LFL ANNUAL REPORT 2016 ANNUAL REPORT

Transcription

1 2016 ANNUAL REPORT 1

2 CONTENTS 03 CHAIRMAN S REVIEW 05 CORPORATE IDENTITY 06 AGRO BULK 08 CORPORATE GOVERNANCE REPORT 21 STATEMENT OF DIRECTORS RESPONSIBILITIES 24 LFL PAILLES 26 STATUTORY DISCLOSURES 28 LFL RICHE-TERRE 30 INDEPENDENT AUDITORS REPORT 32 LFL MADAGASCAR 36 STATEMENTS OF FINANCIAL POSITION 37 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 38 STATEMENTS OF CHANGES IN EQUITY 40 STATEMENT OF CASH FLOWS 41 NOTES TO THE FINANCIAL STATEMENTS 22 SECRETARY S CERTIFICATE 23 STATEMENT OF COMPLIANCE 34 FINANCIAL HIGHLIGHTS 35 STATEMENT OF VALUE ADDED 94 NOTICE OF MEETING 95 PROXY FORM 2 1

3 CHAIRMAN S REVIEW YEAR ENDED JUNE 30, 2016 I am pleased to submit, on behalf of the board of directors, the audited financial statements of the company (LFL) and of the group together with an overview of the Group s main activities for the year ended June 30, 2016 OVERVIEW The group performed well during the present year, various factors contributing to the good results. LFL company achieved excellent sales volumes, both on the local and export markets. Agro Bulk, secured a number of one-off contracts from third parties and LFL Madagascar achieved record sales in an expanding breeding market. These results were achieved on the back of enhanced marketing actions, low commodity prices and production efficiencies of our facilities. Moreover, improved performances posted by our associate companies contributed to these commendable results. The group achieved a turnover of Rs 2,310M and a profit before tax of Rs 172.5M. LIVESTOCK FEED LIMITED Sales The reasonable prices of feed and a more dynamic marketing approach by our sales team have encouraged farmers to invest and develop their production. Consequently, sales have been increasing steadily in Mauritius and export volumes were above expectations with improved sales to Seychelles and Rodrigues. Production Our industrial investment plan which caters for an increase in our production capacity and modernization of our facility at Pailles, is progressing as expected. The second phase is presently underway, and at the end of this calendar year our factory will have a production capacity of 130,000 MT annually. The upgrading of our facilities to a state of the art factory driven by automated digital software, requires a total investment of some Rs 90M. To our customers this will effectively translate into improved feed quality, reduced delivery time and an increased product range. CSR The company has contributed Rs 1.605M in CSR this year, most of which was channelled through the Fonds de Solidarité of the group. LFL took the lead in the realization of the upgrading of the roundabout at Pailles entrance. This project which was cosponsored by about 20 companies of the region and the Municipality of Port Louis was completed in June The feed sales in Mauritius remain largely dominated by the poultry sector. Although the country is self-sufficient in poultry supplies, it has been observed that this sector is still growing, with poultry meat substituting other red meats and fish products due to its quality and price. Attempts by farmers in the pig and milk sectors have remained fruitless, owing to the absence of a clear master plan by local authorities for reducing our dependency on imports. Feed sales to the aquaculture sector have been rather poor; this division has been reorganized and now operates in line with demand. LFL has also been actively involved in a back yard farming project of egg production. To day more than 50 families in hardship conditions have been accompanied to develop their own poultry production under this scheme. AGRO BULK LTD The investment made last year in new equipments and improved storage facilities have brought positive results. The company achieved better unloading rates and secured additional volumes. Agro Bulk Ltd completed the year under review with 150,000 tons of bulk commodities unloaded, a turnover of Rs 78M and a profit before tax of Rs 13.9M. 2 3

4 LFL MADAGASCAR SA AND ENTREPRISE CEREALIERE DE MADAGASCAR SA 2016 was a good year for LFL Madagascar. The company produced some 46,000 MT of feed, a new milestone for the company, quite close to its actual capacity. With the growth of the breeding sector in Madagascar and increased demand for feed, the current production facilities are being reassessed. A plan to increase production capacities is being finalised. Entreprise Céréalière de Madagascar (ECM), is setting up bulk grain storage units in the country, an important step in the development of a sustainable maize production. Farmers have now a centralised location to converge to for the drying and selling of their production. Moreover, ECM which was specifically established to encourage maize production in Madagascar continues to support the value chain by training farmers in production techniques. PROSPECTS At the time of writing, the Foot & Mouth disease has been declared in Rodrigues and Vallée des Prêtres in Mauritius. This epizooty has already affected quite a number of farms in the ruminant sector. Although ruminant feed represents only a small portion of our activity, this disease if not contained, may affect our sales volumes this year. Management is monitoring closely the situation and has enhanced its control procedures. CHAIRMAN S REVIEW YEAR ENDED JUNE 30, 2016 (cont d) On the other hand, the prospect and current commodities prices should enable LFL to maintain its growth this coming year, enabling the company to continue its industrialisation plan. ACKNOWLEDGEMENT I wish to thank my fellow directors for their continuous support and guidance during the year. I would also like to pay tribute to Mr. Adolphe Vallet who resigned this year after having been on the company s board since its incorporation. I wish to thank him for his dedicated support all along. I was also pleased to welcome Mr. Jean Ribet and Mr. Jean Noel Humbert as new directors of the company. Their vast experience in their related fields will definitely be of great support to the board. I would also like to thank the members of the different board committees for their dedicated and professional work. Finally, I would like to commend management and the group personnel at large for their sustained efforts for the development of the Group. GÉRARD BOULLÉ Chairman September 28, 2016 CORPORATE IDENTITY DIRECTORATE FOR THE YEAR ENDED JUNE 30,2016 GÉRARD BOULLÉ (Chairman) MICHEL DE SPÉVILLE, C.B.E. CÉDRIC DE SPÉVILLE PIERRE DINAN ERIC ESPITALIER-NOËL GILBERT ESPITALIER-NOËL ROCKY FORGET JEAN NOËL HUMBERT (Appointed on 13 November 2015) PIERRE-YVES POUGNET (Alternate NOËL EYNAUD) JEAN RIBET (Appointed on 09 September 2015) ADOLPHE VALLET (Resigned on 09 September 2015) SECRETARY FOOD & ALLIED SECRETARIAL SERVICES CO LTD MANAGING DIRECTOR ROCKY FORGET AUDITORS BDO & CO. BANKERS THE MAURITIUS COMMERCIAL BANK LTD BARCLAYS BANK MAURITIUS LIMITED THE HONGKONG AND SHANGHAI BANKING CORPORATION LTD AFRASIA BANK MAURITIUS REGISTERED OFFICE FOOD & ALLIED GROUP HEADQUARTERS, GENTILLY, MOKA FACTORY CLAUDE DELAITRE ROAD, LES GUIBIES, PAILLES 4 5

5 AGRO BULK 6 7

6 1.2 Distribution of shareholding at June 30, 2016 The Company had 974 Ordinary Shareholders as at June 30, 2016, distributed as follows: CORPORATE GOVERNANCE REPORT YEAR ENDED JUNE 30, 2016 The Board adheres to and ensures that the highest standard of principles of good governance are followed and applied throughout the company. The Statement of Directors Responsibilities and the Statement of Compliance are on pages 21 and 23 respectively. No. of Shares No. of Shareholders No. of Shares Owned % Shareholding , , , , ,823, ,346, ,374, above ,092, ,500, Shareholders Agreements affecting Governance of the Board There are no shareholders agreements that affect the governance of the Company. 2. CONSTITUTION 1. SHAREHOLDING STRUCTURE The shareholding structure of the Company at June 30, 2016 is as follows: AVIPRO CO LTD 21% MANAGEMENT AND DEVELOPMENT CO LTD (MADCO) 39.58% LES MOULINS DE LA OTHERS CONCORDE LTEE (LMLC) 6.15% 33.27% The Constitution is in line with the Companies Act The shares of the Company are traded on the DEM and are free from any restrictions on ownership. Shareholders have a pre-emptive right on all new shares issued by the Company up to the extent of their respective holding in the shares of the Company. On November 13, 2015, the Constitution of the Company has been amended by way of special resolution so that, henceforth, each year, one-third of the Directors longest in office shall retire and offer themselves for re-election at the annual meeting of shareholders. Each lot of one-third of the directors, if re-elected, will have a three-year term after which they shall offer themselves for re-election. 3. THE BOARD LIVESTOCK FEED LIMITED (LFL) The Directors regard Management and Development Company Limited (MADCO), incorporated in Mauritius, as the ultimate holding company. The list of subsidiaries and associates of LFL are on pages 64 to Shareholders holding more than 5% of the Company The shareholders holding more than 5% of the Company are: The Board, as the governing body, fully understands its role, responsibility and authority in setting the strategy and monitors the performance of the Company. A Code of Conduct for directors was adopted by the Board. The Company is headed by a unitary Board consisting at June 30, 2016 of ten members, five of whom are non-executive nonindependent and four of whom are independent. Although there is only one executive director on the Board, it is of the view that the participation of senior executives to subcommittees of the Board meets the spirit of the Code. The functions and responsibilities of the Chairman and Managing Director are separate. A board evaluation is held every two years to assess the performance of the Board. The last evaluation was carried out during the financial year under review. No. Shareholders No. of Ordinary Shares held % 1 Management and Development Company Limited 12,468, Avipro Co Ltd 6,615, Les Moulins de la Concorde Ltée 1,938,

7 CORPORATE GOVERNANCE REPORT - YEAR ENDED JUNE 30, THE DIRECTORS The table below indicates the Directors common to Livestock Feed Limited and other companies of the Food & Allied Group. NO DIRECTORS LFL MADCO AVIPRO LMLC 1 Gérard Boullé (Chairman) Michel de Spéville, C.B.E. 3 Cédric de Spéville * * 4 Pierre Dinan Eric Espitalier-Noël 6 Gilbert Espitalier-Noël Rocky Forget Jean Noël Humbert Pierre-Yves Pougnet 10 Jean Ribet ALTERNATE DIRECTORS 1 Noël Eynaud Alternate to Pierre-Yves Pougnet (LFL) * * Alternate to Michel de Spéville on these companies. AVIPRO LFL LMLC MADCO Avipro Co Ltd Livestock Feed Limited Les Moulins de la Concorde Ltée Management and Development Company Limited 4. PIERRE DINAN BSc. (Econ), FCA (Fellow of the Institute of Chartered Accountants in England and Wales), was a Senior Partner at De Chazal du Mée (DCDM) for 20 years until he retired in June He was also a Director of Multiconsult, a global business management services company, for twelve years until He acts presently as a Company Director for a number of public companies in the manufacturing and financial services sectors respectively. He is an independent member of the Monetary Policy Committee set up under the Bank of Mauritius Act. Mr Dinan was the founder Chairman of the Mauritius Institute of Directors. He was appointed to the Board of Livestock Feed Limited on 23 February 2005 and is the Chairman of the Audit and Risk Committee and the Corporate Governance Committee. Directorship in listed companies: Swan General Ltd, Swan Life Ltd and Les Moulins de la Concorde Ltée. 5. ERIC ESPITALIER-NOËL Holds a Bachelor s degree in Social Sciences and an MBA. He was first appointed to the Board of Livestock Feed Ltd in 1991 and is currently the Chief Executive Officer of ENL Commercial Limited. 5. DIRECTORS PROFILE No Directors Executive 1. GÉRARD BOULLÉ (CHAIRMAN) Gérard Boullé is holder of a Maîtrise de Gestion from University of Paris IX Dauphine in France and is presently the Chief Operating Officer (C.O.O), Food Industry of the Food & Allied Group of Companies. Mr Boullé sits on the board of several companies in Mauritius and was appointed Chairman of Livestock Feed Limited on 04 December MICHEL DE SPÉVILLE, C.B.E. Founder President of the Food & Allied Group. Founder and Senator of the Jeune Chambre Economique de l Ile Maurice. Elevated to the rank of Commander of the Order of the British Empire (C.B.E). Honorary Citizen of Moka- Flacq District of Mauritius. Honorary Fellow Agribusiness, University of Mauritius. Elevated to the rank of Chevalier de l Ordre de Mérite de Madagascar. Elevated to the rank of Chevalier de la Légion d honneur de France. He is also Chairman and member of the Board of various companies of the Food & Allied Group and a member of the Board of Directors of several listed companies. He is also a former President of the Mauritius Chamber of Commerce & Industry and a former President of L Institut de la Francophonie pour l Entreprenariat (IFE). Non- Executive Independent Non- Independent Direct Shareholding in LFL Indirect Shareholding in LFL Ord % Pref % Ord % Pref % Directorship in other Listed Companies 1 Gérard Boullé Michel de Spéville, C.B.E. 3 Cédric de Spéville Pierre Dinan Eric Espitalier-Noël Gilbert Espitalier- - - Noël Rocky Forget Jean Noël Humbert Pierre-Yves Pougnet Jean Ribet Alternate Directors 11 Noël Eynaud Directorship in listed companies: Fincorp Investment Ltd, Les Moulins de la Concorde Ltée, Tropical Paradise Co. Ltd and Mauritius Freeport Development Co Ltd. 3. CÉDRIC DE SPÉVILLE Obtained a Maîtrise en économie from University of Paris I Panthéon Sorbonne in He also completed a Msc in Accounting and Finance at the London School of Economics in 2002 and obtained a Master in Business Administration from Columbia Business School in He was Consultant for COFINTER in Paris from 2002 to 2003 and joined the Food & Allied Group of Companies in In January 2013, Cédric de Spéville was appointed Group Chief Executive Officer. He is director on various companies of the Food & Allied Group. He is a former President of the Mauritius Chamber of Commerce and Industry. He was appointed to the Board of Livestock Feed Limited on 28 March 2008 as alternate director to Mr Michel de Spéville and on 06 May 2009 as director. Directorship in listed companies: The Bee Equity Partners, Les Moulins de la Concorde Ltée, Tropical Paradise Co. Ltd and Mauritius Freeport Development Co Ltd. Other directorships: Automatic Systems Ltd, ENL Land Ltd, ENL Limited, Malls of (Mauritius) Bagatelle Ltd, Rogers & Co Ltd and Tropical Paradise Co. Ltd (alternate director). 6. GILBERT ESPITALIER-NOËL Holds an MBA from Insead Fontainebleau, France. He is a Non-Executive Director of the ENL Group. He was appointed to the Board of Livestock Feed Limited on 16 February Other directorships: ENL Limited, ENL Land Ltd, ENL Commercial Limited, New Mauritius Hotels Ltd and Rogers & Co Ltd. 7. ROCKY FORGET Joined the Food & Allied Group of Companies in 1980 when he held a position in the farming division. Mr Forget was appointed in 1991 as Technical & Commercial Manager of Livestock Feed Limited prior to being nominated General Manager in Mr Forget is holder of an MBA from Surrey University. Mr Forget was appointed Managing Director on 06 May

8 CORPORATE GOVERNANCE REPORT - YEAR ENDED JUNE 30, JEAN NOËL HUMBERT Appointed as Chief Corporate Affairs Officer of the Food & Allied Group in January 2015, Mr. Humbert is the holder of an Honours Degree in Agriculture and a Diploma in Agriculture & Sugar Technology. He disposes of a vast experience in the field of agro-industry having managed different companies in the sector and also in his previous capacity as General Secretary of the Mauritius Chamber of Agriculture ( ) and Chief Executive Officer of the Mauritius Sugar Syndicate ( ). He has also acted as President of the National Productivity and Competitiveness Council. He is currently Chairman of the Board of Directors of New Maurifoods Ltd and Chairman of the Board of ENL Land. Mr. Humbert was appointed to the Board of Livestock Feed Limited on 13 November PIERRE-YVES POUGNET Accountant by profession, Mr Pierre-Yves Pougnet was appointed to the Board of Livestock Feed Limited on 26 September 1985 and is also a member of both the Corporate Governance Committee and the Audit and Risk Committee. Other directorships: P.O.L.I.C.Y. Limited, Tropical Paradise Co. Ltd and Les Moulins de la Concorde Ltée. 10. JEAN RIBET Mr Ribet is a member of the South African Institute of Chartered Accountants and holds a Bachelor of Commerce degree from the University of Cape Town, South Africa. He joined the Constance Group as Group Financial Controller in 1991 and was appointed Group Chief Executive Officer in 2004 with overall responsibility for the agro-industrial, tourism and investment activities of the Constance Group. He was appointed on the Board of Livestock Feed Ltd on 9 September Directorship in listed companies: Belle Mare Holding Ltd and IBL Ltd. ALTERNATE DIRECTOR 1. NOËL EYNAUD (ALTERNATE TO MR PIERRE-YVES POUGNET) Accountant by profession, he is a Director of Management and Development Company Limited. He was appointed to the Board of Livestock Feed Limited on 12 December 1986 as alternate director to Mr Pierre-Yves Pougnet. Mr Eynaud is an alternate director on the Board of Les Moulins de La Concorde Ltée and is a board member of Avipro Co Ltd. 7. DIRECTORS DEALINGS The directors follow the principles set out in the DEM Rules on restrictions on dealings by the directors. None of the directors dealt in the shares of the Company during the year. 8. DIRECTORS FEES The fees for Members of the Board, Audit and Risk and Corporate Governance Committees at June 30, 2016 were as follows: Type of meeting Chairperson Directors Annual Retainer (Rs) Meeting Fee (Rs) Annual Retainer (Rs) Meeting Fee (Rs) Board 70,000 8,000 55,000 8,000 Audit and Risk 35,000 8,000 25,000 8,000 Corporate Governance 30,000 8,000 20,000 8,000 The attendance of the Directors and Committee Members and their fees for the financial year ended June 30, 2016 were as follows: No Directors Board Attendance Board Fees Audit & Risk Committee Attendance Audit & Risk Committee Fees Corporate Governance Committee Attendance Corporate Governance Committee Fees 5 Meetings Rs 5 Meetings Rs 3 Meetings Rs 1 Gérard Boullé 5/5 110, /3 44,000 2 Michel de Spéville,C.B.E. 5/5 95, PROFILE OF SENIOR MANAGEMENT TEAM Rocky Forget Managing Director Christophe Noël Manager - LFL Pailles Michel de l Estrac LFL Madagascar SA Patrick Duchenne Manager - Agro Bulk Ltd Sébastien Rae Chief Financial Officer Alexandre Mazery Head of Procurement Bernard de Robillard Manager -ECM Ajay Bhaugeerothee Human Resource Manager The profile of the Managing Director is stated on page 11. Holder of a BSc in marketing and an MBA from Surrey University, Mr Noël joined Livestock Feed Limited in 2006 as Marketing Manager. He was promoted Manager of LFL Pailles Operations in April Mr Noël also manages operation at LFL Riche Terre since Joined Livestock Feed Limited in 2009 as Process and Project Engineer at LFL Riche Terre. He was promoted Production Manager of LFL Riche Terre in 2011 and in January 2016, he was promoted Manager of LFL Madagascar SA. Mr De l Estrac holds a Master s Degree in Industrial Engineering (France) and an MBA from Paris Dauphine University and IAE de Paris. Joined Livestock Feed Limited in 1982 as Maintenance Engineer. Mr Duchenne held the position of Production Manager of LFL Pailles and Riche Terre as from He was appointed as Manager of Agro Bulk Ltd in July Joined the Food & Allied Group of Companies in 2006, as Group Financial Analyst and in 2011 was promoted Chief Financial Officer of Livestock Feed Limited. Mr Rae is an FCCA and holds an MBA. Joined Livestock Feed Limited in 2014 as Head of Procurement. Mr Mazery is a member of the Institute of Chartered Secretaries and Administrators of UK. Joined the Food & Allied Group of Companies in June 2014, as Operations Manager of Entreprise Céréaliere de Madagascar. Mr de Robillard is a holder of BSC in Agriculture and an MBA from Surrey University. Joined Livestock Feed Limited in Mr Bhaugeerothee holds a BSc. in Human Resource Management and an MBA with specialization in HRM. He is a certified member of CIPD UK. The above managers and other senior officers do not hold shares in the Company. No senior officer of LFL has been granted any special right to subscribe for equity or debt securities of the Company Cédric de Spéville 3/5 79,000 4/5 57, Pierre Dinan 5/5 95,000 5/5 79,000 3/3 54,000 5 Eric Espitalier-Noël 2/5 71,000 3/5 49,000 2/3 36,000 6 Gilbert Espitalier-Noël 2/5 71, Rocky Forget 5/5 95, Jean Noël Humbert * 3/5 79, Pierre-Yves Pougnet 5/5 95,000 4/5 57,000 3/3 44, Jean Ribet ** 3/5 79, Adolphe Vallet *** 1/5 63, Alternate Directors 1 Noël Eynaud * Mr. Humbert has been appointed on the board on November 13,2015 ** Mr. Ribet has been appointed on the board on September 9, 2015 *** Mr. Vallet resigned on September 9, Statement of Remuneration Philosophy Directors fees are benchmarked on local norms and reviewed on regular basis by the Board upon recommendation of the Corporate Governance Committee. The task of determining the remuneration of Executive, Senior Management and Staff has been delegated by the Board to the Management Company, MADCO. The level of remuneration of senior staff is benchmarked on the Industry s norms and is reviewed on a regular basis. 13

9 CORPORATE GOVERNANCE REPORT - YEAR ENDED JUNE 30, REMUNERATION OF THE EXECUTIVE DIRECTOR The Board does not disclose the remuneration paid to the Executive Director as it considers that it is sensitive information. 10. BOARD COMMITTEES 10.1 Corporate Governance Committee The members of the Corporate Governance committee are: - Mr. Pierre Dinan (Chairman) - Mr. Gérard Boullé - Mr. Eric Espitalier-Noël - Mr. Pierre-Yves Pougnet for new directors has been reviewed by the Corporate Governance committee and upon recommendation of such committee, has been approved by the Board. Such induction programme is under the responsibility of the Chairman of the Board and is conducted by the Company Secretary Audit and Risk Committee The members of the Audit and Risk Committee are: - Mr. Pierre Dinan (Chairman) - Mr. Gérard Boullé - Mr. Eric Espitalier-Noël - Mr. Pierre-Yves Pougnet Internal Control and Risk Management The Board has entrusted to the Audit and Risk Committee the responsibility to report on the effectiveness of Internal Control. The Board has also entrusted to the Audit and Risk Committee the responsibility to ensure that Management identifies and manages all inherent risks on a regular basis and by, amongst other initiatives, keeping a Risk Register Internal Audit The Company outsources the internal audit function to Food & Allied Corporate Services Co Ltd which has a team of qualified professionals with extensive experience in complaints were received from the Internal Auditor during the year under review with respect to restrictions on access to records, management or employees of the organisation. The objectives of the reviews performed by the Internal Audit function are to give assurance on the adequacy and effectiveness of internal controls, compliance with applicable laws and regulations as well as on the reliability of financial reporting. During the financial year under review, the function has been reporting on the following cycles and their sub processes: stock, procurement, property plant & equipment, sales and cash & bank not withstanding a complete follow up on the status of recommendations made following previous interventions on all other aspects and sectors of internal controls and risks within the enterprise. - Food & Allied Secretarial Services Co Ltd (Secretary) - Food & Allied Secretarial Services Co Ltd (Secretary) auditing, fraud examination, risk management, information systems security and governance External Auditors The Corporate Governance Committee met three times during the year. The terms of reference of the Committee as approved by the Board are in summary: - To make recommendations to the Board on all corporate governance provisions to be adopted so that the Board remains effective in ensuring that the Company complies with prevailing corporate principles and practices; - To ensure that the disclosure requirements with regard to corporate governance, whether in the annual report or other reports on an ongoing basis, are in accordance with the principles of the Code of Corporate Governance as recommended by the National Committee on Corporate Governance; - To make recommendations to be Board on the nomination and remuneration of Directors. The Board recognized the significance of the board evaluation exercise which was carried out in 2014 and has decided that this exercise be carried out on a two-year basis. A new board evaluation has been done during the financial year ended June 30, The Corporate Governance Committee has worked out an internal procedure which provides guidance to the Board on the nomination of Directors. The procedure was approved by the Board and an induction programme The committee met five times during the year. The terms of reference of the Audit and Risk Committee were approved by the Board and are in summary: - To assist the Board in fulfilling its supervisory responsibilities. - To review the financial reporting process, the system of internal control and assessment of business and financial risks, the internal audit process and the external audit process. - To monitor compliance with laws and regulations as well as Board policies and Board decisions. In performing its duties, the Committee maintains effective working relationships with the Board of Directors, Management, as well as the Internal and External Auditors; - To review regularly the risks register and ensure through internal audit reports that the identified risks are monitored and reviewed on a regular basis. - To submit recommendations to the Board (for consideration and acceptance by shareholders) for the appointment and remuneration of the External Auditors. The Committee confirms that it has discharged its responsibilities for the year in compliance with the above terms of reference. The Board with the assistance of the Audit and Risk Committee and the Internal Auditor monitors the effectiveness of internal controls. The Internal Auditors follow an established system of internal control and policies which ensure that the control objectives are attained. The Internal Audit team has an independent appraisal function which reviews the adequacy and effectiveness of internal controls and the systems that support them. This includes controls at both the operational and financial levels as well as offering guidance to Management in relation to the evaluation of overall business risks and actions taken to mitigate such risks. Weaknesses identified by the Internal Auditors during their reviews are brought to the attention of Management and the Audit & Risk Committee formally by way of risk rated structured reports. These comprise of the results of the current review together with updates on the corrective actions taken by Management to improve control systems and procedures. The Internal Audit Manager reports to the Chairman of the Audit and Risk Committee who in turn brings to the Board any material issues requiring special attention of the Directors. The purpose, authority and responsibility of the Internal Auditors are formally defined in its Charter. The Internal Audit team has the authority to access and examine all information, both paper-based and electronic documents as well as inspect physical assets. No BDO & Co has been assigned the review of the unaudited quarterly disclosures. The fees for this non-audit service amounted to Rs 75, RISK MANAGEMENT An Enterprise Risk Management approach has been adopted since The Risk Register, which is updated by Management yearly, under the monitoring of the Audit and Risk Committee, is subdivided into categories namely: operational, legal, quality, human-resources, commercial, strategic, financial, information technology and natural risks. - Risks are evaluated according to the likelihood of occurrence and the potential impact on the corporate goals. This methodology helps to prioritise the risk responsiveness. For the current financial year, Management has emphasized on food security, quality improvements, supply of raw materials, selection of suppliers, upgrading of production equipment, Enterprise Resource Planning software & export markets. - During the financial year 2015/2016, the company reviewed & reassessed its business process management software (ERP) thereby ensuring the integrated applications will meet customer s demand, facilitate future development projects and enhance company s agility. The company has also organised 14 15

10 CORPORATE GOVERNANCE REPORT - YEAR ENDED JUNE 30, DIVIDEND POLICY risk management refresher courses for managers & head of departments during the year under review. 19. MAJOR EVENTS - With regards to the next financial year 2016/2017, based on updated risks ratings, Management has set up departmental teams to mitigate risks identified. Adequate insurance covers are maintained with a view of transferring some of the The Company has no defined dividend policy as such and risks. The insurance policy cover includes fire and allied perils, machinery breakdown, loss of profits resulting from fire pays dividends based on its current profitability and the and allied perils and machinery breakdown, public and product liabilities, directors liability, burglary, money in transit, liquidity requirements of the Company. goods inland transit, marine cover and credit guarantee insurance for non-group local and foreign credit clients. The 15. RELATED PARTY TRANSACTIONS adequacy of insurance covers is reviewed annually based on the advice of our consultant. - As regards to the Group s Financial risks factors, a description together with the risk management policies adopted are further detailed in note 3 of the Financial Statements. Related party transactions are disclosed in note 33 of the accounts and are at arm s length and in the normal course 12. SHARE OPTION PLAN of business. 16. CONTRACT OF SIGNIFICANCE WITH A SUBSTANTIAL SHAREHOLDER The company does not have a Share Option Plan. Event Month 1 Approval of Audited Financial Statements and Publication of Abridged Financial Statements September 2 Annual Meeting November 3 Dividend Declaration May 4 Dividend Payment June 5 Publication of Quarterly Accounts - 1st quarter - ending 30 September - 2nd quarter - ending 31 December - 3rd quarter - ending 31 March November February May 20. DONATIONS Donations by the Company for the year under review are: 13. SHARE PRICE INFORMATION The following contracts exist between the Reporting Issuer T he following graph shows the evolution of the Company s share price on the Stock Market during the year under review: SHARE PRICE ORDINARY SHARE (Rs) Jun May Apr Mar Feb Jan Dec Nov Oct Sep Aug Jul 15 1) T he provisions of services as mentioned under RS paragraph 18 Management Agreements. 2) T he sale of animal feed to Avipro Co Ltd in the normal PREFERENCE SHARE (Rs) RS course of business. Secretarial Services Co Ltd (wholly owned subsidiary Allied Corporate Services Co Ltd. 17. CONTRACT OF SIGNIFICANCE WITH A DIRECTOR There is no contract of significance between the Reporting Management and Development Company Limited (MADCO) in which six directors have an interest Jun May Apr Mar Feb Jan 16 LFL contributed Rs 1,605,066 to the Fondation Solidarité ( Fondation ) of the Food & Allied Group. The Fondation coordinate the contribution of companies of the Food & alleviation and community development in Mauritius. The Fondation is engaged in projects that have a national Food & Allied Group CSR Coordinator who is responsible Group s vision and to accompany them to realisation and maintain a follow up. Thus, most of the Group Companies CSR funds are pooled monitors the performance and strategic development Along with the actions taken at the Group level under the of the individual companies, also ensuring the cohesive aegis of the Fondation, the Company directly sponsors sharing of the Group culture and values throughout the several community projects in which management and management fees Dec CORPORATE SOCIAL RESPONSIBILITY in the Fondation Solidarité to support selected projects. The above contract is remunerated in the form of 01 Nov 15 1,200 MADCO, spearheading the Food & Allied Group s activities, entities Oct NIL for seeking projects that are in line with the Food & Allied Sep Political Donations impact and these are initiated at corporate level by the Aug 15 Charitable Donations Allied Group towards collective support actions in poverty Issuer and its directors. DEMEX 01 Jul 15 Rs 000 Solidarité is a special purpose vehicle to direct and Livestock Feed Limited has a management contract with VALUE 2015 Rs 000 of MADCO). 4) T he provision of business support services by Food & PREFERENCE SHARE ORDINARY SHARE ) T he provision of secretarial services by Food & Allied 18. MANAGEMENT AGREEMENTS DATE Group and its major Shareholders : employees are fully involved. Amongst projects in which the employees of Livestock Feed Limited are directly involved are: - Crèche de Quatre Bornes: Support to that institution continued with the employment of a qualified pediatric nurse so as to help the children develop and improve DATE 16 17

11 CORPORATE GOVERNANCE REPORT - YEAR ENDED JUNE 30, 2016 their social skills. For the development and well being of the children, milk, cereals, fruits, vegetables and chicken meat were provided. An annual outing is also regularly organized for the children of the Creche. - Back-yard farming: The project of supporting vulnerable families into the setting up of back yard farming units has been extended further, with the support of Caritas & Terre de Paix. New groups of vulnerable families have been identified at Vacoas, Albion & Bambous. 360 birds, cages and feed have been distributed to family units. LFL has provided training on layer husbandry to these families. - Environmental project intersection Pailles : LFL was the promoter of a project to embellish the round about at the entrance of Pailles. This project was supported by ± 20 companies of the region and inaugurated in June Environment As from August 2013, Livestock Feed Limited (LFL) is certified ISO 14001:2004; LFL Pailles has an effective environmental management system that ensures the compliance of its activities with the Mauritian laws. The system is based on a methodology whereby risk are systematically identified and rated. Objectives are set by the management in an annual environmental review committee and an annual action plan is put into action with the view of mitigating the identified risks. The Company has focused during this year on the recycling of waste such as all scrap metal, used oil, paper, plastic and E-Waste Human Resources Leveraging on Employee Engagement for a high performance culture. We believe that engaged employees do the extra mile to perform at high levels and bring value to the company. In line with its mission statement, management is committed to creating the conditions and environment that foster employee engagement, the essentials of which we believe are: - Ethical behaviour ; - Job clarity ; - Respect, dialogue and feedback ; - A sense of purpose ; - Personal and Professional development ; - Employee health and social well being. 18 Our initiatives in this endeavour in this past year have been as follows: 1. A Lean management initiative has been launched: personnel was trained and accompanied to implement Kaizen boards in their sections, with the objective to facilitate problem solving and enhance autonomy and teamwork. Twenty kaizen boards are actually operational in the main factory. 2. To enhance job clarity and transparency. An organisation and functional chart has also been shared and discussed with personnel, and particular focus has been on the existence of support services who act in transversal mode to ensure effective support to operations, coherence among business units and compliance to different sets of rules/ standards. 3. A budget of 5% of our annual salary bill is devoted to employee development. A 3-year talent programme is underway to develop our young professionals. The program takes the identified talent through management and project skills, legal compliance, soft skills development and self mastery. Workers on the other hand attend in turn the life skills programme offered in the group for their personal development. This programme covers self awareness and self management, health, communication and family life, household budget and commitment to work life among others. 4. Finally a medical surveillance programme including audiometric monitoring, supervised by the company doctor, is ongoing. All employees undergo the necessary tests to ensure fitness for their specific position. Training on Health and Safety issues is ongoing. 5. During the year under review, LFL undertook, together with all the Companies within the Food & Allied Group, a job evaluation exercise at Staff and Management level, aimed at developing a grading structure. All jobs were analysed and evaluated according to the Hay Methodology following the training of a cross-functional team of Managers. All employees were duly informed about their job s grade including explanations on the criteria used. This was followed by a proper national remuneration benchmarking exercise and the development of a Remuneration Strategy and policy. This enabled the company to perform the July 2016 salary review while ensuring fairness and equity. 22. HEALTH AND SAFETY The Company benefits from the services of a Health and Safety Officer from the Food & Allied Group of Companies who acts as facilitator for the Health & Safety team of LFL. His role is to ensure compliance to OSHWA & Safety & Health Laws through regular Audits. Furthermore, annual refresher training courses as well as Sensitization, Safety & Health programs are carried out. Strong importance is attached to Personal Protective Equipment (PPE) and ongoing employee education is effected on the matter. Regular Health and Safety meetings with employee participation are scheduled to review actions required and carried out to mitigate these risks in this area. 23. ETHICS The company adheres to the code of ethics of the Food and Allied Group, which is vulgarized through a booklet detailing the principles of the code. All new employees receive a copy of the Code. This item is further discussed during the inductions. 24. OPERATING RESULTS FORECAST For the year under review, Livestock Feed Limited did not publish any operating results forecast. 25. SUMMARY OF RESULTS, ASSETS & LIABILITIES Results - Net profit after Tax GROUP Rs (000 s) Rs (000 s) 151, ,895 Current Assets 913, ,581 Non Current Assets 1,308,859 1,205,228 Total Assets 2,222,012 2,020,809 Capital and Reserves 1,424,449 1,305,390 Current Liabilities 595, ,358 Non Current Liabilities 202, ,061 Total Equity and Liabilities 2,222,012 2,020,809 SANDRINE MOUSSA FOOD & ALLIED SECRETARIAL SERVICES CO LTD SECRETARY September 28,

12 STATEMENT OF DIRECTORS RESPONSIBILITIES YEAR ENDED JUNE 30, 2016 FINANCIAL STATEMENTS INTERNAL CONTROL The Directors acknowledge their responsibilities for: (i) Adequate accounting records and maintenance of effective internal control systems; (ii) The preparation of financial statements which fairly present the state of affairs of the Group and the Company as at the end of the financial year and the results of its operations and cash flows for that period and which comply with International Financial Reporting Standards (IFRS); (iii) The selection of appropriate accounting policies supported by reasonable and prudent judgments. The report of the external auditors confirming that the financial statements are fairly presented is on pages 30 and 31. The Directors report that: (i) Adequate accounting records and an effective system of internal controls and risks management have been maintained; (ii) Appropriate accounting policies supported by reasonable and prudent judgments and estimates have been used consistently; (iii) International Financial Reporting standards have been adhered to. Any departure in fair presentation has been disclosed, explained and quantified; (iv) The Code of Corporate Governance has been adhered to. Reasons have been provided where there has not been compliance. The Directors acknowledge their responsibility for the Company s systems of control. The systems have been designed to provide the directors with reasonable assurance that assets are safeguarded, that transactions are authorized and properly recorded and that there are no material errors and irregularities. An internal audit system is in place to assist management in the effective discharge of its responsibilities, and it is independent of management and reports to the Audit and Risk Committee. RISK MANAGEMENT The Directors acknowledge their overall responsibility for maintaining a sound and effective system of internal controls to safeguard the Company s assets and shareholders interests. The Board accepts overall responsibility for risk management. Through the Audit and Risk Committee, the Directors are made aware of the risk areas which affect the Company and ensure that Management has taken appropriate measures to mitigate these risks. Gérard Boullé Chairman Pierre Dinan Director September 28,

13 STATEMENT OF COMPLIANCE YEAR ENDED JUNE 30, 2016 (Section 75 (3) of the Financial Reporting Act) Name of Public Interest Entity: LIVESTOCK FEED LIMITED Reporting Period: 1 ST JULY 2015 TO 30 TH JUNE 2016 SECRETARY S CERTIFICATE YEAR ENDED JUNE 30, 2016 We certify that, to the best of our knowledge and belief, the Company has filed with the Registrar of Companies all such returns as are required of the Company under the Companies Act FOOD & ALLIED SECRETARIAL SERVICES CO LTD Corporate Secretary September 28, 2016 We, the Directors of LIVESTOCK FEED LIMITED, confirm that to the best of our knowledge LIVESTOCK FEED LIMITED has complied with all of its obligations and requirements under the Code of Corporate Governance except that: (i) Section 2 (2.2.3) - the Board is comprised of only one executive director instead of two as recommended by the Code. The Board believes that the involvement of senior executives at the level of Board sub-committees and Management committees satisfies the requirements of interactions at decisional level (explained in Note 3 of the Corporate Governance report); (ii) Section 2 (2.8) and the Board does not disclose the remuneration paid to the Executive Director as it considers that it is sensitive information. (explained in Note 9 of the Corporate Governance report). Gérard Boullé Chairman Pierre Dinan Director September 28,

14 LFL PAILLES 24 25

15 STATUTORY DISCLOSURES STATUTORY DISCLOSURES YEAR ENDED JUNE 30, The directors have the pleasure to submit herewith their Annual Report together with the audited financial statements for the year ended June 30, DIRECTORATE AT JUNE 30, 2016 (CONTD.) Directors remuneration Directors fees (including bonuses and commissions) received and receivable from the Company were Rs 1,382,000 (2015: Rs 1,254,000). 4. DIRECTORS SERVICE CONTRACTS There was no service contract between the Group and any of the Directors during the year. 5. DONATIONS 2. PRINCIPAL ACTIVITIES The principal activity of Livestock Feed Limited is unchanged from last year and consists of the processing of animal feeds. The principal activities of the subsidiary companies are as follows: Agro Bulk Limited: unloading, storage and handling of bulk commodities for compounders LFL Madagascar SA: Processing of animal feeds Entreprise Cérealière de Madagascar SA: unloading, storage and handling of bulk commodities for compounders Rumitech Limited: The company has been wound up on August 26, The consolidated statement of profit or loss and other comprehensive income for the year ended June 30, 2016 is set out on page DIRECTORATE FOR THE YEAR ENDED JUNE 30, 2016 Livestock Feed Limited Agro Bulk Limited Gérard Boullé (Chairman) Gérard Boullé (Chairman) Michel de Spéville, C.B.E Cedric de Spéville Cedric de Spéville Eric Espitalier- Noël Pierre Dinan Rocky Forget Eric Espitalier- Noël Gilbert Espitalier-Noël Rumitech Limited (wound up on ) Rocky Forget Cedric de Spéville The Group The Company Charitable donations Political donations - 1,200-1, , ,247 No charitable donations were made by the subsidiaries Rumitech Limited and Entreprise Cérealière de Madagascar for the year (2015: Nil). 6. AUDITORS The fees payable to the auditors, BDO & Co, for audit and other services were: Audit services Other services Livestock Feed Limited Agro Bulk Limited Other services relate to the review of quarterly abridged financial statements. 7. DIVIDENDS Jean Noël Humbert (as from ) Pierre-Yves Pougnet Jean Ribet (as from ) Adolphe Vallet (resigned on ) LFL Madagascar SA Gérard Boullé Pierre-Yves Pougnet Rocky Forget Entreprise Céréalière de Madagascar SA Dividends of Rs.37,800,000 ( Rs.37,800,000) on ordinary shares and Rs.424,391 ( Rs.424,391) on preference shares have been declared in respect of the current year. Cédric de Spéville (Chairman) (as from ) Gérard Boullé (Chairman) (as from ) Michel de Spéville Yves Rousset Agro Bulk Ltd rep. by Gérard Boullé Agro Bulk Ltd rep. by Gérard Boullé Approved by the Board of Directors on September 28, and signed on its behalf by: Madco Mada Sarl rep. by Jérôme Poutot Jérôme Poutot Avipro Co. Ltd rep. by Thierry de Spéville Agrifarms Ltd rep. by Cédric de Spéville Avitech SA rep. by Thierry de Spéville Madco Mada Sarl rep. by Cédric de Spéville Gérard Boullé Chairman Pierre Dinan Director Pierre Dinan (as from ) Michel de Spéville LFL Mada SA rep. by Rocky Forget 26 27

16 LFL RICHE-TERRE 28 29

17 INDEPENDENT AUDITORS REPORT TO THE MEMBERS INDEPENDENT AUDITORS REPORT TO THE MEMBERS 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. REPORT ON THE FINANCIAL STATEMENTS (CONTINUED) We have obtained all information and explanations we have required. In our opinion, proper accounting records have been kept by the Company as far as it appears from our examination of those records. Financial Reporting Act 2004 We believe that the audit evidence we have The directors are responsible for preparing the obtained is sufficient and appropriate to provide a corporate governance report. Our responsibility This report is made solely to the members of Livestock Feed with International Financial Reporting Standards and in basis for our audit opinion. is to report on the extent of compliance with the Limited (the Company ), as a body, in accordance with compliance with the requirements of the Companies Act Code of Corporate Governance as disclosed in the Section 205 of the Companies Act Our audit work has 2001, and for such internal control as the directors determine OPINION annual report and on whether the disclosure is been undertaken so that we might state to the Company s is necessary to enable the preparation of the financial consistent with the requirements of the Code. members those matters we are required to state to them statements that are free from material misstatement, In our opinion, the financial statements on pages in an auditors report and for no other purpose. To the whether due to fraud or error. 36 to 91 give a true and fair view of the financial In our opinion, the disclosure in the annual report fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the AUDITORS RESPONSIBILITY position of the Group and of the Company as at June 30, 2016, and their financial performance is consistent with the requirements of the Code. Company s members as a body, for our audit work, for this and their cash flows for the year then ended in BDO & Co report, or for the opinions we have formed. Our responsibility is to express an opinion on these financial accordance with International Financial Reporting Chartered Accountants REPORT ON THE FINANCIAL STATEMENTS statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards and comply with the Companies Act Standards require that we comply with ethical requirements We have audited the group financial statements of Livestock and plan and perform the audit to obtain reasonable REPORT ON OTHER LEGAL AND Feed Limited and its subsidiaries (the Group ) and the assurance whether the financial statements are free from REGULATORY REQUIREMENTS Company s separate financial statements on pages 36 to material misstatement. Port Louis, 91 which comprise the statements of financial position Companies Act 2001 Mauritius. at June 30, 2016, statements of profit or loss and other An audit involves performing procedures to obtain audit Date: September 28, comprehensive income, statements of changes in equity evidence about the amounts and disclosures in the financial We have no relationship with, or interests in, the and statements of cash flows for the year then ended, and statements. The procedures selected depend on the auditors Company or any of its subsidiaries, other than a summary of significant accounting policies and other judgement, including the assessment of the risks of material in our capacity as auditors and dealings in the Shabnam Peerbocus, FCA explanatory notes. misstatement of the financial statements, whether due ordinary course of business. Licensed by FRC. to fraud or error. In making those risk assessments, the DIRECTORS RESPONSIBILITY FOR THE FINANCIAL auditors consider internal control relevant to the Company s STATEMENTS preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in The directors are responsible for the preparation and fair the circumstances, but not for the purpose of expressing presentation of these financial statements in accordance an opinion on the effectiveness of the Company s internal 30 31

18 LFL MADAGASCAR 32 33

19 FINANCIAL HIGHLIGHTS OF STATEMENT OF VALUE ADDED YEAR ENDED JUNE 30, 2016 YEAR ENDED JUNE 30, 2016 Rs EMPLOYEES 34% DIVIDENDS 10% FINANCE COSTS 9% TURNOVER (Rs Million) PROFIT AFTER TAX (Rs Million) ,192 2, Rs Rs , , CORPORATE TAX 6% RETAINED PROFIT 30% DEPRECIATION 11% 2015/ /2015 MARKET VALUE OF ORDINARY SHARES (Rs) DIVIDEND PAID/ ORDINARY SHARE (Rs) Rs 000 % Rs 000 % Turnover 2,310,606 2,057,597 Other income 7,473 6,682 Investment income 3,662 2,953 Share of results of associates 55,023 26,776 2,376,764 2,094,008 Paid suppliers (2,005,396) (1,769,577) Wealth created 371, , EARNINGS PER SHARE (Rs) Distributed as follows: Employees 125, , Dividends 38, , Finance Costs 34, , Corporate tax 21, ,565 5 Retained profit 112, , Depreciation 39, , , ,

20 STATEMENTS OF FINANCIAL POSITION YEAR ENDED JUNE 30, 2016 Notes ASSETS Non-current assets Property, plant and equipment 5 669, , , ,296 Intangible assets 6 6,856 9,360 2,793 4,820 Investments in subsidiary companies ,373 69,373 Investments in associates 8 492, , , ,694 Investments in financial assets 9 139, , , ,452 Non-current receivables ,308,859 1,205, , ,635 Current assets Inventories , , , ,811 Trade and other receivables , , , ,730 Derivative financial instruments 13 18,867 5,321 18,867 5,321 Cash and cash equivalents 29(b) 127,233 98,423 90,188 75, , , , ,098 Total assets 2,222,012 2,020,809 1,498,221 1,430,733 EQUITY AND LIABILITIES Capital and reserves Share capital , , , ,536 Other reserves , ,608 49,126 36,668 Retained earnings 880, , , ,691 Owners' interests 1,424,449 1,305, , ,895 LIABILITIES Non-current liabilities Borrowings ,256 71,265 66,213 48,258 Other payables 17 17,610 12, Retirement benefit obligations 18 32,633 34,872 32,444 34,609 Deferred tax liabilities 19 40,803 37,585 32,063 28, , , , ,726 Current liabilities Trade and other payables , ,253 95, ,052 Borrowings , , , ,706 Current tax liabilities 21 8,530 6,565 2,879 5, , , , ,112 Total liabilities 797, , , ,838 Total equity and liabilities 2,222,012 2,020,809 1,498,221 1,430,733 These financial statements have been approved for issue by the Board of Directors on September 28, Revenue STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME YEAR ENDED JUNE 30, 2016 Notes 2(t), 23 2,310,606 2,057,597 1,773,091 1,640,370 Cost of sales 24 (1,972,784) (1,754,493) (1,530,957) (1,420,220) Gross profit 337, , , ,150 Other income 26 11,135 9,635 32,905 27,905 Administrative expenses 24 (191,557) (172,556) (130,659) (123,615) 157, , , ,440 Finance costs 27 (39,935) (31,499) (28,168) (18,040) Share of profit of associates 8(a) 55,023 26, Profit before taxation 172, , , ,400 Income tax expense 21 (21,347) (17,565) (14,559) (11,935) Profit for the year 151, , ,653 94,465 Other comprehensive income: Items that will not be reclassified to profit or loss Remeasurement of post employment benefit obligations 18 3,417 (1,474) 3,291 (1,029) Deferred tax on remeasurement of post employment 19 benefit obligations (513) 221 (494) 154 Items that may be reclassified subsequently to profit or loss Currency translation differences 18,463 (13,641) - - Share of other comprehensive income of associates 8(a) (12,190) 30, Currency translation differences of associate 8(a) (16) 4, Change in value of available-for-sale financial assets 9 (464) 797 (464) 797 Cash flow hedges 15 11,709 (931) 11,709 (931) Other comprehensive income for the year 20,406 19,262 14,042 (1,009) Total comprehensive income for the year 171, , ,695 93,456 Profit attributable to: Owners of the parent 151, , ,653 94,465 Total comprehensive income attributable to: Owners of the parent 171, , ,695 93,456 Earnings per share Mr. Gérard Boullé Chairman Mr. Pierre Dinan Director The notes on pages 41 to 91 form an integral part of these financial statements. Auditors report on pages 30 and 31. The notes on pages 41 to 91 form an integral part of these financial statements. Auditors report on pages 30 and

21 STATEMENT OF CHANGES IN EQUITY STATEMENT OF CHANGES IN EQUITY YEAR ENDED JUNE 30, 2016 YEAR ENDED JUNE 30, 2016 Notes Share Capital (Attributable to owners of the parent) Revaluation and other Reserves Retained Earnings Total Notes Share Capital (Attributable to owners of the parent) Revaluation and other Reserves Retained Earnings Total Balance at July 1, , , ,246 1,305,390 Profit for the year , ,141 Other comprehensive income for the year - 20,406-20,406 Total comprehensive income for the year - 20, , ,547 Balance at July 1, ,536 36, , ,895 Profit for the year , ,653 Other comprehensive income for the year - 14,042-14,042 Total comprehensive income for the year - 14, , ,695 Release on scrapped assets - (1,584) 1,584 - Release on disposal of assets - (481) Movement in reserves - (14,264) - (14,264) Dividends (38,224) (38,224) - (16,329) (36,159) (52,488) Release on scrapped assets - (1,584) 1,584 - Dividends (38,224) (38,224) - (1,584) (36,640) (38,224) Balance at June 30, ,536 49, , ,366 Balance at June 30, , , ,228 1,424,449 Balance at July 1, , , ,794 1,204,045 Profit for the year , ,895 Other comprehensive income for the year - 19,262-19,262 Total comprehensive income for the year - 19, , ,157 Release on disposal of assets - (1,170) 1,170 - Movement in reserves - 3,801 (1,389) 2,412 Dividends (38,224) (38,224) - 2,631 (38,443) (35,812) Balance at July 1, ,536 38, , ,287 Profit for the year ,465 94,465 Other comprehensive income for the year - (1,009) - (1,009) Total comprehensive income for the year - (1,009) 94,465 93,456 Release on disposal of assets - (665) Movement in reserves - (624) - (624) Dividends (38,224) (38,224) - (1,289) (37,559) (38,848) Balance at June 30, ,536 36, , ,895 Balance at June 30, , , ,246 1,305,390 The notes on pages 41 to 91 form an integral part of these financial statements. Auditors report on pages 30 and 31. The notes on pages 41 to 91 form an integral part of these financial statements. Auditors report on pages 30 and

22 STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 2016 Notes Cash flows from operating activities Cash generated from operations 29(a) 223, , , ,669 Interest paid (34,181) (30,997) (22,805) (21,183) Tax paid (16,679) (15,397) (14,324) (10,167) Net cash from operating activities 172, , , ,319 Cash flows from investing activities Purchase of property, plant and equipment (115,491) (37,854) (56,823) (10,112) Purchase of intangible assets (490) (3,838) (308) (1,664) Purchase of investment in financial assets - (15,596) - (15,596) Purchase of options (14,399) (6,669) (14,399) (6,669) Proceeds from disposal of options 6,613 1,192 6,613 1,192 Purchase of investment in associates (4) (2,845) (4) (45) Proceeds from sale of property, plant and equipment 2,722 2,686 1,359 2,320 Dividends received 16,247 15,352 26,247 23,352 Non current receivables 196 (196) - - Net cash used in investing activities (104,606) (47,768) (37,315) (7,222) Cash flows from financing activities Proceeds from long-term borrowings 67,552 32,538 40,000 16,600 Proceeds from short-term borrowings 790, , , ,000 Payments on long-term borrowings (26,705) (22,712) (22,232) (21,554) Payments on short-term borrowings (790,000) (590,000) (790,000) (590,000) Finance lease principal payments (4,922) (1,229) (4,113) (742) Dividends paid to company's shareholders (38,224) (38,224) (38,224) (38,224) Advanced receipts 5,271 12, Net cash from/(used in) financing activities 2,972 (17,288) (24,569) (43,920) Net increase in cash and cash equivalents 71,198 90,024 43,428 53,177 Movement in cash and cash equivalents At July 1, (13,351) (98,084) 16,566 (36,611) Increase 71,198 90,024 43,428 53,177 Effect of foreign exchange rate changes 3,321 (5,291) - - At June 30, 29(b) 61,168 (13,351) 59,994 16,566 The notes on pages 41 to 91 form an integral part of these financial statements. Auditors report on pages 30 and 31. NOTES TO THE FINANCIAL STATEMENTS 1. GENERAL INFORMATION YEAR ENDED JUNE 30, 2016 Livestock Feed Limited is a public limited company incorporated and domiciled in Mauritius. The address of its registered office is Food and Allied Group Headquarters, Gentilly, Moka and its principal place of business is at Claude Delaitre Street, Pailles. These financial statements will be submitted for consideration and approval at the forthcoming Annual Meeting of Shareholders of the Company. 2. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements of Livestock Feed Limited comply with the Companies Act 2001 and have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements include the consolidated financial statements of the parent company and its subsidiary companies (The Group) and the separate financial statements of the parent company (The Company). The financial statements are presented in Mauritian Rupees and all values are rounded to the nearest thousand (Rs 000), except when otherwise indicated. Where necessary, comparative figures have been amended to conform with change in presentation in the current year. The financial statements are prepared under the historical cost convention, except that: (i) land and buildings, and plant and machinery, are carried at revalued amounts; and (ii) available-for-sale investments and derivative instruments are stated at their fair value. (a) Basis of preparation Standards, Amendments to published Standards and Interpretations effective in the reporting period There are no standards, amendments to published standards and interpretations effective for the first time in the reporting period. Standards, Amendments to published Standards and Interpretations issued but not yet effective Certain standards, amendments to published standards and interpretations have been issued that are mandatory for accounting periods beginning on or after January 1, 2016 or later periods, but which the Group has not early adopted. Standards, Amendments to published Standards and Interpretations issued but not yet effective

23 NOTES TO THE FINANCIAL STATEMENTS 2. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (b) Property, plant and equipment 2. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (d) Investment in subsidiaries (a) Basis of preparation (cont d) At the reporting date of these financial statements, the following were in issue but not yet effective: IFRS 9 Financial Instruments IFRS 14 Regulatory Deferral Accounts Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11) Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38) IFRS 15 Revenue from Contract with Customers Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) Equity Method in Separate Financial Statements (Amendments to IAS 27) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) Annual Improvements to IFRSs Cycle Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28) Disclosure Initiative (Amendments to IAS 1) IFRS 16 Leases Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12) Amendments to IAS 7 Statement of Cash Flows Clarifications to IFRS 15 Revenue from Contracts with Customers Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2) Where relevant, the Group is still evaluating the effect of these Standards, amendments to published Standards and Interpretations issued but not yet effective, on the presentation of its financial statements. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 4. Land and buildings and plant and machinery, held for use in the production or supply of goods or for administrative purposes, are stated at their fair value, based on periodic valuations by external independent valuers, less subsequent depreciation for buildings and plant and machinery. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the assets carrying amount or recognised as a separate asset as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Increases in the carrying amount arising on revaluation are credited to other comprehensive income and shown as revaluation surplus in shareholders equity. Decreases that offset previous increases of the same asset are charged against the revaluation surplus directly in equity; all other decreases are charged to profit or loss. Properties in the course of construction for production, administrative purposes or for purposes not yet determined are carried at cost less any recognised impairment loss. Cost includes professional fees. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use. Depreciation is calculated on the straight-line method to write off the cost or revalued amounts of the assets to their residual values over their estimated useful lives as follows: Annual Rates Buildings 2%-10% Plant and machinery 1%-33% Factory equipment 5%-33% Furniture, fittings and equipment 10%-33% Motor vehicles 20% Freehold land is not depreciated. The assets residual values, useful lives and depreciation method are reviewed, and adjusted prospectively, if appropriate, at the end of each reporting period. (b) Property, plant and equipment (cont d) Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Gains and losses on disposals of property, plant and equipment are determined by comparing proceeds with carrying amount and are included in profit or loss. On disposal of revalued assets, the amounts included in revaluation surplus relating to that asset are transferred to retained earnings. (c) Intangible assets (i) Goodwill Goodwill arising on an acquisition of a business is carried at cost, as established at the date of acquisition of the business, less accumulated impairment losses, if any. Goodwill is tested annually for impairment. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the gains and losses on disposal. Goodwill is allocated to cash-generating units for the purpose of impairment testing. (ii) Computer software Acquired computer software licences are capitalised on the basis of costs incurred to acquire and bring to use the specific software and are amortised using the straight-line method over their estimated useful lives (3-5 years). Costs associated with developing or maintaining computer software are recognised as an expense as incurred. Costs that are directly associated with the production of identifiable and unique software controlled by the Group and that will generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include the software development employee costs and an appropriate portion of relevant overheads. Computer software development costs recognised as assets are amortised over their estimated useful lives (not exceeding 3 years). Separate financial statements of the investor In the separate financial statements of the investor, investments in subsidiary companies are carried at cost. The carrying amount is reduced to recognise any impairment in the value of individual investments. Consolidated financial statements Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interests proportionate share of the acquiree s net assets. The excess of the consideration transferred, the amount of any non-controlling interests in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree (if any), over the fair value of the identifiable net assets acquired, is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss as a bargain purchase gain. Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group

24 NOTES TO THE FINANCIAL STATEMENTS 2. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (d) Investment in subsidiaries (cont d) Consolidated financial statements (cont d) Transactions with non-controlling interests The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to noncontrolling interests are also recorded in equity. Disposal of subsidiaries When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. (e) Investments in associates Separate financial statements of the investor In the separate financial statements of the investor, investments in associated companies are carried at cost. The carrying amount is reduced to recognise any impairment in the value of individual investments. Consolidated financial statements An associate is an entity over which the Group has significant influence but not control, or joint control, generally accompanying a shareholding between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method, except when classified as held-for-sale. Investments in associates are initially recognised at cost as adjusted by post acquisition changes in the Group s share of the net assets of the associate less any impairment in the value of individual investments. Any excess of the cost of acquisition and the Group s share of the net fair value of the associate s identifiable assets and liabilities recognised at the date of acquisition is recognised as goodwill, which is included in the carrying amount of the investment. Any excess of the Group s share of the net fair value of identifiable assets and liabilities over the cost of acquisition, after assessment, is included as income in the deternination of the Group s share of the associate s profit or loss. When the Group s share of losses exceeds its interest in an associate, the Group discontinues recognising further losses, unless it has incurred legal or constructive obligation or made payments on behalf of the associate. Unrealised profits and losses are eliminated to the extent of the Group s interest in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Where necessary, appropriate adjustments are made to the financial statements of associates to bring the accounting policies used in line with those adopted by the Group. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate. Dilution gains and losses arising on investments in associates are recogised in profit or loss. (f) Financial assets (i) Categories of financial assets The Group classifies its financial assets in the following categories : loans and receivables and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its financial assets at initial recognition. 2. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (f) Financial assets (cont d) (i) Categories of financial assets (cont d) (a) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment. The Group s loans and receivables comprise cash and cash equivalents, and trade and other receivables. (b) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in noncurrent assets unless management intends to dispose of the investment within twelve months after the end of the reporting period. (ii) Recognition and measurement Purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Investments are initially measured at fair value plus transaction costs for all financial assets. Available-for-sale financial assets are subsequently carried at their fair values. Loans and receivables are carried at amortised cost using the effective interest method. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. Unrealised gains and losses arising from changes in the fair value of financial assets classified as available-for-sale are recognised in other comprehensive income. When financial assets classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in profit or loss as gains and losses on financial assets. The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active, and for unlisted securities, the Group establishes fair value by using valuation techniques. These include the use of recent arm s length transactions and reference to other instruments that are substantially the same. (iii) Impairment of financial assets (a) Financial assets classified as available-for-sale The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-forsale financial assets, the cumulative loss, measured as the difference between acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss, is removed from equity and recognised in profit or loss. If the fair value of a previously impaired debt security classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised, the impairment loss is reversed and the reversal recognised in profit or loss. Impairment losses recognised in profit or loss for an investment in an equity instrument classified as availablefor-sale are not reversed through profit or loss. (b) Financial assets carried at amortised cost For loans and receivables category, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred), discounted at the financial asset s original effective interest rate. The carrying amount of the asset is reduced and, the amount of the loss is recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised

25 NOTES TO THE FINANCIAL STATEMENTS 2. SIGNIFICANT ACCOUNTING POLICIES (CONT D) Cash flow hedge The effective portion of changes in the fair value of derivatives 2. SIGNIFICANT ACCOUNTING POLICIES (CONT D) Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses arising from experience (g) Trade receivables that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss (k) Cash and cash equivalents adjustments and changes in actuarial assumptions, the return on plan assets (excluding interest) and the effect of Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of provision is recognised in profit or loss. (h) Derivative financial instruments and hedging activities Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates derivatives as hedges of a particular risk associated with a recognised liability or a highly probable forecast transaction (cash flow hedge). relating to the ineffective portion is recognised immediately in profit or loss within finance costs. Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of forward foreign exchange contracts hedging import purchases is recognised in profit or loss within cost of sales. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expeted to occur, the cumulative gain or loss that was reported in equity is immediately transferred to profit or loss within finance costs. Derivatives at fair value through profit or loss Certain derivative instruments do not qualify for hedge accounting and are accounted for at fair value through profit or loss. Changes in the fair value of these derivatives instruments that do not qualify for hedge accounting are recognised immediately in profit or loss within finance costs. Cash and cash equivalents include cash in hand and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position. (l) Share capital Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as deduction, net of tax, from proceeds. Preference share capital Preference share capital is classified as equity if it is nonredeemable, or redeemable only at the Company s option, and any dividends are discretionary. Discretionary dividends thereon are recognised as distributions within equity upon approval by the Company s shareholders. (m) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average cost basis. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (based on the asset ceiling (if any, excluding interest), is recognised immediately in other comprehensive income in the period in which they occur. Remeasurements recognised in other comprehensive income shall not be reclassified to profit or loss in subsequent period. The Group determines the net interest expense/(income) on the net defined benefit liability/(asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability/(asset), taking into account any changes in the net defined liability/(asset) during the period as a result of contributions and benefit payments. Net interest expense/(income) is recognised in profit or loss. Service costs comprising current service cost, past service cost, as well as gains and losses on curtailments and settlements are recognised immediately in profit or loss. (ii) Gratuity on retirement For employees who are not covered (or who are insufficiently covered by the above pension plans), the net present value of gratuity on retirement payable under the Employment Rights Act 2008 is calculated by a qualified actuary and provided for. The obligations arising under this item are not funded. The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. The fair values of various derivative instruments used for hedging purposes are disclosed in note 13. Movements on the hedging reserve in shareholders equity are shown in note 15. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. (i) Trade and other payables Trade and other payables are stated at fair value and subsequently measured at amortised cost using the effective interest method. (j) Borrowings Borrowings are recognised initially at fair value being their issue proceeds net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting period. normal operating capacity), but excludes borrowings costs. Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and applicable variable selling expenses. (n) Retirement benefit obligations (i) Defined benefit plans A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period, less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries (iii) Termination benefits Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without the possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value. (iv) Defined contribution plans A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service using the projected unit credit method. in the current and prior periods

26 NOTES TO THE FINANCIAL STATEMENTS 2. SIGNIFICANT ACCOUNTING POLICIES (CONT D) the entity operates ( functional currency ), except for the subsidiaries located in Madagascar and whose functional 2. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (s) Long term receivables (n) Retirement benefit obligations (cont d) (iv) Defined contribution plans (cont d) and presentation currency is the Madagascar Ariary (MGA). The consolidated financial statements are presented in Mauritian rupees, which is the Group s functional and presentation currency. (p) Foreign currencies (cont d) (iii) Group companies (cont d) Long term receivables with fixed maturity terms are measured at amortised cost using the effective interest rate method, less provision for impairment. The carrying amount of the asset is reduced by the difference between the asset s Payments to defined contribution plans are recognised as an expense when employees have rendered service that entitle them to the contributions. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on On consolidation, exchange differences arising from the translation of the net investment in foreign entities are taken to shareholders equity. carrying amount and the present value of estimated cash flows discounted using the original effective interest rate. The amount of loss is recognised in profit or loss. If there is objective evidence that an impairment loss has been (o) Current and deferred income tax The tax expense for the period comprises of current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. Current tax The current income tax charge is based on taxable income for the year calculated on the basis of tax laws enacted or substantively enacted by the end of the reporting period. Deferred tax Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred income tax is determined using tax rates that have been enacted or substantively enacted at the reporting date and are expected to apply in the period when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable amounts will be available against which deductible temporary differences and losses can be utilised. (p) Foreign currencies (i) Functional and presentation currency Items included in the financial statements of each of the Group s entities are measured using Mauritian rupees, the currency of the primary economic environment in which the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when deferred in equity as qualifying cash flow hedges. Foreign exchange gains and losses that relate to the purchase of raw materials are presented in profit or loss within cost of sales. All other foreign exchange gains and losses are presented in profit or loss within finance costs. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date the fair value was determined. Translation differences on non-monetary items, such as equities classified as available-for-sale financial assets, are included in the fair value reserve in equity. (iii) Group companies The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (a) assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; (b) income and expenses for each statement representing profit or loss and other comprehensive income are translated at average exchange rates; (c) all resulting exchange differences are recognised in other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in profit or loss as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. (q) Impairment of non-financial assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Any impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). (r) Leases Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight line basis over the period of the lease. (i) Accounting for leases - where Group is the lessee Finance leases are capitalised at the lease s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. incurred, the amount of impairment loss is measured as the difference between the carrying amount of the asset and the present value (PV) of estimated cash flows discounted at the current market rate of return of similar financial assets. (t) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, returns, value added taxes, rebates and other similar allowances and after eliminating sales withing the Group. (i) Sale of goods Sales of goods are recognised when the goods are delivered and titles have passed, at which time all of the following conditions are satisfied: the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the amount of revenue can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the Group, and the costs incurred or to be incurred in respect of the transaction can be measured reliably. (ii) Rendering of services Revenue from rendering of services are recognised in the accounting year in which the services are rendered. (iii) Other revenues earned by the Group are recognised on the following bases: - Interest income - on a time-proportion basis using the effective interest method. - Dividend income - when the shareholder s right to receive payment is established

27 NOTES TO THE FINANCIAL STATEMENTS 2. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (u) Dividend distribution Dividend distribution to the Company s shareholders is recognised as a liability in the Group s financial statements in the period in which the dividends are declared. (v) Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources that can be reliably estimated will be required to settle the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. (w) Segment reporting Segment information presented relate to operating segments that engage in business activities for which revenues are earned and expenses incurred. (x) Alternative Minimum Tax (AMT) Alternative Minimum Tax (AMT) is provided for, where the Company has a tax liability of less than 7.5% of its book profit pays a dividend. AMT is calculated as the lower of 10% of the dividend paid and 7.5% of book profit. 3. FINANCIAL RISK MANAGEMENT 3.1 Financial Risk Factors The Group s activities expose it to a variety of financial risks: market risk (including currency risk, cash flow and fair value interest rate risk and price risk), credit risk and liquidity risk. The Group s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group s financial performance. The Company uses derivative financial instruments to hedge certain risk exposures. A description of the significant risk factors is given below together with the risk management policies applicable. (a) Market risk (i) Currency risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the Euro, the US dollar, Malagasy Ariary and Seychellois rupee. The Group uses forward contracts to hedge its exposure to foreign currency risk when future commercial transactions, recognised assets and liabilities are denominated in a currency that is not the entity s functional currency. External foreign exchange contracts are designated at Group level as hedges of foreign exchange risk on specific assets, liabilities or future transactions. At June 30, 2016, if the rupee had weakened/strengthened by 5% against the US dollar/euro/malagasy Ariary/Seychellois rupee, with all other variables held constant, post tax profit for the year would have been Rs 000 4,769 (2015: Rs 000 2,564) higher/lower for the Company, and Rs 000 6,995 (2015: Rs 000 1,705) for the Group, mainly as a result of foreign exchange gains/losses on translation of US dollar/ Euro denominated bank balances, trade receivables, trade payables and borrowings. (ii) Price risk The Group is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated statement of financial position as availablefor-sale. The Group is not exposed to commodity price risk. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group. 3. FINANCIAL RISK MANAGEMENT (CONT D) 3.1 Financial Risk Factors (cont d) (a) Market risk (cont d) (ii) Price risk (cont d) Sensitivity analysis The table below summarises the impact of increases/decreases in the fair value of the investments on the Group s equity. The analysis is based on the assumption that the fair value had increased/decreased by 5%. Categories of investments: Impact on equity Rs000 s Rs000 s Available-for-sale 6,999 7,023 (b) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group s trade receivables. The amounts presented in the statement of financial position are net of allowances for doubtful receivables, estimated by the Group s management based on prior experience and the current environment. The Group s trade receivables is concentrated amongst its related parties. The table below shows the balance of major counterparties at the end of the reporting period for the Company: Overdue balance Balance Overdue balance Balance Major counterparties - 183,105 6, ,740 Others 1,554 64,806-63, , ,368 Management does not expect any losses from non-performance by these counterparties. The Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history

28 NOTES TO THE FINANCIAL STATEMENTS 3. FINANCIAL RISK MANAGEMENT (CONT D) 3.1 Financial Risk Factors (cont d) 3. FINANCIAL RISK MANAGEMENT (CONT D) 3.1 Financial Risk Factors (cont d) (c) Cash flow and fair value interest rate risk (d) Liquidity risk (cont d) The Group s interest-rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest-rate risk. At June 30, 2016, if interest rates on rupee-denominated borrowings had been 50 basis points higher/lower with all other variables held constant, post tax profit for the year would have been Rs 000 2,183 (2015: Rs 000 1,909) lower/higher for the Group and Rs 000 2,089 (2015: Rs 000 1,852) lower/higher for the Company, mainly as a result of higher/lower interest expense on floating rate borrowings. At June 30, 2016, if interest rates on Malagasy Ariary-denominated borrowings at that date had been 50 basis points higher/lower with all other variables held constant, post tax profit for the year would have been Rs (2015: Rs ) lower/higher for the Group, mainly as a result of higher/lower interest expense on floating rate borrowings. (d) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivery of cash or another financial asset. Prudent liquidity risk management includes maintaining sufficient cash and marketable securities and the availability of funding from an adequate amount of committed credit facilities. The Group aims at maintaining flexibility in funding by keeping committed credit lines available. Management monitors rolling forecasts of the Company s liquidity reserve on the basis of expected cash flow. Forecasted liquidity reserve as of June 30, 2017 is as follows: Rs000 s Rs000 s Opening balance for the period 61,168 59,994 Cash flows from operating activities 90,634 56,891 Cash flows from investing activities (131,695) (34,607) Cash flow from financing activities 26,294 (26,441) Closing balance for the period 46,401 55,837 The table below analyses the Group s financial exposure into relevant maturity grouping into relevant maturity groupings based on the remaining period at the end of the reporting period to the contractual maturity date. Less than Between 1 Between 2 Over 5 years 1 year and 2 years and 5 years At June 30, 2016 Bank borrowings 184,278 33,918 57,819 - Finance lease liabilities 5,476 10,694 8, Trade and other payables 131, Bank overdraft 66, Other borrowings 199, ,731 44,612 66, At June 30, 2015 Bank borrowings 185,127 22,396 24,984 2,661 Finance lease liabilities 4,798 4,840 15, Trade and other payables 140, Bank overdraft 111, Other borrowings 110, ,793 27,236 40,720 3,309 Less than Between 1 Between 2 Over 5 years 1 year and 2 years and 5 years At June 30, 2016 Bank borrowings 176,791 23,400 29,587 - Finance lease liabilities 4,104 9,189 4,037 - Trade and other payables 95, Bank overdraft 30, Other borrowings 155, ,256 32,589 33,624 - At June 30, 2015 Bank borrowings 181,082 12,156 18,772 - Finance lease liabilities 4,113 4,104 13,226 - Trade and other payables 134, Bank overdraft 58, Other borrowings 110, ,758 16,260 31,

29 NOTES TO THE FINANCIAL STATEMENTS 3. FINANCIAL RISK MANAGEMENT (CONT D) 3.2 Fair value estimation 3. FINANCIAL RISK MANAGEMENT (CONT D) 3.3 Capital risk management (cont d) The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1. Instruments included in level 1 comprise primarily quoted equity investments classified as available for sale. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based on observable market data,the instrument is included in level 3. The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. 3.3 Capital risk management The debt-to-adjusted capital ratio at June 30, 2016 and June 30, 2015 were as follows: Total debt (note 16) 566, , , ,964 Less: cash and cash equivalents (127,233) (98,423) (90,188) (75,236) Net debt 439, , , ,728 Total equity 1,424,449 1,305, , ,895 Less: amounts recognised in equity relating to cash flow hedges (10,778) 931 (10,778) 931 Adjusted capital 1,413,671 1,306, , ,826 Debt-to- adjusted capital ratio 31% 30% 38% 40% There were no changes in the Group s approach to capital risk management during the year. The Group s objectives when managing capital are: to safeguard the Group s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk. The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt. Consistently with others in the industry, the Group monitors capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated as net debt to adjusted capital. Net debt is calculated as total debt less cash and cash equivalents. Adjusted capital comprises all components of equity (i.e., share capital, retained earnings, revaluation and other reserves), other than amounts recognised in equity relating to cash flow hedges. During 2016, the Group s strategy, which was unchanged from 2015, was to maintain the debt-to-adjusted capital ratio to a reasonable level in order to secure access to finance at reasonable costs

30 NOTES TO THE FINANCIAL STATEMENTS 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 4.1 Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (a) Estimated impairment of goodwill The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2(c)(i). These calculations require the use of estimates. (b) Impairment of available-for-sale financial assets The Group follows the guidance of IAS 39 on determining when an investment is other-than-temporarily impaired. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost, and the financial health of and near-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow. (c) Pension benefits The present value of the pension obligations depend on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost/(income) for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations. The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension obligation. Other key assumptions for pension obligations are based in part on current market conditions. Additional information is disclosed in note 18. (d) Revaluation of property, plant and equipment The Group carries land and buildings and plant and machinery at revalued amounts with changes in fair value being recognised in other comprehensive income. Plant and machinery was last revalued on June 30, Land and buildings was last revalued on June 30, CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT D) 4.1 Critical accounting estimates and assumptions (cont d) (e) Asset lives and residual values Property, plant and equipment are depreciated over its useful life taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In reassessing assets lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. Consideration is also given to the extent ofcurrent profits and losses on the disposal of similar assets. (f) Depreciation policies Property, plant and equipment are depreciated to their residual values over their estimated useful lives. The residual value of an asset is the estimated net amount that the Group would currently obtain from disposal of the asset, if the asset were already of the age and in condition expected at the end of its useful life. The directors therefore make estimates based on historical experience and use best judgement to assess the useful lives of assets and to forecast the expected residual values of the assets at the end of their useful lives. (g) Limitation of sensitivity analysis Sensitivity analysis in respect of market risk demonstrates the effect of a change in a key assumption while other assumptions remain unchanged. In reality, there is a correlation between the assumptions and other factors. It should also be noted that these sensitivities are non-linear, and larger or smaller impacts should not be interpolated or extrapolated from these results. Sensitivity analysis does not take into consideration that the Group s assets and liabilities are managed. Other limitations include the use of hypothetical market movements to demonstrate potential risk that only represent the Group s view of possible near-term market changes that cannot be predicted with any certainty. (h) Impairment of assets Goodwill is considered for impairment at least annually. Property, plant and equipment, and intangible assets, are considered for impairment if there is a reason to believe that impairment may be necessary. Factors taken into consideration in reaching such a decision include the economic viability of the asset itself and where it is a component of a larger economic unit, the viability of that unit itself. Future cash flows expected to be generated by the assets or cash-generating units are projected, taking into account market conditions and the expected useful lives of the assets. The present value of these cash flows, determined using an appropriate discount rate, is compared to the current net asset value and, if lower, the assets are impaired to the present value. The impairment loss is first allocated to goodwill and then to the other assets of a cash-generating unit. (i) Fair value of securities not quoted in an active market The fair value of securities not quoted in an active market may be determined by the Group using valuation techniques, including third party transaction values, earnings or net asset value, whichever is considered to be appropriate. The Group would exercise judgement and estimates on the quantity and quality of pricing sources used. Changes in assumptions about these factors could affect the reported fair value of financial instruments

31 NOTES TO THE FINANCIAL STATEMENTS 5. PROPERTY, PLANT AND EQUIPMENT 5. PROPERTY, PLANT AND EQUIPMENT (CONT D) Freehold Land & Buildings Building on Leasehold Land Plant and Machinery Factory Equipment Furniture, Fittings & Equipment Motor Vehicles Capital work in progress (a) COST OR VALUATION At July 1, ,123 78, ,056 72,561 35,638 26,451 12, ,390 Additions 3, ,574 9,886 5,485 6,001 88, ,386 Transfers 1, , (8,505) (81) Disposals - - (6,192) (621) (609) (6,855) - (14,277) Scrapped assets (1,424) - (2,963) (2,346) (6,719) (169) - (13,621) Exchange differences (191) 643 At June 30, ,926 79, ,546 86,230 33,956 25,468 92,238 1,041,440 DEPRECIATION At July 1, ,618 42, ,093 51,605 21,496 16, ,360 Charge for the year 5,417 3,288 10,711 9,084 3,864 3,940-36,304 Reclassifications Disposal adjustments - - (5,574) (587) (558) (5,740) - (12,459) Scrapping adjustments (1,247) - (2,276) (1,379) (6,035) (127) - (11,064) Exchange differences At June 30, ,035 45, ,954 58,887 18,788 14, ,582 NET BOOK VALUES At June 30, ,891 33, ,592 27,343 15,168 10,693 92, ,858 Total Freehold Plant and Machinery Factory Equipment Furniture, Fittings & Equipment Motor Vehicles Capital work in progress Land Buildings Total (c) COST OR VALUATION At July 1, , , ,067 62,539 25,590 18,350 3, ,001 Transfers - 1, (2,847) (81) Additions - 3,253 1,199 6,528 3,468 2,657 39,718 56,823 Scrapped assets - (1,424) (2,963) (2,346) (6,719) (169) - (13,621) Disposals (621) (144) (5,041) - (5,806) At June 30, , , ,303 66,833 22,281 15,797 40, ,316 DEPRECIATION At July 1, ,527 97,406 41,636 16,077 14, ,705 Reclassifications Charge for the year - 5,417 7,895 4,099 2,516 2,153-22,080 Scrapping adjustments - (1,247) (2,276) (1,379) (6,035) (127) - (11,064) Disposal adjustments (587) (97) (5,041) - (5,725) At June 30, , ,025 43,769 12,461 11, ,142 NET BOOK VALUES At June 30, , , ,278 23,064 9,820 4,607 40, ,174 Freehold Land & Buildings Building on Leasehold Land Plant and Machinery Factory Equipment Furniture, Fittings & Equipment Motor Vehicles Capital work in progress Total (b) COST OR VALUATION At July 1, ,123 65, ,725 74,514 36,281 29,942 19, ,604 Additions - 12,863 18,643 6,213 6,188 5,167 16,031 65,105 Reclassifications - 4, (91) (6,201) - 2, Transfers , (21,596) (674) Disposals - - (5,056) (473) (144) (8,315) - (13,988) Scrapped assets - (182) (5,148) (3,367) (8,697) Exchange differences - (4,640) - (7,602) (486) (343) 58 (13,013) At June 30, ,123 78, ,056 72,561 35,638 26,451 12, ,390 DEPRECIATION At July 1, ,391 31, ,041 46,520 23,842 20, ,550 Charge for the year 227 8,054 9,108 8,050 3,056 4,018-32,513 Reclassifications - 4, (11) (4,944) (273) Disposal adjustments - - (2,620) (379) (116) (8,099) - (11,214) Scrapping adjustments - - (4,553) (4,553) Exchange differences - (1,615) - (2,575) (342) (131) - (4,663) At June 30, ,618 42, ,093 51,605 21,496 16, ,360 NET BOOK VALUES At June 30, ,505 36, ,963 20,956 14,142 9,907 12, ,030 Freehold Furniture, Capital Plant and Factory Fittings & Motor work in Land Buildings Machinery Equipment Equipment Vehicles progress Total (d) COST OR VALUATION At July 1, , , ,222 56,890 28,888 24,055 16, ,233 Reclassifications - 4, (91) (6,201) - 2, Transfers , (17,624) (447) Additions - 5,894 13,730 6,213 3, ,632 32,297 Scrapped assets - - (5,148) (5,148) Disposals - - (3,884) (473) (125) (6,505) - (10,987) At June 30, , , ,067 62,539 25,590 18,350 3, ,001 DEPRECIATION At July 1, ,546 97,136 38,769 19,038 17, ,330 Reclassifications - 4, (11) (4,944) Charge for the year - 5,058 6,463 3,257 2,093 2,623-19,494 Scrapping adjustments - - (4,553) (4,553) Disposal adjustments - - (1,757) (379) (110) (6,505) - (8,751) At June 30, ,527 97,406 41,636 16,077 14, ,705 NET BOOK VALUES At June 30, , , ,661 20,903 9,513 4,291 3, ,

32 NOTES TO THE FINANCIAL STATEMENTS 5. PROPERTY, PLANT AND EQUIPMENT (CONT D) 5. PROPERTY, PLANT AND EQUIPMENT (CONT D) (e) Additions include assets leased under finance leases of Rs 000 3,895 (2015: Rs ,251) for the Group, and Rs.nil (2015: Rs ,185) for the Company. If the land, buildings, and plant and machinery were stated on the historical cost basis, the amounts would be as follows: (f) Leased assets included in property, plant and equipment comprise: Freehold land & Buildings Plant and Machinery Rs000's Rs000's Rs000's Cost-capitalised finance leases 1,285 30,179 31,464 Accumulated depreciation (36) (3,216) (3,252) Net book amount 1,249 26,963 28,212 Freehold Buildings Plant and Machinery Rs000's Rs000's Rs000's Cost-capitalised finance leases 1,285 20,900 22,185 Accumulated depreciation (36) (2,278) (2,314) Net book amount 1,249 18,622 19,871 Total Total (h) Freehold land & Buildings Plant and Machinery Rs000's Rs000's Rs000's Rs000's Cost 200, , , ,080 Accumulated depreciation (46,656) (44,649) (171,744) (164,354) Net book value 154, ,306 74,572 83,726 Freehold land & Buildings Plant and Machinery Rs000's Rs000's Rs000's Rs000's Cost 144, , , ,564 Accumulated depreciation (26,638) (23,742) (136,022) (129,310) Net book value 118, ,302 31,778 40,254 Depreciation charge is allocated as follows in the statements of profit or loss and other comprehensive income: (g) The Group s land and buildings were last revalued on June 30, 2013 by Société D Hotman De Spéville and Cogir Ltd. Plant and machinery was last revalued on June 30, 2014 by Engineering Technical and Management Services, independent qualified valuers. Land was revalued on the basis of open market value. Buildings and plant and machinery were revalued on the basis of depreciated replacement cost. The revaluation surplus/deficit net of deferred income taxes was credited/charged to revaluation reserve in shareholders equity. Details of the Group s freehold land, buildings and plant and machinery measured at fair value and information about the fair value hierarchy as at June 30, 2016, are as follows: (i) Rs000's Rs000's Rs000's Rs000's Cost of sales 27,752 23,682 16,844 14,408 Administrative expenses 8,552 8,831 5,236 5,086 36,304 32,513 22,080 19,494 Bank borrowings are secured by floating charges on the assets of the Group, including property, plant and equipment (note 16). Level 2 Level 2 Rs000's Rs000's Freehold land 324,532 69,260 Buildings 33, ,003 Plant and machinery 166, , , ,541 There were no transfers between level 1 and 2 during the year

33 NOTES TO THE FINANCIAL STATEMENTS 6. INTANGIBLE ASSETS 6. INTANGIBLE ASSETS (CONT D) (a) COST Goodwill Computer software Total Rs000 s Rs000 s Rs000 s At July 1, ,575 15,963 17,538 Additions Exchange differences Transferred from capital work in progress - PPE At June 30, ,575 16,557 18,132 (c) Computer software Rs000 s Rs000 s COST At July 1, 12,171 10,087 Additions 308 1,664 Transferred from capital work in progress - PPE At June 30, 12,560 12,171 AMORTISATION At July 1, ,178 8,178 Charge for the year - 3,099 3,099 Exchange differences - (1) (1) At June 30, ,276 11,276 NET BOOK VALUES At June 30, ,575 5,281 6,856 AMORTISATION At July 1, 7,351 5,305 Charge for the year 2,416 2,046 At June 30 9,767 7,351 NET BOOK VALUES At June 30 2,793 4,820 (d) Amortisation charge is allocated as follows in the statements of profit or loss and other comprehensive income: (b) COST Computer Goodwill software Total Rs000 s Rs000 s Rs000 s Rs000 s Rs000's Rs000 s Rs000 s Administrative Expenses 3,099 2,290 2,416 2,046 At July 1, ,575 11,478 13,053 Additions - 3,838 3,838 Transferred from capital work in progress - PPE At June 30, ,575 15,963 17,538 AMORTISATION At July 1, ,888 5,888 Charge for the year - 2,290 2,290 At June 30, ,178 8,178 NET BOOK VALUES At June 30, ,575 7,785 9,

34 NOTES TO THE FINANCIAL STATEMENTS 7. INVESTMENTS IN SUBSIDIARY COMPANIES 8. INVESTMENTS IN ASSOCIATES Unquoted Cost Rs000's Rs000's At June 30, 69,373 69,373 Name Rumitech Limited Stated Capital Class of shares held Nominal value of shares held 2016 and 2015 Percentage holding Percentage held by subsidiary companies Country of incorporation and operation Rs. 50,000 Ordinary Rs % 0% Mauritius Main business Wound up on August 26, 2016 (a) Rs000 s Rs000's Investment in associates comprise of: Goodwill 3,098 3,098 Investment in net assets (note 8(a)(i)) 489, , , ,190 (i) Investment in net assets Rs000 s Rs000's At July 1, 461, ,261 Additions 4 2,845 Share of profit after tax and minority interests 55,023 26,776 Dividends (15,360) (12,399) 39,667 17,222 Agro Bulk Limited Rs. 30,000,000 Ordinary Rs % 0% Mauritius Unloading, storage and handling of bulk commodities Exchange difference arising on translation of foreign associates (16) 4,171 Share of other comprehensive income (12,190) 30,119 Movement in reserves 506 3,319 (11,700) 37,609 LFL Madagascar SA Ariary 2,744,540,000 Ordinary Ariary 20, % 0% Madagascar Production of animal feed At June 30, 489, ,092 Entreprise Céréalière de Madagascar SA Ariary 3,100,000,000 Ordinary Ariary 20,000 0% 100% Madagascar Storage, unloading and handling of bulk commodities (b) (COST) Rs000 s Rs000's At July 1, 103, ,649 Additions 4 45 All of the above subsidiaries have June 30 as year end. At June 30, 103, ,

35 NOTES TO THE FINANCIAL STATEMENTS 8. INVESTMENTS IN ASSOCIATES (CONT D) 9. INVESTMENTS IN FINANCIAL ASSETS The summarised financial information of the company s associates were as follows: Company 2016 Concordia Offshore Development Ltd Les Moulins de la Concorde Ltée Poulet Arc En Ciel Ltd Year end Assets Liabilities Revenues Profit June 30, June 30, June 30, Other comprehensive income for the year Total comprehensive income for the year Dividends received during the year Proportion of ownership interest Rs000 s Rs000 s Rs000 s Direct Indirect 161, ,947 34,423 (23,116) 11, % - 1,875, ,153 2,154, ,998 (28,912) 119,086 12, % - 137,506 54, ,057 13,741-13,741 2, % - Main business Holding of investment Milling of wheat Poultry Farming Country of Incorporation and operation Mauritius Mauritius Mauritius (a) AND Rs000's Rs000's Available-for-sale financial assets At July 1, 140, ,059 Additions - 15,596 (Decrease)/increase in fair value (note 15) (464) 797 At June 30, 139, ,452 The fair value of DEM quoted available-for-sale securities is based on the DEM market quoted prices at the close of business on the reporting date. In assessing the fair value of unquoted available-for-sale securities, the Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. The unquoted securities are not materially different from their fair value. Farmshop SA Les Pondeuses Reunies Ltée (formerly Starponte Ltée) June 30, June 30, 20,178 17, ,775 3,547-3, % 3,634 2,534 3, % - 2,198, ,780 2,883, ,306 (52,028) 148,278 15,360 Sales & distribution of animal feed and chicks Provision of technical services Madagascar Mauritius (b) Available-for-sale financial assets include the following: Rs000's Rs000's Equity securities-at fair value -DEM Quoted (Level 1) 3,356 3,820 -Unquoted (Level 3) 136, , , ,452 Company Year end Assets Liabilities Revenues Profit Other comprehensive income for the year Total comprehensive income for the year Dividends received during the year Proportion of ownership interest Rs000 s Rs000 s Rs000 s Direct Indirect Main business Country of Incorporation and operation (c) Available-for-sale financial assets are denominated in Mauritian Rupees. (d) None of the financial assets is either past due or impaired. 10. NON-CURRENT RECEIVABLES 2015 Concordia Offshore Development Ltd June 30, 181,858 31,229 4,971 9,056 9,246 18, % - Holding of investment Mauritius Rs000's Rs000's Les Moulins de la Concorde Ltée June 30, 2,026, ,102 2,079,627 74, , ,569 11, % - Milling of wheat Mauritius Deposits Poulet Arc En Ciel Ltd Farmshop SA Starponte Ltée June 30, June 30, June 30, 132,901 58, ,315 12,446 1,759 14,205 1, % - 12,670 13, ,864 (179) - (179) % 1,537 1,034 1, % - 2,355, ,370 2,659,528 95, , ,479 12,400 Poultry Farming Sales & distribution of animal feed and chicks Provision of technical services (i) All of the above associates are accounted for using the equity method. (ii) As at June 30, 2016, the fair value of the Group s interest in Les Moulins de la Concorde Ltée which is DEM quoted was Rs. 309,898,533 (2015: Rs. 235,963,350) based on the quoted market price available, which is a level 1 input in terms of IFRS 13. (iii) Concordia Offshore Development Ltd, Poulet Arc En Ciel Ltd, Farmshop SA and Les Pondeuses Reunies Ltée are private companies and there are no quoted market prices available for their shares. Mauritius Madagascar Mauritius 11. INVENTORIES Rs000's Rs000's Rs000's Rs000 s Raw Materials 359, , , ,043 Work-in progress 1,642 2,572 1,642 2,572 Finished goods 44,221 39,346 21,191 13,997 Packing materials and sundry consumables 32,675 19,852 23,145 16, , , , ,811 Cost of inventories recognised as expense in cost of sales 1,703,143 1,533,712 1,348,802 1,273,593 The bank borrowings are secured by floating charges on the assets of the Group, including inventory (note 16)

36 NOTES TO THE FINANCIAL STATEMENTS 12. TRADE AND OTHER RECEIVABLES 12. TRADE AND OTHER RECEIVABLES (CONT D) Trade receivables 254, , , ,368 Less: provision for impairment (8,527) (5,176) (3,381) (3,083) Trade receivables - net 245, , , ,285 Prepayments 35,864 73,532 8,165 59,289 Other receivables 47,687 44,374 24,305 28, , , , ,730 The carrying amount of trade and other receivables approximates their fair value. As of June 30, 2016, trade receivables of Rs 000 6,910 for the Group (2015: Rs 000 5,176) and Rs 000 3,381 (2015: Rs 000 3,083) for the Company were impaired. The individually impaired receivables mainly relate to customers who are in unexpectedly difficult economic situations. The ageing of these receivables is as follows: Over 6 months 6,910 5,176 3,381 3,083 As of June 30, 2016, trade receivables of Rs 000 5,249 (2015: Rs ,157) for the Group and Rs 000 1,554 (2015: Rs 000 6,857) for the Company were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows: 3 to 6 months 1,704 1, Over 6 months 3,545 10,145 1,539 5,858 5,249 11,157 1,554 6,857 The carrying amounts of the Group s trade and other receivables are denominated in the following currencies: Malagasy Ariary 81,584 54, Rupee 206, , , ,399 US Dollar 40,085 20,529 37,372 17,385 Euro 1, , , , , ,730 At July 1, 5,176 2,586 3,083 2,586 Provision for receivable impairment 3,351 3, ,173 Receivables written off during the year - (676) - (676) At June 30, 8,527 5,176 3,381 3,083 The other classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The Group does not hold any collateral as security. 13. DERIVATIVE FINANCIAL INSTRUMENTS Contractual amount Fair value of assets/(liabilities) AND Forward foreign exchange contracts - cash flow hedges 72,153 60,809 1,560 (931) Options ,307 6,252 72,153 60,809 18,867 5,321 The hedged highly probable forecast transactions denominated in foreign currency are expected to occur during the next 12 months. Gains and losses recognised in the hedging reserve in equity (Note 15) on forward foreign exchange contracts as of June 30, 2016 are recognised in the profit or loss in the period or periods during which the hedged transaction affects the profit or loss. The maximum exposure to credit risk at the reporting date is the fair value of the derivative assets in the statement of financial position. 14. SHARE CAPITAL Issued and fully paid At July 1, 2015 & June 30, 2016 Number of Ordinary shares (thousands) AND Ordinary Shares Number of Preference shares (thousands) Preference Shares Total Rs000 s Rs000 s Rs000 s 31, , , ,536 The total authorised number of ordinary share is 31,500,000 shares (2015: 31,500,000 shares) with a par value of Rs.10 per share (2015: Rs.10 per share)

37 NOTES TO THE FINANCIAL STATEMENTS 15. REVALUATION AND OTHER RESERVES 15. REVALUATION AND OTHER RESERVES (CONT D) Revaluation reserve Fair value reserve Translation of foreign operations Actuarial losses Reserve of associates Hedging reserve Rs000 s Rs000 s Rs000 s Balance at July 1, , (27,215) (11,705) 169,393 (931) 221,608 Items that will not be reclassified to profit or loss Remeasurement of post employment benefit obligations Deferred tax on remeasurement of post employment benefit obligations Items that may be reclassified subsequently to profit or loss Decrease in fair value of available forsale financial assets Total , , (513) - - (513) - (464) (464) Share of other comprehensive income of associates (12,190) - (12,190) Movement in reserves - - (14,770) (14,770) Release on scrapped assets (1,584) (1,584) Release on disposal of assets (481) (481) Movement in reserve of associate Currency translation differences of associate (16) - (16) Currency translation differences , ,463 Cash flow hedges ,709 11,709 Balance at June 30, ,989 (452) (23,522) (8,801) 157,693 10, ,685 Revaluation reserve Fair value reserve Actuarial losses Hedging reserve Total Rs000 s Balance at July 1, , (10,730) (931) 36,668 Items that will not be reclassified to profit or loss Remeasurement of defined benefit obligations - - 3,291-3,291 Deferred tax on remeasurement of defined benefit obligations - - (494) - (494) Items that may be reclassified subsequently to profit or loss Release on scrapped assets (1,584) (1,584) Decrease in fair value of available forsale financial assets - (464) - - (464) Cash flow hedges ,709 11,709 Balance at June 30, ,733 (452) (7,933) 10,778 49,126 Revaluation reserve Fair value reserve Translation of foreign operations Actuarial losses Reserve of associates Hedging reserve Total Rs000 s Rs000 s Rs000 s Balance at July 1, ,742 (785) (13,574) (10,452) 131, ,715 Items that will not be reclassified to profit or loss Remeasurement of post employment benefit obligations Deferred tax on remeasurement of post employment benefit obligations (1,474) - - (1,474) Items that will not be reclassified to profit or loss Increase in fair value of available-forsale financial assets Share of other comprehensive income of associates ,119 30,119 Movement in reserves Release on disposal of assets (1,170) (1,170) Movement in reserve of associate ,319-3,319 Currency translation differences of associate ,171-4,171 Currency translation differences - - (13,641) (13,641) Cash flow hedges (931) (931) Balance at June 30, , (27,215) (11,705) 169,393 (931) 221,

38 NOTES TO THE FINANCIAL STATEMENTS 15. REVALUATION AND OTHER RESERVES (CONT D) 16. BORROWINGS Revaluation reserve Fair Value Reserve Actuarial losses Hedging Reserve Rs000 s Balance at July 1, ,606 (785) (9,855) - 38,966 Items that will not be reclassified to profit or loss Remeasurement of defined benefit obligations - - (1,029) - (1,029) Deferred tax on remeasurement of defined benefit obligations Items that may be reclassified subsequently to profit or loss Release on disposal of assets (665) (665) Movement in reserves (624) (624) Increase in fair value of available-forsale financial assets Cash flow hedges (931) (931) Balance at June 30, , (10,730) (931) 36,668 Revaluation reserve The revaluation reserve relates to the revaluation of property, plant and equipment. Fair value reserve Fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets that has been recognised in other comprehensive income until the investments are derecognised or impaired. Actuarial losses The actuarial losses represent the cumulative remeasurement of defined benefit obligation recognised. Translation of foreign operations The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations. Total Non-current Bank loans (note 16 (d)) 91,737 50,041 52,987 30,928 Finance lease liabilities (note 16 (c)) 19,519 21,224 13,226 17,330 Current 111,256 71,265 66,213 48,258 Bank overdrafts 66, ,774 30,194 58,670 Bank loans (note 16 (d)) 184, , , ,082 Import loan 199, , , ,841 Finance lease liabilities (note 16 (c)) 5,476 4,798 4,104 4, , , , ,706 Total borrowings 566, , , ,964 (a) The bank borrowings are secured by floating charges on the assets of the Group, including inventories, property, plant and equipment. Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default. (b) The maturity of non-current borrowings is as follows: After 1 year and before 2 years (note 16 (d)) 44,612 27,236 32,589 16,260 After 2 years and before 5 years 66,604 40,720 33,624 31,998 After five years 40 3, ,256 71,265 66,213 48,258 Hedging reserve The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred

39 NOTES TO THE FINANCIAL STATEMENTS 16. BORROWINGS (CONT D) 16. BORROWINGS (CONT D) (c) Finance lease liabilities - minimum lease payments: Not later than 1 year 7,138 6,696 5,265 5,704 Later than one year and not later than two years 12,443 6,256 10,529 5,264 Later than two years and not later than five years 9,438 17,635 4,171 14,700 Later than five years ,059 31,291 19,965 25,668 Future finance charges on finance leases (4,064) (5,269) (2,635) (4,225) Present value of finance lease liabilities 24,995 26,022 17,330 21,443 The present value of finance lease liabilities may be analysed as follows: Not later than one year 5,476 4,798 4,104 4,113 Later than one year and not later than two years 10,694 4,840 9,189 4,104 Later than two years and not later than five years 8,785 15,736 4,037 13,226 Later than five years ,995 26,022 17,330 21,443 (d) Non current borrowings can be analysed as follows: After 1 year and before 2 years Bank loans 33,918 22,396 23,400 12,156 Finance lease liabilities 10,694 4,840 9,189 4,104 44,612 27,236 32,589 16,260 After 2 years and before 5 years Bank loans 57,819 24,984 29,587 18,772 Finance lease liabilities 8,785 15,736 4,037 13,226 66,604 40,720 33,624 31,998 After 5 years Bank loans - 2, Finance lease liabilities , (e) The effective interest rates at the reporting date were as follows: Rs MGA Rs MGA 0% 0% 0% 0% Bank overdrafts Bank loan Import loan Finance lease liabilities Rs Rs 0% 0% Bank overdrafts Bank loan Import loan Finance lease liabilities (f) The carrying amounts of the Group s borrowings are denominated in the following currencies: Rs000's Rs000's Rs000's Rs000's Mauritian rupee 382, , , ,964 Malagasy Ariary (MGA) 111,321 65, US Dollar 72,469-72, , , , ,964 (g) The carrying amounts of current and non-current borrowings are not materially different from the fair values. 17. OTHER PAYABLES Rs000's Rs000 s Advances 17,610 12,339 These represent advances from NL EVD International. The Group, as promoter of the Maize supply chain project in Madagascar, will receive a subsidy from NL EVD International, after the completion of the project. The advance will be converted into a subsidy by NL EVD International upon successful completion of the project

40 NOTES TO THE FINANCIAL STATEMENTS 18. RETIREMENT BENEFIT OBLIGATIONS The following amounts are shown on the statement of financial position: 18. RETIREMENT BENEFIT OBLIGATIONS (CONT D) The reconciliation of the opening balances to the closing balances for the net defined benefit liability is as follows: Rs000's Rs000's Rs000's Rs000's Retirement benefit obligations 32,633 34,872 32,444 34,609 Amounts recognised in the statement of financial position: 32,633 34,872 32,444 34,609 Rs000's Rs000 s Rs000's Rs000 s Defined pension benefits (note 18(a)(ii)) 24,297 26,269 24,108 26,006 Other post retirement benefits (note 18(b)(i)) 8,336 8,603 8,336 8,603 32,633 34,872 32,444 34,609 Amounts charged/(credited) to other comprehensive income: - Defined pension benefits (note 18(a) (v)) 3,799 3,780 3,646 3,689 - Other post retirement benefits (note 18(b)(i)) (794) 1,021 (794) 1,021 3,005 4,801 2,852 4,710 Amounts charged/(credited) to other comprehensive income: - Defined pension benefits (note 18(a) (vi)) (4,004) 996 (3,878) Other post retirement benefits (note 18(b)(i)) (3,417) 1,474 (3,291) 1,029 (iii) At July 1, 26,269 23,302 26,006 23,505 Charged to profit or loss 3,799 3,780 3,646 3,689 (Credited)/Charged to other comprehensive income (4,004) 996 (3,878) 551 Contributions/benefits paid (1,767) (1,809) (1,666) (1,739) Balance at June 30, 24,297 26,269 24,108 26,006 The movement in the defined benefit obligations over the year is as follows: At July 1, 61,640 55,008 59,897 53,746 Current service cost 1,282 1,385 1,235 1,345 Interest expense 3,823 4,274 3,704 4,173 Actuarial (gain)/loss (6,294) 377 (5,981) 83 Employees' contribution Benefits paid (9,315) - (9,315) - At June 30, 51,719 61,640 50,077 59,897 (a) Defined pension benefits (i) The Group operates a defined benefit pension. The plan is a final salary plan, which provides benefits to members in the form of a guaranteed level of pension payable for life. The level of benefits provided depends on members length of service and their salary in the final years leading up to retirement. The assets of the plan are independently administered by Swan Life. The most recent actuarial valuation of the plan assets and the present value of the defined benefit obligations were carried out at June 30, 2016 by Swan Life. The present value of the defined benefit obligations, and the related current service cost and past service cost, were measured using the Projected Unit Credit Method. (ii) The amounts recognised in the statement of financial position are as follows: Present value of funded obligations 51,719 61,640 50,077 59,897 Fair value of plan assets (29,713) (36,472) (27,733) (34,591) Deficit of funded plans 22,006 25,168 22,344 25,306 Present value of unfunded obligations 2,291 1,101 1, Liability in the statement of financial position 24,297 26,269 24,108 26,006 (iv) The movement in the fair value of plan assets of the year is as follows: At July 1, (36,472) (32,662) (34,591) (30,923) Remeasurements: Return on plan assets, excluding amounts included in interest expense (1,924) (2,521) (1,801) (2,387) Actuarial loss 1, , Employer's contribution (1,677) (1,750) (1,667) (1,738) Employees' contribution (582) (596) (536) (550) Scheme expenses Cost of insuring risk benefits Benefits paid 9,315-9,315 - At June 30, (29,713) (36,472) (27,733) (34,591) 76 77

41 NOTES TO THE FINANCIAL STATEMENTS 18. RETIREMENT BENEFIT OBLIGATIONS (CONT D) 18. RETIREMENT BENEFIT OBLIGATIONS (CONT D) (v) The amounts recognised in profit or loss are as follows: (viii) The principal actuarial assumptions used for the purposes of the actuarial valuation were: Rs000's Rs000's Rs000's Rs000's Current service cost 1,407 1,426 1,235 1,345 Scheme expenses Cost of insuring risk benefits Interest expense 1,973 1,825 1,949 1,839 Past service cost (68) Total included in employee benefit expense 3,799 3,780 3,646 3,689 Actual return on plan assets (785) (1,992) (716) (1,884) (vi) The amounts recognised in other comprehensive income are as follows: Rs000's Rs000's Rs000's Rs000's Remeasurement on the net defined benefit liability: Losses on pension scheme assets 1, , Experience gains on the liabilities (5,306) (1,007) (4,963) (1,250) Change in assumption underlying the present value of the scheme - 1,350-1,299 Actuarial (gain)/loss recognised in OCI (4,004) 996 (3,878) 551 (vii) The fair value of the plan assets at the end of the reporting period for each category, are as follows: Discount rate 6.50% 6.50% 6.50% 6.50% Future salary growth rate 5.00% 5.00% 5.00% 5.00% (ix) Sensitivity analysis on defined benefit obligations at end of the reporting date: Increase Decrease Increase Decrease June 30, 2016 Discount rate (1% movement) 2,339 2,339 2,177 2,177 Future salary growth rate (1% movement) 2,430 2,430 2,222 2,222 Increase Decrease Increase Decrease June 30, 2015 Discount rate (1% movement) 2,343 2,343 2,177 2,177 Future salary growth rate (1% movement) 2,409 2,409 2,222 2,222 The sentitivity above have been determined based on a method that extrapolates the impact on net defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The sensitivity analysis may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Local equities 2,289 1,458 2,240 1,427 Overseas equities 2,330 1,668 2,281 1,633 Fixed interest 4,892 4,256 4,800 4,180 Properties Qualifying insurance policy 20,188 29,076 18,412 27,351 Total market value of assets 29,713 36,472 27,733 34,591 The fair values of the above equity and debt instruments are determined based on quoted market prices in active markets whereas the fair values of properties and derivatives are not based on quoted market prices in active markets. The Company s ordinary shares are not included in the pension plan assets. (x) The defined benefit pension plan exposes the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market risk. (xi) The funding requirements are based on the pension fund s actuarial measurement framework set out in the funding policies of the plan. (xii) The Group is expected to contribute Rs 000 3,950 to the pension scheme for the year ending June 30, (xiii) The weighted average duration of the defined benefit obligation is 4 years at the end of the reporting period (2015: 6 years). (b) Other post retirement benefits Other post retirement benefits comprise mainly of gratuity on retirement payable under the Employment Rights Act 2008 and other benefits

42 NOTES TO THE FINANCIAL STATEMENTS 18. RETIREMENT BENEFIT OBLIGATIONS (CONT D) 19. DEFERRED INCOME TAXES (CONT D) (b) Other post retirement benefits (CONT D) (i) Movement in gratuity on retirement: Rs000's Rs000 s At July 1, 8,603 8,074 Total expense (credited)/charged to profit or loss (794) 1,021 Charged to other comprehensive income Contributions/benefits paid (60) (970) At June 30, 8,336 8,603 (b) (Credited)/ At July 1, charged to profit or loss Credited to equity At June 30, 2015 Deferred income tax assets Retirement benefit obligations (4,707) (303) (221) (5,231) Deferred income tax liabilities Accelerated tax depreciation 22, ,836 Asset revaluation 20,197 (1,217) - 18,980 43,100 (284) - 42, DEFERRED INCOME TAXES Deferred income taxes are calculated on all temporary differences under the liability method at 15% (2015: 15%). (a) There is a legally enforceable right to offset current tax assets against current tax liabilities and deferred income tax assets and liabilities when the deferred income taxes relate to the same fiscal authority. The following amounts are shown in the statement of financial position: Rs000's Rs000 s Rs000's Rs000 s Deferred tax liabilities 40,803 37,585 32,063 28,859 The movement on the deferred income taxes account is as follows: Balance at July 1, 37,585 38,393 28,859 29,300 Charged/(credited) to profit or loss 2,705 (587) 2,710 (287) Charged/(credited) to equity 513 (221) 494 (154) At June 30, 40,803 37,585 32,063 28,859 Deferred income tax assets and liabilities and deferred income tax credit in the statement of profit or loss and other comprehensive income are attributable to the following items: (a) (Credited)/ At July 1, charged to profit or loss Charged to equity At June 30, 2016 Deferred income tax assets Retirement benefit obligations (5,231) (177) 513 (4,895) Net deferred income tax liabilities 38,393 (587) (221) 37,585 (c) (Credited)/ At July 1, charged to profit or loss Credited to equity At June 30, 2016 Deferred income tax assets Retirement benefit obligations (5,191) (169) 494 (4,866) Deferred income tax liabilities Accelerated tax depreciation 19,111 2,655-21,766 Asset revaluation 14, ,163 34,050 2,879-36,929 Net deferred income tax liabilities 28,859 2, ,063 (d) (Credited)/ At July 1, charged to profit or loss Credited to equity At June 30, 2015 Deferred income tax assets Retirement benefit obligations (4,737) (300) (154) (5,191) Deferred income tax liabilities Accelerated tax depreciation 18, ,111 Asset revaluation 15,855 (916) - 14,939 34, ,050 Net deferred income tax liabilities 29,300 (287) (154) 28,859 Deferred income tax liabilities Accelerated tax depreciation 23,836 2,959-26,795 Asset revaluation 18,980 (77) - 18,903 42,816 2,882-45,698 Net deferred income tax liabilities 37,585 2, ,

43 NOTES TO THE FINANCIAL STATEMENTS 20. TRADE AND OTHER PAYABLES 22. DIVIDENDS PER SHARE Trade payables 37,745 54,539 37,392 59,672 Accrued expenses 51,791 19,626 41,323 13,752 Other payables 41,790 66,088 16,936 60,628 At June 30, 131, ,253 95, ,052 The carrying amount of trade and other payables approximate their fair value. 21. INCOME TAX AND Rs000's Rs000 s Amounts recognised as distributions to equityholders in the year: Final dividend for the year ended June 30, 2016 of Rs.1.20 per share (2015: Rs.1.20 per share) 37,800 37,800 Preference shares 12% dividend ,224 38, REVENUE (a) (b) Statement of financial position At July 1, 6,565 3,810 5,354 3,299 Underprovision in previous year Current tax on the adjusted profit for the year at 15% (2015: 15%) 18,519 17,954 11,801 12,039 Income tax paid (16,677) (15,397) (14,324) (10,167) At June 30, 8,530 6,565 2,879 5,354 Statement of profit or loss and other comprehensive income Current tax on the adjusted profit for the year at 15%/20% (2015:15% /20%) 18,519 17,954 11,801 12,039 Movement in deferred taxation account (note 19) 2,705 (587) 2,710 (287) Underprovision in previous years ,347 17,565 14,559 11,935 The tax on the Group s and the Company s profit before taxation differs from the theoretical amount that would arise using the basic tax rate as follows: Rs000's Rs000 s Rs000's Rs000 s Profit before taxation and share of results of associates 117, , , ,400 Tax calculated on accounting profit at 15%/20% (2015:15% /20%) 23,142 17,320 17,432 15,960 Income not subject to tax (5,367) (1,835) (4,016) (4,896) Expenses not deductible for tax purposes 3,449 1,882 1, Underprovision in previous years Tax charge 21,347 17,565 14,559 11,935 Sales of goods 2,238,482 2,005,841 1,710,021 1,594,583 Rendering of services 72,124 51,756 63,070 45,787 2,310,606 2,057,597 1,773,091 1,640, EXPENSES BY NATURE Depreciation 36,304 32,513 22,080 19,494 Amortisation 3,099 2,290 2,416 2,046 Employee benefit expense (note 25) 125, ,171 95,612 92,204 Provision for bad debts 3, Cost of inventories recognised as expense 1,703,143 1,533,712 1,348,802 1,273,593 Utilities and other consumables 48,282 34,819 22,707 26,543 Transportation 92,597 69,499 74,473 55,993 Repairs and maintenance 21,231 17,032 17,156 12,422 Unloading cost 20,856 11, Management fees 12,183 10,744 9,104 8,765 Advertising & marketing expenses 4,110 3,329 3,862 3,212 General administrative expenses 42,438 45,135 30,483 24,833 Other expenses 50,953 42,661 34,623 24,233 Total cost of sales and administrative expenses (Note 24(a)) 2,164,341 1,927,049 1,661,616 1,543,835 (a) Cost of sales 1,972,784 1,754,493 1,530,957 1,420,220 Administrative expenses 191, , , ,615 2,164,341 1,927,049 1,661,616 1,543,

44 NOTES TO THE FINANCIAL STATEMENTS 25. EMPLOYEE BENEFIT EXPENSE 28. EARNINGS PER SHARE Wages and salaries, including termination benefits 118, ,597 90,376 85,208 Social security costs 3,970 3,773 2,384 2,286 Pension cost - defined benefit plan (note 18) 3,799 3,780 3,646 3,689 Other post-retirement benefits (note 18) (794) 1,021 (794) 1, , ,171 95,612 92, OTHER INCOME Profit attributable to equity holders of the Company 151, , ,653 94,465 Less: Preference share dividend (424) (424) (424) (424) 150, , ,229 94,041 Number of ordinary shares in issue 31,500,000 31,500,000 31,500,000 31,500,000 Earnings per share Rs Dividend income - DEM quoted 74-12,659 11,012 - Unquoted 3,588 2,953 16,363 12,340 Others 7,473 6,682 3,883 4,553 11,135 9,635 32,905 27, NET FINANCE COST 29. NOTES TO THE STATEMENTS OF CASH FLOWS (a) Cash generated from operations Profit before taxation 172, , , ,400 Adjustments for : Depreciation on property, plant and equipment 36,304 32,513 22,080 19,494 Profit on sale of property, plant and equipment (758) (1,118) (1,132) (549) Net foreign exchange loss/(gain) (195) 1,277 (586) (2,368) Fair value loss/(gains) on financial instruments 5,949 (775) 5,949 (775) 5, ,363 (3,143) Interest expense: - Bank overdrafts 10,989 4,645 2,764 2,919 - Bank loans 14,110 12,053 11,621 11,267 -Finance leases 2, , Import loan 6,575 6,773 6,575 6,773 -Other interest 281 7, ,181 30,997 22,805 21,183 39,935 31,499 28,168 18,040 (b) Scrapping of property, plant and equipment 2,557 4,144 2, Loss on disposal of options 2,696 1,586 2,696 1,586 Amortisation of intangible assets 3,099 2,290 2,416 2,046 Increase in provision for retirement benefit obligations 1,178 2,023 1,126 2,001 Provision for bad debts 3,351 2, Dividend income (3,662) (2,953) (29,022) (23,352) Interest expense 34,181 30,997 22,805 21,183 Share of results of associates (55,023) (26,776) - - Fair value loss/(gains) on derivative financial instruments 3,253 (2,361) 3,253 (2,361) Changes in working capital - inventories (75,274) (15,648) (46,365) (22,801) - trade and other receivables 19,482 (8,493) 39,243 (38,650) - trade and other payables (8,925) (9,321) (38,401) 13,039 - import loan 88,745 56,541 44,675 56,541 Cash generated from operations 223, , , ,669 Cash and cash equivalents Cash in hand and at bank 127,233 98,423 90,188 75,236 Bank overdrafts (66,065) (111,774) (30,194) (58,670) 61,168 (13,351) 59,994 16,

45 NOTES TO THE FINANCIAL STATEMENTS 29. NOTES TO THE STATEMENTS OF CASH FLOWS (CONT D) (c) Non cash transactions The principal non cash transaction is the acquisition of property,plant and equipment using finance leases (note 5). Additions during the year 119,386 65,105 56,823 32,297 Net amount received under finance lease (3,895) (27,251) - (22,185) 115,491 37,854 56,823 10, ULTIMATE HOLDING COMPANY The directors regard Management and Development Company Limited (MADCO), incorporated in Mauritius, as its ultimate holding company. 31. COMMITMENTS Capital expenditure authorised for at end of the reporting period but not recognised in the financial statements is as follows: Authorised but not contracted for 53,157 53,400 53,157 53,400 Authorised and contracted for 13,782-13,782-66,939 53,400 66,939 53, BANK GUARANTEES Bank guarantees to third parties RELATED PARTY TRANSACTIONS Purchase of goods or services Sales of goods or services Amount owed to related parties Amount owed by related parties 2016 Holding company 12, Minority shareholder ,456-95,820 Fellow subsidiary companies 25, ,639 2,930 19,249 Enterprise with common directors 58,629 10,428 3,169 2,108 Associated companies 142, ,060 17,889 19, ,918 1,020,583 24, , Holding company 12, Minority shareholder , ,870 Fellow subsidiary companies 18, ,473 1,233 12,118 Enterprise with common directors 37,332 10,060 2,283 2,200 Associated companies 115, ,185 19,792 19, , ,979 23, ,

46 NOTES TO THE FINANCIAL STATEMENTS 33. RELATED PARTY TRANSACTIONS (CONT D) 34. SEGMENT INFORMATION Purchase of goods or services Sales of goods or services Amount owed to related parties Amount owed by related parties 2016 Holding company 10, Minority shareholder ,456-95,320 Subsidiary companies 69, ,654 9,665 41,461 Fellow subsidiary companies 14,326 71, ,046 Enterprise with common directors 58,629 10,428 3,169 2,108 Associated companies 141,671 48,743 17,699 9, , ,806 30, , Holding company 10, Minority shareholder , ,870 Subsidiary companies 64,294 97,689 10,296 25,596 Fellow subsidiary companies 10,680 47, ,426 Enterprise with common directors 37,332 10,060 2,283 2,200 Associated companies 115,081 48,870 19,735 11, , ,650 32, ,961 (a) The transactions to and from related parties are made at normal market prices. There has been no guarantees provided or received for any related party receivables or payables and outstanding balances at year end are unsecured. For the year ended June 30, 2016, the Group has not recorded any impairment of receivables relating to amounts owed by related parties (2015 : Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates. (b) Key management personnel compensation Salaries, bonuses and car benefits 22,390 22,194 14,010 14,119 Pension and other benefits 1,225 1, ,615 23,401 14,887 15,029 Production of Animal Feed 2016 Transport and storage services Group transactions Total Total segment revenues 2,462,963 80,710-2,543,673 Inter-segment sales (161,411) (71,656) - (233,067) Revenues from external customers 2,301,552 9,054-2,310,606 Segment result 178,444 8,851 (29,895) 157,400 Share of results of associates 55,023 Finance cost (39,935) Profit before taxation 172,488 Income tax expense (21,347) Profit for the year 151,141 Production of Animal Feed 2015 Transport and storage services Group transactions Total Total segment revenues 2,157,930 65,232-2,223,162 Inter-segment sales (107,401) (58,164) - (165,565) Revenues from external customers 2,050,529 7,068-2,057,597 Segment result 156,170 7,359 (23,346) 140,183 Share of results of associates 26,776 Finance cost (31,499) Profit before taxation 135,460 Income tax expense (17,565) Profit for the year 117,

47 NOTES TO THE FINANCIAL STATEMENTS 34. SEGMENT INFORMATION (CONT D) 34. SEGMENT INFORMATION (CONT D) 2016 Transport Production of Animal Feed and storage services Unallocated Total Segment assets 1,648, ,668 (152,397) 1,729,855 Associates 492,157 2,222,012 Segment liabilities 697, ,748 (43,669) 756,760 Interest revenue Interest expense 32,383 1,798-34,181 Cost of sales 1,919,425 53,359-1,972,784 Capital Expenditure 68,129 51, ,386 Depreciation 30,554 5,750-36,304 Amortisation 2, , Transport Production of Animal Feed and storage services Unallocated Total Segment assets 1,505, ,309 (119,728) 1,556,619 Associates 464,190 2,020,809 (b) (c) Geographical information The Group operate in the following main geographical segments: Turnover Total assets Capital expenditure Rs000 s Rs000 s Mauritius 1,620,733 1,539,471 1,904,530 1,822,714 61,514 40,223 Madagascar 689, , , ,095 57,872 24,882 2,310,606 2,057,597 2,222,012 2,020, ,386 65,105 Sales revenue is based on the country in which the customer is located. Total assets and capital expenditure are shown by the geographical area in which the assets are located Rs000 s Rs000 s Analysis of sales: Sales of animal feed 2,301,552 2,050,157 Revenue from services 9,054 7,440 2,310,606 2,057,597 Segment liabilities 654,139 70,226 (46,531) 677,834 Interest revenue Interest expense 30, ,997 Cost of sales 1,718,638 35,855-1,754,493 Capital Expenditure 47,567 17,538-65,105 Depreciation 27,179 5,334-32,513 Amortisation 2, ,290 (a) Group transactions represent elimination of intra group transactions which are entered into under the normal commercial terms and conditions that would be available to unrelated third parties. Segment assets consist of property, plant and equipment, intangible assets, inventories and receivables, investments, investment properties and cash and cash equivalents and exclude associates. Segment liabilities comprise operating liabilities and exclude items such as taxation and certain corporate borrowings. Capital expenditure comprises additions to property, plant and equipment and intangible assets

48 NOTES NOTES 92 93

49 NOTICE OF MEETING YEAR ENDED JUNE 30, 2016 NOTICE IS HEREBY GIVEN that the 42 nd ANNUAL MEETING of the Shareholders of the Company will be held at the offices of Livestock Feed Limited, Les Guibies, Pailles, on Friday November 11, 2016 at p.m. AGENDA 1. To consider the Annual Report of the Company for the year ended June 30, To receive the Auditors Report for the year ended June 30, To consider and approve the financial statements of the Company for the year ended June 30, To re-appoint the following persons who retire (i) by rotation as per the Company s Constitution and (ii) in accordance with section 138 (6) of the Companies Act 2001 and who offer themselves for re-election: Mr Michel de Spéville C.B.E Mr Pierre-Yves Pougnet 5. To re-appoint Mr Eric Espitalier-Noël who retires by rotation as per the Company s Constitution and who offers himself for re-election. 6. To re-appoint Mr Pierre Dinan as Director of the Company until the next Annual Meeting in accordance with section 138 (6) of the Companies Act To ratify the payment of a dividend. 8. To re-appoint Messrs. BDO & Co. as Auditors of the Company who will hold office until the next Annual Meeting and to authorise the Directors to fix their remuneration. 9. To transact such other business, if any, as may be transacted at such Annual Meeting. BY ORDER OF THE BOARD FOOD & ALLIED SECRETARIAL SERVICES CO LTD SECRETARY October 27, 2016 Members entitled to attend and vote at the meeting may appoint proxies to attend and vote for them. The instrument appointing a proxy or any general power of attorney shall be deposited to the attention of The Company Secretary, Food & Allied Secretarial Services Co Ltd, Food & Allied Group Headquarters, Gentilly, Moka not less than 24 hours before the day fixed for the meeting or else the instrument of proxy shall not be treated as valid. BRN: C PROXY FORM INSTRUMENT APPOINTING A PROXY I/We.... of.....being a shareholder of Livestock Feed Limited do hereby appoint..... of or failing him/her..... of as my/our proxy to vote for me/us on my/our behalf at the 42 nd Annual Meeting of the Shareholders of The Company to be held at Les Guibies, Pailles on Friday November 11, 2016 and commencing at p.m. and at any adjournment thereof. I/We direct my/our proxy to vote in the following manner (please Vote with a Tick) : 3. To consider and approve the financial statements of the Company for the year ended June 30, To re-appoint Messrs. Michel de Spéville C.B.E. and Pierre-Yves Pougnet who retire (i) by rotation as per the Company s Constitution and (ii) in accordance with section 138 (6) of the Companies Act 2001 and who offer themselves for re-election. 5. To re-appoint Mr Eric Espitalier-Noël who retires by rotation as per the Company s Constitution and who offers himself for re-election. 6. To re-appoint Mr Pierre Dinan as Director of the Company until the next Annual Meeting in accordance with section 138(6) of the Companies Act To ratify the payment of a dividend. 8. To re-appoint Messrs. BDO & Co. as Auditors of the Company who will hold office until the next Annual Meeting and to authorise the Directors to fix their remuneration. For Against Signed this... day of

50 96