December 2011 a fall in turnover to Rs. 316M and losses amounting to Rs. 257M after a one-off downward adjustment of Rs. 296M to the current (biological) assets held for sales under the IAS 41 valuation method. The impact of this adjustment was already contained in DRBC Group results to June The financial results for the year 2012 are also likely to be significantly affected by the continued downward pressure on sales volumes, prices and the very difficult international market environment. Management has, during the year, taken actions to review the costs and organization structure of the company and a recovery is expected as from year Noveprim Europe Limited ( NEL ) For year ending December 2011, the turnover was in line with budget figures and with the strict monitoring of costs, the net profit finally reached Rs. 17,9M compared to the budgeted figure of Rs. 15,4M. NEL is still facing a competitive market situation leading to contraction in prices combined with a persistent low level of activity in the preclinical research sector worldwide. To resist in this thorny environment and ensure future growth, NEL will be shortly offering other primate sources with the aim to gain additional market shares. 46 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

26 Leisure & Entertainment Ciel et Nature Limited ( CNL ) The slowdown in the tourism industry and lower international and local market spending power have been challenging for CNL in the financial year under review. The decrease in the number of visitors together with a reduced spend per visitor thus resulted in a slight decline in the financial performance of the company. In the face of such difficult market conditions, it was decided to outsource the operational activities at Domaine de L Etoile, to TerrOcéan Ltd, a subsidiary of Duprat Ltd. which is an established leader on the French leisure market, which shall be responsible for the management of leisure activities whereas Anahita Residences and Villas Ltd shall take over the Food and Beverages operations as from September 1, It is believed that this operational shift shall add considerable value to CNL through the expertise and knowhow of renowned and experienced operators. Value creation with diversified product offering and improved standards of services will constitute the main considerations for an optimal company performance. 48 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

27 CSER Corporate Social & Environmental Responsibility 50 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

28 CSER ALTEO has been committed to a sustainable development policy for many years, mainly through CIEL Group s Fondation Nouveau Regard ( FNR ), accredited by the National CSR Committee as a Special Purpose Vehicle ( SPV ). This year, FNR spent nearly Rs. 15M on various projects, out of which Rs M came from the CSR contribution of ALTEO. Social empowerment and fight against poverty The Fondation Nouveau Regard has been empowered to receive the CSR tax contribution of the subsidiary and associate companies of ALTEO since February It has since spent these funds on projects corresponding to the criteria set by its Board of Directors, while following the legal guidelines of the law governing this tax. Thus, this year, 80% of the amount received was used to finance projects managed by local NGOs in such areas as the fight against poverty, education, disability and health, as follows : In line with government policy, the struggle against poverty has been the spearhead of the FNR s action this year. At the end of 2010, FNR launched a large-scale integrated community development project in partnership with Caritas: La Caze Lespwar. This project, located at Solitude, assists communities living in poverty and facing difficulties in the regions of Solitude, Triolet, Plaine des Papayes, Pointe aux Piments, and now reaching even as far as Arsenal. It provides services adapted to the needs of these population groups: education and training, community gardening, breakfast for pupils, sports, holiday activities for children, activities for women, and, in the next few months, a solidarity shop and a pre-school centre/creativity centre. An average of 250 persons per week uses the centre. In addition to this major project, FNR continues to foster the integration of street children by supporting the SAFIRE voluntary association, of which it has been a partner since In the field of education, FNR supports alternative education. Thanks to the ANFEN network and to the Zippy programme of ICJM, children with learning difficulties have access to education. 25% 52% 19% 9% 52% 20% Fight against poverty Education 19% Disability 9% Health FNR is also strongly committed to providing disabled children with access to education: thus, in January 2010 it opened the first secondary school for deaf children in collaboration with the NGO Society for the Welfare of the Deaf. In 2010, the Form 1 pre-vocational programme was launched with 20 pupils, then From II in 2011 and Form III in Today, around 50 children benefit from schooling and will be channelled to vocational training courses at the end of it. Overall, this year Fondation Nouveau Regard has helped 3,500 direct beneficiaries and 60,000 indirect ones thanks, among other activities, to the coming publication of 40,000 information and prevention brochures concerning the most common cancers in Mauritius, in partnership with the NGO Link to Life. In November 2011, FNR also sponsored the film Hope, of the NGO Friends in Hope, which supports persons with mental disorders and their families. 52 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT

29 CSER (Cont d) Sport Sport is a unifying factor for gathering young people in pursuit of sound and positive values. That is why this year ALTEO has supported the Curepipe Starlight Sporting Club and the Faucon Flacq Sporting Club ( FFSC ). FFSC has benefited from the sponsorship of ALTEO, along with on-going financial contributions from FUEL. What started out as a football team grew into a club offering a variety of sporting activities, including volleyball, athletics and boxing. Children between the ages of 14 and 16 train at the club three days a week and besides learning to play a sport, they also learn the value and discipline of being part of a team, and develop the skills and attitudes that can help them to succeed. Environment In 2006, ALTEO became a partner in the opening of the Vallée de Ferney to the public, while saving it from the destruction which had been planned for it FNR has an ongoing commitment to support the Vallée de Ferney, more particularly for the setting-up of a field station with the objective to serve as living and working research quarters for biodiversity conservation at Vallée de Ferney. The field station will also provide study experience opportunities to local nature NGOs, University of Mauritius students and foreign researchers. For the future ALTEO will continue to fulfil the various commitments of DRBC and FUEL in CSER activities which focus on: Social Housing, Socio-Economic Development, Eradication of Absolute Poverty, Education and Training, Childcare and Health. Those various CSER commitments will be met through two Special Purpose Vehicles, the CIEL Group s Fondation Nouveau Regard and GML Fondation Joseph Lagesse. 54 ALTEO ANNUAL REPORT 2012 ALTEO ANNUAL REPORT