4 1 0 RT 2 L REPO A NNU A ANNUAL REPORT CHEMCO LIMITED

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1 ANNUAL REPORT

2 Dear Shareholder The Board of Directors is pleased to present the Annual Report of Chemco Limited for the year ended 31 December 2014, the contents of which are listed below. This report was approved by the Board of Directors at its meeting held on 11 May Antoine L Harel Chairman Beas Cheekhooree Managing Director What s inside 02 Vision, Mission and Values 03 Company Profile 04 Business Segments 05 Corporate Information 06 Board of Directors 07 Senior Management Profile 08 Chairman s Statement 09 Managing Director s Report 10 Corporate Governance Report 16 Statutory Disclosures 17 Statement of Directors Responsibilities 18 Statement of Compliance 19 Certificate by Secretary 20 Independent Auditors Report to the Members 21 Statement of Financial Position 22 Statement of Profit or Loss 23 Statement of Profit or Loss and Other Comprehensive Income 24 Statement of Changes in Equity 25 Statement of Cash Flows 26 Notes to the Financial Statements ANNUAL REPORT

3 Vision To be the leader in the chemical business in the region and to diversify through new ventures Mission To foster a quality culture and sustainable development To satisfy the requirements of all our stakeholders To create an environment conducive to maximising the wealth of our Company To promote the development and welfare of our staff while applying best practices and high ethical standards Values Passion Generate desire for success Relationship uild a strong bond with our partners and B with the community Integrity Be honest and ethical in our dealings Development romote a learning culture and embrace P change Excellence urture creativity, share best practices and N deliver on promises 2 CHEMCO LIMITED

4 Company profile Operating since Sectors of activity Number of employees OPERATING RESULTS 2014 TURNOVER ( M) Chemco Limited was incorporated in It is a public company listed on the Development and Enterprise Market (DEM) since 2007 and is a subsidiary of Harel Mallac & Co. Ltd. The Company is involved in the distribution of industrial chemicals as well as a range of consumer goods in the local and regional markets. PROFIT AFTER TAXATION ( M) 8.8 DIVIDEND PER SHARE () 1.10 ANNUAL REPORT

5 Business Segments 9% Sugar Chemicals 55% Industrial Chemicals 8% Tyres 16% Refrigeration Products Coagulants Flocculants Biocides Lime Phosphoric Acid Sulphur End Uses Complete range of process chemicals for the sugar industry Products Caustic Soda Hydrochloric Acid Hydrogen Peroxide Calcium Carbonate Sodium Sulphate Sodium Chloride Sulphuric Acid Food Chemicals End Uses Range of chemicals for textile, food and beverages and detergents industry Products GT Radial CEAT Superhawk Ketter End Uses Variety of radial tyres for passenger cars to fit 12 to 15 inch rims and tyres for light trucks, lorries and buses Products Air Conditioners Galanz Supreme (9,000-24,000 btu) Midea (9,000-60,000 btu) Ammonia Gas and Freon Gases R22, R407C and R410 End Uses Air conditioners suitable for domestic and industrial purposes 5% Swimming Pool Chemicals and Equipments 5% Water Treatment Chemicals 2% Laboratory Services* Products Cyanuric Acid Calcium Hypochlorite Chempool Acid & Alkali Pool Accessories Pumps & Filters Desalination Equipment Reverse Osmosis Systems Water Purifiers End Uses Wide range of chemicals and equipments to keep swimming pool water crystal clear Products Coagulants Flocculants Polymers Lime Calcium Hypochlorite Chlorine Dioxide End Uses Boiler water treatment Cooling tower/chiller Process water treatment Water Treatment: Demineralised System Softeners Plant Reverse Osmosis Membrane System Products Water & Wastewater Analysis Microbiological Testing Soil and Sand Analytical Services End Uses Environmental monitoring services provided with high tech laboratory equipment Technical support to Customers * The Laboratory is ISO certified 4 CHEMCO LIMITED

6 Corporate Information COMPANY SECRETARY HM Secretaries Ltd. 18 Edith Cavell Street Port Louis AUDITORS BDO & Co BANKERS The Mauritius Commercial Bank Ltd. Bramer Banking Corporation Ltd. LEGAL ADVISERS Ivan Collendavelloo Chambers Etude Georges Robert NOTARY Mr Didier Maigrot Notary Public REGISTERED OFFICE Chaussée Tromelin Fort George Port Louis REGISTRY Mauritius Computing Services Ltd. 18 Edith Cavell Street Port Louis BUSINESS REGISTRATION NUMBER C ANNUAL REPORT

7 Board of Directors ANTOINE L HAREL (57) Chairman (Non-Executive) Antoine L Harel is a Fellow Member of the Institute of Chartered Accountants in England and Wales and holds a BA (Hons) degree in Accounting and Computing. He joined Harel Mallac & Co. Ltd. in In 1997, he was appointed Group CEO and is Chairman of the Board since April He was President of the Mauritius Chamber of Commerce and Industry in 1992/1993. He was appointed to the Board of Directors of Chemco Limited on 30 November Other Directorships (listed Companies): Harel Mallac & Co. Ltd. (Chairman), Compagnie des Magasins Populaires Limitée (Chairman), The Mauritius Chemical and Fertilizer Industry Limited (Chairman), Bychemex Limited (Chairman) and Les Gaz Industriels Ltd (Chairman). VINCENT LABAT (52) Independent Director Vincent Labat graduated as a Chemical Engineer. From 1996 to 2009, he was the Managing Director of Les Gaz Industriels Ltd, a listed Company. In 2010, he joined Medine Limited as Project Development Executive. In July 2011, he was appointed as Managing Director of the Agriculture Cluster. He was appointed to the Board of Directors of Chemco Limited on 12 August Other Directorships (listed Companies): Bychemex Limited and The Mauritius Chemical and Fertilizer Industry Limited. CHARLES HAREL (47) Non-Executive Director Charles Harel holds an MBA from the University of Birmingham, UK, as well as a National Diploma in Management and Finance from Cape Technikon, South Africa. He joined the Harel Mallac Group in 1993 and was nominated CEO of the Group effective January He was appointed to the Board of Directors of Chemco Limited on 29 May Other Directorships (listed Companies): Harel Mallac & Co. Ltd., Compagnie des Magasins Populaires Limitée, The Mauritius Chemical and Fertilizer Industry Limited and Bychemex Limited. GUY HAREL (66) Non-Executive Director MICHEL RIVALLAND G.O.S.K. (61) Non-Executive Director Michel Rivalland G.O.S.K. is a Fellow Member of the Chartered Association of Certified Accountants. He joined the Board of Directors of The Mauritius Chemical and Fertilizer Industry Limited on 1 June 2006 and served as Managing Director from October 2006 to 30 June He is currently an Executive Director of Harel Mallac & Co. Ltd. He was appointed to the Board of Directors of Chemco Limited on 21 December Other Directorships (listed Companies): Compagnie des Magasins Populaires Limitée, Harel Mallac & Co. Ltd., Bychemex Limited and The Mauritius Chemical and Fertilizer Industry Limited. JEAN YVES CORSON (55) Independent Director In office up to 21 July 2014 Jean Yves Corson holder of a Maîtrise d Economie d Entreprise from Université de Paris I, Panthéon, Sorbonne held various senior management positions in France from 1986 to 1990 before returning to Mauritius where he joined Noblesse Cie Ltée. He joined the Groupe Union in 1992 as Financial Manager and was appointed Corporate Planning and Development Manager in He was appointed to the Board of Directors of Chemco Limited on 14 December Jean Yves Corson passed away on 21 July BEAS CHEEKHOOREE Executive Director In office as from 31 October 2014 Beas Cheekhooree holds a Bachelor s degree in Chemical Engineering from the North East London Polytechnic, United Kingdom. He has over 25 years experience in textile and apparel sector and occupied various senior management positions during the last 15 years in the textile industry, in Mauritius and in India before joining the Harel Mallac Group in 2012 as Managing Director of Harel Mallac Export Ltd, a company forming part of the Chemical Arm of Harel Mallac and has occupied this position up to now. In October 2013, he was appointed General Manager of MCFI Ltd. Group of Companies. Since October 2014 he is the Managing Director of Harel Mallac Export Ltd., Harel Mallac (Tanzania) Limited and MCFI Group of companies. Other Directorships (listed Companies): Bychemex Limited and The Mauritius Chemical and Fertilizer Industry Limited. Aged 66, Guy Harel joined Harel Mallac Group in 1981 as Managing Director of Fapcom Ltd. In 1983, he created Henkel Chemicals (Mauritius) Limited and became its Managing Director in He was, since the acquisition of the former by the Harel Mallac Group in 2007, the Managing Director of Archemics Ltd. up to 31 December He was appointed to the Board of Chemco Limited on 29 May Other Directorships (listed Companies): Bychemex Limited and The Mauritius Chemical and Fertilizer Industry Limited. 6 CHEMCO LIMITED

8 Senior Management Profile BEAS CHEEKHOOREE Managing Director Beas Cheekhooree holds a Bachelor s degree in Chemical Engineering from the North East London Polytechnic, United Kingdom. He has over 25 years experience in textile and apparel sector and occupied various senior management positions during the last 15 years in the textile industry, in Mauritius and in India before joining the Harel Mallac Group in 2012 as Managing Director of Harel Mallac Export Ltd, a company forming part of the Chemical Arm of Harel Mallac and has occupied this position up to now. In October 2013, he was appointed General Manager of MCFI Ltd. Group of Companies. Since October 2014 he is the Managing Director of Harel Mallac Export Ltd., Harel Mallac (Tanzania) Limited and MCFI Group of companies. RAVI VENKATASAMI Operations Manager Ravi Venkatasami holds a BEng (Hons) degree in Chemical and Environmental Engineering and a Master s degree in Project Management. He joined the Group in October 2001 where he has assumed various positions as Sales Executive (2003) and Export Manager (2007). He has been the Operations Manager of Chemco Limited and Bychemex Limited since February ROMESH RAJA RAI Finance Manager Romesh Raja Rai is an Associate Member of the Institute of Chartered Accountants in England and Wales (ACA) and completed his articles with Coopers and Lybrand (London). He joined the MCFI Group in 1988 as Finance Manager. ANNUAL REPORT

9 Chairman s Statement Dear Shareholder The business environment was again marked by subdued economic growth, with a GDP growth rate of 3.5% for the year ending 2014 and a contraction of the sugar sector by 1.7%. Against the backdrop of this sluggish economic environment as well as flaring competition, Chemco achieved a satisfactory performance in Turnover increased by 6% over last year to 324M while Basic Earnings per Share grew by 12%. These notable positive financial results can be attributed to more stringent cost control measures and improved operational efficiency. The Company also increased its Return on Net Capital Employed to 10%. During the year, Chemco further consolidated its position in the domestic market as a leading supplier of chemicals, household air conditioning units and water management services. The water treatment division has shown remarkable progression, with an average growth rate of 20% per annum. The Company s efforts to tap into the household water purifiers segment as well as build its credentials in sea water desalination and brackish water treatment plants in the hospitality sector, have been heftily rewarded. In the same vein, the company has been leveraging new business opportunities by successfully launching the Total Water Management (TWM) services in It is currently servicing leading hotel resorts such as Oberoi and Shanti Maurice. As the Company pursues its growth strategy, it will strengthen its customer base through value-added technical expertise and enhanced customer proximity. In tune with the worldwide sustainability movement and as a prolific innovator, the company is intent on bringing more and more sustainable technologies in water purification and effluent treatment processes to the local market. Acknowledgements The Board would like to extend its gratitude to the Management and staff of Chemco for their commitment, professionalism and hard work. We are confident that the Company s strategic orientation, dedicated talent pool and customer-centric approach will continue to deliver sustainable growth in the years ahead. Jean Yves Corson, a member of the Board since 2010, passed away in July Since his appointment to the Board, he has put his financial and business acumen at the service of the Company. We are grateful for his valued contribution. Antoine L Harel Chairman 8 CHEMCO LIMITED

10 Managing Director s Report The Industrial Chemicals Division, one of the major contributor to the Company s turnover, accounts for 55% of the Company s revenue during the year ending December Despite operating in an extremely competitive business segment, Chemco managed to remain at the forefront of the local chemicals business. Turnover of the division grew by 6% in comparison to With a strong market presence and an efficient inventory management system, the division consistently met customers expectations, be it in terms of product quality or timely delivery. The Refrigeration Division maintained its market share in spite of the growing number of players in the household air conditioning business in Mauritius. The Company remained one of the leading importers of air conditioning units across the island. Two new eco-friendly brands namely, Eco-Air and AUX, were introduced during the year as part of its sustainable range of products. The Tyre Division sustained a loss in market share. Sales were curtailed as a result of rising competition from local importers of tyres from China and increased competitive pricing. However, the division managed to mitigate further market share erosion by expanding its distribution channels and appointing selected resellers in strategic locations around the island. The Detergent Division performed well and turnover grew by 10% over the previous year despite a proliferation of small players entering the market. Increased imports from countries such as Egypt and South Africa also led to cut-throat competition in this particular market. The Company introduced a range of eco-friendly detergents during the year in view of moving out of the generic detergent segment. The Total Water Management Services Division delivered a noteworthy performance in Thanks to renewed sales and marketing strategies and the introduction of enhanced customer value propositions, turnover grew by a substantial 36% compared to the previous year. The shift from the traditional business model of selling water treatment chemicals to a complete water management package yielded positive results. The comprehensive suite of services now includes purification systems for incoming raw water supply, management of effluent treatment plants, management and operation of swimming pools, related consultancy services in water management and water purification units for domestic households. The Sugar Chemicals Division improved its turnover by 26% in spite of unfavourable factors. Indeed, the sugar sector faced many challenges in 2014, notably adverse climatic conditions, labour strikes and the general economic slowdown due to the General Elections at the end of the year. The falling sugar prices on the world market further compounded the difficulties of the sector. That said, the Company will pursue its strategy to supply first class and high quality chemicals cost effectively to the sector. The Laboratory Division made remarkable progress in Turnover grew by 15%. The chemical and microbiological labs performed satisfactorily thanks to a dedicated and qualified pool of technicians. This unit is also consolidating its reputation on the market by focusing on its sampling protocol, testing services and integrity of results. The Company aims at capitalising on these strengths to enhance its brand image whilst looking for international affiliation to further build its expertise. The Way Forward Chemco will continue to invest in eco-friendly products while pursuing its sustainable development initiatives in The Company intends to grow its customer base by focusing on innovation and value-added services including providing technical advice on sustainability to the manufacturing sector at large. With a newly invigorated growth plan and strengthened marketing strategies, the Company will launch several initiatives to increase its brand awareness whilst promoting a more judicious use of chemicals. Beas Cheekhooree Managing Director ANNUAL REPORT

11 Corporate Governance Report Chemco Limited (the Company ) is committed to the highest standards of business integrity, transparency and professionalism in all its activities to ensure that the activities within the Company are managed ethically and responsibly to enhance business value for all stakeholders. THE BOARD OF DIRECTORS The Board endeavours to exercise leadership, entrepreneurship, integrity and judgment in directing the Company, so as to achieve continuing prosperity for the organisation whilst ensuring both performance and compliance. The Board also ensures that the activities of the Company comply with all legal and regulatory requirements as well as with its constitution from which the Board derives its authority to act. The Board inter alia oversees the development and implementation of the Company s corporate strategy and reviews performance objectives. It provides for succession plans for key individuals, ensures effective communication with the Company s stakeholders, promotes the Company s Code of Ethics, and oversees financial and capital management. As such, it reviews and approves quarterly and annual financial reports, monitors financial results and approves major capital expenditure, acquisitions, divestitures and material commitments. The Board finally oversees compliance and risk management. The Board was aggrieved in July 2014 by the demise of Mr Jean Yves Corson, an independent director, who loyally served the Company for the past four years. At 31 December 2014, the Board of Directors consisted of six members, of whom one is an independent director and one an executive director. The Board concluded that in view of its size, having one executive director and the Finance Manager attending board meetings whenever required is in accordance with the spirit of the Code of Corporate Governance for Mauritius with regard to executive presence on the Board. The Board will consider the appointment of an additional independent director to bring the number of such directors on the Board to two. Non-executive Directors have free access to members of the senior management team. All Directors have access to the Company Secretary. The Directors are elected as per the provisions of the Company s constitution that do not provide for a definite term of office. With a view to enhancing the Board s effectiveness, a Board performance review is carried out yearly to assess the directors appreciation of the Board s performance, its procedures and practices. The results of the assessment are examined by the Corporate Governance Committee. This Committee makes its recommendations to the Board on any required remedial action. Since the Company has a management contract with The Mauritius Chemical and Fertilizer Industry Limited (MCFI), the Board has delegated authority to MCFI s Audit Committee and Corporate Governance Committee to provide it with assistance in discharging its duties and responsibilities. This is done through a more comprehensive evaluation of specific issues that are the remit of such committees. The Board regularly receives the reports and recommendations of these committees and takes appropriate action. The Board entrusts the day-to-day management of the Company to MCFI through its Managing Director who ensures the smooth running of the organisation. The composition of the Board of Directors and other directorships held by the Directors in other listed companies are given on page 6. BOARD MEETINGS The Board meets regularly during the year. For the period under review the Board met six times. Board meetings are conducted in accordance with the Company s constitution and the Companies Act. Board meetings are organised in such a way as to allow Directors to receive all relevant information critical to their understanding of the business to be conducted at the Board meeting, and therefore to participate fully in the decisionmaking process. The Board may invite management or external consultants to attend Board meetings whenever required. RESPONSIBILITIES ENTRUSTED TO MCFI S CORPORATE GOVERNANCE COMMITTEE The Board has entrusted to MCFI s Corporate Governance Committee the key areas that are the remit of a nomination and remuneration committee. The Committee s main responsibilities include establishing a formal and transparent procedure for developing policy on senior management remuneration. The Committee also fixes the fees of the Company s non-executive and independent non-executive Directors. It oversees the process regarding recommendation of potential candidates as Directors, ensures that proposed Directors are not disqualified from holding that position, and monitors the balance and effectiveness of the Board. The Committee met four times in RESPONSIBILITIES ENTRUSTED TO MCFI S AUDIT COMMITTEE The Board has entrusted to MCFI s Audit Committee the key areas that are the remit of an Audit Committee as detailed in the formal terms of reference approved by the Board. The Committee thus assists the Board in discharging its duties relating to the safeguarding of assets, the operation of adequate systems and control processes, and the preparation of accurate financial reports and statements, in compliance with all applicable legal requirements and accounting standards. The Committee also addresses issues relating to risk management and provides a forum for discussing business risks and control issues, and for formulating relevant recommendations for consideration by the Board. During the period under review the Committee met four times. 10 CHEMCO LIMITED

12 Corporate Governance Report ATTENDANCE AT BOARD MEETINGS HELD IN 2014 Directors Attendance Antoine L Harel 6/6 Charles Harel 6/6 Guy Harel 5/6 Jean Yves Corson 3/3 Vincent Labat 3/6 Michel Rivalland G.O.S.K 6/6 Beas Cheekhooree 2/2 RISK MANAGEMENT The Board regularly addresses and evaluates physical, human resources, IT, business, financial, reputational as well as regulatory and compliance risks. In the course of 2014, the internal audit function examined and evaluated the adequacy and effectiveness of control systems in place within the Company. Reports were subsequently produced and submitted to the Audit Committee. The Audit Committee reviewed the reports and, when applicable, made relevant recommendations to the Board. Since 2010 a risk management framework for the Company was adopted followed by implementation of a continuous and dynamic system of risk assessment through compliance checks and discussions with the management for enhanced risk mitigation strategies. Some of the risk areas and relevant control procedures have been identified as follows: Physical Risks Among the physical risks identified are unavoidable events such as riots, cyclones and other natural calamities. Mitigating actions such as the adoption of cyclone and fire procedures, the subscription to a relevant insurance cover, and the identification of a business continuity plan and disaster recovery plan have been taken. To limit the occurrence of on-site accidents, health and safety as well as security procedures have been implemented. The Company also draws upon the expertise of both an Occupational Physician Consultant and a full-time Health and Safety Officer. The Company s control procedures ensure mitigation of risks relating to fraud and theft. Human Resources Risks Loss of key personnel has been identified as a major risk factor. In view of mitigating this risk, retention policies have been adopted as well as a formal performance assessment and reward system implemented within the Company. Furthermore, a Code of Ethics has been adopted, so as to limit reputational risks. Health surveillance is performed at regular intervals on employees in high risk jobs in line with the Company s Health and Safety policy. Technology Risks In order to mitigate the risk of an IT crash or major breakdown, back-up and restriction procedures have been set up within the Company. Internal Control Internal control is a process designed to provide reasonable assurance regarding the achievement of organisational objectives with respect to: Effectiveness and efficiency of operations Safeguarding of assets and data of the organisation Reliability of financial and other reporting Prevention of fraud and irregularities Acceptance and management of risk Conformity with the codes of practice and ethics adopted by the organisation Compliance with applicable laws and regulations Supporting business sustainability under normal as well as adverse operating conditions. Internal Control is applicable to and is built into various business processes so as to cover all significant enterprise areas. During the year, one review of internal control was performed by the Internal Audit. The Board has set appropriate policies to ensure that the above control measures are implemented. ANNUAL REPORT

13 Corporate Governance Report Internal Audit Internal audit is an objective assurance function reporting to the Board of Directors and Management. The Internal Audit function is performed by the Harel Mallac Group Internal Auditor. Internal audit provides assurance as to the adequacy and effectiveness of the risk management and internal control framework of an organisation. Internal audit assists the Board and management to maintain and improve the process by which risks are identified and managed, and helps the Board discharge its responsibilities to maintain and strengthen the internal control framework. The Internal Auditor has examined the current control systems to check their suitability and to ensure that they are being adhered to. The Internal Auditor conducts its assignments based on a yearly plan which is validated by the Audit Committee and has unrestricted access to the Company s records, management and employees. Systems reviewed in 2014 at Company levels include the sales, debtors and cash cycle as well as the stock cycle and cover all significant areas of the Company s internal control. In 2014, the Internal Auditor has regularly submitted to the Audit Committee reports for discussion and follow-up of the implementation of recommended actions. GROUP STRUCTURE The Directors recognise that the parent entity is Harel Mallac & Co. Ltd. and that the ultimate parent entity is Société Pronema. The Directors common to the aforesaid entities are Mr Antoine L Harel who is gérant of Société Pronema and Director of Harel Mallac & Co. Ltd. and Messrs Charles Harel and Michel Rivalland G.O.S.K. who sit on the Board of Directors of Harel Mallac & Co. Ltd. SHAREHOLDERS HOLDING MORE THAN 5 PER CENT OF THE COMPANY Shareholders directly or indirectly interested in 5 per cent or more of the ordinary share capital of the Company are detailed on page 16. DIVIDEND POLICY Dividends are distributed after considering the Company s performance and profitability, gearing, investment needs, capital expenditure requirements and growth opportunities. Year Dividend per share () Dividend Cover (Times) Dividend Yield (%) SHARE PRICE INDEX FROM JANUARY 2012 TO FEBRUARY 2015 Chemco Share Price () Jan Feb - 12 Mar - 12 Apr - 12 Chemco Share Price v/s Demex from January 2012 to February 2015 May - 12 Jun - 12 Jul - 12 Aug - 12 CHEMCO LIMITED Sep - 12 Oct - 12 Nov - 12 Dec - 12 Jan - 13 Feb - 13 Mar - 13 Apr - 13 May - 13 Jun - 13 Jul - 13 Aug - 13 Sep - 13 Oct - 13 Nov - 13 Dec - 13 Months Jan - 14 Feb - 14 Mar - 14 Apr - 14 May - 14 Jun - 14 Jul - 14 Aug - 14 Sep - 14 Oct - 14 Nov - 14 Dec - 14 Jan - 15 Feb Chemco Demex Demex

14 Corporate Governance Report DIRECTORS INTEREST IN SHARES The direct and indirect interests of Directors in the ordinary shares of the Company are to be found on page 16. DIRECTORS DEALING IN SHARES OF THE COMPANY The direct and indirect interests of Directors in the ordinary shares of the Company are to be found on page 16. The Directors are aware of Appendix 6 of the Listing Rules of the Stock Exchange of Mauritius Ltd. which provides for restrictions on dealings during a close period as well as the provisions of the Companies Act 2001 on disclosure and restrictions on share dealings by Directors. All the disclosures made by the Directors are entered into an Interest Register. During the year under review none of the Directors bought or sold any of the Company s shares. RELATED PARTY TRANSACTIONS Related party transactions are detailed on page 46. SENIOR MANAGEMENT PROFILE The profile of the senior management members is given on page 7. COMPANY S CONSTITUTION The constitution of the Company does not provide any ownership restrictions or pre-emption rights. It is in agreement with the Companies Act 2001 and the DEM rules, and does not contain any material clause that needs to be disclosed. SHAREHOLDERS AGREEMENT AFFECTING THE GOVERNANCE OF THE COMPANY BY THE BOARD The Company is not aware of any such agreement during the period under review. THIRD PARTY MANAGEMENT AGREEMENT The Company has a management agreement with The Mauritius Chemical and Fertilizer Industry Limited for management support services including but not limited to financial, accounting, legal, internal audit and human resources fields. The agreement is renewable on a yearly basis. DIRECTORS FEES Directors are paid directors fees with the Exception of the executive Director and two of the non-executive directors. DIRECTORS REMUNERATION Directors remuneration is given on page 16. It has been disclosed globally due to sensitivity of the information. REMUNERATION POLICY The Company s remuneration policy recommends that the Company provides competitive rewards for its senior management staff, taking into account the Company s performance and external market data from independent sources, in particular, where available salary levels for similar positions in comparable companies. The remuneration package consists of base salary, fringe benefits and an annual individual performance bonus. The remuneration package is determined by the Board of Directors upon recommendations of the Corporate Governance Committee. EMPLOYEE SHARE OPTION PLAN No employee share option plan is available within the Company. CODE OF ETHICS The Board has adopted a Code of Ethics reflecting the Company s values and corporate culture. ANNUAL REPORT

15 Corporate Governance Report PROFILE OF COMPANY S SHAREHOLDERS AS AT 28 FEBRUARY 2015 Size of shareholding Number of Shareholders Number of shares Owned % Holding , , , ,001-5, , ,001-10, , ,001-50, , , , , , , , , , ,174, Over 500, ,394, Total 1,199 6,208, SUMMARY OF SHAREHOLDING CATEGORY AS AT 28 FEBRUARY 2015 Category of Shareholders Number of Shareholders Number of Shares Owned % Holding Individual 1, , Insurance and assurance companies 3 94, Investment and trust companies Other corporate bodies 65 5,412, Total 1,199 6,208, SHAREHOLDER INFORMATION Forthcoming Annual Meeting A proxy form is enclosed for those shareholders unable to attend. Shareholders are requested to bring their identity cards or passports to the meeting, as these are required for registration. Schedule of Events Publication of condensed audited results for previous year March 2015 Annual Meeting May/June 2015 Publication of condensed results for the 1 st quarter May 2015 Publication of condensed results for the 2 nd quarter August 2015 Publication of condensed results for the 3 rd quarter November 2015 Dividend declaration & payment December 2015/January 2016 Shareholders Practical Guide Issues Change of address If shares are deposited with CDS Change of name Acquisition or disposal of shares Share transfers Lost share certificate Direct dividend credit Action Contact the Company s secretariat Contact personal broker Contact the Company s secretariat Contact personal broker Contact the Company s secretariat Contact the Company s secretariat Forward the relevant form to the Company s secretariat 14 CHEMCO LIMITED

16 Corporate Governance Report SOCIAL, HEALTH AND SAFETY The Company is fully committed to protect and enhance the health and safety of all its employees in the workplace through its on-going hazard and risk assessment processes, control systems and preventive measures against any occupational diseases in compliance with OSHA In line with the philosophy of the Harel Mallac Group, Occupational Health and Safety is a foremost priority across all business operations. The objectives of the Company are to continuously improve the workplace environment; drive injuries, occupational illnesses and operational incidents as close to zero as possible and to strive for a work environment where Nobody gets injured. Business operations involve inherent risks but these risks can be substantially reduced if managed properly. Therefore, a considerable amount of time, effort and money have been expended in identifying and eliminating potential hazards before they led to incidents - and our investment has been rewarded. The Group s approach to Occupational Health and Safety in 2015 will further enhance the work environment while instigating a sustainable change in workplace by focusing on employees safety-oriented behaviours. The Company also ensures that its recruitment and promotion policies are fair and that procedures adopted are both transparent and meritbased. We also promote conscientious business practices whereby we ensure that there is honesty and transparency in all our practices, and the provision of a healthy and safe environment for all employees. CORPORATE, SOCIAL AND ENVIRONMENTAL RESPONSIBILITY As a member of the Harel Mallac Group, Chemco is actively involved in the various corporate social responsibility (CSR) activities funded by the Fondation Harel Mallac as well as actively supports the causes it endorses. The key focal points of the Fondation Harel Mallac were reviewed in 2014 in order to ensure that it optimises the reach of its CSR initiatives. Sustainability was at the core of this realignment and the foundation would henceforth support projects that further create and nurture lasting relationships with the Group s stakeholders. For the year elapsed, 80% of the foundation fund was split among three main initiatives, namely the CSR Group Project, CSR to Employees and CSR to Community, while the remaining 20% of the fund has been carried forward to enable the foundation to strengthen its support capacity to the community in Furthermore, and in line with the philosophy of the Harel Mallac Group, it was decided that all employees willing to, would benefit from a solidarity release of one workday during the year to assist an NGO supported by the foundation. The Company also strives to improve the environmental impact of its activities by encouraging responsible use of resources in order to ensure the quality of life for future generations. The Company has embarked on significant programmes in the use of more environment-friendly products and services, as well as the reduction of electricity and other resources in the conduct of its business. ANNUAL REPORT

17 Statutory Disclosures PRINCIPAL ACTIVITIES The principal activities of the Company during the year have remained unchanged and consist of the trading of specialised chemical products for the textile industry and general goods. DIRECTORS The Directors of the Company as at 31 December 2014 are listed on page 6. DIRECTORS SERVICE CONTRACTS There are no service contracts between the Company and its Directors. DIRECTORS REMUNERATION AND BENEFITS Remuneration and benefits received, or due from the Company were: Executive Director - - Non-executive Directors Total DIRECTORS INTERESTS IN SHARES The interests of the Directors in the shares of the Company as at 31 December 2014 were: Directors Direct Interest Indirect Interest Antoine L Harel - 196,085 Charles Harel - 194,920 The other Directors have no shares either directly or indirectly in the Company. CONTRACTS OF SIGNIFICANCE There was no contract of significance to which the Company has been a party and in which a Director of the Company was materially interested, be it directly or indirectly. THIRD PARTY MANAGEMENT AGREEMENT The Company has a management contract with The Mauritius Chemical and Fertilizer Industry Limited. SHAREHOLDERS At 28 February 2015, the following shareholders were directly or indirectly interested in more than 5 per cent of the Company s share capital. Shareholders Interest % Harel Mallac & Co.Ltd Alteo Limited 7.42 The Mauritius Chemical & Fertilizer Industry Ltd 6.52 CORPORATE SOCIAL RESPONSIBILITY Donations Political - - Others - - Corporate Social Responsibility AUDITORS FEES The fees payable to the auditors, for the audit and other services were: Other services provided by the auditors of the Company relate to the issue of certificate for stock items in the bonded warehouse. 16 CHEMCO LIMITED Audit fees payable: -BDO & Co Fees paid for other services provided by: -BDO & Co - 10

18 Statement of Directors Responsibilities The Directors acknowledge their responsibilities for: 1. Adequate accounting records and maintenance of effective internal control systems. 2. The preparation of financial statements which fairly present the state of affairs of the Company as at the end of the financial year, the results of its operations, and cash flow for that year and comply with International Financial Reporting Standard (IFRS). 3. The selection of appropriate accounting policies supported by reasonable and prudent judgements. The External Auditors are responsible for reporting on whether the Company s financial statements are fairly presented. The Directors report that: 1. Adequate accounting records and an effective system of internal controls and risk management have been maintained. 2. Appropriate accounting policies supported by reasonable and prudent judgements and estimates have been used consistently. 3. International Financial Reporting Standards have been adhered to. Any departure in the fair presentation has been disclosed, explained and quantified. 4. The Code of Corporate Governance has been adhered to. Reasons have been provided where there has not been compliance. Signed on behalf of the Board of Directors on 9 March Antoine L Harel Chairman Beas Cheekhooree Managing Director ANNUAL REPORT

19 Statement of Compliance (Section 75 (3) of the Financial Reporting Act) Name of PIE: CHEMCO LIMITED Reporting Period: Year ended 31 December 2014 We, the Directors of Chemco Limited, confirm to the best of our knowledge that the PIE has not complied with Section 2.2.2, and of the Code of Corporate Governance. The reason for non-compliance is detailed on page 10 of the Corporate Governance Report. Antoine L Harel Chairman Beas Cheekhooree Managing Director 9 March CHEMCO LIMITED

20 Certificate by Secretary We certify to the best of our knowledge and belief that the Company has filed with the Registrar of Companies all such returns as are required of the Company under the Companies Act For HM Secretaries Ltd. Secretary 9 March 2015 ANNUAL REPORT

21 Independent Auditors Report to the Members This report is made solely to the members of Chemco Limited (the Company ), as a body, in accordance with Section 205 of the Companies Act Our audit work has been undertaken so that we might state to the Company s members those matters we are required to state to them in an auditors report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company s members as a body, for our audit work, for this report, or for the opinions we have formed. Report on the Financial Statements We have audited the financial statements of Chemco Limited on pages 21 to 48 which comprise the statement of financial position as at 31 December 2014 and the statement of profit or loss, statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. Directors Responsibility for the Financial Statements The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in compliance with the requirements of the Companies Act 2001, and for such internal control as the directors determine is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. Report on the Financial Statements We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements on pages 21 to 48 give a true and fair view of the financial position of the Company as at 31 December 2014 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the Companies Act Report on Other Legal and Regulatory Requirements Companies Act 2001 We have no relationship with, or interests in, the Company, other than in our capacity as auditors, business advisers and dealings in the ordinary course of business. We have obtained all information and explanations we have required. In our opinion, proper accounting records have been kept by the Company as far as it appears from our examination of those records. Financial Reporting Act 2004 The Directors are responsible for preparing the corporate governance report. Our responsibility is to report the extent of compliance with the Code of Corporate Governance as disclosed in the annual report and on whether the disclosure is consistent with the requirements of the Code. In our opinion, the disclosure in the annual report is consistent with the requirements of the Code. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. BDO & Co Chartered Accountants Port Louis, Mauritius. 9 March 2015 Rookaya Ghanty, F.C.C.A. Licensed by FRC 20 CHEMCO LIMITED

22 Statement of Financial Position At 31 December 2014 ASSETS Notes Non-current assets Property, plant and equipment 5 8,991,180 9,817,056 Investments in financial assets 7 50,800 48,768 Deferred tax assets ,886-9,503,866 9,865,824 Current assets Inventories 9 77,344,007 68,754,202 Trade and other receivables ,288,353 82,608,044 Cash and cash equivalents 26(b) 2,851,921 10,429, ,484, ,791,599 Total assets 207,988, ,657,423 EQUITY AND LIABILITIES Capital and reserves Share capital 11 6,208,722 6,208,722 Share premium 5,518,864 5,518,864 Other reserves (4,082,462) (1,421,702) Retained earnings 91,408,407 89,467,943 Owners interest 99,053,531 99,773,827 LIABILITIES Non-current liabilities Deferred tax liabilities 13-9,423 Retirement benefit obligations 8 5,858,269 2,791,577 5,858,269 2,801,000 Current liabilities Trade and other payables 14 95,646,215 62,067,075 Current tax liabilities 15(a) 600, ,799 Dividends 16 6,829,594 6,208, ,076,347 69,082,596 Total liabilities 108,934,616 71,883,596 Total equity and liabilities 207,988, ,657,423 These financial statements have been approved for issue by the Board of Directors on 9 March Antoine L Harel Chairman Beas Cheekhooree Managing Director The notes on pages 26 to 48 form an integral part of these financial statements. Auditors report on page 20. ANNUAL REPORT

23 Statement of Profit or Loss Notes Revenue 2.14, ,326, ,263,328 Cost of sales 23 (254,315,057) (241,613,002) Gross profit 70,011,803 64,650,326 Other income 18 1,456,510 1,216,842 Other gains/(losses) - net ,142 (225,761) Operating expenses 23 (63,435,281) (56,968,634) 8,988,174 8,672,773 Finance income 20 1,442, ,978 Profit before taxation 22 10,430,825 9,368,751 Income tax expense 15(b) (1,660,767) (1,546,931) Profit for the year 8,770,058 7,821,820 Profit attributable to owners of the parent 8,770,058 7,821,820 Earnings per share (/share) The notes on pages 26 to 48 form an integral part of these financial statements. Auditors report on page CHEMCO LIMITED

24 Statement of Profit or Loss and Other Comprehensive Income Note Profit for the year 8,770,058 7,821,820 Other comprehensive income for the year: Items that will not be reclassified to profit or loss: Remeasurement of defined benefit obligations 12 (2,662,792) 389,414 Items that may be reclassified subsequently to profit or loss: Increase/(decrease) in fair value of available-for-sale financial assets 12 2,032 (8,128) Other comprehensive income for the year, net of tax (2,660,760) 381,286 Total comprehensive income for the year 6,109,298 8,203,106 Total comprehensive income attributable to owners of the parent 6,109,298 8,203,106 The notes on pages 26 to 48 form an integral part of these financial statements. Auditors report on page 20. ANNUAL REPORT

25 Statement of Changes in Equity Actuarial Share Share Fair value (losses)/ Retained Notes capital premium reserve gains earnings Total At 1 January ,208,722 5,518,864 28,448 (1,450,150) 89,467,943 99,773,827 Profit for the year ,770,058 8,770,058 Other comprehensive income for the year ,032 (2,662,792) - (2,660,760) Total comprehensive income for the year - - 2,032 (2,662,792) 8,770,058 6,109,298 Dividends (6,829,594) (6,829,594) Total transactions with owners of the parent (6,829,594) (6,829,594) Balance at 31 December ,208,722 5,518,864 30,480 (4,112,942) 91,408,407 99,053,531 At 1 January as restated 6,208,722 5,518,864 36,576 (1,839,564) 87,854,845 97,779,443 Profit for the year ,821,820 7,821,820 Other comprehensive income for the year (8,128) 389, ,286 Total comprehensive income for the year - - (8,128) 389,414 7,821,820 8,203,106 Dividends (6,208,722) (6,208,722) Total transactions with owners of the parent (6,208,722) (6,208,722) Balance at 31 December ,208,722 5,518,864 28,448 (1,450,150) 89,467,943 99,773,827 The notes on pages 26 to 48 form an integral part of these financial statements. Auditors report on page CHEMCO LIMITED

26 Statement of Cash Flows Notes Cash flow from operating activities Cash generated from operations 26(a) 2,751,609 42,847,145 Interest paid (450,115) (984,029) Tax paid (1,868,432) (1,877,490) Net cash generated from operating activities 433,062 39,985,626 Cash flows from investing activities Purchase of property, plant and equipment 5 (2,230,803) (2,180,053) Proceeds from sale of property, plant and equipment 248,913 - Dividend received 1,829 2,032 Net cash used in investing activities (1,980,061) (2,178,021) Cash flows from financing activities Dividends paid 16 (6,208,722) (6,208,722) Net cash used in financing activities (6,208,722) (6,208,722) Net (decrease)/increase in cash and cash equivalents (7,755,721) 31,598,883 Movement in cash and cash equivalents At 1 January 10,429,353 (21,363,145) (Decrease)/increase (7,755,721) 31,598,883 Effect of foreign exchange rate changes 178, ,615 At 31 December 26(b) 2,851,921 10,429,353 The notes on pages 26 to 48 form an integral part of these financial statements. Auditors report on page 20. ANNUAL REPORT

27 Notes to the Financial Statements 1. GENERAL INFORMATION Chemco Limited is a public company incorporated and domiciled in Mauritius. The address of its registered office is Chaussée Tromelin, Fort George, Port Louis. Its main activity is the trading of chemicals and general goods. The Company is listed on the Development & Enterprise Market (DEM) of the Stock Exchange of Mauritius. The directors consider Harel Mallac & Co. Ltd., incorporated in the Republic of Mauritius as the holding company and Société Pronema, an entity registered in the Republic of Mauritius as the ultimate parent entity. 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. 2.1 Basis of preparation The financial statements of Chemco Limited comply with the Companies Act 2001 and have been prepared in accordance with International Financial Reporting Standards (IFRS). Where necessary, comparative figures have been amended to conform with changes in presentation in the current year. The financial statements are prepared under the historical cost convention, except that available-for-sale investments are stated at their fair value. These financial statements are that of an individual entity. The financial statements are presented in Mauritian Rupees. (a) Standards, Amendments to published Standards and Interpretations effective in the reporting period Amendments to IAS 32, Offsetting Financial Assets and Financial Liabilities, clarify the requirements relating to the offset of financial assets and financial liabilities. The amendment is not expected to have any impact on the Company s financial statements. Amendments to IFRS 10, IFRS 12 and IAS 27, Investment Entities, define an investment entity and exempt a reporting entity that meets the definition of an investment entity from consolidating its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss in its consolidated and separate financial statements. Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure requirements for investment entities. The amendment has no impact on the Company s financial statements. IFRIC 21, Levies, sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation addresses what the obligating event is that gives rise to pay a levy and when should a liability be recognised. The Company is not subject to levies so the interpretation has no impact on the Company s financial statements. Amendments to IAS 36, Recoverable Amount Disclosures for Non-financial Assets, remove the requirement to disclose the recoverable amount of a cash-generating unit (CGU) to which goodwill or other intangible assets with indefinite useful lives had been allocated. The amendment has no impact on the Company s financial statements. Amendments to IAS 39, Novation of Derivatives and Continuation of Hedge Accounting, provide relief from the requirement to discontinue hedge accounting when a derivative designated as a hedging instrument is novated under certain circumstances. The amendments also clarify that any change to the fair value of the derivative designated as a hedging instrument arising from the novation should be included in the assessment and measurement of hedge effectiveness. The amendment has no impact on the Company s financial statements. Annual Improvements Cycle IFRS 13 (Amendment), Fair Value Measurement clarifies in the Basis for Conclusions that short-term receivables and payables with no stated interest rates can be measured at invoice amounts when the effect of discounting is immaterial. The amendment has no impact on the Company s financial statements. Annual Improvements Cycle IFRS 1 (Amendment), First-time Adoption of International Financial Reporting Standards clarifies in the Basis for Conclusions that an entity may choose to apply either a current standard or a new standard that is not yet mandatory, but permits early application, provided either standard is applied consistently throughout the periods presented in the entity s first IFRS financial statements. The amendment has no impact on the Company s financial statements, since the Company is an existing IFRS preparer. 26 CHEMCO LIMITED