SEM S MISSION STATEMENT

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1 ANNUAL REPORT 2017

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3 Annual Report SEM S MISSION STATEMENT SEM is committed to becoming a World Class Stock Exchange. We will strive to position the Exchange as a service-driven and operationally excellent organisation with world-class trading and settlement capabilities, which incorporate and maintain the fundamental principles of market integrity, investor protection and efficient discovery. We undertake to actively pursue startegies that contribute to the growth of the capital market activities in Mauritius. In the pursuance of our mission, we endeavour to further the interests of the investing community, the business community, the government and nation, and our members, shareholders and employees.

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5 TABLE OF CONTENTS Annual Report Pages Group Financial Highlights 04 Performance Highlights 05 Corporate Review 06 Board of Directors Profile SEM Management Profile Directors Report Chief Executive s Report SEM Corporate Governance Report Operating and Financial Review: 37 Listing activities Trading activities Marketing activities Legal activities Financial review Financial Reports 64 Directors Responsibility Statement / Certificate from the Company Secretary 66 Auditors Report to the Shareholders of the Stock Exchange of Mauritius Ltd Statements of Financial Position 70 Statement of Comprehensive Income 71 Statement of Changes in Equity The Group 72 Statement of Changes in Equity The Company 73 Statements of Cash Flows 74 Notes to the Financial Statements Additional Information 104 Member Companies Listed Companies - Official Market (OM) Development & Enterprise Market (DEM)

6 04 The Stock Exchange of Mauritius Ltd GROUP FINANCIAL HIGHLIGHTS FINANCIAL YEAR (FY) 2017 (Restated) 2016 For the year (Rs'M) Revenue Other Income Administrative expenses (83.4) (75.9) Operating profit Net profit attributable to equity holders At year-end (Rs'M) Net Current assets Total assets Total liabilities Shareholders' funds (Rs'M) - Stated Capital Reserves Number of shares issued 5,000,000 5,000,000 Revenue growth 0.5 (24.2) Operating profit margin Net Profit Margin Cost-to-income ratio Return on Equity Per share Data Basic earnings (Rs) Net Tangible Assets (Rs) Net Dividend (Rs) Definitions Operating Profit Margin Operating Profit Margin is the operating profit of the group expressed as a percentage of revenue. Net profit Margin Net profit Margin is the net profit attributable to equity holders, expressed as a percentage of total revenue of the group. Cost-to-income ratio It is the ratio of total expenses to total revenue of the group. Return on Equity It is the net profit attributable to equity holders, expressed as a percentage of shareholders funds. Net tangible assets It is the total assets less total liabilities of the group, divided by the number of shares issued. Net dividend It is calculated as the dividends proposed divided by the number of shares issued.

7 PERFORMANCE HIGHLIGHTS Annual Report Key Market Statistics FINANCIAL YEAR % Change Total Turnover (Value) Rs bn OM DEM Number of Sessions Average Daily Turnover (Value) Rs m OM DEM Total Number of Shares Traded (m) OM 1, ,192.5 (42) DEM Accounts held with the Central Depository &Settlement Co. Ltd (CDS) Number of Securities accounts opened 470, ,228 8 Number of Shares Deposited (bn) (65) Aggregate value of shares held (Rs bn)

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9 CORPORATE REVIEW The Stock Exchange of Mauritius Ltd Annual Report 2017

10 08 The Stock Exchange of Mauritius Ltd BOARD OF DIRECTORS PROFILE CHAIRMAN Shivraj (Kevin) Rangasami Non-Executive Director, is a Fellow of the Association of Chartered Certified Accountants, UK. He reckons more than 15 years of experience in the financial services industry and has spent the last 10 years in the Capital Markets and Securities sectors in a senior management role. He is the Chairperson of the SEM. He is currently the Managing Director of MCB Stockbrokers Ltd and is also a Non-Executive Director of the CDS. VICE CHAIRMAN Prof. Donald Ah-Chuen Non-Executive Director, is a fellow member of (a) the Institute of Chartered Accountants in England and Wales, and (b) the Institute of Chartered Accountants of Australia. He holds a M.B.A. degree (Strathclyde) and is also a M.C.I.P.D. (Member of Chartered Institute of Personnel & Development, U.K.). He is the Vice Chairperson of the SEM and a member of its Strategic Development Committee. He is currently a Director of the ABC Group and the Managing Director of ABC Banking Corporation Ltd. He was Chairman of the Tertiary Education Commission of Mauritius and President of the Mauritius Chamber of Commerce and Industry in 2000 and 2006, and is an Executive Committee Member of the Chinese Chamber of Commerce. DIRECTORS Sunil Benimadhu Joined the SEM as Chief Executive in May He was appointed Executive Director of the SEM in October He holds a M.B.A. in Finance and Investment from the University of Illinois, United States. He also holds a D.E A. in Development Economics and a Maîtrise in Macro-Economics from the University of Aix-Marseille, France. Sunil is the Chairman of Global Finance Mauritius, the apex body of private sector operators in the Financial Services Industry in Mauritius. He has been elected in September 2017 for a new three-year term on the Board of the World Federation of Exchanges (WFE), an association of the World s leading Stock Exchanges. Sunil was the President of the African Securities Exchanges Association (ASEA) an association of 23 Exchanges operating on the continent, from August 2010 to November From 2002 to 2004, he was a member of the Executive Committee of the South Asian Federation of Exchanges (SAFE), which comprises twelve Stock Exchanges of the South Asian region. From 2001 to 2003, he chaired the SADC Committee of Stock Exchanges (COSSE), an association of stock exchanges which includes ten exchanges of the Southern African region. Nitish Benimadhu Non-Executive Director, holds a Honours Degree and a Masters Degree in Economics from the University of Ottawa, Canada. He currently holds the position of Senior Manager - Capital Markets and leads the non-insurance cluster of SWAN. Nitish has more than 10 years experience in the finance industry and has expertise in the life & pension business, general insurance, reinsurance and asset management. He also holds directorship positions on a number of companies in various sectors of the economy. He is a member of the investment committee of SWAN. He is also the Chairperson of CDS. Reedhee Bhuttoo Non-Executive Director, is an Associate member of the Chartered Institute of Securities and Investments (UK). She also holds an Advanced Professional Diploma in Marketing from The Chartered Institute of Marketing (UK) and a Degree (Hons) in Economics from the M.S University of Baroda, Gujrat, India. She is currently the Head of SBM Securities Ltd, member of the SBM Group of companies. She is also currently a Non-Executive Director of the CDS, and the President of the Port Louis Stockbroking Association.

11 BOARD OF DIRECTORS PROFILE Annual Report DIRECTORS Dipak Chummun Non-Executive Director, is a Fellow of the Institute of Chartered Accountants in England and Wales (ICAEW) and holds a degree in computer science from the University of Manchester. He is the Group CFO of IBL Ltd and is a Director of Mauritian Eagle Insurance Company Limited, both listed on the SEM. He is also a Director of DTOS, Manser Saxon, CNOI, Seafood Hub, Princes Tuna, Winhold, Bloomage and a number of companies within the IBL group as well as a Director of the Mauritius Renewable Energy Agency (MARENA). An experienced international banking professional, Mr Chummun has over two decades held a number of senior positions with Standard Chartered, Barclays, EmiratesNBD and Deutsche Bank in London, Dubai, Singapore and Frankfurt and has previously served as an International Advisory Board member of ICAEW in London. André Chung Shui Non-Executive Director, member of the Strategic Committee and Chairman of the Investment Committee, holds a degree from the London School of Economics and is a Fellow of the Institute of Chartered Accountants in England & Wales. He trained to qualify as a Chartered Accountant with KPMG in London. He was previously a Senior Executive of the Happy World Group. André held the position of Managing Director of Mauritian Eagle Insurance Co Ltd from During that period, he was a Vice President and subsequently President of the Insurers Association of Mauritius. He is currently an Executive Director at LCF Securities Ltd, a licensed Investment Dealer. He is also a fellow of the Mauritius Institute of Directors. He is a Non-Executive Director of the CDS and chairs the Audit and Risk Committee. Dev Kumar Gopy Non-Executive Director, holds a D.E.A in Finance and a Maîtrise in Financial Management from L Institut D Administration Des Entreprises of University of Montpellier II, France. He currently occupies the position of Chief Investment Officer at the State Insurance Company of Mauritius Ltd. He is also a Director of the SICOM Financial Services Ltd and Cyber Properties Investments Ltd. Manvendra (Sherry) Singh Non-Executive Director, is the Chief Executive Officer of Mauritius Telecom since February He is an ICT and Marketing professional with a long career in Telecommunications and Marketing in the private sector, namely as the Marketing and Customer Service Manager in a well-established Mauritian telecom company. Mr Manvendra Singh also gained expertise from leading international companies such as Vodafone UK, Tele2 Sweden, Celltel Sri Lanka and Mobitel Cambodia. In 2003, Mr Manvendra Singh started his own business and specialised in marketing and telecommunications services. He also held the position of Senior Advisor to the Vice Prime Minister and Minister of Finance & Economic Development from July 2010 to July During the same period he was a board member of the State Investment Corporation, the Mauritius Duty Free Paradise and the State Land Development Company. Jaiyansing Shailen Soobah Non-Executive Director, is a Fellow of the Association of Chartered Certified Accountants and holds a Master in Business Administration. He started his career with De Chazal Du Mée (now BDO) where he spent 10 years in the audit and offshore departments. In 2003, he moved to the Financial Services Commission where he was officer-in-charge of the insurance supervision department. In 2009, he joined CIM Group, and was subsequently appointed as Senior Manager Compliance of the insurance and investment cluster. With the merger of the insurance businesses of Swan and CIM in June 2012, he was appointed Manager-Business Support in the Corporate Office and is also the Group Company Secretary of Swan. He has recently been appointed Risk Officer and is a member of Swan s executive committee. Shailen is a Director of Swan Securities Ltd, Swan Global Funds Ltd and Swan International Co Ltd.

12 The Stock Exchange of Mauritius Ltd 10 SEM MANAGEMENT PROFILE SUNIL BENIMADHU Chief Executive Please refer to Directors Profile on page 8 of this Annual Report. DARMANAND VIRAHSAWMY Senior Manager/Head of Business Development Darmanand holds a D.E.S.S in Economics of Information and a Maîtrise in Econometrics from the University of Montpellier, France. He joined the SEM in 1989 as Manager and currently holds the position of Senior Manager/Head of Business Development. VICKRAM RAMFUL Head of Listing Vickram is a Fellow of the Association of Chartered Certified Accountants. He holds a BA (Hons) in Business Accounting from the University of Lincolnshire and Humberside (UK) and a MBA in Finance. He joined the SEM in 2005 as Financial Analyst and was appointed as Corporate Finance Manager in November On 15th July 2016, he was appointed as Head of Listing. He is a member of the Mauritius Institute of Professional Accountants (MIPA) and the ACCA Mauritius Branch. PAMELA LI CHUN FONG Manager Finance and Administration Pamela is a Fellow of the Association of Chartered Certified Accountants and also holds a Diploma in Accountancy. She joined the SEM in 1995 as Accountant and currently holds the position of Manager Finance and Administration. She is a member of the Mauritius Institute of Professional Accountants (MIPA) and the ACCA Mauritius Branch.

13 SEM MANAGEMENT PROFILE Annual Report CHAITANAND (RISHI) JHEENGUN Manager, Trading and Market Information/ Company Secretary Rishi is a Fellow of the Institute of Chartered Secretaries and Administrators (ICSA) and he also holds a M.B.A. He joined the SEM in 1990 as Administrative Officer and currently holds the position of Manager Trading and Market Information. He is also the company Secretary of both SEM and CDS and is a member of the ICSA Mauritius Branch. SHALINI GOKHOOL Manager, Legal Affairs Shalini holds an LLB (Hons) and has also completed the Vocational Course for Barristers at the Mauritius Council of Legal Education in Having acquired experience in legal firms and in the banking sector, she joined the SEM in 2001 as Manager Legal Affairs. NISHAN AUBEELUCK Manager, Marketing and Market Development Nishan holds an MSc in International Business from the University of Melbourne, Australia. He joined the SEM in 2004 as Manager Marketing and Market Development. He is a member of the Australian Centre for International Business (ACIB), the Financial Services Institute of Australia and the Finance and Treasury Association of Australia (FTA).

14 12 The Stock Exchange of Mauritius Ltd DIRECTORS REPORT The Board of Directors has the pleasure of presenting the twenty eighth (28th) Annual Report of the Stock Exchange of Mauritius (SEM) for the year ended 30 June This Annual Report, which comprises the audited financial statements of the Group and the Company, the Corporate Governance Report and other statutory disclosures pursuant to Section 221 of the Companies Act 2001, have been approved by the SEM s Board at a meeting held on 27th September Principal activities of the Group and the Company The principal activities of the SEM, as defined by its Constitution, are: 1) to operate and maintain a securities exchange in accordance with law; 2) to provide facilities for the buying and selling and otherwise dealing in securities on a securities exchange; 3) to provide and maintain, to the satisfaction of the Financial Services Commission (FSC) adequate and properly equipped premises for the conduct of its business; and 4) to have operating rules for the markets it operates pursuant to law. The principal activities of its Subsidiary Company, the Central Depository and Settlement Co. Ltd (CDS), as defined by the Securities (Central Depository, Clearing and Settlement) Act 1996, are to provide depository, clearing and settlement services in order to facilitate dealings in securities on the Exchange. Group Results The total revenues of the Group for the financial year 2017 reached Rs 191.3m, a slight decrease of 0.8% over the preceding financial year (FY 2016: Rs192.9m). Total expenses of the Group were to the tune of Rs 83.3m, representing an increase of 9.7% as compared to the last financial year (FY restated: Rs 75.9m). Group profits reached Rs 88.8m, a decrease of 7.5% over the last year s Group profits of Rs 96.0m (restated). Shareholders funds showed an increase of 7.8% over the preceding year, reaching a total value of Rs 455.4m as at 30 June 2017 (FY restated: Rs 422.5m). Company Results The total revenue of the SEM for the financial year 2017 amounted to Rs 133.9m, a decrease of 2% over the last financial year (FY 2016: Rs 136.6m). Total expenses were to the tune of Rs 57.8m, showing an increase of 11.6% over the preceding year (FY restated: Rs 51.8m). This resulted in Net Profit After Tax for the SEM of Rs 64.4m, a decrease of 10% over last year (FY restated: Rs 71.6m). As at 30 June 2017, the Shareholders funds reached a total value of Rs 351.2m, showing an increase of 7.9% as compared to FY restated which was Rs 325.4m. Dividends At its meeting held on 27th June 2017, in line with the approved dividend policy of the Group, the Board of Directors approved a dividend payment of 60% of the net profit after tax for the year ended 30 June Dividends amounting to Rs 38.6m will be paid to the Ordinary Shareholders of the SEM (Rs 7.73 per share). For the year ended 30 June 2016, dividends paid to the Ordinary Shareholders of SEM were Rs 43.3m (Rs8.67 per share, restated after bonus issue).

15 DIRECTORS REPORT Annual Report Auditors The Auditors, Messrs Deloitte have expressed their willingness to continue in office and a resolution proposing their re-appointment will be submitted at the next Annual Meeting of the Company. In accordance with Section 221 (1) (h) of the Companies Act 2001, the Remuneration of the Auditors is disclosed in note 17 of the audited financial statements. Note of Appreciation We would like to express our gratitude to all stakeholders, namely the Ministry of Financial Services and Good Governance, the Financial Services Commission, the Listed Companies, the Investment Dealers, the Asset Management Companies and the Investors for their valuable support and contribution towards the smooth operation of the market and development of the Exchange. On behalf of the Board, we would like to convey a special note of appreciation to Messrs Gopallen Mooroogen and Vikash Tulsidas who resigned as Directors on 5 th December We also welcome Messrs Jaiyansingh Soobah and Manvendra Singh who were appointed Directors to sit on SEM Board on 5 th December Finally, we would also like to extend our thanks to all our fellow Directors, the Chief Executive, SEM Management and Staff Members for their dedicated efforts and hard work during the year. Shivraj Rangasami Chairman Professor Donald Ah Chuen Vice Chairman Date: 27 th September 2017

16 14 The Stock Exchange of Mauritius Ltd CHIEF EXECUTIVE S REPORT Financial year was an eventful and exciting year for the SEM from a performance as well as from a developmental perspective. In line with SEM team s innovative DNA, we introduced a number of groundbreaking changes to our operational and regulatory set-up with the view to adding a new chapter to our internationalisation strategy. I am pleased to report on our activities for financial year 2016/2017. A brief appraisal of the stock market evolution After two consecutive years characterised by strong downward pressure on SEM s main indices, triggered essentially by the emerging/frontier markets meltdown in the wake of economic slowdown in the BRICS countries, crashing commodities prices and weakening emerging markets currencies, the stock market in Mauritius moved back in positive territory, garnering double-digit gains during financial year 2016/2017. The SEMDEX moved up by 21.1%, positioning the SEM among the top four best performing Exchanges in Africa led by Zimbabwe, Egypt and Morocco. The market rally in Mauritius was spurred by the solid performance of some heavy capitalised stocks, renewed interests from foreign investors in local stocks, a favourable interest rate environment and attractive valuation ratios on some stocks. In the wake of the market s bullish run, total market capitalisation reached nearly Rs 450 billion for the first time in end June 2017, representing 103% of the Country s GDP and confirming the SEM s leadership position in Africa (ex South Africa) in terms of the market capitalisation to GDP ratio. The year under review was also very engaging from a listing and capital-raising perspective. 31 new securities cutting-across different asset classes were listed on SEM. The SEM s multi-currency platform was also used by issuers to raise capital to the tune of Rs 32.5 billion confirming the SEM s leadership role as a competitive capital-raising platform and strengthening the SEM s link to the real economy. An overview of the ground-breaking changes implemented during the year To showcase the impact of SEM s internationalisation thrust on the Exchange s activities, we undertook to introduce a number of new indices to capture the contribution of listed foreign-currency denominated issuers to the trading activities of the SEM. In this context, two new indices, the SEM all share index (SEM-ASI) and the SEM all share total return index (SEMTRI-ASI) were launched in September SEM-ASI has not only boosted the SEM s market capitalisation, but it has also enabled a better reflection of the effective size of the Official Market and enhanced the profile of Mauritius as an International Financial Centre. The introduction of SEM-ASI and SEMTRI-ASI has also helped consolidate the synergistic link between SEM and the Global Business Sector and improve the substance of activities conducted from Mauritius. To strengthen the SEM s competitiveness with regard to dual listing, we amended our Listing Rules to introduce additional flexibility for international issuers considering a secondary listing on the SEM. This includes a new fast track listing route for issuers having a primary listing on an Exchange such as the Australian Securities Exchange, the Johannesburg Stock Exchange, the London Stock Exchange, NYSE, EURONEXT or the Toronto Stock Exchange and seeking a secondary listing on the SEM. We organised in partnership with one of our Investment Dealers a road show in South Africa, with a view to reaching out to South African companies, to market SEM s competitive multi-currency capital-raising and listing platform which can be of interest to those issuers which aim at raising capital to fund their international expansion. Some potential issuers have shown interests and approached the SEM for further discussions.

17 CHIEF EXECUTIVE S REPORT Annual Report During the year under review, we pursued initiatives to extend our presence in the region as well as in the international Exchange space. The SEM is now represented and very active at the international level on the Board of Directors of the World Federation of Exchanges, which is the apex body regrouping around 65 Exchanges from all around the world. The SEM occupies the Vice-Chairmanship position at the level of the WFE Emerging Markets Working Group and has spearheaded two key studies on the promotion of liquidity and the enhancement of retail investors participation in frontier emerging Stock Exchanges. We were also active at the regional level through the the African Stock Exchanges Association (ASEA), the Committee of SADC Stock Exchanges (CoSSE) and the Southern Asian Federation of Exchanges (SAFE). Future Developments The SEM is considering digitalizing its services. We are considering to develop a mobile application with the aim of providing access to market data via mobile devices where an investor can be able to view and analyse the stock market via his/her mobile device. We are also considering the upgrading of the current trading system to the latest version of the technology which includes the FIX gateway. This technological upgrade will facilitate the linking of the Mauritius Stock Market to overseas remote brokers and other international intermediaries, on the one hand, and to other African Exchanges, on the other hand. In this connection, we are in discussion with the African Development Bank (AfDB) for the funding related to the implementation costs and project expenses of the new trading system and will finalise with the selected supplier of the technology with regard to the timing of the implementation of the upgraded technology at SEM. With the growing trend of issuers to leverage on SEM s platform to raise debt funding and to provide a better visibility of the debt market, we feel it is the appropriate time for the creation of a bond market index. This new index will also enable investors to use it as a tool to track the evolution of debt instruments and to compare the return on specific investments. During the year, the SEM will also engage with Euroclear to discuss about Euroclear-SEM/CDS link with a view to encouraging international corporates and governments in Africa to list multi-currency bonds on SEM s international debt trading platform. With regard to our strategy of reaching out and in order to create awareness about the SEM and to boost financial literacy, we will partner up with the JCI CityPlus of Mauritius, as well as some Investment Dealers and fund managers to educate investors via talks across the country. We will also organise similar talks to key associations, such as Rotary, Business Mauritius, in order to attract high net worth investors and potential issuers to our market. Our long-term objective through these events is to enhance the democratization process and increase the number of local retail shareholders from 100,000 to 150,000 by Internationalisation, diversification and growth remain top on our agenda. We will maintain our focus on consolidating Mauritius s position as a prominent gateway for capital flows linking Europe, USA and Australia to both Africa and Asia, and strive for the SEM to become a capital-raising hub for both regional and global players.

18 16 The Stock Exchange of Mauritius Ltd CHIEF EXECUTIVE S REPORT In line with our internationalisation strategy and policy of new product offering on the Exchange, we approved the listing of the first Depositary Receipt (DR), representing the Class D Shares of the African Export-Import Bank (Afreximbank), subject to Afreximbank successfully obtaining the minimum aggregate subscription of USD 100 million prior to its listing. Afreximbank is a supranational financial institution whose purpose is to facilitate, promote and expand intra- and extra-african trade. The listing and trading of the DRs has been scheduled for 04 October The listing of Afreximbank s Depositary Receipts constitutes the first DR on SEM, which is an important milestone in the internationalisation process of the Exchange. It will potentially open the door to future DR issues from leading African issuers, which can leverage on SEM s multi-currency platform to raise capital outside their home market, while targeting international investors. Acknowledgement I express my gratitude to the Chairman and the Board of Directors of the SEM for their contribution to the SEM s developmental agenda. I would like to thank the Ministry of Financial Services and Good Governance, the Financial Services Commission, the Investment Dealers, the Listed Companies, the members of SEM s Listing Executive Committee, the CDS and other stakeholders of the Exchange in supporting us in our endeavours and contributing to SEM s transformational initiatives. Last but not least, my thanks go to all the Staff members of the SEM for their insights, dedication and for working very closely with me for the overall benefit of the institution. Sunil Benimadhu Chief Executive Date: 01 September 2017

19 SEM CORPORATE GOVERNANCE REPORT 2017 Annual Report Introduction The Board of the SEM is accountable to its shareholders for the overall direction and control of the Company. It is committed to high standards of governance designed to protect the interests of its shareholders and all other stakeholders while promoting the highest standards of integrity, transparency and accountability. Compliance with Governance Standards The SEM Board is committed to ensuring that its policies and practices in the critical areas of financial reporting, remuneration reporting and corporate governance, meet high levels of disclosure and comply with the Code of Corporate Governance for Mauritius, the Securities Act 2005, the Financial Services Act 2007 and with the relevant regulations and rules made under these Acts. Composition of SEM Board As per the provisions of the SEM Constitution, the Board of Directors currently consists of ten (10) Directors, including nine (9) Directors who are independent of the management of the Exchange and one (1) Executive Director. The Chief Executive of the SEM is the Executive Director. The Board is of the view that the current size of the Board is appropriate and that it has the right mix of skills and experience which can enable the Board to carry out its duties and responsibilities in an effective and competent manner. Terms of office In accordance with the provisions of Clause 21.3(c) and Clause 23.1(b) of the SEM Constitution, the term of office of the Directors is for two years and the term of office of the Chairman and the Vice Chairman is for a maximum of two continuous terms of two years or such shorter periods as the Board may decide. Directors Profile The profile of the Directors sitting on the Board of the SEM for the financial year ended 30 June 2017, are disclosed on pages 8 to 9 of the Annual Report.

20 18 The Stock Exchange of Mauritius Ltd SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) SEM s Governance Framework This section of the report illustrates the Corporate Governance framework adopted by the SEM and describes the activities of the Board and its Committees for the financial year SEM S GOVERNANCE FRAMEWORK EXTERNAL AUDITORS (Appointment) (Reporting) SHAREHOLDERS OF THE SEM Election of 10 Directors: - 2 Members of Industry - 1 Executive Director Approval of appointment (Pursuant to section 24 of the Financial Services Act 2007) FINANCIAL SERVICES COMMISSION BOARD OF DIRECTORS OF THE SEM (Appointment) (Appointment) (Reporting) (Reporting) OTHER COMMITTEES OF THE SEM: Listing Executive Committee Index Management Committee Consultative & Informative Committee SEM BOARD COMMITTEES Corporate Governance Committee: - Nomination Committee - Remuneration Committee Audit & Risk Management Committee Sub-Committee on the supervision of Listing matters SEM Investment Committee Strategic Committee OTHER STAKEHOLDERS: Investment Dealers Listed Companies Investors Data Vendors Suppliers (Overview) (Reporting) SEM MANAGEMENT COMMITTEE (Supervise) (Reporting) (Conduct Audit) OPERATIONS OF THE SEM

21 SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Annual Report Board Meetings and Procedures SEM s Board Charter In order to assist the Directors in the discharge of their duties, the SEM has adopted a Board Charter, which sets out the framework for the composition, responsibilities, duties, procedures, powers, authority and accountability of its Board. The SEM Board Charter also embodies the rules of conduct of Board Members of the SEM and the commitment of the Board of Directors to ensuring that the company s governance processes and structures comply with the Mauritius Code of Corporate Governance and international best practice. Board Procedures The agenda of each Board meeting is finalized by the Chief Executive /Chairman. Board papers are prepared by management under the supervision of the Chief Executive to provide relevant facts, analysis and recommendations to enable informed decision-making by the Board. The agenda and papers for meetings are submitted to Directors and Board Committee members well in advance, to enable them to prepare for these meetings. During meetings, the Chairman encourages constructive and effective debates and Directors are given the chance to freely express their views or share information with their peers in the course of deliberation as a participative Board. Any Director /Board Committee member who has a direct or deemed interest in the subject matter to be deliberated, declares his/her interest and abstains from deliberation and voting on the same during the meeting. The Company Secretary ensures that there is a quorum for all meetings and those meetings are convened in accordance with the relevant terms of reference. The minutes prepared by the Company Secretary memorises the proceedings of all meetings, including the tabling of pertinent issues and the decisions made. In doing so, the Company Secretary internalises the governance principles in the Company and keeps the Board updated on the follow-up action arising from the Board s decisions and/or requests at subsequent meetings. This allows the Board to perform its fiduciary duties and fulfil its oversight role via the respective Board Committees towards instituting a culture of transparency and accountability in the Company. Supply of and access to information The Directors have individual and independent access to the advice and dedicated support services of the Company Secretary in ensuring the effective functioning of the Board. The Directors may seek advice from the management on issues under their respective purview. In addition, the Board may seek independent professional advice at the Company s expense on specific issues to enable the Board to discharge its duties in relation to the matters being deliberated. Conflicts of Interests The SEM Board Charter contains provisions relating to the management of conflicts of interest and the rules of conduct for Directors. Clause 10 of the SEM Board Charter provides that a Director should make a best effort to avoid conflicts of interest or situations where others might reasonably perceive there to be a conflict of interest. Where a conflict of interest arises or may arise, a Director must disclose the conflict to the Board. On declaring his/her interest and ensuring that it is entered in the Register of Interests of the company, a Director can participate in the debate and/ or indicate his/her vote on the matter, although such vote would not be counted. The Director must give careful consideration in such circumstances to the potential consequences it may have for the Board, company and him.

22 20 The Stock Exchange of Mauritius Ltd SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Board Meetings The Directors attendance at the Board meetings of the SEM during the past financial year 2017 are detailed in the table below: SEM BOARD Remuneration Committee Audit & Risk Mgt Committee Name of Director MH MA MH MA MH MA Mr Shivraj Kevin Rangasami ( Chairman /Non-Executive) Professor Donald Ah- Chuen ( Vice Chairman / Non- Executive) Mr André Chung Shui ( Non- Executive) Mr Manvendra Singh (A) ( Non- Executive) 5 2 Mr P. Gopallen Mooroogen (R) ( Non- Executive) 5 2 Mr Dev Gopy ( Non- Executive) Mr Sunil Benimadhu ( Executive) Dipak Chummun ( Non- Executive) 5 3 Mr Jayansingh Soobah (A) ( Non- Executive) 5 3 Mr Nitish Benimadhu ( Non- Executive) Mrs Reedhee Bhuttoo ( Non- Executive) Mr Vikash Tulsidas (R) ( Non- Executive) 5 1 MH: Represents the number of meeting held during the year. MA: Represents the number of meeting attended during the year. Directors who resigned during the FY 2017 (R) Messrs Gopallen Mooroogen and Vikash Tulsidas resigned as Directors on 05 December 2016 (R) Messrs Shivraj Rangasami and André Chung Shui resigned as members of the Audit and Risk Management Committee on 17 January 2017 Directors who were appointed during the FY 2017 (A) Messrs Jaiyansingh Soobah and Manvendra Singh were appointed Directors on 05 December 2016 (A) Mrs Redhee Bhuttoo and Mr Dev Gopy were appointed as members of the Audit and Risk Management committee on 17 January 2017

23 SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Annual Report SEM Board Committees and Sub-Committees The Board of the SEM is accountable to shareholders for the strategic direction of the Company and the pursuit of value creation for shareholders. The Board delegates the implementation of its strategy to its management within a formal delegation framework. However, the Board remains ultimately responsible for corporate governance and the affairs of the Company. The Board has established the following Committees and has entrusted them with specific responsibilities to oversee the affairs of the Company, with authority to act on behalf of the Board in accordance with their respective Terms of Reference (TOR): Corporate Governance Committee, which encompasses the Nomination and the Remuneration Committees; Audit and Risk Management Committee; Sub-Committee on the supervision of Listing matters Strategic Committee SEM Investment Committee. SEM Board Corporate Governance Committee Nomination Committee Remuneration Committee Audit & Risk Management Committee Approved Terms of Reference - Ensure reporting requirements on Corporate Governance are in accordance with the principles of the Code; - Determine, agree and develop policies on corporate governance in accordance with the principles of the Code; - Ensure disclosures are made in the Annual Report in compliance with the disclosure provisions in the Code of Corporate Governance for Mauritius. Approved Terms of Reference - Recommend the appointment of Executive and Non-Executive Directors; - Make recommendations on the Board structure, size and composition; - Identify and nominate candidates to fill Board vacancies and put in place plans for succession; - Recommend continuation of service for Directors reaching the age of 70; - Recommend Directors retiring by rotation for re-election. Approved Terms of Reference - Determine, agree and develop the Company s policy on executive and senior management remuneration; - Determine specific remuneration packages for Executive Directors of the company; - Determine the level of Non-Executive & independent Non-Executive Directors fees. Approved Terms of Reference - Recommend the appointment of external auditors to the Board; - Review the audit strategy and agree on the timing and nature of reports from the external auditors; - Examine and review the financial statements and ensure they comply with the accounting standards and with legal requirements; - Monitor and review the effective functioning of the internal control systems and reporting; - Monitor and review the risk management framework.

24 The Stock Exchange of Mauritius Ltd 22 SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Sub-Committee on the Supervision of Listing matters Strategic Committee Investment Committee Approved Terms of Reference - To review the quarterly report of the Listing Division on matters pertaining to the continuing listing obligations of listed companies; - To approve, in specific cases, proposed sanctions taken by the SEM against listed companies; - To report to the Board of Directors on matters that may result in the eventual suspension or withdrawal of a listed company. Approved Terms of Reference - To discuss on matters pertaining to the Strategic Policy of the SEM; - To report to the Board of Directors on any outcome of matters pertaining to the - Strategic Policy of the SEM. Approved Terms of Reference - To determine and review the Investment Policy and Guidelines to be adopted by SEM Management for taking investment decisions. - To ensure that investments made by the SEM, are in line with the approved Investment Policy and Guidelines. - To consider and approve proposals from SEM Management that may exceed the maximum percentage stipulated in the Investment Policy and Guidelines. - To assess analyse and review the performance of the investments undertaken by the SEM. - To report to the Board on the investments undertaken by the SEM on an annual basis. - To review and amend the Investment Policy and Guidelines from time to time, in line with the changing market environment and the evolution of the financial market. Membership and Meetings Corporate Governance Committee, Nomination and Remuneration Committee (CG) The CG Committee comprises three Non-Executive Directors and one Executive Director. During the financial year 2017, the following persons sat as Members of the Committee: Mr. Shivraj Rangasami (Chairperson & Non-Executive Director) Professor Donald Ah Chuen (Non-Executive Director) Mr. Dev Gopy (Non-Executive Director) Mr Sunil Benimadhu (Chief Executive and Executive Director). The Manager Finance and Administration acts as secretary to the Committee. Reporting and Accountability The CG Committee, through its Chairperson, is accountable to the Board for its activities and makes recommendations to the Board on matters falling under its responsibilities; Remuneration Committee (RC) Meetings The RC meets as and when necessary and met five times during the financial year The RC approved the performance bonuses of the Chief Executive and the SEM staff for the year ended 30 June 2017 and reviewed the remuneration of the Chief Executive and the SEM staff for the financial year This year, the remuneration of the Chief Executive and the SEM staff were reviewed, based on the salary benchmarking exercise and the report of Hay Group South Africa Pty Ltd (Korn Ferry). During the financial year 2017, the Members of the RC also reviewed the SEM Pension fund, based on the recommendations made in the Actuarial Valuation Report of AON Hewitt Ltd.

25 SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Annual Report Remuneration Philosophy At each year-end, the employee s remuneration and the performance bonuses are reviewed and approved by the Members of the RC. The salaries are reviewed as per the recommendations of the Chief Executive and takes into consideration, the rate of inflation for the year. The Remuneration strategy also includes assessing if remuneration is market competitive and is designed to attract, motivate and retain employees. Audit and Risk Management Committee The Audit and Risk Management Committee comprises three Non-Executive Directors. Members for the year were: Mr. Nitish Benimadhu (Chairperson) Mrs Reedhee Bhuttoo Mr Dev Gopy The Company Secretary acts as secretary to the Committee. The Chief Executive and the Manager Finance and Administration also attend the Committee meetings by invitation. Reporting and Accountability The Audit and Risk Management Committee through its Chairperson is accountable to the Board for its activities and makes recommendations to the Board on matters falling under its responsibilities. The Chairperson of the Committee, or, in his absence, an alternate member attends the Annual Meeting to answer questions concerning matters falling within the ambit of the Committee. Meetings The Audit and Risk Management Committee meets as and when necessary and met three times during the financial year In line with its terms of reference, the scope of work of the Committee included; follow up on the internal control functions and risk management, appointment of IT Security Auditors, review of IT Security Audit Report, SEM Pension Scheme, review of audited accounts, annual report, budget, declaration of dividend and appointment of auditors and fixing of their remuneration. Sub-committee on the supervision of Listing matters The Sub-committee on the supervision of Listing matters comprises two Non-Executive Directors. Members for the year were: Mr. P. Gopallen Mooroogen (Chairperson) and Prof Donald Ah Chuen. The Chief Executive and the Head of Listing are also members of the Sub-committee. The Manager Legal Affairs acts as secretary to the Sub-committee. Reporting and Accountability The Sub-committee on the supervision of Listing matters through its Chairperson is accountable to the Board for its activities and makes recommendations to the Board on matters falling under its responsibilities.

26 24 The Stock Exchange of Mauritius Ltd SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Membership and Meetings (cont d) Meetings The Listing Division sends periodic reports on a quarterly basis to apprise the Sub-committee members of ongoing listing issues as well as on the financial monitoring of listed companies. Meetings of the Sub-committee may be held as and when necessary during the year to consider specific cases referred to it by the SEM. No meeting of the Sub-committee on the supervision of Listing matters was held during the financial year , but members were kept fully apprised of all impending issues and on the financial status of companies monitored through regular reporting. Strategic Committee The Strategic Committee comprises four Non-Executive Directors and one Executive Director. The following Directors were elected to sit as Members of the Strategic Committee for the financial year 2017: Mr. Shivraj Rangasami (Chairperson & Non-Executive Director) Professor Donald Ah Chuen (Non-Executive Director) Mr André Chung Shui (Non-Executive Director) Mr Manvendra Singh (Non-Executive Director) Mr. Sunil Benimadhu (Chief Executive and Executive Director) The Manager Finance and Administration acts as secretary to the Committee. Reporting and Accountability The Strategic Committee through its Chairperson is accountable to the Board on all matters pertaining to the Strategic Policy of the SEM and makes recommendations to the Board on all matters pertaining to the Strategic Policy to be adopted by the SEM. Meetings The Strategic Committee meets as and when necessary to discuss on matters pertaining to the strategic policy of the SEM. Directors Shareholdings and Interests Under Clause 11 of the SEM Board Charter: The Secretary of the Board shall maintain a register of interests, pursuant to S 190 (2) (c) of the Companies Act Upon appointment to the Board, a Director shall be required to provide the Secretary to the Board with a complete list of their Directorships and/or material interests in any security listed or traded on SEM and in any Member Company of SEM or any interests as defined by S147 of the Companies Act 2001 for entry in the interests register. Material interest is defined as any interest of 5% or more in the share capital of the company. Notwithstanding the provisions of S148 of the Companies Act, 2001, a Director shall forthwith inform the Secretary to the Board of any changes in their Directorships and/or shareholdings which would affect the effect of increasing or reducing their shareholding above or below the level of material interest disclosure.

27 SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Annual Report Directorships in listed companies The number of other directorships which the Directors of the SEM Board hold in listed companies and the number of shares held by them, both directly and indirectly in the SEM is disclosed in the table below: Name of Director Number of Directorships in Listed Companies Number of shares held directly in SEM Number of shares held indirectly in SEM Professor Donald Ah-Chuen 3 Nil 0.46% Mr. Sunil Dutt Benimadhu Nil Nil Nil Mr. André Chung Shui Nil Nil Nil Mr. Dev Kumar Gopy Nil Nil Nil Mr Dipak Chummun 1 Nil Nil Mr Manvendra Singh Nil Nil Nil Mr Shivraj Rangasami Nil Nil Nil Mr Nitish Benimadhu Nil Nil Nil Mr Jayansingh Soobah Nil Nil Nil Mrs Reedhee Bhuttoo Nil Nil Nil Dealings in shares by the Directors The Directors of SEM have followed the principle of the model code on securities transactions as detailed in Appendix 6 of the Mauritius Stock Exchange Listing Rules. There were no dealings in the shares of the SEM by the Directors of the Company during the year ended 30 June The Company has no share option plans. Shareholders Agreement There is no shareholders agreement which affects the governance of the Company by the Board and the SEM does not have any management agreement with third parties. Management Agreement There is a management agreement between SEM and the CDS for the provision of Information Technology (IT) Services to the Company.

28 26 The Stock Exchange of Mauritius Ltd SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Directors Remuneration The total remuneration paid to the Directors of the SEM and the CDS for the financial year ended 30 June 2017 and for the previous year 2016 are disclosed in the table below: Name of Director FY 2017 Rs 000 SEM FY 2016 Rs 000 FY 2017 Rs 000 CDS FY 2016 Rs 000 Professor Donald Ah-Chuen Mr. Nitish Benimadhu Mr Sunil Dutt Benimadhu 9,536 8, Mrs. Reedhee Bhuttoo Mrs Aruna Radhakeesoon Mr Bhogunsingh Chikhuri Mr André Chung Shui Mr. Dev Kumar Gopy Mr Gaëtan Lan Hun Kuen Mr Steve Yeung Mr Vipin Mahabirsingh - - 5,606 3,565 Mr Peroomal Gopallen Mooroogen Mr Shivraj Rengasami Mr Sameer Kumar Sharma Mr Ramanaidoo Sokappadu Mr Vikash Tulsidas Mr Derek Wong Wan Po Mr Mavendra Singh Mr Jayansingh Soobah Mr Dipak Chummun Internal Control Report The Board of Directors affirms its overall responsibility for the Company s system of internal control and risk management and for reviewing the adequacy and integrity of the system. The system of internal control covers inter alia, governance, risk management, financial, organisational, operational and compliance control. This section of the Report discloses the Risk Control Mechanisms implemented at the SEM and gives an overview of the system of internal controls existing within the organisation. The risks control mechanisms already in place at the SEM include: Capital Adequacy Requirements In accordance with the Stock Exchange (Financial Reporting of Investment Dealers) Rules, all Investment Dealers have to submit, in addition to the audited accounts, Capital Adequacy Requirements returns (CAR) by the tenth business day of quarterly period in respect of the close of business for the previous three months, reflecting the Investment Dealer s risk positions and its financial resources.

29 SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Annual Report Internal Control Report (cont d) As per the Stock Exchange ( Financial Reporting of Investment Dealers ) Rules, no Investment Dealer is allowed a shortfall in its capital, other than pursuant to a specific temporary exception granted by the SEM. The SEM has full discretion as to the necessity and sufficiency of special adjustments in any particular case, taking into consideration all factors pertaining to the market with regard to the financial resources or future contracts and the affairs as a whole of the Investment Dealer involved. Compensation Fund Section 148 of the Securities Act 2005 provides for the creation and maintenance of a Compensation Fund to provide for the compensation of investors who suffer pecuniary loss as a result of: - the inability of a licensee under the Act or any collective investment scheme to satisfy claims arising from civil liability by it in connection with services provided; - fraud or defalcation by a licensee, a collective investment scheme or any of its officers or employees; or - the insolvency or bankruptcy of any licensee or collective investment scheme. The SEM Compensation Fund was established, maintained and administered by the SEM under the repealed Stock Exchange Act 1988 (now Section 148 of the Securities Act 2005). In 1999, the Board of Directors of the SEM approved that an initial amount of Rs2.75 million be transferred out of the SEM s retained earnings for the purpose of the Fund. The value of the Fund as at 30 June 2017 amounted to Rs 4.8 million. In case of any shortfall arising in the Fund, the Investment Dealers, as per the requirements of the SEM Business Rules, would be called upon to contribute to the shortfall in the Compensation Fund. In addition to that, depending upon the size of its business and its relative risk exposure, each Investment Dealer is required to take a Professional Indemnity insurance cover as per the requirements of the SEM Business Rules. Audit of Internal Controls In order to keep under review the adequacy and effectiveness of the organisation s system of internal control, an audit of the internal controls of the SEM is being undertaken once every two years by external auditors. In November 2015, SEM received the visit of the inspectors of the Financial Services Commission (FSC) for an on-site inspection and audit of SEM s internal control and procedures including the financial and accounting records. By and large, the SEM has demonstrated compliance and met the expectations of the FSC in the context of the on-site inspection and audit. The next audit of the internal controls is scheduled for the end of the calendar year External Audit An external audit of the SEM financial statements is performed at the end of each financial year by External Auditors, who are duly registered under the Mauritius Institute of Professional Accountants and licensed by the Financial Reporting Council. The audited financial statements together with the annual report of the SEM are first discussed at the level of the SEM Audit and Risk Management Committee. After review, the Audit and Risk Management Committee recommends the financial statements to the SEM Board for approval.

30 28 The Stock Exchange of Mauritius Ltd SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Internal Control Report (cont d) Stock Exchange Professional Indemnity/Crime Insurance/ Directors & Officers Liability Insurance Cover Since SEM and CDS have common interests and common Directors who sit on both Boards, the management of SEM and CDS decided to take a comprehensive joint- insurance policy which includes the Stock Exchange Professional Indemnity, Crime Insurance and Directors & Officers Liability insurance, for a total amount of Rs25 million. This decision has enabled both companies to achieve synergies and reduce their insurance costs. IT System The SEM has outsourced its IT function to its subsidiary CDS, which possesses the necessary IT expertise. The outsourcing agreement, which started since January 2001, also includes the technical management of the Automated Trading System (ATS). Any software enhancements, modifications and additions are thoroughly tested before implementation in the live environment. A formal Change Management Procedure has been implemented so as to ensure that the IT Systems are being regularly updated. IT Security Audit In order to assist the SEM and the CDS in identifying any IT risks and to undertake appropriate measures to address those IT risks, the whole IT system is being subject to a specialized external IT Security Audit once every two years. During the financial year 2017, an IT Security Audit was carried out by PricewaterhouseCoopers Ltd. The Scope of the IT Security Audit comprised of the following: - Performing a review of the security policy of SEM and CDS; - Reviewing the existing network architecture to confirm that it is capable of supporting required security controls; - Performing a security audit of the network components like routers, firewall, switches etc; - Performing security audit of the Solaris and windows servers and databases; - Conducting internal vulnerability assessment; - Verifying the VPN and wireless connections; - Performing non-intrusive external penetration testing; - Reviewing of Disaster Recovery Planning and - Verifying workstations on the network of SEM and CDS. Overall Observation - The IT infrastructure of SEM and CDS has been well designed to protect against both internal and external threats. - The IT auditors performed external attacks such as password cracking, denial of service, buffer overflow, user enumeration among others on the web facing application, but they were not able to penetrate inside the network or retrieve any information. - The recommendations of the past assessment conducted in April/May 2015 have been implemented to further enhance the security posture of the SEM/CDS IT infrastructure.

31 SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Annual Report Internal Control Report (cont d) - The IT Auditors also validated that the SEM/CDS servers, databases and network equipment are appropriately configured in line with good practices and proven methods. - The IT security policy and IT contingency plan are well designed and structured to mitigate known security risks. - The disaster recovery procedures are tested regularly to ensure a timely resumption of services following a major incident or disaster. - The vulnerability assessment and penetration testing did not reveal weaknesses which may lead to the direct compromise of the SEM/CDS IT infrastructure. The high- level findings and recommendations of the IT Security Audit were discussed at the level of SEM and CDS Audit Committees and a joint-decision was taken to implement all the recommendations included in the IT Audit Report during this financial year Disaster Recovery Plan The SEM has a Disaster Recovery Plan (DRP) to cater for various possible scenarios. The DPR covers both preventive and corrective measures, which will enable it to deal with various types of disasters, which can disrupt normal ATS system operation. Prevention of loss of data in the event of media failures is achieved through the implementation of redundant and cyclical backup tapes that are stored both onsite and off-site. The ATS system is designed with High-Availability configuration with main and backup servers. The back-up database server maintains a mirror image of the database on the main server. In the event of a problem with the main database server, the backup server takes over without physical intervention required at client sites. Similarly, if one of the two trading engines goes down, the second trading engine takes over within 10 minutes. In the event of a major disaster that causes the ATS site to be unavailable, systems and business operations will be restored at a backup site within 2 hours. During the financial year , three simulations of the DRP were performed on the following respective dates: 28th September 2016, 13th December 2016 and 27th April The simulation performed on 28th September 2016, involved the participation of the Investment Dealers, Custodian Banks as well as the employees of SEM and CDS. The results of the three simulations were all successful as no systems downtime was observed. Report on the Members Compliance Visit (Rule of SEM Business Rules) Section 24(1)(a) of the Securities Act 2005 provides that in addition to its other functions, the SEM shall have regulatory functions and shall, inter alia, ensure that it adequately supervises the market operations and conduct of market participants. The SEM s Business Rules have been implemented to enable the SEM to discharge its regulatory functions vis à vis market participants. These rules provide for the criteria and conditions for Investment Dealers to be admitted as Trading Members of the SEM, disciplinary action against Trading Members in the event of non-compliance with the rules, requirements on the business practices of Trading Members and a Code of Conduct which the Trading Members must observe when trading on SEM.

32 30 The Stock Exchange of Mauritius Ltd SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Report on the Members Compliance Visit (cont d) The SEM s Business Rules were approved by the FSC in October 2008 and came into force in January 2009, following a 3-month transition period given to the Investment Dealers to ensure compliance with the new rules. The SEM has set up a compliance unit under the leadership of the Senior Manager which monitors on an on-going basis compliance of Trading Members with the requirements of the SEM s Business Rules. With the adoption of the SEM s Business Rules, the SEM monitors the following: Eligibility criteria for membership; Continued compliance with Exchange requirements, including training and certification of participants and capital adequacy; Trading operations of participants, including issue of contract notes to clients, brokerage charges, turnover limits, margin requirements; Code of conduct for members and members responsibilities; Maintenance of records, annual accounts and audit; Inspection of participants; Sanctions in cases of non-compliance with regulations, rules and procedures of the Exchange. A thorough investigation and compliance visit was undertaken with the Investment Dealers, in virtue of Rule of SEM Business Rules to assess how the standards described in the Business Rules had been complied with. The audit started on 11 January 2017 and was completed on 03 February 2017 and was held in the presence of a Senior Officer and the Compliance officer of the Investment Dealer. Surprise visits were done to the offices of Trading Members during trading hours so as to verify whether transactions carried out on the stock exchange through the ATS are in conformity with the Trading Rules & Procedures and the Rules made under the Securities Act A questionnaire type form derived from the Business Rules was used during the audit exercise, which covered specific and general aspects of the trading operations of the Trading Member, such as the Admission of Applicants as Trading Members; Continuing Obligations of Trading Members; Business Practices of Trading Members and Code of Conduct of the SEM Business Rules. The main components of the audit exercise comprised a «walk through» of a complete trade cycle process, i.e. opening of Clients Accounts in CDS, deposit of securities, receipt buy or sell orders from a client, input of order details in ATS, collection and despatch of Contract Notes, executions of trades and post trade functions. All Trading Members have been informed in writing of the shortcomings observed during the Compliance Visit. A follow-up visit was carried out by end of February 2017 to verify if the shortcomings identified had been addressed. It was noted that all Trading Members are compliant with the Business Rules. A copy of the full report has been submitted to the Chief Executive of the SEM. Special Remark: With regard to Bramer Capital Brokers Ltd (BCBL), following the Cease Trade Order issued BCBL in accordance with Section 133 of the Securities Act 2005 by the FSC, BCBL was not allowed as from Monday 29 February 2016 to execute any trades through the SEM s Automated Trading System until further notice. Following a phone conversation with Mr Georges Cheung of BDO on Wednesday 08 February 2017, he informed us that BDO has sent a letter to the clients of BCBL, informing them to transfer their account to any of one of the Investment Dealers licensed by the FSC as the licence of BCBL will be revoked in the near future by the FSC.

33 SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Annual Report Other Sub-Committees of the SEM Along with the SEM Board Committees, the SEM has also set-up three other Sub-committees, namely; - the Consultative and Informative Committee - the Index Management Committee - the Listing Executive Committee CONSULTATIVE AND INFORMATIVE COMMITTEE INDEX MANAGEMENT COMMITTEE LISTING EXECUTIVE COMMITTEE Approved Terms of Reference Approved Terms of Reference Approved Terms of Reference Discuss issues related to trading activities, operational aspects of the ATS & CDS Systems, new products and development of the market. Establish the criteria and procedures for selection of the constituents of the SEM-10. Determine the base period and value and to formulate a scientific and transparent methodology of index calculation. Review, monitor and maintain periodically the SEM-10 and consider the development of sectorial indices. The inclusion or exclusion of a constituent in the SEM-10 is at the discretion of an independently constituted IMC. This discretion shall only be used in the spirit of furthering the objectives of the SEM-10. Determine the suitability of applications for listing; Recommend changes to Listing Rules and Rules of the Development & Enterprise Market (DEM) to the Board; Assess cases of apparent breaches of the Listing Rules / DEM Rules and make recommendations to the Board for their adjudication; Assess cases on the suspension or cancellation of a listing on the Exchange and refer to the Board for consideration. Membership and meetings Consultative and Informative Committee (CIC) The CIC comprises of representatives of SEM, CDS, Investment Dealers and Custodian Banks. It does not have executive powers, but can make recommendations to the Board. The Chief Executive of SEM acts as Chairperson of the Committee. Meetings The Committee meets as and when the need arises and met once during the year. The main issues discussed by the Committee included; operational aspects of ATS and CDS Systems, new trading system, implementation of new indices, introduction of new products, short selling and review of fee structure for ETFs.

34 32 The Stock Exchange of Mauritius Ltd SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Membership and meetings (cont d) Index Management Committee (IMC) The Index Management Committee, which is composed of Investment Dealers, fund managers, academics, and officials from the Stock Exchange of Mauritius, ensures that the process of building and maintaining the SEM-10 Index is as interactive as possible. Members who sat on the IMC for the year ended 30 June 2017 are: Mr Prem Beejan (Chairman), Mr Sunil Benimadhu, Mr Raj Tapesar, Mr Mathew Lamport, Mr Vikash Tulsidas and Mr Nitish Benimadhu. Mr Darmanand Virahsawmy acts as Secretary to the IMC. Meetings The Index Management Committee (IMC) meets on a quarterly basis to review the constituents of the SEM-10 and the Reserve List. These meetings are held on the first Tuesday (or nearest Mauritian business day after that day) of January, April, July and October. Listing Executive Committee (LEC) Members who sat on the LEC for the year ended 30 June 2017 were: Mr Sunil Benimadhu (Chief Executive), Mr Vickram Ramful (Head of Listing), Ms Shalini Gokhool (Manager Legal Affairs), Mr Chaitanand Jheengun (Manager Trading and Market Information) and external Members who were: Mr Jean Pierre Lim Kong (Chairman), Mrs Prabha Chinien, Mr Deva Marianen, Mr Jean Michel Ng Tseung, Mr Ravindra Chetty and Mr Vaughan Heberden. Meetings During the financial year , sixteen (16) meetings of the LEC were held whereby the following issues, inter alia, were considered: Applications for listings on the Official Market, withdrawals from the Official Market, Corporate actions for both the Official Market and the DEM and cancellation of admission from the DEM. Fees paid to external Members of the Listing Executive Committee (LEC) The remuneration of the LEC Members for the financial year 2017 and for the previous financial year 2016, are disclosed in the table below: Name of LEC Member FY 2017 (Rs 000) FY 2016 (Rs 000) Mr Nassir Ramtoola Mr Ravindra Chetty Mrs Prabha Chinien Mr Vaughan Heberden 25 - Mr Jean Pierre Lim Kong Mr Deva Marianen Mr Jean Michel Ng Tseung Mr Bilal Sassa - 51 SEM Management Committee (MC) The SEM MC is composed of the Chief Executive, the Senior Manager, the Head of Listing, the Manager Finance and Administration, the Manager Trading and Market Information, the Manager Legal Affairs, the Manager Marketing and Market Information. The Executive Secretary acts as Secretary to the MC.

35 SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Annual Report Meetings The Members of the MC meet regularly to discuss on the day-to-day management and business operations of the SEM. Any relevant issues raised at Board level which need to be channelled to SEM management, are also discussed at the MC before implementation by the management team. Profile of Management Team The profile of each Member of the Management Team is disclosed on pages of this Annual Report. Social, Ethical, Safety, Health and Environmental Issues All the employees of the SEM are bound by the internal rules and regulations, as detailed in the SEM Employee Handbook. The SEM Employee Handbook is being regularly updated to take into account changes in the legislation and to reflect the provisions of the New Employment Rights Act In the discharge of their duties, the SEM staffs are committed to the highest standards of integrity and ethical conduct. Staff Welfare The SEM has also established a staff welfare programme where the sporting activities of the employees of the SEM are sponsored, in line with the approved budget. The SEM has also provided for medical insurance and 24-hour accident covers for all its employees. Dividend Policy of the SEM The dividend policy adopted by the Company is disclosed in the Directors Report on page 12 of the Annual Report. Group Structure of the SEM The SEM holds 51 per cent of the ordinary share capital of the Central Depository and Settlement Company Ltd (CDS). The main activities of the CDS are to provide depository, clearing and settlement services in order to facilitate dealings in securities. The total value of the ordinary share capital issued by the CDS is Rs15 million and its total reserves as at 30 June 2017, amounted to Rs million. SHAREHOLDERS OF THE SEM SEM Ltd (51% Shareholding) CDS Ltd

36 34 The Stock Exchange of Mauritius Ltd SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Common Directors and the shareholding percentages The table below lists the names of common Directors who sat in both the Boards of the SEM and CDS during the financial year ended 30 June 2017 together with the shareholding percentages in SEM and CDS respectively: Name of Director Name of Shareholder % shareholding in SEM Ltd % shareholding in CDS Ltd Mr Nitish Benimadhu Swan Life Ltd 15 - Mr. André Chung Shui Newton Securities Ltd Mr Shivraj Rangasami MCB Stockbrokers Ltd Mrs Reedhee Bhuttoo SBM Securities Ltd Mr Mavendra Singh Mauritius Telecom Ltd Note: Mr Manvendra Singh resigned as Director of CDS on Related Party Transactions (RPT) A list of the significant related-party disclosures between the Company and its subsidiaries, and between the Group and other related parties including relevant key management personnel for FY 2017, is set out in Note 22 of the Financial Statements. SEM Shareholders and the percentage shareholdings The table below discloses the list of shareholders of the SEM and the relative number of Ordinary shares held by them as at 30 June 2017: List of shareholders of the Stock Exchange of Maurtius Ltd Number of shares held at 30 June 2017 % Holding 1 Swan Life Ltd 750, IBL Ltd 443, Mauritius Telecom Ltd 375, State Insurance Company of Mauritius Ltd 375, Swan General Ltd 375, Mirabel Investments Ltd 344, Newton Securities Ltd 287, MCB Stockbrokers Ltd 271, Azelbourne Financial Services Ltd 247, Plasmo Ltd 246, Ramet Investment Ltd 242, SBM Securities Ltd 241, Island Life Assurance Co Ltd 225, ABC Motors Co Ltd 187, Chue Wing & Co Ltd 187, Alteo Limited 37, Excelsior United Development Companies Limited 37, Medine Limited 37, The Bee Equity Partner Ltd 37, Galvanising Co Ltd 30, Associated Brokers Ltd 15, The Mauritius Development Investment Trust Co Ltd 2, Total 5,000,

37 SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) Annual Report Restrictions on the ownership of SEM shares SEM being a public company, the transfer of its shares are not subject to pre-emption rights. However, restrictions on ownership of shares as required by law are reflected in the following clauses 10.1 and 10.4 of the SEM Constitution: Clause 10.1: Transfer of Shares to be subject to Board and FSC approval:- Notwithstanding the rights conferred upon the Board by clause Hereof, all transfers and transmissions of Shares shall have to be approved by the Board. Any document relating to or affecting the title to any Shares shall be registered with the Company, after having been approved by the Board, without payment of any fee. No Shares shall be transferred except with the approval of the FSC pursuant to Section 23 of the Financial Services Act Clause 10.4: Board s right to refuse or delay registration of transfer:- (a) The Board may, subject to compliance with sections 87 to 89 of the Act, refuse or delay the registration of any transfer of any Share to any person, whether that person be an existing Shareholder or not, where: (i) so required by law; (ii) a holder of any such Share has failed to pay on the due date any amount payable thereon either in terms of the issue thereof or in accordance with the Constitution (including any Call made thereon); (iii) the transfer is not accompanied by such proof as the Board reasonably requires of the right of the transferor to make the transfer; (iv) The Company is required or authorised to do so under the provisions of the Securities (Central Depositary, Clearing and Settlement) Act or any other enactment. (b) Notice of the decision of the Board refusing or delaying a transfer of any Share, stating the reasons for the refusal, shall be sent to the transferor and the transferee within twenty-eight (28) days of the date on which such transfer was delivered to the Board. Important Dates Important Dates Dividend declaration 27 th June 2017 Submission of audited accounts & annual reports to the Financial Services Commission (FSC) 29 th September 2017 Dividend payment 27 th October 2017 Annual Meeting of Shareholders of the SEM December 2017

38 The Stock Exchange of Mauritius Ltd 36 SEM CORPORATE GOVERNANCE REPORT 2017 (CONT D) SEM Corporate Social Responsibility (CSR) The SEM CSR policy is to contribute towards CSR programmes or activities that will help to Eradicate Absolute Poverty. For the FY 2017, in line with its approved CSR guidelines, the SEM financed various CSR programmes through thirteen NGO s as listed below: Name of NGO Amount sponsored (Rs 000) 1 Openmind Project Les Amis de Zippy S.A.C.I.M A.P.E.I.M A.P.S.A T1 Diams 80 7 Maison Familiale Rurale de Nord 80 8 Lizie Dan La Main 80 9 Child Hope Friends in Hope United Skills Workers Cooperative Society Limited Fondation pour l enfance, Terre de Paix PILS 80 Total amount sponsored 1,465 Political donations No political donation was made by the SEM during the financial year Shivraj Kevin Rangasami Chairman Date: 27 th September 2017

39 OPERATING AND FINANCIAL REVIEW The Stock Exchange of Mauritius Ltd Annual Report 2017

40 The Stock Exchange of Mauritius Ltd 38 LISTING ACTIVITIES marked yet another successful year on the listings front as the SEM saw a 35% increase in the number of new securities listed on its platform and made considerable progress in the advancement of its internationalisation agenda. Listings of Global & Specialised Funds and Global Business Companies were still numerous, as in previous years. 9 Global & Specialised Funds were admitted to listing, and Universal Partners Limited joined the Official Market in the Global Business Companies segment. A notable trend on the listings side was the continued increase in the number of specialist debt securities listings (18 out of the 31 new securities listed in being specialist debt securities) as an evergrowing number of companies are now turning to these instruments as an alternative avenue for raising finance in order to restructure their balance sheets or to have access to a new market with more competitive rates to fund their projects. New specialist debt security listings during the year also included the first Masala Bond to be listed on our platform, thus setting the stage for more Masala Bonds to use the SEM as a listing platform in the years to come. Moreover, 3 Structured Products issued by MCB Structured Solutions Ltd under its Crescendo Global Security Notes Programme were listed during the year under review, thereby broadening the SEM s offering in terms of Structured Products. In June 2017, the SEM also received an application by The African Export-Import Bank for the listing of Depositary Receipts on the Official Market. The listing of these Depositary Receipts, which has been scheduled for October 2017, and which is subject to The African Export-Import Bank successfully completing its private placement exercise prior to listing, will be the first listing of Sponsored Depositary Receipts on the SEM since the introduction of new Rules for the listing of such instruments in Overall, during the year, the SEM witnessed a steady increase in the number of foreign listings as it maintained its efforts to reinforce its position as an international listing venue. Evolution of new listings on the SEM NEW SECURITIES LISTED NEW SECURITIES LISTED NEW SECURITIES LISTED 2 New domestic securities New domestic securities New domestic securities New foreign securities 8 New foreign securities New foreign securities

41 LISTING ACTIVITIES (CONT D) Annual Report New listings on the Official Market Domestic Companies Global Business Companies Global & Specialized Funds Debt Securities Specialist Debt Instruments Exchange Traded Funds Structured products New listings in New listings in New listings in New listings on the DEM New listings in New listings in Domestic Companies Debt securities New listings in

42 The Stock Exchange of Mauritius Ltd 40 LISTING ACTIVITIES (CONT D) Overview of listed issuers The charts below provide an overview of issuers listed on the OM and DEM (by sector of activity), as at the end of June 2017: Official Market Banks & Insurance and Other Finance [7] Structured Products [4] Commerce [6] Exchange Traded Fund [5] Industry [7] Global Business Companies [13] Investments [13] Specialised debt securities [27] Leisure & Hotels [5] Global & Specialised Funds [27] Property Development [1] Foreign [1] Sugar [1] Debt [5] Transport [1]

43 LISTING ACTIVITIES (CONT D) Annual Report Overview of listed issuers (cont d) DEM Banks & Insurance and Other Finance [2] Property development [2] Commerce [4] Transport [1] Debetures [3] Sugar [3] Industry [11] Others [6] Investments [7] Mineral & Exploration [1] Leisure & Hotels [4] Withdrawals saw the withdrawal of 2 Global and Specialised Funds from the Official Market, namely AFRASIA Special Opportunities Fund and Africa Sustainability Fund, in August 2016 and February 2017 respectively, following the winding up of these funds. In December 2016, the listing of the Platinum securities of NewGold Issuer (RF) Limited was also cancelled after the redemption of the Platinum securities held by investors on the SEM. Withdrawals from the DEM included that of Bharat Telecom Ltd in March 2017.

44 The Stock Exchange of Mauritius Ltd 42 LISTING ACTIVITIES (CONT D) Corporate Transactions on the OM and the DEM Private placements were numerous in , especially amongst the listed Global Business Companies which used such exercises to raise capital on the SEM s multicurrency platform in order to fund their investment objectives. Capital raising through the issue of specialist debt securities was also increasingly popular during the year. The chart below provides a break-down of corporate transactions on the Official Market and the DEM during the year under review. Consideration Issues Related Party Transactions Substantial Transactions Disclosable Transactions Employee Share Option Schemes Further issue of specialist debt Bonus Issues Consideration Issues Rights Issues Private Placements Other developments As part of its efforts to explore new business opportunities and optimise market structure to accommodate a greater number of international issuers, in December 2016, the SEM introduced a new wave of reforms to its existing listing framework to consolidate its offering as an effective dual-listing platform. Given the interest of international issuers with regard to a secondary listing on the SEM, amendments were made to the Listing Rules to introduce additional flexibility for such issuers. This includes a new fast track listing route whereby issuers having a primary listing on an Exchange such as the Australian Securities Exchange, the Johannesburg Stock Exchange, the London Stock Exchange, NYSE, EURONEXT or the Toronto Stock Exchange can submit the same listing application documents approved by the Exchange of primary listing to the SEM. The fast track listing process effectively reduces time, cost and management constraints for the issuer with regard to the preparation of application documents. Further flexibility introduced in the Listing Rules for international issuers having a secondary listing on the SEM also includes a reduced regulatory gap as the post-listing obligations of the Exchange where the international issuer has its primary listing take precedence over the post-listing obligations of the SEM. These amendments were made in the context of the SEM s internationalisation strategy, and with their implementation, it is expected that the number of listings / dual-listings by international issuers will increase in the near future.

45 LISTING ACTIVITIES (CONT D) Annual Report Other developments (cont d) The SEM continued its efforts in maintaining and enhancing the competitiveness of its offering as a capital raising platform, and it successfully rolled out a simplified capital-raising framework to facilitate capital raising exercises by investment companies. Investment companies are no longer required to issue full Listing Particulars each time they wish to raise capital to pursue their investment objectives. Instead, Listing Particulars are issued and valid for a one year period, during which time, the investment company may list new shares by issuing an Information Note which is approved by the SEM s Listing Division. This simplified framework is speedy and efficient, and effectively facilitates the capital raising process, especially when investment companies have limited time periods to raise capital and act on investment opportunities. As regards the SEM Sustainability Index (SEMSI), which was launched in the year , Mauritian Eagle Insurance Company Limited was included in the Index as a new member in July A growing number of companies expressed their interest in participating in the SEMSI evaluation process and SEMSI is gradually proving itself as an effective tool to promote sustainability in both listed and unlisted companies in Mauritius. Some companies are effectively stepping up their efforts on the sustainability front and are aiming to be included in SEMSI by Prospects on the Listings side appear to be very optimistic in the years to come as the market grows and deepens as a result of new listings, an increasingly diversified product offering and an international investor base. The SEM will continue to hone its competitive edge by exploring ways to provide greater flexibility, new products and added value to its stakeholders. Official Market Market Performance Evolution of SEMDEX & SEMTRI (Rs) - FY SEMDEX 2,100 2,000 1,900 1,800 1,700 1,600 1,500 7,700 7,500 7,300 7,100 6,900 6,700 6,500 6,300 6,100 5,900 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 SEMTRI (Rs) Feb-17 Mar-17 Apr-17 May-17 Jun-17 SEMDEX SEMTRI (RS)

46 The Stock Exchange of Mauritius Ltd 44 TRADING ACTIVITIES Official Market (cont d) The financial year was marked by a strong performance of market indices and saw some of them setting new records during the year. Driven by the good performance of some leading stocks and a general positive market sentiment, the total return index, SEMTRI surged to a new all time high level of points on the 29th June The SEMDEX finished at points on same day which is its highest level for the period under review. As depicted on the graph above, the SEMDEX and the SEMTRI evolved in positive territory during the year. With a view to acknowledging the contribution of the Global Business Companies, the Stock Exchange of Mauritius launched the SEM All Share Index (SEM-ASI) and the total return index, SEMTRI-ASI on the 12th September 2016 and 10th October 2016 respectively. Both indices ended the session of 29th June 2017 at their highest level of points and points respectively. Furthermore, total capital raised on the Official Market amounted to Rs 31.9bn during the financial year , out of which some 89% were raised by Global Business Companies. Market capitalization of the Official Market crossed the Rs 400 billion mark on the 27th June 2017 and closed the year at Rs 400.4bn representing around 92% of the country s GDP. The price earnings ratio and the dividend yield stood at and 2.40% respectively at end of June The table below shows some salient market indicators at end of June Official Market Indicators FY SEM-ASI 2, SEMTRI-ASI 7, SEMDEX 2, SEMTRI (Rs) 7, SEMTRI (US$) 3, SEM SEMSI Market Capitalisation ( Rs Bn ) Market Cap / GDP (%) Total Value Traded (Rs Bn ) Total Volume Traded (M) 1.28 Market PER Market Dividend Yield (%) 2.40 Performance of Market Indices Market indices registered solid gains during the financial year After starting the first months of the year on an optimistic note, the local market picked up strongly in January 2017 and maintained its upward momentum throughout the year Market indices registered double digit gains during the period under review. The local index, SEMDEX finished the year at points growing by 21.1% during the year. The total return index, SEMTRI ended at 7472 points gaining 25.1% during the same period. Both the SEM-ASI and the SEMTRI-ASI finished the year with strong gains of 15.1% and 16.1% respectively. The Blue chip index, SEM-10 index closed the last session of the year at points. The SEM Sustainability Index (SEMSI) ended the session of 30th June 2017 at points.

47 TRADING ACTIVITIES (CONT D) Annual Report Official Market (cont d) The table below shows the comparative figures for the market indices and market capitalization. Market Index Performance INDICES 1-Jul Jun-17 Return (%) SEM-ASI* 1, , SEMTRI-ASI - RS** 6, , SEMDEX 1, , SEMTRI - RS 5, , SEMTRI - USD 2, , SEM SEMSI Market Capitalisation (RS) - SEMASI* 323,931,755, ,378,924, Market Capitalisation (RS) - SEMDEX 199,067,274, ,724,939, Note: *SEM-ASI - launched on the 12 th September 2016 **SEMTRI-ASI - launched on 10 th October 2016 Turnover and Volume Traded Total value traded registered a slight growth of 3.7% during the year and stood at Rs 13.6bn at end of June Average daily turnover for the 250 trading sessions held stood at Rs 54.4m compared. A total volume of 1.3bn shares were transacted in the financial year As illustrated on the chart below, the Banks, Insurance & other Finance sector, the Investments Sector and the Leisure & Hotels sector accounted for 80.9% of the total value traded. Value Traded by Sector - FY INDUSTRY 2.4% COMMERCE 1.43% INVESTMENTS 24.2% LEISURE & HOTELS 11.6% PROPERTY DEVELOPMENT 0.1% TRANSPORT 0.4% FOREIGN 0.03% SUGAR 0.3% FUNDS / GBL COMPANIES 8.1% BANKS & INSURANCE & OTHER FINANCE 45.1% DEBENTURES 3.7% EXCHANGE TRADED FUND 1.8%

48 The Stock Exchange of Mauritius Ltd 46 TRADING ACTIVITIES (CONT D) Official Market (cont d) Investor profile by category The chart below shows the breakdown of total value traded by different category of investors. Foreign investors accounted for 34.9% of the total value traded during the year. The share of local institutions trading value remained about 42.2% throughout the financial year compared to 35.8% last year. Turnover by Investor Types 100% % of Total Value Traded 80% 60% 40% 20% % Foreign Investors Local Institutions Local Individuals Investments by Foreign Investors Purchases by foreigners amounted to Rs 3.7bn whereas sales stood at Rs 5.8bn resulting in a net sell-off of Rs 2.1bn. The following chart depicts the net foreign investments on a monthly basis during the period July 2016 to June Net Foreign Investments - FY 2016/2017 1, Rs M Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 PURCHASES(Rs) SALES(Rs) NET PURCHASES

49 TRADING ACTIVITIES (CONT D) Annual Report Official Market (cont d) Market Capitalization Market capitalisation of the SEMDEX, which constitutes of mainly domestic companies, registered a growth of 27.5% during the period under review and stood at Rs 253.7bn at end of June Market capitalisation of the SEM-ASI constituents stood at Rs 400.4bn representing 92.1% of country s GDP. As shown in the chart below, the Banks, Insurance & other Finance sector and the Investment sector represented 66.4% of the total market capitalization. Market Capitalisation by Sector - June 2017 TRANSPORT 0.4% FUND/GBL COMPANIES 12.7% FOREIGN 0.1% SUGAR 1.1% PROPERTY & DEVELOPMENT 0.2% BANKS, INSURANCE & OTHER FINANCE 25.7% COMMERCE 8.5% LEISURE & HOTELS 6.7% INDUSRTY 4.0% INVESTMENTS 40.7% Top ten companies in terms of Total Return The following table shows the top ten companies in terms of total return for the financial year under review which ranges from 31.2% to 55.7%. Total Return Index Companies Listing Date 1-Jul Jun-17 Change (%) National Investment Trust Ltd 29-Jul-93 1, , Greenbay Properties Ltd 30-Jan Vivo Energy Mauritius Ltd 13-Nov-91 5, , Lottotech Ltd 11-Jun IBL Ltd 14-Jul CIM Financial Services Ltd 30-Oct United Basalt Products Ltd 5-Jul-89 6, , Promotion and Development Ltd 17-Jan MCB Group Limited 5-Jul-89 21, , Fincorp Investment Ltd 31-Aug-94 1, ,

50 The Stock Exchange of Mauritius Ltd 48 TRADING ACTIVITIES (CONT D) Development & Enterprise Market (DEM) Market Performance The Development & Enterprise Market (DEM) was marked by a good performance of market indices during the financial year of Triggered by the healthy standing of some listed stocks, the main index, DEMEX and the total return index, DEMTRI closed at their all-time high level on 16th May The DEMEX ended the session of 16th May at points whereas the DEMTRI closed at points. Total market capitalization on DEM stood at Rs 49.5bn at end of June Rs 562.5m were raised on the DEM during the year. The market was trading at a PE ratio of 9.48 and dividend yield of 3.26%. The table below demonstrates some market indicators at end of June DEM Indicators FY DEMEX DEMTRI (RS) DEMTRI (US) Market Capitalisation ( Rs Billion ) Market Cap / GDP (%) 11.4 Total Value Traded (Rs Billion ) 1.6 Total Volume Traded (Million) 93.9 No. of Trading Sessions 250 Market PER 9.48 Market Dividend Yield (%) 3.26 Evolution and Performance of Market Indices DEMEX & DEMTRI (Rs) - FY DEMEX DEMTRI (Rs) Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 DEMEX DEMTRI (RS)

51 TRADING ACTIVITIES (CONT D) Annual Report Development & Enterprise Market (DEM) (cont d) As shown in above chart, market indices on the Development & Enterprise Market picked up around mid- August 2016 evolved in a positive environment during the year. The DEMEX ended the year at points gaining 9.8% during the year. The DEMTRI grew by 13% during the same time frame and closed at points. The table depicts performance of the indices during the period under review. Index Performance 1-Jul Jun-17 Change (%) DEMEX DEMTRI (RS) DEMTRI (US) Market Capitalisation ( Rs Bn ) Turnover and Volume Traded Turnover & Volume Traded : FY Rs Bn Volume (M) FY 13/14 FY 14/15 FY 15/16 FY 16/17 Turnover Volume Total value traded registered a slight fall of 2.1% during the year and stood at Rs 1.6bn. On the other hand total volume of shares grew by 23.7% and stood at 93.9 million shares at end of June As shown in the chart above, Rs 9.8 billion were traded during the last four years on the DEM. The top trading sector during the period under review was the Property & Development sector which accounted for 22.1% of the total amount traded.

52 The Stock Exchange of Mauritius Ltd 50 TRADING ACTIVITIES (CONT D) Development & Enterprise Market (DEM) (cont d) Value Traded by Sector - FY SUGAR 11.6% TRANSPORT 0.1% DEBENTURES 10.16% BANKS & INSURANCE 13.2% COMMERCE 1.43% INDUSTRY 2.4% INVESTMENTS 18.8% PROPERTY DEVELOPMENT 22.1% LEISURE & HOTELS 4.4% OTHERS 15.9% MINERAL & EXPLORATION % Foreign Investment Foreign investors demonstrated positive mood on the DEM during the year and this was reflected by a net inflow of Rs 109m compared to a net sell off of Rs 50.5m last year. The chart below shows the evolution of net foreign investments on a monthly basis for the financial year Net Foreign Investments - FY Rs m Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17

53 TRADING ACTIVITIES (CONT D) Annual Report Development & Enterprise Market (DEM) (cont d) Market Capitalization Total market capitalization on the DEM grew by 11.3% during the year on the back of good performance of some listed stocks and stood at Rs 49.5 billion at end of June As depicted in the table below, the best performing sectors in terms of market capitalization was the Banks & Insurance, Others and the Commerce sectors. DEM - Market capitalization by sector (Rs Bn) SECTORS 1-Jul Jun-17 Change (%) BANKS & INSURANCE COMMERCE INDUSTRY INVESTMENTS LEISURE AND HOTELS MINERAL & EXPLORATION OTHERS PROPERTY DEVELOPMENT SUGAR TRANSPORT Top ten companies in terms of Total Return The following table shows the top ten companies in terms of total return for the financial year under review which ranges from 23.9% to 175%. Total Return Index Companies Listing Date 1-Jul Jun-17 Change (%) Compagnie Des Villages De L Isle De France Ltée 25-Apr Quality Beverages Ltd 4-Aug ABC Banking Corporation Ltd 18-Jan Medical & Surgical 4-Aug The Bee Equity Partners Ltd 4-Aug ABC Motors Company Ltd 4-Aug , Phoenix Investment Company Ltd 4-Aug , Ciel Textile Ltd 4-Aug Excelsior United Development Companies Ltd 4-Aug Livestock Feed Ltd (Ordinary) 4-Aug

54 The Stock Exchange of Mauritius Ltd 52 MARKETING ACTIVITIES Financial year was an interesting year underpinning some key initiatives by SEM s Marketing and Market Development Department to further improve the experience of market players and investors using our Exchange. Emphasis was placed on training of market players and boosting of data business operations which is slowly becoming a sustainable fixed income revenue stream and improvement of investor services. Looking forward into the new financial year, an analysis of global trends and industries which are likely to be disrupted by digital technology and big data in the near to medium term, reveals that financial services including the Exchange business, is one of those. In the new era of cloud, digital technology and big data, in its transformational progress to digital, SEM will actively look at the application and use of digital technology in the new financial year embarking on a new digital journey, with a view to further improving its investor services. Digital technology can particularly play a significant role for the SEM in the areas of market development and financial education, in reaching out to a wider investor base and enabling on-demand offerings, where investors can pull services from the Exchange rather than with the classic push model. In SEM s view, it is more of a necessity than a consideration, as if we look at the younger generation (the so-called digital natives ), they are looking to do everything on the website and on devices and want everything to be intuitive, simple and on-demand. Digital technology plays squarely into that space to simplify and empower investors and the public at large. This is why digital technology is the new focal element that will guide SEM s strategic drive, in embarking on a new digital journey and implementing a few transformational initiatives in the new financial year and beyond, to further improve the experience of market players and investors using our exchange. Key Undertakings for Data Business Development Data business with global data vendors and global index providers constitutes a powerful marketing medium for the Stock Exchange in reaching out to institutional investors globally with a view to attracting more foreign investor interest for our listed stocks. Being tracked by such global market players also enhances SEM s visibility at the international level while also fostering its integration within the international financial markets. Over the last financial year, following active marketing efforts, the SEM added on its list of vendors, a new major global player namely S&P Global. Data Business Operations, although at its infancy stage, is slowly becoming a sustainable fixed income revenue stream. As of end July 2017, Data Business Services account for 8% of SEM s fixed income revenue stream and 2% of SEM s total revenue. SEM approached the mark of 100,000 retail shareholders in 2017 In the past, Mauritians have tended to see the stock market as an investment option reserved for the elite and believed it was difficult and complex to break into. However, this perception is slowly changing, with an array of ongoing investor education and market development initiatives over the years to demystify the SEM, empower the investor and making it simpler for the investor to invest and access market information. Some of these initiatives amongst others, comprise targeted reach-out programs in association with other stakeholders, partnership with the press for daily coverage of the stock market such as stock market performance and corporate actions/accounts of listed companies at the time of filing with SEM, in-house Courses at SEM for the public at large upon listing and trading of new instruments, evolving and ever-improving online tools on SEM s website namely, updated online classes and research/charting tools as well as a range of investor publications.

55 MARKETING ACTIVITIES (CONT D) Annual Report Key Undertakings for (cont d) In 2017, SEM came close to the mark of 100,000 retail shareholders with the number of retail investors registered at the CDS, standing at 96,199 by end June There are definitely many more who own shares indirectly via Mutual Funds and Collective Investment Schemes. As a percentage of the working population in Mauritius, nearly 20% of the working population are today shareholders of listed companies. Although this figure compares favourably with some larger emerging stock markets and even with some developed markets, the SEM is working at further increasing the number of retail shareholders over time and aiming at 150,000 shareholders by Specialised Training Workshops for Market Practitioners In May 2017, the SEM held a practical 2-Day workshop on Corporate Valuation, designed to enable professionals in the financial services sector to have an in-depth understanding of the techniques of valuation of public companies as well as of private equity ventures. The program s instructor is a finance professional of more than 25 years and is closely associated with the SEM since a few years, in the training of professionals of the capital markets and broader financial services industry. The targeted audience comprised representatives of listed issuers on the Exchange, investment dealers, financial analysts, asset managers, pension funds, accountants and executives from management companies in the global business sector. Participants had the opportunity to work on a range of valuation practices via real case-studies, covering the core fundamental backgrounds of valuation of IPO s, listed/non-listed companies and the advanced valuation techniques namely brand valuation, start-up and private equity ventures valuation, and buy-back impact on valuation. SEM Young Investor Award (SEMYIA) Competition marked its 25th Edition in 2017 One of the ways of attracting young people as future stock market investors has been through the popular SEM Young Investor Award Competition, the annual flagship activity of the SEM since 1993 for the young Mauritian generation, aimed at triggering the interest of participants for the stock market and sharpening their appetite as would-be investors in future. SEMYIA is an annual Event which has over time, spiked the interest of students to become investors on the SEM, with more than 20,000 participants over the last 25 years. The participation of more than 1000 students every year over the last decade constitutes a clear indication of the immense interest behind this competition, which is today an eagerly sought-after annual national event for lower-six school students in Mauritius. This year s competition marked its 25th Edition and has attracted 208 teams of five students each from 104 colleges across the country, representing 1040 participants. The primary aim behind SEMYIA is giving young students the opportunity to go beyond classes and learn in practice, about investing and experiencing trading as an investor on the Stock Exchange, without having to commit real money. Following initial technical training sessions, players get to initially invest a hypothetical sum of Rs 200,000 in listed stocks and ETFs, by creating their own initial share portfolio and placing buy/sell orders, while consulting Investment Dealers and following daily share prices and corporate announcements/ accounts of listed companies on SEM s website, with a view to managing their portfolio to achieve the best total return (dividends and capital gains) at the end of the three-month period of the competition. This practical stock market game puts participants in the shoes of a real investor by gaining a better understanding of the operational features of the SEM, an improved knowledge of how stocks are valued and how to assess a listed issuer s potential and have a stronger interest for broader financial and economic issues.

56 54 The Stock Exchange of Mauritius Ltd MARKETING ACTIVITIES (CONT D) Future Undertakings for SEM embracing the digital age: SEM Mobile App inclusive of a Simulator (Game component) + SEM Web App The Exchange intends to roll out a SEM mobile app in 2018, which will run on both ios and Android and will allow investors at large to have a real digital feel of the stock market. The mobile app will be multifunctional and allow any investor, in Mauritius or elsewhere, to follow and get alerts on market price movements of all listed instruments on the SEM, as well as place buy and sell orders with his/her stockbroker. Investors will also have access to charting tools, salient company information namely company announcements and published accounts as well as key company market data. The SEM mobile app will also contain a simulator (game component) that will provide non investors and new investors at large with the possibility to have a virtual trading experience without taking any risks. Prospective investors wary of losing money on the stock market will therefore be able to set up a mock trading account by selecting their favourite companies, watch their investments and play a simulated game using up-to-date market prices on all listed instruments. The application will measure instant profits/losses by keeping track of the virtual profit and loss situation of any player with alerts on stop losses or profit taking positions. The SEM Mobile app will also contain a time-bound tournament game where investors can play with each other in groups, and view scores and positions on a leader board. The core objective of this second component of the app will be to educate/train the user to learn to trade on stocks and let users keep a tab on their investments. This new SEM mobile app will definitely complement the SEM website s evolving and ever-improving online tools and features, in empowering the investor and making it simpler for the investor to invest and access market information. In this connection, SEM will also work on a responsive web design to make a web application for SEM s website. This will enable SEM s website to be fully responsive on smart screens of mobile devices. The digital journey SEM is definitely on and will be interesting. Like most businesses, it will be an ongoing process of working on how to change and evolve rapidly in the digital fintech revolution. On-field Reach Out Investor Education Programs: Open-Days and Targeted Programs In addition to modern technology-enabled investor education and market development initiatives, SEM also believes in continuing its traditional on-ground educational role by organising Open-Days alongside investment dealers, in promoting awareness amongst the public on stock market investment. Open-Days will be done in association with investment dealers as well as asset managers, pension funds and the MBC TV/private radio stations. The conventional purpose of these Open-Days is to foster awareness about the SEM, to promote financial literacy and to demonstrate, through one-on-one interactions with the public at large, how the SEM has contributed to the democratisation process of the Mauritius economy by enabling a large number of investors to become shareholders of Mauritian companies and benefit from the growth of these companies. While this is an ongoing feature in terms of on-field investor education, the SEM also intends to explore other ground-based avenues and platforms of encouraging people to find more about investing on the stock market. In this connection, the Exchange would like to go the extra mile and call upon the licensed banks in Mauritius and use their private banking unit and/or staff to reach out to targeted investors. For banks which are supportive of this initiative, SEM intends to organise focused in-house training sessions for the relevant bank clients as well as the Bank Branch Managers/Senior Staff so that they can in turn relay the necessary technical and operational information to their clients/depositors who do not yet invest on the Exchange. Two banks have already expressed their interest during the course of the new financial year SEM feels that this would be an effective targeted long-term channel to promote its activities at grass root level.

57 LEGAL ACTIVITIES Annual Report Future Undertakings for (cont d) The initiatives of the Legal Department during the financial year were closely linked with the continued efforts of the SEM to pursue on the path of innovation and render the listing framework more attractive for international companies and more particularly dually listed companies. As described below, a number of regulatory changes have been brought to facilitate the listing and trading of new products, introduce added flexibility to the existing listing framework for dually listed entities seeking a secondary listing on the SEM and to enhance liquidity on the market. Amendment to the ATS Schedule of Procedures for the Trading of Depositary Receipts on SEM The SEM had reviewed its listing framework during the last few years to cater for the listing of new products on the Exchange, including the listing of Depositary Receipts (DRs). Following the expression of interest by a potential issuer to list and trade sponsored DRs on the Exchange, some further technical amendments have been brought to the ATS Schedule of Procedures (SEM Trading Procedures) to ensure consistency with other regulatory requirements and introduce added clarity in the regulations to facilitate the trading of these financial instruments. The proposed amendments pertaining to the trading of depositary receipts on the SEM were approved by the regulator on 31 May 2017 and came into effect on the same day. Introduction of Added Flexibility to the Existing Listing Framework for Dually Listed Entities To further enhance the attractiveness of its listing and capital-raising framework, the SEM has brought amendments to Chapter 15 of the Listing Rules to provide for a fast-track listing route for companies that are already primarily listed on a selective list of well-known recognised exchanges worldwide, as defined in the new Appendix 8A recently incorporated in the Listing Rules. The fast-track route enables an international issuer that is already primarily listed on a list of recognised securities exchanges (i.e. ASX,JSE, LSE, Euronext, NYSE and TSX) to submit the same application document that it had submitted for listing on the primary Exchange, provided the issuer is listed on a board which is equivalent to the Official Market. The issuer would, however, be required to submit additional up-to-date information to supplement the information previously published in the application document lodged with the primary Exchange. Under the revamped Chapter 15 of the Listing Rules, post-listing requirements of the primary Exchange may take precedence over the SEM Listing Rules with the approval of the SEM. The amended Chapter 15 of the Listing Rules has received the approval of the FSC and became effective since 20 December Introduction of Dual-Currency Trading and Settlement of Foreign Currency Denominated Securities The SEM has introduced dual-currency trading and settlement of foreign currency denominated securities that are listed on the Exchange, following requests from Global Business Companies and management companies. The objective is to offer investors the option to trade securities, which are currently only traded in foreign currency, in Mauritian Rupees (MUR) as well, thus improving liquidity in the securities traded. Consequently, amendments have been brought to the ATS Schedule of Procedures to allow dual-currency trading and settlement of foreign currency denominated securities listed on the SEM. The amendments were approved by the Regulator and became effective on 29 November 2016.

58 The Stock Exchange of Mauritius Ltd 56 LEGAL ACTIVITIES (CONT D) Future Undertakings for (cont d) Waiver of Quarterly Reporting for Issuers Having a Primary Listing in a Foreign Jurisdiction and a Secondary Listing on the SEM To position the SEM competitively to attract more international listings, the SEM has engaged with the FSC for a dispensation to be granted to companies which are primarily listed in a foreign jurisdiction and secondarily listed on the SEM, with regard to the filing and publication of quarterly financial statements. Where under the law of the foreign jurisdiction an issuer is required to file and publish financial statements at an interval other than on a quarterly basis (e.g. where the law of the jurisdiction of primary listing requires financial statements to be filed and published on a half-yearly basis), that issuer may henceforth file and publish its financial statements on the same periodical basis as required by the law in the jurisdiction of its primary listing. This specific waiver of the reporting requirements for companies that are primarily listed in a foreign jurisdiction with a secondary listing on the SEM has become applicable since 1 September Amendment of the Financial Services Act 2007 to Allow Corporations Holding a Category 2 Global Business Licence to Invest in Securities Listed on the SEM Further to the enactment of the Finance (Miscellaneous Provisions) Act 2016, Section 73(2) of the Financial Services Act 2007 was amended to allow a corporation holding a Category 2 Global Business Licence (GBC2) to invest in securities listed on the Exchange. This follows from representations previously made by stakeholders to allow such corporations to invest in listed securities. For this purpose, a GBC2 may now enter into a business relationship with licensed Investment Dealers for the purpose of opening a securities account and investing in listed securities.

59 FINANCIAL REVIEW 2017 Annual Report Analysis of Revenue for the Financial Years 2015 to 2017 The table below discloses the components of the revenue of the SEM over a three-year period starting from 01 July 2015 to 30 June FY 2017 FY 2016 FY 2015 Rs'M % Rs'M % Rs'M % Transaction fees % % % Annual Listing & Application fees % % % Corporate Actions, Service fees and Annual Membership fees 4.9 4% 3.5 3% 1.5 1% Sale of information, Advert on SEM WEB site & SEM Publications 5.4 4% 6.4 5% 4.6 3% Investment Income % % 17 10% Dividends 9.7 7% % 16 10% Foreign Exchange gains 0 0% 0.3 0% 1.1 1% Accreditation fees & Misc. Income 3 2% 2.2 2% 0.4 0% Total Revenue % % % The main components of the revenue of the SEM are: revenue derived from Transaction fees, Annual listing & Application fees and Investment income. The total percentages of these three components of revenue are: 82% in FY 2017, 83% in FY 2016 and 86% in FY Dividends received also constitute a major source of the SEM revenue and this represents 7% in FY 2017, 8% in FY 2016 and 10% in FY The other sources of revenue are: income derived from Corporate Actions, Service fees & Annual Membership fees, Accreditation fee and revenue from the Sale of data and SEM publications. These represent 11% of the total revenue of the SEM in FY 2017, 6% in FY 2016 and 4% in FY The chart below illustrates the trend of revenue of the SEM over the past three financial years 2015 to Revenue Trend (FY FY 2017) Accreditation fee & Misc. Income Exchange gains Dividends Investment Income Sale of Data & Advert on SEM WEB site & publications Corp. Actions, Annual Membership & Service fees FY 2017 % FY 2016 % FY 2015 % Listing & Application fees Transaction fees 0% 20% 40% 60% 80%

60 58 The Stock Exchange of Mauritius Ltd FINANCIAL REVIEW 2017 (CONT D) Analysis of Revenue for the Financial Years 2015 to 2017 (cont d) The table below analyses the different components of expense incurred by the SEM during the three year period from 01 July 2015 to 30 June 2017 and indicates the percentage that each component of expense represents over the total expense of the SEM. FY 2017 FY 2016 FY 2015 Rs'M % Rs'M % Rs'M % Staff cost and related expenses % % % ATS Expenses 4.9 8% 4.5 9% 4.7 9% Marketing & Development Expenses 2 3% 2.1 4% 2.8 5% Depreciation 3.4 6% 3.3 6% 3.0 6% Admin. Expenses & Insurance 2.1 4% 2 4% 2.0 4% Registration Fee 1.6 3% 1.7 3% 1.7 3% Audit & Professional Fees 0.8 1% 1.1 2% 0.9 2% Other Operating Expenses % % 4.9 9% Total Expenses % % % The main components of expense for the SEM are: Staff costs & related expenses, Automated Trading System (ATS) expenses and other operating expenses. These three components represent 83% of the total expense for FY2017, 81% for FY 2016 and 80% for FY Depreciation cost is also another main item of expense for the SEM, although its percentage out of the total expense has remained unchanged at 6% over the last three years. The other components of expense are: Marketing and Development, Administration and insurance, Registration fees, Audit and Professional fees and Corporate Social Responsibility. These represent 11% of the total expense for FY 2017, 13% for FY 2016 and 14% for FY The Chart below gives an illustration of the trend of expenditure for the SEM over the past three years from 01 July 2015 to 30 June 2017: Analysis of Expenses (FY FY 2017) Other Operating Expenses Audit & Professional Fees Registration Fee Admin. Expenses & Insurance FY 2017 % FY 2016 % FY 2015 % Depreciation Marketing & Devpt Expenses ATS Expenses Staff Cost and Related Expenses 0% 10% 20% 30% 40% 50% 60% 70%

61 FINANCIAL REVIEW 2017 (CONT D) Annual Report Costs, Revenues and Cost to Income Ratio The total revenue, total cost and the Cost to Income ratio of the SEM over the last five financial years starting from FY 2013 to FY 2017 are disclosed in the table below. Financial Year Total Revenues Rs M Total Costs Rs M Cost/Income Ratio % * * restated Over the past five years, the total revenue has increased by 23.6% from Rs108.3 Million in FY 2013 to Rs133.9 Million in FY Total Costs showed an overall increase of per cent from Rs 44.3 Million in FY 2013 to Rs 57.8 Million in FY The Cost to Income ratio showed an increase of 4.9% from 41% in FY 2013 to 43% in FY2017. The chart below illustrates the trend of Total Revenue, Total Cost and Cost to Income ratio over the 5-year period 2013 to Total Revenues, Total Costs, Cost / Income Ratio (FY FY 2017) Rs'million Total Revenues Rs'M Total Costs Rs'M Cost/Income Ratio %

62 The Stock Exchange of Mauritius Ltd 60 FINANCIAL REVIEW 2017 (CONT D) Profit Margin The table below displays the Total revenue, the Net income and the Net Profit Margin of the SEM for the past five financial years 2013 to Financial Year Total Revenues Rs M Net Income Rs M Net Profit Margin (Net Income/Total Revenue) % Total revenue of the SEM over the last five years, demonstrated an overall increase of 23.6% from Rs million in FY 2013 to Rs million in FY Net Income, which is total revenue less total cost, on the other hand, showed an overall increase of 18.7% over five years, from Rs 64.1 million in FY 2013 to Rs 76.1 million in FY The Net Profit Margin showed a slight decrease of 3.4% over the last five years, from 59% in FY 2013 to 57% in FY The chart below depicts the trend of the Total Revenue, Net Income and the Net Profit Margin over the last five financial years 2013 to Net Profit Margin (FY 2013 to FY 2017) % % % % 65% Rs Milliion % % 60% 55% Margin Financial Years 50% Total Revenues Net Income Net Profit Margin

63 FINANCIAL REVIEW 2017 (CONT D) Annual Report Return On Equity (ROE) The table below discloses the figures over the last five financial years 2013 to 2017 of the Net Income, the Shareholders Funds (Equity) and the Return on Equity (ROE= Net income / Equity). Shareholders Funds and Return on Equity (ROE). Financial Year Net Income Rs M Equity Rs M Return on Equity % % % % 2016* % % * restated SEM Shareholders funds (Equity) over the past five financial years increased significantly by 50.5%, from Rs Million in FY 2013 to attain a total value of Rs M in FY Net Income increased by an overall percentage of 18.7% from Rs64.1 Million in FY 2013 to reach Rs 76.1 Million in FY The Return on Equity over the past five years decreased by 18.5 per cent from 27% in FY 2013 to 22% in FY ROE (Net Income/Equity) - FY 2013 to % 40% Net income and Equity Rs Million % % % 22% % 30% 25% 20% 15% 10% 5% Return on Equity * 2017 Financial Years 0% Net Income Equity Return on Equity

64 The Stock Exchange of Mauritius Ltd 62 FINANCIAL REVIEW 2017 (CONT D) Cash and Cash Equivalents Cash and cash equivalents increased significantly over the last five financial years showing an overall percentage increase of 52% from Rs Million in FY 2013 to reach Rs 314 Million in FY FY 2017 Rs M FY 2016 Rs M FY 2015 Rs M FY 2014 Rs M FY 2013 Rs M Cash and Cash Equivalents The trend of Cash and Cash Equivalents of the Company over the past five years is illustrated in the chart below. Cash and Cash Equivalents Rs'million FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Cash and Cash Equivalents

65 FINANCIAL REVIEW 2017 (CONT D) Annual Report Wealth Created and Distributed by the Company * 2015 Rs M % Rs M % Rs M % Turnover Other Income Administrative Expenses TOTAL WEALTH CREATED % % % DISTRIBUTED AS FOLLOWS: Members of Staff Salaries and other benefits % % % Providers of Capital Dividends to ordinary shareholders % % % Government - taxation % % % % % % Wealth reinvested in the Company to maintain and develop operations: Profit retained % % % Depreciation 3.4 3% 3.3 3% 3.0 2% % % % TOTAL WEALTH DISTRIBUTED AND RETAINED % % % * restated Wealth created & distributed FY FY 2015 FY 2016* FY 2017 Government & taxation (%) Salaries and other benefits (%) * restated

66 64 The Stock Exchange of Mauritius Ltd

67 Annual Report FINANCIAL REPORTS The Stock Exchange of Mauritius Ltd Annual Report 2017

68 The Stock Exchange of Mauritius Ltd 66 DIRECTORS RESPONSIBILITY STATEMENT The following statement, which should be read in conjunction with the Report of the Auditors, set out on page ss 67 to 69, is made with a view to distinguishing the respective responsibilities of the Directors and of the auditors in relation to the financial statements. The Directors are required by the Companies Act 2001 to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year and of the profit and loss and cash flow for the financial year. The Directors consider that in preparing the financial statements on pages 70 to 103 the Company has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates, and that all applicable accounting standards have been followed. The Directors have responsibility for ensuring that the Company keeps accounting records which disclose with reasonable accuracy the financial position of the Company and which enable them to ensure that the financial statements comply with the Companies Act The Directors have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and Group and to prevent and detect fraud and other irregularities. Other responsibilities of the Directors include overseeing the implementation and upholding of good Corporate Governance practices and ensuring that effective systems of internal controls and risk management have been maintained. Shivraj Rangasami (Chairman) Sunil Benimadhu (Executive Director) CERTIFICATE FROM THE COMPANY SECRETARY I certify that, to the best of my knowledge and belief, the Company has filed with the Registrar of Companies all such returns as are required of the Company under the Companies Act 2001 in terms of Section 166 (d). Chaitanand Jheengun, FCIS Secretary

69 Annual Report 2017 INDEPENDENT AUDITOR S REPORT TO THE SHAREHOLDERS OF THE STOCK EXCHANGE OF MAURITIUS LTD 67 Report on the audit of the consolidated and separate financial statements Opinion We have audited the consolidated and separate financial statements of The Stock Exchange of Mauritius Ltd (the Company ) and its subsidiary (collectively referred to as the Group ) set out on pages 70 to 103, which comprise the consolidated and separate statements of financial position as at 30 June 2017, and the consolidated and separate statements of profit or loss and other comprehensive income, consolidated and separate statements of changes in equity and consolidated and separate statements of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated and separate financial statements give a true and fair view of the financial position of the Group and the Company as at 30 June 2017, and of their consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and comply with the requirements of the Mauritius Companies Act Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those Standards are further described in the Auditor s Responsibilities for Audit of the Consolidated and Separate Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements of the International Ethics Standards Board of Accountants (IESBA) Code of Ethics for Professional Accountants. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Report on other legal and regulatory requirements Mauritius Companies Act 2001 In accordance with the requirements of the Mauritius Companies Act 2001, we report as follows: we have no relationship with, or interest in, the Company and its subsidiary other than in our capacities as auditor and tax advisor; we have obtained all information and explanations that we have required; and in our opinion, proper accounting records have been kept by the Company as far as appears from our examination of those records. Other information The directors are responsible for the other information. The other information comprises the Group Financial Highlights, Performance Highlights, the Corporate Review, the Operating and Financial Review, the Financial Reports, the Certificate from the Company s Secretary and Additional Information, but does not include the consolidated and separate financial statements and our auditor s report thereon. Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express any form of assurance or conclusion thereon. In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

70 The Stock Exchange of Mauritius Ltd 68 INDEPENDENT AUDITOR S REPORT TO THE SHAREHOLDERS OF THE STOCK EXCHANGE OF MAURITIUS LTD (CONT D) Report on the audit of the consolidated and separate financial statements (cont d) Responsibilities of directors for the consolidated and separate financial statements The directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with International Financial Reporting Standards and in compliance with the requirements of the Mauritius Companies Act 2001 and they are also responsible for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated and separate financial statements, the directors are responsible for assessing the ability of the Group and the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. The directors are responsible for overseeing the Group s financial reporting process. Auditor s responsibilities for the audit of the consolidated and separate financial statements Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of the directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

71 Annual Report 2017 INDEPENDENT AUDITOR S REPORT TO THE SHAREHOLDERS OF THE STOCK EXCHANGE OF MAURITIUS LTD 69 Report on the audit of the consolidated and separate financial statements (cont d) We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. This report is made solely to the Company s shareholders, as a body, in accordance with section 205 of the Mauritius Companies Act Our audit work has been undertaken so that we might state to the Company s shareholders those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company s shareholders as a body, for our audit work, for this report, or for the opinions we have formed. Deloitte Chartered Accountants Twaleb Butonkee, FCA Licensed by FRC 27 September 2017

72 The Stock Exchange of Mauritius Ltd 70 STATEMENTS OF FINANCIAL POSITION AT 30 JUNE 2017 THE GROUP THE COMPANY Notes Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 (Restated) (Restated) (Restated) (Restated) ASSETS Non-current assets Property, plant and equipment 5 47,594 51,589 51,826 29,103 31,658 30,980 Intangible assets Investment in subsidiary ,650 7,650 7,650 Deposits 8 400, , , , , ,458 Stock Exchange Compensation Fund 9 4,825 4,730 4,617 4,825 4,730 4,617 Deferred taxation Other receivables 11 50,680 42,527 37,447 26,813 24,921 25, , , , , , ,192 Current assets Inventories Trade and other receivables 11 27,043 33,334 27,129 27,707 35,374 32,346 Deposits 8 89,371 81,180 70,621 53,371 49,113 37,493 Bank balances and cash 26,107 10,113 15,432 6,229 2,583 1, , , ,460 87,307 87,070 71,428 Total assets 646, , , , , ,620 EQUITY AND LIABILITIES Capital and reserves Stated capital 12 50,050 50,050 3,350 50,050 50,050 3,350 Retained earnings 405, , , , , ,852 Equity attributable to owners of 455, , , , , ,202 the company Non-controlling interest 116, , , Total equity 572, , , , , ,202 Non-current liabilities Retirement benefit obligations 13 14,043 11,171 10,329 7,763 6,945 6,195 Deferred taxation , Stock Exchange Compensation Fund 9 4,825 4,730 4,617 4,825 4,730 4,617 19,084 17,014 15,742 12,804 11,863 10,812 Current liabilties Trade and other payables 15 13,206 12,469 13,342 5,183 4,251 6,497 Taxation 14 3,701 2,820 5,807 2,284 1,907 3,572 Dividends 16 38,626 43,335 59,537 38,626 43,335 59,537 55,533 58,624 78,686 46,093 49,493 69,606 Total liabilities 74,617 75,638 94,428 58,897 61,356 80,418 Total equity and liabilities 646, , , , , ,620 Approved by the Board of Directors and authorised for issue on 27 th September 2017 Shivraj Rangasami (Chairman) Sunil Benimadhu (Executive Director) The notes from pages 75 to 103 form an integral part of these financial statements

73 Annual Report 2017 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE THE GROUP THE COMPANY Notes Rs 000 Rs 000 (Restated) Rs 000 Rs 000 (Restated) Revenue , ,266 98,244 98,840 Other income 19 38,385 40,681 35,662 37,752 Administrative expenses (83,373) (75,881) (57,761) (51,774) Operating profit 107, ,066 76,145 84,818 Contribution to Guarantee Fund 21 (210) (218) - - Profit before taxation , ,848 76,145 84,818 Income tax expense 14 (18,915) (20,806) (11,676) (13,142) Profit after taxation 88,821 96,042 64,469 71,676 Transfer to Stock Exchange Compensation Fund 9 (95) (113) (95) (113) PROFIT FOR THE YEAR 88,726 95,929 64,374 71,563 Other Comprehensive Income:- Items that will not be reclassified subsequently to profit or loss Actuarial loss on defined benefit pension plan 13 (2,248) (487) - - Deferred tax on actuarial loss 1, (983) (487) - - TOTAL COMPREHENSIVE INCOME FOR THE YEAR 87,743 95,442 64,374 71,563 Profit for the year attributable to:- Owners of the company 72,058 78,742 64,374 71,563 Non-controlling interest 16,668 17, ,726 95,929 64,374 71,563 Total comprehensive income attributable to : Owners of the company 71,557 78,494 64,374 71,563 Non-controlling interest 16,186 16, ,743 95,442 64,374 71,563 Earnings per share The notes from pages 75 to 103 form an integral part of these financial statements

74 The Stock Exchange of Mauritius Ltd 72 STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017 (a) THE GROUP Notes Share capital Share premium Retained earnings Attributable to owners of the company Non controlling interest Total equity Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Balance at 30 June 2015 (As previously reported) 3, , , , ,042 Adjustments (5,311) (5,311) (46) (5,357) At 1 July 2015 (As restated) 3, , , , ,685 Profit for the year ,742 78,742 17,187 95,929 Other comprehensive income for the year - - (248) (248) (239) (487) Total comprehensive income for the year ,494 78,494 16,948 95,442 Bonus Issue of Shares 12 46,700 - (46,700) Proposed dividends for (43,335) (43,335) - (43,335) Dividends paid to noncontrolling interest (15,395) (15,395) Balance at 30 June 2016 (As restated) 50, , , , ,397 Profit for the year ,058 72,058 16,668 88,726 Other comprehensive income for the year - - (501) (501) (482) (983) Total comprehensive income for the year ,557 71,557 16,186 87,743 Proposed dividends for (38,626) (38,626) - (38,626) Dividends paid to noncontrolling interest (10,290) (10,290) Balance at 30 June , , , , ,224 The notes from pages 75 to 103 form an integral part of these financial statements

75 Annual Report 2017 STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) (b) THE COMPANY 73 Notes Share capital Share premium Retained earnings Total equity Rs 000 Rs 000 Rs 000 Rs 000 Balance at 30 June 2015 (As previously reported) 3, , ,465 Adjustments (5,263) (5,263) At 1 July 2015 (As Restated) 3, , ,202 Profit for the year ,563 71,563 Other comprehensive income for the year Total comprehensive income for the year ,563 71,563 Bonus issue of shares 12 46,700 - (46,700) - Proposed dividends for (43,335) (43,335) Balance at 30 June 2016 ( As restated) 50, , ,430 Profit for the year ,374 64,374 Other comprehensive income for the year Total comprehensive income for the year ,374 64,374 Proposed dividends for (38,626) (38,626) Balance at 30 June , , ,178 The notes from pages 75 to 103 form an integral part of these financial statements

76 The Stock Exchange of Mauritius Ltd 74 STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017 CASH FLOWS FROM OPERATING ACTIVITIES THE GROUP THE COMPANY Rs 000 Rs 000 (Restated) Rs 000 Rs 000 (Restated) Profit before taxation 107, ,848 76,145 84,818 Adjustments for: Depreciation of property, plant and equipment 5,247 5,205 3,388 3,323 Amortisation of intangible assets Profit on disposal of property, plant and equipment - (338) - (338) Interest receivable (27,777) (28,905) (17,605) (18,256) Retirement benefit obligations Loss/(profit) on exchange 246 (230) 246 (230) Dividend receivable - - (9,665) (10,710) OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 86,112 93,016 53,327 59,357 Decrease/(increase) in inventories 27 (31) - - (Increase)/decrease in trade and other receivables (2,647) (1,392) (1,522) (1,460) (Decrease)/increase in trade and other payables 737 (873) 932 (2,246) CASH GENERATED FROM OPERATIONS 84,229 90,720 52,737 55,651 Income tax paid (17,768) (23,448) (11,271) (14,591) Income tax refund on compensation fund NET CASH GENERATED FROM OPERATING ACTIVITIES 66,481 67,293 41,486 41,081 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (1,252) (5,293) (833) (4,326) Proceeds from sale of property, plant and equipment Purchase of intangible assets - (6) - - Dividend received ,710 16,025 Interest received 28,447 18,879 23,742 11,777 Investment in non-current fixed deposits (120,376) (51,900) (92,376) (24,500) Proceeds from non current fixed deposits 104,756 50,307 68,756 31,201 NET CASH GENERATED FROM INVESTING ACTIVITIES 11,575 12,650 9,999 30,840 CASH FLOWS FROM FINANCING ACTIVITIES Dividend paid to shareholders of holding company (43,335) (59,538) (43,335) (59,537) Dividends paid to non-controlling interest (10,290) (15,395) - - NET CASH USED IN FINANCING ACTIVITIES (53,625) (74,933) (43,335) (59,537) NET INCREASE IN CASH AND CASH EQUIVALENTS 24,431 5,010 8,150 12,384 CASH AND CASH EQUIVALENT AT THE BEGINNING OF THE YEAR 91,293 86,053 51,696 39,082 Effects of exchange rates on cash and cash equivalents (246) 230 (246) 230 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 115,478 91,293 59,600 51,696 REPRESENTED BY: Deposits - Current (Note 8) 89,371 81,180 53,371 49,113 Bank balances and cash 26,107 10,113 6,229 2, ,478 91,293 59,600 51,696 The notes from pages 75 to 103 form an integral part of these financial statements

77 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE GENERAL INFORMATION Following enactment of the Securities Act 2005, The Stock Exchange of Mauritius Ltd (the company ) has adopted a new constitution and changed its status from private to public company on 6th October Its principal place of business and registered office is situated at One Cathedral Square Building, Level 4, 16, Jules Koenig Street, Port Louis. The main activities of the company and its subsidiary are: The Stock Exchange of Mauritius Ltd : To provide facilities for buying, selling and otherwise dealing in securities on the Stock Exchange. The Central Depository & Settlement Co Ltd: To provide depository, clearing and settlement service in order to facilitate dealings in securities. The company and its subsidiary are collectively referred to as the group. 2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs) In the current year, the group and company have applied all of the new and revised IFRSs issued by the International Accounting Standards Board ( IASB ) and the International Financial Reporting Interpretations Committee ( IFRIC ) of the IASB that are relevant to their operations and effective for accounting periods beginning on 1 July Relevant Standards applied with no material effect on the financial statements IAS 1 IAS 16 Presentation of Financial Statements - Amendments resulting from the disclosure initiative Property, Plant and Equipment - Amendments regarding the clarification of acceptable methods of depreciation and amortisation IAS 16 Property, Plant and Equipment - Amendments bringing bearer plants into the scope of IAS 16 IAS 19 IAS 27 IAS 38 IFRS 7 Employee Benefits - Amendments resulting from September 2014 Annual Improvements to IFRSs Separate Financial Statements - Amendments reinstating the equity method as an accounting option for investments in subsidiaries, joint ventures and associates in an entity s separate financial statements Intangible Assets - Amendments regarding the clarification of acceptable methods of depreciation and amortisation Financial Instruments: Disclosures - Amendments resulting from September 2014 Annual Improvements to IFRSs IFRS 10 Consolidated Financial Statements - Amendments regarding the application of the consolidation exception IFRS 12 Disclosure of Interests in Other Entities - Amendments regarding the application of the consolidation exception

78 The Stock Exchange of Mauritius Ltd 76 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs) (CONT D) 2.2 New and revised Standards in issue but not yet effective IAS 7 Statement of Cash Flows - Amendments as result of the Disclosure initiative (effective 1 January 2017) IAS 12 Amendments regarding the recognition of deferred tax assets for unrealised losses (effective 1 January 2017) IAS 39 IFRS 7 IFRS 7 IFRS 9 Financial Instruments: Recognition and Measurement - Amendments to permit an entity to elect to continue to apply the hedge accounting requirements in IAS 39 for a fair value hedge of the interest rate exposure of a portion of a portfolio of financial assets or financial liabilities when IFRS 9 is applied, and to extend the fair value option to certain contracts that meet the own use scope exception (effective 1 January 2018) Financial Instruments: Disclosures -Deferral of mandatory effective date of IFRS 9 and amendments to transition disclosures (effective 1 January 2018) Financial Instruments: Disclosures - Additional hedge accounting disclosures (and consequential amendments) resulting from the introduction of the hedge accounting chapter in IFRS 9 (effective 1 January 2018) Financial Instruments - Finalised version, incorporating requirements for classification and measurement, impairment, general hedge accounting and derecognition (effective 1 January 2018) IFRS 9 Financial Instruments - Amendments regarding the interaction of IFRS 4 and IFRS 9 (effective 1 January 2018) IFRS 10 Consolidated Financial Statements - Amendments regarding the sale or contribution of assets between an investor and its associate or joint ventures (deferred indefinitely) IFRS 12 Disclosure of Interests in Other Entities - Amendments resulting from Annual Improvements Cycle (clarifying scope) (effective 1 January 2017) IFRS 15 Revenue from Contracts with Customers - Original issue (effective 1 January 2018) IFRS 15 Revenue from Contracts with Customers - Clarifications to IFRS 15 (effective 1 January 2018) IFRIC 22 Foreign Currency Transactions and Advance Consideration (effective 1 January 2018) IFRIC 23 Uncertainty over Income Tax Treatments (effective 1 January 2019) The directors anticipate that these amendments will be applied in the financial statements for the annual periods beginning on the respective dates as indicated above. The directors have not yet assessed the potential impact of the adoption of these amendments. 3. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of preparation of financial Statements The Financial statements are prepared under the historical cost convention and in accordance with International Financial Reporting Standards (IFRS).

79 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) SIGNIFICANT ACCOUNTING POLICIES (CONT D) (b) Basis of consolidation The consolidated financial statements incorporate the financial statements of the company and entities controlled by the company. Control is achieved when the company: has power over the investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns The company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. Where the company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The company considers all relevant facts and circumstances in assessing whether or not the company s voting rights in an investee are sufficient to give it power including: the size of the company s holding of voting rights relative to the size and dispersion of holding of the other vote holders; potential voting rights held by the company, other vote holders or other parties; rights arising from other contractual arrangements; and any additional facts and circumstances that indicate that the company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders meetings. Consolidation of a subsidiary begins when the company obtains control over the subsidiary and ceases when the company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the company gains control until the date when the company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the company and to the non-controlling interest. Total comprehensive income of subsidiaries is attributed to the owners of the company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows, relating to transactions between members of the Group are eliminated in full on consolidation. Non-controlling interests in the net assets (excluding goodwill) of the consolidated subsidiary are identified separately from the Group s equity therein. Non-controlling interests consist of the amount of those interests at the date of original business combination and the non-controlling interests share of changes in equity since the date of the combination. Total comprehensive income of the subsidiary is attributable to the owners of the company and non-controlling interests even if this results in the non-controlling interests having a deficit balance.

80 The Stock Exchange of Mauritius Ltd 78 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (c) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents revenue from transaction fees, listing fees and service fees. Revenue from services are recognised when the services have been performed and are billable. Other income include interest receivable, sale of information, and consultancy fees which are recognised on an accrual basis while dividend income is recognised when the shareholders rights to receive the dividend have been established. (d) Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Profit or loss on disposal of property, plant and equipment is determined by the difference between the carrying value of the assets and its net disposal proceeds and is accounted for in profit or loss. Depreciation is calculated so as to write off the cost of property, plant and equipment less their residual values over their estimated useful lives using the straight line method as follows: Freehold office premises - 50 Years Office furniture and equipment Years Computer equipment - 5 Years Motor vehicles Years (e) Intangible assets Computer Software Computer software that is not considered to form an integral part of any hardware equipment is recorded as intangible assets. The software is capitalised at cost and amortised over its estimated useful lives of 13 1/2 years. Development Cost Cost associated with developing or maintaining computer software are recognised as an expense as incurred. Costs that are directly associated with the production of identifiable and unique software controlled by the group and that will generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. The Computer software development costs recognised as assets are amortised using the straight line method over their estimated useful lives (5 years). (f) Investment in subsidiary In the company s separate financial statements, investment in subsidiary is stated at cost. The carrying amount is reduced if there is any impairment in value.

81 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) SIGNIFICANT ACCOUNTING POLICIES (CONT D) (g) Inventories Inventories are valued at the lower of cost (determined on the weighted average basis) and net realisable value. Cost of inventories comprise all costs of purchase and other costs incurred in bringing such stocks to their present condition and location. Net realisable value is the estimate of the selling price in the ordinary course of business less selling expenses. (h) Foreign currencies Items included in the financial statements are measured using Mauritian Rupees. The financial statements of the Group and the Company are presented in Mauritian Rupees, which is the Group s and the Company s functional and presentation currency. Transactions in foreign currencies are translated to Mauritian Rupees at the rate of exchange ruling at the date of transaction. Monetary assets and liabilities outstanding at year end are translated to Mauritian rupees ( Rs ) at the rates of exchange ruling at the reporting date. Exchange differences arising on the settlement and the retranslation of monetary items are recognised in profit or loss. (i) Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. Current Tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of profit or loss and other comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group s liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the reporting date. Deferred Tax Deferred tax is provided on the comprehensive basis using the liability method. Deferred tax liabilities are recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. (j) Retirement benefits The company operates a defined contribution pension plan. Its subsidiary, The Central Depository & Settlement Co Ltd (CDS) operates a defined benefit pension plan. (i) Defined contribution pension plan and state pension plan The company s contributions to the defined contribution pension plan are charged to profit or loss in the year in which they fall due.

82 The Stock Exchange of Mauritius Ltd 80 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (j) Retirement benefits (Cont d) (ii) Defined benefit pension plan For defined benefit retirement plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows: - Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements). - Net interest expense or income. - Remeasurement. The Group presents the first two components of defined benefit costs in profit or loss in the line administrative expenses. Curtailment gains and losses are accounted for as past service costs. (iii) State pension plan Contributions to the National Pension Scheme are charged to profit or loss in the period in which they are due. (iv) Retirement Gratuity under the Employment Rights Act 2008 (Amended 2013) For employees whose benefits are not expected to be fully offset by the Company s defined pension plan, the net present value of gratuity on retirement payable under the Employment Rights Act 2008 (Amended 2013) is calculated by a qualified actuary and provided for. The obligations arising under this items are not funded. (k) Provisions Provisions are recognised when the group has a present obligation as a result of a past event, and it is probable that the group will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the directors best estimate of the expenditure required to settle the obligation at the reporting date. Provisions are reviewed at the end of each reporting date and adjusted to reflect the current best estimate. (l) Financial instruments Financial assets and liabilities are recognised on the statement of financial position when the group has become party to the contractual provisions of the financial instruments. The classification of financial instruments depends on the nature and purpose of financial instruments and is determined at the time of initial recognition.

83 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) SIGNIFICANT ACCOUNTING POLICIES (CONT D) (l) Financial instruments (Cont d) These instruments are measured as set out below: (i) Held-to-maturity investments Held-to-maturity investments are financial assets with fixed or determinable payments and fixed maturity that the company has the positive intent and ability to hold to maturity. They are measured at amortised cost, less any impairment loss. The interest accrued is recorded as interest income in profit or loss. (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including trade and other receivables, bank balances and cash, and deposits) are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the effect of discounting is immaterial. The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction cost and other premium or discounts) through the expected life of the financial asset, or where appropriate, a shorter period. (iii) Cash and cash equivalents Cash comprises cash at bank and in hand. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks and investments in deposits with maturity of less than 1 year. (iv) Other financial liabilities Other financial liabilities are stated at their amortised cost. (v) Derecognition of financial assets The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset in its entirety, the difference between the asset s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

84 The Stock Exchange of Mauritius Ltd 82 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (l) Financial instruments (Cont d) (vi) Derecognition of financial liabilities The Group derecognises financial liabilities when, and only when, the Group s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss. (vii) Impairment of financial assets Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. For certain categories of financial assets, such as trade receivables, assets are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Group s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in local economic conditions that correlate with default on receivables. For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the financial asset s original effective interest rate. (m) Impairment of other assets At the end of each reporting date, the group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any, and the carrying amount of the asset is reduced to its recoverable amount. (n) Related parties Related parties are individuals and companies where the individual or company has the ability, directly or indirectly to control the other party or exercise significant influence over the other party s financial and operating decisions. (o) Stated capital Ordinary shares are classified as equity.

85 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 4. ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY The preparation of financial statements in accordance with IFRSs requires the directors and management to exercise judgement in the process of applying the accounting policies. It also requires the use of accounting estimates and assumptions that may affect the reported amounts and disclosures in the financial statements. Judgements and estimates are continuously evaluated and are based on historical experience and other factors, including expectations and assumptions concerning future events that are believed to be reasonable under the circumstances. The actual results could, by definition therefore, often differ from the related accounting estimates. 83 Where applicable, the notes to the financial statements set out areas where management has applied a higher degree of judgement that have a significant effect on the amounts recognised in the financial statements, or estimations and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Property, plant and equipment The cost of the property, plant and equipment is depreciated over the estimated useful life of the asset. The estimated useful life is based on expected usage of the asset and expected physical wear and tear, which depends on operational factors. Management has not considered any residual value as it is deemed immaterial. Impairment of unquoted investment in subsidiary Determining whether investment in subsidiary is impaired requires an estimation of the value in use of the investment. In considering the value in use, the directors have taken into consideration the management accounts and cash flow projections of the subsidiary. The actual results could however differ from estimates. Allowances for doubtful debts Allowance for doubtful debts for the group is determined using a combination of factors to ensure that the trade receivables are not overstated due to non-recoverability. The allowance for doubtful debts for all customers is based on a variety of factors, including the overall quality and ageing of the receivables, continuing credit evaluation of the customer s financial conditions. Also,specific provisions for individual accounts are recorded when the company becomes aware of the customer s inability to meet its financial obligations such as in the case of deterioration in the customer s operating results or financial position. Retirement benefit obligations The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate, rate of salary increase, rate of pension increase and average retirement age. Any changes in these assumptions will impact the carrying amount of pension obligations. The Group and the Company determine the appropriate discount rates at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group and the Company consider the interest rates to high-quality government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension obligation.

86 The Stock Exchange of Mauritius Ltd 84 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 5. PROPERTY, PLANT AND EQUIPMENT (a) THE GROUP Freehold Office Premises Office furniture and equipment Computer equipment Motor vehicles Total Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Cost At 1 July ,873 10,512 21,356 12,085 82,826 Additions ,275 2,800 5,293 Disposals - (3) - (1,800) (1,803) At 30 June ,873 10,727 23,631 13,085 86,316 At 1 July ,873 10,727 23,631 13,085 86,316 Additions ,252 Write-off - (9) - - (9) At 30 June ,873 11,000 24,601 13,085 87,559 Accumulated depreciation At 1 July ,772 8,037 16,503 2,688 31,000 Charge for the year ,553 2,163 5,205 Disposals - (3) - (1,475) (1,478) At 30 June ,529 8,766 18,056 3,376 34,727 At 1 July ,529 8,766 18,056 3,376 34,727 Charge for the year ,628 2,225 5,247 Write-off - (9) - - (9) At 30 June ,286 9,394 19,684 5,601 39,965 Net book value At 30 June ,587 1,606 4,917 7,484 47,594 At 30 June ,344 1,961 5,575 9,709 51,589

87 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 5. PROPERTY, PLANT AND EQUIPMENT (CONT D) (b) THE COMPANY 85 Cost Freehold Office Premises Office furniture and equipment Computer Motor equipment vehicles Total Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 At 1 July ,463 5,419 8,425 8,418 44,725 Additions ,421 2,800 4,326 Disposal (1,800) (1,800) At 30 June ,463 5,524 9,846 9,418 47,251 At 1 July ,463 5,524 9,846 9,418 47,251 Additions At 30 June ,463 5,781 10,422 9,418 48,084 Accumulated depreciation At 1 July ,146 3,863 5,658 2,078 13,745 Charge for the year ,000 1,440 3,323 Disposal (1,475) (1,475) At 30 June ,575 4,317 6,658 2,043 15,593 At 1 July ,575 4,317 6,658 2,043 15,593 Charge for the year ,067 1,502 3,388 At 30 June ,004 4,707 7,725 3,545 18,981 Net book value At 30 June ,459 1,074 2,697 5,873 29,103 At 30 June ,888 1,207 3,188 7,375 31,658 The directors are of the opinion that property, plant and equipment has not suffered any impairment as of the reporting date.

88 The Stock Exchange of Mauritius Ltd 86 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 6. INTANGIBLE ASSETS THE GROUP Computer Software Development Cost Total Rs 000 Rs 000 Rs 000 Cost At 1 July , ,019 Additions 6-6 At 30 June , ,025 Additions At 30 June , ,025 Amortisation At 1 July , ,848 Charge for the year At 30 June , ,929 Charge for the year At 30 June , ,965 Net book value At 30 June At 30 June The directors are of the opinion that intangible assets have not suffered any impairment as of the reporting date. 7. INVESTMENT IN SUBSIDIARY 2017 and 2016 Rs 000 The Company Unquoted Investment At 1 July and 30 June 7,650 The investment in subsidiary represents 51% of the ordinary share capital of Central Depository & Settlement Co Ltd ( CDS ), a company incorporated in Mauritius. At the end of the reporting period, the directors are of the opinion, that there has been no objective evidence of impairment.

89 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 7. INVESTMENT IN SUBSIDIARY (CONT D) Central Depository & Settlement Co. Ltd The core business of the CDS is to provide centralised depository, clearing and settlement services to securities markets Rs 000 Rs 000 Current Assets 65,449 48,841 Non-current assets 189, ,114 Current Liabilities 28,681 30,398 Non current Liabilities 6,280 5, Rs 000 Rs 000 Revenue 68,722 68,607 Expenses (34,814) (33,516) Profit for the year 33,908 35,091 Other comprehensive (loss)/income for the year (983) (487) Total comprehensive income for the year 32,925 34,604 Net cash generated from operating activities 24,997 26,213 Net cash generated from (used in) investing activities 12,284 (2,165) Net cash used in financing activities (21,000) (31,422) Net increase (decrease) in cash and cash equivalents 16,281 (7,374) 8. DEPOSITS THE GROUP THE COMPANY Rs 000 Rs 000 Rs 000 Rs 000 Maturity falling: - Within one year 89,371 81,180 53,371 49,113 - Between two to five years 392, , , ,757 - More than five years 7,940-7, , , , , , , , ,870 The deposits bear interest at rates ranging from 1.65% to 9.20 % p.a. (2016: 0.4% to 10% p.a.).

90 The Stock Exchange of Mauritius Ltd 88 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 9. STOCK EXCHANGE COMPENSATION FUND (a) The Board of Directors of The Stock Exchange of Mauritius Ltd decided on 3 August 1998 to create a compensation fund, in accordance with section 40 of The Stock Exchange Act This fund was set up in accordance with sections 40 to 45 of the Stock Exchange Act 1988, which has now been replaced by Section 148 of the Securities Act Its objective is to compensate persons suffering from pecuniary losses from any default committed by member companies. An initial amount of Rs 2,750,000 was transferred out of the company s retained earnings for this purpose in Movements on the fund are detailed below: THE GROUP AND THE COMPANY Rs 000 Rs 000 Balance at 1 July 4,730 4,617 Add: Interest receivable from investments made on behalf of Compensation Fund ,841 4,750 Less: Income tax charge (16) (20) Balance at 30 June 4,825 4,730 Net movement for the year (b) For cash flow purposes THE GROUP AND THE COMPANY Rs 000 Rs 000 Movement for the year (excluding tax provision) INVENTORIES THE GROUP Rs 000 Rs 000 Stationery, at cost TRADE AND OTHER RECEIVABLES THE GROUP THE COMPANY Rs 000 Rs 000 Rs 000 Rs 000 Non -Current Interest receivable from fixed deposits 45,909 35,865 24,196 20,940 Loan to employees 3,123 3,642 2,123 2,757 Other receivables 1,648 3, ,224 50,680 42,527 26,813 24,921 Current Trade receivables 14,236 9,336 10,166 6,845 Interest receivable from fixed deposits 7,689 18,515 5,110 14,617 Other receivables and prepayments 3,912 4,188 2,052 2,399 Loan to employees 1,206 1, Dividend receivable from subsidiary - - 9,665 10,710 27,043 33,334 27,707 35,374

91 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 11. TRADE AND OTHER RECEIVABLES (CONT D) The average credit period on sales of services is 7 days for the company and 30 days for the subsidiary. No interest is charged on the trade receivables. Before accepting any new customer, an assessment is made of the potential customer s credit quality. There are no past due debts which require a provision for doubtful debts as at 30 June 2017 as the directors consider them to be fully recoverable. 89 Loans to employees are unsecured, repayable as per the contractual terms of the agreements, ranging between one to eight years and granted in line with the approved policy of the company and interest rates on these loans are charged at the current market rates which are reviewed every six months. Non-current other receivables include deferred expenditure in relation to car grant scheme to staff. Ageing of past due but not impaired debts THE GROUP THE COMPANY Rs 000 Rs 000 Rs 000 Rs days 3,916 2, days 455 1, ,391 More than 90 days and less than 365 days ,609 4, , STATED CAPITAL THE GROUP AND THE COMPANY Rs 000 Rs 000 Issued and fully paid 5,000,000 ordinary shares of Rs10 each (2016: 5,000,000 Shares of Rs 10 each) 50,000 50,000 Share Premium ,050 50,050 Ordinary shares are not redeemable, carry voting rights, entitlement to dividends or distributions and on winding up to any surplus on assets of the company. During the year ended 30 June 2016, the company capitalised part of its reserve through a bonus issue of 4,670,000 new ordinary shares of MUR 10 each. 13. RETIREMENT BENEFIT OBLIGATIONS THE GROUP THE COMPANY Rs 000 Rs 000 Rs 000 Rs 000 Gratuity on retirement (a) 7,763 6,945 7,763 6,945 Pension benefits (b) 6,280 4, ,043 11,171 7,763 6,945

92 The Stock Exchange of Mauritius Ltd 90 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 13. RETIREMENT BENEFIT OBLIGATIONS (CONT D) The company participates in a defined contribution (DC) pension plan for all its employees. Its contributions for DC employees are expensed to profit or loss and amounted to Rs 5,651,000 for the year ended 30 June 2017 (2016: Rs 2,103,000). The company has a residual obligation imposed by the Employment Rights Act (ERA) 2008 on top of the DC plan. Accordingly, the company has recognised a net defined liability of Rs 7,763,000 for these gratuities in its statement of financial position as at 30 June 2017 (2016 restated: Rs 6,945,000). The pension plan typically exposes the company to the following actuarial risks: Interest risk: A decrease in the bond interest rate will increase the plan liability, however, this may be partially offset by a decrease in inflationary pressures on salary increases. Salary risk: The plan liability is calculated by reference to the future projected salaries of plan participants. As such, an increase in the salary of the plan participants above the assumed rate will increase the plan liability whereas an increase below the assumed rate will decrease the liability. There has been no plan amendment, curtailment or settlement during the year. a. Gratuity on retirement THE GROUP AND THE COMPANY Rs 000 Rs 000 Reconciliation of Net Defined Liability Opening balance 6,945 6,195 Amount recognised in profit and loss Closing balance 7,763 6,945 Reconciliation of Present Value of Defined Benefit Obligation Opening Balance 6,945 6,195 Current Service cost Interest expense ,763 6,945 Component of amount recognised in Profit and Loss Current service cost Liability/(asset) Net acturial loss recognised in the year

93 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 13. RETIREMENT BENEFIT OBLIGATIONS (CONT D) a. Gratuity on retirement (Cont d) Principle Assumptions used at end of period Discount rate 6.5% 7.0% Rate of Salary Increase 5.0% 5.0% Rate of pension increase ( for residual retirement gratuities only) 2.5% 2.5% Average retirement age (ARA) 65.0% 60.0% Sensitivity Analysis on Defined Benefit Obligation at end of period Increase due to 1% decrease in discount rate 2,392 N/A Decrease due to 1% increase in discount rate 2,116 N/A The above sensitivity analysis has been carried out by recalculating the present value of obligation at the end of the period after increasing or decreasing the discount rate while leaving all other assumptions unchanged. The results are particularly sensitive to a change in discount rate due to the nature of the liabilities being the difference between the pure retirement gratuities under the Employment Rights Act 2008 and the deductions allowable, being 5 times the annual pension provided and half the lump sum received by the member at retirement from the pension fund with reference to the employer s share of contributions. The latter amount is Rs 25,469,000 as at 30 June Any similar variation in the assumptions would have shown smaller variations in the defined benefit obligation. Future Cashflows The funding policy is to pay benefits out of the reporting entity s cash flow as and when due. The company does not expect to make any contribution to its pension plan for the financial year 2018 and the weighted average duration of the defined benefit obligation is 12 years. Retirement benefit obligations have been based on the report submitted by AON Hewitt Ltd dated 04 August b. Pension benefits THE GROUP Rs 000 Rs 000 Reconciliation of Net Defined Liability Opening balance 4,226 4,134 Amount recognised in profit and loss 2,012 1,529 Amount recognised in other comprehensive income 2, Less Employer Contributions (2,206) (1,924) Closing balance 6,280 4,226 The amounts recognised in the statement of financial position are determined as follows: Present value of funded obligations 28,996 23,182 Fair value of plan assets (22,716) (18,956) Liability in the statement of financial position 6,280 4,226

94 The Stock Exchange of Mauritius Ltd 92 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 13. RETIREMENT BENEFIT OBLIGATIONS (CONT D) b. Pension benefits (Cont d) The amounts recognised in the statement of profit or loss and other comprehensive income are as follows: Rs 000 Rs 000 Current service cost 1,539 1,289 Interest cost 1,623 1,395 Expected return on plan assets (1,394) (1,158) Fund expenses and life insurance Past service cost - (226) Net actuarial loss recognised in the year 2, Total included in staff costs 4,260 2,016 Movements in the liability recognised in the Statement of financial position: Rs 000 Rs 000 At 1st July 4,226 4,134 Effect of additional emoluments Total expenses as shown above 4,260 2,016 Contributions (2,206) (2,074) At 30th June 6,280 4,226 The principal actuarial assumptions used were as follows: Rs 000 Rs 000 Discount rate 6.50% 7.00% Expected return on plan assets 6.50% 7.00% Future salary increases 4.50% 4.50% Future pension increases 1.50% 1.50% Sensitivity Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase and mortality. The sensitivity analyses below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the period, while holding all other assumptions constant Rs 000 Rs 000 Effect on present value of funded obligations 1% increase in discount rate 24,472 19,506 1% decrease in discount rate 34,766 27,868 1% increase in salaries 32,360 26,035 1% decrease in salaries 26,068 20,706 Effect of changing longevity - rate up 28,509 22,817 Effect of changing longevity - rate down 29,472 23,539

95 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 13. RETIREMENT BENEFIT OBLIGATIONS (CONT D) b. Pension benefits (Cont d) Reconciliation of the present value of defined benefit obligation Rs 000 Rs 000 Present value of obligation at start of year 23,182 19,776 Effect of additional emoluments Current service cost 1,783 1,519 Interest cost 1,623 1,395 Fund expenses and life insurance (244) (229) Liability loss/(gain) 2, Past service cost - (226) Present value of obligation at end of year 28,996 23,182 Reconciliation of fair value of plan assets Rs 000 Rs 000 Fair value of plan assets at start of year 18,956 15,642 Expected return on plan assets 1,394 1,158 Employer contributions 2,206 2,074 Fund expenses and life insurance (244) (229) Asset gain Fair value of plan assets at end of year 22,716 18,956 Distribution of plan assets at end of year The assets of the scheme are invested in a Deposit Administration Fund with Metropolitan Life (Mauritius) Ltd. History of obligations, assets and experience adjustments Rs 000 Rs 000 Fair value of plan assets 22,716 18,956 Present value of defined benefit obligation (28,996) (23,182) Deficit (6,280) (4,226) Asset experience gain during the year Liability experience loss during the year (2,652) (797) The expected contributions to post-employment benefit plans for the year ending 30 June 2018 are Rs2,304,911 (2017: Rs2,167,380). The actual return on plan asset is Rs1,617,135 (2016: Rs1,469,564). Pension amounts and disclosures have been based on the report submitted by Feber Associates Limited, Actuaries and Consultants.

96 The Stock Exchange of Mauritius Ltd 94 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 14. TAXATION (i) Income tax Income tax is calculated at the rate of 15% (2016: 15%) on the profit for the year as adjusted for income tax purposes and corporate social responsibility ( CSR ) of 2%. The group and the company are required to set up a CSR fund equivalent to 2% of their chargeable income of the preceding year to implement a CSR programme in accordance with their own CSR framework. Where the amount paid out of the CSR fund is less than the amount provided under the fund, the difference shall be remitted to the Director-General at the time of submission of the income tax return of the year under review. (a) THE GROUP THE COMPANY Rs 000 Rs 000 (Restated) Rs 000 Rs 000 (Restated) Tax Liability At 1st July 2,820 5,807 1,907 3,572 Paid during the year (2,820) (5,807) (1,907) (3,572) Provision for the year 16,341 17,310 10,183 10,989 CSR 2,308 3,151 1,465 1,937 CSR paid (2,308) (3,151) (1,465) (1,937) APS Paid (12,640) (14,490) (7,899) (9,082) At 30 June 3,701 2,820 2,284 1,907 (ii) THE GROUP THE COMPANY Rs 000 Rs 000 (Restated) Rs 000 Rs 000 (Restated) Tax Charge Provision for the year 16,341 17,310 10,183 10,989 Deferred tax movement CSR 2,308 3,151 1,465 1,937 18,915 20,806 11,676 13,142 (iii) Deferred taxation Deferred tax is calculated on all temporary differences under the liability method at the rate of 17% (2016: 17%). THE GROUP THE COMPANY Rs 000 Rs 000 (Restated) Rs 000 Rs 000 (Restated) At 1 July (1,113) (768) (188) 28 Charge to profit or loss (266) (345) (28) (216) Charge to other comprehensive income 1, At 30 June (114) (1,113) (216) (188) Disclosed as follows: Deferred tax asset Deferred tax liability (216) (1,113) (216) (188) (114) (1,113) (216) (188)

97 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 14. TAXATION (CONT D) (iii) Deferred taxation (Cont d) Deferred tax liabilities/(assets) arise from the following: 95 THE GROUP Deferred tax liabilities Accelerated capital allowances Deferred tax assets Retirement benefit obligations At 1 July 2015 Charge to profit or loss At 30 June 2016 Charge to profit or loss Charge to other comprehensive income At 30 June 2017 Rs'000 Rs'000 Rs'000 Rs'000 Rs'000 Rs'000 (Restated) (Restated) (Restated) 1, , ,801 (1,053) (128) (1,181) (241) (1,265) (2,687) Net deferred tax liabilities , (1,265) 114 THE COMPANY At 1 July 2015 Charge to profit or loss At 30 June 2016 Charge to profit or loss At 30 June 2017 Rs'000 Rs'000 Rs'000 Rs'000 Rs 000 (Restated) (Restated) (Restated) Deferred tax liabilities Accelerated capital allowances 1, , ,536 Deferred tax assets Retirement benefit obligations (1,053) (128) (1,181) (139) (1,320) Net deferred tax (assets)/liabilities (28) (iv) Tax reconciliation THE GROUP THE COMPANY % % (Restated) % % (Restated) Tax at the applicable rate Tax effect of: - Expenses not deductible for tax purposes Exempt income and other adjustments (2.22) (2.95) (4.06) (3.61) - CSR adjustments Effective tax rate

98 The Stock Exchange of Mauritius Ltd 96 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 15. TRADE AND OTHER PAYABLES THE GROUP THE COMPANY Rs 000 Rs 000 Rs 000 Rs 000 Trade payables 8,060 5,367 1, Other payables and accruals 5,146 7,102 2,924 3,549 Amount due to subsidiary company ,206 12,469 5,183 4,251 The amount due to subsidiary company is unsecured, interest free with no fixed terms of repayment. The average credit period of trade payables is 30 days. The group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe. 16. DIVIDENDS Following a board resolution dated 27 th June 2017, a final dividend amounting to Rs 38,626,307 (Rs 7.73 per share) [2016: Rs 43,335,462 (Rs 8.67 per share)] was declared in respect of the year ended 30 June PROFIT BEFORE TAXATION Profit before taxation is arrived at after charging the following items: THE GROUP THE COMPANY Rs 000 Rs 000 Rs 000 Rs 000 Staff costs 55,729 45,905 36,095 30,214 Depreciation on property, plant and equipment 5,247 5,205 3,388 3,323 Amortisation of intangible assets Loss/(Profit) on exchange 246 (230) 246 (230) Auditors remuneration: - Audit fees to group auditors Audit fees to auditors of subsidiary REVENUE THE GROUP THE COMPANY Rs 000 Rs 000 Rs 000 Rs 000 Transaction fees 106, ,886 64,830 67,744 Listing fees 45,573 42,254 32,777 30,436 Service fees Annual Membership fees , ,266 98,244 98,840

99 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 19. OTHER INCOME 97 THE GROUP THE COMPANY Rs 000 Rs 000 Rs 000 Rs 000 Other income includes the following: Sale of information 3,232 3,939 3,232 3,939 Advertising income 2,150 2,400 2,150 2,400 Interest receivable 27,665 28,772 17,493 18,123 Profit on disposal of property, plant and equipment Miscellaneous income 5,016 3,209 3,010 1,879 Profit on exchange Dividend receivable - - 9,665 10,710 Interest for compensation fund Consultancy fees 210 1, ,385 40,681 35,662 37, EARNINGS PER SHARE The calculation of earnings per share is based on group earnings of Rs 72,058,000 (2016: Rs 78,742,000 (restated)) and 5,000,000 ordinary Shares in issue as at 30 June GUARANTEE FUND Section 3(8) of the Securities (Central Depository, Clearing and Settlement) Act 1996 requires the Central Depository & Settlement Co Ltd (CDS) to establish and maintain a Guarantee Fund for the purpose of providing an indemnity against any default in respect of payments for or delivery of securities by any participant and of obligations of participants towards CDS. The Fund is independently managed by the Business Conduct Committee (BCC) and not by the Board of Directors of CDS. The BCC consists of a majority of independent members who are not directors of the CDS.

100 The Stock Exchange of Mauritius Ltd 98 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 21 GUARANTEE FUND (CONT D) The assets of the Guarantee Fund consist of all money accruing lawfully to that fund and of such contributions as may be specified in the CDS rules. The Guarantee Fund is made up as follows:- THE GROUP Rs 000 Rs 000 MCB deposit account 29,200 28,770 Savings account 3,720 3,688 Current account 2 4 Temporary cash deposit - (1) Contributions due on value of transactions Cash deposit from Investment dealers (410) (410) Income tax payable (30) (42) Interest receivable 1, ,020 32,772 Movements on the fund are detailed below:- Balance at 01 July 32,772 32,236 Contribution made by CDS Refund to Participant - (662) Interest 1,221 1,153 Income tax (183) (173) 1, Balance at 30 June 34,020 32, RELATED PARTY TRANSACTIONS THE GROUP THE COMPANY Rs 000 Rs 000 Rs 000 Rs 000 (i) Outstanding balances Amount due to subsidiary company (ii) Purchases of goods and services Purchases of services Subsidiary - - 1,644 1,542 (iii) Compensation of key management personnel Short term benefits 16,754 15,190 12,705 11,625 Post employment benefits 2,383 1, ,137 16,746 13,531 12,446 (iv) Remuneration of directors - Non executive 2,169 2,197 1, Executive 15,142 12,646 9,536 8,346 (v) Dividend income - - 9,665 10,710 (vi) Dividend receivable from subsidiary - - 9,665 10,710 (vii) Dividend payable 38,626 43,335 38,626 43,335

101 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 23. FINANCIAL RISK MANAGEMENT Capital risk management The group manages its capital to ensure that it will be able to continue as a going concern while maximising the returns of the stakeholders. The capital structure of the group and the company consists of stated capital and retained earnings. 99 The Board of Directors of the SEM has a policy of maintaining a non-distributable reserve included under retained earnings, representing 24 months budgeted expenditure to ensure its own business continuity and to provide a shock absorber to cover the ultimate risk when all other risk mechanisms have been exhausted. Significant accounting policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 3 to the financial statements. Categories of financial instruments THE GROUP THE COMPANY Rs 000 Rs 000 Rs 000 Rs 000 Financial assets Loans and receivables: Deposits: - Current 89,371 81,180 53,371 49,113 - Non current 400, , , ,757 Bank balances and cash 26,107 10,113 6,229 2,583 Trade and other receivables: - Current 24,367 30,457 27,707 35,374 - Non current 50,680 42,527 26,813 24, , , , ,748 Financial liabilities Amortised cost: Trade payables 8,060 5,367 1, Other payables and accruals 5,146 7,102 2,924 3,549 Amount due to subsidiary company Dividends payable 38,626 43,335 38,626 43,335 51,832 55,804 43,809 47,586 Foreign Currency risk Except for bank balances in United States Dollars (USD) amounting to Rs 10,122,565 (2016: Rs 8,501,219) and other insignificant balances in Australian Dollar (AUD), Great Britain Pound Sterling (GBP), South African Rand (ZAR) and Euro (EUR) amounting to Rs 8,066 (2016: Rs 75,994) for the group and Rs 10,121,143 (2016: Rs 8,500,498) for the company at 30 June 2017, there are no other financial instruments denominated in foreign currencies. The group and company are mainly exposed to currency risk of USD relative to MUR.

102 The Stock Exchange of Mauritius Ltd 100 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 23. FINANCIAL RISK MANAGEMENT (CONT D) Foreign currency risk (Cont d) The following table details the group s and company s sensitivity to a 5% increase in United States Dollars (USD) against the Mauritian Rupee (MUR). A positive number below indicates an increase in profit where USD strengthen 5% against MUR. For a 5% weakening of USD against the relevant currency, there would be an equal and opposite impact on the profit. THE GROUP THE COMPANY Rs 000 Rs 000 Rs 000 Rs 000 Increase in Profit and Equity USD Credit risk The group s and the company s credit risk is primarily attributable to their financial assets. At year end, the group and the company consider that all the trade receivables are recoverable. The carrying amount of financial assets recorded in the statement of financial position, represents the group s and the company s maximum exposure to credit risk. The group and the company do not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The group and the company define counterparties as having similar characteristics if they are related entities. Concentration of risk is limited due to the customer base being large and diverse. Interest rate risk The group and the company are not significantly exposed to risks associated with the effects of fluctuations in the prevailing levels of market interest rates on their financial position and cash flows as they do not hold significant variable interest bearing instruments. The interest rate profile of the group s and the company s financial assets as at 30 June 2017 is as follows: THE GROUP AND THE COMPANY % % Deposits Liquidity risk management Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the management of the group s short, medium and long-term funding and liquidity management requirements. The group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

103 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 23. FINANCIAL RISK MANAGEMENT (CONT D) Liquidity risk management (Cont d) The maturity profile of the financial liabilities is summarised as follows: 101 THE GROUP Less than 1 month Less than 1 Year 1-5 Years Total Rs 000 Rs 000 Rs 000 Rs Trade and other payables - 13,206-13,206 Dividends - 38,626-38,626-51,832-51, Trade and other payables ,443-12,469 Dividends - 43,335-43, ,778-55,804 THE COMPANY Less than 1 month Less than 1 Year 1-5 Years Total Rs 000 Rs 000 Rs 000 Rs Trade and other payables - 5,183-5,183 Dividends - 38,626-38,626-43,809-43, Trade and other payables - 4,251-4,251 Dividends - 43,335-43,335-47,586-47,586 Fair value of financial instruments The directors consider that the carrying amounts of financial assets and financial liabilities recognised in the financial statements approximate their fair values.

104 The Stock Exchange of Mauritius Ltd 102 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 24. PRIOR YEAR ADJUSTMENT (a) In prior years, the group used to calculate deferred tax on the actual corporate tax rate prevailing in Mauritius which is at 15%. However, it was agreed that the 2% Corporate Social Responsibility (CSR) Contribution as imposed by the Government should also be considered in the computation of the deferred tax. Consequently deferred tax has been computed at 17% and amount pertaining to prior years has been accounted as a prior year adjustment. Comparative figures have been restated accordingly. CSR Contribution previously accounted under administrative expenses has now been reclassified under tax expense. (b) The group and the company have adjusted for a shortfall between the retirement gratuity obligation under the Employment Rights Act 2008 and the company s pension fund. This difference and the impact on deferred tax have now been recognised with retrospective effect and comparative figures have been restated accordingly as follows: Impact on profit/(loss) for the year THE GROUP AND THE COMPANY Rs 000 Rs 000 Increase in administration expenses (750) (750) Decrease in income tax expenses (deferred tax) Decrease in profit for the year (677) (662) Decrease in profit and total comprehensive income for the year attributable to: Impact on assets, liabilities and equity as at 1 July 2015: As at 30 June 2015 (as previously reported) THE GROUP As at 30 June 2015 (as restated) As at 30 June 2015 (as previously reported) THE COMPANY As at 30 June 2015 (as restated) Adjustments Adjustments Rs'000 Rs'000 Rs'000 Rs'000 Rs'000 Rs'000 Retirement benefit obligation (4,134) (6,195) (10,329) - (6,195) (6,195) Deferred tax asset Deferred tax liability (1,606) 810 (796) (904) Total effect on net assets (5,740) (5,357) (11,097) (904) (5,263) (6,167) Retained earnings 389,258 (5,311) 383, ,115 (5,263) 293,852 Non controlling interest 109,434 (46) 109, Total effect on equity 498,692 (5,357) 493, ,115 (5,263) 293,852

105 Annual Report 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 (CONT D) 24. PRIOR YEAR ADJUSTMENT (CONT D) Impact on assets, liabilities and equity as at 30 June 2016: 103 As at 30 June 2016 (as previously reported) THE GROUP As at 30 June 2016 (as restated) As at 30 June 2016 (as previously reported) THE COMPANY As at 30 June 2016 (as restated) Adjustments Adjustments Rs'000 Rs'000 Rs'000 Rs'000 Rs'000 Rs'000 Retirement benefit obligation (4,226) (6,945) (11,171) - (6,945) (6,945) Deferred tax liability (2,024) 911 (1,113) (1,208) 1,020 (188) Total effect on net assets (6,250) (6,034) (12,284) (1,208) (5,925) (7,133) Retained earnings 378,386 (5,980) 372, ,305 (5,925) 275,380 Non controlling interest 110,994 (53) 110, Total effect on equity 489,380 (6,033) 483, ,305 (5,925) 275, CAPITAL COMMITMENTS Authorised by the Board of Directors but not contracted for: THE GROUP THE COMPANY Rs 000 Rs 000 Rs 000 Rs 000 Commitments for the acquisition of property plant and equipment 35,309 22,470 30,344 22, SUBSEQUENT EVENTS There are no events after the reporting date which requires amendments and/or disclosures in the financial statements as at 30 June 2017.

106

107 ADDITIONAL INFORMATION The Stock Exchange of Mauritius Ltd Annual Report 2017