We are focusing on our strategy of optimising our cane ...€¦ · The year has been difficult in...

The agribusiness segment of our operations is led by sugar cane cultivation, with non-sugar production accounting for about 30% of revenue. The year has been difficult in both clusters: our consolidated turnover dropped from Rs 778m to Rs 707m and our profit after tax declined from Rs 54m to Rs 12m. We nevertheless managed to remain profitable.

Sugar cane cultivation has been affected by the twin impact of a surplus on the world sugar market and an unfavourable euro/rupee exchange rate which resulted in the lowest sugar price in a decade. This decline was offset to some extent by a one-off compensation of Rs 2,000/t of sugar paid by the Sugar Insurance Fund Board and a 2,327 tonne increase in the sugar volume accruing to us.

A 17.5% increase in wages was prescribed in the wake of the November 2014 labour strike, payable over four years effective as from January 2014. Thus, this year, we had to absorb the equivalent of 18 months of pay raise, that is, an additional Rs 6m. The compounding effect of various bonuses and premiums computed on the increased wage is expected to translate in an at least 30% increase in our wage bill, by end of June 2018.

Turnover from non-sugar operations went down from Rs 265m to 213m. Our performance has been heavily impacted by continuing difficulties faced by operations in the landscaping services sector. This poor performance is largely attributable to the persistent lack of dynamism in the construction industry. The negative impact on our turnover has been to the tune of Rs 62m.

We have however noted satisfactory progress in other lines of activities, namely syndic management and agro-supplies with positive results from poultry production and a smart reorientation of the flower business towards agro-supply.

We are focusing on our strategy of optimising our cane business model, through cost control and increase in productivity, while actively contributing to shape the strategic orientation of the sector at the national level

ENL AGRIBUSINESS REVIEW

2015(FY16

estimate)4,389 Ha

2009(FY10)

4,856 Ha

2010(FY11)

4,721 Ha

2011(FY12)

4,711 Ha

2012(FY13)

4,309 Ha

2013(FY14)

4,378 Ha

2014(FY15)

4,327 Ha

2008(FY09)

4,793 Ha

AREA AND CANE HARVESTED BY CROP YEARS

377,

155

383

,477

359

,930

363

,630

331

,605

330

,091

375

,872

362

,000

29,290

30,340

29,01629,072

28,94028,725

27,06526,906

Tonnes of cane harvested

Tonnes of sugar accruing

ANNUAL REPORT 2015 / ENL LIMITED12

ENL

TONNES OF SUGAR IN 2015

agribusiness

ENL LIMITED / ANNUAL REPORT 2015 13

SEGMENTAL REVIEW

REVENUE DERIVEDFROM NON-SUGAR

OPERATIONS


2015(FY16

estimate)2009(FY10)

2010(FY11)

2011(FY12)

2012(FY13)

2013(FY14)

2014(FY15)

2008(FY09)

SUGAR PRICE PER TON BY CROP YEARS (RS)

17,427

14,612

13,536

16,020

17,573

15,830

12,694

13,500

TRACKING EFFICIENCY GAINS

The years ahead will be challenging, though not without opportunities. Next year, we expect to harvest a lower volume of cane. Sugar price should not increase significantly: the tonne of sugar is projected to fetch Rs 13,500, excluding a potential contribution from the Sugar Insurance Fund Board.

The Sugar Sector Multi-Annual Adaptation Strategy draws to an end in 2015. This will be followed, in 2018/19, by the announced abolition of sugar quotas in the European sugar market. We have been preparing for these due dates by focusing on our strategy to optimise our cane business model. We act on two fronts, controlling costs at our own level and actively contributing to shape the strategic orientation of the sector at the national level.

The sugar cane activities are already operating at near-optimal efficiency. Our cost of production is below the national average. Nevertheless, we continue to track additional efficiency gains, through the mechanisation of field operations and the review of our fertilisation, transport and plantation programmes.

The Mauritius Sugar Syndicate has taken decisive steps to spread commercial risks and enhance revenue for planters and millers. It has signed new sales agreements with Crystalco and British Sugar, agreements that will kick in as from October 2015.

ENL AGRIBUSINESS REVIEW

2015(FY16

estimate)4,389 Ha

2011(FY12)

4,711 Ha

2012(FY13)

4,309 Ha

2013(FY14)

4,378 Ha

2014(FY15)

4,327 Ha

% OF CANES HARVESTED MECHANICALLY

42% 45

% 48% 51

%

61%


ENL Commercial spearheads our operations in the commerce and light manufacturing sectors. This year saw a 14% increase in turnover, led by Axess, which gained two percentage points in market share. Plastinax Austral renewed with profitability after a long time and Nabridas continued to do well. Both companies contributed to further consolidate sales.

Despite the increase in turnover, we made a net loss of Rs 9m. We experienced a sharper rise in costs than anticipated due to process upgrades and new investments taking longer than planned to kick start. The situation was compounded by the sudden appreciation of the dollar since the beginning of 2015, the contraction of the construction industry and the suboptimal performance of the hospitality sector.

The level of our indebtedness rose by Rs 196m, on the back of significant investments in capacity building. Initiatives taken during the year include:

> the launch of Quicklane, an innovative one-stop shop for batteries, tyres and rapid garage service,

> the implementation of a new automotive dealership management system,

> the opening of a new, standalone garage for Suzuki, our best seller for the year,

> the acquisition of Tractor and Equipment Mauritius Ltd (TEML),

> the acquisition of a roto-moulding machine, enabling Nabridas to extend its range of products, and

> the acquisition of 25 arpents of land at Petit Verger for the development of a manufacturing hub.

We also maintained focus on building capacity in terms of human resource and invested in more than 2,500 hours of training in management, leadership and in organisational effectiveness.

LEAN ENTERPRISE PRINCIPLE

In a bid to be more customer-centric in our approach to business, we refocussed our teams on their respective brands’ promise to the customer in terms of quality, reliability and availability. Several of our companies stepped more confidently into the digital marketing arena and are now using social media to stay close to their markets and maintain customer loyalty.

We also embraced the lean enterprise principle, rationalising production and management processes to minimise wastage. All of our subsidiaries have now integrated continuous process improvement tools in their daily work routine.

We are confident that the energy and resolve of our teams in taking on the challenges will pave the way to greater efficiency and profitability

ENL COMMERCIAL REVIEW


ENLCommercial

TURNOVER


SEGMENTAL REVIEW

- People- Process- Performance

measurement

pillars for growth


Judging by the important contribution of the lean principle to the Plastinax Austral turnaround, we are confident to be on the right track for sustainable performance enhancement across the group. Plastinax’s results have been the highlight of the year: diligent application of the lean enterprise principle coupled with good stock management and product innovation have enabled the company to reverse a long standing loss cycle.

Our investments are in line with our 3-year plan which focuses on the areas we need to improve in order to deliver our strategy for growth: people, process and performance measurement. We are confident that the energy and resolve of our teams in taking on the challenges will pave the way to greater efficiency and profitability.

ENL COMMERCIAL SHARE PERFORMANCE

20152014201320122011

24.1

0

3.73%4.25%

7.27% 6.81%

5.71%36.2

1

30.9

6

24.1

6 27.0

6

25.6

2

22.0

0

23.5

0

21.0

0

21.2

0

Market price (Rs) NAV per share (Rs)

Dividend Yield (%)

201520142013

PROFITABILITY AND TURNOVER (RS’M)

2,11

8

28

(70)

52

(9)

64

51

2,29

8

2,61

6

Turnover Pro�t after tax from continuing operations

Operating pro�ts from Continuing Operations

ENL COMMERCIAL REVIEW


We are long-term equity investors, aiming for significant to controlling shareholding in market-leading companies. We are the holding company of Rogers and a major shareholder in Avipro and MADCO, both of which are associated companies. We also hold significant stakes in Tropical Paradise Company.

During the year, our turnover increased by 15% to reach Rs 7.2bn. The healthy growth impacted positively on our operating profit which increased by 45% to reach Rs 555m. Our profit after taxation also grew by 45% to Rs 1.2bn, due mainly to the Rs 849m increase in share of profits from associated companies.

These results were mainly driven by Rogers which reported better results in all business segments and especially in the property and logistics sectors. The company’s performance was boosted by new acquisitions as well as by the re-launch of its operations in the financial services sector. Associated companies New Mauritius Hotel and Swan as well as the jointly-held entity Bagaprop made further positive contributions to Rogers’ overall performance.

Our associates Avipro and MADCO, in which ENL Investment holds a 49% stake, maintained their healthy performance with a combined profit after tax of Rs 580m. This represents an 80% increase compared to last year. Our share of the profit amounted to Rs 215m.

The value of our total assets grew by 7% to reach Rs 25.3 bn this year, impacted notably by the new companies acquired by Rogers. We were nonetheless able to maintain our debt to equity ratio at a reasonable level.

We are long-term equity investors, aiming for significant to controlling shareholding in market-leading companies

ENL INVESTMENT REVIEW

PROFIT AFTER TAXATION

+ 45%

Rs 1.2bn


ENLInvestment

TURNOVER


FOR OUR VENTURE CAPITAL FUND


OUR RETURN IN THE FINANCIAL SERVICES SECTOR

This year marked our return in the global business sector following the expiry, in December 2014, of the non-competition agreement with CIM. The development of our operations is led by Rogers Capital. The latter acquired Kross Border and Consilex, two global business management companies, in January 2015 to spur on the development of this cluster.

This year, Rogers acceded to the exclusive SEM 10 club of blue chip companies on the stock exchange of Mauritius. Its associate, the Swan Group, rebranded itself. Swan Insurance Company thus became Swan General and Anglo-Mauritius Insurance Company became Swan Life.

Going forward, we expect our subsidiary and associated companies to remain on a path of healthy growth. This year, the aviation and hospitality sectors showed signs that they are picking up and this uptrend is expected to continue during the coming months. Our operations are well positioned to draw full advantage of the renewed dynamism.

THE DAWN OF A NEW BEGINNING

The property sector will remain an important income earner. Rogers is about to acquire an important additional stake in Bagaprop, the owner of the Bagatelle Mall of Mauritius, subsequent to which the latter will become a subsidiary. The ENL Corporate Venture fund is now fully operational with an initial endowment of Rs 760m. We expect it to soon become a preferred instrument for innovation within the group.

On the less bright side of the picture, we fear that the expected changes in the double taxation avoidance treaty with India will impact the global business sector negatively. But this is also an opportunity for the Mauritian international financial centre to emancipate from India. Rogers Capital will take the opportunity to further develop new business opportunities, including in Africa.

ENL INVESTMENT REVIEW


CEO’S REVIEW

ENL LIFESTYLEENL lifestyle

2 NEW BRANDS LAUNCHED IN 2015


ENL Lifestyle is the youngest of our business clusters, being engaged in the hotel, restaurant and leisure sectors of activity. This year, its turnover increased from Rs 189m to Rs 227m.

However, profit after tax went down from Rs 11m to Rs 3m, mainly due to increases in operational expenses and pre-opening costs. Nevertheless, operating cash flows were maintained at Rs 19m. We launched two new brands during the year, namely Voilà Meetings and Savinia Bistrot.

Voilà Meetings takes a holistic approach to the organisation of meetings and conferences, honing in on the specific purpose of a meeting to create and design a more engaging and technology-enriched experience. Voilà Meetings generated Rs 3m profits through its first year hosting 14,800 meeting delegates, confirming its success.

Savinia Bistrot, a restaurant specialising in high-quality aged steaks, opened in December 2014 at Bagatelle Mall of Mauritius. Some 31,000 covers were served during the first 7 months of operation bringing in a turnover of Rs 22m, with positive cash flows of Rs 1.7m.

Voilà Hotel at Bagatelle Mall of Mauritius maintained its occupancy and average room rate despite a general slow-down in the business for the first half of calendar year 2015. The hotel’s operations generated Rs 94m of turnover (including Voilà meetings) and Rs 10.5m positive cash flows for the year.

VOILA MEETINGS DELEGATES

14,80020152014

653

41

544

4110

Voila Bagatelle

Savinia Bistrot

Moka'z

Ocean Basket

CONTRIBUTION TO TURNOVER (%)

ENL LIFESTYLE REVIEW

ENL Lifestyle keeps targeting the growing middle market aspirations of Mauritius. Our future plans include expansion of existing brands and the creation of new brands where there is a clear market need


GROWING MIDDLE MARKET

Turnover generated by our two Ocean Basket outlets remained stable at Rs 101m. We however registered a positive cash flows of Rs 13.9m. We are planning to open a third restaurant at Phoenix Commercial Centre.

The “Winning Ways” platform, focusing on the professional growth of individuals and teams, is up and running. We believe that this tool supports our employees to become more engaged. ENL’s global employee engagement survey carried out in late 2014 showed that ENL Lifestyle’s employees are highly engaged. We are implementing an e-learning platform this coming financial year to keep the focus on our human resources development.

ENL Lifestyle keeps targeting the growing middle market aspirations of Mauritius. Our future plans include expansion of existing brands and the creation of new brands where there is a clear market need. We are working on the development of an entertainment hub locally and have also started a feasibility study in view of opening a Voilà Hotel in Kenya.

20152014

COVERS

Savinia BistrotMoka'z Ocean Basket

61k

200k

56k

189k

31k

ENL LIFESTYLE REVIEW

ANNUAL REPORT 2015 / ENL LIMITED26 ENL LIMITED / ANNUAL REPORT 2015 27

The ENL Property cluster develops, in priority, strategically located land belonging to the group into sustainable income-generating assets. We aim for sustainability by maintaining a qualitative, integrated and long-term approach to property development.

This year, we nearly doubled our turnover which rose from Rs 847m to Rs 1.5bn. The increase was attributable to the consolidation of Cogir as a subsidiary for a full year (compared to five months last year) as well as to the sale of L’Estuaire and of Les Allées d’Helvétia Phase 3, two residential developments targeting the domestic market.

However, our profit after tax went down from Rs 383m to Rs 299m. This is mainly due to the fact that last year’s results included profits on the sale of residential land parcels at Bagatelle. Furthermore, Mall of Mauritius at Bagatelle, which is the developer of the Bagatelle precinct, incurred a loss of Rs 250m as a result of a fair value loss on investment properties recorded following a review of the usable space in respect of the land bank owned in Bagatelle.

Overall, despite an oversupplied market, our residential products sold well and demand for our office facilities offering went up. Our resilience stems from the quality of our products, our reputation as trendsetting developers and our on-going efforts to bring the best value-for-money products to the market.

Our property and asset management activity centres on a portfolio of office and retail properties that is managed by Enatt. This portfolio was valued at Rs 10.2bn at 30 June 2015 and generated rental income of around Rs 1bn compared to Rs 800m last year.

ENL PROPERTY REVIEW

Our resilience stems from the quality of our products, our reputation as trendsetting developers and our on-going efforts to bring the best value-for-money products to the market

ASSETS UNDER MANAGEMENT (RS'M)

994

996 1,05

8

5,04

0

8,23

3

9,14

8

Commercial centresOf�ces

201520142013


ENLProperty

29ENL LIMITED / ANNUAL REPORT 2015

NICHE MARKETS TARGETED

The group’s retail assets spread over 100,000 m², with an average occupancy rate of 97%. They generated rental income amounting to Rs 924m. As the market becomes saturated, we work together with Ascencia to develop more specialised facilities targeting niche markets. We thus completed Bagatelle Motor City Phase 1 and started works for the Home and Leisure wing of Bagatelle Mall. We also started works on a convenience shopping centre in Floreal which is scheduled to open in November 2016.

Our portfolio of office properties includes Vivéa Business Park and Bagatelle Office Park. It generated rental income of Rs 76m, representing an 18% increase from last year. This year, we invested into The Factory, an old building renovated into a signature office block as well as in the construction of Lighthouse, a new office complex, in Vivéa Business Park. We intend to continue to bring new products to the market at a controlled pace, as demand in our signature office facilities is picking up.

As regards our residential properties, in addition to completing and delivering Les Allées d’Helvétia Phase 3 and L’Estuaire, we started construction works for Bagatelle Les Résidences-Belle Rive, a collection of 22 high-end apartments. We also started infrastructure works for Telfair, a new integrated village we are creating on 157 arpents in Moka, and launched Telfair Views, a set of residential lots forming part of this new development. Our IRS operations benefitted from two bulk land sales at Villas Valriche. We are currently developing new phases at Villas Valriche and La Balise Marina, on the west coast.

The year was further marked by the opening of three estate agencies under the prestigious label Sotheby’s International Realty. We now service a wider clientele and we expect to gain significantly from this partnership to improve the quality and level of our service.

ENL PROPERTY REVIEW

INCOME FROM YIELDING ASSETS UNDER MANAGEMENT (RS'M)

28 62 76 488

808 95

2

201520142013



COGIR remained under pressure as the construction industry continued to contract. Its margins came under stiff pressure as competition intensified. COGIR maintained a disciplined approach to its operations, modernising its structures, diversifying its product and service offering and building winning synergies with our property development teams. Its order book for the coming year is full as a result.

SMART CITY SCHEME

We expect several external factors to feed the momentum gathered so far in the property development segment of our activities. The announced exit of Atterbury Mauritius Consortium from the shareholding of Mall of (Mauritius) at Bagatelle is an opportunity to further consolidate our business model.

The Smart City Scheme introduced by the Government will provide us with further incentives to continue investing in sustainable property developments. We are fine-tuning our master plan for the Moka region to obtain the certification for an area extending from Verdun to Bagatelle.

The next level of growth has to be sought outside our boundaries. We are actively working at getting a first project off the ground in Kenya with the signature of a MoU with our local partners for the construction of two shopping malls in Nairobi and Nakuru.

AVERAGE YIELD OF ASSETS UNDER MANAGEMENT (%)

6.8%

6.0% 6.0%

7.5%

7.3% 7.8%


201520142013


We are focusing on our strategy of optimising our cane ...€¦ · The year has been difficult in...

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