ANNUAL REPORT 2008 ANNUAL REPORT. Innodis Building Caudan - Port Louis Mauritius. Tel. (230) Fax (230)

Transcription

1 Innodis Building Caudan - Port Louis Mauritius Tel. (230) Fax (230) info@innodisgroup.com ANNUAL REPORT

2 Titre ouverture Contents Chairman s Statement 3 Financial Highlights 7 CEO s Review 8 Corporate Governance Report 13 Other Statutory Disclosures 19 Secretary s Certificate 27 Auditors Report 29 Consolidated Financial Statements and Notes 31 1

3 Chairman s Titre ouverture Statement 3

4 Chairman s Statement In my message last year, I welcomed the return of profitability across our Mauritian businesses. This year, we have managed to maintain our growth momentum despite the difficult international environment. As an example over the year under review, price of maize, which is key to our poultry operations, has increased by 38% over the previous year. Prices of other components, such as oil, also rose significantly whilst the Rupee was subject to another year of volatility. The effect of these would have been severe had Innodis not been improving its value proposition both in the market and internally, to raise productivity as part of its restructuring plan. During the year, our investment in Mozambique was restructured, resulting in an increase of our stake to 81% in HWFRL Investments Ltd from 66% last year, after converting some of our loans into equity. In order to maintain our commitment to the Mozambique operations, the Board approved an additional investment of Rs 45M to support the operations and the working capital requirements. At the same time, an impairment provision of Rs 30M was made to ensure that the obtains a higher return on capital when profits are reaped in the future. For the financial year 07/08, the s turnover increased by 15% to reach Rs 2.7 billion and operating profit improved to Rs 155M compared with Rs 50M for the previous year. profit attributable to the shareholders increased to Rs 110M compared with Rs 22M last year. We ended the year with a five-fold increase in earnings per share to Rs Challenges ahead Consumption of our food products has increased steadily over the past years and the trend is expected to continue, driven by positive real economic growth. In July 2007, Government removed duties on a wide range of imported products, including poultry, as a policy response to inflationary pressures. The relevance of the policy measure, in the current context of food shortage, and the absence of a proper local anti-dumping framework, is questionable. However, there is a strong case for greater vigilance and control from the authorities, given the sensitive nature of some of these products. In any event, our strategy, i.e. our portfolio and our investment plan, going forward, will be reviewed to adapt to this new environment. Looking ahead, inflation in Mauritius, with its impact on purchasing power and our balance of payment, will be a challenge to all of us in the coming months. At Innodis however, with our brands, our people and our relationships, we have proven to be resilient and will aim to be better and stronger for our shareholders. Dividends Given the above, the Board decided to exercise caution and not to declare a dividend. However, once the impact of the above policy change is fully evaluated, particularly in terms of our cash investment in the short term, the Board will continue its dividend payment, in line with its objective, to deliver higher shareholder value. Appreciation I would like to take this opportunity to thank my colleagues on the board for their wise counsel and to congratulate the Chief Executive, his management team and all the people of Innodis, for yet another commendable performance during the past year. Sir René S.C Seeyave, CBE Chairman 29 September 2008 We ended the year with a five-fold increase in earnings per share 4 Chairman s Statement Chairman s Statement 5

5 Financial Highlights Principal key figures Rs M rs M Rs M rs M Turnover 2,745 2,388 2,150 1,854 Operating profit Profit after tax and minority interests Rs rs Rs rs Earnings per share Dividend per share Net asset value per share turnover 3,000 2,000 1,000 0 Rs M profit after tax (20) Rs M Financial Highlights 7

6 CEO s REVIEW Financial results turnover for the year increased by 15% to reach Rs 2.7 billion ( Rs 2.4 billion). Operating profit increased three-fold to reach Rs 155M, compared to Rs 50M for the previous year, driven by good performance across all of our business segments. Earnings per share increased to Rs 3.00, compared to Rs 0.60 last year. Return on capital employed (ROCE) is an important indicator to us. It stood at 11% up on last year s 4%. Our gearing also improved from 35% to 32%. The drivers which delivered the above results were: better market positioning of our key brands, productivity gains from our manufacturing units and improved performance from our main subsidiaries. Sales performance Frozen and chilled meat Our frozen meat segment, including chicken, experienced 19% growth in turnover despite the worldwide shortage affecting both the fish and red meat segments. Our margins especially in the value added range and beef, were higher due to improved procurement planning. Following the liberalisation of import of chicken, our focus will be to enhance the value proposition of our chilled chicken range to our consumers. In that respect, we shall be devoting resources and infrastructure to achieve this goal. This segment, which currently accounts for over 40% of our total chicken sale, is expected to expand further to reach at least 50% by the end of the financial year Dairy products and spreads On the dairy segment, our sale of instant powdered milk suffered from the doubling of international prices and supply shortages. However, the situation has since then eased considerably. Prices have dropped and we expect to regain our market share through our flagship brand, Twin Cows. The launching of our sterilised milk targeting the more affluent consumers will further improve our position in this growing market. We grew our cheese spread range by over 30% thanks to an aggressive marketing plan, implemented during the year with our supplier, Fromageries Bel SA. We also welcome the addition of Picon, a well known cheese brand from the same supplier, to further complement our portfolio. Our margarine sales were affected by shortage of supplies from our partner, Unilever. However, this has been corrected and we look forward to an improved supply and delivery from the latter. Dessert and impulse range We achieved a 10% increase in yoghurt volume this year while ice cream has performed in line with our expectation. New packaging and flavours were introduced for flavoured milk Ole and drinking yoghurt Kick Start. Sales of these two products since their relaunch have been on a rising trend and have yet to reach their cruising speed. We have also re-organised our sales structure so as to adapt to the ever demanding retail players, with our sales force equipped with the latest technology to provide a better delivery service. 8 CEO s Review CEO s Review 9

7 CEO s Review In the next financial year, we will continue our growth momentum by introducing new products with greater appeal to our health conscious consumers. Beverages Despite the tough competition from cheap imports, our sales of juice under the Ceres brand was in line with our objective: a 12% rise in volume sales. Our locally manufactured nectar juice has also performed well following a complete change in packaging and a well targeted marketing plan. We expect further gain this coming year with the complete removal of duty on imported juice, and the decision of Government to ban the sale of certain beverages in school canteens. Rice and other staples Despite being adversely affected in volume terms following export ban enacted by India and Pakistan, turnover of rice has increased by 28%. This result was due to a sharp rise in price. In the canned foods segment, we have made an excellent inroad with around 60% volume increase. Overall, with the fall in purchasing power, prospects in the basic food commodities segment look promising. Manufacturing excellence Both our poultry and dairy manufacturing divisions performed well in terms of key production parameters. The poultry division, located at Beau Climat, comprises an integrated broiler operation with five farms owned by Innodis, and another four managed by outside contract growers. The division produces an average output of 120,000 birds per week. During the year, the price of feed increased by over 26%, but the impact on our cost per unit was mitigated to some extent by productivity gains and higher volumes. Review of subsidiaries Peninsula Rice Milling Ltd (PRM) PRM ended the year with a profit after tax of Rs 11.7M. Our efforts to secure brown rice from reputed suppliers in both India and Pakistan yielded results at a time when these countries were facing food security issues. The world harvest of rice for this year shows an upward trend and we are also expecting an easing of prices especially of basmati by December We have noted during the year that, due to high price, there has been a shift in the consumption away from basmati to cheaper long grain rice. However over the long term, the freshness of our product and with prices correcting, our two brands, Rimilda and Rozana, will be expected to regain market share and grow in their respective segments. Moçambique Farms, Limitada (MFLDA) Our performance both in terms of turnover and margins improved during the year. This was achieved thanks to management effort to diversify its customer base, mainly through the opening of dedicated franchise outlets. Our broiler production could have been much higher, had it not been for a shortage of day-old chicks on the market. We have signed an agreement with a local operator to manage our existing broiler farms and to supply birds to our processing plant. This agreement aims to share the main production risks and to provide a more stable level of output. Our objective for FY 2009 is to process an output of 40,000 birds per week as from December Innodis, following a restructuring and refinancing exercise, has increased its effective holding in MFLDA (through HWFRL) Investments Ltd) to 61.6% from 50.7% last year. The additional financing together with the operational improvement, is expected to pave the way for next year. Supercash Ltd Poulet Arc-en-Ciel Ltée (PAC) PAC is an integrated broiler operator working entirely with outside contract growers. Since its acquisition in 2006, PAC s profitability has continuously improved from its original loss position. For the year, the results show an increase in turnover of 27% compared with last year, and a marked improvement in profit after tax to Rs 12M. Broiler performance in terms of weight and feed consumption was better than the previous year whilst our customer base remained loyal despite the very competitive environment. For this year, PAC will suffer from the loss of two contract growers, which contributed to 25% of its output. Discussions are under way with new contract growers to compensate for this shortfall. Building the organisation During the year, we maintained our reorganisation efforts by doing away with the previous structure centred on product types (consumer and frozen). We reorganised the two units in terms of their common key functions namely: sales and distribution, supply chain management and procurement, each under different management. The objective of the reorganisation is to provide Innodis with a modern platform that is focused on its core competencies, hence providing better customer service, improved control and accountability. Furthermore, all of our logistics and warehouse platforms are now operated from facilities located near our seaport. Support functions such as accounting, human resources and marketing, have been kept at corporate level. It is also expected that the new structure, coupled with a new Enterprise Resource Planning system, to be implemented during FY 2009, will help towards achieving corporate goals. People are core to our strategy. Several training programmes have been implemented at our production facilities, mainly at shop floor level, to improve standards and efficiency. This will continue in the future as we are committed to creating a safe and healthy working environment. Outlook Today, with the price liberalisation, increased concentration of the retail sector and higher cost of capital, we will continue to operate in an even more competitive landscape. To sustain value and growth, we need to adapt our strategies and continue to enhance our value proposition to both our customers and end consumers. Quality will remain at the core of our strategy. We are confident that today, we have positioned the business in such a way so as to maintain its growth momentum despite the volatile environment. Prospects look good in all key segments and we expect a satisfactory sales performance in terms of both value and volume with the easing of supply and drop in price of basic commodities world-wide. Udaysingh Taukoordass, ACA Chief Executive Officer 29 September 2008 The dairy manufacturing unit, which is located at Phoenix, also faced higher input costs but contained its production costs through better yields and higher volumes. This enabled us to maintain our competitiveness across our product range. Going forward, our R&D department will keep its focus on product quality and new product introduction. Turnover from our cash and carry operations fell marginally due to the effects of the relocation of one of its main stores from Pailles to Riche Terre, the competition from larger retailers, and the short supply of some fast moving products. Overall, the operations were profitable and delivered an acceptable return on capital employed. Going forward, we will continue to develop the cash and carry concept and to integrate it further with the Innodis distribution platform. 10 CEO s Review CEO s Review 11

8 Corporate Governance Titre ouverture Report 13

9 Corporate Governance Report The Board of Directors of Innodis Ltd is committed to sound corporate governance and ensure that principles of good Corporate Governance, as applicable in Mauritius, are fully adhered and form an integral part in the way in which the s business is conducted. Board, directors and committees The Board consists of 8 directors, two of whom are executives. The Board is led by the Chairman who is a non-executive director. The Board meets quarterly and its principal functions include the following: determining the s purpose, strategy and values, and monitoring implementation and performance; reviewing and approving business plans including annual budgets and performance; ensuring an appropriate system of internal control and compliance with laws and regulations as may be appropriate and relevant to the business of the and ; and approving acquisitions and disposals as appropriate to the business. Board committees The Board has two standing committees to assist it in the discharge of its duties. The Committees, which are set out below, meet regularly under terms of reference set by the Board. Audit Committee The Audit Committee currently comprises the following members: Maurice de Marasse Enouf, FCCA (Chairman) Gil de Sornay Victor Seeyave The Board approved an Audit Committee Charter on 25 July 2007, which sets out the responsibilities of the Audit Committee with the objectives of assisting the Board in fulfilling its responsibilities. The Committee reviews the financial reporting process, the system of internal control and management of financial risks, the audit process and the s process for monitoring compliance with laws and regulations, and its own code of business conduct. In performing its duties, the Committee maintains effective working relationship with the Board, management, and internal and external audit. The Audit Committee met four times during the year. Corporate Governance Committee This committee comprises the following members: Gil de Sornay (Chairman) Pierre Doger de Speville Victor Seeyave The Corporate Governance Committee s terms of reference include but are not limited to: determining and developing the general policy on corporate governance in accordance with the Code of corporate governance, legal compliance and ethical policies; assisting the Board on establishing a formal and transparent procedure for developing a remuneration policy for senior management and making recommendation to the Board on all new Board appointments. The Corporate Governance Committee met on four occasions during the year. Directors attendance at meetings The record of attendance at Board and Committee meetings is shown in the summary table below: Director/committee member Board Audit Corporate meetings Committee Governance Sir René Seeyave 7 of 7 N/A N/A Jacques de Chateauvieux Nil N/A N/A Maurice de Marasse Enouf 7 of 7 4 of 4 N/A Jean How Hong 6 of 7 N/A N/A Pierre Doger de Speville 6 of 7 N/A 5 of 6 Gil de Sornay 6 of 7 4 of 4 6 of 6 Victor Seeyave 6 of 7 4 of 4 6 of 6 Udaysingh Taukoordass 7 of 7 N/A N/A Directors dealing in shares The directors use their best endeavours to follow the principles of the model code on securities transactions by directors (as detailed in Appendix 6 of the Stock Exchange listing rule). Statement of remuneration policy The remuneration of key executives is determined by the Corporate Governance Committee. The level of remuneration is based on a formal assessment of performance in accordance with agreed result areas. A statement showing the remuneration of executive and non executive directors is disclosed on page 22 of the Annual Report. Shareholders The shareholders holding more than 5% of the company are listed on page 76 of this report. Share option plan The has no share option plan. Dividend policy The Board has not established a formal dividend policy. However, the Board endeavors to distribute dividends in light of the s profitability, cash flow requirements and planned capital expenditure. 14 Corporate Governance Report Corporate Governance Report 15

10 Board of directors 1. Sir René S.C Seeyave, CBE Non-Executive Chairman Knighted in 1985 by H.M The Queen of England, Sir René has been associated with the economic landscape of Mauritius for over 40 years. Over that period, he has served on numerous public and private sector institutions, among which the University of Mauritius as Vice Chairman of the Council. His vision has spawned a number of business ventures in fields as diverse as textiles, property development and the foods sector. Sir René chairs Innodis Ltd as well as the Altima of Companies whose recent ventures have been property development mainly in the Ebene Cybercity area and the setting up of Business Process Outsourcing operations. 2. Jacques de Chateauvieux Non-Executive Director Graduate of Institut Supérieur de Gestion (Paris) and holder of an MBA from Columbia (New York), he was a consultant with Boston Consulting and has worked as Contrôleur de gestion at Union des Transports Aériens. He is presently the Chairman and Chief Executive Officer of BOURBON, and also the chairman of Jaccar, CBo Territoria, Sapmer, as well as a member of the Conseil de surveillance of AXA. 3. Maurice de Marasse Enouf, FCCA Independent Non-Executive Director A Chartered Certified Accountant, he retired in 2001 after 29 years of service as Finance Manager of the WEAL group of Companies. He acts as independent director on the boards of several companies including Mauritius Oil Refineries Ltd. He is also a director of Harel Frères Ltd and is currently the Chairman of the Audit Committee of Innodis Ltd and of Mauritius Oil Refineries Ltd. 4. Jean How Hong Executive Director Holder of a Diploma in Sugar Technology (School of Agriculture, University of Mauritius), he has previously assumed functions of General Manager of Mauritius Farms Ltd, General Manager (Commercial Division) of Happy World Ltd and Executive Director prior to his being appointed as Chief Operating Officer of the in August Pierre Doger de Speville Independent Non-Executive Director Notary Public from August 1965 to June 1997, he is the Chairman of the Medine of Companies. He is also a director of Swan Insurance Ltd. 6. Gil de Sornay Independent Non-Executive Director He joined Swan Insurance Co. Ltd in 1958 and was appointed General Manager in He retired in 1996 and acted as Adviser to the Chief Executive of Swan Insurance Co. Ltd up to December Victor Seeyave Non-Executive Director Holder of a BA degree in Economics (UK) and an MBA (USA), he is the Managing Director of Altima Ltd. He is also a director of Swan Insurance Ltd. 8. Udaysingh Taukoordass, ACA Executive Director Chief Executive Officer since October 2005 and a Chartered Accountant by profession, Mr. Taukoordass has, for over ten years, worked for PriceWaterhouseCoopers, a firm of chartered accountants in UK and Mauritius, where he has held senior positions in audit, corporate finance and management consultancy. Prior to his appointment, he was financial adviser to the Ministry of Finance and Economic Development. 16 Corporate Governance Report

11 Other Statutory Titre Disclosures ouverture 19

12 Other Statutory Disclosures The directors are pleased to present their report together with the audited financial statements of the and for the year ended 30 June The financial statements of the and are set out on pages 31 to 77. The auditors report on these financial statements is on pages 29 and 30. Review of business The principal activities of the comprise production, poultry farming, distribution and marketing of food and grocery products. Segment information is disclosed in note 6 to the financial statements. Results For the year under review, the recorded a turnover of Rs 2.7 billion (2007 Rs 2.4 billion), whilst profit after tax attributable to shareholders was Rs 110 million (2007 Rs 22 million). Dividend Independent directors Maurice de Marasse Enouf, FCCA Gil de Sornay Pierre Doger de Speville (ii) Supercash Ltd, Hygiene Products Ltd, Peninsula Rice Milling Co. Ltd, Pailles Properties Ltd, Micali Ltd, Redbridge Investments Ltd, Loughton Investments Ltd (iii) (iv) Victor Seeyave Jean How Hong Challenge Hypermarkets Ltd Jean How Hong Jean Marc René Brebion (resigned on 27 February 2008) Jacques de Chateauvieux (resigned on 27 February 2008) Maurice de Marasse Enouf, FCCA Victor Seeyave (appointed on 18 March 2008) Wing Soon Leung Wan Kin (appointed on 18 March 2008) HWFRL Investments Ltd Jean How Hong Neermal Saddul Alternate Kavita Devi Ramphul-Saddul Victor Seeyave (viii) Innodis Export Ltd (ix) Jean How Hong Udaysingh Taukoordass, ACA Essentia Ltd Jean How Hong Udaysingh Taukoordass, ACA Statement of directors responsibilities in respect of financial statements The s directors are responsible for the preparation and fair presentation of the financial statements, comprising the balance sheet as at 30 June 2008 and, the income statement, the statement of changes in equity and cash flow statement for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, in accordance with International Financial Reporting Standards and in compliance with the requirements of the Mauritius Companies Act. The directors responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. The directors have made an assessment of the s ability to continue as a going concern and have no reason to believe the business will not be a going concern in the year ahead. Significant contracts No contract of significance existed during the year under review between the or any of its subsidiaries and the directors. No dividend was declared (2007 Rs 22 million). Directors (v) Moçambique Farms, Limitada Jean How Hong Neermal Saddul Egas Mussanhane Olivier Decanniere The following directors held office during the year ended 30 June 2008: (i) Innodis Ltd Executive directors Udaysingh Taukoordass, ACA (Chief Executive Officer) Jean How Hong (Chief Operating Officer) Non-executive directors Sir René S.C Seeyave, CBE (Chairman) Jacques de Chateauvieux Victor Seeyave (vi) (vii) Mauritius Farms Limited Jean How Hong Udaysingh Taukoordass, ACA Poulet Arc-en-Ciel Ltée Gilbert Espitalier Noël Patrick Hardy Sir René S.C Seeyave, CBE Gil de Sornay Victor Seeyave Jean How Hong Udaysingh Taukoordass, ACA Maurice de Marasse Enouf, FCCA 20 Other Statutory Disclosures Other Statutory Disclosures 21

13 Directors remuneration and benefits Directors emoluments Rs 000 rs 000 Innodis Ltd Remuneration 7,053 5,415 Fees Pension costs defined contribution plans ,905 6,231 There was no emolument paid to the directors by any of the other subsidiaries (2007 nil). Sir René Seeyave and/or Victor Seeyave hold shares, directly and/or indirectly, in the following companies which are shareholders of the : Number number Happy World Limited - 12,992,985 Happy World Bureautique Ltd - 500,000 Wilwin Investments Limited 309, ,990 Zenith Enterprises Limited - 338,939 Chaussée Properties Limited - 390,000 Burnley Trading Ltd - 120,000 Newton Securities Ltd - 8 Altima Ltd 7,345,000-7,654,495 14,960,922 Number of directors whose emoluments fall within the following bands Number number Between Rs 2,000,001 and Rs 3,000, Between Rs 3,000,001 and Rs 4,000,000-1 Between Rs 4,000,001 and Rs 5,000, Other Transactions during the year (i) (ii) During the year, 14,651,419 Ordinary Shares in the, representing 39.89% of the issued share capital were transferred to Foods Div Ltd, a subsidiary of Happy World Limited. Jaccar, a company in which Jacques de Chateauvieux has a controlling interest, holds 2,924,743 (2007-1,070,868) ordinary shares in the, representing 7.96% ( %) of the issued share capital. Directors interests in the shares of the Direct Indirect Direct indirect holding holding holding holding Number Number Number number Directors service contracts There is no service contract between the or any of its subsidiaries and its directors except for the service contract of the Chief Executive Officer. The term of the service contract is for a period of two years starting October 2005 and has been extended on mutually agreed terms until 31 December The notice period for termination of the contract by either the or the Chief Executive Officer is three months. Sir René S.C Seeyave, CBE 2,700-2,700 - Maurice de Marasse Enouf, FCCA Jean How Hong 21,218 3,747 21,218 3,747 Victor Seeyave 100, ,000 - Gil de Sornay 13,697-13,697 - Donations Donations made to charitable and community institutions by the and the during the financial year amounted to Rs 10,403 (2007 Rs 13,327) and nil (2007 Rs 10,859) respectively. 138,148 3, ,148 3, Other Statutory Disclosures Other Statutory Disclosures 23

14 Auditors remuneration Audit Other Audit other fees services Fees services KPMG KPMG: current year 1, Ernst & Young Grant Thornton Acknowledgement The Board would like to thank all employees for their continued dedication and loyalty. Auditors KPMG are willing to continue as auditors of the. A resolution to re-appoint them and to authorise the directors to fix auditors remuneration will be submitted at the annual meeting. Approved by the board of directors on 29 September 2008 and signed on its behalf by: Sir René S.C Seeyave, CBE Chairman Mr. Udaysingh Taukoordass, ACA Chief Executive Officer 24 Other Statutory Disclosures

15 Secretary s Titre Certificate ouverture 27

16 Secretary s Certificate Secretary s Certificate under Section 166(d) of the Companies Act 2001 In accordance with Section 166(d) of the Companies Act 2001, we hereby certify that to the best of our knowledge and belief, the has filed with the Registrar of Companies, all such returns as are required of the under the Companies Act AuditoRs Titre ouverture Report ECS Secretaries Ltd Secretary 29 September Secretary s Certificate 29

17 Independent Auditors Report to the Members of Innodis Ltd Report on the financial statements We have audited the financial statements of Innodis Ltd (the ) and its subsidiaries (together the ) on pages 31 to 77 which comprise the balance sheet as at 30 June 2008 and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. Directors responsibility for the financial statements The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in compliance with the requirements of the Mauritius Companies Act. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the s preparation and fair presentation of the financial statements 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 s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements on pages 31 to 77 give a true and fair view of the financial position of the and of the at 30 June 2008 and their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the Mauritius Companies Act. Other matter This report, including the opinion, has been prepared for, and only for, the s members, as a body, in accordance with Section 205 of the Mauritius Companies Act and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Report on other legal and regulatory requirements Companies Act We have no relationship with or interests in the or any of its subsidiaries other than in our capacities as auditors and tax advisors. We have obtained all the information and explanations we have required. In our opinion, proper accounting records have been kept by the as far as it appears from our examination of those records. KPMG Public Accountants Port Louis 29 September 2008 Consolidated financial Titre statements ouverture and notes 30 Auditors Report 31

18 Consolidated Income Statement Consolidated Balance Sheet as at 30 June 2008 Note Revenue 2,744,705 2,387,507 2,149,838 1,854,255 Profit from operating activities 7 155,296 49, ,696 84,483 Net finance expense 9 (49,425) (47,786) (28,118) (33,396) Share of profit of equity accounted investees 15 17,183 8, Profit/(loss) before income tax 123,054 10,919 91,578 51,087 Income tax expense 10 (28,631) (12,580) (20,440) (7,498) Profit/(loss) from continuing operations 94,423 (1,661) 71,138 43,589 Minority interest 15,862 23, Profit for the year 110,285 22,133 71,138 43,589 Earnings per share (Rs) note ASSETS Non-current assets Property, plant and equipment 12 1,189,767 1,199, , ,535 Intangible assets 13 47,748 61,286 37,862 50,778 Investments in subsidiaries , ,133 Investments in equity accounted investees 15 68,794 57,921 29,015 29,015 Available-for-sale investments 16 1,209 1,181 1,209 1,181 Loans to subsidiaries ,541 - Receivables 18 20,332 20,865 20,332 20,865 1,327,850 1,340,920 1,107, ,507 Current assets Inventories , , , ,274 Receivables and prepayments , , , ,482 Cash and cash equivalents 35,240 21,709 2,296 10, , , , ,261 Total assets 2,033,820 1,952,938 1,793,218 1,719,768 EQUITY AND LIABILITIES Shareholders equity Share capital , , , ,303 Share premium 5,308 5,308 5,308 5,308 Revaluation reserve 227, , , ,274 Foreign exchange translation reserve 6,324 (842) - - Retained earnings 399, , , ,349 1,005, ,347 1,004, ,234 Minority interest 116, , Total equity 1,122,764 1,012,785 1,004, ,234 Non-current liabilities Borrowings , , , ,359 Employee benefits 23 32,164 40,223 30,718 38,850 Deferred tax liabilities net 24 28,323 20,236 36,388 33, , , , ,083 Current liabilities Bank overdrafts 255, , , ,344 Borrowings 22 55,263 94,412 49,053 79,769 Trade and other payables , , , ,259 Taxation 18,749 7,293 18,734 7, , , , ,451 Total liabilities 911, , , ,534 Total equity and liabilities 2,033,820 1,952,938 1,793,218 1,719,768 Approved by the Board on 29 September The notes on pages 38 to 77 form part of these consolidated financial statements. Chairman Chief Executive Officer The notes on pages 38 to 77 form part of these consolidated financial statements. 32 Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 33

19 Consolidated Statement of Changes in Equity Foreign currency Share Share Revaluation translation Retained Minority Total capital premium reserve reserve earnings Total interests equity Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 At 30 June ,303 5, ,527 1, , , ,998 1,013,517 Profit/(loss) for the year ,133 22,133 (23,794) (1,661) Dividends (22,038) (22,038) - (22,038) Revaluation reserve realised - - (5,033) - 5, Foreign exchange translation difference (2,267) - (2,267) (180) (2,447) Transfer - - (3,373) - 3, Loan from subsidiaries ,414 25,414 At 30 June ,303 5, ,121 (842) 285, , ,438 1,012,785 Profit/(loss) for the year , ,285 (15,862) 94,423 Acquisition of minority ,380 18,380 Revaluation reserve realised - - (3,373) - 3, Foreign exchange translation difference ,166-7,166-7,166 Loan from subsidiaries (9,990) (9,990) At 30 June ,303 5, ,748 6, ,115 1,005, ,966 1,122,764 The notes on pages 38 to 77 form part of these consolidated financial statements. Consolidated Statement of Changes in Equity (continued) Share Share Revaluation Retained capital premium reserve earnings Total Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 At 30 June ,303 5, , , ,683 Profit for the year ,589 43,589 Dividend (22,038) (22,038) Revaluation reserve realised - - (3,085) 3,085 - Transfer - - (3,373) 3,373 - At 30 June ,303 5, , , ,234 Profit for the year ,138 71,138 Revaluation reserve realised - - (3,373) 3,373 - At 30 June ,303 5, , ,860 1,004,372 The notes on pages 38 to 77 form part of these consolidated financial statements. 34 Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 35

20 Consolidated Cash Flow Statement Consolidated Cash Flow Statement (continued) Cash flows from operating activities Profit before taxation 123,054 10,919 91,578 51,087 Adjustments for: - Employee benefits (8,059) 4,160 (8,132) 4,051 - Depreciation 84,605 89,345 59,099 57,518 - Amortisation of premiums on leasehold land Impairment losses of intangible assets 13, , Provision for impairment of goodwill on acquisition of associates Foreign currency translation adjustment 6,820 11, Share of profit before tax of associates (17,183) (8,835) (Profit)/loss on disposal of property, plant and equipment (115) 9,999 (204) 9,039 - Interest income (8,744) (3,408) (6,344) (48) - Interest expense 67,561 65,822 53,350 47,813 - Dividend income - - (3,517) (3,517) - Provision for impairment of property, plant and equipment - 2,906-2,906 - Provision for impairment of leasehold land - 2,282-2,282 - Provision for impairment of investments in subsidiaries , , , , ,087 Changes in inventories (48,707) (516) (51,369) 103 Changes in receivables and prepayments (31,714) ,898 (73,536) Changes in trade and other payables (20,956) 16,033 (37,561) 32, , , , ,557 Interest paid (67,561) (65,822) (53,350) (47,813) Tax paid (6,270) - (6,270) - Net cash from operating activities 87, , ,627 83,744 Cash flows from investing activities (Increase)/decrease in loan to subsidiaries - - (83,541) 15,282 Acquisition of subsidiary and associate, net of cash acquired (28) - (78,049) (382) Proceeds from disposal of property, plant and equipment 1,095 70, ,462 Interest received 8,744 3,408 6, Dividend received 3,517 3,517 3,517 3,517 Payments for purchase of property, plant and equipment (75,685) (56,365) (64,938) (51,093) Net cash (used in)/generated from investing activities (62,357) 21,282 (215,672) 33,834 Cash flows from financing activities Payments of finance lease liabilities (34,920) (32,370) (27,604) (23,539) Loans due to minority interest (9,990) 25, Proceeds from issue of shares to minority 18, Loans received - 25,279-20,852 Proceeds from finance leases 20,421 13,892 20,421 13,892 Repayment of borrowings (33,523) (68,712) (25,240) (65,795) Decrease in amount due to related parties (1,225) (82,529) (1,220) (48,460) Dividends paid - (22,038) - (22,038) Net cash used in financing activities (40,857) (141,063) (33,643) (125,088) Net (decrease)/increase in cash and cash equivalents (16,093) 16,846 (75,688) (7,510) Cash and cash equivalents at beginning of year (203,841) (220,687) (161,839) (154,329) Cash and cash equivalents at end of year (219,934) (203,841) (237,527) (161,839) Cash and cash equivalents consist of: Cash and bank balances 35,240 21,709 2,296 10,505 Bank overdrafts (255,174) (225,550) (239,823) (172,344) (219,934) (203,841) (237,527) (161,839) The notes on pages 38 to 77 form part of these consolidated financial statements. The notes on pages 38 to 77 form part of these consolidated financial statements. 36 Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 37

21 1. Reporting entity Innodis Ltd (the ) is a public company domiciled in Mauritius. The address of the registered office is at Innodis Building, Caudan, Port Louis. The main activities of the and the are production, poultry farming, distribution and marketing of food and grocery products. 2. Basis of preparation (a) Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). (b) Basis of measurement The consolidated financial statements have been prepared on the historical cost basis except for the revaluation of land and buildings. (c) Functional and presentation currency These consolidated financial statements are presented in thousands of Mauritian Rupees (Rs 000), which is the s functional currency. (d) Use of estimates and judgements The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognised in the period in which the estimate is revised and in any future period affected. In particular, information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements, is described in the following notes: Note 13 intangible assets Note 23 employee benefits 3. Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by the entities. (a) Basis of consolidation (i) Subsidiaries Subsidiaries are entities controlled by the. Control exists when the has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are presently exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. A listing of the principal subsidiaries is shown in note 14. (ii) Associates and joint ventures (equity accounted investees) Associates are those entities in which the has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the holds between 20 and 50 per cent of the voting power of another entity. Joint ventures are those entities over whose activities the has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decision. Associates and joint ventures are accounted for using the equity method (equity accounted investees). The consolidated financial statements include the s share of the income and expenses of equity accounted investees after adjustments, to align the accounting policies with those of the, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the has an obligation or has made payments on behalf of the investee. A listing of the principal associates is shown in note 15. (iii) Transactions eliminated on consolidation Intra-group balances and any unrealised income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investments to the extent of the s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. 38 Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 39

22 3. Significant accounting policies (continued) (b) Foreign currency 3. Significant accounting policies (continued) (c) Financial instruments (continued) (i) Foreign currency transactions (ii) Investments at fair value through profit or loss Transactions in foreign currencies are translated to the respective functional currency of the entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss. (ii) Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Mauritian Rupee at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Mauritian Rupee at exchange rates at the dates of the transactions. Foreign currency differences are recognised directly in equity in the foreign currency translation reserve (FCTR). When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to profit or loss. (c) Financial instruments An instrument is classified at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the manages such investments and makes purchase and sales decisions based on their fair value. Upon initial recognition, attributable transaction costs are recognised in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss. (iii) Available-for-sale financial assets The s investments in equity securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, and foreign exchange gains and losses on available-for-sale monetary items are recognised directly in equity. When an investment is derecognised, the cumulative gain or loss in equity is transferred to profit or loss. (iv) Other Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses. (d) Property, plant and equipment Non-derivative financial instruments Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables. (i) Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. The cost of property, plant and equipment is determined by reference to its fair value. Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured as described below. (i) Held-to-maturity investments If the has the positive intent and ability to hold debt securities to maturity, then they are classified as held-to-maturity. Held-to-maturity investments are measured at amortised cost using the effective interest method, less any impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the cost of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. (ii) Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. 40 Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 41

23 3. Significant accounting policies (continued) (d) Property, plant and equipment (continued) (iii) Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives. The estimated useful lives for the current and comparative periods are as follows: Buildings - 2% - 2.5% Improvement to buildings - 20% Plant and machinery (excluding rice milling equipment) - 10% Furniture and equipment - 10% - 25% Motor vehicles - 15% - 25% Rice milling equipment is depreciated on the basis of machine usage. Land is not depreciated. Depreciation methods, useful lives and residual values are reassessed at the reporting date. (e) Intangible assets (i) Goodwill Goodwill arises on the acquisition of subsidiaries, associates and joint ventures. Goodwill represents the excess of the cost of an acquisition over the fair value of the s share of the net assets of the acquired subsidiary/associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of any entity include the carrying amount of goodwill relating to the entity sold. When the excess is negative goodwill, it is recognised immediately in profit or loss. When additional shares are acquired in a subsidiary after control was obtained, this is accounted for using the equity method (equity accounted investees). Goodwill is not remeasured. Trademarks and licences are shown at historical cost. Trademarks and licences have a definite useful life and are carried at cost less accumulated amortisation and impairment losses. 3. Significant accounting policies (continued) (e) Intangible assets (continued) (f) (ii) Subsequent measurement Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment. (iii) Other intangible assets Other intangible assets that are acquired by the, which have finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses. (iv) Subsequent expenditure Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss when incurred. (v) Amortisation Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The estimated useful lives for the current and comparative period are as follows: Trademarks and licences - 20 years Biological assets Biological assets are measured at fair value less point-of-sale costs, with any change therein recognised in profit or loss. Point-ofsale costs include all costs that would be necessary to sell the assets. (g) Leased assets Leases in terms of which the assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases and the leased assets are not recognised on the s balance sheet. 42 Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 43

24 3. Significant accounting policies (continued) 3. Significant accounting policies (continued) (h) Inventories (j) Impairment (continued) (i) (j) Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in, first-out principle, and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The cost of items transferred from biological assets is their fair value less point-of-sale costs at the date of transfer. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and that form an integral part of the s cash management, are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Impairment (i) Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in equity is transferred to profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in equity. (ii) Non-financial assets The carrying amounts of the s non-financial assets, other than biological assets, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at each reporting date. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash flows from continuing use that are largely dependent on the cash inflows of other assets or group of assets (the cash-generating unit ). The goodwill acquired in a business combination, for purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cashgenerating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (k) Employee benefits (i) Defined contribution plans Obligations for contributions to defined contribution pension plans are recognised as an expense in profit or loss when they are due. 44 Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 45

25 3. Significant accounting policies (continued) (k) Employee benefits (continued) (l) (ii) Termination benefits Termination benefits are recognised as an expense when the is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before the normal retirement date. Termination benefits for voluntary redundancies are recognised if the has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted and the number of acceptances can be estimated reliably. (iii) Short-term benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A provision is recognised for the amount expected to be paid if the has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (iv) State pension plan Contributions to the National Pension Fund are expensed in the income statement. Provisions A provision is recognised if, as a result of a past event, the has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. (m) Revenue (i) Goods sold Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts, volume rebate and value added tax. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably and there is no continuing management involvement with the goods. (ii) Rental income 3. Significant accounting policies (continued) (n) Lease payments Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustments are confirmed. (o) Finance income and expenses Finance income comprises interest income on funds invested, dividend income, gains on the disposal of available-for-sale financial assets, changes in the fair value of financial assets at fair value through profit or loss, foreign currency gains and gains on hedging instruments that are recognised in profit or loss. Interest income is recognised as it accrues, using the effective interest method. Dividend income is recognised on the date that the s right to receive payment is established, which in the case of quoted securities is the ex-dividend date. Finance expenses comprise interest expense on borrowings, foreign currency losses, changes in the fair value of financial assets at fair value through profit or loss and impairment losses recognised on financial assets. All borrowing costs are recognised in profit or loss using the effective interest method. (p) Income tax expense Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date and any adjustments to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit and differences relating to investments in subsidiaries and jointly controlled entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. 46 Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 47

26 3. Significant accounting policies (continued) 3. Significant accounting policies (continued) (p) Income tax expense (continued) A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised. (q) Earnings per share (r) The presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the by the weighted average number of ordinary shares outstanding during the period. Related parties For the purposes of these financial statements, parties are considered to be related to the if they have the ability, directly or indirectly, to control the or exercise significant influence over the in making financial and operating decision, or vice versa, or where the is subject to common control or common significant influence. (s) Segment reporting (t) New standards and interpretations not yet adopted (continued) Revised IAS 23 Borrowing Costs removes the option to expense borrowing costs and requires that an entity capitalises borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The revised IAS 23 will become mandatory for the s 2009 financial statements and will constitute a change in accounting policy for the. In accordance with the transitional provisions, the will apply the revised IAS 23 to qualifying assets for which capitalisation of borrowing costs commences on or after the effective date. IFRIC 11 IFRS 2 and Treasury Share Transactions requires a share-based payment arrangement in which an entity receives goods or services as consideration for its own equity instruments to be accounted for as an equity-settled share-based payment transaction, regardless of how the equity instruments are obtained. IFRIC 11 will become mandatory for the s 2009 financial statements, with retrospective application required. It is not expected to have any impact on the consolidated financial statements. IFRIC 12 Service Concession Arrangements provides guidance on certain recognition and measurement issues that arise in accounting for public-to-private service concession arrangements. IFRIC 12, which becomes mandatory for the s 2008 financial statements, is not expected to have any effect on the consolidated financial statements. IFRIC 13 Customer Loyalty Programmes addresses the accounting by entities that operate, or otherwise participate in, customer loyalty programmes for their customers. It relates to customer loyalty programmes under which the customer can redeem credits for awards such as free or discounted goods or services. IFRIC 13, which becomes mandatory for the s 2009 financial statements, is not expected to have any impact on the consolidated financial statements. (t) A segment is a distinguishable component of the that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The s primary format for segment reporting is based on business segments. New standards and interpretations not yet adopted A number of new standards, amendments to standards and interpretations are not yet effective, and have not been applied in preparing these consolidated financial statements: IFRS 8 Operating Segments introduces the management approach to segment reporting. IFRS 8, which becomes mandatory for the s 2009 financial statements, will require the disclosure of segment information based on the internal reports regularly reviewed by the s Chief Operating Decision Maker in order to assess each segment s performance and to allocate resources to them. Currently, the presents segment information in respect of its business segments (see note 6). IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction clarifies when refunds or reductions in future contributions in relation to defined benefit assets should be regarded as available and provides guidance on the impact of minimum funding requirements (MFR) on such assets. It also addresses when a MFR might give rise to a liability. IFRIC 14 will become mandatory for the s 2008 financial statements, with retrospective application required. The has not yet determined the potential effect of the interpretation. 48 Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 49

27 4. Determination of fair values A number of the s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. (a) Property, plant and equipment The fair value of property, plant and equipment recognised as a result of a business combination is based on market values. The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The market value of items of freehold land, buildings, improvement to buildings, plant, equipment, fixtures and fittings is based on the quoted market prices for similar items. (b) Intangible assets The fair value of trademarks acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the trademark being owned. The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the assets. (c) Biological assets The fair value of livestock held for sale is based on the market price of livestock of similar age, breed and genetic make-up. (d) Inventory The fair value of inventory acquired in a business combination is determined based on its estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventory. (e) Investments in equity and debt securities 5. Financial risk management Overview The has exposure to the following risks from its use of financial instruments: credit risk liquidity risk market risk. This note presents information about the s exposure to each of the above risks, the s objectives, policies and processes for measuring and managing risk, and the s management of capital. Quantitative disclosures have also been included. The Audit Committee oversees how management monitors compliance with the s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. (i) Credit risk Credit risk is managed on a basis and arises principally from the s aggregate balance of amounts receivable. Trade and other receivables Trade receivables comprise a large, widespread customer base. These risks are controlled by the application of credit limits and credit controlling procedures. The does not require collateral in respect of trade and other receivables. The establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a known loss component based on historical data for similar financial assets. The fair value of financial assets at fair value through profit or loss, held-to-maturity investments and available-for-sale financial assets is determined by reference to their quoted bid price at the reporting date. The fair value of held-to-maturity investments is determined for disclosure purposes only. (f) Trade and other receivables The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. 50 Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 51

28 5. Financial risk management (continued) Illustrated in the tables below is a detailed analysis of the s exposure to credit risk. The ageing of trade receivables at the reporting date was: Gross Impairment Gross Impairment Up to 90 days 136, ,340 - Over 90 days 98,961 30,860 86,709 23, ,608 30, ,049 23,851 The movement in the allowance for impairment in respect of trade receivables during the year was as follows: Impairment impairment Rs 000 rs 000 Balance at 1 July 23,851 16,130 Impairment loss recognised 7,009 7,721 Balance at 30 June 30,860 23, Financial risk management (continued) (ii) Liquidity risk Liquidity risk is the risk that the will not be able to meet its financial obligations as they fall due. The s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the s reputation. The s liquidity risk consists mainly of the amount borrowed from time to time. The details of borrowing are disclosed in note 22. Bank facilities are reviewed on an annual basis. Current borrowings are well below the confirmed facilities available to the : Rs 235 million overdraft facility that is secured. Interest would be payable at the rate of PLR (prime lending rate) plus basis points. Rs 55 million that can be drawn down to meet short-term financing needs. The facility has a 90-day maturity that renews automatically at the option of the. Interest would be payable at a rate of PLR plus basis points. In terms of contractual maturity of financial assets and liabilities, they are all expected to be realised within one year, with the exception of investments which are long-term and borrowings which are to be matured as shown in note 22. (iii) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. (iv) Currency risk The is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of entities, primarily the Euro (EUR), but also U.S. Dollars (USD), South African Rand (ZAR) and Pound Sterling (GBP). The currencies in which these transactions are primarily denominated are EUR, USD, ZAR and GBP. The has no significant concentrations of credit risk except for as mentioned in note 20. The s policies ensure that the vetting criteria including internal ratings take into consideration economic realities. These ratings do not preclude the monitoring of outstanding debts continuously and relevant diminution in value, recognised as and when they become apparent; such that maximum exposure to credit risk is represented by the book value of the receivables carried in the balance sheet. 52 Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 53

29 5. Financial risk management (continued) The currency profile of the s financial assets and liabilities is summarised as follows: Financial Financial Financial Financial assets liabilities assets liabilities Australian Dollar Euro 14,550 11,970-4,248 Mauritian Rupee 297, , ,872 1,868,276 Pound Sterling - 1, South African Rand 1,627 15, ,371 United States Dollar - 33, ,817 Mozambican Meticais 18,146 74,097 7,510 60, , , ,154 1,952, Financial risk management (continued) (v) Interest rate risk The s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the to cash flow interest rate risk. Borrowings issued at fixed rates expose the to fair value interest rate risk. The interest rate profile of the financial assets and financial liabilities of the as at 30 June 2008 was: Financial liabilities Rs 000 Interest rate Rs 000 Interest rate Secured bank loan (Rs) 157,491 11% % 166,896 11% % Secured bank loan (Mtn) 22,718 22% - 25% 29,828 22% - 25% Unsecured bank loan (Rs) 30,397 11% % 48,634 11% % Bank overdraft 255,174 11% % 225,550 11% % Finance lease 84,530 11% - 13% 99,027 11% - 13% Interest rate sensitivity analysis The following exchange rates were applied during the year: Average rate Spot rate Euro Pound Sterling South African Rand United States Dollar Mozambican Meticais The sensitivity analysis has been determined based on the exposure to interest rate for the financial liabilities as at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the balance sheet date was outstanding for the whole year. If interest rate had been 1% higher and all other variables are held constant, the s profit would have decreased by Rs 5,503,000. Capital Risk Management Management reviews the capital structure on a regular basis. As part of its review, the management considers the cost of capital and the optimum way of financing the business in order to maximise return for stakeholders. The business is financed by a combination of Equity and Debt, which includes bank borrowings. A change of 1% in foreign exchange rate will result in a movement of about Rs 100,000 on profit. 54 Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 55

30 5. Financial risk management (continued) Gearing ratio The gearing ratio for the at the year-end was as follows: Jun-08 Jun-07 Rs 000 rs 000 Total borrowings 550, ,935 Less: cash and cash equivalents (35,240) (21,709) 6. Segment reporting (continued) Business segments The comprises the following main business segments: Poultry and frozen foods: poultry farming, and distribution of chicken and other frozen food items. Consumer goods: manufacturing, marketing and distribution of food and grocery products. Others: manufacture and distribution of ice cream, yoghurt and manufacture of sanitary pads and hygiene products. Segment information Net debt 515, ,226 Total Equity 1,117,764 1,012,785 Total Capital 1,632,832 1,561,011 Year ended 30 June 2008 Poultry and Consumer frozen foods goods Others Total Rs 000 Rs 000 Rs 000 Rs 000 Gearing ratio 32% 35% 6. Segment reporting Segment information is presented in respect of the s business segments. The primary format, business segments, is based on the s management and internal reporting structure. Inter-segment pricing is determined on an arm s length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly investments (other than investment property) and related revenue, loans and borrowings and related expenses, corporate assets and head office expenses, and income tax assets and liabilities. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill. Turnover 1,589, , ,839 2,744,705 Operating profits 100,237 53,234 1, ,296 Net finance costs (49,425) Share of profit of equity accounted investees 17,183 Profit before income tax 123,054 Income tax expense (28,631) Profit from continuing operations 94,423 Minority interest 15,862 Net profit for the year 110,285 Segment assets 1,137, , ,126 1,965,026 Associates 68,795 Total assets 2,033,821 Segment liabilities 645, ,915 55, ,615 Unallocated liabilities 14,443 Total liabilities 916,058 Other segment items Capital expenditure - Purchase of property, plant and equipment 28,512 7,887 39,286 75,685 Depreciation 46,737 12,634 25,234 84,605 Impairment losses - Intangible assets 2,303 6,870 4,365 13,538 - Goodwill on acquisition of associates Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 57

31 6. Segment information (continued) 7. Profit from operating activities Year ended 30 June 2007 Poultry and Consumer frozen foods goods Others Total Rs 000 Rs 000 Rs 000 Rs 000 The following items have been (credited)/charged in arriving at operating profit: Turnover 1,313, , ,638 2,387,506 Operating profits 37,007 16,792 (3,929) 49,870 Net finance costs (47,786) Share of profit of equity accounted investees 8,835 Loss before income tax 10,919 Income tax expense (12,580) Loss from continuing operations (1,661) Minority interest 23,794 Net profit for the year 22,133 Segment assets 1,148, , ,913 1,895,018 Associates 57,920 Total assets 1,952,938 Segment liabilities 614, ,947 70, ,887 Unallocated liabilities 19,266 Total liabilities 940,153 Other segment items Capital expenditure - Purchase of property, plant and equipment 14,191 23,083 19,091 56,365 Depreciation 53,537 14,756 21,052 89,345 Impairment losses - Intangible assets 4, ,450 - Goodwill on acquisition of associates Rental income (1,945) (1,221) (305) (3,222) (Profit)/loss on disposal of property, plant and equipment (115) 9,999 (115) 9,039 Depreciation on property, plant and equipment - Owned assets 52,659 65,812 26,751 41,755 - Assets under finance leases 31,946 23,533 32,348 15,763 Amortisation of premiums on leasehold land Hire of property, plant and equipment 33,293 18,268 28,493 18,268 Impairment losses on intangible assets - Brand, licences, goodwill, etc. 13, , Goodwill on purchase of associate Impairment of investment in subsidiaries ,000 - Cost of inventories expensed: - Raw material 860, , , ,291 - Finished goods 1,335,521 1,011, , ,910 Staff costs (note 8) 217, , , ,905 Repairs and maintenance 13,259 8,260 11,793 7, Staff costs Wages and salaries 200, , , ,900 Social security costs 3,649 7,179 3,085 5,655 Defined contribution plans 4,716 4,654 3,850 4,287 Defined benefits contribution 4,876 4,160 4,860 4,051 Other benefits 3,368 2,088 3,126 2, , , , ,905 Number of persons employed at year end: The s turnover and contribution to results are derived substantially from operations in Mauritius. There has been no significant change in the principal activities of the since the previous financial year. Number Number Number number Full time Part time ,139 1, Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 59

32 9. Finance income and expense Interest income (8,744) (3,408) (6,344) (48) Net foreign exchange transaction gains (9,392) (14,627) (18,889) (14,369) Interest expense: - Bank overdrafts 26,895 32,078 21,348 18,253 - Bank loans 24,382 26,215 23,077 25,801 - Finance leases 6,416 7,147 4,691 4,678 - Loan owed to related parties 6,148-1,022 (976) - Other interest 3, , Income tax expense 49,425 47,786 28,118 33,396 Current tax charge Income tax based on adjusted profits at statutory rates 15,266 4,171 15,156 4,172 Underprovision in previous year 2,769 2,908 2,769 2,908 Deferred taxation 8,123 4,055 2, Share of tax of associates 2,473 1, ,631 12,580 20,440 7,498 Reconciliation of effective taxation Profit before taxation 123,054 10, ,696 51,087 Income tax at statutory rates 18,458 1,637 17,954 7,663 Non-deductible expenses 125 3, Tax incentives not recognised in income statement - (56) - - Underprovision in previous year 2,769 2,908 2,769 2,908 Other adjustments 4,806 3, (3,104) Share of tax of associates 2,473 1, Earnings per share 28,631 12,580 20,440 7,498 The calculation of earnings per share is based on the s profit after taxation and minority interests for the year of Rs 110,285,000 (2007 Rs 22,133,000) and on 36,730,266 ordinary shares in issue ( ,730,266). 12. Property, plant and equipment Furniture Freehold Improvement Plant and and Motor Work in land Buildings to buildings machinery equipment vehicles progress Total Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Cost or deemed cost At 1 July , ,626 13, , , ,317 3,872 1,704,171 Additions 2,211 3, ,738 44,196 14, ,685 Disposals (540) (16) (4,293) (477) (5,326) Transfers , (2,333) - At 30 June , ,019 14, , , ,882 1,103 1,774,530 Depreciation At 1 July ,865 8, , ,096 76, ,504 Depreciation for the year , ,749 21,390 12,273-84,605 Disposal (351) (16) (3,979) - (4,346) At 30 June ,739 60,762 8, , ,470 84, ,763 Net book value At 30 June , ,257 5, , ,470 39,053 1,103 1,189,767 At 30 June , ,761 5, , ,664 36,782 3,872 1,199, Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 61

33 12. Property, plant and equipment (continued) Furniture Freehold Plant and and Motor Work in land Buildings machinery equipment vehicles progress Total Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Cost or deemed cost At 1 July , , , ,697 94,949 1,101 1,090,661 Additions 2,211 1,229 10,024 37,224 14,250-64,938 Disposals (4,292) (478) (4,770) At 30 June , , , , , ,150,829 Depreciation At 1 July , ,548 87,467 66, ,126 Depreciation for the year - 8,485 22,677 17,962 9,975-59,099 Disposal (3,979) - (3,979) At 30 June , , ,429 72, ,246 Net book value At 30 June , , ,229 58,492 32, ,583 At 30 June , , ,882 39,230 28,043 1, , Property, plant and equipment (continued) The freehold land and buildings of the, excluding Sociéte Centre Point, were revalued on 30 June 2003 by Messrs Alan Tinkler, Ramlackhan and Co., Chartered Valuation Surveyors, on an open market value basis. The directors consider the current value to be at least equal to its carrying amount. The carrying amounts of property, plant and equipment that would have been included in the financial statements had the assets been carried at cost are as follows: Rs 000 Rs 000 At 30 June , ,463 At 30 June , ,438 Included in the s property, plant and equipment, are motor vehicles, and plant and machinery held under finance leases. Details are as follows: Leased motor vehicles Net book value 22,892 19,188 21,952 17,208 Depreciation charge 10,767 8,727 10,486 7,774 Leased plant and machinery Net book value 90, ,548 58,429 55,493 Depreciation charge 21,179 14,806 20,705 7, Intangible assets Cost At 1 July 2007 and 30 June , , , ,743 Impairment losses At 1 July 56,892 56,270 54,965 54,965 Charge for the year 13, ,916 - At 30 June 70,430 56,892 67,881 54,965 Net book value At 30 June 47,748 61,286 37,862 50, Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 63

34 14. Investments in subsidiaries Cost Rs 000 rs 000 At 1 July 176, ,133 Additions (see below note 1) 78,020 - Impairment (see below note 2) (30,000) - At 30 June 224, ,133 Notes 1. During the year, a capital restructuring of HWFRL Investments Ltd (HWFRL) was undertaken and advances to the tune of Rs 78 million were converted into share capital. On 01 December 2007, the s equity holding as a result of the conversion increased to 81% ( %). 2. Following the impairment review of the s investment in HWFRL, a provision of Rs 30 million was recognised at 30 June In estimating the carrying value of the investment, post restructuring, the future discounted cash flow (DCF) model has been used. A number of assumptions and estimates are involved in the application of a DCF model, which includes growth rates, volumes, market prices of chicken in Mozambique and future investment plans. These assumptions are subject annually to review by management and by the Board of Directors. The cash flow forecast has been adjusted by an appropriate discount rate. Details of the s subsidiaries Country of Description Name of subsidiaries incorporation of shares held % holding Principal activity Hygiene Products Ltd mauritius ordinary 100 Manufacture and sell sanitary pads and hygiene products Micali Ltd mauritius ordinary 100 Provide warehousing facilities Pailles Properties Ltd mauritius ordinary 100 Property investment Société Enatou mauritius Investment holding Supercash Ltd mauritius ordinary 100 Wholesale Peninsula Rice Milling Co. Ltd Mauritius ordinary 100 Rice milling Challenge Hypermarkets Ltd mauritius ordinary 50.1 Property development Loughton Investments Ltd mauritius ordinary 100 Property development HWFRL Investments Ltd mauritius ordinary 81 Investment holding Mauritius Farms Limited mauritius ordinary 100 Investment holding Essentia Ltd mauritius ordinary 100 Investment holding Innodis Export Ltd mauritius ordinary 100 Investment holding 14. Investments in subsidiaries (continued) The indirectly holds investments in the following subsidiaries: Country of % effective Name of subsidiaries incorporation holding Principal activity Société Narien mauritius 100 Property holding Redbridge Investments Ltd mauritius 100 Property development Société Centre Point mauritius 50.1 Property development Moçambique Farms, Limitada mozambique 61.6 Broiler growing and processing Poulet Arc-en-Ciel Ltée mauritius 56.4 Poultry farming and sales of chicken 15. Investments in equity accounted investees Rs 000 rs 000 At 1 July 57,921 54,366 Share of profit before tax of associates 17,183 8,835 Share of tax of associates (2,474) (1,444) Provision for impairment of goodwill on acquisition of associates (319) (319) Dividend income (3,517) (3,517) At 30 June 68,794 57,921 Cost At 1 July and 30 June 32,315 32,315 Provision for impairment At 1 July and 30 June 3,300 3,300 Net book value At 30 June 29,015 29,015 Details of the s associates Country of Description of Name of associates incorporation shares held % holding Promotion et Diversification Publicitaire Limitée mauritius ordinary 50 Meaders Feeds Ltd mauritius ordinary 33 Salière de l Ouest Limitée mauritius ordinary Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 65

35 15. Investments in equity accounted investees (continued) The indirectly holds investments in the following associate: Country of Description of Name of associate incorporation shares held % holding Ariva Ltée mauritius ordinary Available-for-sale investments Unquoted and Rs 000 Fair value: At 1 July 2007 and 30 June , Non-current receivables Premiums on acquisition of leasehold land and Rs 000 Cost At 1 July 2007 and 30 June ,602 Amortisation At 1 July ,737 Charge for the year 533 At 30 June ,270 Net book amount At 30 June ,332 At 30 June ,865 Premiums paid on acquisition of leasehold land are amortised over the lease terms ranging between 45 and 60 years. Details of the s unquoted investments Country of Description of Value of Name of Companies incorporation shares held investments Rs 000 Progos mauritius ordinary 50 Ecocentre Ltée mauritius ordinary 30 Ecocentre Ltée mauritius Preference 90 Medical and Surgical Centre Limited mauritius ordinary 1,000 SIT Land Holdings Ltd Mauritius ordinary Loans to subsidiaries The loans to subsidiaries are unsecured, bear interest and are repayable after more than one year. 1, Inventories Raw materials 97, ,271 72, ,974 Finished goods 280, , , ,270 Work in progress 9,983-9,983 - Goods in transit , ,998 Consumables Spare parts 13,549 17,176 13,016 17,176 All the above are stated at cost. 20. Receivables and prepayments 402, , , ,274 Trade receivables - gross 235, , , ,701 Less: provision for impairment (30,860) (23,851) (7,009) (23,852) Trade receivables - net 204, , , ,849 Prepayments Amounts owed by subsidiaries , ,355 Amounts owed by associates 3, , Amounts owed by related parties Other receivables 59,426 48,634 58,981 59, , , , , Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 67

36 21. Shareholders equity Share capital Authorised Number Number Rs 000 rs Ordinary shares of Rs 10 each 50,000,000 50,000, , ,000 Issued and fully paid - Ordinary shares of Rs 10 each 36,730,266 36,730, , ,303 Share premium A share premium arises when the value of the consideration received for the issue of shares exceeds the nominal value of the shares issued. The share premium account is regarded as permanent capital of the and only certain expenses of a capital nature may be set-off against it, namely: the preliminary expenses of the ; or the expenses of, or the commission paid on, the creation or issue of any shares. 22. Borrowings Current Secured bank loans 30,097 56,462 25,423 51,019 Lease liabilities 25,166 36,724 23,630 27,529 Loans owed to related parties - 1,226-1,221 55,263 94,412 49,053 79,769 Non-current Secured bank loans 180, , , ,135 Lease liabilities 59,363 62,303 51,940 55, , , , ,359 Total borrowings 295, , , ,128 The share premium account may also be applied: in paying up shares of the to be issued to shareholders of the as fully paid shares; to reflect the decrease in the share premium account arising from shares acquired or redeemed. Revaluation reserve The revaluation reserve arises from the revaluation of the s land and buildings. This reserve is reduced by the transfers to retained earnings: on an annual basis of an amount equivalent to the depreciation on the surplus on revaluation, net of the deferred tax impact; and on disposal of the revalued property, plant and equipment, of the remaining revaluation surplus on the property, plant and equipment disposed of, net of the deferred tax impact. The revaluation reserve may be applied in paying up shares of the and its subsidiaries to be issued to their shareholders as fully paid shares. Foreign exchange translation reserve The foreign exchange translation reserve consists of the s share of the exchange difference arising on the consolidation of the subsidiary whose financial statements are presented in Mozambican Meticais. Maturity of non-current borrowings (excluding finance lease liabilities) Between 1 and 2 years 116,043 57, ,096 51,704 Between 2 and 5 years 64, ,230 14, ,431 After 5 years , , , ,135 Bank loans Repayable by instalments: - Within 1 year 30,097 56,462 25,423 51,019 - Between 1 and 2 years 116,043 57, ,096 51,704 - Between 2 and 5 years 64, ,230 14, ,431 - After 5 years , , , , Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 69

37 22. Borrowings (continued) The bank loans are secured by floating charges on the assets of the and its subsidiaries and the rates of interest vary between 9.25% and 13.50% ( between 9.25% and 10.00%) per annum. The loans owed to related parties are unsecured, carry interest at prime lending rate less 1% and are repayable on demand. Bank overdrafts The bank overdrafts and other banking facilities are secured by floating charges of Rs 528,500,000 (2007 Rs 528,500,000) on all the assets of the and its subsidiaries. Finance lease liabilities minimum lease payments Future Present value Future Present value minimum lease of minimum minimum lease of minimum payments Interest lease payments payments Interest lease payments Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Less than one year 39,653 8,041 31,612 45,523 8,799 36,724 Between one and five years 29,176 5,495 23,681 33,241 5,461 27,780 More than five years 34,018 4,782 29,236 40,812 6,289 34, Employee benefits Amounts recognised in the balance sheet at year end Present value of funded obligations 19,088 19,591 17,562 18,181 Fair value of plan assets (7,894) (9,839) (5,294) (7,646) Present value of net obligations 11,194 9,752 12,268 10,535 Present value of unfunded obligations 9,103 22,121 9,103 22,121 Unrecognised actuarial gains 11,867 8,350 9,347 6,194 Liability recognised in balance sheet at year end 32,164 40,223 30,718 38,850 Amounts recognised in the income statement Current service costs 910 1, Interest costs 3,896 3,500 3,624 3,377 Expected return on plan assets (889) (850) (677) (695) Actuarial gains/(losses) recognised (11,976) 356 (11,826) 386 Total included in staff costs (8,059) 4,160 (8,132) 4, ,847 18,318 84, ,576 20,549 99,027 Future Present value Future Present value minimum lease of minimum minimum lease of minimum payments Interest lease payments payments Interest lease payments Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Movement in liability recognised in the balance sheet At 1 July 40,223 36,063 38,850 34,799 Acquisition of subsidiary (Income)/expense recognised in the income statement (8,059) 4,160 (8,132) 4,051 At 30 June 32,164 40,223 30,718 38,850 Less than one year 31,069 7,439 23,630 35,022 7,493 27,529 Between one and five years 28,204 5,439 22,765 26,057 4,980 21,078 More than five years 33,749 4,574 29,175 40,425 6,279 34,146 93,022 17,452 75, ,504 18,752 82,753 % % % % Principal actuarial assumptions at end of year Discount rate Expected rate of return on plan assets Future salary increases Future NPS ceiling increases Future pension increases Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 71

38 24. Deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following: Assets Liabilities Net Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Tax losses carried forward 13,301 17, ,301 17,980 Accelerated capital allowances - 1,227 (23,720) (20,401) (23,720) (19,174) Surplus on revaluation of building - - (24,401) (27,367) (24,401) (27,367) Over provision of deferred tax asset Retirement and other obligations - 5,787 (1,458) - (1,458) 5,787 Provision for impairment of investment 1,395 1, ,395 1,395 Provision for impairment of receivables Under provision of deferred tax liability 5, , ,256 27,532 (49,579) (47,768) (28,323) (20,236) 24. Deferred tax assets and liabilities (continued) Movement in temporary differences during the year recognised Recognised Balance at in profit Recognised Balance at in profit Recognised Balance at 1 July 2006 and loss in equity 30 June 2007 and loss in equity 30 June 2008 rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Property, plant and equipment (52,783) 5,139 1,103 (46,541) (4,546) 2,966 (48,121) Employee benefits 212 5,575-5,787 (7,245) - (1,458) Provisions 2,580 (42) - 2,538 5,417-7,955 Tax losses carried forward 32,139 (14,159) - 17,980 (4,679) - 13,301 (17,852) (3,487) 1,103 (20,236) (11,053) 2,966 (28,323) recognised Recognised Balance at in profit Recognised Balance at in profit Recognised Balance at 1 July 2006 and loss in equity 30 June 2007 and loss in equity 30 June 2008 rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Assets Liabilities Net Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Property, plant and equipment (43,479) 177 1,103 (42,199) (3,756) 2,966 (42,989) Employee benefits - 5,787-5,787 (7,005) - (1,218) Provisions 2, ,538 5,281-7,819 Tax losses carried forward 7,141 (7,141) (33,963) (1,014) 1,103 (33,874) (5,480) 2,966 (36,388) Tax losses carried forward Accelerated capital allowances (18,588) (15,340) (18,588) (14,832) Surplus on revaluation of building - - (24,401) (27,367) (24,401) (27,367) Retirement and other obligations - 5,787 (1,218) - (1,218) 5,787 Provision for impairment of investment 1,395 1, ,395 1,395 Provision for impairment of receivables Under provision of deferred tax liability 5, , ,819 8,833 (44,207) (42,707) (36,388) (33,874) 25. Trade and other payables Trade payables 90, ,343 32,427 40,489 Bills payable 40,194 67,225 45,548 61,241 Accruals and other payables 127,628 83,031 98,941 79,873 Amounts owed to associates 23,057 35,867 23,057 35,867 Amounts owed to subsidiaries - - 4,726 24, , , , ,259 Amounts owed to associates and related parties are unsecured, interest free and have no fixed repayment terms. Amounts owed to subsidiaries are unsecured, interest free and repayable on demand. 72 Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 73

39 26. Dividends and Rs 000 rs 000 Paid nil per ordinary share (2007 Rs 0.60) - 22, Related party transactions (continued) Rs 000 rs Related party transactions (iii) Outstanding balances resulting from the sales and purchases of goods and services The following transactions were carried out by the with related parties: (i) Sales of goods and services Rs 000 rs 000 (a) Receivables from associates Meaders Feeds Ltd Altima Ltd 4 - Promotion et Diversification Publicitaire Limitée - 2, ,111 (a) Sales of feed ingredients Meaders Feeds Ltd (b) Service charges Altima Ltd 556 1,035 Salière de L Ouest Limitée 3 - Promotion et Diversification Publicitaire Limitée Procontact Ltd (ii) Purchases of goods and services (a) Purchases of goods Salière de L Ouest Limitée 18,606 17,638 (b) Payment for services received Ariva Ltée 983 1,403 Altima Ltd 7,139 5,660 (b) Receivables from related parties Happy World Services Ltd Altima Ltd (c) Payable to associates Meaders Feeds Ltd 22,395 35,855 Ariva Ltée Promotion et Diversification Publicitaire Limitée Salière de L Ouest Limitée 1,049 3,161 Related party transactions are carried out on normal commercial terms. 23,600 39,127 8,122 7,063 (c) Purchases of feed ingredients Meaders Feeds Ltd 328, ,303 (d) Advertising expenses Promotion et Diversification Publicitaire Limitée 533 1, Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 75

40 28. Operating lease commitments 31. Contingent liabilities The future aggregate minimum lease payments under non-cancellable operating leases are as follows: At the balance sheet date, the had contingent liabilities in respect of bank guarantees arising in the ordinary course of business from which it is anticipated that no material liabilities will arise. The has given bank guarantees amounting to Rs 527,300 ( Rs 430,400) in favour of third parties. Not later than 1 year 11,848 2,408 8, Later than 1 year and not later than 2 years 24,404 2,508 17, Later than 2 years and not later than 5 years 25,567 7,873 18, Later than 5 years 3,250 5,559-3,238 65,069 18,348 45,356 5, Major shareholders The major shareholders of the and their holdings are as follows: % % Foods Div Ltd Altima Ltd Happy World Limited Jaccar e Bourbon Old Mutual Assurance Society Indian Ocean Regional Fund Ltd Capital commitments Capital expenditure authorised at the balance sheet date but not yet contracted for is as follows: 32. Three year summary Rs 000 Rs 000 rs 000 Issued share capital 367, , ,303 Share premium 5,308 5,308 5,308 Revaluation reserve 227, , ,527 Foreign exchange translation reserve 6,324 (842) 1,425 Retained earnings 399, , ,956 Profit/(loss) before income tax 123,054 10,919 (7,551) Profit after tax and minority interest 110,285 22,133 4,398 Dividends proposed and paid - 22,038 - Turnover 2,744,705 2,387,507 2,012,805 Non-current assets 1,327,850 1,340,920 1,441,957 Current assets 705, , ,877 Capital and reserves 1,005, , ,519 Minority interest 116, , ,998 Non-current liabilities 300, , ,689 Current liabilities 610, , , Rs 000 Rs 000 rs 000 Issued share capital 367, , ,303 Share premium 5,308 5,308 5,308 Revaluation reserve 227, , ,732 Retained earnings 403, , ,340 Profit before income tax 91,578 51,087 14,096 Profit after income tax 71,138 43,589 12,990 Dividends proposed and paid - 22,038 - Turnover 2,149,838 1,854,255 1,581,265 Non-current assets 1,024, ,507 1,087,982 Current assets 769, , ,577 Capital and reserves 1,004, , ,683 Non-current liabilities 276, , ,526 Current liabilities 512, , ,350 Property, plant and equipment 123,188 84,000 99,188 75,000 Number of ordinary shares issued 36,730,266 36,730,266 36,730, Consolidated Financial Statements and Notes Consolidated Financial Statements and Notes 77

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