CONTENTS. Directorate. Chairman s review. Corporate Governance Report. Annual report. Statement of Directors Responsibilities. Statement of Compliance

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2 CONTENTS Directorate Annual report Statement of Directors Responsibilities Chairman s review Corporate Governance Report Statement of Compliance Secretary s Certificate Auditor s report Statements of Profit or Loss and other Comprehensive Income Statements of Cash Flows Financial Highlights Statements of Financial Position Statements of Changes in Equity Notes to the Financial Statements Notice of Meeting (loose sheet) Proxy Form (loose sheet)

3 DIRECTORATE Board of Directors (June 30, 2017) Hansraj Ruhee (Chairman) Cédric de Spéville Michel de Spéville, C.B.E. (Alternate Noël Eynaud) Pierre Dinan Eric Espitalier-Noël Anwar Joonas Deonanan Makoond Jean-Pierre Montocchio Pierre-Yves Pougnet Aruna Devi Bunwaree Ramsaha (Alternate Benoit Barbeau) Petrus van Niekerk Secretary Eclosia Secretarial Services Ltd General Manager Philippe la Hausse de Lalouvière Auditors BDO & CO Bankers The Mauritius Commercial Bank Ltd State Bank of Mauritius Ltd The Hong Kong and Shanghai Banking Corporation Limited Barclays Bank Mauritius Limited Registered Office and Factory Registered Office: Eclosia Group Headquarters, Gentilly, Moka Office and Factory: Cargo Peninsula, Quay D, Port Louis, L M L C A N N U A L R E P O R T 3

4 CORPORATE GOVERNANCE REPORT (CONTINUED) CORPORATE GOVERNANCE REPORT (CONTINUED) CHAIRMAN S REVIEW 4 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 5

5 CHAIRMAN S REVIEW On behalf of the Board of Directors, I am pleased to submit the audited financial statements of the Company (LMLC) and the Group together with an overview of the Company s main activities for the year ended June 30, Overview The Company achieved slightly lower sales volumes compared to last year on the local market due to the relatively static market conditions. Export volumes of flour were also lower as a result of sustained, fierce international competition. In addition, poor climatic conditions in wheat growing areas negatively affected the wheat characteristics and depressed productivity during the milling process. Nevertheless, the Group achieved a turnover of Rs 1,860 M for the year with a net profit before tax of Rs 81.9 M. The Company The Company s turnover of Rs 1,830 M for the year was achieved from sales of 158,200 MT of flour and bran, slightly below the 162,000 MT sold last year. With a net profit before tax of Rs 80.1M and the payment of a dividend of Rs 8.00 per ordinary share to the shareholders, the Company experienced a challenging but ultimately successful and profitable year. Sales The contracts of the State Trading Corporation (STC) for the supply of flour to the nation for the past four calendar years were awarded in totality to LMLC based on its favorable offers. As a result, STC was again the main client of LMLC for which some 102,000 MT of flour were produced during the year. Four types of flour are milled for the national requirements; white flour for French-style bread, Asian type flour for faratha and chapathi as well as two types of brown flour for baking brown bread and faratha. The use of flour in the national diet continues to diversify with dietary changes and the increasing variety and quality of flour-based products on the market. We expect this trend to continue over the foreseeable future. The production and sales by LMLC of a variety of high quality specialty flours in small packs, continue to increase despite strong competition from repackers of subsidised flour in small packs. LMLC products under the brands Blédor and Les Moulins are sold mainly on the local retail market and sustain good brand loyalty on account of their excellent quality. CHAIRMAN S REVIEW The export market for flour continued to encounter fierce competition from international producers. As a result, export sales to clients in the region declined to 15,400 MT during the year, from the 17,000 MT achieved in The market most affected is Madagascar, which receives imports from Asia, Africa and the Middle East. On-going efforts to support clients in the region including technical visits to distributors and bakeries, did help support sales. Bran The local demand for fresh, high quality bran for the animal feed sector was satisfied by LMLC. This production supports and sustains the animal and poultry farming activities of Mauritius and Rodrigues. More than 9,000 MT of surplus bran was exported to Africa, Asia and the region; although an attack of foot and mouth disease in Mauritius disrupted our exports to Réunion. Operations Whilst the flour quality was excellent, the extraction rate was lower than budgeted on account of the wheat characteristics. Milling operations in the past year suffered from difficulties in extracting the targeted amounts of flour from wheat. The efficiency of the production process continued to be of a very high level with targeted machine efficiencies, energy consumption and product outputs being achieved. In particular, the robust control system (SCADA) and packing operations were greatly improved. Further improvements to packing infrastructure and product storage were carried out and these improvements 6 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 7

6 CHAIRMAN S REVIEW CHAIRMAN S REVIEW will continue in the coming year. In particular, control measures on product storage and delivery were reinforced during the year. A start was made with the design of a new, innovative enterprise management IT system, which should be fully operational in All the four existing internationally recognised accreditation systems were maintained during the year; ISO9001 (quality management system), ISO (environmental management), ISO (health and safety management) and HACCP (food safety system). In addition, the new ISO norm for laboratory processes recently obtained, was successfully audited for the first time. After Sale Service and Training The Company continues to maintain comprehensive technical assistance visits to more than 200 bakeries in the country. The training courses provided to professional bakers and pastry makers to help them to upgrade their skills, learn new methods and improve baking product quality, continue to develop and improve. These services are highly appreciated by bakers, and their benefits are reflected in the diversity and improvement in product quality offered to the public. The training courses provided at the Company s training centre La Fournée des Moulins are also available to the public and some 1,100 people took advantage of these training courses during the year. Technico-commercial visits were made to bakeries and clients in countries of the region. These visits strengthened client-supplier relations and permitted a better understanding of client needs and difficulties. Public Outreach Fete du Pain This annual event was organised with a popular element playing an important part this year. A Caravane de la Fête du Pain toured Mauritius over several weekends and held Duels Gourmands in public spaces. This was covered in the press and the social media. Other public events were held with exhibitions of decorative bakery and sandwich competitions at the Caudan Waterfront and several competitions between professionals and student bakers were organised to improve and develop new techniques. A large number of schools participated in competitions and educational events linked to flour and flour products. A series of training courses and competitions involving professional and student bakers from hotels, traditional and commercial bakeries was held over several weeks. World Bakery Cup Following the successful participation of the LMLC supported Mauritius national bakers team in the World Cup of Bakery in February 2016, one of the team members was selected in early 2017 to participate in a special event, the Bakery Masters competition. This event will be held in Paris in 2018 and so the baker will continue training at the LMLC Training centre during the coming year. Corporate Social Responsibility/ Sponsorships The Company continues to support the Pain d Epices project in Rodrigues which has created and now sustains a cottage-industry of baking entrepreneurs. The Association- Mezon Rodrigues is now increasingly in the hands of Rodrigan producers but LMLC provides administrative support and product quality control functions, to ensure sustainability of the projet. The Company contributed Rs 1.7 M to the Fondation Solidarité of the Eclosia Group, which has a series of CSR projects assisting vulnerable sectors of society. Training courses in baking are offered to non-profit organisations as part of LMLC s CSR initiatives. The Company continues to sponsor several educational institutions and needy students and has set up a scholarship system for students in technical fields. This has allowed the employment of gifted young men and women after their graduation from school. Subsidiaries Amigel The Tamam franchise concept now operates seven franchised outlets around Mauritius. A focus on operational efficiency, customer services and product quality has improved the situation of Amigel Ltd, which nevertheless made a loss of Rs 10.9 M for the year. The Company is confident there is a need for small baked-product outlets and is convinced of the importance of developing entrepreneurship by this means. Efforts are being redoubled to achieve financial stability with well-serviced and quality products. Concordia Investments Ltd Following the sale of its investment in Mozambique, Concordia Offshore Development Ltd changed its status from a GBL 1 company to a domestic company and was renamed Concordia Investments Ltd to better reflect the new status and its role as an investor in local projects. The results of the Company showed a profit of Rs 7.4 M for the year and a total comprehensive income of Rs 9.3 M. Acknowledgements I take this opportunity to express my thanks to my fellow directors for their guidance and support during this year, in particular those who in addition to their duties on the Board also served on the committees, for which I am grateful. I extend my sincere appreciation to Mr. Vincent Ah Chuen who resigned as director after 12 years on the Board. I equally acknowledge the commitment of Management and the Company s personnel as a whole. Their efforts and rigour continue to sustain the activities, performance and development of the Company. Hansraj Ruhee Chairperson 8 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 9

7 The Directors have pleasure in submitting the Annual Report of Les Moulins de la Concorde Ltée together with the audited financial statements for the year ended June 30, Principal activities The principal activity of Les Moulins de la Concorde Ltée is the milling of wheat and its main products, wheat flour and wheat bran, which are sold on the local market and exported to the Indian Ocean islands and African countries. The Company also sells various types of wheat flour in small packs. ANNUAL REPORT June 30, 2017 The principal activity of its subsidiary companies are as follows: 1. Concordia Investments Ltd (formerly Concordia Offshore Developments Ltd) - holding of investment. 2. Amigel Ltd - producer of unbaked frozen products. The consolidated statements of profit or loss and other comprehensive income for the year ended June 30, 2017 is set out on page 56. Directorate at June 30, 2017 Les Moulins de la Concorde Ltée Concordia Investments Ltd (formerly - The Company Concordia Offshore Developments Ltd) - Subsidiary Hansraj Ruhee (Chairman) Michel de Spéville, C.B.E. (Chairman) Vincent Ah Chuen (up to ) Pierre-Yves Pougnet Cédric de Spéville Cédric de Spéville Michel de Spéville, C.B.E. Gérard Boullé (Alternate : Noël Eynaud) Petrus van Niekerk (as from ) Pierre Dinan Amigel Ltd - Subsidiary Eric Espitalier-Noël Gérard Boullé (Chairman) Anwar Joonas Vincent Ah Chuen (up to ) Deonanan Makoond Cédric de Spéville Jean-Pierre Montocchio Michel de Spéville, C.B.E. Pierre-Yves Pougnet Anwar Joonas Petrus van Niekerk Hansraj Ruhee Aruna Devi Bunwaree Ramsaha (Alternate : Benoit Barbeau) Directors remuneration There was no contract of significance subsisting during the period to which the Company or one of its subsidiaries is a party and in which a director is or was materially interested, either directly or indirectly. ANNUAL REPORT - JUNE 30, 2017 Remuneration and benefits (including bonuses and commissions) received and receivable from the Company and its subsidiaries were as follows: Directors of Les Moulins de la Concorde Ltée Rs000 s Rs000 s Executive Directors Full-Time - - Part-Time - - Non-executive Directors Full-Time - - Part-Time ((12) (2016: 12)) 2,119 1,726 2,119 1,726 Directors of subsidiaries Rs000 s Rs000 s Executive Directors - - Full-Time - - Part-Time Non-executive Directors - - Full-Time Part-Time ((5) (2016: 6)) Directors Service Contracts None of the directors of the Company or of the subsidiaries has service contracts with the Company or with any of its subsidiaries. 10 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 11

8 ANNUAL REPORT - JUNE 30, 2017 ANNUAL REPORT - JUNE 30, 2017 Donations THE GROUP THE COMPANY Charitable donations Auditors Fees The fees paid to the auditors for audit and other services were: THE GROUP THE COMPANY Audit fees paid to: - BDO & Co Dividends Dividends of Rs 43.2 M (2016: Rs 43.2 M) on ordinary shares and Rs 6 M (2016: Rs 6 M) on preference shares have been paid in respect of the current year. Approved by the Board of Directors on September 19, 2017 and and signed on its behalf by: Hansraj Ruhee Chairman Michel de Spéville C.B.E Director 12 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 13

9 CORPORATE GOVERNANCE REPORT L M L C A N N U A L R E P O R T 15

10 CORPORATE GOVERNANCE REPORT Shareholding Structure CORPORATE GOVERNANCE REPORT (CONTINUED) At June 30, 2017, the Company s shareholding structure and the shareholders holding more than 5% of the Company were as follows: Les Moulins de la Concorde Ltée (LMLC) is a Public Interest Entity quoted on the Development Enterprise Market (DEM) of the Stock Exchange of Mauritius. The Board of Directors is ultimately responsible and accountable for ensuring that corporate governance is established and maintained in the Company. In this regard, governance structures and procedures have been implemented, in conformity with the Company s internal policies as well as external legislation. The Statement of Directors Responsibilities and Statement of Compliance are on pages 41 and 42 respectively. Livestock Feed Ltd 29.13% Les Moulins de la Concorde Ltée CREDO LM (PTY) Ltd 28.49% Management and Development Company LTD 8.94% Mauritius Ports Authority (MPA) 8.33% Société Matram * 5.91% others 19.2% *wholly owned by Management and Development Company Limited 16 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 17

11 CORPORATE GOVERNANCE REPORT (CONTINUED) CORPORATE GOVERNANCE REPORT (CONTINUED) Group Structure The Group Structure of Les Moulins de la Concorde Ltée at June 30, 2017 was as follows : Les Moulins de la Concorde Ltée Shareholders Agreements Affecting Governance of the Company by the Board There are no shareholders agreements that affect the governance of the Company by the Board. Share option plan There is no share option plan in place at the Company. Common Directors on Shareholder Companies and Subsidiaries The table below indicates the Directors common to the shareholder companies having more than 5% holding in Les Moulins de la Concorde Ltée and Directors common to the subsidiaries of the Company: Subsidiaries amigel ltd 100% CONCORDIA INVESTMENTS LTD 77% INDIGO HOTELS & RESORTS LTD 27.4% Associate Distribution of Shareholding at June 30, 2017 The Company had 1,941 ordinary shareholders as at June 30, 2017, distributed as follows: No. of Shares No. of Shareholders No. of Shares owned % Shareholding , , , , , ,438, above 500, ,111, ,941 5,400, SHAREHOLDERS HAVING SUBSIDIARIES MORE THAN 5% OF LMLC No. DIRECTORS LMLC LFL MADCO CREDO MPA SOCIETE CIL AMIGEL LM MATRAM LTD 1 Hansraj Ruhee (Chairman) Vincent Ah Chuen (up to ) Cédric de Spéville Michel de Spéville, C.B.E Pierre Dinan Eric Espitalier-Noël Anwar Joonas Deonanan Makoond Jean-Pierre Montocchio Pierre-Yves Pougnet Aruna Devi Bunwaree Ramsaha Petrus van Niekerk ALTERNATE DIRECTORS 13 Noël Eynaud (alternate to Mr. Michel de Spéville) 14 Louis Gervais Charles Benoit Barbeau (alternate to Mrs. Aruna Devi Bunwaree Ramsaha) LMLC: Les Moulins de la Concorde Ltée LFL: Livestock Feed Limited MADCO: Management and Development Company Limited MPA: Mauritius Ports Authority CIL: Concordia Investments Ltd (ex-concordia Offshore Developments Ltd) 18 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 19

12 CORPORATE GOVERNANCE REPORT (CONTINUED) CORPORATE GOVERNANCE REPORT (CONTINUED) Constitution of the Company The Constitution of the Company is in line with the Companies Act Material Clauses in the Constitution (i) Shareholders have a pre-emptive right on all new shares issued by the Company up to the extent of their respective holding in the shares of the Company. (ii) The shares of the Company are traded on the Development and Enterprise Market and are free from any restrictions on ownership. The Governance Structure The Board The Board, as the governing body, fully understands its role, responsibility and authority in setting the direction, the management and control of the Company. The Company has a unitary Board and is chaired by an independent director. At June 30, 2017, the Board is composed of eleven non-executive members and two alternate members, six of whom are independent. The Chairperson heads the Board and is not involved in the day-to-day management of the Company. The Chairperson meets the General Manager on a regular basis to discuss matters pertaining to the Company and he devotes sufficient time to his duties and responsibilities towards the Company. Although there are no executive Directors sitting on the Board, it is the Board s view that: (i) the active participation of the General Manager at all Board meetings and the participation of senior executives in subcommittees of the Board meets the spirit of the Code of Corporate Governance for Mauritius; (ii) the Board is of an appropriate size and meets the Company s business requirements; (iii) its Directors have the requisite skills, experience and knowledge to contribute effectively to the Company; (iv) even though the term of office of independent Directors may exceed nine years, they have demonstrated an independence of mind and judgement in the performance of their duties as Directors. The Board recognises the positive impact of gender diversity on Board deliberations and will use its best endeavours to try and diversify its composition in that respect. A Board Charter is being developed to formalise the governance practices of the Board. A Code of Conduct was adopted by the Directors which provides them with guidance in the conduct of the business of the Company and in dealing with stakeholders with integrity and in an ethical manner. A Directors Code of Ethics is being implemented. It will replace the existing Code of Conduct and will apply to all Directors serving the Board. Board information Relevant Board information is provided to the Board members in a timely manner to enable them to have sufficient time to study the matters that will be discussed at the meetings and make appropriate decisions. Where necessary and subject to the formal approval of the Chairperson, Directors may have access to independent professional advice at the Company s expense to enable them to discharge their responsibilities. A Directors and Officers Liability Cover is in place for Directors and senior officers of the Company. Board Evaluation The performance of the Board is evaluated every two years and is led by the Corporate Governance Committee and the Company Secretary. A board evaluation exercise will be carried out during the financial year The Directors Except for Mr Petrus van Niekerk who is a resident of South Africa, all the other Directors of the Company are residents of Mauritius. Directors Direct Indirect Number of Shareholding Shareholding other Directorships in LMLC in LMLC in Listed % % Companies Non-Executive Independent Non-Independent Ord Pref Ord Pref 1 Hansraj Ruhee (Chairman) Vincent Ah Chuen (up to ) Cédric de Spéville Michel de Spéville, C.B.E Pierre Dinan Eric Espitalier-Noël Anwar Joonas Deonanan Makoond Jean-Pierre Montocchio Pierre-Yves Pougnet Aruna Devi Bunwaree Ramsaha Petrus van Niekerk Alternate Director 1 Noël Eynaud (alternate to Mr. Michel de Spéville) 2 Benoit Barbeau (alternate to Mrs. Aruna Devi Bunwaree Ramsaha) 20 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 21

13 CORPORATE GOVERNANCE REPORT (CONTINUED) CORPORATE GOVERNANCE REPORT (CONTINUED) The Directors confirm that they have followed the principles set out in the DEM Rules on restrictions on dealings by the directors. None of the Directors have traded in the shares of the Company during the year under review. Directors Profile Hansraj Ruhee(Chairman) Diploma in Business Administration. Executive Director of Ramphul Ltd. Mr. Ruhee was appointed Director of Les Moulins de La Concorde Ltée on March 3, He is also an independent Director of the Mauritius Oil Refineries Ltd and a member of its Audit and Corporate Governance Committees. He is also the Chairman of its Ethics Committee. Mr. Ruhee is a past President of The Mauritius Chamber of Agriculture and the Mauritius Sugar Syndicate. He is still serving on the main committee of the Mauritius Sugar Syndicate. Mr. Ruhee was appointed Chairman of Les Moulins de la Concorde Ltée on November 15, Vincent Ah Chuen (up to 5 May 2017) Mr. Vincent Ah Chuen is the Managing Director of ABC Group of Companies. He was appointed to the Board of Les Moulins de La Concorde Ltée on December 11, Mr. Ah Chuen also sits on the Board of ABC Motors Co Ltd, Mauritius Union Assurance Co Ltd and is the Chairman of POLICY Ltd. Cédric de Spéville Obtained a Maîtrise en économie from the University of Paris I Panthéon Sorbonne in He also completed an Msc in Accounting and Finance at the London School of Economics in 2003 and obtained a Master in Business Administration from Columbia Business School in He was Consultant for COFINTER in Paris from 2002 to 2003 and joined the Eclosia Group in In January 2013, Cédric de Spéville was appointed Group Chief Executive Officer. He is a director of various companies of the Eclosia Group and a former President of the Mauritius Chamber of Commerce and Industry. He was appointed to the Board of Les Moulins de la Concorde Ltée on April 22, Other directorships: Livestock Feed Limited, Tropical Paradise Co. Ltd and Mauritius Freeport Development Co Ltd. Michel de Spéville, C.B.E. Founder President of the Eclosia Group. Founder and Senator of the Jeune Chambre Economique de l Ile Maurice. Elevated to the rank of Commander of the Order of the British Empire (C.B.E). Honorary Citizen of Moka-Flacq District of Mauritius. Honorary Fellow Agribusiness, University of Mauritius. Elevated to the rank of Chevalier de l Ordre de Mérite de Madagascar. Elevated to the rank of Chevalier de la Légion d Honneur de France. Mr. Michel de Spéville is Chairman and member of the Board of various companies of the Eclosia Group and a member of the Board of Directors of Fincorp Investment Ltd and Livestock Feed Limited. He is also a former President of the Mauritius Chamber of Commerce and Industry and a former President of L Institut de la Francophonie pour l Entrepreneuriat (IFE). Pierre Dinan BSc. (Econ), FCA (Fellow of the Institute of Chartered Accountants in England and Wales), Mr. Dinan was a Senior Partner at De Chazal du Mée (DCDM) for 20 years until he retired in June He was also a Director of Multiconsult, a global business management services company, for twelve years until He acts presently as a Company Director for a number of public companies in the manufacturing and financial services sectors. He is an independent member of the Monetary Policy Committee set up under the Bank of Mauritius Act. Mr. Dinan was the Founder Chairman of the Mauritius Institute of Directors. He was appointed to the Board of Les Moulins de la Concorde Ltée on February 4, 2009 and is the Chairman of the Audit and Risk Committee and the Corporate Governance Committee. Other directorship : Livestock Feed Limited. Eric Espitalier-Noël Holds a Bachelor s degree in Social Sciences and an MBA. He was first appointed to the Board of Les Moulins de la Concorde Ltée in 2006 and is currently the Chief Executive Officer of ENL Commercial Limited. Other directorships: Automatic Systems Ltd, ENL Land Ltd, ENL Limited, Malls of (Mauritius) Bagatelle Ltd, Livestock Feed Limited, Rogers & Co Ltd and Tropical Paradise Co. Ltd (alternate director). Anwar Joonas Holder of a B. Com., Executive Chairman of Joonas & Co Ltd and Managing Director of Galvabond Ltd. He was appointed to the Board of Les Moulins de La Concorde Ltée on January 18, 1993 as alternate Director to Mr. Mohammed Issack Joonas and appointed Director on April 22, Mr. A. Joonas also sits on the Board of Lafarge (Mauritius) Cement Ltd. He is the Past President of the Mauritius Employers Federation, Chairman of MEF CSR Fund, Council Member of The Mauritius Institute of Training & Development (MITD), Charter Member and Past President of the Rotary Club of Quatre Bornes. 22 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 23

14 CORPORATE GOVERNANCE REPORT (CONTINUED) CORPORATE GOVERNANCE REPORT (CONTINUED) Deonanan Makoond Holder of an MSC, Tourism Planning and a B.A (Hons) in Economics. He is the CEO of Business Mauritius, the coordinating body of the Mauritius private sector. He co-chairs with the Board of Investment a wide range of initiatives on Business Facilitation and Ease of Doing Business in Mauritius. He is also a member of Statistics Mauritius. He cochairs the Skills Working Group with the Ministry of Labour and the Graduate Training for Employment Scheme (GTES) with the Ministry of Education to address the issue of skills mismatch. He co-chaired the implementation of rescue plans in the context of the financial and European crises. Mr Makoond was a Director of the European Centre for Development Policy Management (ECDPM), a Dutch Foundation based in Maastricht and specialising in matters regarding ACP-EU trade relations. He was appointed to the Board of Les Moulins de La Concorde Ltée on May 3, Jean-Pierre Montocchio Born in 1963, he was appointed notary public in Mauritius in He participated in the National Committee on Corporate Governance as a member of the Board of Directors Sub-Committee. He is a director of a number of listed companies in Mauritius. Other directorships: Caudan Development Ltd (Chairman), Fincorp Investment Ltd (Chairman), New Mauritius Hotels Ltd, Promotion and Development Ltd (Chairman), MCB Group Ltd, Rogers Co. Ltd and ENL Land Ltd. Pierre-Yves Pougnet An accountant by profession, Mr. Pierre-Yves Pougnet was appointed to the board of Les Moulins de la Concorde Ltée on November 22, He also sits on the Boards of P.O.L.I.C.Y. Limited, Livestock Feed Limited, Tropical Paradise Co. Ltd and Avipro Co Ltd. Aruna Devi Bunwaree Ramsaha Deputy Director-General of the Mauritius Ports Authority, Mrs. Bunwaree Ramsaha is a Fellow of the Chartered Association of Certified Accountants (FCCA) and is the holder of an MBA. Mrs. Bunwaree Ramsaha also sits on the board of Froid des Mascareignes and Transfroid Ltée and is an alternate director on the board of Cargo Handling Corporation Ltd and Mauritius Cargo Community Services Ltd. Petrus van Niekerk Founder and director of a Group of grain milling and feed manufacturing companies operating in southern Africa. He was appointed to the Board of Les Moulins de La Concorde Ltée on December 2, Alternate Director Noël Eynaud (Alternate to Michel de Spéville) An accountant by profession, Noël Eynaud is a Director of Management and Development Company Limited. He was appointed to the Board of Les Moulins de La Concorde Ltée on June 30, 1993 and is a member of the Audit and Risk Committee. Mr. Eynaud is an alternate director on the Board of Livestock Feed Limited and Tropical Paradise Co Ltd. Benoit Barbeau (Alternate to Aruna Devi Bunwaree Ramsaha) Port Master at the Mauritius Ports Authority since 2010, Captain Barbeau has been acting as alternate to Mrs Bunwaree Ramsaha on the Board of Les Moulins de la Concorde Ltée since November 10, Directors appointment procedures Appointment procedures Directors are elected at the Annual Meeting of Shareholders. However, should a casual vacancy arises, the Board has the authority to appoint a Director to hold office until the next annual meeting. The Constitution of the Company provides an annual rotation of Directors whereby one-third of the Directors longest in office shall retire and offer themselves for re-election at the annual meeting of shareholders. Accordingly, every director has a three-year term of office on the Board. Consequently at the annual meeting to be held on November 7, 2017, Messrs Eric Espitalier-Noël, Hansraj Ruhee, Deonanan Makoond and Pierre Dinan will step down and offer themselves for re-election. A procedure for the appointment of Directors has been adopted and serves as guidance for the appointment of Directors on the Board of the Company. The Corporate Governance Committee, in its role as Nomination Committee, leads the process and screens candidates based on the requirements of the position, the skills and expertise needed. Once a candidate is selected, the Corporate Governance Committee makes its recommendation to the Board, who will decide whether to propose to the shareholders the appointment of the selected candidate. A letter of appointment for non-executive Directors has been adopted by the Board and it sets out their terms of appointment. 24 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 25

15 CORPORATE GOVERNANCE REPORT (CONTINUED) CORPORATE GOVERNANCE REPORT (CONTINUED) Induction and orientation A formal induction plan is in place and is remitted to the Director and comprises, interalia, minutes of the last three board meetings prior to his appointment, the financial statements, the mission statement of the company, and relevant legislations which shall enable him to understand the duties and obligations of being a Director. The responsibility of the induction process lies with the Chairperson and the latter delegates to the General Manager and the Management staff the responsibility of acompanying newly appointed Directors in their introduction to the Company and its business operations. Professional development The Company provides opportunities for its Directors to develop their knowledge and skills through workshops and development programmes. Succession planning The Board is in the process of setting up succession plans for senior management positions in the Company so as to maintain the continuity and sustainability of the enterprise. Directors duties Upon appointment, the duties of a Director on the Board of the Company are communicated to him through the induction pack. They are also outlined in his letter of appointment. Directors have a duty to declare their interests and they make a formal declaration of their interests to the Company as required under the Securities Act. Directors are also informed of the closed periods where they are not allowed to trade in the shares of the Company. A board charter is in the process of being implemented. Code of ethics The Directors are presently guided by the Code of Conduct and the latter will be embodied in the code of ethics for the Directors which is in the process of being implemented. Conflicts of interest The Company Secretary maintains an interest register for the members of the Board and senior officers of the Company. It is, however, the responsibility of each Director and senior officer to notify of any change in their declaration of interests and to ensure that it is recorded in this register. The Company s Constitution provides that a Director who has an interest in a transaction shall declare forthwith to the Company his interest and he shall not participate in the vote on the transaction. Whenever a Director finds himself in a state of conflict or potential conflict of interest pertaining to a transaction to be put for decision before the Board, the Director shall abstain from being present when the matter is brought up for discussion and shall not participate in the discussions or vote on the matter. Specific provisions relating to directors conflicts of interests shall be included in the Board Charter. The Company Secretary Eclosia Secretarial Services Ltd is the corporate body that holds the functions of Company Secretary. The secretarial work is undertaken by qualified chartered company secretaries who are members of the Institute of Chartered Secretaries and Administrators (ICSA) of the United Kingdom. In performing their role, the company secretaries of Eclosia Secretarial Services Ltd, undertake a minimum of 21 hours of skills development annually as part of their training as Chartered Secretaries of the Institute of Chartered Secretaries and Administrators of the United Kingdom. The company secretaries are also members of the Mauritius Institute of Directors and the ICSA Mauritius Branch. MANAGERS Title Description 1. Philippe la Hausse General de Lalouvière Manager Board members have access to the company secretaries of Eclosia Secretarial Services Ltd who are assigned the task of guiding the Board in the application and implementation of the principles of the Code of Corporate Governance as well as ensuring that the Board is aware of the statutory and regulatory requirements. The Board is satisfied that Eclosia Secretarial Services Ltd, through its representatives, fulfils satisfactorily its responsibilities towards the Board and the Company. The role and duties of the functions of the Company Secretary will be outlined in a formal job description. Senior Management Team The members of the senior management team hereunder do not hold shares in the Company and are not entitled nor granted any special right to subscribe to shares of the Company. Employed in the Eclosia Group since 1988 and previously General Manager of New Maurifoods Limited, he holds a Bachelor s degree in sciences and post-graduate degrees in natural sciences. He has served in the chair and on the boards of several large non-governmental organizations and para-statal bodies in the field of environment, heritage as well as industry. 26 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 27

16 CORPORATE GOVERNANCE REPORT (CONTINUED) CORPORATE GOVERNANCE REPORT (CONTINUED) MANAGERS Title Description 2. Jimmy Pierrelouis Finance Manager 3. Robert Soder Production Manager Directors remuneration Employed by Les Moulins de la Concorde Ltée since May Mr Pierrelouis holds a Bachelor s degree in Accounting and Finance from the University of Mauritius and is a Fellow Member of the Association of Chartered Certified Accountants. He has more than 10 years of broad ranging experience across various industries: tobacco, petroleum, audit, printing and stationery; both locally and in Africa. Employed by Les Moulins de la Concorde Ltée since October 2008, Mr. Soder has worked for the Eclosia Group as Production Manager at New Maurifoods Limited for five years. Before this, he was Production and Operations Manager in two milling operations in Nigeria and in Haiti. He has been qualified miller since 1987 and has held a Diploma as milling technologist since 1993 from the Swiss Milling school. The remuneration for members of the Board, Audit and Risk and Corporate Governance Committees at June 30, 2017 were as follows: CHAIRMAN DIRECTORS Type of meeting Annual Meeting Annual Meeting Retainer Fee Retainer Fee Rs Rs Rs Rs Board meeting 100,000 10,000 80,000 10,000 Audit and Risk 70,000 10,000 50,000 10,000 Corporate Governance 50,000 10,000 35,000 10,000 The attendance of the Directors and Committee Members and their remuneration for the financial year ended June 30, 2017 were as follows: Directors Board Board Audit and Audit and Corporate Corporate Attendance Fees Risk Risk Governance Governance Committee Committee Committee Committee Attendance Fees Attendance Fees Out of Out of Out of 5 Meetings 5 Meetings 2 Meetings held Rs. held Rs. held Rs. 1 Hansraj Ruhee 5/5 150, /2 55,000 2 Vincent Ah Chuen* 4/5 120, Cédric de Spéville 5/5 130, Michel de Spéville, C.B.E 4/5 120, Pierre Dinan 4/5 120,000 5/5 120,000 2/2 70,000 6 Eric Espitalier-Noël 2/5 100, Anwar Joonas 5/5 130,000 5/5 100, Deonanan Makoond 3/5 110, Jean-Pierre Montocchio 1/5 90, /2 45, Pierre-Yves Pougnet 5/5 130,000 5/5 100,000 2/2 55, Pieter van Niekerk 5/5 130, Aruna Devi Bunwaree Ramsaha 5/5 130, Alternate Director 1 Noël Eynaud 0/7-4/5 90, Benoit Barbeau 0/ * Resigned on 5 May No fee was paid to the Directors sitting on the subsidiary company Concordia Investments Ltd (ex-concordia Offshore Developments Ltd) whereas those Directors sitting on the Board of Amigel Ltd were entitled to an annual remuneration of Rs.10,000 (the Chairman of Amigel Ltd Rs.15,000) and an attendance fee of Rs.5,000 per meeting. Statement of Remuneration Philosophy Directors fees are benchmarked on local norms and reviewed on a regular basis by the Board upon recommendation of the Corporate Governance Committee. The level of remuneration of senior staff is benchmarked on the Industry s norms and is reviewed by Management and Development Company Limited (MADCO) on an annual basis. 28 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 29

17 CORPORATE GOVERNANCE REPORT (CONTINUED) CORPORATE GOVERNANCE REPORT (CONTINUED) Board Committees Corporate Governance Committee The Corporate Governance Committee for the financial year ended June 30, 2017 consisted of of the following members: Position Name Status Chairperson Mr Pierre Dinan Independent Member Mr Pierre-Yves Pougnet Non-Executive Member Mr Hansraj Ruhee Independent Member Mr Jean Pierre Montocchio Independent Secretary Eclosia Secretarial Services Ltd The General Manager, Mr Philippe la Hausse de Lalouvière, attends the meetings of the Corporate Governance Committee. The terms of reference of the Committee are in summary: to make recommendations to the Board on all corporate governance provisions to be adopted so that the Board remains effective and complies with prevailing corporate principles and practices; and to ensure that the disclosure requirements with regard to corporate governance, whether in the annual report or other reports on an ongoing basis, are in accordance with the principles of the Code of Corporate Governance. The terms of reference of the Corporate Governance Committee are reviewed as and when required. The Committee met twice during the year and continued the established programme of monitoring governance performance within the Company and also ensuring the Company s compliance with existing legislations and policies. The Committee performed a gap analysis of the Company structure and reporting with the newly published National Code of Corporate Governance and made recommendations for improvements. Remuneration and Nomination The Corporate Governance Committee assumes the tasks of the Remuneration and Nomination Committee and makes recommendations to the Board with regard to: (a) Directors and Committee Members fees and (b) the nomination of Directors. Audit and Risk Committee The members of the Audit and Risk Committee at June 30, 2017 were: Position Name Status Chairperson Mr Pierre Dinan Independent Member Mr Pierre-Yves Pougnet Non-Executive Member Mr Anwar Joonas Independent Member Mr Noël Eynaud Independent Secretary Eclosia Secretarial Services Ltd The Committee met five times during the year. Careful consideration was devoted to the reports of auditors with special attention given to the Risk Register. The terms of reference of the Audit and Risk Committee are reviewed as and when required and they are in summary: to assist the Board in fulfilling its supervisory responsibilities. to review the financial reporting process, the system of internal control and assessment of business and financial risks, the internal and external audit processes. to monitor compliance with laws and regulations as well as Board policies and Board decisions. In performing its duties, the Committee maintains effective working relationships with the Board of Directors, Management, and the Internal and External Auditors; to make certain that the Internal Auditors follow an established system of internal control and policies which ensure that the control objectives are attained; to submit recommendations to the Board (for consideration and acceptance by Shareholders) for the appointment and remunerations of the External Auditors; to review quarterly and annual financial statements for publication and submit same to the Board for final approval; to monitor and review the Risk Register of the Company and to make recommendations to the Board regarding all aspects of risks associated with the Company. The Company s results after each quarter were meticulously analysed and the performance of the enterprise scrutinised by the committee. The audit findings reports of both the external auditors and the internal audit team were closely followed. The response of Management to the issues raised was monitored to ensure satisfactory closure. 30 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 31

18 CORPORATE GOVERNANCE REPORT (CONTINUED) CORPORATE GOVERNANCE REPORT (CONTINUED) Information, Information Technology and Information Security Governance The Eclosia Group IT Committee (GIT) has been mandated to provide the necessary directions on strategy, infrastructure, security and operations management in relation to information, communication, and technology systems within the Eclosia Group and its associate companies. The GIT directs and supports the companies in the fields of Digital Innovation and Technical Management, Enterprise Architecture and Standards and IT Security and Solution Endorsement. Resilience of the IT infrastructure has been tested via a Vulnerability and Penetration Tests assignment and recommendations highlighted by the Service Provider were being implemented. An IT policies and Procedure (ITPP) manual, which comprises 32 policies and 200 control points, was implemented at LMLC and Risk Governance and Internal Control Risk Governance The Board is responsible for the governance of risk and for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives. The Board has entrusted to the Audit and Risk Committee the responsibility of ensuring that Management identifies and manages all inherent risks on a regular basis and amongst other initiatives, by keeping a Risk Register. Reviews of the Company s Risk Register were is audited by the Eclosia Group IT Audit Department on a 2-year roll over program and the findings of the audit are reported to the Audit and Risk Committee. An End User IT Security Policy is remitted to all new recruits and must be adhered to by all employees. To maintain a reliable and secured IT environment, the Company with the support of Eclosia Group, has taken initiatives to strengthen its IT Governance Framework, which covers Information Management, Information Technology and Information Security. The Company is participating in an initiative of the Eclosia Group for the development of a Common Enterprise Resource Planning System aimed at improving business operations and the decision-making process. done by Management on a continuous basis during the year. The domains of finance, production, operations, human resources, food quality, information technology, environment, security and communication risks were addressed. The risk appetite fixed by the Board was maintained at the previous year s level of Rs 20 M. The Risk Register was updated by Management with actions being taken to eliminate or mitigate risks. As a result, certain risks were successfully and significantly reduced such as the risk of foreign exchange fluctuations affecting results, and mitigated by procuring wheat in the same currency as the export sales. The milling control system which has been comprehensively modernised during the last year, performed smoothly and permitted the integration of new equipment into the mill control structure. Risks for the Company were reviewed and mitigation actions identified and implemented during the year. The key risks included operational malfunctioning, market-related risks as well as foreign exchange rate changes and product quality issues. All these were evaluated and appropriate measures put in place to mitigate them. A special Audit and Risk Committee meeting is held on a yearly basis to assess the risks of the Company and monitor and evaluate the Company s risks management process to ensure that it is monitored and is effective. The Audit and Risk Committee was satisfied that the measures to effectively mitigate or counter risks had been identified and appropriate action plans were in place. The Business Continuity Plan (BCP) is a stepwise and planned approach to recovering business operations in the aftermath of a materialized risk and gives comfort for the sustainability of operations. The Risk Register provides the scenarios that could affect operations of the enterprise. A disaster simulation was conducted to test the effectiveness of the BCP and it was audited by an external consultant. The result was highly satisfactory. The whistleblowing procedure put in place at the Company was embodied in the antifraud policy. Internal Control In addition to the review of the Company s risks by the Audit and Risk Committee, a sound internal control system is in place in the Company. The Board has entrusted to the Audit and Risk Committee with the responsibility of reporting on the effectiveness of Internal Control. Management of the Company follows a formalised set of policies and procedures. These are laid out in manuals in the fields of Human Resources, Finance, IT and all aspects of industrial production. Compliance is ensured through a comprehensive series of audits performed by auditors external to the Company. The principle of continual improvement is at the base of all procedures. The internal functioning of the enterprise is continually monitored through a series of audits and monitoring systems, which include: Internal audits of all operations; External audits of operational and financial aspects; Information technology audits; 32 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 33

19 CORPORATE GOVERNANCE REPORT (CONTINUED) CORPORATE GOVERNANCE REPORT (CONTINUED) Client audits from a limited number of long-standing clients to assure them of process and product quality standards; Food safety, environmental impact, management systems and health and safety systems (as detailed below); Technical audits by milling engineers and millers concerning yields, efficiencies and machine performance; An Excellence Award series of audits that compare the Company management to norms established by the Eclosia Group. LMLC continued to successfully maintain the five internationally-recognised management systems already in place: Quality Management (ISO 9001:2000); Environmental Management (ISO 14001); Food Safety Management (HACCP); Occupational Health and Safety Assessment Services (OHSAS); Testing and calibration norm (ISO 17025). These systems are audited internally and are accredited by external consultants, some from overseas, who perform annual audits of the systems in place. These systems set out policies to ensure food safety, customer care and satisfaction, reliability and consistency in production, environment friendly processes, safe and healthy working conditions, laboratory analysis of raw materials and finished products, teamwork and employee involvement. During the year, all control systems functioned well and the enterprise once again attained the Gold level in the Excellence Award and maintained all accreditation systems satisfactorily. Audit Internal Auditors The internal audit service is contracted to Eclosia Corporate Services Ltd, which has a team of qualified professionals with extensive experience in auditing, fraud examination, risk management, food safety, industrial efficiencies, information systems security and governance. The Internal Audit team has an independent appraisal function that reviews the adequacy and effectiveness of internal controls and the systems that support them. This includes controls at both the operational and financial levels as well as offering guidance to Management in relation to the evaluation of overall business risks and actions taken to mitigate such risks. The Internal Audit Manager reports to the Chairman of the Audit and Risk Committee who in turn brings before the Board any material issues requiring the special attention of the Directors. The Board, with the assistance of the Audit and Risk Committee and the Internal Auditor, monitors the effectiveness of internal controls. Regular and surprise audits were performed by the Internal Auditors and the findings and recommendations and Management responses, are reported to the Committee. Weaknesses identified by the Internal Auditors during their reviews were brought VALUE to the attention of Management and the Audit and Risk Committee formally by way of risk rated structured reports. These comprise the results of the current review together with updates on the corrective actions taken by Management to improve control systems and procedures. The purpose, authority and responsibility of the Internal Auditors are formally defined in its Charter. The Internal Audit team has the authority to access and examine all information, both Share Price Information Rs Jul Jul Aug Aug Sept Sept Oct Oct Nov Nov Dec Dec 16 DEMEX paper-based and electronic documents as well as to inspect physical assets. No complaints were received from the Internal Auditor during the year under review with respect to restrictions on access to records, management or employees of the organisation. External Auditors The external auditors, BDO & Co, were contracted for the annual financial audit. SHARE PRICE 01 Jan Jan Feb 17 ORDINARY SHARES 01 Feb Mar Mar Apr Apr May May Jun 17 PREFERENCE SHARES 01 Jun L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 35

20 CORPORATE GOVERNANCE REPORT (CONTINUED) CORPORATE GOVERNANCE REPORT (CONTINUED) Dividend Policy The Company s policy is to pay divided based on its current profitability and the liquidity requirements of the Company so as to ensure, as far as possible, a relatively consistent return to shareholders. The dividend paid for the financial year under review is Rs.8.00 per ordinary share and Rs per preference share (2015/2016: Rs.8.00 per ordinary share and Rs per preference share). Related party transactions Related party transactions are made at arm s length and in the normal course of business. Related party transactions between the Company or any of its subsidiaries or associates and a director, controlling shareholder or companies owned or controlled by a director or controlling shareholder are disclosed in note 27 to the financial statements on pages 119 to 120. Management agreements Les Moulins de la Concorde Ltée has had a management contract with Management and Development Company Limited (MADCO) since its inception. MADCO is actively involved in the monitoring of the performance and strategic development of the companies of the Eclosia Group. As a result, Les Moulins de la Concorde Ltée benefits from a cohesive sharing of enterprise management culture, values and ethics. MADCO also participates in important exercises of raw material procurement, personnel recruitment and management and determining major capital expenditure. Les Moulins de la Concorde Ltée has a technical management agreement with NMI Group Services (Pty) Ltd, an associate company of Credo LM (Pty) Ltd. In terms of the contract the Company benefits from the vast technical experience in the domain of milling of the NMI Group in the Southern African region. Audits of mass reconciliation for the entire wheat milling process are conducted every year as well as monitoring of the plant and machinery maintenance process and mill upkeep. The company also provides technical and strategic input and support for development projects. Annual shareholders events Annual Meeting The Annual Meeting of the Company will be held on November 7, Shareholders are invited to attend the Annual Meeting where they will have the opportunity to interact with the Members of the Board, Management and the external auditor and be presented with a review of the Company s performance and outlook. The Company also published quarterly reviews on its results and performance in the media and on its website. These reviews are made available to shareholders upon request. Events Month 1 Approval of Final Accounts and publication of Abridged Financial Statements September 2 Annual Meeting November 3 Dividend Declaration May 4 Dividend Payment June 5 Publication of Quarterly Accounts - 1st quarter - ending 30th September November - 2nd quarter - ending 31st December February - 3rd quarter - ending 31st March May Donations Company Rs 000 Rs 000 Charitable Donations Political Donations Nil Nil Public Outreach The Fournée des Moulins training centre at the mill site continued to operate successfully during the year, providing courses for 1,124 trainees, many of whom were employed in the baking sector. New or improved baking techniques were imparted to candidates, thus contributing to the progress and development of the baking sector in Mauritius. The team of baking and food-technology technicians employed by the Company continued to provide their technical services to bakers and other flour users in Mauritius and Rodrigues. These services are greatly appreciated by local entrepreneurs and clients. Technico commercial visits were conducted during the year to Reunion Island, Mayotte, Madagascar and the Seychelles by company technicians to serve existing clients and explore additional export markets. Bakers from Réunion Island visited the mill during the year, in order to discuss their product needs and quality. The Fête du Pain was held in Mauritius in May and in Rodrigues in June A Caravane Fête du Pain Duel Gourmand travelled around the island for five weekends organising popular baking competitions and exposing the general public to basic nutritional aspects of flour products. This engendered a wide positive media reaction. Competitions were held among professional bakers, hotel bakers as well as commercial bakers, in decorative bread, sandwiches and special breads. Competitions for student bakers in training were extremely popular and generated much excitement. The Company web site and social media sites continued to show steady visitor growth over the year. 36 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 37

21 CORPORATE GOVERNANCE REPORT (CONTINUED) CORPORATE GOVERNANCE REPORT (CONTINUED) The Company sponsored social, cultural and sporting projects, including the donation of flour and semolina during religious festivals, and to organisations concerned with underprivileged groups. Social Policies & Activities Corporate Social Responsibility The Company contributed Rs. 1.7 M to the Fondation Solidarité of the Eclosia Group. The Fondation Solidarité was set up in 1999 by Eclosia Group as a special purpose vehicle to direct and coordinate collective support actions in poverty alleviation and community development in Mauritius. The Fondation is managed and monitored on a regular and professional basis. Management and staff of the Company have been directly involved in supporting specific community projects, notably the Pain d Epice à base de miel de Rodrigues project, now in its sixth year. As the activities now are on an economic footing, LMLC has decreased its financing input but continued logistic and quality assurance support. The Association Mezon Rodrigues functioned among the Rodriguese Pain d Epice producers in order to support their production and commercial activities. LMLC assists the Association in its administration. LMLC also provided support to projects concerning nutrition and national health, including the provision of baking training sessions at the Company s Training Centre and explored cooperation with the prison bakery. Ethics The Company s Code of Ethics which presents the objectives and ethical policies of the Company is actively promoted amongst employees through sensitisation and awareness programmes. Top and middle management were particularly targeted through sensitisation programmes as crucial stakeholders of the code within the Company. Training sessions on security, personal finance and drug dangers were conducted among employees during the year. Environment The action plan to monitor and reduce the carbon footprint and CO 2 emissions of the Company was continued during the year. The situation showed a certain stability coupled with some encouraging actions for reducing environmental impact. The environmental management system, certified to ISO 14001: 2004 standards by Anglo Japanese American Registrars Mauritius Ltd, ensures that the Company s activities impact on the environment is kept to a minimum. Energy consumption, the reduction of waste, the recuperation and use of rainwater, favouring raw materials from suppliers who respect good environmental practices and the minimization of the carbon footprint are important aspects of the environmental management plan. Investment was made in several energyefficient motors in order to reduce electricity consumption. LMLC contributed to the Port Area Environment Committee through the maintenance of green areas on its site and in the surroundings. Health and Safety Scrupulous respect of employee health and safety norms is a sine qua non for efficient and well-managed industrial operations. To this end the Company is accredited with OHSAS certification (Occupational Health and Safety Accreditation System) best practice in health and safety management. The Company hires the services of an experienced Health and Safety Officer who ensures compliance with existing legal requirements in this area and facilitates the functioning of an active health and safety committee at LMLC. All conditions within the Company which impact on the health and safety of employees are monitored. No emergency incidents occurred during the year. Attention was paid to emergency response procedures which were tested repeatedly through drills. Statutory disclosures Direct and indirect interests of senior officers in the equity or debt securities of LMLC or any subsidiary The direct and indirect interests of the Directors of the Company are already disclosed in the Directors profile of the Corporate Governance Report (see page 22). The senior officers (General Manager, Finance Manager and Company Secretary) do not hold shares in the Company. Right to subscribe for equity or debt securities of LMLC granted to any senior officer No senior officer of Les Moulins de la Concorde Ltée (LMLC) has been granted any right to subscribe for equity or debt securities of the Company. Operating results For the period under review, LMLC published comments on its quarterly operating results in the widely read local media. Service contracts There are no service contracts with the Directors of the Company. The Company has a service contract with New Edge Solutions Ltd, an IT services provider. The Company has a distribution contract with Panagora Marketing Company Limited for the distribution of flour in small packs. Both New Edge Solutions Ltd and Panagora Marketing Company Limited form part of the Eclosia Group. In addition, flour mixes and improvers are sold to Cascadel Ltd through a service agreement for retail distribution. The Company has contracted Eclosia Secretarial Services Co Ltd (a wholly owned subsidiary of Management and Development Co Ltd (MADCO)) to provide corporate secretarial services to the Company and its subsidiary Amigel Ltd. 38 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 39

22 CORPORATE GOVERNANCE REPORT (CONTINUED) Amigel Ltd has a franchise agreement with the French company La Mie Caline Ltée for the provision of technical and marketing services for its activities. The Company contracts out many operational activities such as security, machinery and electrical maintenance, transport and pest control to local service providers. All transactions carried out in terms of the above contracts are in the normal course of business and at arm s length. Contract of significance with substantial shareholders The Company has a formal management contract with MADCO whereby the Company pays a fee based on its annual gross turnover. Summary of results, assets and liabilities The Company has formal technical management contract with NMI Group Services (Pty) Ltd whereby the Company pays a fee based on its annual gross turnover. Contract of significance with Directors There is no contract of significance with the Directors. Three Directors of LMLC are also Directors of Eclosia Secretarial Services Ltd. One director of LMLC is also a Director of NMI Group Services (Pty) Ltd. GROUP Rs 000 Rs 000 Results Net Profit after tax 66, ,998 Current Assets 631, ,755 Non-current Assets 1,328,457 1,249,290 Total Assets 1,960,196 1,875,045 GROUP Rs 000 Rs 000 Capital and reserves 1,510,827 1,487,892 Current liabilities 269, ,580 Non-current liabilities 179, ,573 Total equity and liabilities 1,960,196 1,875,045 Eclosia Secretarial Services Ltd Secretary September 19, 2017 Financial Statements The Directors acknowledge their responsibilities for: (i) adequate accounting records and maintenance of effective internal control systems; (ii) the preparation of financial statements which fairly present the state of affairs of the Group and the Company as at the end of the financial year and the results of its operations and cash flows for that period and which comply with International Financial Reporting Standards (IFRS); (iii) the selection of appropriate accounting policies supported by reasonable and prudent judgments. The report of the external auditors confirming that the financial statements are fairly presented is on page 48. The Directors report that: (i) adequate accounting records and an effective system of internal controls and risks management have been maintained; (ii) appropriate accounting policies supported by reasonable and prudent judgments and estimates have been used consistently; (iii) International Financial Reporting standards have been adhered to. Any departure from fair presentation has been disclosed, explained and quantified; (iv) the Code of Corporate Governance has been adhered to. Reasons have been provided where there has not been compliance. CORPORATE GOVERNANCE REPORT (CONTINUED) Statement of Directors Responsibilities Internal Control The Directors acknowledge their responsibility for the Company s systems of control. The systems have been designed to provide the Directors with reasonable assurance that assets are safeguarded, that transactions are authorized and properly recorded and that there are no material errors and irregularities. An internal audit system is in place to assist management in the effective discharge of its responsibilities. This system is independent of management and reports to the Audit and Risk Committee. Risk Management The Directors acknowledge their responsibility for maintaining a sound and effective system of internal controls to safeguard the Company s assets and shareholders interests. The Board accepts overall responsibility for risk management. Through the Audit and Risk Committee, the Directors are made aware of the risk areas which affect the Company and ensure that Management has taken appropriate measures to mitigate these risks. Hansraj Ruhee Chairman September 19, 2017 Michel de Spéville Director 40 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 41

23 CORPORATE GOVERNANCE REPORT (CONTINUED) CORPORATE GOVERNANCE REPORT (CONTINUED) Statement of Compliance (Section 75 (3) of the Financial Reporting Act) Secretary s Certificate JUNE 30, 2017 Name of Public Interest Entity: LES MOULINS DE LA CONCORDE LTEE Reporting Period: JULY 1, 2016 TO JUNE 30, 2017 We, the Directors of LES MOULINS DE LA CONCORDE LTEE, confirm that to the best of our knowledge LES MOULINS DE LA CONCORDE LTEE has complied with all of its obligations and requirements under the Code of Corporate Governance except for: Section 2 (2.2.3) - Composition of the Board - where although there are no executive Directors sitting on the Board, it is the Board s view that the active participation of the General Manager at all Board meetings and the participation of senior executives in subcommittees of the Board meets the spirit of the Code of Corporate Governance for Mauritius (see page 20 of the report). We certify that, to the best of our 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 ECLOSIA SECRETARIAL SERVICES LTD Secretary September 19, 2017 Hansraj Ruhee Chairman Michel de Spéville C.B.E Director September 19, L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 43

24 Notes to the Financial Statements FINANCIAL HIGHLIGHTS Year ended June 30, 2017 Notes to the Financial Statements TURNOVER (RS MILLION) 2,166 2,164 2,161 2,155 1,860 PROFIT BEFORE TAX AND DIVIDENDS (RS MILLION) PRODUCTION-Tons EARNINGS PER SHARE (RS) % 4.67% 4.55% 4.02% 3.4% Flour Bran DIVIDEND YIELD (%) 44 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 45

25 AUDITOR S REPORT L M L C A N N U A L R E P O R T 47

26 INDEPENDENT AUDITOR S REPORT (CONTINUED) INDEPENDENT AUDITOR S REPORT To the Shareholders of Les Moulins de la Concorde Ltée This report is made solely to the members of Les Moulins de la Concorde Ltée (the Company ), as a body, in accordance with Section 205 of the Companies Act Our audit work has been undertaken so that we might state to the Company s members those matters we are required to state to them in an 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 members as a body, for our audit work, for this report, or for the opinions we have formed. Report on the audit of the Financial Statements Opinion We have audited the consolidated financial statements of Les Moulins de la Concorde Ltée and its subsidiary companies (the Group), and the Company s separate financial statements on pages 58 to 122 which comprise the statements of financial position as at June 30, 2017, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matters 1 Going Concern More than 69% of the revenue of Les Moulins de la Concorde Ltée is derived from a sole customer. Such concentration risk may cast doubt on the going concern of the Company. On an annual basis, Les Moulins de la Concorde Ltée is subject to an international tender exercise by the customer. The Company has obtained the tender up to December 31, 2017 and the new tendering exercise for the year 2018 is expected to be done in October Related disclosure Refer to note 2.1 (accounting policies) Audit Response We have obtained sufficient appropriate audit evidence about the appropriateness of management use of the going concern assumption in the preparation of these financial statements. In our opinion, the financial statements on pages 58 to 122 give a true and fair view of the financial position of the Group and of the Company as at June 30, 2017, and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the Companies Act 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 the Audit of the Financial Statements section of our report. We are independent of the Group and of the Company in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Mauritius, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 2 Inventories As at June 30, 2017, the Group s inventories stood at Rs.483M (2016: Rs.421M). Related disclosure Refer to note 2.1 (accounting policies) and note 10 of the accompanying financial statements. Our audit procedures consisted of attending the annual physical inventory counts, discussing the counting procedure with the client and observing the counts as they were being done. We have also performed a reconciliation of the stock as per the count and the stock as per the stock listing at year end in order to detect any possible deviation. We have reviewed the costing of the finished goods and enquired about any obsolete inventory items. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters 48 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 49

27 INDEPENDENT AUDITOR S REPORT (CONTINUED) INDEPENDENT AUDITOR S REPORT (CONTINUED) Key Audit Matters 3 Other Provisions for Liabilities Pension accounting Pension accounting is complex and contains areas of significant judgment, such as discount and inflation rates and demographic assumptions used in the valuation of the net liability. Therefore, a risk exists that inappropriate assumptions are used resulting in an inaccurate pension valuation at year-end. Related disclosure Refer to note 2.13 (accounting policies), note 4.1(b) (critical accounting estimates) and note 15 of the accompanied financial statements 4 Investments At 30 June 2017, the investments amounted to Rs.449m for the Group and Rs.364m for the Company. This amount is made up of investment in subsidiaries, associates and available-for-sale financial assets. The main risks identified are related to the high value of the items. There is also a risk of impairment which needs to be assessed. Audit Response We have: - assessed the design and implementation of key controls around the pension accounting; - assessed the actuarial assumptions (discount rate, inflation rates, and mortality assumptions) adopted by the Group for the valuation of its retirement benefit obligations, with specific focus on changes to demographic assumptions and rates in the year; - reviewed the pension scheme liability; and - reviewed the disclosures made in note 22 and compared these to the requirements of IAS 19 Employee Benefits. We have tested for possible impairment of these investments. We have also reviewed the classification and accounting treatment of the Company s investment portfolio in line with the accounting policies set out in notes 2.4, 2.5 and 2.6 to the financial statements. Key Audit Matters 5 Property, Plant and Equipment (PPE) Valuation of buildings and flour mill equipment As set out in the critical accounting estimates and judgements on page 85, and in the notes on pages of the financial statements, the Group measures its buildings and flour mill equipment at fair value and this represents a significant accounting estimate. PPE assets are measured initially at cost, with buildings and flour mill equipment subsequently measured at fair value. Valuations of buildings are performed by Mr Vincent d Unienville, an independent professionally accredited expert, in accordance with the Royal Institute of Chartered Surveyors (RICS) Appraisal and Valuation Manual, and performed with sufficient regularity to ensure that the carrying value is not materially different from fair value at the Statement of Financial Position date. Valuation of flour mill equipment is performed by professional suppliers of milling plants. Audit Response Valuation - We assessed the credentials of the independent property valuer. - We assessed the assumptions used in the valuation report submitted by the independent property valuer. - We confirmed that the valuation was correctly accounted for and disclosed in the financial statements. Related disclosure Refer to notes 7, 8 and 9 of the accompanying financial statements. The main risks identified are related to the involvement of a range of judgemental assumptions. PPE is valued at Rs.870 M for the Group and Rs.839 M for the Company in the Statements of Financial Position as at 30 June Related disclosure Refer to note 5 of the accompanying financial statements. 50 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 51

28 INDEPENDENT AUDITOR S REPORT (CONTINUED) INDEPENDENT AUDITOR S REPORT (CONTINUED) Other information The Directors are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements and our auditor s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the 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. Responsibilities of Directors and Those Charged with Governance for the Financial Statements The Directors are responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards and in compliance with the requirements of the Companies Act 2001, and for such internal control as the Directors determine is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Group and the Company s ability 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 Group and the Company or to cease operations, or have no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group and the Company s financial reporting process. Auditor s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the 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 judgment 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 Group and the Company s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by directors. Conclude on the appropriateness of 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 Group and 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 Group and 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. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. 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. 52 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 53

29 INDEPENDENT AUDITOR S REPORT (CONTINUED) INDEPENDENT AUDITOR S REPORT (CONTINUED) We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements Companies Act 2001 We have no relationship with, or interests in, the Company or any of its subsidiaries, other than in our capacity as auditors, business advisers and dealings in the ordinary course of business. We have obtained all information and explanations we have required. In our opinion, proper accounting records have been kept by the Company as far as it appears from our examination of those records. Financial Reporting Act 2004 The Directors are responsible for preparing the corporate governance report. Our responsibility is to report the extent of compliance with the Code of Corporate Governance as disclosed in the annual report and on whether the disclosure is consistent with the requirements of the Code. In our opinion, the disclosure in the annual report is consistent with the requirements of the Code. BDO & Co Chartered Accountants Port Louis, Mauritius. September 19, 2017 Shabnam Peerbocus, FCA Licensed by FRC 54 L M L C A N N U A L R E P O R T L M L C A N N U A L R E P O R T 55

30 FINANCIAL STATEMENTS L M L C A N N U A L R E P O R T 57