innodisgroup.cominnodisgroup.com/media/32681/annual_report_2017.pdfINNODIS ANNU 2017 1 Financial...

AN

NU

AL REPO

RT 2017

ANNUAL REPORT

2017

INNODIS ANNUAL REPORT 2017

1

Financial Highlights 4

Group Structure 5

Overview of Activities 6-7

Chairman and CEO’s Report 10-16

Board of Directors 21-24

Statement of Directors’ responsibilities 25

Corporate Governance Report 28-36

Secretary’s Certificate 39

Other Statutory Disclosures 39

Independent Auditors’ Report 42-45

Consolidated statements of profit or loss and other comprehensive income 48

Consolidated statements of financial position 49-50

Consolidated statements of changes in equity 51-53

Consolidated statements of cash flows 54-55

Notes to the consolidated and separate financial statements 58-122

TABLE OFCONTENTS


2


3

Corinne, Senior Production Supervisor

SATISFY THE GROWING DEMAND OF HEALTH-CONSCIOUS CONSUMERS

The introduction of a locally-produced Greek-style yoghurt is another milestone in the growth of our dairy line. Our new creamy, protein and calcium-rich yoghurt already has its fan base. We are now launching a new range of low-fat fruited yoghurt to satisfy the growing demand of health-conscious consumers looking for innovative products.

"

"


4

0

1000

2000

3000

4000

5000

20172016201520142013

4,156 4,193 4,294 4,287 4,180

Turnover (Rs B)

0

50

100

150

200

250

300

20172016201520142013

264

211227 224

200

Operating Profit (Rs M)

0

1

2

3

4

5

20172016201520142013

4.10

3.15 3.18 3.07

0.19

Earnings per share (Rs)

0

50

100

150

200

20172016201520142013

151

116 117 113

7

Profit attributable to Owners of the Company (Rs M)

0.0

0.5

1.0

1.5

2.0

20172016201520142013

1.80 1.85 1.85 1.85 1.85

Dividend per share (Rs)

Turnover 2017

Rs 4.18Bi l l ion

FINANCIALHIGHLIGHTS


5

INNODIS LTD

100%Point Frais

Franchise Ltd

50.1%Challenge

Hypermarkets Ltd

100%Supercash

Ltd

100%Innodis

Poultry Ltd

100%Essentia

Ltd

51%Meaders Feeds Ltd

100%Peninsula Rice

Milling Ltd

100%HWFRL

Investments Ltd

100%Mauritius Farms Ltd

GROUPSTRUCTURE

60%Green Island

Milling Ltd

100%Redbridge Investment

Ltd

100%Société

Centre Point

75%Meaders

Seychelles Ltd

100%Moçambique

Farms, Limitada

100%Poulet

Arc-en-Ciel Ltée

AGRO-INDUSTRY

IMPORTS ANDDISTRIBUTIVE TRADE

MEADERS FEEDS LTD

INNODIS POULTRY LTD

MOÇAMBIQUEFARMS, LTA

POULET ARC-EN-CIEL

LTÉE

WAREHOUSING & DISTRIBUTION

FROZENFOODS

CHILLEDFOODS

DRYGOODS

OVERVIEWOF ACTIVITIES

NON-FOOD


6

MANUFACTURING

FRANCHISING

RETAILING

SUPER CASH

ICE CREAM STERILISEDMILK

YOGHURT JUICE

RICE MILLING

POINT FRAIS


7


8

"

"Rajkumar, Supervisor

ASIR SEKIRITE ET KONFIANS BAN KONSOMATERFer preske 40 banane ki sak zour, avek lekip, nou asir nou ki ban poul eleve dan ban meyer kondision: ki zot sol confortab, ki zot gagn ase dilo, enn manze 100% vezetal ek enn bon laeration. Bokou kontrol ek prosedir finn met en plas pou asir sekirite et konfians ban konsomater.


9


10

“

”

Group turnover remained

stable at Rs4.2 billion

(FY15/16: Rs4.3 billion),

buoyed by an increase in

turnover in our consumer

goods segment.

During the year under review, the economy was once again relegated to the

background, as the local headlines continued to be heavily tinted with political

considerations. As a result, private investment was conservative, with GDP growth

not expected to exceed 3.9% for 2017. In the food and distribution sector, prices

and margins remained under pressure, as competition stayed sky high among

distributors and among retailers.

CHAIRMAN AND CEO’SREPORT

Victor Seeyave Chairman

Jean-Pierre Lim Kong Chief Executive Officer

That said, our greatest challenge during that period came from an unexpected event. In September 2016, the authorities announced the suspected presence of the salmonella bacterium in a batch of chicks destined to small poultry farmers. The announcement, echoed by the media, caused widespread concern among the public, resulting in an inevitable drastic fall in chicken consumption during the ensuing months. In spite of subsequent statements from government officials to the effect that the incident was an isolated one which did not affect large operators like ourselves, it was too little too late. Our turnover and profit figures would carry the hit for the rest of the financial year.

In Mozambique, although we are faring much better operation-wise, the depreciation of the Mozambican currency and the difficult macro-economic conditions that prevailed in the country during the past financial year left the Board of Innodis Ltd with no other choice but to proceed with the impairment of 40% of the loan advanced to our subsidiary Moçambique Farms Limitada, to be in line with IFRS standards. This impairment dented the profitability of Innodis Ltd by Rs133 million.

At Group level, we are nonetheless pleased to report that most of our subsidiaries have produced satisfactory results. Both Poulet Arc-en-Ciel Ltée and Meaders Feeds Ltd performed in line with


11

expectations, in spite of being partially affected by the salmonella scare. Supercash Ltd made a welcome return to profitability after several years, while Moçambique Farms, Limitada finished the year on a positive note, with an encouraging trend of sustained progress over recent months.

However, these positive results only partly mitigated the downturn in our poultry activities. Group profit from operating activities stood at Rs200.1 million against Rs223.6 million for the previous financial year. Group turnover remained stable at Rs4.2 billion (FY15/16: Rs4.3 billion), buoyed by an increase in turnover in our consumer goods segment, which compensated to a certain extent the fall in revenue from poultry sales. EPS stood at Rs0.19 against Rs3.07 in FY15/16, the drop being attributable to matters such as the Salmonella scare that have adversely impacted on our local operations. A dividend per share of Rs1.85 was declared for the year.

MANAGEMENT AND BOARD OF DIRECTORS

As reported during the course of the last financial year, Jean How Hong retired as CEO as at 31 December 2016, and Jean-Pierre Lim Kong took up the position as from January 2017. Jean continues to serve on the Board as a non-executive Director, and Jean-Pierre has been appointed as an additional member of the Board, where he will be acting as the main conduit between the latter and Senior Management.

On the other hand, Sir René Seeyave has informed the Board that he will not be standing for re-election as a director at the annual general meeting of shareholders on the 15 December 2017. We take this opportunity to thank Sir René for his contribution to the company since its creation in 1973. Under his Chairmanship and as a member on the Board, he has helped the company flourish and soar to new heights, and we will be ever so grateful to him.

PERFORMANCE BY CLUSTER

T H E P O U LT R Y D I V I S I O N

As mentioned in the opening paragraphs of this report, the year under review, in particular the first semester, was a very challenging one for the local poultry industry. The contraction in demand following the Salmonella scare not only dealt a hard blow to our sales volumes, but also resulted in the sky-rocketing

of frozen chicken stocks, leading in turn to higher storage costs, which further impacted on our profitability in this segment. Fortunately, consumer confidence in chicken consumption has been restored in the first quarter of the calendar year 2017, and we do not foresee any recurrence of similar incidents in the near future. We are also thankful that this episode has raised awareness among consumers about the importance of purchasing chicken that originates from reputable operators like ourselves, who invest heavily in quality management systems such as HACCP and ISO 22000 to ensure the safety of consumers.

Moreover, we are now in the final phase of the development of our further processed chicken range of products, and the products should hit the shelves in the coming months. The necessity to diversify our chicken offering is all the more crucial given that the traditional chicken market has reached its maturity. That being said, we believe there is still potential to grow our market share through the revamping and expansion of our Point Frais franchise, which we shall address later on in this report. We are also looking at growing our export segment further in the region. The range of products identified for export includes our value added chicken products and day old chicks.


12

- Vegetables and fruits cultivation

In keeping with our diversification strategy, our Innodis Poultry Ltd team has been tasked with the implementation of a new project, consisting of the growing of fruits and vegetables in a protected environment on the land adjacent to our poultry houses – the rationale being that the higher concentration of carbon dioxide produced by the birds should be beneficial to plant growth. The cultivation will be initially based on agriculture raisonnée principles, but we believe that the potential is there in the medium to long term to move towards organic farming.

- Biogas and composting plant

Finally, we are excited to report that the pilot phase of our biogas plant combined with a composting facility is now up and running, and a final assessment of the financial feasibility of the project should be made in the next few months. This project is dear to us as it holds a key role in our renewed commitment towards sustainable development, in particular the ecological management and conversion of our waste products. Ultimately, our objective is to align ourselves with leading international ecological benchmarks in terms of resource and waste management.

In the event that we proceed with the commissioning of a full-scale plant, we are looking at the possibility of producing an important portion of our own energy requirements at our processing facility, while the chemical-free compost by-product could be sold to farmers as well as utilised in our own vegetables and fruits cultivation.

T H E D A I R Y D I V I S I O N

Our Dairy business fared better over the previous year, mainly driven by the introduction of our DairyVale™ Greek style yoghurt in October 2016, which contributed to a volume increase of 25% of our yoghurt sales. Our new Greek style yoghurt was an instant hit, particularly among the Millennial generation and consumers who have been looking for a protein and calcium rich yoghurt, with the added health benefit of gut-friendly probiotics. The introduction of this yoghurt is another testimony of our commitment to bring forth a diversified offering of healthier food alternatives. Moreover, other innovative products have joined our DairyVale™ range during the year, such as Ti-Malin Chocolate and Berry Trifle packs.

In our ice cream segment, we are pleased to report that we expect the Dairymaid™ brand to be soon registered under Innodis Ltd, following the transfer from Nestlé of all the trade mark rights associated with the brand. This assignment coincides with the uplifting of our Dairymaid™ impulse range of ice creams, which are now dressed in trendier and more appealing wrappers. Moreover, to complement our imported ice cream offering, we also introduced new varieties, such as Oreo, Cadbury’s and Crunchies. Finally, we have started exporting our new Bingo™ nectar spouted pouches to Reunion island and repeat orders have been confirmed.

The year ahead looks promising with new opportunities in both DairyVale™ and Dairymaid™ as well as in our Olé™ flavoured milk range. After the success of our Nature and Nature Sucré Greek style yoghurt, we are now set to launch a range of low-fat fruited Greek style yoghurt at the beginning of October 2017. We believe that there is good potential to develop the Greek style yoghurt range further in the future.

Moreover, we are also set to make our mark in the dessert market, with a new range of DairyVale™ flans due to be launched in the first semester, while our KickStart™ drinking yoghurt will be sporting a fresh new look, which is closer to the identity of its main market base.

As we expand our portfolio in future years, we will continue to scrutinise our cost structure and ensure that we are on target with key performance indicators in relation to efficiency, yield and quality, while keeping our focus on sustainable production management through energy conservation projects. In this regard, an ISO 14000 certification in relation to environmental management standards is currently in the pipeline.

T H E C O M M E R C I A L D I V I S I O N

The year under review was one of the most challenging ones that we have recently faced in our Commercial division. In addition to the drop in sales of both chilled and frozen chicken, we also had to cope with the re-introduction of a 15% import duty on our margarine from South Africa, which reduced the competitiveness of our leading brands Flora™ and Blueband™.

“

”

After the success of our Nature and

Nature Sucré Greek Style yoghurt,

we are now set to launch a range of

low-fat fruited Greek Style yoghurt at

the beginning of October 2017.



13

- New developments in our non-food offering

Sales of our non-food categories of products were also on the rise from year to year, with a good performance of our Huggies™ range of nappies and the launch during the year of a new range of homecare products from Egypt. We are now expecting further growth in this category during the coming year with the introduction of a range of Babaria™ cosmetics and personal care products. Babaria™ is one of the leading brands in Spain in the eco-chic category of beauty products, and we are confident that Babaria™, with its commitment to the use of natural ingredients, will resonate positively among the growing number of health-conscious local consumers.

Point Frais

Our main objective during the FY16/17 was to refresh the look & feel and uplift the level of service at our franchised Point Frais outlets. This was done by means of an ongoing refurbishment programme as well as further training of Point Frais staff in relation to product safety and customer service. While we were on target regarding our goals for the year, we were also faced with the negative effect of the salmonella incident on our turnover. Fortunately, the drop in sales was contained as consumers’ trust in the franchise gradually outweighed the initial scare.

We are now primed to take the franchise to the next level with a renewed focus on expanding our network and evolving our franchise into a modern proximity shop model with a more varied offering, including a full range of value-added chicken products, ready-to-eat chicken products, as well as other non-chicken convenience foods. This is in line with our strategy to expand into proximity retailing.

During the year, our margins remained under pressure, with the level of competition standing at an all-time high in both the distribution and retail sectors. However, actions initiated at the beginning of the year to incorporate certain safeguards in our promotional sales policy have produced encouraging results, and we are now witnessing a gradual improvement in our average margin.

Frozen goods

In recent years, a recurrent issue faced by our Commercial division has been the inconsistent supply of local fish, and last year was no exception, as we found ourselves yet again in short supply in spite of continuous efforts to source from alternative suppliers. We believe that this sector will continue to be a volatile one, unless the local fishing industry can attract new operators and marine resources both in our economic zone and elsewhere are sustainably managed. In the red meat category, sales were also affected by direct imports of Indian buffalo meat by some large retail outlets. Finally, as already mentioned, sales of frozen chicken were below budget.

Nevertheless, the Frozen division had its fair share of encouraging results, as sales were in line with expectations in our range of chicken products under the Doux™ brand and frozen vegetables under Americana™ and Emborg™. During the last quarter, we also successfully launched our new range of Marina™ value-added seafood products.

Consumer goods

We are pleased to report that turnover in our Consumer goods division was higher than last year. Our Twin Cows™ milk and La Vache Qui Rit™ and Floridia™ cheeses performed above expectations. During the year, we introduced our new Twin Cows™ UHT milk imported from France, and the market response was very positive. Our range of canned foods also performed well, in particular our Lucky Star™ pilchards, Palm™ corned beef, Monarch™ corned mutton and Kestrel™ canned vegetables.

On the negative side, sales of Ceres™ fruit juices were affected by the introduction of a sugar tax as well as parallel imports, and we also faced a shortage of local Bois Cheri™ tea during the second semester.

- Expansion of our beverages division

During the year, we launched Africana Beer™, a pale lager beer brewed in Estonia, setting the scene for a return of the company to the alcoholic beverages business. Our initial objective is to capture a fair share of the beer market currently dominated by a single operator, and the early feedback received so far on Africana Beer™ has been positive.

Our strategy going forward is to develop a stronger beverages division with a dedicated team and with the addition of further alcoholic beverages down the road.

“”

We are now expecting further growth

in this category (non-food) during the

coming year with the introduction of

a range of Babaria™ cosmetics and

personal care products.


14

OUR SUBSIDIARIES

M O Ç A M B I Q U E FA R M S , L I M I TA D A

The number of actions we have taken in Mozambique to enhance the operational performance of our poultry business in the country continue to bring encouraging results. We have significantly reduced our average fixed costs and our performance metrics both on our farms and at our processing plant have greatly improved.

We are also pleased to report that we have recently secured the exclusive supply of chicken to Kentucky Fried Chicken™ in the country, and are now looking forward to increase our market penetration in the retail sector, both in and outside Maputo. With a more secured client base, we are now poised for our next phase of expansion, with a projected increase in output of some 30% in the near future. As a result of the combined efforts of our production and sales teams in Mozambique, the business has been yielding a positive EBITDA for the past months.

However, our operational success has been over-shadowed during the past years by the deterioration of key macro-economic indicators in Mozambique. The Mozambican currency has weakened considerably against major currencies, while interest rates and costs of raw materials have increased sharply. The rate of inflation was also quite alarming during the year. The combined effect of these factors was two-fold. First of all, they had a direct impact on our financial results in as much as we were unable to pass on the full escalation in costs to consumers, who were themselves feeling the strain of the struggling economy. Secondly, as mentioned earlier in this report, the Board of Innodis Ltd deemed it prudent to proceed with an impairment of Rs133 million of its total advances to Moçambique Farms, Limitada.

Our many years of experience in Mozambique caution us against being overly optimistic for the future. However, we cannot help but be encouraged by the sustained positive trend in our operational performance, as well as the latest improved economic forecasts for the country. GDP growth in Mozambique is now expected to expand by 5.3% in the years 2018-2021, up from the 4.7% forecast for this year. Mining exploration, including the exploitation of natural gas reserves, is also expected to drive the country’s economic recovery, possibly heralding the future strengthening of the currency and the creation of new macro-economic conditions that are more conducive to business development.

M E A D E R S F E E D S LT D

Meaders Feeds performed reasonably well during the year. While turnover recorded a minor drop from Rs1.25 billion in 2016 to Rs1.17 billion in 2017 as a result of export restrictions to the region and a drop in sales to poultry operators following the Salmonella incident, profit after tax nevertheless recorded a moderate increase from Rs79.1 million to Rs80.7 million. The subsidiary of the company in Seychelles, Meaders (Seychelles) Ltd, also performed well, with turnover up by almost 18%, and is already establishing itself as a significant player in the agro-industry in the island.

During the year, we invested in additional storage facilities at our Riche Terre site, and we now have sufficient storage space to cater for our current and future requirements. Meaders Feeds is currently building a new plant to produce ruminant feeds and expects to supply feeds for dairy cows, beef cattle, deer, sheep and goats by the end of the first semester of the new financial year.

In our strategic bid to be closer to our customers, we have opened new shops in Triolet, Rodrigues and Seychelles, with the objective of offering a one-stop shop service to the farming community. Three more shops are due to be opened in the coming years.

S U P E R C A S H LT D

Last year, we reported a series of measures to get Supercash back on track, including the rationalisation of product categories and the introduction of new ones. As part of our ongoing efforts to redress the business, we have also been working on improving our operational efficiency and securing better deals at procurement level. We are now pleased to report that these efforts have been rewarded with a return to profitability.

In the year ahead, we are now planning to open a new Supercash retail outlet in Rose Hill. This outlet, which should be operational by the end of the first quarter, will be branded as a Supercash Xpress outlet. However, it will be a departure from our original Supercash Xpress pilot project, which was based on a franchise model. The new Supercash Xpress proximity outlets will be self-owned and self-managed, giving us a better grasp on the level of customer service, costs management and profit margins. Our future plans also include the refurbishment of our existing outlet in Port Mathurin, Rodrigues, and the opening of a Supercash Xpress outlet in the island.



15

P O U L E T A R C - E N - C I E L LT É E

The salmonella scare in September 2016 did not spare our subsidiary, Poulet Arc-en-Ciel Ltée, which is also engaged in poultry production. However, the company, which operates mainly in the unbranded chicken segment, was able to take advantage of the close business relationship it has traditionally enjoyed with its regular client base to mitigate the negative impact on sales. In fact, our operational model at Poulet Arc-en-Ciel enabled us to bounce back after this episode to record a slight growth in turnover and an improved profitability.

With the cost of feeds poised to remain stable during the year ahead, and barring any unforeseen adverse events, we expect Poulet Arc-en-Ciel to continue to fare well in the near future. We are also pleased to report that our belief in the solid fundamentals of the company has led us to increase our shareholding in our subsidiary from 56.4% to a full 100%.

P E N I N S U L A R I C E M I L L I N G C O . LT D

In spite of our appeals for the regulation of the rice market in Mauritius, the fact remains that it is still characterised by an astounding number of operators and brands, most of which are labelled “basmati” without any official certification. Moreover, in the past year, a sharp increase in world prices of Pusa (40%) and 1121 (60%) basmati was observed, making pure certified basmati rice more costly to the end-consumer. To address this issue, we introduced a standard basmati during the year to align with the current offering in this market, and this action has had a positive impact on sales during the last semester. Moreover, a new brand of rice, Shandar™, was launched for the Rodrigues market.

To instil new life into our rice segment, we are currently working on a project to export our rice to Reunion island in 2018. We expect that this would contribute to an improved turnover figure for the coming year.

SOCIAL RESPONSIBILITY AND STAFF WELFARE

We have donated a sum of Rs2 million to 16 NGOs during the past financial year in relation to our CSR programme. However, the amount of direct donations is set to be drastically reduced in future years, as we will be required to tender 50% of our CSR funds to the MRA, which amount will subsequently be raised to 75%. We regret that this new regulatory framework will leave us with a restricted scope to continue to support the NGOs which have become our partners over the years. Our hope is that these NGOs will somehow find a way to obtain a fair share of the CSR funds that will be channelled through the MRA and the National CSR Foundation to enable them to pursue their commendable work in the field of personal empowerment.

The change in the CSR framework however coincides with the re-establishment of a fully loaded HR programme, and we are pleased to report that several of our initiatives have embraced a more social approach. We have in mind the celebration of the Independence Day with the children of the Elles C Nous association and of Easter at the Foyer Père Laval – events that encourage a more active participation of our staff in our Social Responsibility initiatives, where they can share some of their time, as opposed to our more traditionally limited role as a contributor of funds.

Other HR initiatives during the year include the full computerisation of staff applications for leave, the signature of a partnership agreement with the Association internationale des étudiants en sciences économiques et commerciales (AIESEC), and the organisation of a Wellness Week. The second edition of this Wellness Week was a great success. Our staff was invited to take advantage of free screenings for cholesterol and diabetes. A wide range of advice was dispensed, from security at work and defensive driving to the importance of healthy nutrition, while workshops were organised to raise awareness on breast cancer as well as alcohol and drug abuse. Our staff also had the opportunity to be initiated to self-defence techniques and zumba classes.

We have every reason to believe that the coming year will also be an enriching one for our staff, as we remain committed towards the personal development of each and every individual and the promotion of the vital team spirit that underpins the success of every company.

“”

We are also pleased to report that we

have recently secured the exclusive

supply of chicken to Kentucky Fried

Chicken™ in the country


16

OUTLOOK

The change in leadership during the course of the year has ushered in a new era of development for the Group, with a fresh vision that rests on accelerating our growth while ensuring that we get better at what we do. As far as growth is concerned, we believe that it will be led by an increased emphasis on the development of our own brands through the many projects that we have touched upon as well as the accelerated diversification of our activities. We are also aiming to increase our retail presence in order to reap the benefits of further vertical integration.

However, we also need to recognise that a blind focus on growth alone can come at a cost, with bold initiatives to drive sales potentially impacting on the bottom line and becoming ultimately unsustainable. It will be a delicate balancing act, but our overriding priority going forward will be on containing our costs and ensuring that the business returns to a healthy level of profitability, particularly at the level of the company. With the most impactful FY16/17 events not expected to recur in the near future, the introduction of new product categories and launch of our earmarked projects, we are quietly confident that the year ahead should yield better results.

As we conclude this report, dear shareholders, we wish to thank you for keeping your faith in the Group in spite of the difficult year that we have faced. On behalf of the Board and the Management team, we can assure you that no effort will be spared at our level to honour that trust and deliver on our promise to create value for the benefit of all our stakeholders.

“”

... our overriding priority going forward will be on

containing our costs and ensuring that the business

returns to a healthy level of profitability.



17

Law Fong, Senior Supervisor

PLUS D’EMPHASE SUR NOS MARQUESJe travaille dans le département commercial depuis plusieurs années, et je peux dire que nous avons accompli un gros travail avec Twin Cows depuis le lancement. La gamme a aujourd’hui bien grandi pour inclure le Twin Cows Cheddar et le lait UHT en briques, préparé à partir de lait frais de France. Je suis certain que la marque Twin Cows a de belles années devant elle !

"

"

The Directors are pleased to present the annual report together with the audited financial statements of Innodis Ltd (the “Company”) and its subsidiaries (collectively referred to as the “Group”) for the year ended 30 June 2017. The annual report is published in full on the organisation’s website. The financial statements of the Group and the Company are set out on pages 48 to 122. The auditors’ report on these consolidated and separate financial statements is on pages 42 to 45.

REVIEW OF BUSINESS

The principal activities of the Group comprise production of poultry and dairy products, poultry farming, animal feeds manufacturing, rice milling, distribution and marketing of food and grocery products. During the year the Group consolidated its stake in the poultry sector and acquired the balance of the remaining shares of Poulet Arc-En-Ciel Ltée which is, since 15 June 2017, a wholly-owned subsidiary of Mauritius Farms Ltd, itself a wholly-owned subsidiary of Innodis Ltd. The Group also acquired on 14 August 2017 the remaining 25% stake in Moçambique Farms, Limitada which is now a wholly owned subsidiary.

Segment information is disclosed in Note 6 to the consolidated and separate financial statements.

RESULTS

For the year under review, the Group and the Company recorded a turnover of Rs4.18 billion (2016 – Rs4.29 billion) and Rs2.38 billion (2016 – Rs2.63 billion) respectively, whilst profit/ (loss) after tax attributable to shareholders for the Group and the Company were profit of Rs134 million (2016 – profit: Rs126 million) and loss of Rs37 million (2016 – profit: Rs133 million) respectively.

DIVIDENDS

Total dividends declared by the Group and the Company for the year ended 30 June 2017 were Rs147 million (2016 – Rs95 million) and Rs68 million (2016 – Rs68 million) respectively.

DIRECTORS’REPORT


20

The following directors held office during the year ended 30 June 2017:

(i) Innodis Ltd

Executive Directors

Jean-Pierre Lim Kong (Chief Executive Officer as from 1 January 2017)

Rahim Bholah

Sonny Wong Lun Sang

Non-Executive Directors

Victor Seeyave (Chairman)

Sir René Seeyave Kt., CBE

Jacques Wing Soon Leung Wan Kin

Jean How Hong (Chief Executive Officer up to 31 December 2016 and Non-Executive Director since 1 July 2017)

Independent Directors

Maurice de Marassé Enouf

Gil de Sornay

Imrith Ramtohul

(ii) Peninsula Rice Milling Ltd

Jean How Hong (Chairman)

Victor Seeyave

Sonny Wong Lun Sang

Jean-Pierre Lim Kong (appointed on 21 February 2017)

(iii) Redbridge Investments Ltd


Victor Seeyave

Vivekanand Ramtohul


(iv) Challenge Hypermarkets Ltd


Victor Seeyave




(v) HWFRL Investments Ltd


Victor Seeyave



(vi) Moçambique Farms, Limitada


Victor Seeyave (resigned on 1 December 2016)

Craig Irvine (resigned on 19 September 2016)

N. Vincent Reynolds Moothoo

Jacques Wing Soon Leung Wan Kin (resigned on 1 December 2016)


(vii) Mauritius Farms Limited



Vivekanand Ramtohul


BOARD OFDIRECTORS


21

(viii) Poulet Arc-en-ciel Ltée


Rahim Bholah (appointed on 22 June 2017)

Gérard Louis Boullé (resigned on 10 July 2017)


Dominique Rocky Forget (resigned on 22 June 2017)

Jacques Wing Soon Leung Wan Kin (resigned on 12 February 2017)



Gaetan Philip Sébastien Rae (resigned on 22 June 2017)

Vivekanand Ramtohul (appointed on 22 June 2017)

Victor Seeyave

Gerard Yoon Kong Wong Chong

Sonny Wong Lun Sang (appointed on 22 June 2017)

(ix) Essentia Ltd



Vivekanand Ramtohul


(x) Green Island Milling Limited


Rahim Bholah

Graeme Lance Robertson

Rachmat Imanuel Suhirman

(xi) Meaders Feeds Limited

Yannick Lagesse (Chairman)

Robert Joseph Bernard Montocchio

Jean How Hong

Jean Baptiste Wiehe

Maurice de Marassé Enouf (resigned on 30 April 2017)

Jocelyn Fanchette

Ramtohul Vivekanand – Alternate to Jean-Pierre Lim Kong

Rahim Bholah – Alternate to Jean How Hong

Emmanuel Wiehe – Alternate to Jean Baptiste Wiehe

Johann Montocchio – Alternate to Robert Joseph Bernard Montocchio

Jean-Pierre Lim Kong (appointed on 1 May 2017)

(xii) Supercash Ltd


Victor Seeyave

Sonny Wong Lun Sang


(xiii) P. Frais Franchise Ltd


Sonny Wong Lun Sang

Vivekanand Ramtohul


(xiv) Innodis Poultry Ltd

Victor Seeyave (Chairman)

Jean How Hong

Vivekanand Ramtohul




BOARD OFDIRECTORS


22

Directors’ Profiles

Victor Seeyave Non-Executive Chairman

Victor is the holder of a BA in Economics (UK) and an MBA (USA). He is currently the Managing Director of Altima Ltd and previously held several management positions in the foods division of the Group. He is a director of Swan General Ltd and of Swan Life Ltd. He is currently a member of the Corporate Governance Committee.

Rahim BholahExecutive Director

Rahim Bholah joined Innodis Ltd in 1993 as Production Manager at the poultry production plant and has today 26 years of hands-on experience in the manufacturing sector, within textiles, poultry and dairy industries. He is also running the Peninsula Rice Milling Ltd operations, which is a subsidiary of Innodis Ltd. He holds a Bachelor (Hons) degree in Production Engineering and Production Management from the University of Nottingham (UK). He also possesses a Postgraduate Diploma in Management. He has significantly contributed to the growth of the Group through initiatives in quality management, value engineering, innovation, productivity enhancement and market share gain both locally and regionally. He does not hold directorship in other listed companies.

Maurice de Marassé EnoufIndependent Director

Maurice retired in 2001 after 29 years of service as Finance Manager of the WEAL group of Companies. He acts as Non-executive Director on the board of Terra Mauricia Ltd and as Independent Director on the board of Mauritius Oil Refineries Ltd. He is currently the Chairman of the Audit and Risk Committee and a member of the Corporate Governance Committee of Innodis Ltd; he is also a member of the Audit Committees of the Mauritius Oil Refineries Ltd and Terra Mauricia Ltd.

Gil de SornayIndependent Director

Gil joined Swan Insurance Co. Ltd in 1958 and was appointed as General Manager in 1976. He retired in 1996 and acted as Adviser to the Group Chief Executive of Swan Insurance Co Ltd up to December 2000. Gil is currently the Chairman of the Corporate Governance Committee of Innodis Ltd. He is also a member of the Audit and Risk Committee of Innodis Ltd. He does not hold directorship in other listed companies.

Jean How HongNon-Executive Director

Jean has been the Chief Executive Officer of Innodis Ltd since February 2009 and up to 31 December 2016. Jean holds a Diploma in Sugar Technology (School of Agriculture, University of Mauritius). He had previously assumed the functions of Executive Director of Mauritius Farms Ltd, General Manager (Commercial Division) of Happy World Ltd and Chief Operating Officer of the Company from August 2005 to December 2008. He chairs the Corporate Governance Committee of Meaders Feeds Ltd and does not hold directorships in other listed companies.


23

Jacques Wing Soon Leung Wan KinNon-Executive Director

Jacques is a Fellow Member of the Association of Chartered Certified Accountants UK. He is the General Manager - Finance of Altima Group and has had valuable exposure to the affairs of Innodis Ltd, having previously held management responsibilities in the food division of the Group. Jacques is currently a member of the Audit and Risk Committee of Innodis Ltd. He does not hold directorship in other listed companies.

Jean-Pierre Lim KongExecutive Director

Jean-Pierre is the Chief Executive Officer of Innodis Ltd since 1st January 2017. He previously held the position of General Manager for Finance and Administration of the company from 2000 to 2005. Jean-Pierre is a Fellow of the Institute of Chartered Accountants in England and Wales and holds a BSc (Hons) in Mathematics and Management Studies from King’s College London. Prior to joining Innodis Ltd, he worked for KPMG’s audit and consulting practices in London, the business advisory departments of KPMG and DCDM Consulting in Mauritius, and for the Cim Group in Mauritius, first as Managing Director of Cim Finance Ltd and subsequently as Group Chief Finance Executive. He currently chairs the Listing Executive Committee of the Stock Exchange of Mauritius. Jean-Pierre also served on the Board of the Mauritius Institute of Directors for three years. He does not hold directorships in other listed companies.

Imrith RamtohulIndependent Director

Imrith is presently the Senior Investment Consultant at Aon Hewitt Ltd (Mauritius). He has also previously held positions at Mauritius Union Group, the Stock Exchange of Mauritius and at subsidiaries of South African banking groups Rand Merchant Bank and Nedbank. Imrith is a member of the CFA Institute Global Investment Performance Standards (GIPS) Asset Owners Subcommittee. He has more than 17 years of experience in the financial services sector and has been cited in a number of media publications. Imrith holds the Chartered Financial Analyst designation and is a Fellow of the Association of Chartered Certified Accountants UK (FCCA). He also graduated from the University of Cape Town with a Bachelor of Business Science (Honours) degree. Imrith is a Director of IPRO Growth Fund Ltd.

Sir René Seeyave Kt., CBENon-Executive Director

A prominent and respected entrepreneur, Sir René has been the prime mover in some of the most successful ventures that the country has known, amongst which the textile, food and distribution sectors. For his contribution to the Mauritian economy, Sir René was the youngest person in the private sector to be knighted by H.M The Queen of England in 1985. During his career, Sir René has been entrusted with key positions in several public and private sector institutions. Today, Sir René chairs the Board of the Altima Group, which has completed several property projects in Ebène Cybercity and has launched a management company in association with Alter Domus, a large international group offering corporate management services.

Sonny Wong Lun SangExecutive Director

Sonny has more than seventeen years of experience in the food sector as Production & Quality Manager, Sales & Marketing Manager and is currently the General Manager of the Group’s commercial division. He holds an MBA from ‘IAE – Institut en Administration des Entreprises’ of Poitiers, a Master-DESS in project management from the University of Bordeaux and a Master-DEPA in entrepreneurship from the IFE of Réduit. He does not hold directorship in other listed companies.

BOARD OFDIRECTORS


24

Directors acknowledge their responsibilities for:

(i) adequate accounting records and maintenance of effective internal control systems;

(ii) the preparation of consolidated and separate 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 cash flows for that period, and which comply with International Financial Reporting Standards (IFRS), the Financial Reporting Act and in compliance with the Mauritius Companies Act;

(iii) the use of appropriate accounting policies supported by reasonable and prudent judgements and estimates;

(iv) the Group and the Company’s adherence to the Code of Corporate Governance; and

(v) having made an assessment of the Group and Company as a going concern and have reasons to believe it will continue to operate for the foreseeable future.

The external auditors are responsible for reporting on whether the financial statements are fairly presented.

The Directors report that:

(vi) adequate accounting records and an effective system of internal controls and risk management have been maintained;

(vii) appropriate accounting policies supported by reasonable and prudent judgements and estimates have been used consistently;

(viii) International Financial Reporting Standards, the Financial Reporting Act and the Mauritius Companies Act have been adhered to. Any departure has been disclosed, explained and quantified in the consolidated and separate financial statements; and

(ix) The Code of Corporate Governance has been adhered to in all material aspects and explanations have been provided for any non-compliance.

Approved by the Board of Directors on 27 September 2017 and signed on its behalf by:

Victor Seeyave Maurice de Marassé EnoufChairman Director

STATEMENT OFDIRECTOR’S REPONSIBILITIES


25

MARINAMARINA

Winley, Assistant supervisor

ZAME FER KOMPROMI LOR FRESER NOU BAN PRODWI Depi mo travay Innodis, kantite prodwi nou distribie finn bien augmente. Zordi, nou ena ene gran variete frwi de mer, pa zis bann prodwi ki nou emballer dan seksion Packing, me osi bannes prodwi pli elabore, fasil pou kwi, ki nou distribie. Kot Innodis, pe import ki prodwi nou vende, zame nou fer kompromi lor freser nou ban prodwi.

"

"

CORPORATE GOVERNANCE REPORTThe Corporate Governance Report includes Other Statutory Disclosures pursuant to Section 221 of the Mauritius Companies Act 2001.

Innodis Ltd was incorporated on 25 April 1973. The Company is listed on the official market of the Stock Exchange of Mauritius Ltd since 1996 and is a public interest entity as defined by the Financial Reporting Act.

STATEMENT OF COMPLIANCE

The Board of Directors of Innodis Ltd ensures that the principles of good corporate governance, as applicable in Mauritius, are fully adhered to and form an integral part in the way in which the Group’s business is conducted. It is also committed to fair financial disclosure for its shareholders and all the stakeholders at large.

THE STRUCTURE OF THE BOARD AND ITS COMMITTEES

The directors are aware of their legal duties; the Board assumes responsibility for leading and controlling the organisation and meeting all legal and regulatory requirements.

The Company has a unitary Board of directors which consists of three executive directors, four non-executive directors and three independent non-executive directors. The directors come from diverse business backgrounds and possess the necessary knowledge, skills, objectivity, integrity, experience and commitment to make sound judgements on various key issues relevant to the business of the Company, independent of management. The list of the directors and their profiles are included on pages 21 to 24 of the Annual Report.

The Company complies with the Code of Corporate Governance which stipulates that the Company shall have at least two independent and two executive directors.

The Board meets on a quarterly basis and at such ad hoc times as may be required. Its main functions include the following:

• Reviewing and evaluating present and future opportunities, threats and risks in the external environment and current and future strengths, weaknesses and risks relating to the Company;

• Determining strategic options, selecting those to be pursued, and resolving the means to implement and support them;

• Determining the business strategies and plans that underpin the corporate strategy;

• Ensuring that the Company’s organisational structure and capabilities are appropriate for implementing the chosen strategies;

• Delegating such authority and power to management as may be deemed appropriate and monitoring and evaluating the implementation of policies, strategies and business plans;

• Ensuring that internal controls are effective;

• Overseeing information governance within the Group and ensuring that information assets are managed effectively;

• Communicating with senior management;

• Ensuring that communications both to and from shareholders and relevant stakeholders and all strategic partners are effective; and

• Understanding and taking into account the interests of shareholders and relevant stakeholders in policy and strategy implementation.

Appointment and re-election of Directors

The directors are normally appointed by shareholders by an ordinary resolution at the Annual Meeting. In compliance with the Constitution of the Company, the Board may also appoint any person to be a director, either to fill a casual vacancy, or as an addition to the existing directors. Moreover, the Board may appoint any of the Managers of the Company as an executive director and may limit the powers of the latter.

All directors, whether appointed by a resolution of shareholders or by the directors, shall hold office only until the next Annual Meeting, at which time they shall retire, or shall be eligible for re-election.

Board Committees

The Board has two standing committees to assist in the discharge of its duties. The committees, which are set out below, meet regularly under terms of reference set by the Board. The Chairman of each committee has the responsibility to report to the Board regarding all decisions and matters arising at each Board meeting. The committees may from time to time seek independent professional and consultancy services, and any recommendations in connection therewith are subject to the approval of the Board.

Board and Directors’ Appraisal

The last Directors’ self-appraisal was carried out in May 2015. Given that the composition of the Board of Directors remains stable, an assessment of its functioning has not been carried out during the year under review. The next one is scheduled in the next financial year.

Chairman

Victor Seeyave is the current Chairman. The Chairman has no executive or management responsibilities and chairs meetings of the Board and of Shareholders.

The Chairman’s primary function is to:

• preside over the meetings of directors and ensure the smooth functioning of the Board in the interests of good governance;

• provide overall leadership and encourage active participation of all directors; and

• ensure that all the relevant information and facts are placed before the Board to enable the directors to reach informed decisions, and maintain sound relations with the Company’s shareholders.

Chief Executive Officer (CEO)

The CEO is responsible for the day-to-day management of the Company and works in close collaboration with the management team. The CEO also reports to the Board of Directors.


28

The post of CEO is held by Mr. Jean-Pierre Lim Kong since 1 January 2017 following the decision of Mr. Jean How Hong to retire from the said function.

Leadership

Directors and members of Management exercise the utmost good faith, honesty and integrity in all their dealings with or on behalf of the Company. They are well versed with the day-to-day transactions of the Company and are sufficiently experienced and qualified to fulfil their roles and functions.

Corporate Governance Committee

The Corporate Governance Committee comprises two independent directors, including its Chairperson and one non-executive director as follows:

• Gil de Sornay (Committee Chairman) – Independent Director

• Victor Seeyave – Non-Executive Director

• Maurice de Marassé Enouf – Independent Director

Given the nature, size and moderate complexity of the business, the functions that would have normally devolved to remuneration committee and to a nomination committee are discharged by the Corporate Governance Committee, which submits its recommendations to the Board for approval.

The committee members met 3 times during the year. The mandate of the Corporate Governance Committee is to:

• determine and develop the general policy regarding legal compliance, ethics of the Group and corporate governance in accordance with the Code of Corporate Governance;

• assist the Board in establishing a formal and transparent procedure for developing a remuneration policy for senior management and making recommendations to the Board on all new Board appointments;

• ensure that the Board has a right balance of skills, expertise and independence;

• ensure that any new director is fully aware of his/her roles, duties, responsibilities, obligations and potential liabilities as a director;

• ensure that a succession planning exists in respect of the Chief Executive Officer and members of senior management; and

• have unrestricted access to any employee information relevant to the performance of his/her duties.

Audit and Risk Committee

The Audit and Risk Committee consists of two independent directors, including its Chairperson and one Non-Executive Director as follows:

• Maurice de Marassé Enouf (Committee Chairman) – Independent Director

• Gil de Sornay – Independent Director

• Jacques Wing Soon Leung Wan Kin – Non-Executive Director

The Audit and Risk Committee met 5 times during the year and the members of the Committee have examined and tabled their views on financial reports prior to publication, the audited consolidated and separate financial statements, as well as reports

from the Internal and External Auditors.

The mandate of the Audit and Risk Committee is to:

• review and recommend to the Board, for approval, the audited consolidated and financial statements and the abridged audited consolidated results as at June 30 (the end of the financial year), as well as the unaudited quarterly abridged consolidated financial statements for publication in accordance with the Securities Act 2005;

• evaluate the work of the external auditors;

• ensure that significant adjustments, unadjusted differences, disagreements with Management and management letters are discussed with the external auditors;

• review the contents of the annual report before its release;

• review and discuss with Management the recommendations made by internal and external auditors and their implementation;

• review the effectiveness of the system for monitoring compliance with laws and regulations and the results of Management’s investigation and follow-up of any fraudulent acts and/or non-compliance; and

• oversee the Company’s compliance with legal and regulatory provisions, its Constitution, code of conduct, by-laws and any rules established by the Board.

Internal Audit Function

The Internal Audit Manager and Risk reports to the Audit Committee and administratively to the Chief Executive Officer. The Audit Committee approves the yearly plan of the internal audit manager which comprises the following main responsibilities:

• Determining the adequacy and effectiveness of the systems of internal accounting and financial reporting of the Company;

• Reviewing management controls designed to safeguard Company resources and verify the existence of such resources;

• Determining whether adequate controls are incorporated into information technology systems and the overall IT administrative functions;

• Appraising the use of resources with regard to cost, efficiency and effectiveness;

• Reviewing compliance with Company policies, plans and procedures to ensure achievement of business objectives;

• Investigating suspected fraudulent activities within the organisation and notifying the Audit and Risk Committee and Management of the results;

• Coordinating with and having oversight of other control and monitoring functions (risk management, quality assurance, security and safety);

• Issuing periodic reports to the Audit and Risk Committee on the results of audit activities and management plans to address audit observations; and

• Following-up of implementations of action plans to address significant weaknesses identified.


29

CORPORATE GOVERNANCE REPORTThe internal audit team has unrestricted access to the records, management and employees of the Group. The Internal Audit Manager has the responsibility of ensuring that internal controls are implemented at Group level, except for Meaders Feeds Ltd which has its

own internal audit function.

THE STRUCTURE OF THE BOARD AND ITS COMMITTEES (CONTINUED)

Risk Management Function

The Directors recognise that the Board has the overall responsibility for the risk management and internal control mechanisms of the Company. Management assists the Board in implementing, operating and monitoring the internal control systems which manage the risks of calamities and failure to achieve business objectives, and provide reasonable but not absolute safeguards against material misstatements or losses. The systems of internal controls put in place by management include:

• the maintenance of proper accounting records;

• the implementation of the policies and strategies approved by the Board;

• the regular assessment of specific risk managements such as – market risks, credit risks, liquidity risks, operation risks, commercial risks, technological risks, compliance risks and human resource risks; and

• the overseeing and reviewing on an ongoing basis of the risks associated with occupational health and safety, as well as environmental issues.

Management has a well-designed structure for the identification and management of risks through stringent controls which are reviewed on a regular basis by the internal audit department. This provides the directors a certain level of assurance that risk management processes are in place and effective.

Procurement Function

One of the key risk areas of the Group is the procurement function. As such, Management has set up a separate procurement committee. The aims of the Procurement Committee are to prioritise and manage risks across the entire supply chain. The Procurement Committee currently reports to the Chief Executive Officer and its main terms of reference are to:

identify, and manage procurement risks according to their chances of occurrence and severity;

• provide guidelines on procurement;

• make recommendations for the selection of suppliers to ensure best value for money is received, and the adequacy of stocks, taking into consideration cash flow requirements; and

• set the highest possible ethical standards and best practices for procurement through defined policies and monitoring.

DIRECTORS’ ATTENDANCE AT MEETINGS FOR THE PERIOD FROM 1 JULY 2016 TO 30 JUNE 2017

The record of attendance at Board and Committee meetings is shown in the summary table below:

Board Meetings28 Sep 2016 14 Nov 2016 07 Dec 2016 13 Feb 2017 15 May 2017 21 Jun 2017

Victor Seeyave ü ü ü ü ü ü

Rahim Bholah ü ü ü ü ü ü

Maurice de Marassé Enouf ü ü ü ü ü ü

Gil de Sornay ü ü ü ü ü ü

Jean How Hong ü ü ü ü ü ü

Jacques Leung Wan Kin ü ü ü û ü ü

Jean-Pierre Lim Kong* - - - ü ü ü

Imrith Ramtohul ü ü ü ü ü ü

Sir René Seeyave û û ü û û ü

Sonny Wong Lun San ü ü ü ü ü û

* Jean-Pierre Lim Kong has been appointed as Director on 9 January 2017.


30

Audit and Risk Committee Meetings23 Sep 2016 07 Nov 2016 20 Jan 2017 10 Feb 2017 12 May 2017

Maurice de Marassé Enouf ü ü ü ü ü

Jacques Leung Wan Kin ü ü ü û ü

Gil de Sornay ü ü ü ü ü

Corporate Governance Committee Meetings

01 Jul 2016 28 Sep 2016 13 Feb 2017

Gil de Sornay ü ü ü

Maurice de Marassé Enouf ü ü ü

Victor Seeyave ü ü ü

Common Directorships

Common directorships are disclosed on pages 21 to 24 under the Directors’ Profiles.

COMPANY SECRETARY

The secretary of the Company is Box Office Ltd.

The role of the Company secretary is to:

• ensure compliance with the Company’s constitution and all relevant statutory and regulatory requirements, codes of conduct and rules established by the Board; and

• provide guidance and advice to the Board on matters of ethics and good governance.

STATEMENT OF REMUNERATION PHILOSOPHY

The Board’s Corporate Governance Committee has the responsibility for reviewing the remuneration of key executives, including the Chief Executive Officer. The level of remuneration is based on a formal assessment of performance in accordance with agreed target parameters and is in line with market trends.

A statement showing the remuneration of executive and non-executive directors is shown below.

CONSOLIDATED SEPARATE

2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Executive* 44,110 21,122 31,857 15,337

Non-Executive 3,090 3,021 3,090 3,021

47,200 24,143 34,947 18,358

Section 2.8.2 of the Code of Corporate Governance with respect of disclosure of the individual remuneration of directors has not been complied with. The reason for non-compliance is provided on page 37.

*An amount of Rs15 million paid as gratuity to the former CEO is included in the statement of remuneration of executive directors of the Company and the Group.

DIRECTORS’ SERVICE CONTRACTS

There are no service contracts between the Company or any of its subsidiaries and their directors, with the exception of the service contract of the Chief Executive Officer and that of the Managing Director of Meaders Feeds Ltd. Jean How Hong retired as CEO on 31 December 2016 subsequent to which he had a consultant contract from 1 January 2017 to 30 June 2017.

SHARE OPTION PLAN

The Group and the Company have no share option plans.


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CORPORATE GOVERNANCE REPORTSUBSTANTIAL SHAREHOLDERS

The shareholders holding more than 5% of the ordinary shares of the Company at 30 June 2017 were:

• Foods Div Ltd – 33.73%

• Altima Ltd – 13.07%

• National Pension Fund – 7.86%

• Swan Life Ltd – 6.35%

• Excelsior United Development Companies Limited – 5.53%

Summary of shareholders by category

Investment & Trust 1.57 %

Individual 12.80 %

Pension & Provident Funds 14.14 %

Insurance & Assurance 13.57 %

Other Corporate Bodies 57.92 %

SHAREHOLDING PROFILE

Size of shareholding No of shareholders No of shares owned %1 – 500 1,579 289,801 0.79

501 – 1,000 417 339,283 0.92

1,001 – 5,000 535 1,267,643 3.45

5,001 – 10,000 131 920,316 2.5

10,001 – 50,000 105 2,371,336 6.46

50,001 – 100,000 18 1,238,154 3.37

100,001 – 250,000 11 1,630,356 4.44

250,001 -1,000,000 8 2,770,027 7.54

Over 1,000,000 6 25,903,350 70.53

2,810 36,730,266 100


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DIRECTORS’ AND SENIOR OFFICERS’ INTEREST AND DEALING IN SHARES

The Directors use their best endeavours to follow the principles of the model Code on Securities Transactions by Directors (as detailed in Appendix 6 of the Stock Exchange listing rules).

The Directors’ and Senior Officers’ direct and indirect interests in shares of the Company at 30 June 2017 were as follows:

2017 2017 2016 2016

Direct

holding

Number

Direct

holding

Number

Indirect

holding

%

Indirect

holding

%

Directors :

Sir René Seeyave 2,700 15.87 2,700 15.87Maurice de Marassé Enouf 533 - 533 -Jean How Hong 39,218 0.01 39,218 0.01Victor Seeyave - 30.45 - 30.45Gil de Sornay 13,697 - 13,697 -Jacques Wing Soon Leung Wan Kin 2,620 - 2,620 -Imrith Ramtohul 24,242 0.0041 14,032 0.0041Rahim Bholah 2,000 - 2,000 -Sonny Wong - - - -

Jean-Pierre Lim Kong 1 - - -85,011 46.3341 74,800 46.3341

Senior Officers :Amrith Dass Nunkoo 310 - 310 -V. N. Reynolds Moothoo - - - -Vivekanand Ramtohul - - - -Gerard Yoon Kong Wong Chong 698 - 698 -Jocelyn Fanchette - - - -Hansley Chadee 200 - 200 -Rajneetee Beeharry - - - -Arvin Saddul - - - -Christina Sam See Moi - - - -Deven Ramasawmy - - - -Box Office Ltd - - - -

1,208 - 1,008 -

During the year under review, Imrith Ramtohul has acquired 10,210 additional shares of the Company.


33

CORPORATE GOVERNANCE REPORTSTAKEHOLDERS’ RELATIONS AND COMMUNICATION

The Board aims to properly understand the information needs of all shareholders and strongly believes in an open and meaningful dialogue with all those involved with the Group. It ensures that shareholders and other stakeholders are kept informed on matters affecting the Group. The Group’s website (www.innodisgroup.com) is used to provide relevant information. Open lines of communication are maintained to ensure transparency and optimal disclosure. All Board members are requested to attend annual meetings to which all shareholders are invited.

Share price information

For the year under review, Innodis share price has decreased by 8% from Rs40.00 at 30 June 2016 to Rs37.00 at 30 June 2017.

2017 2016

Share price (Rs) 37.00 40.00Earnings per share (Rs) 0.19 3.07Price Earnings Ratio (times) 195 13.03Dividend per share (Rs) 1.85 1.85Dividend yield (%) 5.00 4.63

TIMETABLE OF IMPORTANT EVENTS FOR SHAREHOLDERS:

September Approval of audited consolidated and separate financial statements

September/October Presentation to Fund Managers

November Publication of first quarter results

December Declaration of interim dividends*

Annual meeting of shareholders

February Publication of second quarter results

May Publication of third quarter results

June Declaration of final dividends*

*Subject to the approval by the Board of Directors

RELATED PARTY TRANSACTIONS

Related party transactions are set out in Note 29.

CONTRACT OF SIGNIFICANCE

The Company has a Technical and Advisory services agreement with Altima Ltd. There is no other contract of significance between the Company or any of its subsidiaries and a third party, in which a director is materially interested directly or indirectly, for the year under review.

DIVIDEND POLICY

The Board has not established a formal dividend policy. However, the Board endeavours to authorise distributions in the light of the company’s profitability, cash flow requirements and planned capital expenditure.

SUSTAINABILITY REPORTING

Health, Safety and Environmental policies

The Group has developed and implemented social, safety, health and environmental policies and practices that in all material respects comply with existing legislative and regulatory frameworks.

The Group carries out regular risk assessments to ensure that all production units are operated in such a manner as to minimise damage to the environment and the neighbourhoods. Regular training sessions, both in-house and outsourced, are also provided to our staff to ensure that health and safety cultures prevail within the Group and that everyone is well informed about health and safety policies in place.

Health and Safety committees, consisting of representatives of both Management and employees, are held every two months. The objectives of this committee are to promote cooperation between the employer and the employees and to discuss projects and plans in order to promote the health and safety culture at Innodis.

The Group operates its day-to-day activities in a way that is aligned as far as possible with green, environmentally-friendly and energy-saving principles, paying special attention to the regular maintenance and optimal use of its fleet of vehicles to minimise carbon emissions. The used engine oil of our vehicles as well as the plastic, paper and carton waste products at our commercial division are routinely recycled. We also have a project in the pipeline to produce renewable energy.

We are engaged in sustainable chicken production. This involves the responsible use of the natural resources of air, water, energy and other natural inputs for rearing animals, as well as the animals, themselves, in terms of their own welfare. Sustainability also includes protecting and taking care of the members of our workforce that grow the animals and process the poultry products. To build trust and confidence among consumers, Innodis has been voluntarily pursuing third party certifications and adopting best practices for several years.

The ISO 14001 certification has helped us identify areas where we can further improve on waste handling and recycling, make best use of our natural resources, create opportunities for environmental benefits, care even more for our animals, water, energy utilisation, and protect the air and the soil.

The system that we have in place at Innodis is in accordance with best international standards and practices in relation to environment protection and community welfare. The implementation of our Environmental Management System is part of our drive to incorporate sustainability into every aspect of chicken production, for the ultimate benefit of the consumer.


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Corporate Social Responsibility (CSR): Innodis Foundation

For the financial year ended 30 June 2017, Innodis Foundation, which manages the CSR funds of Innodis Group has donated some Rs2.0 million (2016: Rs3.0 million) to sixteen NGO’s involved in activities that we consider to be high on our priority list of interventions.

The Foundation has allocated funds to projects which are in line with its four priority action areas, namely the:

• assistance to the alleviation of poverty;

• promotion of education and training to vulnerable groups;

• assisting in developing a healthy nutrition programme for the needy; and

• supporting projects for the protection of the environment.

Since its inception in June 2010, Innodis Foundation has funded NGO projects to the tune of Rs23.4 million under its corporate social responsibility (CSR) program.

SHAREHOLDERS’ AGREEMENT

There is no shareholders’ agreement which affects the governance of the Company by the Board.

MANAGEMENT AGREEMENT

There is no management agreement between Innodis or any of its subsidiaries with third parties, except in the case of our subsidiaries, Poulet Arc-en-Ciel Ltée and Innodis Poultry Ltd, which have a management agreement with Innodis Ltd.

CONSTITUTION OF THE COMPANY

The Constitution of the Company does not provide for any ownership restrictions of shares.

Save and except where the terms of issue of any class of shares – as may be determined by the Board - specifically provides otherwise, all new shares are, before issue, offered to existing holders in proportion to their existing shareholdings.

The shareholders of the Company approved, at a Special Meeting held on 18 December 2013, a new constitution which replaced the memorandum and articles of association of the Company. This constitution, drafted in compliance with the prevailing legislations, in particular the Companies Act 2001 and the appendix 4 of the Listing Rules, also takes into account the prevailing Code of Corporate Governance.

Code of Ethics

The Group is committed to the highest standards of integrity and ethical conduct in dealing with all its stakeholders. Employees at all levels have partaken in the drawing up of the Group’s code of ethics, which reflects its diversity and unique culture. Adequate grievances and disciplinary procedures are in place to enable enforcement of the Code of ethics. The code of ethics can be viewed on the Company’s website.

SENIOR MANAGEMENT TEAM

The Senior Management team, other than the CEO, Jean-Pierre Lim Kong and the other Executive Directors, Sonny Wong Lun Sang (General Manager – Commercial) and Rahim Bholah (General Manager – Production), are as follows:

Vivekanand Ramtohul, FCCA

Group Finance Manager

Vivek has been working with the Group for 16 years. He is a Fellow of the Association of Chartered Certified Accountants, UK

Jocelyn Fanchette

General Manager - Meaders Feeds Ltd

Jocelyn holds an MSc Animal Production from the University of Reading – UK, as well as a BSc (Hons) Agriculture, a Diploma in Agriculture & Sugar Technology, and a Diplôme Supérieur en Administration des Entreprises from the University of Mauritius.

Reynolds Moothoo

General Manager Agribusiness and Regional Development – Innodis Poultry Ltd

Reynolds’ main responsibilities include the management of our local vertically integrated poultry operations, now regrouped under Innodis Poultry Ltd, as well as the development and oversight of our poultry-related activities in the region. Reynolds joined Innodis in 2005. He has over 38 years’ management experience in the agro-industry. He holds a Diploma in Agriculture, a Diploma in International Marketing and a Masters in Business Administration from Surrey University, UK.

Gerard Yoon Kong Wong Chong

General Manager – Poulet Arc-en-Ciel Ltée

Gerard started his career in the sugar industry and has been working in the poultry business since 1978. He is currently responsible for the activities of Poulet Arc-en-Ciel Ltée. He holds a BSc in Agriculture.

Hansley Chadee

IT Manager

Recipient of the state scholarship, Hansley holds a BEng Information System from Imperial College London, and an MPhil in Artificial Intelligence from Cambridge University. He holds an MBA from Imperial College London and has been with the Company for the past 17 years.


35

CORPORATE GOVERNANCE REPORTSENIOR MANAGEMENT TEAM (continued)

Amrith Dass Nunkoo

Logistics Manager

He holds an MA Engineering from the University of Cambridge, UK. He is presently in charge of the Group’s dry warehouse and cold room activities. He is also in charge of the management of the fleet of vehicles and refrigeration systems.

Rajneetee Beeharry

Human Resources Manager

Rajneetee has over 16 years of working experience within different areas that span over Human Resources, Hospitality, Quality Assurance, Training and Food & Beverage within Financial and Hospitality sector. She holds a BSc in Human Resources from the University of Mauritius and an MBA Degree from the Management College of South Africa. She joined the Company in April 2016 and is currently leading the Human Resources department.

Arvin Saddul

Manager - Supercash Ltd

He has been working for the Group for 26 years. He holds a BEng Mechanical Engineering from University of Manchester, UK. He is a Chartered Engineer and holds an MBA in Project Management

Christina Sam See Moi

Senior Manager – Commercial

Christina joined the Company in 2000, right after graduating from university and has since worked in the marketing field. She holds a BSc (Hons.) Management from the London School of Economics and Political Science.

Deven Ramasawmy

Internal Audit Manager

He is a member of the Association of Chartered Certified Accountants, UK. He joined the Group in 2014 as Internal Audit Executive and is now the Group’s Internal Audit Manager. Previously he has worked for Shibani Finance and Poivre Corporate Services as Internal Audit Manager.

ACKNOWLEDGEMENT

The Board would like to thank all employees for their continued dedication and loyalty.

Victor Seeyave Box Office LtdDirector Company Secretary


36

STATEMENT OF COMPLIANCE (As per Section 75 (3) of the Financial Reporting Act)

We, the Directors of Innodis Ltd, confirm, to the best of our knowledge that the Company has complied with the requirement of the Code of Corporate Governance, except for:

(a) section 2.8.2 - the reason being that the Board of Directors considers this information as very sensitive in this competitive market.

(b) section 2.10.4 – the reason being that an evaluation of directors were carried out in 2015 and given that the composition of the Board of Directors remains stable, the next evaluation will be done in the next financial year.

Gil de Sornay Victor SeeyaveChairman Director

27 September 2017


37

SECRETARY’S CERTIFICATE UNDER SECTION 166(D) OF THE MAURITIUS COMPANIES ACT 2001

In accordance with Section 166 (d) of the Mauritius Companies Act 2001, we hereby 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 Mauritius Companies Act 2001.

Box Office LtdCompany Secretary

27 September 2017

SECRETARY’SCERTIFICATE


38

AUDITORS’ REMUNERATION

2017 2016

Rs’000 Rs’000

Company: KPMG : Audit Fees 1,895 2,006

Advisory Services - 50

Group: KPMG : Audit Fees 2,747 3,569

Advisory Services - -

Ernst & Young : Internal Audit Services 554 360Tax Services 52 50

External Auditors

The Audit and Risk Committee has approved the re-appointment of KPMG to act as External Auditors of the Group for the next financial year. This approval is subject to ratification by the shareholders of Innodis Ltd by means of a resolution at the annual meeting. The next annual meeting is scheduled to be held in December 2017.

OTHER STATUTORYDISCLOSURES


39

Priscilla, Logistics Officer

CONSISTANTLY DELIVERS ON ITS QUALITY PROMISEWho doesn’t know Ceres, one of our most famous brands? Year in, year out, it consistently delivers on its quality promise, and has become a local benchmark for other brands. For me, Ceres is a reminder of our constant need to likewise deliver on our promise of high quality, wholesome products, so that we become the company by which all other companies are measured !

"

"


42

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF INNODIS LTD

REPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

Opinion

We have audited the consolidated and separate financial statements of Innodis Ltd (the Group and the Company), which comprise the consolidated and separate statements of financial position as at 30 June 2017, and the consolidated and separate statements of profit or loss and other comprehensive income, the consolidated and separate statements of changes in equity and the consolidated and separate statements of cash flows for the year then ended, and the notes to the consolidated and separate financial statements, including a summary of significant accounting policies, as set out on pages 48 to 122.

In our opinion, these consolidated and separate financial statements give a true and fair view of the consolidated and separate financial position of Innodis Ltd as at 30 June 2017, and of its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and in compliance with the requirements of the Mauritius Companies Act and Financial Reporting Act.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated and Separate Financial Statements section of our report. We are independent of the Group and Company in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Assessment of investments in subsidiaries for impairment (applicable to the separate financial statements)

Refer to note 16 of the accompanying consolidated and separate financial statements.

THE KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN OUR AUDIT

As at 30 June 2017, the Company has investments in subsidiaries with a carrying value of Rs593m (2016: Rs649m).

There were indicators at 30 June 2017, year end, that the Company’s main investments in subsidiaries, namely Moçambique Farms, Limitada, HWFRL Investments Ltd, and Peninsula Rice Milling Ltd, may be impaired as they have faced deteriorating financial performance for a number of years or incurred losses during the current year. In addition, Supercash Ltd had a net liability position as at 30 June 2017. Accordingly, management assessed these investments for impairment at year end using a discounted cashflow approach to compare the recoverable amount of the investments in subsidiaries to the their carrying value. An impairment of Rs133m was recognised in respect of the investment in Moçambique Farms, Limitada.

Due to the level of judgement used by management in the assessment for impairment in investments in subsidiaries, we determined that this is a key audit matter in our audit of the separate financial statements.

Our audit procedures in respect of this key audit matter included, amongst others:

• Evaluating management’s impairment assessment process to determine whether all indicators of impairment were identified based on our knowledge of the Group and current market information.

• Evaluating the reasonableness of management’s cash flows projections, used in the discounted cash flow model, of its subsidiaries and assessing the appropriateness of the assumptions used in light of our knowledge and understanding of the Group.

• Evaluating the adequacy of the financial statement disclosures, including disclosures of key assumptions and judgements.


43


REPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (CONTINUED)

Key audit matters (continued)

Valuation of Consumable Biological Assets (applicable to the consolidated financial statements)

Refer to the accounting policy in note 3(g) and to notes 4(a) and 20(b) to the consolidated and separate financial statements.

THE KEY AUDIT MATTER HOW THE MATTER WAS ADDRESSED IN OUR AUDIT

The Group’s biological assets include consumable biological assets amounting to Rs38.8m at year end. These consumable biological assets comprise hatchable eggs and live broiler chicks which are measured at fair value less estimated costs to sell.

Management used the income approach to measure the fair value of consumable biological assets and made significant judgements about unobservable inputs in applying this method, including:

• the hatchability rate, where the fair value of hatchable eggs is determined based on the value at which a one day chick can be sold, less hatchery costs and adjusted for the hatchability rate.

• the mortality rate and yield rate, where the fair value of live broiler chicks is determined based on the selling price of processed chicken, adjusted for the mortality and yield rates.

Given the significance of the judgements involved in determining the fair value of consumable biological assets, this matter was considered to be a key audit matter in our audit of the consolidated financial statements.

Our audit procedures in respect of this key audit matter included, amongst others:

• Assessing whether the income approach was an appropriate method to determine the fair value of consumable biological assets in accordance with the requirements of IAS 41 Agriculture.

• Evaluating the reasonableness of the key unobservable inputs based on historical internal production data used to evaluate the hatchability rate, mortality rate and yield rate.

• Evaluating the adequacy of the financial statement disclosures, including disclosures of key assumptions and judgements.

Other Information

The directors are responsible for the other information. The other information comprises all of the information contained in the Annual Report (but does not include the consolidated and separate financial statements and our auditors’ report thereon), which we obtained prior to the date of this auditors’ report, and the Financial Highlights, Group Structure, Overview of Activities and Chairman and CEO’s Report, which is expected to be made available to us after that date.

Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, on the other information obtained that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the Financial Highlights, Group Structure, Overview of Activities and Chairman and CEO’s Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charge with governance and the members.

Directors’ Responsibility for the Consolidated and Separate Financial Statements

The directors are responsible for the preparation of consolidated and separate financial statements that give a true and fair view in accordance with International Financial Reporting Standards and in compliance with the requirements of the Mauritius Companies Act and Financial Reporting Act, and for such internal control as the directors determine is necessary to enable the preparation of the consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and/or Company or to cease operations, or have no realistic alternative but to do so.


44


REPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (CONTINUED)

Auditors’ Responsibilities for the Audit of the Consolidated and Separate Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group and/ or Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves a true and fair view.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matter

This report is made solely to the Company’s members, as a body, in accordance with Section 205 of the Mauritius Companies Act. Our audit work has been undertaken so that we might state to the Company’s members, as a body, those matters that 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.


45


REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

Mauritius Companies Act

We have no relationship with or interests in the Group and Company other than in our capacity as auditors and arm’s length dealings in the ordinary course of business.

We have obtained all the 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

The directors are responsible for preparing the corporate governance report. Our responsibility is to report on the extent of compliance with the Code of Corporate Governance as disclosed in the financial statements and on whether the disclosure is consistent with the requirements of the Code.

In our opinion, the disclosure in the financial statements is consistent with the requirements of the Code.

KPMG JOHN CHUNG, BSC FCAEbène, Mauritius Licensed by FRC

Date: 27 September 2017

ENN LEKIP PASIONE KI TRAVAY ENSAM Mo travay, li pas fasil, mais mo fier ki mo contribuer dans prodiksion ene bann meyer dite nou pei. Ici, se enn lekip pasione qui travay ensam pou prodir pa nek dite classik, me osi bann labwason kouma ice tea kinn infise avec dite Bois Cheri. Kan servi vre dite, so gou vremem ene lot sa !

"

"Mitha, Tea Plucker


48

CONSOLIDATED AND SEPARATE STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2017


2017 2016 2017 2016

Note Rs’000 Rs’000 Rs’000 Rs’000

Revenue 7 4,179,749 4,286,989 2,379,382 2,632,082 Profit from operating activities 8 200,054 223,622 104,993 195,640

Finance income 10 4,892 26,671 14,882 20,689 Finance cost 10 (77,962) (82,937) (51,071) (60,071)Share of profit of equity-accounted investees, net of tax 17 1,126 133 - - Impairment of investment in subsidiary 16(a) - - (135,156) - Profit/(loss) before income tax 128,110 167,489 (66,352) 156,258 Income tax (expense)/credit 11 (14,035) (41,099) 29,365 (23,714)Profit/(loss) for the year 114,075 126,390 (36,987) 132,544

Other comprehensive income

Items that will never be reclassified to profit or lossActuarial gain on retirement benefit obligations 25 4,248 17,762 11,838 15,258 Revaluation of property, plant and equipment 33,737 - - - Deferred tax on retirement benefit obligations 26 (722) (3,020) (2,012) (2,594)Deferred tax on revaluation reserve 26 (7,030) (4,851) 1,488 (4,743)

30,233 9,891 11,314 7,921 Items that are or may be reclassified to profit or lossForeign currency translation difference – foreign operations (11,110) (26,199) - - Other comprehensive income/(loss) for the year 19,123 (16,308) 11,314 7,921 Total comprehensive income/(loss) for the year 133,198 110,082 (25,673) 140,465 Profit attributable to:Owners of the Company 7,020 112,591 Non-controlling interest 107,055 13,799 Profit for the year 114,075 126,390 Total comprehensive income attributable to:Owners of the Company 34,265 75,527 Non-controlling interest 98,933 34,555 Total comprehensive income for the year 133,198 110,082

Earnings per shareBasic/diluted earnings per share (Rs) 12 0.19 3.07

The notes on pages 58 to 122 form part of these consolidated and separate financial statements.


49

CONSOLIDATED AND SEPARATE STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2017


2017 2016 2017 2016

Note Rs’000 Rs’000 Rs’000 Rs’000

ASSETSNon-current assetsProperty, plant and equipment 13 1,651,334 1,656,826 358,248 324,414 Intangible assets and goodwill 15 5,809 5,809 - -Bearer biological assets 20(b) 5,673 6,030 - -Non-current receivables 19 12,371 12,943 12,371 12,943 Investment property 14 - - 504,364 488,119 Investments in subsidiaries 16(a) - - 592,523 649,334 Equity-accounted investees 17 1,126 - - -Available-for-sale investments 18 209 209 209 209 Total non-current assets 1,676,522 1,681,817 1,467,715 1,475,019 Current assetsInventories 20(a) 807,099 1,227,971 481,201 826,042 Assets held for sale 22 - 13,000 - 7,400 Bearer biological assets 20(b) 33,422 40,480 - -Consumable biological assets 20(b) 38,778 29,110 - -Trade and other receivables 21 765,378 723,912 854,165 648,273 Income tax receivable - - 5,642 -Cash and cash equivalents 121,109 48,472 22,356 6,907 Total current assets 1,765,786 2,082,945 1,363,364 1,488,622 Total assets 3,442,308 3,764,762 2,831,079 2,963,641 EQUITY AND LIABILITIESShareholders’ equityShare capital 23 367,303 367,303 367,303 367,303 Share premium 23 5,308 5,308 5,308 5,308 Revaluation reserve 23 355,909 342,963 317,992 321,979 Foreign currency translation reserve (20,896) (24,886) - -Retained earnings 962,780 1,018,147 818,804 908,441 Total equity attributable to owners of the Company 1,670,404 1,708,835 1,509,407 1,603,031 Non-controlling interests 118,060 143,663 - -Total shareholders’ equity 1,788,464 1,852,498 1,509,407 1,603,031



50

CONSOLIDATED AND SEPARATE STATEMENTS OF FINANCIAL POSITION (CONTINUED)AS AT 30 JUNE 2017


2017 2016 2017 2016

Note Rs’000 Rs’000 Rs’000 Rs’000

Non-current liabilitiesBorrowings 24 64,969 195,411 45,924 146,325 Retirement benefit obligations 25 78,150 88,653 35,583 54,928 Deferred tax liabilities – net 26 67,980 63,841 3,225 32,066 Total non-current liabilities 211,099 347,905 84,732 233,319 Current liabilitiesBank overdrafts 401,521 471,846 325,147 309,769 Current tax liabilities 3,232 32,543 - 13,954 Borrowings 24 748,268 640,121 555,132 442,481 Trade and other payables 27 289,724 419,849 356,661 361,087 Total current liabilities 1,442,745 1,564,359 1,236,940 1,127,291

Total liabilities 1,653,844 1,912,264 1,321,672 1,360,610

Total equity and liabilities 3,442,308 3,764,762 2,831,079 2,963,641

Approved by the Board on 27 September 2017 and signed on its behalf by:

Victor Seeyave Maurice de Marassé EnoufChairman Director



51

CONSOLIDATED AND SEPARATE STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 30 JUNE 2017

Consolidated Share capital

Share premium

Revaluation reserve

Foreign currency

translation reserve

Retained earnings Total

Non-controlling interests

Total shareholders’

equityRs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

At 1 Jul 2015 367,303 5,308 387,802 (11,137) 951,976 1,701,252 198,875 1,900,127 Total comprehensive income for the year Profit for the year - - - - 112,591 112,591 13,799 126,390 Other comprehensive incomeForeign currency translationdifference – foreign operations - - (33,206) (13,749) - (46,955) 20,756 (26,199)

Deferred tax on revaluation reserve released (Note 26) - - (4,851) - - (4,851) - (4,851)Deferred tax on retirement benefit obligations (Note 26) - - - - (3,020) (3,020) - (3,020)Actuarial gain on retirement benefit obligations (Note 25) - - - - 17,762 17,762 - 17,762 Revaluation reserve released (Note 23) - - (6,782) - 6,782 - - -Total other comprehensive income - - (44,839) (13,749) 21,524 (37,064) 20,756 (16,308)

Total comprehensive income for the year - - (44,839) (13,749) 134,115 75,527 34,555 110,082 Transaction with owners, recorded directly in equity Contribution by and distributions to owners Dividend - - - - (67,944) (67,944) (27,282) (95,226)Loan - - - - - - (62,485) (62,485)Balance as at 30 Jun 2016 367,303 5,308 342,963 (24,886) 1,018,147 1,708,835 143,663 1,852,498



52

CONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 30 JUNE 2017

Consolidated Share capital

Share premium

Revaluation reserve

Foreign currency

translation reserve

Retained earnings Total

Non-controlling

interest


equityRs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

At 1 Jul 2016 367,303 5,308 342,963 (24,886) 1,018,147 1,708,835 143,663 1,852,498 Total comprehensive income for the year Profit for the year - - - - 7,020 7,020 107,055 114,075 Other comprehensive incomeForeign currency translationdifference – foreign operations - - (6,978) 3,990 - (2,988) (8,122) (11,110)Deferred tax on revaluation reserve (Note 26) - - (7,030) - - (7,030) - (7,030)Deferred tax on retirement benefit obligations (Note 26) - - - - (722) (722) - (722)Actuarial gain on retirement benefit obligations (Note 25) - - - - 4,248 4,248 - 4,248 Revaluation gain on land and buildings - - 33,737 - - 33,737 - 33,737 Revaluation reserve released (Note 23) - - (6,783) - 6,783 - - -Total other comprehensive income - - 12,946 3,990 10,309 27,245 (8,122) 19,123 Total comprehensive income for the year - - 12,946 3,990 17,329 34,265 98,933 133,198 Transaction with owners, recorded directly in equity Contribution by and distributions to owners Dividend - - - - (67,951) (67,951) (79,096) (147,047)Winding up of subsidiary - - - - (3,741) (3,741) - (3,741)Acquisition of non-controlling interests (Note 31) - - - - (1,004) (1,004) (45,440) (46,444)Balance as at 30 Jun 2017 367,303 5,308 355,909 (20,896) 962,780 1,670,404 118,060 1,788,464



53

CONSOLIDATED AND SEPARATE STATEMENTS OF CHANGES IN EQUITY (CONTINUED)FOR THE YEAR ENDED 30 JUNE 2017

SeparateShare capital

Share premium

Revaluation reserve

Retained earnings


equityRs’000 Rs’000 Rs’000 Rs’000 Rs’000

At 1 Jul 2015 367,303 5,308 332,197 825,709 1,530,517 Total comprehensive income for the year

Profit for the year - - - 132,544 132,544 Other comprehensive incomeDeferred tax movement (Note 26) - - (4,743) (2,594) (7,337)Deferred tax on retirement benefit obligations (Note 25) - - - 15,258 15,258 Revaluation reserve released (Note 23) - - (5,475) 5,475 -Total other comprehensive income - - (10,218) 18,139 7,921 Total comprehensive income - - (10,218) 150,683 140,465 Transaction with owners, recorded directly in equity Contribution by and distributions to owners Dividend (Note 28) - - - (67,951) (67,951)Balance as at 30 Jun 2016 367,303 5,308 321,979 908,441 1,603,031

Total comprehensive income for the yearLoss for the year - - - (36,987) (36,987)Other comprehensive incomeDeferred tax movement (Note 26) - - - (2,012) (2,012)Deferred tax on revaluation reserve (Note 26) - - 1,488 - 1,488 Deferred tax on retirement benefit obligations (Note 25) - - - 11,838 11,838 Revaluation reserve released (Note 23) - - (5,475) 5,475 -Total other comprehensive income - - (3,987) 15,301 11,314 Total comprehensive income - - (3,987) (21,686) (25,673)Transaction with owners, recorded directly in equity Contribution by and distributions to owners Dividend (Note 28) - - - (67,951) (67,951)Balance as at 30 Jun 2017 367,303 5,308 317,992 818,804 1,509,407



54

CONSOLIDATED AND SEPARATE STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017


2017 2016 2017 2016

Note Rs’000 Rs’000 Rs’000 Rs’000

Cash flows from operating activitiesProfit/(loss) after income tax expense 114,075 126,390 (36,987) 132,544

Adjustments for:Depreciation 13 124,006 108,997 59,503 57,723 Purchase of biological assets 358 (4,002) - 76,858 Amortisation of premiums on leasehold land 19 572 572 572 572 Amortisation of intangible assets 15 - 31 - - Depreciation of investment property 14 - - 7,255 4,290 Impairment of subsidiaries 16(a) - - 135,155 - Impairment of equity accounted investees 17 - 4,300 - 5,126 Share of profit of equity-accounted investees, net of tax 17 (1,126) (133) - - Impairment loss on measurement of assets held for sale - 1,000 - 100 (Profit)/loss on disposal of property, plant and equipment 8 (123,670) 1,972 (949) (64,494)Interest income 10 (4,339) (5,579) (10,332) - Interest expense 10 77,962 82,936 51,071 60,071 Dividend income 8 - - (130,564) (29,100)Unrealised Exchange (gain)/loss 1,503 (775) (1,328) 382 Income tax expense (14,035) 41,099 (29,365) 23,714

175,306 356,808 44,031 267,786 Movement in retirement benefit obligations (10,503) (33,324) (19,345) (56,888)Changes in inventories 420,872 (8,958) 344,841 (45,177)Changes in trade and other receivables (41,466) (54,800) (205,892) 3,905 Changes in trade and other payables (130,125) 28,784 (4,426) 139,152

414,084 288,510 159,209 308,778 Interest paid (77,962) (82,936) (51,071) (60,071)Tax paid (47,865) (30,668) (19,276) (21,250)Net cash generated from operating activities 288,257 174,906 88,862 227,457



55

CONSOLIDATED AND SEPARATE STATEMENTS OF CASH FLOWS (CONTINUED)FOR THE YEAR ENDED 30 JUNE 2017


2017 2016 2017 2016

Note Rs’000 Rs’000 Rs’000 Rs’000

Cash flows from investing activitiesAdvances to subsidiaries - - (32,976) (127,943)Proceeds from disposal of property, plant and equipment 214,263 2,348 8,349 1,598 Interest received 10 4,339 5,579 10,332 - Dividend received - - 93,514 28,687 Acquisition of non-controlling interests (46,444) - - - Payments for purchase of property, plant and equipment (178,709) (130,691) (93,338) (32,387)Net cash used in investing activities (6,551) (122,764) (14,119) (130,045)Cash flows from financing activitiesPayments of finance lease liabilities (56,115) (35,765) (25,677) (20,253)Loans received 26,757 65,266 18,956 73,830 (Decrease)/increase in net amount due to related parties (10,380) (22,198) - - Dividends paid (102,922) (99,080) (67,951) (67,951)Net cash used in financing activities (142,660) (91,777) (74,672) (14,374)Net increase/(decrease) in cash and cash equivalents 139,046 (39,635) 71 83,038 Effects of exchange rate fluctuations on cash and cash equivalents 3,916 1,779 - - Cash and cash equivalents at beginning of year (423,374) (385,518) (302,862) (385,900)Cash and cash equivalents at end of year (280,412) (423,374) (302,791) (302,862)Cash and cash equivalents consist of:Cash and bank balances 121,109 48,472 22,356 6,907 Bank overdrafts (401,521) (471,846) (325,147) (309,769)

(280,412) (423,374) (302,791) (302,862)


Azhar, Sales Representative

VOUS NE MANQUEREZ JAMAIS D’ÉPATER VOS CONVIVESAvec nos pâtes Barilla, nous avons de quoi être fiers. Numéro 1 en Italie, ces pâtes sont fabriquées à partir de farine de blé dur, une des raisons pour lesquelles elles restent toujours al dente. Ainsi, nos maccheronis ou encore nos spaghettis se démarquent tant par leur texture que par leur goût unique. Avec Barilla, vous ne manquerez jamais d’épater vos convives !

"

"


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NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017

1. REPORTING ENTITY

Innodis Ltd (the “Company”) is a public company domiciled in Mauritius. The address of the registered office is at Innodis Building, Caudan, Port Louis. The main activities of the Group and the Company are production of poultry and dairy products, poultry farming, animal feed manufacturing, rice milling, distribution and marketing of food and grocery products.

The financial statements include the consolidated financial statements of the parent company and its subsidiary companies (together referred as the “Group”) and the separate financial statements of the parent company (the “Company”).

2. BASIS OF PREPARATION

(a) Statement of compliance

The consolidated and separate financial statements have been prepared on going concern basis in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and in compliance with requirements of the Mauritius Companies Act 2001 and the Financial Reporting Act.

(b) Basis of measurement

The consolidated and separate financial statements have been prepared under the historical cost basis except for the following material items in the consolidated and separate statements of financial position:

• Consumable biological assets (broilers and hatchable eggs) are measured at fair value less costs to sell;

• The liability for retirement benefit obligations is recognised as the present value of defined obligations less the net total of the plan assets, plus unrecognised actuarial gains, less unrecognised past service cost and unrecognised actuarial losses;

• Land and buildings are measured at revalued amounts; and

• Assets held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

(c) Functional and presentation currency

These consolidated and separate financial statements are presented in thousands of Mauritian Rupees (Rs’000), which is the Company’s functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated. All group entities have Mauritian Rupees as their functional currency except for the following subsidiary:

Subsidiary Functional currency

Moçambique Farms, Limitada Mozambican Metical (MZN)

Meaders (Seychelles) Ltd uses Seychellois Rupee (SCR) as functional and presentation currency and is consolidated at Meaders Feeds Ltd.

(d) Use of estimates and judgements

In preparing these consolidated and separate financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

(i) Judgements

Information about judgement made in applying accounting policies that have the most significant effects on the amounts recognised in the consolidated and separate financial statements is included in the following notes:

• Note 16(a): Investment in subsidiaries; basis of consolidation

• Note 24 & 30 : Leases- whether an arrangement contains a lease


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2. BASIS OF PREPARATION (CONTINUED)

(d) Use of estimates and judgements (continued)

(ii) Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ending 30 June 2017 is included in the following notes:

• Note 3(m) – Impairment of assets: key assumptions underlying recoverable amounts;

• Note 4 – Determination of fair values;

• Note 20(a) – Valuation of inventories;

• Note 20(b) – Determining the fair value of biological assets on the basis of significant unobservable input;

• Note 25 – Measurement of retirement benefit obligations: key actuarial assumptions;

• Note 26 – Recognition of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used;

• Note 34 – Recognition and measurement of provision and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources.

(iii) Going Concern

The directors have prepared cash flow forecasts for at least the next 12 months based on reasonable and supportable assumptions, which will provide the Company with sufficient funds to finance future operations and support its subsidiaries and enable the Company to realise its assets and settle its liabilities in the normal course of business.

(iv) Useful lives of property, plant and equipment

Determining the carrying amounts of property, plant and equipment requires the estimation of the useful lives and residual values of these assets. The estimates of useful lives and residual values carry a degree of uncertainty. Management have used historical information relating to the Group and Company and the relevant industries in which the Group’s and Company’s entities operate in order to best determine the useful lives and residual values of property, plant and equipment.

Management will increase the depreciation charge where useful lives are less or it will write off or write down technically obsolete or non-strategic assets that have been abandoned or sold.

(v) Determination of fair values

Information about determination of fair values and valuation of financial instruments are described in Notes 3(c) and 4.

(e) Changes in accounting policies

There were no new standards and interpretations effective for the year under review which significantly impacted the consolidated and separate financial statements. The accounting policies adopted by the Group and the Company are consistent with those of the previous years.

The accounting policies adopted are consistent with those of the previous financial year except that the Group and company have adopted the following new and amended IFRS and IFRIC interpretations as of 1 July 2016:

AMENDMENTS

- Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38) 1 January 2016

- Agriculture: Bearer Plants (Amendment to IAS 16 and IAS 41) 1 January 2016

- Equity Method in Separate Financial Statements (Amendments to IAS 27) 1 January 2016

- Disclosure Initiative (Amendments to IAS 1) 1 January 2016

- Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28) 1 January 2016


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(e) Changes in accounting policies (continued)

The effects of these standards have been described below:

Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)

The amendments clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets. These amendments have no significant impact on the Group and Company since the Group and the Company do not apply revenue base depreciation methods.

Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41)

The amendments to IAS 16 Property, Plant and Equipment and IAS 41 Agriculture require a bearer plant (which is a living plant used solely to grow produce over several periods) to be accounted for as property, plant and equipment in accordance with IAS 16 Property, Plant and Equipment instead of IAS 41 Agriculture. The produce growing on bearer plants will remain within the scope of IAS 41. These amendments have no significant impact on the Group and Company since the Company does not apply bearer plants to be accounted for as property, plant and equipment.

Equity Method in Separate Financial Statements (Amendments to IAS 27)

The amendments allow an entity to apply the equity method in its separate financial statements to account for its investments in subsidiaries, associates and joint ventures. The Company has not elected to apply equity accounting in its separate financial statements.

Disclosure Initiative (Amendments to IAS 1)

The amendments provide additional guidance on the application of materiality and aggregation when preparing financial statements. The amendments also clarify presentation principles applicable to of the order of notes, OCI of equity accounted investees and subtotals presented in the statement of financial position and statement of profit or loss and other comprehensive income. There has been no impact following adoption of the amendments on the consolidated and separate financial statements as the notes and policies already included in the consolidated and separate financial statements provide a good understanding and comparability to the users.

Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28)

The amendment to IFRS 10 Consolidated Financial Statements clarifies which subsidiaries of an investment entity are consolidated instead of being measured at fair value through profit and loss. The amendment also modifies the condition in the general consolidation exemption that requires an entity’s parent or ultimate parent to prepare consolidated financial statements. The amendment clarifies that this condition is also met where the ultimate parent or any intermediary parent of a parent entity measures subsidiaries at fair value through profit or loss in accordance with IFRS 10 and not only where the ultimate parent or intermediate parent consolidates its subsidiaries.

The amendment to IFRS 12 Disclosure of Interests in Other Entities requires an entity that prepares financial statements in which all its subsidiaries are measured at fair value through profit or loss in accordance with IFRS 10 to make disclosures required by IFRS 12 relating to investment entities.

The amendment to IAS 28 Investments in Associates and Joint Ventures modifies the conditions where an entity need not apply the equity method to its investments in associates or joint ventures to align these to the amended IFRS 10 conditions for not presenting consolidated financial statements. The amendments introduce relief when applying the equity method which permits a non-investment entity investor in an associate or joint venture that is an investment entity to retain the fair value through profit or loss measurement applied by the associate or joint venture to its subsidiaries.

The amendments have no impact on the financial statements.

The amendments apply retrospectively for annual periods beginning on or after 1 January 2016, with early application permitted.


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(f) New or revised accounting standards and interpretations have been issued but not yet effective for the year ended 30 June 2017

Up to the date of issue of these financial statements, the IASB has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended 30 June 2017 and which have not been adopted in these financial statements.

The Group and the Company are in the process of making an assessment of what the impact of these amendments, new standards and new interpretations is expected to be in the period of initial application.

All Standards and Interpretations will be adopted at their effective date (except for those Standards and Interpretations that are not applicable to the entity).

The standards that need to be considered for financial years ending on or after 30 June 2017 are listed below.

Disclosure Initiative (Amendments to IAS 7)

The amendments provide for disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flow and non-cash changes. This includes providing a reconciliation between the opening and closing balances for liabilities arising from financing activities.

The Group and Company are currently assessing the impact of IAS 7 and plan to adopt the amendments on the required effective date.

The amendments apply for annual periods beginning on or after 1 January 2017 and early application is permitted.

Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12)

The amendments provide additional guidance on the existence of deductible temporary differences, which:

• depend solely on a comparison of the carrying amount of an asset and its tax base at the end of the reporting period; and

• is not affected by possible future changes in the carrying amount or expected manner of recovery of the asset.

The amendments also provide additional guidance on the methods used to calculate future taxable profit to establish whether a deferred tax asset can be recognised.

The Group and Company are currently assessing the impact of IAS 12 and plans to adopt the amendments on the required effective date.

The amendments apply for annual periods beginning on or after 1 January 2017 and early application is permitted.


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(f) New or revised accounting standards and interpretations have been issued but not yet effective for the year ended 30 June 2017 (continued)

IFRS 15 Revenue from contracts with customers

This standard replaces IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfer of Assets from Customers and SIC-31 Revenue – Barter of Transactions Involving Advertising Services.

The standard contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognised.

This new standard will most likely have a significant impact on the Group and the Company, which will include a possible change in the timing of when revenue is recognised and the amount of revenue recognised.

The Group and Company are currently assessing the impact of IFRS 15 and plan to adopt the new standard on the required effective date.

The standard is effective for annual periods beginning on or after 1 January 2018, with early adoption permitted.

IFRS 9 Financial Instruments

On 24 July 2014, the IASB issued the final IFRS 9 Financial Instruments Standard, which replaces earlier versions of IFRS 9 and completes the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement.

This standard will have a significant impact on the Group and the Company, which will include changes in the measurement bases of the Group’s and the Company’s financial assets to amortised cost, fair value through other comprehensive income or fair value through profit or loss. Even though these measurement categories are similar to IAS 39, the criteria for classification into these categories are significantly different. In addition, the IFRS 9 impairment model has been changed from an “incurred loss” model from IAS 39 to an “expected credit loss” model, which is expected to increase the provision for bad debts recognised in the Group.

The Group and Company have not yet made a decision in this regard. In the former case, all fair value gains and losses would be reported on other comprehensive income, no impairment losses would be recognised in profit or loss and no gains or losses would be reclassified to profit or loss on disposal. In the latter case, all fair value gains and losses would be recognised in profit or loss as they arise, increasing the volatility of the Group’s and Company’s profits. It is expected that impairment losses are likely to increase and become more volatile for assets in the scope of the IFRS 9 impairment model. However, the Group and Company have not yet finalised the impairment methodologies that it will apply under IFRS 9.

The standard is effective for annual periods beginning on or after 1 January 2018 with retrospective application, early adoption is permitted.

Clarifying share-based payment accounting (Amendments to IFRS 2)

Currently, there is ambiguity over how a company should account for certain types of share-based payment arrangements. The IASB has responded by publishing amendments to IFRS 2 Share-based Payment.

The amendments cover three accounting areas:

Measurement of cash-settled share-based payments –The new requirements do not change the cumulative amount of expense that is ultimately recognised, because the total consideration for a cash-settled share-based payment is still equal to the cash paid on settlement.

Classification of share-based payments settled net of tax withholdings –The amendments introduce an exception stating that, for classification purposes, a share-based payment transaction with employees is accounted for as equity-settled if certain criteria are met.

Accounting for a modification of a share-based payment from cash-settled to equity-settled –. The amendments clarify the approach that companies are to apply.

The new requirements could affect the classification and/or measurement of these arrangements and potentially the timing and amount of expense recognised for new and outstanding awards.


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Clarifying share-based payment accounting (Amendments to IFRS 2) (continued)

The Group and Company are currently assessing the impact of the changes and plans to adopt the amendments on the required effective date.

The amendments are effective for annual periods commencing on or after 1 January 2018.

Transfers of Investment property (Amendments to IAS 40)

The IASB has amended the requirements in IAS 40 Investment property on when a company should transfer a property asset to, or from, investment property.

The Group and Company are currently assessing the impact of the changes and plan to adopt the amendments on the required effective date.

The amendments apply for annual periods beginning on or after 1 January 2018. Early adoption is permitted.

IFRIC 22 Foreign Currency Transactions and Advance Considerations

When foreign currency consideration is paid or received in advance of the item it relates to – which may be an asset, an expense or income – IAS 21 The Effects of Changes in Foreign Exchange Rates is not clear on how to determine the transaction date for translating the related item.

This has resulted in diversity in practice regarding the exchange rate used to translate the related item. IFRIC 22 clarifies that the transaction date is the date on which the Group and the Company initially recognises the prepayment or deferred income arising from the advance consideration. For transactions involving multiple payments or receipts, each payment or receipt gives rise to a separate transaction date.

The Group and Company are yet to assess the full impact of adopting the standard and will provide more information in the consolidated and separate financial statements for the year ended 30 June 2018.

The interpretation applies for annual reporting periods beginning on or after 1 January 2018.

IFRS 16 Leases

IFRS 16 was published in January 2016. It sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer (‘lessee’) and the supplier (‘lessor’). IFRS 16 replaces the previous leases Standard, IAS 17 Leases, and related Interpretations. IFRS 16 includes a single model for lessees which will result in almost all leases being included on the Statement of Financial position. No significant changes have been included for lessors.

The Group and Company have begun assessing the potential impact on the financial statements resulting from the application of IFRS 16.

The standard is effective for annual periods beginning on or after 1 January 2019, with early adoption permitted only if the entity also adopts IFRS 15. The transitional requirements are different for lessees and lessors.

The most significant impact expected is that the Group and Company may have to recognise new assets and liabilities for their operating leases. In addition, the nature of expenses related to those leases will now change as IFRS 16 replaces the straight-line operating lease expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities.


The standard is effective for annual periods beginning on or after 1 January 2019, with early adoption permitted only if the entity also adopts IFRS 15.


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IFRIC 23 Uncertainty over Income Tax Treatments

IFRIC 23 clarifies the accounting for income tax treatments that have yet to be accepted by tax authorities. Specifically, IFRIC 23 provides clarity on how to incorporate this uncertainty into the measurement of tax as reported in the financial statements.

IFRIC 23 does not introduce any new disclosures but reinforces the need to comply with existing disclosure requirements about:

• judgments made;

• assumptions and other estimates used; and

• the potential impact of uncertainties that are not reflected.


IFRIC 23 applies for annual periods beginning on or after 1 January 2019. Earlier adoption is permitted.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these consolidated and separate financial statements.

(a) Basis of consolidation

(i) Business combination

The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.

(ii) Subsidiaries

Subsidiaries are all entities controlled by the Group. The Group controls an entity when it 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. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

In the Company’s financial statements, investments in subsidiaries are measured at cost. The carrying amount is reduced if there is any indication of impairment in value.

A list of the principal subsidiaries is shown in Note 16(a).

The accounting policies with respect to business combinations are set out in Note 3(f)(i).

(iii) Non-controlling interests (NCI)

NCI are measured at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.


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3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(a) Basis of consolidation (continued)

(iv) Loss of control

Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary with any non-controlling interests and other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as a financial asset depending on level of influence retained.

(v) Interests in equity-accounted investees

The Group’s interests in equity-accounted investees comprise interests in associates.

Associates are those entities in which the Group has significant influence, but no control or joint control, over the financial and operating policies.

Interests in equity-accounted investees are accounted for using the equity method. They are initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, these consolidated financial statements include the Group’s share of profit or loss and other comprehensive income of equity-accounted investees, until the date on which significant influence ceases. In the separate financial statements, the interests in equity-accounted investees are carried at cost less any impairment losses.

(vi) Transactions eliminated on consolidation

Intra-group balances and any unrealised income and expenses arising from intra-group transactions are eliminated in preparing these consolidated and separate financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investments to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Foreign currency

(i) Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group companies at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated to the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss.

However, foreign currency differences arising from translation of the following items are recognised in other comprehensive income:

• available-for-sale equity investments (except on impairment, in which case foreign currency differences that have been recognised in other comprehensive income are reclassified to profit or loss).

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into Mauritian Rupee at exchange rates at the reporting date. The income and expenses of foreign operations are translated into Mauritian Rupee at exchange rates at the dates of the transactions.

Foreign currency differences are recognised in other comprehensive income, and presented in the translation reserve, except to the extent that the translation difference is allocated to non-controlling interest.

When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount of the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group disposes of only part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to non-controlling interest. When the Group disposes of only part of an associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

If the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, then foreign currency differences arising from such item form part of a net investment in the foreign operation. Accordingly such differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve.


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(c) Financial instruments

Financial assets and liabilities are recognised in the statement of financial position when the Group and the Company become party to the contractual provisions of the financial instruments.

Except where stated separately, the carrying amounts of the Group’s and the Company’s financial instruments approximate their fair values. The classification of financial instruments depends on the nature and purpose of the financial instrument and is determined at the time of initial recognition.

Non-derivative financial instruments

The Group and the Company classify non-derivative financial assets as loans and receivables and available-for-sale financial assets.

The Group and the Company classify non-derivative financial liabilities into the other financial liabilities category.

Non-derivative financial assets comprise available-for-sale investments, loans to subsidiaries, trade and other receivables and cash and cash equivalents.

Non-derivative financial liabilities comprise of borrowings, bank overdrafts and trade and other payables.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group and the Company have a legal right to offset the amounts and intend either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as follows:

(i) Available-for-sale financial assets

The Group’s investments in equity securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment, and foreign exchange gains and losses on available-for-sale monetary items are recognised directly in other comprehensive income and accumulated in the fair value reserve. When an investment is derecognised, the cumulative gain or loss in equity is transferred to profit or loss.

Available-for-sale investments which do not have a quoted market price and whose fair value cannot be reliably measured, are carried at cost, less any impairment. The fair value of the available-for-sale investments that could not be reliably measured due to unavailability of information on the market are kept at cost.

(ii) Loans and receivables

Loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period.

(iii) Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group’s and the Company’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Cash and cash equivalents are measured at amortised cost which is equivalent to their fair value.

(iv) Derecognition of financial assets

The Group and the Company derecognise a financial asset only when the contractual rights to the cash flows from the asset expire or they transfer the financial assets and substantially all the risks and rewards of ownership of the asset to another entity.

If the Group and the Company neither transfer nor retain substantially all the risks and rewards of ownership and continue to control the transferred asset, the Group and the Company recognise their retained interest in the asset and an associated liability for amounts they may have to pay. If the Group and the Company retain substantially all the risks and rewards of ownership of a transferred financial asset, the Group and the Company continue to recognise the financial asset and also recognise a collateralised borrowing for the proceeds received.


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(c) Financial instruments (continued)

Non-derivative financial instruments (continued)

(v) Other financial liabilities

Other financial liabilities comprise borrowings, bank overdrafts and trade and other payables and are recognised initially on the trade date, which is the date that the Group and the Company become a party to the contractual provisions of the instrument.

Other financial liabilities are initially measured at fair value less, for instruments not at fair value through profit or loss, any directly attributable transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

(vi) Derecognition of financial liabilities

The Group and the Company derecognise financial liabilities when, and only when, the Group’s and the Company’s obligations are discharged, cancelled, or expire.

(d) Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity.

(e) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost which includes capitalised borrowing costs, less accumulated depreciation and any accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the cost of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

Following initial recognition at cost, freehold land and buildings are revalued on average every 5 years. Any revaluation surplus is credited to revaluation reserve as part of other comprehensive income, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss. A revaluation deficit is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same recognised in the asset revaluation reserve. The revaluation reserve is realised over the period of the useful life of the property by transferring the realised portion from the revaluation reserve to retained earnings.

At the end of each reporting period, an entity is required to assess whether there is any indication that an asset may be impaired, that is, its carrying amount may be higher than its recoverable amount. If there is an indication that an asset may be impaired, then the asset's recoverable amount must be calculated.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within “other income” in profit and loss. At the time of disposal of the assets, any revaluation surpluses are transferred to retained earnings from revaluation reserve.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The estimated useful lives, residual values and depreciation methods are reviewed at each year end, with the effect of any changes accounted for as a change in estimates. The change is accounted for on a prospective basis.


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(e) Property, plant and equipment (continued)

(ii) Subsequent costs

Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group and to the Company. The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and the Company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

(iii) Depreciation

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Assets held under finance leases are depreciated over the shorter of the lease term and their useful lives.

The depreciation rates for the current and comparative periods are as follows:

Buildings - 2% - 5% p.a

Improvement to buildings - 4% - 33% p.a

Furniture and equipment - 2% - 33% p.a

Plant and machinery (excluding rice milling equipment) - 4% - 33% p.a

Motor vehicles - 7.5% - 33% p.a

Rice milling equipment is depreciated on the basis of machine usage.

Freehold land and work-in-progress are not depreciated.

Work-in-progress relates to:

• extension of premises and will be transferred to buildings once work is completed.

• acquisition of plant and machinery which will be transferred once commissioning is completed.

(iv) Reclassification to investment property

When the use of a property changes from owner occupied to investment property, the property is transferred at its carrying value from property, plant and equipment.

(f) Intangible assets and goodwill

Other intangible assets


Other intangible assets that are acquired by the Group and the Company have finite useful lives and are measured at cost less accumulated amortization and any accumulated impairment losses. These represent trademarks and licences.

(ii) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.


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(f) Intangible assets and goodwill (continued)

Other intangible assets (continued)

(iii) Amortisation

Intangible assets are amortised over their useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset are reviewed at least each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset.

A summary of the policies applied to the Group’s and the Company’s intangible assets is as follows for the current and comparative periods:

Computer software and distribution rights Brand and licences

Useful lives 3 years 5 - 20 years

Amortisation method Used Amortised on a straight line basis over its estimated useful life

Amortised on a straight line basis over its estimated useful life

Internally generated or acquired Acquired Acquired

Amortisation methods, useful lives and residual values are reviewed at each reporting period and adjusted if appropriate

Goodwill


Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses.

From 1 July 2010, the Group has applied IFRS 3 Business Combinations (2008) in accounting for business combinations.

Business combinations are accounted for using the acquisition method as at the acquisition date, which is when control is transferred to the Group. The Group controls an entity when it 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. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable.

The Group measures goodwill at the acquisition date as:

• the fair value of the consideration transferred; plus

• the recognised amount of any non-controlling interests in the acquiree; plus

• if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less

• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.


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(f) Intangible assets and goodwill (continued)

Goodwill (continued)

(ii) Subsequent measurement

Goodwill is measured at cost less accumulated impairment losses. In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and any impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity accounted investee.

The Group tests goodwill annually for impairment or more frequently if there are indicators that goodwill might be impaired. The recoverable amounts are determined based on value-in-use calculations using cash flow projections.

Acquisitions of non-controlling interests

For each business combination, the Group elects to measure any non-controlling interests in the acquiree either:

• at fair value; or

• at their proportionate share of the acquiree’s identifiable net assets, which are generally at fair value.

Changes in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their capacity as owners. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. No adjustments are made to goodwill and no gain or loss is recognised in profit or loss.

(g) Biological assets

'Biological assets' are living animals that are capable of biological transformation. Biological transformation comprises the processes of growth, degeneration, production and procreation that cause qualitative or quantitative changes in a biological asset.

The income approach constitute of estimating the fair value of the biological assets at measurement date. The fair valuation at measurement date is arrived at by estimating the expected cash inflows at time of maturity discounted by unobservable inputs such as hatchability rate, mortality rate and yield rate to derive the fair value of the biological assets at measurement date.

There are two types of biological assets.

• Bearer biological assets consist of breeding stock of chickens which are kept for laying hatchable eggs, including grandparent breeding, parent-rearing and laying stock. Breeding stock is capitalised at cost at the beginning of its productive cycle and is depreciated on a straight-line method over the anticipated productive cycle over which the Group expects to benefit from the asset, usually 65 weeks. The depreciation rate is approximately 3.13% per week.

• Consumable biological assets consist of hatchable eggs and live broiler chicks that are raised specifically for meat production. Consumable biological assets are measured at fair value less estimated costs to sell at year end, with gains and losses arising from changes in the fair values recorded in profit or loss for the period in which they arise. The determination of fair value is based on active market values, where appropriate, or management’s assessment of the fair value based on available data and benchmark statistics.

All the expenses incurred in establishing and maintaining the biological assets are recognised in profit or loss. All costs incurred in acquiring biological assets are capitalised.

(h) Non-current receivables

Non-current receivables relate to premiums paid on acquisition of leasehold land. Premiums paid on acquisition of leasehold land are amortised over the lease terms ranging between 15 and 41 years.

(i) Investment property

Investment properties are properties held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in production or supply of goods or services or for administrative purposes.

Investment properties are measured initially at cost, including transaction cost. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the cost of day to day servicing of an investment property. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and impairment.


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(i) Investment property (continued)

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year of retirement or disposal.

Transfers

Transfers from land and buildings to investment property are accounted at carrying amount.

The depreciation rate for investment property is 2%.

(j) Leased assets

Determining whether an arrangement contains a lease

At inception of an arrangement, the Group and the Company determine whether such an arrangement is or contains a lease. A specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of that specified asset and the arrangement conveys to the Group and the Company the right to control the use of the specified asset.

At inception or upon reassessment of the arrangement that contains a lease, the Group and the Company separate payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group and the Company conclude for a finance lease that is impracticable to separate payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is recognised using the Group’s and the Company’s incremental borrowing rate.

The Group and the Company as lessee

Leased assets

Leases in terms of which the Group and the Company assume substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are operating leases and are not recognised in the consolidated and separate statements of financial position.

Lease payments

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

The Group and the Company as lessor

Leases where the Group and the Company do not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs in negotiating an operating lease are added to the carrying amount of the leases asset and recognised over the lease term on the same bases as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

(k) Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out principle and on a weighted average cost basis in some subsidiaries, and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

The cost of items transferred from biological assets is their fair value less costs to sell at the date of transfer.


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(l) Assets held for sale

Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use.

Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets, investment property or biological assets, which continue to be measured in accordance with the Group’s other accounting policies. Impairment losses on initial classification as held-for-sale or held-for distribution and subsequent gains and losses on re-measurement are recognised in profit or loss.

Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortised or depreciated, and any equity-accounted investee is no longer equity accounted.

(m) Impairment

(i) Non-derivative financial assets

Financial assets not classified as at fair value through profit or loss, including an interest in equity accounted investee, are assessed at each reporting date to determine whether there is objective evidence of impairment.

Objective evidence that financial assets are impaired includes:

• default or delinquency by a debtor;

• restructuring of an amount due to the Group and the Company on terms that the Group and the Company would not consider otherwise;

• indications that a debtor or issuer will enter bankruptcy;

• adverse changes in the payment status of borrowers or issuers in the Group and the Company;

• the disappearance of an active market for a security because of financial difficulties or;

• Observable data indicating that there is measurable decrease in expected cash flows from a group of financial assets;

• Adverse changes in the financial performance of related party, including subsidiaries.

For an investment in equity security, objective evidence of impairment included a significant or prolonged decline in its fair value below its cost.

Financial assets measured at amortised cost

The Group and the Company consider evidence of impairment for these assets at both an individual asset and a collective level. All individually significant assets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that has been incurred but not yet individually identified. Assets that are not individually significant are collectively assessed for impairment. Collective assessment is carried out by grouping together assets with similar risk characteristics.

In assessing collective impairment, the Group and the Company use historical information on the timing of recoveries and the amount of loss incurred, and make an adjustment if current economic and credit conditions are such that actual losses are likely to be greater or lesser than suggested by historical trends.

An impairment loss is calculated as the difference between an asset’s carrying amount, and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account. When the Group and the Company consider that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.

Available-for-sale financial assets

Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve to profit or loss. The amount reclassified is the difference in the acquisition cost (net of any principal repayment and amortisation) and the current fair value, less any impairment loss previously recognised in profit or loss. If the fair value of an impaired available-for-sale debt security subsequently increases and the increase can be related objectively to the event occurring after the impairment loss was recognised, then the impairment loss is reversed through profit or loss. Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available for sale are not reversed through profit or loss.


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(m) Impairment (continued)

(i) Non-derivative financial assets (continued)

Equity accounted investees

An impairment loss in respect of an equity accounted investee is measured by comparing the recoverable amount of the investment with its carrying amount. An impairment loss is recognised in profit or loss under administrative expenses, and is reversed if there has been a favourable change in the estimates used to determine the recoverable amount.

Investment in subsidiary

The carrying amount is reduced to recognise any impairment in the value of individual investments. Impairment losses are recognised in profit or loss.

For an investment in subsidiary, objective evidence of impairment included a significant or prolonged decline in its fair value below its cost. Management assesses that investments in subsidiaries should be impaired when the latter are loss-making over a long period of time, have a negative equity position, or where cash flow forecasts indicate that the subsidiaries will not be able to turn round their business in the foreseeable future. Management also considers that there is a need for impairment when the recoverable amount of the investment in subsidiaries (fair value less costs of disposal or value in use) is lower than their carrying amount at each reporting date.

An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable amount.

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset or the cash generating unit.

The key assumptions used in the estimation of the recoverable amount are set out in note 16(a). The values assigned to the key assumptions represent management`s assessment of future trend in the relevant industries and have been based on historical data from both external and internal sources. Cash flow projections include specific estimates for future years and terminal values to determine the recoverable amount of investment.

Following the impairment loss recognised, the recoverable amount was equal to the carrying amount. Therefore any adverse movement in a key assumption would lead to further impairment.

(ii) Non-financial assets

At each reporting date, the Group and the Company review the carrying amounts of their non-financial assets (other than biological assets measured at fair value, investment property, inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash generating units. Goodwill arising from a business combination is allocated to cash generating units or groups of cash generating units that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash generating unit is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset or the cash generating unit.

An impairment loss is recognised if the carrying amount of an asset or cash generating unit exceeds its recoverable amount.

Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the cash generating unit, and then to reduce the carrying amounts of the other assets in the cash generating units on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.


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(n) Employee benefits obligations

(i) Retirement benefits obligations

The Group and the Company operate various pension schemes. The schemes are generally funded through payments to trustees-administered funds, determined by annual actuarial calculations. The Group and the Company have both defined contribution plan and defined benefit plan.

Defined Contribution plans

The Group and the Company maintains a defined contribution plan for its employees. A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

Gratuity on retirement

The Group and the Company is required under the Employment Rights Act 2008 (the “ERA”) to make a statutory gratuity payment to employees retiring after continuous employment with the Group and the Company for a period of 12 months or more. The employee needs to have reached retirement age as prescribed by the ERA to be eligible for the gratuity payment.

The Group and the Company calculates its net obligations in respect of defined benefit pension plans arising from the ERA for employees by estimating the amount of future benefit that its employees have earned in return for their service in the current and prior periods, that benefit is discounted to determine the present value. The discount rate is the yield at the end of the reporting period. The net present value of gratuity on retirement payable under the ERA is calculated by qualified actuaries (Feber Associates and Swan Life Ltd) using the projected unit credit method on a yearly basis

The Group and the Company is eligible to deduct employer’s share of contributions from the above defined contribution plans maintained by the Group and the Company to the extent as prescribed by the ERA, which may or may not leave a residual liability to be provided for in the financial statements. The obligations arising under this item are not funded.

In accordance with the Employment Rights Act, the amounts deductible are:

• half the lump sum payable from the defined contribution scheme, based on employer’s contribution;

• five times the amount of any annual pension payable at the retirement age due from the defined contribution, based on employer’s contribution;

• any other gratuity granted at the retirement age; and

• ten times the amount of any other annual pension granted at the retirement age.

State pension plan

Contributions to the National Pension Fund are expensed in profit or loss.

(ii) Employee benefits obligations

Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Other benefits

Employee entitlement to annual leave and other benefits are recognised as and when they accrue to the employees.


75



(n) Retirement benefit obligations (continued)

(ii) Employee benefits obligations (continued)

Termination benefits

Termination benefits are recognised as an expense when the Group and the Company is committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognised as an expense if the Group and the Company has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting date then they are discounted to their present value.

(o) Revenue

(i) Sale of goods

Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably and there is no continuing management involvement with the goods and the amount of revenue can be measured reliably. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts, volume rebate and value added tax.

The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement.

(ii) Commission

If the Group and the Company act in the capacity of an agent rather than as the principal in a transaction, then the revenue recognised is the net amount of commission made by the Group and the Company.

(iii) Investment property rental income

Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Rental income from investment property is recognised as other income.

(iv) Value Added Tax

Revenues, expenses and assets are recognised net of the amount of value added tax except:

• where the value added tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the value added tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables that are stated with the amount of value added tax included.

The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of accounts receivables or payables in the statement of financial position.

(p) Dividend income

Dividend income is recognised in profit or loss on the date that the Group’s and the Company’s right to receive payment is established, which in case of quoted securities is the ex-dividend date.

(q) Finance income and finance costs

Finance income comprises interest income, foreign exchange gains, net gains on forward contract and the reclassification of net gains or losses previously recognised in other comprehensive income. Interest income is recognised as it accrues, using the effective interest method.

Finance expenses comprise interest expenses on loans and borrowings, overdrafts, finance leases and loss on forward contracts. Borrowing costs not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.


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(r) Income tax expense

Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised.

(i) Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.

Current tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and if it relates to the same taxation authority.

(ii) Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

• temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

• temporary differences related to investments in subsidiaries and associates to the extent that the Group and the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

• taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group and Company expect at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and deferred tax liabilities are offset only if the following criteria are met:

(a) The entity has a legally enforceable right to set off current tax assets against current tax liabilities; and

(b) The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

(i) the same taxable entity; or

(ii) different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(iii) Corporate Social Responsibility (CSR)

In line with the definition within the Income Tax Act 1995, Corporate Social Responsibility (CSR) is regarded as a tax and is therefore subsumed with the income tax recognised in profit or loss and the income tax liability on the statement of financial position.

The CSR charge for the current year is measured at the amount expected to be paid to the Mauritian tax authorities. The CSR rate and laws used to compute the amount are those charged or substantively enacted by the reporting date.


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(s) Related parties

For the purposes of these consolidated and separate financial statements, parties are considered to be related to the Group and the Company if they have the ability, directly or indirectly, to control the Group and the Company or exercise significant influence over the Group and the Company in making financial and operating decision, or vice versa, or where the Group and the Company are subject to common control.

(t) Earnings per share

The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit for the year attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares in issue during the year. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

(u) Segment reporting

An operating segment is a component of the Group or Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components.

All operating segments operating results are reviewed regularly by the Chief Executive Officer to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial position is available.

(v) Provisions

Provisions are recognised when the Group and the Company have a legal or constructive obligation as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation.

Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessment of the time value of money and the risk specific to the liability. The unwinding of a discount is recognised as finance cost.

4. DETERMINATION OF FAIR VALUES

A number of the Group’s and Company’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(a) Consumable biological assets

Live broiler chicks and hatching eggs are assessed based on fair values arrived at by using the income approach. The determination of fair value is based on active market values, where appropriate, or management’s assessment of the fair value based on available data and benchmark statistics.

The fair values of the Group’s consumable biological assets are determined by management annually at the reporting date through the income approach, by estimating the expected cash inflows at time of maturity adjusted for unobservable inputs such as hatchability rate, mortality rate and yield rate to derive the fair value of the biological assets at measurement date. Inputs and assumptions used in the determination of the fair value are verified and validated based on internal production histories.

(b) Trade and other receivables

The fair value of trade and other receivables, which is determined for disclosure purposes, is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date for all long term receivables.

(c) Property, plant and equipment

The fair value of property is the the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of items of property, plant and equipment is based on market approach and cost approach using quoted market prices for similar items, when available and replacement cost when appropriate. Depreciated replacement cost estimates reflect adjustments for physical deterioration as well as functional and economic obsolescence. Further information is included in Note 13.


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4. DETERMINATION OF FAIR VALUES (CONTINUED)

(d) Inventories

The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less the estimated cost of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories.

(e) Available-for-sale investments

The Group’s and the Company’s available-for-sale investments are valued at quoted market prices at the reporting date. Those investments which do not have a quoted market price and whose fair value cannot be reliably measured are carried at cost, less any impairment.

(f) Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.

(g) Assets held for sale

The Group’s and the Company’s assets held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

(h) Fair value hierarchy

The Group and the Company classify financial instruments measured at fair values using the following fair value hierarchy that reflect the significance of the inputs used in making the measurements:

• Level 1: Quoted (unadjusted) prices in an active market for an identical instrument.

• Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

• Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices.


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4. DETERMINATION OF FAIR VALUES (CONTINUED)(h) Fair value hierarchy (continued)

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

Carrying amounts Fair value

Consolidated Loans and receivables

Available- for-sale

Other financial liabilities Total Level 1 Level 2 Level 3 Total

30 Jun 2017 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Financial assets measured at fair valueSIT Land Holdings Ltd - 39 - 39 - - 39 39Progos - 50 - 50 - - 50 50Ecocentre Ltée - 120 - 120 - - 120 120

Financial assets not measured at fair value

Trade and other receivables* 719,297 - - 719,297 - - - -Cash and cash equivalents 121,109 - - 121,109 - - - -

840,406 209 - 840,615 - - 209 209

Financial liabilities not measured at fair value Borrowings - - 813,237 813,237 - - - -Bank overdrafts - - 401,521 401,521 - - - -Trade and other payables - - 289,724 289,724 - - - -

- - 1,504,482 1,504,482 - - - -

30 Jun 2016

Financial assets measured at fair valueSIT Land Holdings Ltd - 39 - 39 - - 39 39 Progos - 50 - 50 - - 50 50 Ecocentre Ltée - 120 - 120 - - 120 120

Financial assets not measured at fair valueTrade and other receivables* 737,080 - - 737,080 - - - -Cash and cash equivalents 48,472 - - 48,472 - - - -

858,189 209 - 858,398 - - 209 209

Financial liabilities not measured at fair value - - - - - -Borrowings - - 835,532 835,532 - - - -Bank overdrafts - - 471,846 471,846 - - - -Trade and other payables - - 419,849 419,849 - - - -

- - 1,727,227 1,727,227 - - - -


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4. DETERMINATION OF FAIR VALUES (CONTINUED)(h) Fair value hierarchy (continued)

Carrying amounts Fair value

SeparateLoans and receivables

Available- for-sale

Other financial liabilities Total Level 1 Level 2 Level 3 Total

30 Jun 2017 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Financial assets measured at fair valueSIT Land Holdings Ltd - 39 - 39 - - 39 39Progos - 50 - 50 - - 50 50Ecocentre Ltée - 120 - 120 - - 120 120

Financial assets not measured at fair valueTrade and other receivables* 832,587 - - 832,587 - - - -Cash and cash equivalents 22,356 - - 22,356 - - - -

854,943 209 - 855,152 - - 209 209


- - 1,282,864 1,282,864 - - - -

30 Jun 2016Financial assets measured at fair valueSIT Land Holdings Ltd - 39 - 39 - - 39 39Progos - 50 - 50 - - 50 50Ecocentre Ltée - 120 - 120 - - 120 120

Financial assets not measured at fair valueTrade and other receivables 630,042 - - 630,042 - - - -Cash and cash equivalents 6,907 - - 6,907 - - - -

Debt Investment in foreign subsidiary 315,358 315,358952,307 209 - 952,516 - - 209 209


- - 1,259,662 1,259,662 - - - -

*Trade and other receivables excludes prepayments.


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4. DETERMINATION OF FAIR VALUES (CONTINUED)

(h) Fair value hierarchy (continued)

There have been no transfers during the year between levels 1 and 2.

There have been no movements during the year for investments categorised in level 3.

Level 3 fair values

Valuation technique and significant unobservable inputs

The Company is unable to measure the fair value reliably as these refer to unquoted investment. At the reporting date, the directors reviewed the carrying value of the investments and are of the opinion that the investments have not suffered any impairment loss.

Reconciliation of Level 3 fair values

The following table shows a reconciliation from the opening balance to the closing balance for level 3 fair value

Available for sales investments

Rs’000

Balance as at 1 Jul 2016 209 Gains included in other comprehensive income -Net change in fair value (unrealised) -Additions -Balance as at 30 Jun 2017 209

The Group holds an investment in equity shares of the following entities:• SIT Land Holdings Ltd• Progos• Ecocentre Ltee

The above has a fair value of Rs209,000 as at 30 June 2017. The fair value of this investment was categorised as level 3 at 30 June 2017. This was because the shares were not listed and there were no recent observable arm`s length transactions in the share.

(i) Available-for-sale investments

Methodologies would be applied consistently from year to year, except where a change would result in better estimates of fair value.

5 FINANCIAL RISK MANAGEMENTFinancial risk factors

The Group and the Company have exposure to the following risks from their use of financial instruments:

• Credit risk

• Liquidity risk

• Market risk

This note presents information about the Group’s and the Company’s exposure to each of the above risks, the Group’s and the Company’s objectives, policies and processes for measuring and managing risk, and the Group’s and the Company’s management of capital. Quantitative disclosures have also been included.

The Group Audit and Risk Committee oversees how management monitors compliance with the Group’s and the Company’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group and the Company. The Group Audit and Risk Committee is assisted in its role by Internal Audit. Internal Audit undertakes both regular and adhoc reviews of risk management controls and procedures, the results of which are reported to the Audit and Risk Committee.

(i) Credit risk

Credit risk is the risk of loss due to the inability or unwillingness of a counterparty to meet their obligations as and when they fall due. Credit risk is managed on a Group basis and arises principally from the Group’s and the Company’s aggregate balance of amounts receivable.

Loans to subsidiaries

The Company manages its credit risk with regards to loans to subsidiaries by actively monitoring the operations and financial performance of its subsidiaries.

The maximum exposure to credit risk is represented by the carrying amount of the loans to subsidiaries in the separate financial statements.


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5 FINANCIAL RISK MANAGEMENT (CONTINUED)(i) Credit risk (continued)

Trade and other receivables

Trade receivables comprise a large, widespread customer base. These risks are controlled by the application of credit limits, credit controlling procedures and credit insurance.

The Group and the Company do not require collateral in respect of trade and other receivables.

The Group and the Company establish an allowance for impairment that represents their estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a known loss component based on historical data for similar financial assets.

The Group and the Company have no significant concentrations of credit risk. The Group’s and the Company’s policies ensure that the vetting criteria including internal ratings take into consideration economic realities. These ratings do not preclude the monitoring of outstanding debts continuously and relevant diminution in value recognised as and when they become apparent. The maximum exposure to credit risk is represented by the carrying amount of the trade and other receivables in the consolidated and separate statements of financial position.

At 30 June 2017, the ageing of trade receivables that were not impaired, was as follows:

Consolidated Total

Neither past due nor impaired < 30 days 31 – 60 days 61 – 90 days >90 days

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

2017 442,380 257,305 147,188 24,540 6,219 7,128 2016 493,500 270,400 133,373 44,325 32,987 12,415

Separate Total

Neither past due nor impaired < 30 days 31 – 60 days 61 – 90 days >90 days

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

2017 308,720 136,084 140,310 21,324 3,874 7,128 2016 309,292 136,841 105,234 31,404 28,167 7,646

Management believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full, based on historical payment behaviour and extensive analysis of customer credit risk, including underlying customers’ credit ratings if they are available.


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5 FINANCIAL RISK MANAGEMENT (CONTINUED)(i) Credit risk (continued)

Trade and other receivables (continued)

The movement in allowance for impairment in respect of trade receivables during the year was as follows:


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Balance at 1 Jul 29,934 24,839 27,151 27,151 Charge for the year 30,246 5,268 320 -Recovered (887) (173) (527) -Write off (19,114) - (19,057) -Balance at 30 Jun 40,179 29,934 7,887 27,151

At 30 June 2017, at Group level, there was an impairment loss of Rs30.2 m (2016: Rs5.3 m) related to long outstanding customers. Although the goods sold to the customer were subject to a retention of title clause, the Group has no indication that the customer is still in possession of the goods. The impairment loss at 30 June 2017 related to several customers that have indicated that they are not expecting to be able to pay their outstanding balances, mainly due to economic circumstances.

Cash and cash equivalents

Cash and cash equivalents are held in a number of reputable financial institutions. Accordingly, the Group and the Company have no significant concentration of credit risk with respect to cash and cash equivalents.

(ii) Liquidity risk

Liquidity risk is the risk that the Group and the Company will not be able to meet their financial obligations as they fall due. The Group’s and the Company’s approach to managing liquidity is to ensure, as far as possible, that they will always have sufficient liquidity to meet their liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s and the Company’s reputation.

The Group’s and the Company’s liquidity risk consist mainly of the amount borrowed from time to time. The details of borrowings are disclosed in Note 24. The Group and the Company have credit facilities from its bankers and these facilities are reviewed on an annual basis.

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include contractual interest payments and exclude the impact of netting agreements

Contractual cash flows

Carrying valueLess than

1 year Between 1 and 2 years

Between 2 and 5 years Total

Consolidated Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

At 30 Jun 2017Non-derivative financial instrumentsBank overdrafts 401,521 401,521 - - 401,521

Borrowings 813,237 748,268 64,969 - 813,237

Trade and other payables 289,724 289,724 - - 289,724 1,504,482 1,439,513 64,969 - 1,504,482

At 30 Jun 2016Non-derivative financial instrumentsBank overdrafts 471,846 471,846 - - 471,846 Borrowings 835,532 654,932 66,809 153,875 875,616 Trade and other payables 419,849 419,849 - - 419,849

1,727,227 1,546,627 66,809 153,875 1,767,311


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5 FINANCIAL RISK MANAGEMENT (CONTINUED)(ii) Liquidity risk (continued)

Contractual cash flowsCarrying

valueLess than

1 year Between 1 and 2 years

Between 2 and 5 years Total

Separate Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

At 30 Jun 2017Non-derivative financial instrumentsBank overdrafts 325,147 325,147 - - 325,147

Borrowings 601,056 553,132 45,924 - 601,056

Trade and other payables 356,661 356,661 - - 356,661 1,282,864 1,234,940 45,924 - 1,282,864

At 30 Jun 2016Non-derivative financial instrumentsBank overdrafts 309,769 309,769 - - 309,769 Borrowings 588,806 488,806 39,325 106,661 634,792 Trade and other payables 361,087 361,087 - - 361,087

1,259,662 1,159,662 39,325 106,661 1,305,648

(iii) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s and the Company’s income or the value of their holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Foreign currency risk

The Group and the Company are exposed to currency risks from their imports both for their commercial and production activities. As such they are subject to risks from changes in currency values that could affect earnings. Given the limited availability of financial instruments locally, short term transaction risks arising from currency fluctuations are not hedged.

Subject to cost and availability of finance, the Group and the Company aim to minimise their foreign exposure by borrowing in local currency.

Retranslation risks are not hedged.


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The following exchange rates were applied during the year:

AVERAGE RATE SPOT RATE

2017 2016 2017 2016

Rs Rs Rs Rs

Euro 39.5 37.81 40.91 40.52Australian Dollar 25.85 25.71 27.48 27.16South African Rand 2.65 2.52 2.77 2.49United States Dollar 34.8 34.03 35.86 36.48Mozambican Metical 0.65 0.71 0.61 0.54Seychelles Rupee 2.75 2.43 2.81 2.44Pound Sterling 46.1 49.55 46.51 48.96

Foreign currency sensitivity analysis

Foreign exchange risk arises from changes in foreign exchange rates. Fluctuations in the above currencies by 10% would result in a gain or loss recognised in profit or loss and equity as shown below. The analysis does not take the currency positions that are denominated in the functional currencies of relevant operations because they do not create any foreign currency exposure. Also, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure does not represent the exposure during the year.


5 FINANCIAL RISK MANAGEMENT (CONTINUED)(iii) Market risk (continued)

The currency profile of the financial assets and liabilities is summarised as follows:


Financial assets

Financial liabilities

Financial assets

Financial liabilities

Rs’000 Rs’000 Rs’000 Rs’000

2017Australian Dollar 4,262 3,353 4,262 3,353

Euro 14,629 6,865 11,664 5,525

Mauritian Rupee 726,085 1,403,583 781,427 1,223,758

Pound Sterling 569 - 569 -

South African Rand 16,382 39,730 16,382 38,238

United States Dollar 58,087 22,273 40,848 11,990

Seychelles Rupee 10,813 28,478 - -

Mozambican Metical 9,788 200 - -840,615 1,504,482 855,152 1,282,864

2016Australian DollarEuro 887 25,006 887 25,006 Mauritian Rupee 1,793 47,588 1,793 42,782 Pound Sterling 807,667 1,408,811 928,666 1,030,217 South African Rand 15 1,334 15 1,334 United States Dollar 6,376 86,536 6,376 86,536 Seychelles Rupee 14,779 73,787 14,779 73,787 Mozambican Metical 11,112 10,275 - -

15,769 73,890 - -858,398 1,727,227 952,516 1,259,662


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5 FINANCIAL RISK MANAGEMENT (CONTINUED)

(iii) Market risk (continued)

Foreign currency risk (continued)

Foreign currency sensitivity analysis (continued)

Consolidated

Appreciation/ (depreciation)

in foreign exchange rates

Effect on profit or loss

Effect on equity



Effect on profit or loss Effect on equity

2017 2017 2017 2016 2016 2016

% Rs’000 Rs’000 % Rs’000 Rs’000

United States Dollar 10 3,581 (3,581) 10 (5,901) 5,901 (10) (3,581) 3,581 (10) 5,901 (5,901)

South African Rand 10 (2,335) 2,335 10 (8,016) 8,016

(10) 2,335 (2,335) (10) 8,016 (8,016)

Euro 10 776 (776) 10 (4,579) 4,579 (10) (776) 776 (10) 4,579 (4,579)

Mozambican Metical 10 959 (959) 10 (5,812) 5,812 (10) (959) 959 (10) 5,812 (5,812)

Australian Dollar 10 91 (91) 10 (2,412) 2,412 (10) (91) 91 (10) 2,412 (2,412)

Pound Sterling 10 57 (57) 10 (132) 132 (10) (57) 57 (10) 132 (132)

Seychelles Rupee 10 (1,767) 1,767 10 84 (84) (10) 1,767 (1,767) (10) (84) 84


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5 FINANCIAL RISK MANAGEMENT (CONTINUED)

(iii) Market risk (continued)

Foreign currency risk (continued)

Foreign currency sensitivity analysis (continued)

Separate



Effect on profit or loss

Effect on equity



Effect on profit or loss Effect on equity

2017 2017 2017 2016 2016 2016

% Rs’000 Rs’000 % Rs’000 Rs’000

United States Dollar 10 2,886 (2,886) 10 (5,901) 5,901 (10) (2,886) 2,886 (10) 5,901 (5,901)

South African Rand 10 (2,186) 2,186 10 (8,016) 8,016 (10) 2,186 (2,186) (10) 8,016 (8,016)

Euro 10 614 (614) 10 (4,099) 4,099 (10) (614) 614 (10) 4,099 (4,099)

Australian Dollar 10 91 (91) 10 (2,412) 2,412 (10) (91) 91 (10) 2,412 (2,412)

Interest rate risk

The Group’s and the Company’s interest rate risk arises from borrowings. Borrowings issued at variable rates expose the Group and the Company to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group and the Company to fair value interest rate risk.

The Group and the Company have an interest rate policy which aims at minimising the annual interest costs and to reduce volatility. Given the lack of a local bond market and the restricted capital market, the Group and the Company borrow mainly from banks, which are variable indexed to the prime lending rate. Fixed rate loans, especially of long duration, are not competitively priced by banks to allow a dynamic management of the risk. The policy is thus implemented broadly and cost of debt is managed by effective negotiation directly with banks and leasing companies.


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Interest rate risk (continued)

Variable rate instruments

Consolidated SeparateConsolidated and separate Consolidated Separate

Consolidated and separate

2017 2017 2017 2016 2016 2016

Rs’000 Rs’000 Interest Rate Rs’000 Rs’000 Interest Rate

Borrowings (748,113) (539,306) 3.80% -7.25% (716,236) (520,355) 5.25%-7.65%

Bank overdrafts (401,521) (325,147) 4.75%-28.5% (471,846) (309,769) 6.25%-17%

Cash and cash equivalents 121,109 22,356 2%-5% 48,472 6,907 2%-5%

Lease liabilities carry fixed rates of interest and are therefore not exposed to variability in market interest rates.

Interest rate sensitivity analysis

Consolidated

Profit or loss Equity100bp 100bp 100bp 100bp

Increase Decrease Increase DecreaseRs’000 Rs’000 Rs’000 Rs’000

30 Jun 2017Variable rate instruments:Interest on borrowings (7,481) 7,481 (7,481) 7,481

Interest on bank overdrafts (4,015) 4,015 (4,015) 4,015

Interest on cash and cash equivalents 1,211 (1,211) 1,211 (1,211)Cash flow sensitivity (net) (10,285) 10,285 (10,285) 10,285 30 Jun 2016Variable rate instruments:Interest on borrowings (7,162) 7,162 (7,162) 7,162 Interest on bank overdrafts (4,718) 4,718 (4,718) 4,718 Interest on cash and cash equivalents 485 (485) 485 (485)Cash flow sensitivity (net) (11,395) 11,395 (11,395) 11,395


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Interest rate risk (continued)

Interest rate sensitivity analysis (continued)

Profit or loss Equity100bp 100bp 100bp 100bp

Separate Increase Decrease Increase DecreaseRs’000 Rs’000 Rs’000 Rs’000

30 Jun 2017Variable rate instruments:Interest on borrowings (5,393) 5,393 (5,393) 5,393

Interest on bank overdrafts (3,251) 3,251 (3,251) 3,251

Interest on cash and cash equivalents 224 (224) 224 (224)Cash flow sensitivity (net) (8,420) 8,420 (8,420) 8,420 30 Jun 2016Variable rate instruments:

(5,204) 5,204 (5,204) 5,204 Interest on borrowingsInterest on bank overdrafts (3,098) 3,098 (3,098) 3,098 Interest on cash and cash equivalents 69 (69) 69 (69)Cash flow sensitivity (net) (8,233) 8,233 (8,233) 8,233

The sensitivity analysis has been determined based on the exposure to interest rate for the financial liabilities as at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the reporting date was outstanding for the whole year.

Capital risk management

The Group’s and Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders.

The Board of Directors seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position.

The Company and Group monitor capital using a ratio of adjusted net debt to adjusted equity. For this purpose, adjusted net debt is defined as total liabilities, comprising interest-bearing loans and borrowings and obligation under finance leases, less cash and cash equivalents.


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5 FINANCIAL RISK MANAGEMENT (CONTINUED)Capital risk management (continued)

Gearing Ratio


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Total borrowings and bank overdrafts 1,214,758 1,307,378 926,203 898,575 Less : Cash and bank balances (121,109) (48,472) (22,356) (6,907)Adjusted Net Debt 1,093,649 1,258,906 903,847 891,668 Total Equity 1,788,464 1,852,498 1,509,407 1,603,031

Adjusted net debt to equity 61% 68% 60% 56%

6. SEGMENT REPORTING

Operating segments presented are those components of the Group that engage in business activities from which they may earn revenues and incur expenses, including revenues and expenses that relate to transaction with any of the Group’s other components.

Inter-segment pricing is determined on an arm’s length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly investments and related revenue, loans and borrowings and related expenses, corporate assets and head office expenses.

Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill.

The following factors have been taken into consideration on determining the operating segment.

- The nature of the business activities of each component. Each operating segment has a distinct economic activity.

- The existence of managers responsible for the components. Each operating segment has a different manager, who is responsible for the financial results produced.

- For each operating segment, the results are presented separately to the Board.

Segments

The Group has the following strategic divisions, which are its reportable segments. These divisions offer different products and services, and are managed separately because they require different technology and marketing strategies.

· Wholesale & Retail;

· Production and Distribution: poultry farming, distribution of chicken, ice cream, yoghurt and other frozen food items, manufacturing, marketing and distribution of food and grocery products;

· Others: manufacture and distribution of animal feeds.


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6. SEGMENT REPORTING (CONTINUED)The Group’s Chief Executive officer reviews the internal management reports of each division at least quarterly.

Information related to each reportable segment is set out below. Segment profit (loss) before tax is used to measure performance because management believes that this information is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industries.

Segment information

Wholesale & Retail

Production & Distribution Others Adjustments* Total

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Consolidated Year ended 30 Jun 2017External revenue 230,892 3,981,201 1,197,491 (1,229,835) 4,179,749 Segment revenue 230,892 3,981,201 1,197,491 (1,229,835) 4,179,749

Segment profit from operating activities 5,576 61,937 117,424 15,117 200,054

68,245 4,051,237 736,594 (1,413,768) 3,442,308 Segment assetsSegment liabilities 84,781 2,010,409 311,805 (824,363) 1,582,632

Shareholders fund (16,536) 1,960,009 454,223 (727,292) 1,670,404

Non-controlling interest - 1,380 - 116,680 118,060

Current and deferred taxation - 79,439 (29,434) 21,207 71,212 3,442,308

Other segment items- Purchase of property, plant and equipment - 137,180 41,529 - 178,709

- Depreciation 2,737 96,997 24,272 - 124,006

- Amortisation of intangible assets - - - - -- Impairment of investment in subsidiary 133,156 - - - 133,156

*These relates to consolidation adjustments


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6. SEGMENT REPORTING (CONTINUED)Segment information (continued)

Wholesale & retail

Production & distribution Others Adjustments* Total

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Consolidated Year ended 30 Jun 2016

External revenue 282,957 3,512,271 1,279,005 (787,244) 4,286,989 Segment revenue 282,957 3,512,271 1,279,005 (787,244) 4,286,989

Segment profit/(loss) from operating activities (11,060) 207,793 114,908 (88,019) 223,622 Segment assets 68,917 4,356,430 838,129 (1,498,714) 3,764,762

89,755 2,113,444 384,321 (771,640) 1,815,880 Segment liabilitiesShareholders fund (20,838) 2,178,125 408,806 (857,258) 1,708,835 Non-controlling interest - 966 - 142,697 143,663 Current and deferred taxation - 63,895 45,002 (12,513) 96,384 Total equity and liabilities 3,764,762 Other segment items- Purchase of property, plant and equipment - 161,269 - - 161,269 - Depreciation 3,645 83,683 21,669 - 108,997 - Amortisation of intangible assets - - 31 - 31

Geographic information

The geographic information below analyses the Group’s revenue and non-current assets by the company’s country of domiciled. In presenting the following information, segment revenue has been based on the geographic location of customers and segment assets were based on the geographic location of the assets.

2,017 2,016

Rs’000 Rs’000

RevenueMauritius 4,025,063 4,079,982 All foreign countries:Mozambique 127,246 119,017 Seychelles 27,440 87,990

4,179,749 4,286,989 Non-current assetsMauritius 1,571,490 1,569,303 All foreign countries:Mozambique 103,984 111,110 Seychelles 839 1,195

1,676,313 1,681,608

Non-current assets exclude financial instruments, deferred tax assets and employee benefit assets.


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7. REVENUE

Details of revenue generated by Innodis Ltd and its subsidiaries are illustrated in the table below:


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Sales of goodsWholesale & Retail 230,892 282,957 - -Production & Distribution 3,981,201 3,512,271 2,379,382 2,632,082 Others 1,197,491 1,279,005 - -Adjustments (1,229,835) (787,244) - -At 30 Jun 2017 4,179,749 4,286,989 2,379,382 2,632,082

For the year ended 30 June 2017, the Group have not generated revenue through rendering of services to third parties. Any other income generated through rental of investment property and commission receivables from foreign suppliers have been recorded under other income in the financials.

8. PROFIT FROM OPERATING ACTIVITIESThe following items have been (credited)/charged in arriving at profit from operating activities:


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Dividend income - - (130,564) (29,100)Depreciation on property, plant and equipment:- Owned assets 88,665 75,495 43,617 37,248 - Assets under finance leases 35,341 33,502 15,886 20,475

Amortisation of premiums on leasehold land 572 572 572 572 Operating lease expenses 59,458 62,207 59,458 61,690 Profit/(loss) on disposal of property plant and equipment 123,670 (1,972) 949 64,494 Amortisation/impairment on intangible assets:- Brand, licences, trademarks, etc. - 31 - -Cost of inventories expensed:- Raw material 1,414,276 1,896,355 203,965 783,346 - Finished goods 2,054,109 1,608,503 1,794,481 1,352,906 Staff cost (Note 9) 337,455 349,846 120,585 195,748 Repairs and maintenance 17,721 17,350 16,093 13,751


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9. STAFF COST


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Wages and salaries 313,170 337,886 109,071 192,457 Social security and pension costs 24,285 11,960 11,514 3,291

337,455 349,846 120,585 195,748

Number of persons employed at year end:2,017 2,016 2,017 2,016

Number Number Number Number

Full time 1,075 1,090 408 429 Part time 240 218 146 138

1,315 1,308 554 567

10. NET FINANCE COSTS


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Interest income (4,339) (5,579) (10,332) - Net foreign exchange transaction gains (553) (21,092) (4,550) (20,689)

(4,892) (26,671) (14,882) (20,689)Interest expense:- Overdrafts 45,232 41,902 18,685 20,103 - Loans 19,910 20,993 19,910 20,817 - Finance leases 7,923 5,774 4,560 5,268 - Other interest 4,897 14,268 7,916 13,883

77,962 82,937 51,071 60,071

Net finance costs 73,070 56,266 36,189 39,382


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11. INCOME TAX EXPENSE


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Income tax based on adjusted profits at 15% (2016: 15%) 15,410 38,332 - 23,112 Deferred taxation (Note 26) (3,613) (1,177) (29,365) (1,457)Corporate social responsibility 2,238 3,944 - 2,059

14,035 41,099 (29,365) 23,714 Reconciliation of effective taxationProfit before taxation 128,110 167,489 (66,352) 156,258 Income tax at 15% (2016: 15%) 19,217 25,123 (9,953) 23,439 Non-deductible expenses 29,047 (5,089) 27,437 3,394 Exempt income (52,605) (2,790) (31,044) (14,768)Change in recognised deductible temporary difference 18,300 17,890 13,560 11,047 Corporate Social Responsibility 2,238 3,944 - 2,059 Movement in deferred tax (3,613) (1,177) (29,365) (1,457)Unrecognised tax losses 1,412 2,677 - Effect of tax rates in foreign jurisdiction 39 521 - -

14,035 41,099 (29,365) 23,714

12. EARNINGS PER SHARE Basic/diluted earnings per share

The calculation of earnings per share has been based on the Group’s profit attributable to Owners of the Company after taxation and non-controlling interest for the year of Rs7,020,000 (2016: Rs112,591,000) and on 36,730,266 (2016: 36,730,266) ordinary shares issue.

Basic and diluted earnings per share were the same for both years since there was no potential dilutive ordinary shares at 30 June 2017.


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13. PROPERTY, PLANT AND EQUIPMENT

Freehold land Buildings

Improvement to buildings

Plant and machinery

Furniture and

equipmentMotor

vehiclesWork in progress Total

Consolidated Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Cost/revaluedAt 1 Jul 2015 309,470 720,289 13,715 795,914 608,361 231,444 182,353 2,861,546 Additions - 42,589 - 67,280 22,415 12,612 16,373 161,269 Disposals - - - (1,015) (592) (10,543) - (12,150)Reclassification to assets held for sale (14,000) - - - - - - (14,000)Foreign currency translation (5,853) 20,859 (3,303) 108,605 (161,511) 5,381 (26,053) (61,875)Balance at 30 Jun 2016 289,617 783,737 10,412 970,784 468,673 238,894 172,673 2,934,790

At 1 Jul 2016 289,617 783,737 10,412 970,784 468,673 238,894 172,673 2,934,790 Additions 8,000 19,330 3,048 31,408 64,564 26,620 25,739 178,709 Disposals (103,500) - - - (2,160) (12,152) - (117,812)Transfer - 61,730 10,337 51,664 32,917 - (156,648) - Revaluation - 33,737 - - - - - 33,737 Foreign currency translation - 1,283 - 9,446 33 17 - 10,779 Balance at 30 Jun 2017 194,117 899,817 23,797 1,063,302 564,027 253,379 41,764 3,040,203 Accumulated depreciation/and impairment lossesAt 1 Jul 2015 - 36,322 2,721 632,067 373,379 147,683 - 1,192,172 Depreciation for the year - 17,733 359 50,753 18,048 22,104 - 108,997 Foreign currency translation - - (408) (10,352) (1,522) - - (12,282)Disposal adjustment - - - (399) (169) (10,355) - (10,923)Balance at 30 Jun 2016 - 54,055 2,672 672,069 389,736 159,432 - 1,277,964

At 1 Jul 2016 - 54,055 2,672 672,069 389,736 159,432 - 1,277,964 Depreciation for the year - 21,443 860 44,439 35,607 21,657 - 124,006 Foreign currency translation - 296 - 772 27 24 - 1,119 Disposal adjustment - - - - (2,160) (12,060) - (14,220)Balance at 30 Jun 2017 - 75,794 3,532 717,280 423,210 169,053 - 1,388,869

Carrying amounts:Balance as 30 Jun 2017 194,117 824,023 20,265 346,022 140,817 84,326 41,764 1,651,334 At 30 Jun 2016 289,617 729,682 7,740 298,715 78,937 79,462 172,673 1,656,826


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13. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Freehold land Buildings

Plant and machinery

Furniture and

equipmentMotor

vehiclesWork in progress Total

Separate Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Cost/RevaluedBalance at 1 Jul 2015 172,519 496,549 519,113 307,312 169,059 3,116 1,667,668 Additions - 1,135 29,654 20,810 10,752 615 62,966 Disposals - - (180,257) (7,885) (9,950) - (198,092)Reclassification to investment property (146,500) (364,835) - - - - (511,335)Reclassification to assets held for sale (7,500) - - - - - (7,500)Balance at 30 Jun 2016 18,519 132,849 368,510 320,237 169,861 3,731 1,013,707 Additions 8,000 16,128 8,588 45,569 24,296 14,257 116,838 Disposals - - - - (9,106) - (9,106)Reclassification to investment property (8,000) (15,500) - - - - (23,500)Balance at 30 Jun 2017 18,519 133,477 377,098 365,806 185,051 17,988 1,097,939 Accumulated depreciation and impairment lossesBalance at 1 Jul 2015 - 20,439 384,106 290,391 115,057 - 809,993 Depreciation for the year - 5,897 21,305 14,420 16,101 - 57,723 Disposal adjustment - (143,631) (6,104) (9,762) - (159,497)Reclassification to investment property - (18,926) - - - - (18,926)Balance at 30 Jun 2016 - 7,410 261,780 298,707 121,396 - 689,293 Depreciation for the year - 2,622 16,530 24,892 15,459 - 59,503 Disposal adjustment - - - - (9,105) - (9,105)Balance at 30 Jun 2017 - 10,032 278,310 323,599 127,750 - 739,691 Carrying amounts:At 30 Jun 2017 18,519 123,445 98,788 42,207 57,301 17,988 358,248 At 30 Jun 2016 18,519 125,439 106,730 21,530 48,465 3,731 324,414


98


13. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)i) Security

The land and buildings are secured by a fixed charge for Rs200,000. The movable and immovable assets are subject to a floating charge for Rs906,800,000. Bank borrowings are secured by fixed and floating charges over the assets of the Group.

The Group has a floating charge of USD 2.9 million on its plant and machinery pledge in favour of bank overdraft facilities for Moçambique Farms, Limitada.

ii) Valuation

Land and buildings of the Group and the Company have been revalued at open market value on 26 June 2013 by Société D’Hotman De Spéville now known as Chateau Doger De Speville, Chartered Valuation Surveyors. Fair value is determined by reference to market based evidence. This means that valuations performed by the values are based on active market prices, adjusted for any difference in the nature, location or condition of the specific property.

The valuation has been derived using the Sales Comparison Approach and the Depreciated Replacement Cost Approach.

Additionally, during the year, as part of the acquisition of the remaining 43.6% interest in the share capital of the subsidiary Poulet Arc-en-Ciel Ltée, management performed a revaluation assessment on 15 June 2017 with regards to the land and building of the subsidiary Poulet Arc-en-Ciel Ltée based on which a revaluation gain of MUR 33.7 million being surplus between carrying amount and value of land and building based on market based evidence.

The carrying amounts of property, plant and equipment that would have been included in the financial statements had the assets been carried at cost are as follows:


Rs’000 Rs’000

At 30 Jun 2017 1,255,175 368,191 At 30 Jun 2016 1,283,845 327,101

iii) Investment Property

At the Company level, freehold land buildings that were previously used by the poultry division of Innodis Ltd have been transferred to investment property as they are now being leased to Innodis Poultry Ltd, a new subsidiary of Innodis Ltd.

The directors of the Company have made an assessment to ensure that the carrying value of land and buildings does not differ materially from its fair value as at 30 June 2017 and they are of opinion that the carrying amount reflects the fair value of the land and buildings.

iv) Finance lease

Included in the Group’s and the Company’s property, plant and equipment are motor vehicles and plant and machinery held under finance leases. Details are as follows


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Leased motor vehiclesCarrying amount 45,942 44,547 54,247 42,990 Depreciation charge 13,122 15,200 13,991 14,511 Leased plant and machineryCarrying amount 123,688 123,116 14,010 34,392 Depreciation charge 22,915 18,302 1,895 5,964


99


14. INVESTMENT PROPERTY


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

CostAt 1 Jul 12,500 12,500 492,409 -

Transfer from property, plant and equipment - - 23,500 492,409 12,500 12,500 515,909 492,409

Accumulated depreciationAt 1 Jul 12,500 12,500 4,290 -Charge for the year - - 7,255 4,290 At 30 Jun 12,500 12,500 11,545 4,290 Carrying amountsAt 30 Jun - - 504,364 488,119

15. INTANGIBLE ASSETS AND GOODWILLReconciliation of carrying amount


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

CostAt 1 Jul and 30 Jun 120,652 120,652 105,743 105,743Amortisation and impairmentAt 1 Jul 114,843 114,812 105,743 105,743Charge for the year - 31 - -At 30 Jun 114,843 114,843 105,743 105,743Carrying amountsAt 30 Jun 5,809 5,809 - -

Intangible assets and goodwill are as follows:

Separate and Consolidated Consolidated Consolidated Consolidated Consolidated

Brands & licences

Computer software and

distribution rights

Goodwill on acquisition of Peninsula Rice

Milling Ltd

Goodwill on acquisition of Poulet Arc-en-

Ciel Ltée TotalRs’000 Rs’000 Rs’000 Rs’000 Rs’000

CostAt 1 Jul 2016 and 30 Jun 2017 105,743 2,474 4,000 8,435 120,652Amortisation and impairmentAt 1 Jul 2016 105,743 2,210 2,683 4,207 114,843Charge for the year - - - - -At 30 Jun 2017 105,743 2,210 2,683 4,207 114,843Carrying amountsAt 30 Jun 2017 - 264 1,317 4,228 5,809At 30 Jun 2016 - 264 1,317 4,228 5,809


100


16.(A) INVESTMENTS IN SUBSIDIARIES2017 2016

Rs’000 Rs’000

SeparateCostAt 1 Jul 766,297 300,939Additions 78,344 465,358At 30 Jun 844,641 766,297ImpairmentAt 1 Jul 116,963 116,963Charge for period - MFLDA* 133,155 -Charge for period - Société Enatou 2,000 -At 30 Jun 252,118 116,963Carrying amountsAt 30 Jun 592,523 649,334

Included in investments in subsidiaries are loans for which the repayment is neither planned nor likely to occur in the foreseeable future.

The Company has used the following assumptions to consolidate investees which are not wholly or virtually-wholly owned:

1. Whether it has power over the investees;

2. Whether it has exposure, or rights, to variable returns from its involvement with the investees; and

3. Whether it has the ability to use its power over the investees to affect the amount of the returns.

*This relates to the impairment of the investments in Moçambique Farms, Limitada. The impairment charge for the year of Rs133 million was determined by comparing the recoverable amount with the carrying value of the investment as at 30 June 2017. The recoverable amount of the investment in Moçambique Farms, Limitada was deemed to be the value in use. This was calculated by management through a discounted cashflow model.

Besides Moçambique Farms, Limitada and Société Enatou, no further impairment was recognised for the other subsidiaries because they either had a positive net equity or current assets exceeding current liabilities or was profitable during the year.

The key assumptions used in the estimation of the recoverable amount of the investments are set out below:

• The discount rate was a post-tax measure estimated based on the historical industry average weighted average cost of capital,

• The cashflow projections included specific estimates and a terminal growth rate thereafter; and

• The revenue growth rate was based on the expected units to be sold.

Sensitivity to changes in significant unobservable inputs

• 5% increase/(decrease) in the weighted average cost of capital would result in an increase/(decrease) in the recoverable amount by Rs12.6 million.

• 5% increase/(decrease) in the forecast annual revenue growth rate would result in increase/(decrease) in recoverable amount by Rs73.9 million.


101


16.(A) INVESTMENTS IN SUBSIDIARIES (CONTINUED)Details of the Company’s subsidiaries are:

Name of subsidiariesCountry of incorporation

Class of shares held Holding

Cost of investment (Net of impairment) Principal activity

2017 2016 2017 2016

% % Rs’000 Rs’000

Société Enatou Mauritius Ordinary 100 100 - 2,000 Investment holdingSupercash Ltd Mauritius Ordinary 100 100 20,000 20,000 WholesalePeninsula Rice Milling Ltd Mauritius Ordinary 100 100 250 250 Rice millingPeninsula Rice Milling Ltd Mauritius Loan 100 100 43,500 43,500 Rice millingChallenge Hypermarkets Ltd Mauritius Ordinary 50.1 50.1 52,605 52,605 Property developmentMoçambique Farms, Limitada Mauritius Loan 75 75 107,799 - Poultry farming and sales of chickenHWFRL Investments Ltd Mauritius Loan 100 100 152,747 315,357 Investment holdingMauritius Farms, Limited Mauritius Ordinary 100 100 25,992 25,992 Investment holdingEssentia Ltd Mauritius Ordinary 100 100 1 1 Investment holdingMeaders Feeds Ltd Mauritius Ordinary 51 51 39,628 39,628 Feed Mill operationsP. Frais Franchise Ltd Mauritius Ordinary 100 100 1 1 RetailInnodis Poultry Ltd Mauritius Ordinary 100 100 150,000 150,000 Poultry farming and sales of chicken

592,523 649,334

The Company, indirectly, holds investments in the following subsidiaries:

Name of subsidiariesCountry of

incorporation Effective holding Principal activity2017 2016

% %

Société Narien Mauritius 100 100 Property holdingRedbridge Investments Ltd Mauritius 100 100 Property developmentSociété Centre Point Mauritius 50.1 50.1 Property developmentMoçambique Farms, Limitada Mozambique 75 75 Broiler growing and processingPoulet Arc-en-Ciel Ltée Mauritius 100 56.4 Poultry farming and sales of chickenGreen Island Milling Limited Mauritius 60 60 Rice milling

Meaders Seychelles Ltd Seychelles 41 41Distributor of feeds and day old chicks

All the subsidiaries have the same year end as the parent.


102


16.(B) NON-CONTROLLING INTERESTS

Meaders Feeds Ltd

Moçambique Farms,

LimitadaGreen Island

Milling Limited

Challenge Hypermarkets

LtdNCI percentage 49% 25% 40% 49.90%

Rs’000 Rs’000 Rs’000 Rs’000

As at 30 Jun 2017Non-current assets 415,664 103,984 30,492 -

Current assets 399,166 32,960 - 126,462

Non-current liabilities (286,364) (65,509) (1,700) (173)

Current liabilities (86,809) - - -Net assets 441,657 71,435 28,792 126,289

Carrying amount of NCI 216,412 17,859 11,517 63,018

Revenue 1,197,491 127,246 - -

Profit/(loss) 83,828 (8,013) (925) 120,840

OCI (2,075) - - -Total comprehensive income 81,753 (8,013) (925) 120,840

Profit/(loss) allocated to NCI 41,076 2,003 (370) 60,299

OCI allocated to NCI (1,017) - - -Total comprehensive income allocated to NCI 40,059 2,003 (370) 60,299

Cash flows generated from/(used in) operating activities 211,192 (4,081) (925) -Cash flows used in investment activities (37,553) (5,995) - -

Cash flows (used in)/generated from financing activities (64,109) 20,435 925 -Net movement in cash and cash equivalents 109,530 10,359 - -Dividends paid to non-controlling interestsduring the year 24,500 - - 54,596


103


16. (B) NON-CONTROLLING INTERESTS (CONTINUED)

Poulet Arc-en-Ciel Ltée

Meaders Feeds Ltd

Moçambique Farms,

Limitada Green Island

Milling Limited

Challenge Hypermarkets

LtdNCI percentage 43.60% 49% 25% 40% 49.90%

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

As at 30 Jun 2016Non-current assets 66,345 398,221 111,110 31,298 103,500 Current assets 71,160 440,875 27,429 - 48,699 Non-current liabilities (9,919) (87,332) (51,611) - -Current liabilities (41,545) (341,859) (32,935) (1,580) (6,810)Net assets 86,041 409,905 53,993 29,718 145,389

Carrying amount of NCI 37,514 200,853 13,498 11,887 72,549

Revenue 257,057 1,279,005 119,017 - -

Profit/(loss) 15,010 82,945 (13,403) (2,524) 81 OCI (2,092) 140 - - -Total comprehensive income 12,918 83,085 (13,403) (2,524) 81

Profit allocated to NCI 6,544 40,643 (3,350) (1,009) 40 OCI allocated to NCI (912) 68 -Total comprehensive income allocated to NCI 5,632 40,711 (3,350) (1,009) 40

Cash flows generated from/(used in) operating activities 8,228 144,293 (46,298) - -Cash flows used in investment activities (2,287) (72,345) (3,002) - -

Cash flows (used in)/generated from financing activities (937) (77,342) 27,088 - -Net movement in cash and cash equivalents 5,004 (5,394) (22,212) - -Dividends paid to non-controlling interestsduring the year 2,782 24,500 - - -


104


17. EQUITY-ACCOUNTED INVESTEES2017 2016

Rs’000 Rs’000

ConsolidatedAt 1 Jul - 6,620 Share of profit of equity accounted investees 1,126 133 Share of net asset on winding up of investee - (2,453)Impairment - (4,300)At 30 Jun 1,126 -

2,017 2,016

Separate Rs’000 Rs’000

CostAt 1 Jul and 30 Jun 23,146 23,146 Accumulated impairmentAt 1 Jul 23,146 15,700 Impairment - 7,446

23,146 23,146 Carrying amountsAt 30 Jun - -

Details of the Company’s associates, not adjusted for the percentage ownership held by the Group are:

Name of companyCountry of incorporation Activities

Class of shares held % HOLDING

2017 2016

Promotion et Diversification Publicitaire Limitée Mauritius Advertising Ordinary 50 50Salière de l’Ouest Limitée Mauritius Manufacturing Ordinary 48 48Ariva Ltée Mauritius Shipping Agent Ordinary 8.41 8.41

By virtue of the Company’s representation on the Board of Ariva Ltée, the Company deems to have significant influence as investee, and hence continue to treat this investment as associate.

Disclosed judgements applied in concluding that there is significant influence as shareholding is more than 20%.

The summarised financial information of the Group’s equity-accounted investees is not material, hence has not been reported in the consolidated financial statements.


105


18. AVAILABLE-FOR-SALE INVESTMENTS2017 2016

Unquoted Unquoted

Consolidated and separate Rs’000 Rs’000

Cost:At 1 Jul and 30 Jun 209 209

Details of the Group’s and Company’s unquoted investments are:

Country of incorporation

Description of shares held

Value of investmentsName of Companies

Rs’000

Progos Mauritius Ordinary 50Ecocentre Ltée Mauritius Ordinary 30Ecocentre Ltée Mauritius Preference 90SIT Land Holdings Ltd Mauritius Ordinary 39

209

The Company is unable to measure the fair value reliably and the investments had been stated at cost. The fair value of this investment could not be reliably measured as the variability in the range of reasonable fair value estimates was too significant. At the reporting date, the directors reviewed the carrying value of the investments and are of the opinion that the investments have not suffered any impairment loss.

19. NON-CURRENT RECEIVABLESConsolidated and separate

Premiums on acquisition of leasehold land Rs’000

CostAt 1 Jul 2016 & 30 Jun 2017 23,102AmortisationAt 1 Jul 2016 10,159Charge for the year 572At 30 Jun 2017 10,731Carrying amountsAt 30 Jun 2017 12,371

At 30 Jun 2016 12,943

Premiums paid on acquisition of leasehold land are amortised over the lease terms ranging between 15 and 50 years.


106


20. (A) INVENTORIES


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Raw materials 351,799 401,063 75,774 43,763 Finished goods 448,983 815,440 398,678 776,479 Work in Progress 1,489 - 1,569 -Goods in transit - 2,088 - 1,608 Consumables 1,026 9,380 1,378 4,192 Spare parts 3,802 - 3,802 -

807,099 1,227,971 481,201 826,042

Cost of inventories expensed 3,468,385 3,504,858 1,998,446 2,136,252

All inventories are recorded at lower of cost and net realisable value.

20. (B) BIOLOGICAL ASSETSThe classification of biological assets between non-current and current is as follows:


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Bearer biological assetsNon-current 5,673 6,030 - -Current 33,422 40,480 - -At 30 Jun 39,095 46,510 - -Consumable biological assetsNon-current - - - -Current 38,778 29,110 - -At 30 Jun 38,778 29,110 - -

Total Biological Assets at 30 Jun 77,873 75,620 - -


107


20. (B) BIOLOGICAL ASSETS (CONTINUED)


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

At 1 Jul 75,620 79,622 - 76,858 Purchases 149,361 116,937 - -Sales/transfer to inventories (459,794) (376,262) - (76,858)Net increase due to hatching 311,073 257,631 - -Change in fair value less estimated costs to sell 1,613 (2,308) - -At 30 Jun 77,873 75,620 - -

The reconciliation of bearer biological asset movement:


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

At 1 Jul 46,509 46,440 - -Additions 12,361 15,973 - -Depletion (4,948) (7,120) - -Depreciation charge (14,827) (8,783) - -At 30 Jun 39,095 46,510 - -

(i) Measurement of fair values

Fair value hierarchy

The fair value measurements for consumable biological assets amounting to Rs38,778,000 (2016: Rs29,110,000) have been categorized as Level 3 fair value based on inputs to the valuation techniques used. There has been no transfers of assets to a different level.

(ii) Valuation techniques and significant unobservable inputs for consumable biological assets

The following table shows the valuation techniques used in measuring fair values, as well as the significant unobservable inputs used:

Type Valuation techniques Significant unobservable inputsLivestockLivestock comprise of live chickens and eggs.

Livestock are fair valued based on the market price less cost to sale of chickens of similar ages and weights.

• Mortality rate• Hatchability rate• Yield rate

TypeValuation technique Significant unobservable inputs Sensitivity of the input to value

Hatchable eggs Marked to market

Hatchability rate (%) 5% increase/(decrease) in hatchability rate would result in increase/(decrease) in fair value by Rs653,912

Mortality rate (%) 5% increase/(decrease) in mortability rate would result in increase/(decrease) in fair value by Rs3,468,117

Live broilers Marked to market

Yield rate (%) 5% increase/(decrease) in yield rate would result in increase/(decrease) in fair value by Rs962,993


108


21. TRADE AND OTHER RECEIVABLES


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Trade receivables – gross 482,559 523,434 316,607 336,443 Less: accumulated impairment (40,179) (29,934) (7,887) (27,151)Trade receivables – net 442,380 493,500 308,720 309,292 Amounts owed by subsidiaries - - 350,225 177,486 Amounts owed by associate 1,835 4,757 1,835 4,757 Amounts owed by related parties 60,080 18,681 319 314 Other receivables and prepayments 261,083 206,974 193,066 156,424

765,378 723,912 854,165 648,273

Transactions between related parties are carried out in the normal course of business and any amount receivables are repaid as per the Group’s and the Company’s credit terms. An ageing analysis of the Group’s and the Company’s trade receivables is provided in Note 5(i).

22. ASSETS HELD FOR SALE


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Land - 13,000 - 7,400

The fair value measurement for the assets held for sale is based on prices negotiated with a potential buyer.

During the year, the asset held for sale were sold with gain/ loss recognised in income statement.

23. SHAREHOLDERS’ EQUITYShare capital

2017 2016 2017 2016

Number Number Rs’000 Rs’000

AuthorisedOrdinary shares of Rs10 each 50,000,000 50,000,000 500,000 500,000Issued and fully paidOrdinary shares of Rs10 each 36,730,266 36,730,266 367,303 367,303

Share premium

A share premium arises when the value of the consideration received for the issue of shares exceeds the nominal value of the shares issued. The share premium account is regarded as permanent capital of the Company and only certain expenses of a capital nature may be set-off against it, namely:

(i) the preliminary expenses of the Company; or

(ii) the expenses of, or the commission paid on, the creation or issue of any shares.

The share premium account may also be applied:

(i) in paying up shares of the Company to be issued to shareholders of the Company as fully paid shares;

(ii) to reflect the decrease in the share premium account arising from shares acquired or redeemed.


109


23. SHAREHOLDERS’ EQUITY (CONTINUED)Revaluation reserve

The revaluation reserve arises from the revaluation of the Group’s and the Company’s land and buildings and plant and machinery.

This reserve is reduced by the transfers to retained earnings:

(i) on an annual basis of an amount equivalent to the depreciation on the revaluation surplus, net of the deferred tax impact; and

(ii) on disposal of the revalued property, plant and equipment of the remaining revaluation surplus on the property, plant and equipment disposed of, net of the deferred tax impact.

(iii) The revaluation reserve is used to record increases in the fair value of land and buildings. Subsequently when the land and building is being depreciated, proportionately a release of the fair value reserve is released to equity.

(iv) The foreign currency translation reserve records exchange differences arising from the translation of the financial statements of subsidiaries on consolidation.

The revaluation reserve may be applied in paying up shares of the Company and its subsidiaries to be issued to their shareholders as fully paid shares.


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

As at 1 Jul 342,963 387,802 321,979 332,197 Revaluation 33,737 - - -Foreign currency translation difference/foreign operations (6,978) (33,206) - -

369,722 354,596 321,979 332,197 Deferred taxation arising on revaluation of land and building (7,030) (4,851) 1,488 (4,743)Release to retained earnings (6,783) (6,782) (5,475) (5,475)As at 30 Jun 355,909 342,963 317,992 321,979

Foreign currency translation reserve

The foreign currency translation reserve consists of the Group’s share of the exchange difference arising on the consolidation of the subsidiary whose financial statements are presented in Mozambican Metical and Seychellois Rupee.


110


24. BORROWINGS


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

CurrentSecured bank loans 724,558 615,535 532,928 420,038 Lease liabilities 23,710 24,586 22,204 22,443

748,268 640,121 555,132 442,481 Non-currentSecured bank loans 23,555 100,701 6,378 100,317 Lease liabilities 41,414 94,710 39,546 46,008

64,969 195,411 45,924 146,325 Total borrowings 813,237 835,532 601,056 588,806

Terms and repayment schedules

The terms and conditions of outstanding loans are as follows:

Consolidated CurrencyNominal interest rate

Year of maturity

Face value

Carrying value

Face value

Carrying value

2017 2017 2016 2016

Rs’000 Rs’000 Rs’000 Rs’000

Short-term loan MUR 3.80% - 6.25% 2017 629,305 629,305 445,496 445,496Import loan USD 3.80% - 6.25% 2017 35,654 41,400 46,318 46,318Import loan EUR 3.80% - 6.25% 2017 24,402 20,975 40,366 40,366Import loan ZAR 3.80% - 6.25% 2017 29,103 29,103 63,607 63,607Import loan AUD 3.80% - 6.25% 2017 5,262 2,943 19,747 19,747Import loan SGD 3.80% - 6.25% 2017 832 832 - -Long term loan MUR 7.25% 2018 23,555 23,555 100,702 100,702Obligation under finance lease MUR 5.80% - 7.25% 2017 23,710 23,710 24,586 24,586Obligation under finance lease MUR 5.80% - 7.25% 2019 41,414 41,414 94,710 94,710

813,237 813,237 835,532 835,532


111


24. BORROWINGS (CONTINUED)Terms and repayment schedules (continued)

Separate CurrencyNominal interest rate

Year of maturity

Face value

Carrying value

Face value

Carrying value

2017 2017 2016 2016

Rs’000 Rs’000 Rs’000 Rs’000

Short Term Loan MUR 3.80% - 6.25% 2017 439,990 439,990 250,000 250,000Import Loan USD 3.80% - 6.25% 2017 33,339 39,085 46,318 46,318Import Loan EUR 3.80% - 6.25% 2017 24,412 20,974 40,366 40,366Import Loan ZAR 3.80% - 6.25% 2017 29,103 29,103 63,607 63,607Import Loan AUD 3.80% - 6.25% 2017 5,252 2,944 19,747 19,747Import Loan SGD 3.80% - 6.25% 2017 832 832 - -Long term loan MUR 7.25% 2018 6,378 6,378 100,317 100,317Obligation under finance lease MUR 7% - 7.25% 2017 22,204 22,204 22,443 22,443Obligation under finance lease MUR 7% - 7.25% 2019 39,546 39,546 46,008 46,008

601,056 601,056 588,806 588,806

The Company loans are secured by floating charges on the immovable assets of the Company and its subsidiaries and the rates of interest vary between 3.80% and 6.25% (2016: between 6.10% and 11.5%) per annum.

Bank overdrafts

The bank overdrafts and other facilities are secured by floating charges of Rs906,900,000 (2016: Rs906,900,000) on all the assets of the Company and its subsidiaries.

Finance lease liabilities – minimum lease payments

Finance lease liabilities are payable as follows:

Consolidated

Future minimum lease

payments Interest

Present value of

minimum lease payments

Future minimum

lease payments Interest

Present value of minimum

lease payments

2017 2017 2017 2016 2016 2016

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Less than one year 28,119 4,409 23,710 30,953 6,367 24,586 Between one and five years 46,203 4,789 41,414 99,903 5,193 94,710

74,322 9,198 65,124 130,856 11,560 119,296

Separate

Future minimum lease

payments Interest

Present value of

minimum lease payments

Future minimum

lease payments Interest

Present value of minimum

lease payments

2017 2017 2017 2016 2016 2016

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Not later than one year 25,834 3,630 22,204 26,615 4,172 22,443 Later than one year and not later than five years 43,447 3,901 39,546 50,547 4,539 46,008

69,281 7,531 61,750 77,162 8,711 68,451

Leasing agreements

Finance leases relate to plant and machinery and motor vehicles with lease terms of 5 years on average. The Group and Company have option to purchase the equipment and motor vehicles at the residual value as mentioned on the lease contract. The Group’s and Company’s obligations under finance lease are secured by the lessor’s title to the leased assets


112


25. RETIREMENT BENEFITS OBLIGATIONS


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Amounts recognised in the statements of financial position at year endPresent value of funded obligations 340,150 335,460 267,847 272,342 Less amount deductible in accordance with ERA (52,268) (55,584) (22,532) (26,191)

287,882 279,876 245,315 246,151 Fair value of plan assets (209,732) (191,223) (209,732) (191,223)Present value of net obligations 78,150 88,653 35,583 54,928 78,150 88,653 35,583 54,928

The Company has the above residual liability on top of its defined contribution plan. The amounts deductible in accordance with the ERA are as detailed in the accounting policy note under the employee benefits section. It is therefore exposed to investment under-performance of the defined contribution plan. See sensitivity analysis below.

Amounts recognised in the statements of profit or loss and other comprehensive income


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Current service costs 13,823 12,968 11,404 12,081 Interest costs 5,696 9,646 3,438 8,779 Fund expenses & life insurance 1,295 1,397 1,296 1,397 Contributions by employees (3,726) (3,633) (3,727) (3,635)Past service cost (113) - (91) (22,313)Curtailment/settlement (gain) (38) (42,134) - (41,814)

Net (gain)/cost for the year recognised in profit or loss 16,937 (21,756) 12,320 (45,505)Remeasurement recognised in OCI (4,248) (17,762) (11,838) (15,258)Net (gain)/cost for the year 12,689 (39,518) 482 (60,763)Net interest cost for the year Interest on obligation 363 20,185 (1,895) 19,318 Expected return on plan assets 5,333 (10,539) 5,333 (10,539)Net interest cost 5,696 9,646 3,438 8,779


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25. RETIREMENT BENEFITS OBLIGATIONS (CONTINUED)


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Remeasurement recognised in other comprehensive income for the year:Actuarial gains on the obligation (13,901) 34,053 (6,311) 31,548 Actuarial gains/(losses) on the plan assets 18,149 (16,291) 18,149 (16,290)Remeasurement recognised in OCI − gain 4,248 17,762 11,838 15,258 Changes in the present value of the obligationPresent value of obligation at start of year 279,976 336,250 246,150 323,585 Past service cost (113) - (91) (22,313)Interest cost 363 20,185 (1,895) 19,318 Current service cost 13,823 12,968 11,404 12,081 Benefits paid (20,030) (13,340) (16,564) (13,159)Curtailment/settlement (gain) on obligation (38) (42,134) - (41,814)Expected obligation at end of year 273,981 313,929 239,004 277,698 Present value of obligation at end of year 287,882 279,876 245,315 246,150 Remeasurement recognised in OCI at end of year – (loss)/gain (13,901) 34,053 (6,311) 31,548

Changes in the fair value of the plan assetsFair value of plan assets at start of period 191,223 196,511 191,223 196,511 Expected return on plan assets (5,333) 10,543 (5,333) 10,543 Contributions to plan assets 20,620 11,860 20,620 11,860 Benefits paid out of plan assets (13,629) (10,003) (13,629) (10,004)Fund expenses & life insurance (1,296) (1,397) (1,296) (1,397)Expected fair value at end of year 191,585 207,514 191,585 207,513 Fair value of plan assets at end of year 209,732 191,223 209,732 191,223

Remeasurement recognised in OCI at end of year - (gain)/losses (18,147) 16,291 (18,147) 16,291 Movement in liability recognised in the statement of financial positionAt 1 Jul 88,653 139,739 54,927 127,074

Expense recognised in the statement of comprehensive income 16,937 (21,756) 12,320 (45,505)

Actuarial (gain) on unfunded retirement benefit (4,248) (17,762) (11,838) (15,258)Contributions paid (23,192) (11,568) (19,826) (11,383)At 30 Jun 78,150 88,653 35,583 54,928 Principal actuarial assumptions at end of yearDiscount rate (%) 6.5 7 6.5 7 Expected rate of return on plan assets (%) 7 7 7 7 Future salary increases (%) 3 3.5 3 3


25. RETIREMENT BENEFITS OBLIGATIONS


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Amounts recognised in the statements of financial position at year endPresent value of funded obligations 340,150 335,460 267,847 272,342 Less amount deductible in accordance with ERA (52,268) (55,584) (22,532) (26,191)

287,882 279,876 245,315 246,151 Fair value of plan assets (209,732) (191,223) (209,732) (191,223)Present value of net obligations 78,150 88,653 35,583 54,928 78,150 88,653 35,583 54,928

The Company has the above residual liability on top of its defined contribution plan. The amounts deductible in accordance with the ERA are as detailed in the accounting policy note under the employee benefits section. It is therefore exposed to investment under-performance of the defined contribution plan. See sensitivity analysis below.

Amounts recognised in the statements of profit or loss and other comprehensive income


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Current service costs 13,823 12,968 11,404 12,081 Interest costs 5,696 9,646 3,438 8,779 Fund expenses & life insurance 1,295 1,397 1,296 1,397 Contributions by employees (3,726) (3,633) (3,727) (3,635)Past service cost (113) - (91) (22,313)Curtailment/settlement (gain) (38) (42,134) - (41,814)

Net (gain)/cost for the year recognised in profit or loss 16,937 (21,756) 12,320 (45,505)Remeasurement recognised in OCI (4,248) (17,762) (11,838) (15,258)Net (gain)/cost for the year 12,689 (39,518) 482 (60,763)Net interest cost for the year Interest on obligation 363 20,185 (1,895) 19,318 Expected return on plan assets 5,333 (10,539) 5,333 (10,539)Net interest cost 5,696 9,646 3,438 8,779


114




2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Experience adjustments on:Plan liabilities 13,901 34,053 6,309 31,548 Plan assets (18,149) 16,291 (18,147) 16,290 SensitivityEffect on present value of unfunded obligations1% Increase in discount rate 262,373 258,732 236,323 237,963 1% Decrease in discount rate 294,020 289,353 255,992 256,614 1% Increase in salary increase 286,487 281,318 248,703 249,750 1% Decrease in salary increase 268,928 265,402 242,531 243,509

The above sensitivity analysis has been carried out by recalculating the present value of obligation at end of year after increasing or decreasing the discount rate or the future salary increases while leaving all other assumptions unchanged. The results are particularly sensitive to a change in discount rate due to the nature of the liabilities being the difference between the pure retirement gratuities under the Employment Rights Act 2008 and the deductions allowable, being five times the annual pension provided and half the lump sum received by the member at retirement from the pension fund with reference to the Company’s share of contributions. The latter amount is Rs52.2 million (2016: Rs55.5 million) for the Group and Rs22.5 million (2016: Rs26.1 million) for the Company as at 30 June 2017 in respect of the Defined Contribution fund.

The major categories of plan assets at the reporting date for each category are as follows:

SEPARATE

2017 2016

Rs’000 Rs’000

Local equities 73,826 61,531 Overseas equities 75,713 68,084 Fixed interest 32,509 39,366 Cash and others 27,684 22,242 Total market value of assets 209,732 191,223 Present value of plan liability (245,315) (246,151)Deficit (35,583) (54,928)Unrecognised actuarial loss - -

(35,583) (54,928)Reconciliation of the present value of obligationPresent value of obligation at start of year 246,150 323,585 Current service cost 11,404 12,081 Interest cost (1,895) 19,318 Past service costs (91) (22,313)Benefits paid (16,564) (13,159)Curtailment/settlement (gain) on obligation - (41,814)Actuarial loss/(gain) on obligation 6,311 (31,548)Present value of obligation at end of year 245,315 246,150


115



SEPARATE

2017 2016

Rs’000 Rs’000

Reconciliation of fair value of plan assetsFair value of plan assets at start of year 191,223 196,511 Expected return (5,333) 10,543 Contributions paid 20,620 11,860 Benefits paid (13,629) (10,003)Actuarial gain/(loss) 18,147 (16,291)Fund expenses and life insurance (1,296) (1,397)Fair value of plan assets at end of year 209,732 191,223

Expected contribution for next year

The Group and the Company are expected to contribute Rs6 million and Rs4 million respectively to the pension scheme for the year ending 30 June 2018 (2017: Rs6 million and Rs4 million respectively).

Actuarial risk • Interest risk

The present value of the obligation is calculated using a discount rate based on the yields of long term government bonds. An increase or decrease in the discount rate of 1 basis point will have a significant impact on the liabilities as can be seen in the sensitivity section of the results.

• Salary risk

The present value of the liability is calculated based on the future salary increase of the non-members and members of the Defined Contribution plan. Sensitivity analysis of salary increase assumption has been performed to assess its impact on the liability. An increase in salary increase assumption leads to an increase the present value of the obligations.

• Longevity risk

The present value of the obligation for the Defined Contribution members and present value of future pension in payment are calculated based on the best estimate of plan participants’ mortality after retirement. Sensitivity has also been performed in respect of the mortality assumption. An increase in the life expectancy of the plan participants will increase the liability.


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26. DEFERRED TAX ASSETS AND LIABILITIESThe movement in temporary differences during the year were as follows:

Consolidated Assets Liabilities Net2017 2016 2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Tax losses carried forward 35,267 11,714 - - 35,267 11,714 Accelerated capital allowances - - (92,360) (66,665) (92,360) (66,665)Surplus on revaluation of building - - (48,449) (43,254) (48,449) (43,254)Retirement and other obligations 13,285 14,021 - - 13,285 14,021 Provision for impairment of receivables 24,277 20,343 - - 24,277 20,343

72,829 46,078 (140,809) (109,919) (67,980) (63,841)

Separate Assets Liabilities Net2017 2016 2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Accelerated capital allowances - - (26,170) (16,663) (26,170) (16,663)Surplus on revaluation of building - - (42,673) (44,161) (42,673) (44,161)Retirement and other obligations 6,049 9,338 - - 6,049 9,338 Provision for impairment of investment 44,201 19,420 - - 44,201 19,420 Tax loss 15,368 - - - 15,368 -

65,618 28,758 (68,843) (60,824) (3,225) (32,066)

The movements in temporary differences during the year were as follows:

ConsolidatedBalance at 1 Jul 2015

Recognised in profit or

lossRecognised

in equityBalance at 30

Jun 2016


lossRecognised

in equityBalance at

30 Jun 2017

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Property, plant and equipment (61,336) (12,772) - (74,108) (18,252) - (92,360)Revaluation adjustment (38,082) (59) (4,851) (42,992) 1,573 (7,030) (48,449)Employee benefits 21,705 (3,614) (3,020) 15,071 (1,064) (722) 13,285 Provisions 14,670 5,934 - 20,604 3,673 - 24,277 Tax losses carried forward 5,896 11,688 - 17,584 17,683 - 35,267

(57,147) 1,177 (7,871) (63,841) 3,613 (7,752) (67,980)

SeparateBalance at 1 Jul 2015


lossRecognised

in equityBalance at 30

Jun 2016


lossRecognised

in equityBalance at

30 Jun 2017

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Property, plant and equipment (20,605) 3,942 - (16,663) (9,507) - (26,170)Revaluation adjustment (39,418) - (4,743) (44,161) - 1,488 (42,673)Employee benefits 19,062 (7,130) (2,594) 9,338 (1,277) (2,012) 6,049 Provisions 14,775 4,645 - 19,420 24,781 - 44,201 Tax losses 15,368 - 15,368

(26,186) 1,457 (7,337) (32,066) 29,365 (524) (3,225)


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27. TRADE AND OTHER PAYABLES


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Trade payables 131,223 194,047 35,210 40,557Bills payable 53,433 65,143 53,433 60,337Accruals and other payables 105,068 156,919 69,220 123,026Amounts owed to subsidiaries - - 198,798 133,427Amount owed to related parties - 3,740 - 3,740

289,724 419,849 356,661 361,087

Amounts owed to subsidiaries and related parties are unsecured, interest free and with no fixed repayment terms.

28. DIVIDENDS

SEPARATE

2017 2016

Rs’000 Rs’000

Paid 31,220 31,220Proposed 36,731 36,731

67,951 67,951

Rs Rs

Dividend per share 1.85 1.85

29. RELATED PARTY TRANSACTIONS Nature of transaction/balance at year end

Nature of relationship Name of related party

Terms and conditions

Transaction for the year Balance at 30 Jun

2017 2016 2017 2016Consolidated Rs’000 Rs’000 Rs’000 Rs’000

Sales/(Purchases) of goods and services Associate

Promotion et Diversification Publicitaire Limitée

Normal course of business - 2,524 - 2,922

Associate Salière de l’Ouest LimitéeNormal course of business (13,176) (15,864) 1,835 1,835

(13,176) (13,340) 1,835 4,757

Sales of goods and services Shareholder Altima LtdNormal course of business 5 314 319 314

Payment for services received Shareholder Altima Ltd

Technical fees of 0.35 % of turnover is charged (7,121) (8,244) (3,100) (3,740)

Current account Shareholder Altima LtdRepayable on demand 62,861 18,367 62,861 18,367


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29. RELATED PARTY TRANSACTIONS (CONTINUED)Nature of transaction/balance at year end

Nature of relationship Name of related party Terms and conditions

Transaction for the year Balance at 30 Jun

2017 2016 2017 2016

Separate Rs’000 Rs’000 Rs’000 Rs’000

Sales/(Purchases) of goods and services

Subsidiary Challenge Hypermarkets Ltd Normal course of business - 288 (63,025) (23,241)Subsidiary Poulet Arc en Ciel Ltée Normal course of business (9,273) (6,239) 6,130 11,162 Subsidiary Innodis Poultry Ltd Normal course of business (632,208) 288,926 (135,773) (121,348)Subsidiary Meaders Feeds Ltd Normal course of business - 768 - -

(641,481) 283,743 (192,668) (133,427)

Payment for services received Shareholder Altima Ltd

Technical fees of 0.35 % of turnover is charged (7,121) (8,244) - (3,740)

Sales/(Purchases) of goods and services Subsidiary Supercash Ltd Normal course of business 4,330 50,687 53,692 47,685

Subsidiary Mauritius Farm Ltd Normal course of business (46,461) (34,261) 67,072 20,629 Subsidiary Peninsula Rice Milling Ltd Normal course of business 37,496 27,465 46,142 37,027 Subsidiary Point Frais Franchise Ltd Normal course of business 5,825 6,013 7,153 6,673 Subsidiary Innodis Poultry Ltd Normal course of business - 962 125,424 65,047 Subsidiary Société Enatou Normal course of business - - - 23 Subsidiary Redbridge Investments Ltd Normal course of business - - 96 96 Subsidiary Société Narien Normal course of business - 23 - 23

Subsidiary Moçambique Farms, Limitada Normal course of business - (20,483) 589 146 Subsidiary HWFRL Investments Ltd Normal course of business - - 2,890 -Subsidiary Essentia Ltd Normal course of business - - 32 23 Subsidiary Meaders Feeds Ltd Normal course of business - 173 - 29 Subsidiary Poulet Arc-en-Ciel Ltée Normal course of business - 49,274 40,988 - Subsidiary Green Island Milling Ltd Normal course of business - - 17 85

1,190 79,853 344,095 177,486 Sales/(Purchases) of goods and services Associate

Promotion et Diversification Publicitaire Limitée Normal course of business - 2,524 - 2,922

Associate Salière de l’Ouest Limitée Normal course of business - - 1,835 1,835 - 2,524 1,835 4,757

Current account Shareholder Altima Ltd Normal course of business 5 314 319 314


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29. RELATED PARTY TRANSACTIONS (CONTINUED)


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Directors remuneration 47,200 24,143 34,947 18,358


Key management personnel’s emoluments 2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Short-term employment benefit 37,778 23,769 28,002 17,984Post-employment benefit 16,152 613 15,516 613

53,930 24,382 43,518 18,597

30. OPERATING LEASE COMMITMENTSThe future aggregate minimum lease payments under non-cancellable operating leases are as follows:

Leases as Lessee


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Not later than 1 year 54,237 56,778 54,237 50,812 Later than 1 year and not later than 2 years 56,949 59,617 56,949 53,352 Later than 2 years and not later than 5 years 179,390 178,850 179,390 168,060

290,576 295,245 290,576 272,224

Leases as Lessor


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Not later than 1 year - 11,932 8,305 5,966 Later than 1 year and not later than 2 years - 19,688 4,331 6,563 Later than 2 years and not later than 5 years - - 12,993 7,219

- 31,620 25,629 19,748

Leases as Lessee

The Group and the Company lease warehouse facilities and commercial buildings under operating lease. The leases are normally for a period of 5 to 10 years, with an option to renew the lease after that date. Lease payments are increased every year to reflect market rentals.

Leases as Lessor

The Company leases out their investment property and commercial buildings. The leases are normally for a period of 5 years with an option to renew after that date.

The rate is increased on an annually basis to reflect market rate.


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31. ACQUISITION OF NON-CONTROLLING INTEREST IN POULET ARC-EN-CIEL LTÉEOn 15 June 2017, the Group acquired the remaining 43.6% interest in the share capital of Poulet Arc-en-Ciel Ltée. Cash consideration of Rs46,443,000 is payable to the non-controlling shareholders. The fair value of the net assets of Poulet Arc-en-Ciel Ltée (excluding goodwill on the original acquisition) was Rs138,821,839.

2017Rs’000

Recognised amounts of identifiable assets acquired at acquisition dateFinancial assets 34,491

Inventory 5,644

Property, plant and equipment 42,024

Financial liabilities (22,034)Total identifiable assets 60,125

Additional interest acquired in Poulet Arc-en-Ciel Ltée is as follows:

2,017 Rs’000

Cash consideration payable to non-controlling shareholders 46,444

Fair value of the additional interest in Poulet Arc-en-Ciel Ltée (60,125)Net gain recognised directly in equity (13,681)

Net gain has been recognised directly in equity as follows:

2017Rs’000

Gain recognised in revaluation reserve (14,685)

Loss recognised in retained earnings 1,004 Net gain recognised directly in equity (13,681)

32. MAJOR SHAREHOLDERS

The major shareholders of the Company and their holdings are as follows:

· Foods Div Ltd – 33.73%

· Altima Ltd – 13.07%

· National Pension Fund – 7.86%

· Swan Life Ltd – 6.35%

· Excelsior United Development Companies Limited – 5.53%


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33. CAPITAL COMMITMENTSCapital expenditure authorised at the reporting date but not yet contracted for is as follows:


2017 2016 2017 2016

Rs’000 Rs’000 Rs’000 Rs’000

Property, plant and equipment 148,400 192,600 79,575 159,000

34. CONTINGENT LIABILITIESAt the reporting date, the Company had contingent liabilities in respect of company guarantees arising in the ordinary course of business from which it is anticipated that no material liabilities will arise. The Company had given company guarantees amounting to Rs5.3 million (2016: Rs5.3 million) in favour of third parties.

35. FINANCIAL GUARANTEEInnodis Ltd, the holding company, has confirmed through a letter of financial guarantee, that it will financially be supporting Supercash Ltd, HWFRL Investments Ltd and Moçambique Farms, Limitada to enable them to meet their obligations as and when they fall due, for a period of more than twelve months.

36. EVENTS AFTER THE REPORTING DATE Subsequent to the year ended 30 June 2017, the Company, holder of 75% of the capital in Moçambique Farms, Limitada, acquired the remaining 25% of the capital on 14 August 2017.

There have been no other material events after the reporting date which would require disclosure or adjustment to the financial statements for the year ended 30 June 2017.


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THREE YEAR SUMMARY Consolidated

2017 2016 2015

Rs’000 Rs’000 Rs’000

Issued share capital 367,303 367,303 367,303 Share premium 5,308 5,308 5,308 Revaluation reserve 355,909 342,891 387,802 Foreign currency translation reserve (20,896) (24,886) (11,137)Retained earnings 962,780 1,018,147 951,976 Profit before income tax 128,110 167,489 155,898 Profit after tax attributable to owners of the Company 7,020 112,591 116,619 Dividends proposed and paid 67,951 95,226 99,080 Revenue 4,179,749 4,286,989 4,293,739 Non-current assets 1,676,522 1,681,817 1,702,517 Current assets 1,765,786 2,082,945 2,012,850 Capital and reserves 1,670,404 1,708,835 1,701,252 Non-controlling interests 118,060 143,663 198,875 Non-current liabilities 211,099 347,905 512,209 Current liabilities 1,442,745 1,564,359 1,303,031

Separate

2017 2016 2015

Rs’000 Rs’000 Rs’000

Issued share capital 367,303 367,303 367,303 Share premium 5,308 5,308 5,308 Revaluation reserve 306,859 321,979 332,197 Retained earnings 818,804 908,441 825,709 (Loss)/profit before income tax (66,352) 156,258 58,052 (Loss)/profit after income tax (35,733) 132,544 50,101 Dividends proposed and paid 67,951 67,951 67,951 Revenue 2,379,382 2,632,082 2,866,966 Non-current assets 1,467,715 1,475,019 1,257,196 Current assets 1,363,364 1,488,622 1,558,649 Capital and reserves 1,498,274 1,603,031 1,530,517 Non-current liabilities 95,865 233,319 424,848 Current liabilities 1,236,940 1,127,291 860,480 Number of ordinary shares issued 36,730,266 36,730,266 36,730,266

AN

NU

AL REPO

RT 2017

GPO Box 841Innodis BuildingCaudan, Port-LouisMauritius

T. (+230) 206 0800F. (+230) 466 5253

[email protected]

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