2018 annual report - Innodis

2018annualreport

45

6-710-15

1617

20-323336

37-4044-47

5051-5253-5556-57

60-128

1INNODIS ANNUAL REPORT 2018

TABLE OF CONTENTS

Financial Highlights

Group Structure

Overview of Activities

Chairman and CEO’s Report

Directors’ Report

Statement of Directors’ Responsibilities

Corporate Governance Report

Statement of Compliance

Secretary’s Certificate

Statutory Disclosures

Independent Auditors’ Report

Consolidated statements of profit or loss and other comprehensive income

Consolidated statements of financial position

Consolidated statements of changes in equity

Consolidated statements of cash flows

Notes to the consolidated and separate financial statements



The only commercial brand of free-range chicken in Mauritius is our Le Poulet Fermier™, another testament to our dedication to preserving traditional farming methods. Our birds are of a special breed that naturally reach adulthood in about 65 days. They are afforded complete freedom to stretch their legs in the open air and peck the soil for micro-organisms, which complement a natural diet of cereals. This results in a more nutritious meat profile.


4.19

2014 2015 2016

Turnover (Rs B)

2017 2018

4.29 4.29 4.18 4.32

3.15

2014 2015 2016

Earnings per Share (Rs)

2017 2018

3.18 3.07

0.19

2.90

211

2014 2015 2016

Operating Profit (Rs M)

2017 2018

227 224

200

172

Turnover 2018

Rs 4.32 billion

FINANCIAL HIGHLIGHTS


GROUP STRUCTURE

100%

100%

100%

60% 100%

100%

50.1%

100%Innodis

Poultry Ltd

Mauritius Farms Ltd

HWFRL Investments

Ltd 80%Meaders

Seychelles Ltd

100%Moçambique

Farms, Limitada

100%Poulet

Arc-en-Ciel Ltée

100%Société

Centre Point

Green Island Milling

Ltd

Redbridge Investment

Ltd

100%Peninsula

Rice Milling Ltd

51%Meaders

Feeds Ltd

100%Supercash

Ltd

Point Frais Franchise Ltd

Challenge Hypermarkets

Ltd

Essentia Ltd

INNODIS LTD

The main subsidiaries of Innodis Ltd (excluding their holding companies) are shaded in green.


AG

RO

-IN

DU

STR

Y

IMP

OR

TS A

ND

D

ISTR

IBU

TIV

E TR

AD

EMEADERS FEEDS LTD

INNODIS POULTRY LTD

MOÇAMBIQUEFARMS LTA

POULET ARC-EN-CIEL LTÉE

FROZEN FOODS

CHILLED FOODS

DRY GOODS

WAREHOUSING & DISTRIBUTION

OVERVIEW OF ACTIVITIES

NON-FOOD


MA

NU

FACT

UR

ING

FRA

NCH

ISIN

G

ICE CREAM

STERILISED MILK

YOGHURT

JUICE

RICE MILLING RET

AIL

ING


One of most cherished brands both in Mauritius and South Africa, Ceres™ has always been a benchmark by which other brands are measured. Ceres™ fruit juices are prepared from the highest quality fruits grown in the fertile soils of the valley in which the South African town of Ceres is situated. The juices are made of 100% fruit, are naturally rich in essential nutrients, vitamins and minerals, with no sugar added.



CHAIRMAN AND CEO’SREPORT

Although the year has also been challenging in many respects,

our Group turnover has nevertheless risen, albeit modestly (up by 3%).

But more importantly, the Company has posted a Profit after Tax (PAT)

of Rs 77 million for the FY17/18, compared to a loss of Rs 37 million

for the previous financial year.

Victor Seeyave Chairman

Jean-Pierre Lim KongChief Executive Officer


Last year, an unexpected event rattled the whole poultry industry and impeded the Group’s progress. This year however, we are pleased to report that we are in a much better position, as improving economic dynamics coupled with our renewed emphasis on our core business operations and strategic brands have yielded better results for Innodis Ltd as well as most of our subsidiaries.

Although the year has also been challenging in many respects, our Group turnover has nevertheless risen, albeit modestly (up by 3%). But more importantly, the Company has posted a Profit after Tax (PAT) of Rs 77 million for the FY17/18, compared to a loss of Rs 37 million for the previous financial year. Our Group PAT also improved from Rs 114 million to Rs 118 million. The increase appears to be marginal, save that when we factor into last year’s PAT figure the exceptional gain of Rs 99M from the disposal of a portion of land belonging to one of our subsidiaries, our progress immediately becomes more apparent.

We are also pleased to report that our previously loss-making subsidiaries, such as Peninsula Rice Milling Ltd and Moçambique Farms, Limitada, have posted much better operating results in spite of the challenging environments and fierce competition prevailing both locally and overseas. Unfortunately, we ran into some unexpected difficulties at the level of Meaders Feeds Ltd, which we shall address later in this report.

Our EPS rose from Rs 0.19 last year to Rs 2.90, and the company declared a dividend per share of Rs 1.85 for the FY17/18.

M A N AG E M E N T A N D B OA R D O F D I R E C TO R SDuring the course of the year, Sir René Seeyave and Jacques Leung Wan Kin resigned as directors on the 15th December 2017 and the 30th April 2018 respectively to take a well-deserved retirement after several decades of invaluable contribution to the strategic leadership and financial oversight of the Group.

To fill the said vacancies, two young and dynamic new directors have been appointed, namely Richard Luk Tong, Finance Manager of Altima Ltd, and Pauline Seeyave, Group Chief Finance Officer of New Mauritius Hotels Ltd. Pauline is the first woman to serve as a director of Innodis Ltd, and we believe that this appointment sends out a good signal to further increase gender diversity at all levels across the Group.

P E R FO R M A N C E BY C LU S T E R

THE POULTRY DIVISION

Our poultry business has commanded a lot of our attention this year, and for good reason, as we were determined to bounce back, after having taken a severe hit last year. At the beginning of the FY17/18, we still carried a relatively high level of stock, which prompted us to increase our focus on exports as well as sales of live chicken in the open market. This strategy has paid off as our stock levels subsided. Moreover, our commercial team has also been working painstakingly to recover lost clients, both in supermarkets and traditional outlets.

That being said, as from May 2018, we were in for another surprise. In sharp contrast with last year, the whole industry experienced a sudden increase in demand for chicken, and our efforts were shifted towards increasing our production – a situation which was ironic, but for which we were also grateful, as it enabled us to operate at optimal capacity and improve our revenue per kg.

In the year ahead, although we expect some pressure on our operational costs, with the world prices of maize and soya bean being on an upward trend, we are confident that we can still grow the business in line with our strategic plan for the next 3 years. To this

“ To this end, we are investing in the uplifting of our processing equipment and focusing

more and more on the needs of consumers for quality, affordable and ready-to-eat products.

This has already started, with our Prodigal™ chicken charcuterie (cold cuts) range,

launched in August 2018 and the response has been positive. ”


end, we are investing in the uplifting of our processing equipment and focusing more and more on the needs of consumers for quality, affordable and ready-to-eat products. This has already started, with our Prodigal™ chicken charcuterie (cold cuts) range, launched in August 2018 and the response has been positive. We are also planning to introduce additional value-added chicken products in the near future, as we continue to increase our presence and visibility in this market segment. In parallel, we will continue to focus on growing our sales of branded chicken, especially in the chilled segment, which accounts for the greater portion of our total sales of chicken.

Biogas and composting plant: an integrated approach

Moreover, some important strides have been made in the pursuit of our objectives of transforming our poultry activity into a fully sustainable operation. To start with, we have been actively engaged in reducing our reliance on the domestic water supply by recycling the water we use as much as possible. We have also put in place a rain-water harvesting system. More importantly though, our biogas pilot project at Beau Climat has now been successfully completed and we will soon be conducting a financial feasibility assessment for a full-scale waste-to-energy production facility, coupled with a composting unit. Such a facility would enable us to reduce our production and waste disposal costs as well as minimise the growing pressure on landfills - a win-win situation.

Community integration

Furthermore, through Innodis Foundation, we have set up a project aimed at raising awareness among families living in La Flora regarding the sorting out of domestic waste. Special bins have been put at their disposal for this purpose, and their organic kitchen scraps are collected by our poultry team to be naturally processed in our bio-digester. Some of the compost is thereafter made available to these families to help them produce their own fruits and vegetables without the use of added chemicals.

This project enables us to integrate the development of the community with our operations and to increase our brand value. The compost generated is also being used for growing our own fruits and vegetables, which we will touch upon later in this report.

Point Frais

Our Point Frais franchise activity is continuing its process of rebranding and transformation. A dedicated team has been tasked with evolving the franchise from the traditional cold storage/butcher shop into a modern proximity offering that specifically addresses the needs of consumers looking for fresh, convenient and hygienic products at an affordable price.

We have already observed the potential benefits of this exercise from the feedback received from franchisees, and we are quite

upbeat about the future prospects of the franchise, with our new positioning and product offering expected to take shape in the coming year. Our objective is to double the number of franchised outlets within the next 3 years with locations in all major villages and towns.

THE DAIRY DIVISION

It was another satisfactory year for our dairy division, which continued to leverage on the success of our DairyVale™ Greek style yoghurt. In fact, our yoghurt segment grew by a record 26% in turnover over the previous year, confirming the positive response of the market to our innovative, health-oriented products. Overall, turnover grew by 14% in our dairy division.

In addition to our yoghurt range, we have also launched new flans and jellies under DairyVale™. In the ice-cream segment, we have added to our imported range of Dairymaid™ impulse ice cream from South Africa, and increased supply to the Hotels, Restaurants and Catering sector with tailor-made yoghurt and ice cream offerings. Moreover, our Treat™ and Ice Dream™ ice-creams have fared better than last year following our decision to further promote our local brands in the take-home category. Finally, exports of our Bingo™ nectars and Dairymaid™ ice lollies to Réunion Island have equally contributed to our good performance for the year under review.

In order to continuously deliver on our quality promise, we have equipped our in-house laboratory with cutting-edge equipment to perform enhanced microbiological testing and sensory analysis. These will enable us to further strengthen our commitment towards our high quality standards, while also giving our dairy team the means to continuously improve upon the sensory characteristics of our products, such as mouth-feel.

“Our yoghurt segment grew by a record 26% in

turnover over the previous year, confirming the positive

response of the market to our innovative, health-

oriented products. Overall, turnover grew by 14% in our

dairy division.”

CHAIRMAN AND CEO’S REPORT [CONTINUED]


In the first quarter of this new financial year, we have introduced two new fruited variants of our DairyVale™ Greek style yoghurt to strengthen our stronghold in the Greek Style segment. Going forward, we will continue to develop our local range of products, while also focusing on growing our regional exports of ice-cream and juice nectar products. Finally, we are aiming to finalise our ISO 14001 accreditation (environmental management) by the end of the FY18/19.

SALES PERFORMANCE OVERVIEW

Our continuous initiatives throughout the year to add to our product ranges, to improve our procurement and to develop win-win relationships with retailers have all contributed to the growth of both the top line and bottom line for Innodis.

One of the key take-outs for this year is our decision to significantly boost our investments in both advertising and field marketing activation for our strategic brands in modern trade outlets. Moreover, our merchandising team has been re-engineered with the recruitment of additional staff to further strengthen our presence in the modern trade, which currently represents almost 65% of our business.

We also committed further resources to the Hotels, Restaurants and Catering sector, resulting in an improved level of customer service with new categories of products offered and an increased volume of sales. Finally, our promotional initiatives were extended to the traditional retail outlets, a sector which has always been important to us ever since we started our business.

Chilled and Frozen Foods

Our turnover has grown in almost all categories of products and especially in the chicken category with an increased turnover of about 15% over the corresponding period last year. Our core brands Flora™, Blue Band™, Doux™, Bobo™ and Emborg™ performed in line with our expectations.

However, we did face some challenges, firstly in the meat segment, as a result of the emergence of new distributors and direct procurement by some retailers, and secondly in the seafood category, due to the growing scarcity of seafood both locally and internationally. Nevertheless, we managed to launch a full range of ready-to-cook seafood products under our Marina™ brand.

Consumer Goods

In spite of certain shortages at supply level and acute competition on the local market, we still had a good year, as we succeeded in strengthening our leadership position for our key brands – Ceres™, Bois Cheri™, La Vache Qui Rit™, and Lucky Star™. Other brands in the likes of Twin Cows™, Floridia™, Kiri™, Barilla™, Sunbeam™ and Rimilda™ have done well, with improved visibility on the market.

Finally, we are pleased to report that towards the end of the financial year, we have been entrusted with the distribution of the cereal brand Bokomo™, which is manufactured in South Africa and the UK. Bokomo™ has a large range of breakfast products, and we are quite excited about the future growth prospects of this new portfolio.

The fruits and vegetables market: Distribution of smart and organic (“bio”) produce

During the year, the government has set into motion the reform of the agricultural sector, namely by introducing the Use of Pesticides Act 2018, providing incentives for young job-seekers to embrace careers in agriculture, and by subsidising “bio” pesticides. We also welcome the sensitisation campaign about the dangers of an unrestricted use of pesticides in conventional farming as well as its negative impact on soil composition. This has undoubtedly contributed to raise further awareness on this public health issue.

To join this national effort, as previously reported, we have initiated a project of growing fruits and vegetables in green houses and net houses based on MAURIGAP ‘smart’ agriculture principles, with limited use of chemical additives. Our first harvests have been promising, and the result is a healthier product, which we hope to market in the future in our Point Frais outlets.

Moreover, in addition to our ‘smart’ fruits and vegetables, it is now apparent that there is also a growing demand for organic produce. This is why we have also decided to develop an innovative activity, namely the distribution of organic vegetables in supermarkets under a new brand: New Earth™. This project, which we are the first in Mauritius to initiate, was born out of a partnership between Innodis and Farmbasket, which already has several years of experience selling fruits and vegetables without the use of any chemicals or pesticides. The beauty of this partnership is that we share similar objectives, namely (a) improving the dietary habits of consumers, (b) producing fruits and vegetables in accordance with fair trade principles, and (c) making a difference in the fight for the conservation of the planet.


“… we have also decided to develop an innovative

activity, namely the distribution of organic vegetables

in supermarkets under a new brand: New Earth™. ”

We are pleased to report that we have had an amazing support from consumers all across the country who are clearly passionate about their health and the protection of the environment, and who have expressed interest in having the products made available in their local supermarkets. Although the project is still at infancy stage, in time, we believe New Earth™ has the potential to become the reference in Mauritius for locally grown organic produce.

OUR SUBSIDIARIES

Moçambique Farms, Limitada

In Mozambique, the dumping of chicken in the country continues to impact demand for local chicken and inhibit our sales performance. However, our efforts to stabilise the operation during the year has paid dividends. We have improved our production KPIs and have set up a retail outlet in Maputo to better serve our consumers. As a result, Moçambique Farms Limitada registered an encouraging growth of both its revenue and gross profit by nearly 30%.

Nevertheless, it is regrettable that the assurances given by the Mozambican authorities regarding the regulation of imported chicken are not consistently met with concrete action. In this regard, we will continue to press upon the authorities to take necessary measures, in line with their declared objective to phase out imports by 2019, at which time we should be well positioned to take advantage of the increased demand for locally produced chicken. Moreover, according to the International Monetary Fund, the economy is forecast to grow by 3.5% to 4% in 2018. Hopefully, this will trigger an improvement in trading conditions and stimulate consumption.

Meaders Feeds Ltd

Unlike our other subsidiaries, Meaders Feeds experienced a rather difficult year. Following a physical stock-take of raw materials, a write-down of its inventories was effected. Moreover, some of the main clients of the company were financially compensated after a temporary under-performance of their poultry flocks was traced back to a feed formulation issue. As a result of same, Group PAT of Meaders Feeds Ltd (which includes its Seychelles subsidiary) dropped from Rs 84 million to Rs 24 million, while its Group turnover recorded a minor fall from Rs 1.20 billion to Rs 1.14 billion.

However, the above events are not expected to recur in the future, especially with more stringent measures having already been implemented to monitor our stock levels and the adequacy of our

feed formulation processes. On a different note, we have initiated the construction of a plant to produce ruminant feeds as well as a small hatchery in Seychelles for the supply of day-old chicks. Both projects are expected to be operational during the FY18/19.

Supercash Ltd

After successfully returning Supercash to profitability last year, it was vital for us to ensure that the business is given the means to grow into a sustainable retail activity. To this end, we have initiated several projects throughout the year, namely the opening of Supercash Xpress stores in Rose-Hill and Kinoo Square, Port Louis. We have also strengthened our presence in Rodrigues, with the refurbishment of our Port Mathurin store, the opening of a Supercash Xpress outlet in Mont Lubin and the replacement of our delivery vehicles to better service our clients across Rodrigues.

In next financial year, we are planning to invest in refrigeration equipment, mainly at Supercash Port Mathurin, as we position ourselves as the main player in the retail sector in the island. We also look forward to opening further Supercash Xpress stores in Mauritius in dense residential areas as well as locations with high pedestrian traffic.

Poulet Arc-en-Ciel Ltée

Poulet Arc-en-Ciel has performed reasonably well this year. Its profitability was in line with our expectations, although turnover was slightly short of our forecasts - a minor decline attributable to the growing competition in the unbranded poultry market. That being said, as mentioned above, there was an appreciable increase in demand for chicken in the last quarter, and we expect same to be maintained in the future, especially with the approach of the end of year period.

Looking ahead, Poulet Arc-en-Ciel is poised to adjust its sales strategy. The company has traditionally relied on an established number of loyal and reliable buyers to meet its sales targets. However, in view of the emergence of new competitors, one of the main areas of focus of the company will be to seek out new clients and sales outlets to diversify its revenue streams and mitigate risks, while retaining its core client base.

Peninsula Rice Milling Co. Ltd

Peninsula Rice Milling Co. Ltd ended the year with a net improvement of 8% in turnover and a 61% increase in gross profit margin, mainly as a result of better deals negotiated at the procurement level, which improved our competitiveness. Our flagship basmati brand Rimilda™ performed well locally, and sales of our Shandar™ rice introduced in Rodrigues last year are also in line with our expectations. In the coming year, we will continue to focus our sales initiatives on our standard basmati, which currently constitutes the bulk of the market.

CHAIRMAN AND CEO’S REPORT [CONTINUED]


Moreover, there have been some positive discussions with the Mauritius Chamber of Commerce and the Mauritius Standards Bureau to make progress regarding the certification of imported Basmati rice, which we have always strongly advocated. We can only express the hope that this market will soon be better regulated in the interests of all consumers.

STAFF ENG AGEMENT

Last year, we reported on a number of initiatives undertaken for the well-being of our staff. We are pleased to report that many of these initiatives, such as the now popular Wellness Week, have now become regulars and highly anticipated events in our calendar of activities. Moreover, some of our team building exercises this past year have been more colourful than before, as several members of staff and Management enthusiastically participated in February 2018 in the Colour Feast Project, which consisted in the repainting of several houses in Port Louis in vivid colours. Such initiatives are very important, as they give us an opportunity to bring our teams together in a non-working environment to strengthen relationships, while accomplishing something meaningful for the community.

Moreover, in the first quarter of the new financial year, we have commissioned a ‘Happiness Survey’. This should give us some deeper insights as to how we can further improve the work environment, attract, engage and retain the best talents, and generally better address the concerns of our employees. There is no doubt in our minds that employees who feel they are treated fairly and who enjoy their work environment are more productive, and have the potential to become life-long brand ambassadors.

OUTLOOK

SHARING OUR LONG TERM VISION AND OBJECTIVES

Encouraged by our improved results, we are confident that we can leverage on this momentum to make further progress during the next financial year. To this end, our efforts will be focused around three main themes, namely Growth, Operational Excellence and Sustainability.

We will endeavour to grow by shaping a winning portfolio with strategic brands. We aim to reap operational improvements by developing more efficient processes and warehousing solutions, and crafting a continuous improvement and cost management culture. And finally, to ensure our long term sustainability, we will continue to build high-performing teams, develop winning relationships with our suppliers and retailers, and above all, remain close to our consumers, whether through trade fairs, in-store promotions, or through social media platforms. These direct interactions with our consumers are important to us, as they give us a deeper understanding of their requirements and concerns. For instance, it is now clear that eating healthy is a growing preoccupation among many discerning consumers. In this regard, we have chosen to showcase some of our most wholesome brands in this annual report as a symbol of our commitment to introduce more and more health-oriented products in the future.

“ These direct interactions with our consumers

are important to us, as they give us a deeper

understanding of their requirements and concerns.”

Moreover, to obtain the buy-in of all of our stakeholders to make this journey a shared success, we will be launching in the coming months a “projet d’entreprise” to communicate our vision and long term objectives with our consumers, clients, partners and staff, with the aim of developing a deeper, lasting bond with them. Ultimately, our aim is to elevate the Innodis brand in the mind of our stakeholders as one which is tantamount to quality and reliability. We are celebrating this year our 45 years of existence, and we believe that this exercise comes at the right time to give us all a renewed sense of direction as we enter the next phase of our development. To quote Simon Sinek, a British-American author, “greatness starts with a clear vision of the future.”

We are fully aware that many of our shareholders and partners have placed their trust in us a long time ago and have never looked back. Thank you so much for this. One year from now, we hope that both as a stakeholder and as a consumer of our products, you will get to know us even better and you will appreciate what we have set ourselves to accomplish, not just to create better value for you, but also to leave a beneficial footprint on the community and the environment.


DIRECTORS’REPORT

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 2018. The annual report is published in full on the organisation’s website at www.innodisgroup.com. The financial statements of the Group and the Company are set out on pages 50 to 128. The auditors’ report on these consolidated and separate financial statements is on pages 44 and 47.

R E V I E W O F B U S I N E S SThe principal activities of the Group comprise production of poultry and dairy products, animal feeds manufacturing, rice milling, distribution and marketing of food and grocery products.

Innodis is a leader is several of the markets in which it operates (e.g. cheese, juice, chicken franks), or at least a challenger to the market leader (e.g. poultry, yoghurt). Factors that influence the external environment include the level of competition in each market, including the emergence of new players, the growing power of retail outlets, the evolving requirements of consumers, fluctuations in the world prices of petrol and commodities, among others. The Group tackles these challenges by having a diversified offering, by being more and more innovative and efficient, and by pro-actively addressing the needs and aspirations of consumers, in terms of quality, cost, health and environmental-friendliness.

An overview of the growth opportunities being contemplated by the Group - as well as any risks involved - are covered in the Chairman’s and CEO’s report. Moreover, the Group has already embarked on a strategic integrated approach to create value, which takes into account energy savings and its environmental impact, and complementary KPIs in relation to the latter will be devised in the coming year to more accurately measure the Group’s progress.

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

R E S U LT SFor the year under review, the Group and the Company recorded a turnover of Rs 4.32 billion (2017 – Rs 4.18 billion) and Rs 2.42 billion (2017 – Rs 2.38 billion) respectively, whilst profit after tax attributable to shareholders for the Group and the Company amounted to Rs 107 million (2017 – profit: Rs 7 million) and Rs 77 million (2017 – loss: Rs 37 million) respectively.

D I V I D E N D STotal dividends declared by the Company for the year ended 30 June 2018 were Rs 68 million (2017 – Rs 68 million).


STATEMENT OF DIRECTORS’RESPONSIBILITIES

The Directors acknowledge their responsibilities for:

(i) leading and controlling the organisation and meeting all legal and regulatory requirements;

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

(iii) the preparation of consolidated and separate financial statements which present a fair, balanced and understandable assessment of the Company’s financial, environmental, social and governance position, performance and outlook in its annual report and on its website 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 the Mauritius Companies Act 2001;

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

(v) the Company’s adherence to the New Code of Corporate Governance (2016); and

(vi) the governance of risk and for determining the nature and extent of the principal risks it is willing to take in achieving its strategic objectives, and for ensuring that the Company develops and executes a comprehensive and robust system of risk management;

(vii) ensuring that an appropriate dialogue takes place among the Company, its shareholders and other key stakeholders.

The Directors further report that:

(i) the Company is a public interest entity as defined by law;

(ii) the Company is headed by an effective Board, and responsibilities and accountabilities within the Company (including at the level of Senior Management) are clearly identified;

(iii) appropriate Board committees, namely the Audit & Risk Committee and the Corporate Governance Committee (which is also tasked with duties regarding remuneration of Senior Management), have been set up to assist the Board in the effective performance of its duties.

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

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

(vi) 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;

(vii) the Company has an effective and independent internal audit function that has the respect, confidence and co-operation of both the Board and the management, and the Board has established formal and transparent arrangements, namely through its Audit Policy, to appoint and maintain an appropriate relationship with the Company’s internal and external auditors.

(viii) there is a formal, rigorous and transparent process for the appointment, election, induction and re-election of directors. The search for Board candidates is conducted, and appointments are made, on the basis of merit, measured against objective criteria (to include skills, knowledge, experience, and independence and with due regard for the benefits of diversity on the Board, including gender).

(ix) they have assessed the Company as a going concern and have a reasonable expectation that the Company will continue to operate for the foreseeable future and meet its liabilities as they fall due;

(x) they have approved the Audit and Risk Committee, Corporate Governance Committee and Board charters, the Company’s Code of ethics, appropriate job descriptions of the key senior governance positions, an organisational chart, and a statement of accountabilities.

Approved by the Board of Directors on 26 September 2018 and signed on its behalf by:

Mr Victor Seeyave Mr Maurice de Marasse Enouf

Chairman of the Board Chairman of the Audit and Risk Committee



Bokomo™ is the most recent brand that has been added to our portfolio. Bokomo™ features a large range of breakfast cereals, which pack plenty of fibre, protein, calcium, vitamins and minerals, for a healthy start to the day. The brand is owned by the South African Group, Pioneer Foods, which is committed to managing the planet’s resources responsibly and reducing the amount of waste produced with every product.


CORPORATE GOVERNANCE REPORT

The 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.

The Board is aware of its responsibilities for applying and implementing within the Company the eight principles contained in the National Code of Corporate Governance (2016). The Board is committed to attaining and sustaining the highest standards of Corporate Governance with the aim of creating long-term value for the shareholders and stakeholders at large.

The Board has discussed the application of the requirement relating to the disclosure of remuneration for each individual executive director. However, given that it is considered to be a sensitive issue in a very competitive sector, the Board has decided not to disclose individually the remuneration of the executive Directors.

CO N S T I T U T I O N O F T H E CO M PA N Y 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 of December 2013, a new constitution which replaced the memorandum and articles of association of the Company. This constitution was drafted in compliance with the prevailing legislations, in particular the Companies Act 2001 and the appendix 4 of the Listing Rules.

The Constitution of the company can be viewed on its website.

D I S C LO S U R E S A N D E N G AG E M E N T W I T H S TA K E H O L D E R SThe Board is committed to fair financial disclosure for its shareholders and all the stakeholders at large. The Company holds an annual meeting of shareholders, where relevant stakeholders are given the opportunity to be involved in a dialogue on the Company’s position, performance and outlook at the annual meeting of shareholders.

CO D E O F E T H I C S The Group is committed to the highest standards of integrity and ethical conduct in dealing with all its stakeholders. It 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.

T H E B OA R D

BOARD SIZE AND COMPOSITION

To determine its current size and composition, the Board has taken into account (a) the size, complexity and diversity of its operations, (b) the various qualifications and experience of its members, (c) the recommendations of the Code. The Board is satisfied that it is currently of a size and level of diversity that is commensurate with the sophistication and scale of Innodis Group.

There is an appropriate combination of three executive directors, four non-executive directors and three independent 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 22 to 23 of the Annual Report.

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;


THE STRUCTURE OF THE BOARD AND ITS COMMITTEES

The Board has a unitary (one-tier) structure. Directors on the Board are independently minded. There are 10 directors sitting on the board as follows:

NAME GENDER COUNTRY OF RESIDENCE

BOARD APPOINTMENT COMMITTEE APPOINTMENT

Victor Seeyave M Mauritius Non-Executive Chairperson Member of the Corporate Governance Committee

Jean-Pierre Lim Kong M Mauritius Executive Director (Chief Executive Officer)

Maurice de Marassé Enouf M Mauritius Independent Director Chairman of the Audit and Risk CommitteeMember of the Corporate Governance Committee

Gil de Sornay M Mauritius Independent Director Chairman of the Corporate Governance Committee Member of the Audit and Risk Committee

Imrith Ramtohul M Mauritius Independent Director

Pauline Seeyave F Mauritius Non-Executive Director

Richard Luk Tong M Mauritius Non-Executive Director Member of the Audit and Risk Committee

Jean How Hong M Mauritius Non-Executive Director

Sonny Wong Lun Sang M Mauritius Executive Director

Rahim Bholah M Mauritius Executive Director

The Company Secretary is Box Office Ltd; the latter has as partners two qualified Chartered Secretaries, Mrs Sophie Gellé and Mrs Sylvia Maigrot. The main contact of the Company is Mrs Sophie Gellé.


CORPORATE GOVERNANCE REPORT [CONTINUED]

PROFILES OF DIRECTORS AND DETAILS OF E XTERNAL APPOINTMENTS

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.

Maurice de Marassé Enouf

Independent Director

Maurice retired in 2001 after 29 years of service as Finance Manager of the WEAL group of Companies. He is a Non-Executive Director of Terra Mauricia Ltd and as an Independent Director of Mauritius Oil Refineries Ltd. He is currently the Chairperson 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 Sornay


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 Chairperson 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 any directorships in other listed companies.

Jean-Pierre Lim Kong

Executive 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 any directorships in other listed companies.

Imrith Ramtohul


Imrith Ramtohul is the Senior Investment Consultant at Aon Hewitt Ltd (Mauritius), a position he has held since 2012. Prior to Aon Hewitt, Imrith was the Head of Investment at Mauritius Union Group. He also previously worked at the Stock Exchange of Mauritius and at subsidiaries of South African banking groups Rand Merchant Bank and Nedbank. Imrith has 19 years of financial industry experience and has been cited in a number of media outlets. He was a member of the CFA Institute Global Investment Performance Standards (GIPS) Asset Owners Subcommittee between 2012 and 2017. In 2017, he was invited by the President of the Republic of Mauritius to serve as an Assessor on the ‘Disposal of Britam Holdings Ltd shares’ Commission of Inquiry. Imrith graduated with honours from the University of Cape Town, with a Bachelor of Business Science (Honours) degree. He is a CFA Charterholder, has earned the right to use the Certificate in Investment Performance Measurement (CIPM) designation and is a Fellow of the Association of Chartered Certified Accountants UK (FCCA). Imrith is a Director of IPRO Growth Fund Ltd.

Pauline Seeyave

Non-Executive Director

Appointed on 01 January 2018

Pauline was appointed as a new director of Innodis Ltd as from 1st January 2018. She is currently the Group Chief Financial Officer of New Mauritius Hotels Limited. Prior to that, she occupied various senior positions at the State Bank of Mauritius, and was the Head of Credit of the bank before joining NMH. She holds a M.A. (Cantab) Economics from the University of Cambridge. Pauline has 20 years of working experience in the UK and Mauritius. She has managed client portfolios in Audit and Business Assurance and has occupied senior executive roles in banking, across finance, risk management, credit, project finance and corporate banking. In the past, she has served on the boards of SBM Bank (Mauritius) Ltd, State Insurance Company of Mauritius Ltd and Club Méditerranée Albion Resorts Ltd. She is also a director of New Mauritius Hotels Limited (listed company).

Jean How Hong


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 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 chaired the Corporate Governance Committee of Meaders Feeds until 30th June 2018 Ltd and is a director of African Domestic Bond Fund.


Rahim Bholah

Executive 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 does not hold any directorships in other listed companies.

Sonny Wong Lun Sang

Executive Director

Sonny has more than eighteen 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 a 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 any directorships in other listed companies.

Richard Luk Tong


Appointed on 01 May 2018

Richard is the Head of Finance of Altima Group, with both past and present experience in the textile, shipping, consumer services, property development, business process outsourcing and global business industries. Richard also has strong IT skills, including the analysis and design of computerised systems and accounting software implementation. He is a member of the Association of Chartered Certified Accountants (ACCA) and an Associate of the Chartered Institute of Securities and Investments (ACSI). He does not hold any directorships in other listed companies.

DIRECTORS’ ATTENDANCE AT BOARD MEETINGS FOR THE PERIOD FROM 1 JULY 201 7 TO 30 JUNE 2018

BOARD MEETINGS27 Sep 2017 13Nov 2017 06 Dec 2017 14 Feb 2018 08 May 2018 27 June 2018

Victor Seeyave √ √ √ √ √ √

Sir René Seeyave* √ √ Excused N/A N/A N/A

Rahim Bholah √ √ √ √ √ √

Maurice de Marassé Enouf √ √ √ √ √ √

Gil de Sornay √ √ √ √ Excused √

Jean How Hong √ √ √ √ √ √

Jacques Leung Wan Kin*** √ √ √ Excused N/A N/A

Jean-Pierre Lim Kong √ √ √ √ √ √

Imrith Ramtohul √ √ √ √ Excused √

Pauline Seeyave** N/A N/A N/A √ √ √

Sonny Wong Lun San √ Excused √ √ √ √

Richard Luk Tong **** N/A N/A N/A N/A √ √

* Sir René Seeyave has resigned as Director on 15 December 2017

**Pauline Seeyave has been appointed as Director on 01 January 2018

***Jacques Leung Wan Kin has resigned as Director on 30 April 2018

****Richard Luk Tong has been appointed as Director on 01 May 2018

BOARD ORIENTATION AND TR AINING FOR NEW DIRECTORS

New Directors receive an induction and orientation upon joining the Board. Management is also responsible for briefing new directors on the Group’s business.



TR AINING OF DIRECTORS

Training of Directors may comprise of externally conducted courses in matters of relevant interest to the Company.

CHAIRPERSON

Mr Victor Seeyave is the current Chairperson. The Chairperson has no executive or management responsibilities and chairs meetings of the Board and of Shareholders. The Board has ensured that the Chairperson commits sufficient time to carry out his duties and responsibilities effectively.

The Chairperson’s primary functions are 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.

E XECUTIVE DIRECTORS / CHIEF E XECUTIVE OFFICER (CEO)

There are three Executive Directors on the Board.

The post of CEO is held by Mr. Jean-Pierre Lim Kong who is also an Executive Director and reports to the Board of Directors.

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

INDEPENDENT DIRECTORS

The company has three Independent Directors.

The Board considers that an independent director is a board member who normally:

• has not been an employee of the company or group within the past three years;

• has not, or has not had within the past three years, a material business relationship with the company either directly or as a partner, shareholder, director or senior employee of a body that has such a relationship with the company;

• has not received or receive additional remuneration from the company apart from a director’s fee or as a member of the company’s pension scheme;

• is not a nominated director representing a significant shareholder;

• does not have close family ties with any of the company’s advisers, directors or senior employees;

• does not have cross directorships nor significant links with other directors through involvement in other companies or bodies; and

• has not served on the board for more than nine years from the date of their first election.

However, the Board prioritises knowledge and industry experience over the strict application of criteria (g) above. Moreover, the Board will not insist that all of the above criteria be cumulatively met if it is satisfied that a director is able to - and in fact exercises - independence of mind and judgment in his/her duties as a director, even though any one or more of the above criteria is not met.

There is currently 1 female director on the Board, namely Miss Pauline Seeyave, out of 10 directors.

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

However, the Company did not comply with the criteria used for determining whether a director is independent or not. In this regard, the Company has deemed it fit and proper to prioritise knowledge and industry experience over the strict application of the criteria requiring independent directors to have served not more than 9 years on the board in order to qualify as “independent”. The Company currently has 2 board members, namely Mr Gil de Sornay and Mr Maurice de Marassé Enouf, who fulfil all the recommended criteria for being qualified as independent, except for their length of service, which exceeds 9 years. The Board considers such directors to be independent notwithstanding the fact that they have served more than 9 years on the Board, in as much as it is satisfied that the said directors are able to - and in fact exercise - independence of mind and judgment in their duties as directors.

B OA R D CO M M I T T E E SThe Board has two standing committees to assist in the discharge of its duties: the Audit and Risk Committee and the Corporate Governance Committee. The committees meet regularly under the terms of reference set by the Board. The Chairperson 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. The charters of the Committees are reviewed as and when the Chairperson of each Committee deems necessary, or when the Board deems it fit to do so.

CORPOR ATE GOVERNANCE COMMITTEE

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


• Gil de Sornay (Committee Chairperson) – 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 4 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.

The attendance at Corporate Governance Meetings from 01 July 2017 to 30 June 2018 was as follows:

CORPORATE GOVERNANCE COMMITTEE MEETINGS

27 Sep 2017

29 Nov 2017

14 Feb 2018

27 June 2018

Gil de Sornay √ √ √ √

Maurice de Marassé Enouf √ √ √ √

Victor Seeyave √ √ √ √

Common directorships are disclosed on pages 22 to 23 under the Directors’ profiles.

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 Chairperson) – Independent Director

• Gil de Sornay – Independent Director

• Richard Luk Tong – 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 the publication of 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;

• make recommendations to the Board in relation to the appointment, termination and remuneration of internal and external auditors and evaluate the work later;

• 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;

• oversee the Company’s compliance with legal and regulatory provisions, its Constitution, Code of Ethics, by-laws and any rules established by the Board;

• identify any significant issues in relation to the financial statements and how these issues were addressed;

• make recommendations to the Board as regards the appointment or reappointment of the external auditor.

For the year under review, there were no significant issues in relation to the financial statements.

The attendance at Audit and Risks Committee Meetings from 01 July 2017 to 30 June 2018 was as follows:



AUDIT AND RISK COMMITTEE MEETINGS22 Sep 2017 07 Nov 2017 29 Jan 2018 09 Feb 2018 09 May 2018 05/06 June 2018

Maurice de Marassé Enouf √ √ √ √ √ √

Jacques Leung Wan Kin* √ √ √ √ N/A N/A

Gil de Sornay √ √ √ √ Excused √

Richard Luk Tong** N/A N/A N/A N/A √ √

**Jacques Leung Wan Kin has resigned as Director on 30 April 2018

**Richard Luk Tong has been appointed as Director on 01 May 2018

AU D I T

INTERNAL AUDIT FUNCTION

The Internal Audit & Risk Manager reports directly to the members of the Audit and Risk Committee to maintain its independence and objectivity, and administratively to the Chief Executive Officer. The Audit and Risk Committee approves the yearly plan of the Internal Audit & Risk 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.

The internal audit team has unrestricted access to the records, management and employees of the Group. The Internal Audit & Risk

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 internal audit function is regularly monitored and reviewed by the Audit and Risk Committee to ensure that internal control systems are effective.

The structure of the Internal Audit function and qualifications of the Internal Audit & Risk Manager is listed on the company’s website.

D I R EC TO R A P P O I N T M E N T P RO C E D U R E S A N D R E - E L EC T I O N O F D I R E C TO R SThe Board, committees and individual directors have their performance evaluated and are held accountable to appropriate stakeholders.

The directors are normally appointed by shareholders by an ordinary resolution at the Annual Meeting. In accordance 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, hold office only until the next Annual Meeting, at which time they shall retire, or shall be eligible for re-election.

The Board assumes the responsibilities for succession planning and for the induction of new directors.

All new directors have attended and participated in an induction and orientation process.

The Board has the duty to review the professional development and ongoing education of directors.


B OA R D , D U T I E S , A N D I N T E R E S T S A N D P E R F O R M A N C E The directors are aware of their legal duties and observe and foster high ethical standards and a strong ethical culture in the Company. Each director allocates sufficient time to discharge his or her duties effectively. Any conflicts-of-interest and related-party transactions that arise are dealt with in accordance with the Code of ethics. The Board is responsible for the governance of the Company’s information strategy, information technology and information security. The Board, committees and individual directors are supplied with information in a timely manner and in an appropriate form and quality to allow them to perform their duties effectively.

B OA R D E VA LUAT I O NBoard evaluation is carried by way of a Directors’ self-appraisal carried every two years. The last exercise was carried out in the last quarter of 2018 and included also a part on evaluation of sub committees. No independent board evaluator was appointed.

The Directors are invited to fill in a questionnaire, in which the questions are categorized under the following themes:

• company’s relationship and communication with shareholders ;

• the structure of the board;

• board efficiency and effectiveness ;

• board leadership and management relations ;

• directors’ powers and duties ;

• ethics ;

• committees ;

• risks ;

• corporate governance;

• individual assessment.

The results are summarised by the Company Secretary and analysed and discussed in the Corporate Governance Committee where improvement actions are considered, before being submitted for recommendation to the Board.

For the year under review, the evaluation process indicated that directors consider the Board to be effective and well-balanced.

The Board is of the opinion that the current assessment of the Board and Individual Directors is sufficient for the Company.

R I S K G OV E R N A N C E A N D I N T E R N A L CO N T RO LThe Board is responsible for risk governance and ensures that the Company and its subsidiaries develop and executes a comprehensive and robust system of risk management and maintains a sound internal control system.

RISK MANAGEMENT FUNCTION

The Directors recognise that the Board has the overall responsibility for the risk management and internal control mechanisms of the Company. The Board, has, through its Audit and Risk Committee, (a) monitored and evaluated the Company’s strategic, financial, operational and compliance risks, and (b) developed and implemented appropriate frameworks and effective processes for the sound management of risks.

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.

Whistle-blowing procedures are outlined in the Code of Ethics of the company. Reports are made to the HR Manager or CEO and the whistle-blowers may request their identities to be kept confidential.

D I R EC TO R S ’ S E RV I C E CO N T R AC T SThere 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.



CO M PA N Y S E C R E TA RYThe secretary of the Company is Box Office Ltd. The latter offers corporate services, secretarial services, business facilitation services, with a portfolio of more than 180 business entities consisting of listed companies on the Stock Exchange of Mauritius Ltd, public interest entities, public, private and small private companies, partnerships and associations in all fields of activity. The partners of the company are Sylvia Maigrot, ACIS, and Sophie Gellé, ACIS. More information may be obtained on the latter on its website at www.box-office.mu.

The Company Secretary has access to the Board members and Directors may separately and independently contact the Company Secretary who attends and prepares minutes for all Board meetings.

The Company Secretary’s role is defined, and includes the responsibility for:

• providing the Board with guidance as to how their duties and responsibilities should be properly discharged in the best interests of the Company and in accordance with the Companies Act 2001, the Constitution of the Company and the Code of Corporate Governance;

• drafting the agenda of Board and Board committee meetings in consultation with the Chairperson and the CEO;

• circulating agendas and any supporting papers to Directors in good time;

• convening, attending and drafting of minutes of Board and Committee Meetings and Shareholders’ meetings;

• checking that the required quorums of meetings are present;

assisting the Chairperson in organizing Board evaluations and training programs;

The appointment and dismissal of the Company Secretary are matters requiring the Board’s approval.

L E A D E R S H I P 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.

The Board regularly monitors and evaluates compliance with the Code of ethics.

I N T E R E S T S R EG I S T E RThe Company Secretary maintains an interest register, which is available for consultation to shareholders upon written request to the Company Secretary. No entries have been made in the interest register for the reporting period.

S H A R E O P T I O N P L A NThe Group and the Company have no share option plans.

I N FO R M AT I O N , I N FO R M AT I O N T EC H N O LO G Y A N D I N FO R M AT I O N S EC U R I T Y G OV E R N A N C EAn information technology and information security policy exists and is available for consultation on the Company’s website.

The Board oversees information governance through its Audit & Risk Committee, which itself supervises the Internal Audit function, which has no restrictions to its right of access to information.

All significant expenditures on information technology are approved by the Board, following recommendations and explanations provided by Management in that respect.

R E M U N E R AT I O N

STATEMENT OF REMUNER ATION PHILOSOPHY

• The Board is transparent, fair and consistent in determining the remuneration policy for directors and senior executives. The remuneration of senior executives is generally aligned with the salary packages in the industry. The Group believes that adequate remuneration is essential to attracting and retaining talent and to motivating our key executives to perform at their best.

The Board’s Corporate Governance Committee has reviewed 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.

• The non-executive directors have not received remuneration in the form of share options or bonuses associated with organizational performance.


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

2018CONSOLIDATED

2017CONSOLIDATED

2018SEPARATE

2017SEPARATE

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

Fixed Variable Fixed Variable Fixed Variable Fixed Variable

Executive * 37,573 475 41,732 810 16,801 165 18,637 540Non – Executive 1,341 3,355 2,196 2,462 1,341 1,995 2,196 792

38,914 3,830 43,928 3,272 18,142 2,160 20,833 1,332

Remuneration paid to each individual director has not been disclosed as the directors consider this information as very sensitive in this very competitive market.

P RO C U R E M E N T F U N C T I O NOne 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.

S U S TA I N A B I L I T Y R E P O RT I N G

HE ALTH, SAFET Y, SOCIAL 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.

BIOG AS ENERGY PRODUCTION FROM CHICKEN WASTE

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. Bio-composting plants have been installed on our poultry farms and we strive to recycle most of the waste generated by our production systems. In this context, a plant for the production of biogas energy on a pilot basis from our chicken abattoir wastes is already in operation. This plant also treats our processing plant wastes, the by-product of this process being further directed to a composting plant to produce organic fertilisers.

VEGETABLE PRODUCTION

Furthermore, we have also set up greenhouses to produce vegetables and fruits in line with smart agriculture practices (agriculture raisonnée). We will be using our in-house generated composts in these greenhouses, hence closing the recycling loop. This is consistent with our ISO 14001 certification obtained in 2014.

For reminder, 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.

Our social engagement is mainly channelled through Innodis Foundation (see below). However, the Group is also poised to undertake a number of social initiatives independently of our Foundation, as outlined in the Chairman’s and CEO’s report.

CO R P O R AT E S O C I A L R E S P O N S I B I L I T Y (C S R ) : I N N O D I S FO U N DAT I O NFor the financial year ended 30 June 2018, Innodis Foundation, which manages the CSR funds of Innodis Group has donated some Rs 1.2 million (2017: Rs 2.0 million) to nine 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 Rs 24.6 million under its corporate social responsibility (CSR) program.

R E L AT I O N S W I T H S H A R E H O L D E R S A N D OT H E R K E Y S TA K E H O L D E R S

SUBSTANTIAL SHAREHOLDERS

The shareholders holding more than 5% of the ordinary shares of the Company at 30 June 2018 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%

Although the company does not have a formal dividend policy, it has always endeavored, including in the year under review, to maintain a healthy level of dividend distribution in line with the expectations of key stakeholders in relation to their investments.

SUMMARY OF SHAREHOLDERS BY C ATEGORY

Investment & Trust 1.636%

Individual 12.612%

Pension & Provident Funds 14.699%

Insurance & Assurance 13.862%

Other Corporate Bodies 57.191%

SHAREHOLDING PROFILE

Size of shareholding No of shareholders No of shares owned %

1 – 500 1,573 288,524 0.786

501 – 1,000 417 341,583 0.930

1,001 – 5,000 555 1,300,606 3.541

5,001 – 10,000 129 910,250 2.478

10,001 – 50,000 107 2,284,986 6.221

50,001 – 100,000 23 1,581,524 4.306

100,001 – 250,000 13 1,842,416 5.016

250,001 -1,000,000 7 2,277,027 6.199

Over 1,000,000 6 25,903,350 70.523

2,830 36,730,266 100


DIRECTORS AND SENIOR OFFICERS’ INTERESTS AND DE ALING IN SHARES AND THEIR SHAREHOLDING IN THE COMPANY

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 2018 were as follows:

2018 2018 2017 2017

Direct holding Number

Indirect holding

Direct holding Number

Indirect holding

% %

Directors :

Pauline Seeyave 5,601 - 5,601 -Maurice 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 -Imrith Ramtohul 24,242 0.0041 24,242 0.0041Rahim Bholah 2,000 - 2,000 -Sonny Wong - - - -Jean-Pierre Lim Kong 1 - 1 -Richard Luk Tong 262 - 262 -

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 - - - -

CO M M U N I C AT I O NThe 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. The following documents can be viewed on the website:

• The Constitution of the Company

• The Quarterly results

• The Annual reports

• The Notices of annual meeting

• The Board charter

• The Audit and Risk and Corporate Governance Committee Charters

• The Code of ethics

• The IT Policy

• The Audit Policy



• The Management structure

The Annual Meeting is held every year in December. All Board members are requested to attend annual meetings to which all shareholders are invited. The Annual Meeting is an opportunity for shareholders to meet the Directors and have an insight of the company’s activities and results.

The notice of the annual meeting and other shareholder meetings and related papers are sent to shareholders at least 14 days before the meeting in accordance with the Companies Act.

S H A R E P R I C E I N FO R M AT I O NFor the year under review, Innodis share price has increased by 24% from Rs 37.00 at 30 June 2017 to Rs 46.00 at 30 June 2018.

2018 2017

Share price (Rs) 46.00 37.00Earnings per share (Rs) 2.90 0.19Price Earnings Ratio (times) 15.86 195Dividend per share (Rs) 1.85 1.85Dividend yield (%) 4.02 5.00

TIMETABLE OF IMPORTANT EVENTS FOR SHAREHOLDERS:

August Payment of final dividends of previous Financial Year**

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

February/March Payment of interim dividends declared in December**

May Publication of third quarter results

June Declaration of final dividends*

*Subject to the approval by the Board of Directors

** Subject to a resolution to that effect by the Board of Directors

R E L AT E D PA RT Y T R A N SAC T I O N SRelated party transactions are set out in Note 28.

CO N T R AC T O F S I G N I F I C A N C EThe Company has a Technical and Advisory services agreement with Altima Ltd, whereby the latter provides advice, guidance and assistance to the Group in the following areas: strategy, accounting and finance, legal, corporate communications, and marketing. 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.

D I V I D E N D P O L I C YThe 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.

S H A R E H O L D E R S ’ AG R E E M E N TThere is no shareholders’ agreement which affects the governance of the Company by the Board.

AC K N OW L E D G E M E N T The Board would like to thank all employees for their continued dedication and loyalty.

Mr Victor Seeyave Gil de Sornay

Chairman of the Board Chairman of Corporate Governance Committee

Date: 26 September 2018


We, the Directors of Innodis Ltd, confirm, to the best of our knowledge that the Company has complied with the New Corporate Governance Code for Mauritius (2016), has applied all of the principles set out in the Code and has explained how these principles have been applied.

Gil de Sornay Mr Victor Seeyave

Chairman of Corporate Chairman of the Board Governance Committee


STATEMENT OF COMPLIANCE (AS PER SECTION 75 (3) OF THE FINANCIAL REPORTING ACT)


The antioxidants found in high concentration in Bois Cheri™ tea are highly beneficial to our health, as they relentlessly fight free radicals, which are the main causes of chronic diseases. Moreover, our recently launched Moringa Bois Cheri™ herbal teas are also loaded with bioactive antioxidant plant compounds, and pack a punch of other anti-inflammatory, health-promoting nutrients.



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 Ltd

Company Secretary



STATUTORY DISCLOSURES

E X T E R N A L AU D I TO R SKPMG has been acting at External Auditors of the Company for the past 10 years. Based on section 41A (1) of the Financial Reporting Act 2004 (as amended), an audit firm, appointed by a listed company, shall not audit the accounts of that company for a continuous period of more than 7 years. In that respect, in accordance with the Audit and Risk Committee charter as well as the Audit Policy of the company (both of which can be consulted on the website of the company), a tender exercise has been carried out, and the recommendation of the Board (based on the assessment exercise of the Audit and Risk Committee), at the Annual Meeting of Shareholders, will be to appoint Ernst & Young as External Auditors for the Financial Year ending 30 June 2019.

AUDITORS’ REMUNER ATION

2018 2017

Rs’000 Rs’000

Company:

KPMG : Audit Fees 2,019 1,895Advisory Services 300 -

Group:

KPMG : Audit Fees 3,680 2,747Advisory Services 300 -

Ernst & Young : Internal Audit Services 312 554Tax Services 59 52

The Audit and Risk Committee has met regularly with the external auditor without management present and has discussed accounting principles, critical policies, judgments and estimates with the external auditor.

The effectiveness of the external audit process is assessed by the Audit and Risk Committee based on the guidelines contained in the Audit and Risk Committee charter and the Company’s Audit Policy.

The non-audit services provided by the external audit firm are performed by officers other than those who carry out the audit of the Company, in order to ensure the auditor’s objectivity and independence.


STATUTORY DISCLOSURES [CONTINUED]

S U B S I D I A R I E S O F I N N O D I S LT D A N D T H E I R D I R EC TO R S H I P S

(I) PENINSULA RICE MILLING LTD

Jean How Hong (Chairman)

Victor Seeyave

Sonny Wong Lun Sang


(II) REDBRIDGE INVESTMENTS LTD


Victor Seeyave

Vivekanand Ramtohul


(III) CHALLENGE HYPERMARKETS LTD


Victor Seeyave

Jacques Wing Soon Leung Wan Kin (Resigned on 30 April 2018)



(IV) HWFRL INVESTMENTS LTD


Victor Seeyave



(V) MOÇAMBIQUE FARMS, LIMITADA


Victor Seeyave

N. Vincent Reynolds Moothoo


(VI) MAURITIUS FARMS LIMITED



Vivekanand Ramtohul


(VII) ESSENTIA LTD


Jacques Wing Soon Leung Wan Kin (resigned on 30 April 2018)

Vivekanand Ramtohul


(VIII) POULET ARC-EN-CIEL LTÉE


Rahim Bholah

Gérard Louis Boullé (resigned on 10 July 2017)




Vivekanand Ramtohul

Victor Seeyave

Gerard Yoon Kong Wong Chong

Sonny Wong Lun Sang

(IX) GREEN ISLAND MILLING LIMITED


Rahim Bholah

Graeme Lance Robertson

Rachmat Imanuel Suhirman


(X) MEADERS FEEDS LIMITED

Yannick Lagesse (Chairman)

Robert Joseph Bernard Montocchio

Vivekanand Ramtohul (Alternate to Jean-Pierre Lim Kong)

Emmanuel Wiehe (Appointed on 1 January 2018)

David Montocchio (Alternate to Bernard Montocchio) (Appointed on 1 January 2018)


Reynolds Moothoo (Appointed on 1 July 2018)

Jean How Hong (Resigned on 30 June 2018)

Jean Baptiste Wiehe (Resigned on 31 December 2017)

Jocelyn Fanchette (Resigned on 30 June 2018)

Rahim Bholah (Alternate to Jean How Hong)

Johann Montocchio (Alternate to Robert Joseph Bernard Montocchio)

(Resigned on 31 December 2017)

(XI) SUPERCASH LTDJean How Hong (Chairman)

Victor Seeyave

Sonny Wong Lun Sang


(XII) P. FRAIS FRANCHISE LTDJean How Hong (Chairman)

Sonny Wong Lun Sang

Vivekanand Ramtohul


(XIII) INNODIS POULTRY LTD

Victor Seeyave (Chairman)

Jean How Hong

Vivekanand Ramtohul




Richard Luk Tong (appointed on 01 May 2018)

S E N I O R M A N AG E M E N T T E A MThe 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 17 years.

He is a Fellow of the Association of Chartered Certified Accountants, UK.

Yannick Lagesse

Managing Director - Meaders Feeds Ltd (Since 1st July 2018)

Yannick is the holder of a Bachelor of Commerce and a Post Graduate Diploma in Accountancy from the University of Cape Town. He started his career in South Africa in an accountancy firm, and became a member of the South African Institute of Chartered Accountants in 1999. Back in Mauritius, he joined the CIEL Group, where he has held various senior responsibilities. After 8 years at CIEL, he launched his own consultancy firm, providing financial advisory services to a number of companies and individuals. He has acted as Chairman of Meaders Feeds for 6 years prior to his appointment as MD.

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.


STATUTORY DISCLOSURES [CONTINUED]

Hansley Chadee

Senior Manager IT

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 is currently doing an MBA at Imperial College London. He has been with the Company, leading the IT department for the past 18 years.

Amrith 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 27 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, graduating from university and has worked in the marketing department for several years, before being appointed as Senior Manager in the Commercial division. She holds a BSc (Hons.) Management from the London School of Economics and Political Science.

Deven Ramasawmy

Internal Audit & Risk 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.

M A N AG E M E N T AG R E E M E N TThere is no management agreement between Innodis Ltd 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.

D I R EC TO R S ’ I N S U R A N C EThe Directors benefit from an indemnity insurance to cover for liabilities which may be incurred while performing their duties to the extent permitted by law

INNODIS ANNUAL REPORT 2018

42

Our New Earth™ vegetables are organic, i.e. grown without recourse to any chemicals or pesticides. Our earth-conscious farmers work in perfect harmony with nature and are willing to put in the extra care and effort it takes to nourish their lands the traditional way, using organic compost and relying on crop rotation and other natural cultivation techniques. This results in optimal nutrient uptake and plant growth, and allows the soil to naturally regenerate itself year after year.


43

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 2018, 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 as set out on pages 50 to 128.

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 2018, 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 the accounting policy in note 3(l) (i) and note 16 (a) of the accompanying separate financial statements.

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

As at 30 June 2018, the Company has investments in subsidiaries with a carrying value of Rs 587m (2017: Rs 593m).

There were indicators at 30 June 2018, 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. In addition, Supercash Ltd had a net liability position as at 30 June 2018.

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 their carrying value. Based on management’s assessment, no impairment was recognised in respect of investment in subsidiaries for the year ended 30 June 2018.

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:

• 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 and the industry.

• Evaluating the adequacy of the financial statement disclosures in accordance with IAS 36 Impairment of assets, including disclosures of key assumptions and judgements.



44INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF INNODIS LTD

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 Rs 42.4m 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:

• Evaluating 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 actual production data used to evaluate the hatchability rate, mortality rate and yield rate.

• Evaluating the adequacy of the financial statement disclosures in accordance of IAS 41 Agriculture, 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 consisting of Chairman’s and CEO’s report, Directors’ report, Statement of directors’ responsibilities, Corporate governance report, Secretary’s certificate and Statutory disclosures, which we obtained prior to the date of this auditors’ report. Other information does not include the consolidated and separate financial statements and our auditors’ report thereon.

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 auditors’ 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.

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.





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.





Auditors’ responsibilities for the audit of the consolidated and separate financial statements (continued)

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 auditors’ 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.

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 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 (the “Code”) as disclosed in the annual report and on whether the disclosure is consistent with the requirements of the Code.

In our opinion, the disclosures in the Annual Report are consistent with the requirements of the Code.

KPMG JOHN CHUNG, BSC FCA

Ebène, Mauritius Licensed by FRC





Our Lucky Star™ pilchards are rich in protein and essential omega 3 fatty acids, which are more easily absorbed by the body than other omega 3 variants found in plants. Moreover, Lucky Star™ is part of the Responsible Fisheries Alliance, which implements strict annual quotas to ensure the sustainability of pilchard populations.



49

CONSOLIDATED AND SEPARATE STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2018

CONSOLIDATED SEPARATE

2018 2017 2018 2017

Note Rs’000 Rs’000 Rs’000 Rs’000

Revenue 7 4,320,491 4,179,749 2,419,959 2,379,382 Profit from operating activities 8 171,894 200,054 101,634 104,993 Finance income 10 32,589 4,892 17,016 14,882 Finance cost 10 (78,324) (77,962) (46,871) (51,071)Share of profit of equity-accounted investees, net of tax 17 - 1,126 - - Impairment of investment in subsidiary 16(a) - - - (135,156)Profit/(loss) before income tax 126,159 128,110 71,779 (66,352)Income tax (expense)/ credit 11 (7,730) (14,035) 5,406 29,365 Profit/(loss) for the year 118,429 114,075 77,185 (36,987)Other comprehensive income

Items that will never be reclassified to profit or lossActuarial (loss)/gain on retirement benefit obligations 24 (2,130) 4,248 (4,416) 11,838 Revaluation of property, plant and equipment 123,385 33,737 11,970 - Deferred tax on retirement benefit obligations 25 362 (722) 750 (2,012)Deferred tax on revaluation reserve 25 (13,582) (7,030) (2,427) 1,488

108,035 30,233 5,877 11,314

Items that are or may be reclassified to profit or lossForeign currency translation difference – foreign operations 2,556 (11,110) - -

Other comprehensive income for the year 110,591 19,123 5,877 11,314

Total comprehensive income/(loss) for the year 229,020 133,198 83,062 (25,673)

Profit attributable to:Owners of the Company 106,570 7,020 Non-controlling interest 11,859 107,055 Profit for the year 118,429 114,075

Total comprehensive income attributable to:Owners of the Company 217,161 34,265 Non-controlling interest 11,859 98,933 Total comprehensive income for the year 229,020 133,198

Earnings per shareBasic/diluted earnings per share (Rs) 12 2.90 0.19

The notes on pages 60 to 128 form part of these consolidated and separate financial statements


50CONSOLIDATED AND SEPARATE STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2018


2018 2017 2018 2017

Note Rs’000 Rs’000 Rs’000 Rs’000

ASSETSNon-current assetsProperty, plant and equipment 13 1,781,691 1,651,334 361,247 358,248 Intangible assets and goodwill 15 5,809 5,809 - - Bearer biological assets 20(b) 7,702 5,673 - - Non-current receivables 19 11,947 12,371 11,947 12,371 Investment property 14 - - 499,786 504,364 Investments in subsidiaries 16(a) - - 587,470 592,523 Equity- accounted investees 17 1,126 1,126 - - Other investments 18 209 209 209 209 Deferred tax assets 25 7,249 - 504 - Total non-current assets 1,815,733 1,676,522 1,461,163 1,467,715

Current assetsInventories 20(a) 855,392 807,099 514,109 481,201 Bearer biological assets 20(b) 43,569 33,422 - - Consumable biological assets 20(b) 42,446 38,778 - - Trade and other receivables 21 808,024 765,378 660,700 854,165 Income tax receivable 14,806 - 10,993 5,642 Cash and cash equivalents 77,285 121,109 24,286 22,356 Total current assets 1,841,522 1,765,786 1,210,088 1,363,364

Total assets 3,657,255 3,442,308 2,671,251 2,831,079

EQUITY AND LIABILITIESShareholders’ equityShare capital 22 367,303 367,303 367,303 367,303 Share premium 22 5,308 5,308 5,308 5,308 Revaluation reserve 22 454,903 355,909 322,060 317,992 Foreign currency translation reserve (14,314) (20,896) - - Retained earnings 817,971 962,780 829,847 818,804

Total equity attributable toOwners of the Company 1,631,171 1,670,404 1,524,518 1,509,407 Non-controlling interests 236,417 118,060 - - Total shareholders’ equity 1,867,588 1,788,464 1,524,518 1,509,407



51

CONSOLIDATED AND SEPARATE STATEMENTS OF FINANCIAL POSITION (CONTINUED)AS AT 30 JUNE 2018


2018 2017 2018 2017

Note Rs’000 Rs’000 Rs’000 Rs’000

Non-current liabilitiesBorrowings 23 54,434 64,969 29,761 45,924 Retirement benefit obligations 24 76,505 78,150 33,753 35,583 Deferred tax liabilities 25 87,858 67,980 - 3,225 Total non-current liabilities 218,797 211,099 63,514 84,732

Current liabilitiesBank overdrafts 416,392 401,521 299,414 325,147 Current tax liabilities - 3,232 - - Borrowings 23 767,375 748,268 624,702 555,132 Trade and other payables 26 387,103 289,724 159,103 356,661 Total current liabilities 1,570,870 1,442,745 1,083,219 1,236,940

Total liabilities 1,789,667 1,653,844 1,146,733 1,321,672

Total equity and liabilities 3,657,255 3,442,308 2,671,251 2,831,079

Approved by the Board of Directors on 26 September 2018 and signed on its behalf by:

Mr Victor Seeyave Mr Maurice de Marassé EnoufChairman of the Board Chairman of the Audit and Risk Committee



52CONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 30 JUNE 2018

CONSOLIDATED Share

Capital

Share

premiumRevaluation

reserve

Foreign currency

translation reserve

Retained earnings Total

Non-controlling

interest

Total Shareholders’

Equity


At 1 July 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 translation difference – foreign operations - - (6,978) 3,990 - (2,988) (8,122) (11,110)Deferred tax on revaluation reserve (Note 25) - - (7,030) - - (7,030) - (7,030)Deferred tax on retirement benefit obligations (Note 25) - - - - (722) (722) - (722)Actuarial gain on retirement benefit obligations (Note 24) - - - - 4,248 4,248 - 4,248 Revaluation gain on land and buildings - - 33,737 - - 33,737 - 33,737 Revaluation reserve released (Note 22) - - (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 30) - - - - (1,004) (1,004) (45,440) (46,444)

Balance as at 30 June 2017 367,303 5,308 355,909 (20,896) 962,780 1,670,404 118,060 1,788,464



53

CONSOLIDATED AND SEPARATE STATEMENT OF CHANGES IN EQUITY (CONTINUED)FOR THE YEAR ENDED 30 JUNE 2018

CONSOLIDATED Share

Capital

Share premium Revaluation

reserve

Foreign currency

translation reserve

Retained earnings Total

Non-controlling

interest


Equity


At 1 July 2017 367,303 5,308 355,909 (20,896) 962,780 1,670,404 118,060 1,788,464

Total comprehensive income for the year Profit for the year - - - - 106,570 106,570 11,859 118,429

Other comprehensive incomeForeign currency translation difference – foreign operations - - (4,026) 6,582 - 2,556 - 2,556 Deferred tax on revaluation reserve (Note 25) - - (13,582) - - (13,582) - (13,582)Deferred tax on retirement benefit obligations (Note 25) - - - - 362 362 - 362 Actuarial gain on retirement benefit obligations (Note 24) - - - - (2,130) (2,130) - (2,130)Revaluation gain on land and buildings - - 123,385 - - 123,385 - 123,385 Revaluation reserve released (Note 22) - - (6,783) - 6,783 - - -

Total other comprehensive income - - 98,994 6,582 5,015 110,591 - 110,591

Total comprehensive income for the year - - 98,994 6,582 111,585 217,161 11,859 229,020

Transaction with owners, recorded directly in equity Contribution by and distributions to owners Dividend - - - - (67,951) (67,951) (29,555) (97,506)Reduction of share capital - - - - - - (52,390) (52,390)Acquisition of non-controlling interests (Note 30) - - - - (188,443) (188,443) 188,443 - Balance as at 30 June 2018 367,303 5,308 454,903 (14,314) 817,971 1,631,171 236,417 1,867,588



54CONSOLIDATED AND SEPARATE STATEMENTS OF CHANGES IN EQUITY (CONTINUED)FOR THE YEAR ENDED 30 JUNE 2018

SEPARATEShare

capitalShare

premium

Revaluation

reserveRetained earnings


equity

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Balance as at 01 July 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 25) - - - (2,012) (2,012)Deferred tax on revaluation reserve (Note 25) - - 1,488 - 1,488 Deferred tax on retirement benefit obligations (Note 24) - - - 11,838 11,838 Revaluation reserve released (Note 22) - - (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 27) - - - (67,951) (67,951)

Balance as at 30 June 2017 367,303 5,308 317,992 818,804 1,509,407

Balance as at 01 July 2017 367,303 5,308 317,992 818,804 1,509,407

Total comprehensive income for the yearProfit for the year - - - 77,185 77,185

Other comprehensive incomeDeferred tax movement (Note 25) - - - 750 750 Deferred tax on revaluation reserve (Note 25) - - (2,427) - (2,427)

Deferred tax on retirement benefit obligations (Note 24) - - - (4,416) (4,416)Revaluation reserve released (Note 22) - - (5,475) 5,475 - Revaluation gain on land and building - - 11,970 - 11,970

Total other comprehensive income - - 4,068 1,809 5,877

Total comprehensive income for the year - - 4,068 78,994 83,062

Transaction with owners, recorded directly in equity Contribution by and distributions to owners Dividend (Note 27) - - - (67,951) (67,951)

Balance as at 30 June 2018 367,303 5,308 322,060 829,847 1,524,518



55

CONSOLIDATED AND SEPARATE STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018


2018 2017 2018 2017

Note Rs’000 Rs’000 Rs’000 Rs’000

Cash flows from operating activities

Profit/(loss) after income tax expense 118,429 114,075 77,185 (36,987)

Adjustments for:Depreciation 13 127,267 124,006 64,958 59,503 Change in fair value of biological assets (5,335) 358 - - Amortisation of premiums on leasehold land 19 424 572 424 572 Depreciation of investment property 14 - - 7,910 7,255 Impairment of subsidiaries 16(a) - - - 135,155 Share of profit of equity-accounted investees, net of tax 17 - (1,126) - - (Profit)/loss on disposal of property, plant and equipment 8 (1,134) (123,670) (1,106) (949)Interest income 10 (11,543) (4,339) (11,508) (10,332)Interest expense 10 78,324 77,962 46,871 51,071 Dividend income 8 - - (50,215) (130,564)Unrealised Exchange (gain)/ loss (304) 1,503 1,664 (1,328)Income tax expense 7,730 (14,035) (5,406) (29,365)

313,858 175,306 130,777 44,031 Movement in retirement benefit obligations (1,645) (10,503) (1,830) (19,345)Changes in inventories (48,293) 420,872 (32,908) 344,841 Changes in trade and other receivables (57,452) (41,466) 188,114 (205,892)Changes in trade and other payables 97,379 (130,125) (197,558) (4,426)

303,847 414,084 86,595 159,209 Interest paid (78,324) (77,962) (46,871) (51,071)Tax paid (20,668) (47,865) (2,384) (19,276)Net cash generated from operating activities 204,855 288,257 37,340 88,862



56CONSOLIDATED AND SEPARATE STATEMENTS OF CASH FLOWS (CONTINUED)FOR THE YEAR ENDED 30 JUNE 2018


2018 2017 2018 2017

Note Rs’000 Rs’000 Rs’000 Rs’000

Cash flows from investing activitiesAdvances to subsidiaries - - (47,547) (32,976)Proceeds from disposal of property, plant and equipment 8,165 214,263 1,106 8,349 Interest received 3,967 4,339 - 10,332 Dividend received - - 54,695 93,514 Reduction of capital (52,390) - 52,600 - Acquisition of non-controlling interests (736) (46,444) - - Acquisition of property, plant and equipment 13 (132,165) (178,709) (55,987) (93,338)Net cash (used in)/from investing activities (173,159) (6,551) 4,867 (14,119)Cash flows from financing activitiesPayments of finance lease liabilities (15,540) (56,115) (14,045) (25,677)Loans received 907,033 26,757 950,373 18,956 Loan Repayment (882,921) - (882,921) - Decrease in net amount due to related parties - (10,380) - - Dividends paid (97,506) (102,922) (67,951) (67,951)Net cash used in financing activities (88,934) (142,660) (14,544) (74,672)Net (decrease) / increase in cash and cash equivalents (57,238) 139,046 27,663 71

Effects of exchange rate fluctuations on cash and cash equivalents (1,457) 3,916 - - Cash and cash equivalents at beginning of year (280,412) (423,374) (302,791) (302,862)Cash and cash equivalents at end of year (339,107) (280,412) (275,128) (302,791)Cash and cash equivalents consist of:Cash and bank balances 77,285 121,109 24,286 22,356 Bank overdrafts (416,392) (401,521) (299,414) (325,147)

(339,107) (280,412) (275,128) (302,791)



57



59

Our whole DairyVale™ range of yoghurt is rich in probiotics, the gut-friendly bacteria which contributes to better digestion, enhanced mood, and overall health. Our more recently introduced DairyVale Greek Style yoghurt is also rich in protein and calcium, making it an ideal accompaniment for breakfast, a quick snack or a guilt-free dessert.

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

(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.

NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2018


60

2. BASIS OF PREPARATION (CONTINUED)

(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 23 & 29 : Leases- whether an arrangement contains a lease

(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 2018 is included in the following notes:

• Note 3(l) – 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 24 – Measurement of retirement benefit obligations: key actuarial assumptions;

• Note 25 – Recognition of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used;

(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.



61


(d) Use of estimates and judgements (continued)

(iv) Useful lives of property, plant and equipment (continued)

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

Up to the date of issue of these financial statements, the IASB has issued a number of amendments, new standards and interpretations which are effective for the year ended 30 June 2018 and which have been adopted in these financial statements.

These statements, where applicable, have been applied in the year when they are effective.

Disclosure Initiative (Amendments to IAS7)

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 reconciliation of liabilities whose cash flows are expected to be classified under financing activities in the statement of cash flows are disclosed in Note 12 relating to interest-bearing loans and borrowings. Thus, the adoption of this standard had no impact on the financial statements for the current year.

Recognition of Deferred tax assets for unrealised losses (IAS12)

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 are 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. Guidance is provided where an entity may assume that it will recover an asset for more than its carrying amount, provided that there is sufficient evidence that it is probable that the entity will achieve this. Guidance is provided for deductible temporary differences related to unrealised losses are not assessed separately for recognition. These are assessed on a combined basis, unless a tax law restricts the use of losses to deductions against income of a specific type.

The adoption of the amendments did not have any impact in the financial statements.

Standards and interpretations issued but not yet effective up to date of the Group’s and Company’s financial statements are listed below. This listing is of standards and interpretations issued, which the Group and the Company reasonably expect to be applicable at a future date. The Group and the Company intend to adopt those standards when they become effective.



62NOTES TO THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2018

2 BASIS OF PREPARATION (CONTINUED)

(f) New or revised relevant accounting standards and interpretations have been issued but not yet effective for the year ended 30 June 2018

Standard/InterpretationEffective date Periods beginning on or after

IFRS 9 Financial Instruments 1 January 2018

IFRS 15 Revenue from contracts with customers 1 January 2018

IFRS 16 Leases 1 January 2019

IAS 40 amendment Transfers of Investment property 1 January 2018

IFRIC 22 Foreign Currency Transactions and Advance Considerations 1 January 2018

IFRIC 23 Uncertainty over Income Tax Treatments 1 January 2019

IAS 19 amendment Plan Amendment, Curtailment or Settlement 1 January 2019

IFRS 10 and IAS 28 amendment Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

Deferred indefinitely

IAS 28 amendment Long-term Interests in Associates and Joint Ventures 1 January 2019

* 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 directors are of the opinion that the impact of the application of the remaining Standards and Interpretations will be as follows:

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 includes changes in the measurement bases of 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 and the Company.

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

The Group and the Company are currently in the process of assessing the impact of the amendments on these consolidated and separate financial statements.


63


(f) New or revised relevant accounting standards and interpretations have been issued but not yet effective for the year ended 30 June 2018 (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.

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

The Group and the Company are currently in the process of assessing the impact of the amendments on these consolidated and separate financial statements

IFRS 16 Leases

IFRS 16 was published in January 2018. 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 has one 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 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.


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




64


(f) New or revised relevent accounting standards and interpretations have been issued but not yet effective for the year ended 30 June 2018 (continued)

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.

Plan Amendment, Curtailment or Settlement (Amendment to IAS 19)

The IASB’s amendments to IAS 19 address the accounting when a plan amendment, curtailment or settlement occurs during a reporting period.

The amendments clarify that:

• on amendment, curtailment or settlement of a defined benefit plan, it is now mandatory for entities to use the updated actuarial assumptions to determine the current service cost and net interest for the period; and

• the effect of the asset ceiling is disregarded when calculating the gain or loss on any settlement of the plan and is dealt with separately in other comprehensive income (OCI).

The amendments should be applied prospectively to plan amendments, curtailments or settlements that occur on or after 1 January 2019, with earlier application permitted.

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)

The amendments require the full gain to be recognised when assets transferred between an investor and its associate or joint venture meet the definition of a ‘business’ under IFRS 3 Business Combinations. Where the assets transferred do not meet the definition of a business, a partial gain to the extent of unrelated investors’ interests in the associate or joint venture is recognised. The definition of a business is key to determining the extent of the gain to be recognised.

The IASB has decided to defer the effective date for these amendments indefinitely. Adoption is still permitted

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

Long-term Interests in Associates and Joint Ventures (Amendment to IAS 28)

The amendments clarify that an entity applies IFRS 9 to long-term interests in an associate and joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.

The amendments apply for annual periods beginning on or after 1 January 2019. Early adoption is permitted.



65

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.



66

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:

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



67


(b) Foreign currency (continued)

(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.

(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.

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

Non-derivative financial assets comprise 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) Other Investments

Other investment includes investments in equity and preference shares for which the group does not have control nor significant influence over the investee. These investments are measured at cost, less any impairement losses. These investments do not have a quoted active price when the investment is derecognised, the gain or loss is charged to profit or loss.



68


(c) Financial instruments (continued)

Non-derivative financial instruments (continued)

(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.

(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.

(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.



69


(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 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.




3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(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:

Asset Category Rate of Depreciation

a. Freehold Land Nil

b. Freehold Buildings 2% - 5% p.a

c. Plant and Machinery 4% - 33% p.a

d. Furniture and office Equipment 10 - 33% p.a

e. IT and Computer Equipment 25 - 33% p.a

f. Motor Vehicles 6% - 15% p.a

g. Laboratory Equipment 10% p.a

h. Freezers 15% p.a

i. Crates 25% p.a

j. Work in Progress Nil

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


71


(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.

(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.



72


(f) Intangible assets and goodwill (continued)

Goodwill (continued)

(i) Recognition and measurement (continued)

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.

(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.



73


(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.

• 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. These have been further elaborated in Note 4(a).

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.

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%.



74


(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 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.

Spare parts are initially classified as inventory. When a replacement is made to an existing asset, these are is then expensed out or reclassified as PPE depending on their value. Only spare parts above MUR 5,000 are capitalised upon repairs.

An allowance for slow moving spare parts is determined using a combination of factors including the overall quality and ageing of the stocks.

The amount of any write down inventories to net realisable value is recognised as an expense in the period the write down occurs.



75


(l) 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.

Equity accounted investees and Other investments

An impairment loss in respect of an equity accounted investee and/or other investment 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.



76


(l) Impairment (continued)

(i) Non-derivative financial assets (continued)

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.



77


(m) 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.



78


(m) Employee benefit obligations (continued)

(ii) Employee benefits obligations (continued)

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.

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.

(n) 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.

Risk and rewards are generally transferred upon delivery of goods. For cash sales, a cash invoice is issued to the client upon payment once goods have been delivered. For credit sales, the client signs on the credit invoice to acknowledge receipt of the goods.

(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) 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.



79


(o) 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.

(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.

(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.



80


(r) Income tax expense (continued)

(ii) Deferred tax (continued)

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.

(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.



81


(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.

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.

Measurement of fair values and valuation techniques used for biological assets have been detailed in Note 20(b).

(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 price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at 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.



82

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) 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.

(f) 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.



83


4 DETERMINATION OF FAIR VALUES (CONTINUED)

(f) 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

ConsolidatedLoans and receivables

Designated at fair value

Other financial liabilities Total

30 Jun 2018 Rs’000 Rs’000 Rs’000 Rs’000

Financial assets not measured at fair valueTrade and other receivables * 786,410 - - 786,410 Cash and cash equivalents 77,285 - - 77,285

863,695 - - 863,695

Financial liabilities not measured at fair value Borrowings - - 821,809 821,809 Bank overdrafts - - 416,392 416,392 Trade and other payables - - 387,103 387,103

- - 1,625,304 1,625,304

* Trade and other receivables excludes prepayments.

The fair value information of non financial assets have been disclosed in the respective notes:

(i) Property, plant and equipment: Note 13

(ii) Biological assets : Note 20(b)

30 Jun 2017Financial assets not measured at fair valueTrade and other receivables * 719,297 - - 719,297 Cash and cash equivalents 121,109 - - 121,109

840,406 - - 840,406


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


84

Carrying amounts Fair value

SeparateLoans and receivables


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

854,943 - - 854,943 - - - -

Financial liabilities not measured at fair value Borrowings - - 601,056 601,056 - - - - Bank overdrafts - - 325,147 325,147 - - - - Trade and other payables - - 356,661 356,661 - - - -

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

* Trade and other receivables excludes prepayments.


4 DETERMINATION OF FAIR VALUES (CONTINUED)

(f) Fair value hierarchy (continued)

Carrying amounts

SeparateLoans and receivables


Other financial liabilities Total

30 June 2018 Rs’000 Rs’000 Rs’000 Rs’000

Financial assets not measured at fair valueTrade and other receivables * 637,346 - - 637,346 Cash and cash equivalents 24,286 - - 24,286

661,632 - - 661,632


- - 1,112,980 1,112,980

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.

Measurement of fair values and valuation techniques used for property plant and equipment and biological assets have been detailed in Note 13 and 20(b) respectively.


85

5. FINANCIAL RISK MANAGEMENT

Financial 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.

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.




5 FINANCIAL RISK MANAGEMENT (CONTINUED)

(i) Credit risk (continued)

At 30 June 2018, 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

622,327 343,209 206,738 50,680 10,701 10,999 2018

2017 442,380 257,305 147,188 24,540 6,219 7,128

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

413,112 204,684 156,164 37,172 4,093 10,999 2018

2017 308,720 136,084 140,310 21,324 3,874 7,128

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.

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


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Balance at 1 July 40,179 29,934 7,887 27,151 Charge for the year 8,861 30,246 - 320 Recovered (221) (887) (221) (527)Write off (1,382) (19,114) (1,382) (19,057)

Balance at 30 June 47,437 40,179 6,284 7,887

At 30 June 2018, at Group level, there was an impairment loss of Rs7.3 m (2017: Rs 30.2 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 2018 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.


87



(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 23. 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 value

Less than one 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 June 2018Non-derivative financial instrumentsBank overdrafts 416,392 416,392 - - 416,392

Borrowings 821,809 771,938 47,341 35,526 854,805

Trade and other payables 387,103 387,103 - - 387,103

1,625,304 1,575,433 47,341 35,526 1,658,300

At 30 June 2017Non-derivative financial instrumentsBank overdrafts 401,521 401,521 - - 401,521 Borrowings 813,237 779,695 70,426 - 850,121 Trade and other payables 289,724 289,724 - - 289,724

1,504,482 1,470,940 70,426 - 1,541,366




(ii) Liquidity risk (Continued)

Contractual cash flows

Carrying value

Less than one 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 June 2018Non-derivative financial instrumentsBank overdrafts 299,414 299,414 299,414

Borrowings 654,463 646,566 15,979 17,421 679,966

Trade and other payables 159,103 159,103 - - 159,103

1,112,980 1,105,083 15,979 17,421 1,138,483

At 30 June 2017Non-derivative financial instrumentsBank overdrafts 325,147 325,147 - - 325,147 Borrowings 601,056 576,363 49,781 - 626,144 Trade and other payables 356,661 356,661 - - 356,661

1,282,864 1,258,171 49,781 - 1,307,952

(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.


89



(iii) Market risk (continued)

Foreign currency 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

2018Australian Dollar 2,562 3,445 2,562 3,445

Euro 15,911 25,434 13,826 14,664

Mauritian Rupee 727,467 1,544,150 586,151 1,067,364

Pound Sterling 731 123 731 -

South African Rand 30,246 15,005 30,246 14,975

United States Dollar 53,680 24,308 28,116 12,533

Seychelles Rupee 13,388 1,262 - -

Mozambican Metical 19,710 11,577 - -

863,695 1,625,304 661,632 1,112,981

2017Australian Dollar 4,262 3,353 4,262 3,353Euro 14,629 6,865 11,664 5,525Mauritian Rupee 726,085 1,403,583 781,427 1,223,758Pound Sterling 569 - 569 -South African Rand 16,382 39,730 16,382 38,238United States Dollar 58,087 22,273 40,848 11,990Seychelles Rupee 10,813 28,478 - -Mozambican Metical 9,788 200 - -

840,615 1,504,482 855,152 1,282,864

The following exchange rates were applied during the year:

AVERAGE RATE SPOT RATE

2018 2017 2018 2017

Rs Rs Rs Rs

Euro 41.26 39.5 41.66 40.91

Australian Dollar 26.95 25.85 26.42 27.48

South African Rand 2.69 2.65 2.6 2.77

United States Dollar 35.81 34.8 35.76 35.86

Mozambican Metical 0.56 0.65 0.61 0.61

Seychelles Rupee 2.75 2.75 2.57 2.81

Pound Sterling 46.78 46.1 47.04 46.51






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.

CONSOLIDATED

Appreciation/ (depreciation)

in foreign exchange rates

Effect on profit or loss

Effect on Equity




Effect on equity

2018 2018 2018 2017 2017 2017

% Rs’000 Rs’000 % Rs’000 Rs’000

United States Dollar 10 2,937 (2,937) 10 3,581 (3,581) (10) (2,937) 2,937 (10) (3,581) 3,581

South African Rand 10 1,524 (1,524) 10 (2,335) 2,335 (10) (1,524) 1,524 (10) 2,335 (2,335)

Euro 10 (952) 952 10 776 (776) (10) 952 (952) (10) (776) 776

Mozambican Metical 10 813 (813) 10 959 (959) (10) (813) 813 (10) (959) 959

Australian Dollar 10 (88) 88 10 91 (91) (10) 88 (88) (10) (91) 91

Pound Sterling 10 61 (61) 10 57 (57) (10) (61) 61 (10) (57) 57

Seychelles Rupee 10 1,213 (1,213) 10 (1,767) 1,767 (10) (1,213) 1,213 (10) 1,767 (1,767)


91





Foreign currency sensitivity analysis (continued)

SEPARATE




Effect on equity




Effect on equity

2018 2018 2018 2017 2017 2017

% Rs’000 Rs’000 % Rs’000 Rs’000

United States Dollar 10 1,556 (1,556) 10 2,886 (2,886) (10) (1,556) 1,556 (10) (2,886) 2,886

South African Rand 10 1,527 (1,527) 10 (2,186) 2,186 (10) (1,527) 1,527 (10) 2,186 (2,186)

Euro 10 (84) 84 10 614 (614) (10) 84 (84) (10) (614) 614

Australian Dollar 10 (88) 88 10 91 (91) (10) 88 (88) (10) (91) 91

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.





Interest rate risk (continued)

The interest rate profile of the financial assets and financial liabilities of the Group and the Company at 30 June 2018 was:

Variable rate instruments

Consolidated SeparateConsolidated and separate Consolidated Separate

Consolidated and separate

2018 2018 2018 2017 2017 2017

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

Borrowings (821,809) (654,463) 3.50% -7.25% (813,237) (601,056) 3.80% -7.25%

Bank overdrafts (416,392) (299,414) 4.75%-21.75% (401,521) (325,147) 4.75%-28.5%

Cash and cash equivalents 77,285 24,286 2%-5% 121,109 22,356 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 Equity

100bp Increase

100bp Decrease

100bp Increase

100bp Decrease

Rs’000 Rs’000 Rs’000 Rs’000

30 Jun 2018Variable rate instruments:Interest on borrowings (8,218) 8,218 (8,218) 8,218 Interest on bank overdrafts (4,164) 4,164 (4,164) 4,164 Interest on cash and cash equivalents 773 (773) 773 (773)Cash flow sensitivity (net) (11,609) 11,609 (11,609) 11,609

30 Jun 2017Variable rate instruments:Interest on borrowings (8,132) 8,132 (8,132) 8,132 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) (10,936) 10,936 (10,936) 10,936


93




Interest rate risk (continued)

Interest rate sensitivity analysis (continued)

Separate

Profit or loss Equity

100bp Increase

100bp Decrease

100bp Increase

100bp Decrease

Rs’000 Rs’000 Rs’000 Rs’000



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.





Capital risk management (continued)

Gearing Ratio


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Total borrowings and bank overdrafts 1,238,201 1,214,758 953,877 926,203 Less : Cash and bank balances (77,285) (121,109) (24,286) (22,356)Adjusted Net Debt 1,160,916 1,093,649 929,591 903,847

Total Equity 1,867,588 1,788,464 1,524,518 1,509,407

Adjusted net debt to equity 62% 61% 61% 60%

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.

· Production Agro Business: poultry farming, distribution of chicken, manufacture and distribution of animal feeds.

· Distribution and others; food and non-food and grocery products;

· Production others: ice cream, yoghurt and rice & other frozen food items.


95


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 informationProduction

Agro-BusinessProduction

OthersDistribution and others Total

Rs’000 Rs’000 Rs’000 Rs’000

Consolidated

Year ended 30 June 2018External Revenue 1,642,535 312,278 2,365,678 4,320,491 Segment revenue 1,642,535 312,278 2,365,678 4,320,491

Segment profit from operating activities 105,086 13,307 53,502 171,895

1,666,734 180,081 1,803,191 3,650,006 Segment assetsSegment liabilities 590,859 307 1,110,643 1,701,809 Shareholders fund 814,007 153,964 663,200 1,631,171 Non-controlling interest 224,779 11,168 470 236,417 Current and deferred taxation 37,089 14,642 28,878 80,609

3,650,006

Other segment items

- Purchase of property, plant and Equipment 68,930 29,623 33,612 132,165

- Depreciation 48,916 18,038 60,313 127,267

* These relates to consolidation adjustments



6 SEGMENT REPORTING (CONTINUED)

Segment information (continued)Production

Agro-BusinessProduction

OthersDistribution and

others Total

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

Year ended 30 June 2017External Revenue 1,563,650 299,366 2,316,733 4,179,749

Segment revenue 1,563,650 299,366 2,316,733 4,179,749

Segment profit from operating activities 90,984 1,669 107,401 200,054

Segment assets 1,340,843 204,166 1,879,299 3,442,308

Segment liabilities 511,670 46,861 1,024,101 1,582,632 Shareholders fund 674,614 140,645 855,145 1,670,404 Non-controlling interest 105,162 11,517 1,381 118,060 Current and deferred taxation 49,397 5,143 16,672 71,212

3,442,308

Other segment items- Purchase of property, plant and Equipment 62,132 17,455 99,122 178,709 - Depreciation 53,075 14,038 56,893 124,006

* These relates to consolidation adjustments.

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.

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

2018 2017

Rs’000 Rs’000

RevenueMauritius 4,054,819 4,025,063 All foreign countries:Mozambique 175,400 127,246 Seychelles 90,272 27,440

4,320,491 4,179,749

Non-current assetsMauritius 1,707,287 1,571,699 All foreign countries:Mozambique 101,560 103,984 Seychelles 6,886 839

1,815,733 1,676,522


97


7 REVENUE

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


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Sales of goods 4,320,491 4,179,749 2,419,959 2,379,382

8 PROFIT FROM OPERATING ACTIVITIES

The following items have been (credited)/charged in arriving at profit from operating activities:


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Dividend income - - (50,215) (130,564)Rental income from investment property - - (47,693) (47,693)Depreciation on property, plant and equipment :- Owned assets 106,552 88,665 48,379 43,617 - Assets under finance leases 20,715 35,341 16,579 15,886

Amortisation of premiums on leasehold land 424 572 424 572 Operating lease expenses 59,582 59,458 59,582 59,458 Stock written off 37,150 11,165 - - Provision for bad debts 8,861 30,246 - 320

Profit on disposal of property plant and equipment 1,134 123,670 1,106 949 Cost of inventories expensed:- Raw materials 1,571,610 1,414,276 226,177 203,965 - Finished goods 1,946,362 2,054,109 1,721,880 1,794,481 Staff cost (Note 9) 427,276 337,455 186,495 120,585 Repairs and maintenance 18,221 17,721 16,570 16,093

9 STAFF COST


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Wages and salaries 384,832 313,170 157,969 109,170 Social security and pension costs 42,444 24,285 28,526 11,514

427,276 337,455 186,495 120,585

Number of persons employed at year end:

2018 2017 2018 2017

Number Number Number Number

Full time 1,138 1,075 432 408 Part time 250 240 164 146

1,388 1,315 596 554



10 NET FINANCE COSTS


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Interest income (11,543) (4,339) (11,508) (10,332)Foreign exchange transaction gains (21,046) (553) (5,508) (4,550)

(32,589) (4,892) (17,016) (14,882)

Interest expense:- Overdrafts 34,959 45,232 15,500 18,685 - Loans 20,864 19,910 20,864 19,910 - Finance leases 4,061 7,923 3,869 4,560 - Other interest 18,440 4,897 6,638 7,916

78,324 77,962 46,871 51,071

Net finance costs 45,735 73,070 29,855 36,189

11 INCOME TAX EXPENSE


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Income tax based on adjusted profits at 15% (2017: 15%) 7,036 15,410 - -

Deferred taxation (Note 25) (591) (3,613) (5,406) (29,365)Corporate social responsibility 1,285 2,238 - -

7,730 14,035 (5,406) (29,365)

Reconciliation of effective taxationProfit before taxation 126,159 128,110 71,779 (66,352)

Income tax at 15% (2017: 15%) 18,924 19,217 10,767 (9,953)Non-deductible expenses (17,726) 47,347 (21,919) 40,997 Exempt income 3,080 (52,605) 11,152 (31,044)Unrecognised tax losses 2,147 1,412 - - Effect of tax rates in foreign jurisdiction 611 39 - -

7,036 15,410 - -

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 of Rs 106,569,635 (2017 – Rs 7,020,000) on 36,730,266 (2017 - 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 2018.


99


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 01 July 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 June 2017 194,117 899,817 23,797 1,063,302 564,027 253,379 41,764 3,040,203

At 01 July 2017 194,117 899,817 23,797 1,063,302 564,027 253,379 41,764 3,040,203 Additions - 6,000 1,320 39,324 24,614 14,982 45,925 132,165 Disposals - (3,136) - (875) - (26,209) - (30,220)Transfer - (8,789) 1,365 41,078 417 8,310 (42,381) - Revaluation 21,509 29,792 4,926 - (8,737) - 15 47,505 Foreign currency translation - 5,209 - 1,274 1,510 1,742 (104) 9,631 Balance at 30 June 2018 215,626 928,893 31,408 1,144,103 581,831 252,204 45,219 3,199,284

Accumulated depreciation/ and impairment lossesAt 1 July 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 June 2017 - 75,794 3,532 717,280 423,210 169,053 - 1,388,869

At 1 July 2017 - 75,794 3,532 717,280 423,210 169,053 - 1,388,869 Depreciation for the year - 21,862 931 41,540 39,049 23,885 - 127,267 Foreign currency translation - 131 - 262 63 70 - 526 Revaluation - (70,066) (2,301) - (3,513) - - (75,880)Disposal adjustment - (65) - (160) - (22,964) - (23,189)Balance at 30 June 2018 - 27,656 2,162 758,922 458,809 170,044 - 1,417,593

Carrying amounts:Balance as 30 June 2018 215,626 901,237 29,246 385,181 123,022 82,160 45,219 1,781,691

Balance as 30 June 2017 194,117 824,023 20,265 346,022 140,817 84,326 41,764 1,651,334



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 30 June 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 June 2017 18,519 133,477 377,098 365,806 185,051 17,988 1,097,939 Additions - 302 16,967 10,720 11,817 16,181 55,987 Transfer - 248 25,287 - 1,359 (26,894) - Revaluation 481 (1,178) - - - - (697)Disposals - - - - (8,176) - (8,176)Reclassification to investment property - - - - - - - Balance at 30 June 2018 19,000 132,849 419,352 376,526 190,051 7,275 1,145,053

Accumulated depreciation and impairment lossesBalance at 30 June 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 June 2017 - 10,032 278,310 323,599 127,750 - 739,691 Depreciation for the year - 2,635 17,799 27,043 17,481 - 64,958 Revaluation - (12,667) - - - - (12,667)Disposal adjustment - - - - (8,176) - (8,176)Balance at 30 June 2018 - - 296,109 350,642 137,055 - 783,806

Carrying amounts:At 30 June 2018 19,000 132,849 123,243 25,884 52,996 7,275 361,247

At 30 June 2017 18,519 123,445 98,788 42,207 57,301 17,988 358,248


101



i) Security

The movable and immovable assets are subject to a floating charge for Rs 1,793M. 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 June 2018 by Broll Indian Ocean Ltd, Chartered Valuation Surveyors affiliated to the CBRE network whereas for Meaders Feeds Ltd, CDDS Land Surveyors and Property Valuer has valued the property.

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 independent valuers used the Sales Comparison and the Depreciated Replacement Cost approach to determine the valuation. Any gain or loss arising from a change in fair value is recognised in comprehensive income. The fair value measurement for the land and buildings has been categorised as a level 3 fair value based on the inputs for the valuation technique used.


Rs’000 Rs’000Land 93,290 19,000 Buildings 318,189 129,700 Fair value at 30 June 2018 411,479 148,700

Sensitivity

The significant unobservable inputs used in the fair value measurement categorised within Level 3 of the fair value hierarchy of the entity’s portfolios of buildings are per the below:

- Depreciation rate

Significant increase/ (decrease) in estimated depreciation value would result in a significantly higher/ (lower) fair value measurement.

(-5%) (+5%)

Rs’000 Rs’000The Group 40,628 40,228 The Company 2,200 2,100

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


Rs’000 Rs’000

At 30 June 2018 1,259,824 365,119

At 30 June 2017 1,255,175 368,191




i) 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 2018 and they are of opinion that the carrying amount reflects the fair value of the land and buildings.

ii) 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:


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Leased motor vehiclesCarrying amount 40,663 45,942 40,457 54,247 Depreciation charge 13,550 13,122 13,274 13,991 Leased plant and machineryCarrying amount 89,543 123,688 20,765 14,010 Depreciation charge 7,164 22,915 3,304 1,895

14 INVESTMENT PROPERTY

SEPARATE

2018 2017

Rs’000 Rs’000

CostAt 1 July 515,909 492,409 Transfer from property, plant and equipment - 23,500 Addition 3,332 -

519,241 515,909

Accumulated depreciationAt 1 July 11,545 4,290 Charge for the year 7,910 7,255

At 30 June 19,455 11,545

Carrying amountsAt 30 June 499,786 504,364

During the year there has been no direct operating expenses relating to Investment property.


103


15 INTANGIBLE ASSETS AND GOODWILL

Reconciliation of carrying amount


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

CostAt 1 July and 30 June 120,652 120,652 105,743 105,743

Amortisation At 1 July 114,843 114,843 105,743 105,743 Charge for the year - - - -

At 30 June 114,843 114,843 105,743 105,743

Carrying amountsAt 30 June 5,809 5,809 - -

There is no impairment recognised for the year ended 30 June 2018 and 2017.

Intangible assets and goodwill are as follows:

SEPARATE AND CONSOLIDATED CONSOLIDATED

Brands & licences

Computer Software and distribution

rights

Goodwill on acquisition of

Peninsula Rice Milling Ltd

Goodwill on Acquisition of Poulet Arc Ciel

Ltée Total

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

CostAt 1 July 2017 and 30 June 2018 105,743 2,474 4,000 8,435 120,652

AmortisationAt 1 July 2017 105,743 2,210 2,683 4,207 114,843 Charge for the year - - - - -

At 30 June 2018 105,743 2,210 2,683 4,207 114,843

Carrying amountsAt 30 June 2018 - 264 1,317 4,228 5,809

At 30 June 2017 - 264 1,317 4,228 5,809



16 (a) INVESTMENTS IN SUBSIDIARIES

2018 2017

Rs’000 Rs’000

Separate

CostAt 1 July 844,641 766,297 Additions 47,547 78,344 Reduction of capital (52,600) - At 30 June 839,588 844,641

ImpairmentAt 1 July 252,118 116,963 Charge for period- MFLDA* - 133,155 Charge for period- Société Enatou - 2,000 At 30 June 252,118 252,118

Carrying amountsAt 30 June 587,470 592,523

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 Rs 133 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.

There were indicators at 30 June 2018, year end, that the Company’s main investments in subsidiaries, namely Moçambique Farms Limitada, Peninsula Rice Milling Ltd and HWFRL Investments Ltd may be impaired as they have faced deteriorating financial performance for a number of years or in the current year. In addition, Supercash Ltd had a net liability position as at 30 June 2018.

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 their carrying value. Based on management’s assessment, no impairment was recognised in respect of investment in subsidiaries for the year ended 30 June 2018.

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 Rs 12.6 million.

• 5% increase/(decrease) in the forecast annual revenue growth rate would result in increase/(decrease) in recoverable amount by Rs 73.9 million.


105


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

2018 2017 2018 2017

% % Rs’000 Rs’000

Société Enatou Mauritius Ordinary 100 100 - - 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 5 52,605 Property developmentMoçambique Farms Limitada Mozambique Loan 100 75 143,700 107,799

Poultry farming and sales of chicken

HWFRL Investments Ltd Mauritius Investment 100 100 - - Investment holdingHWFRL Investments Ltd Mauritius Loan 100 100 164,393 152,747 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 Retail

Innodis Poultry Ltd Mauritius Ordinary 100 100 150,000 150,000 Poultry farming and sales of chicken

587,470 592,523

The Company, indirectly, holds investments in the following subsidiaries:

Name of subsidiariesCountry of incorporation Effective holding Principal activity

2018 2017

% %

Société Narien Mauritius 100 100 Property holding

Redbridge Investments Ltd Mauritius 100 100

Property development

Société Centre Point Mauritius 50.1 50.1 Property development

Moçambique Farms Limitada Mozambique 100 75

Broiler growing and processing

Poulet Arc-en-Ciel Ltée Mauritius 100 100 Poultry farming and sales of chicken

Green 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.


106NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2018

16 (b) NON-CONTROLLING INTERESTS

The following table summarises the information relating to each of the Group’s subsidiaries that has a material NCI, before any intra-group eliminations.

Meaders Feeds Ltd

Green Island Milling Limited


LtdMeaders

Seychelles

NCI percentage 49% 40% 49.9% 20%

Rs’000 Rs’000 Rs’000 Rs’000

As at 30 June 2018Non-current assets 453,929 29,704 - 6,886 Current assets 399,152 - 1,222 18,355 Non-current liabilities (74,453) - - (39)Current liabilities (323,235) (1,783) (281) (17,018)Net assets 455,393 27,921 941 8,184

Carrying amount of NCI 223,143 11,168 470 1,637

Revenue 1,137,078 - - 90,272

Profit/(loss) 24,508 (872) (399) 1,988 OCI (2,710) - - - Total comprehensive income 21,798 (872) (399) 1,988

Profit/(loss) allocated to NCI 12,009 (349) (199) (398)

OCI allocated to NCI (1,328) - - - Total comprehensive income allocated to NCI 10,681 (349) (199) (398)

Cash flows generated from/(used in) operating activities 41,999 (349) (199) 4,212 Cash flows used in investment activities (21,303) - - (6,232)Cash flows (used in)/generated from financing activities (111,248) - - - Net movement in cash and cash equivalents (90,552) (349) (199) (2,020)

Dividends paid to non-controlling interests during the year 19,600 - 9,955 -


107

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2018

16.(b) NON-CONTROLLING INTERESTS (CONTINUED)

Meaders Feeds Ltd

Moçambique Farms Limitada

Green Island Milling Limited


Ltd

NCI percentage 49% 25% 40% 49.90%

Rs’000 Rs’000 Rs’000 Rs’000As at 30 June 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

41,076 2,003 (370) 60,299 Profit/(loss) allocated to NCI (1,017) - - - OCI allocated to NCITotal 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 interests during the year 24,500 - - 54,596



17 EQUITY-ACCOUNTED INVESTEES2018 2017

Rs’000 Rs’000

ConsolidatedAt 1 July 1,126 - Share of profit of equity accounted investees - 1,126

At 30 June 1,126 1,126

2018 2017Separate Rs’000 Rs’000

CostAt 1 July and 30 June 23,146 23,146

Accumulated impairmentAt 1 July 23,146 23,146 Impairment - -

23,146 23,146

Carrying amountsAt 30 June - -

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

2018 2017Promotion 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.


109


18 OTHER INVESTMENTS

2018 2017

Unquoted Unquoted

Consolidated and separate Rs’000 Rs’000

Cost:At 1 July and 30 June 209 209

Details of the Group’s and Company’s unquoted investments are:

Name of CompaniesCountry of incorporation

Description of shares held

Value of investments

Rs’000

Progos Mauritius Ordinary 50

Ecocentre Ltée Mauritius Ordinary 30

Ecocentre Ltée Mauritius Preference 90

SIT Land Holdings Ltd Mauritius Ordinary 39 209

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 RECEIVABLES

Consolidated and separate

Rs’000

Premiums on acquisition of leasehold landCostAt 1 July 2017 & 30 June 2018 23,102

AmortisationAt 1 July 2017 10,731 Charge for the year 424

At 30 June 2018 11,155

Carrying amountsAt 30 June 2018 11,947

At 30 June 2017 12,371

Premiums paid on acquisition of leasehold land are amortised over the lease terms ranging between 15 and 50 years.



20.(a) INVENTORIES


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Raw materials 294,788 351,799 68,370 75,774 Finished goods 507,970 448,983 436,612 398,678 Work in Progress 3,312 1,489 3,312 1,569 Goods in transit 11,169 - - - Consumables 1,598 1,026 1,136 1,378 Spare parts 36,555 3,802 4,679 3,802

855,392 807,099 514,109 481,201

Cost of inventories expensed 3,517,973 3,468,385 1,948,057 1,998,446

All inventories are recorded at lower of cost and net realisable value.

During the year, the Group inventories have been reduced by Rs 37,150,206 (2017 – Rs 11,165,405) as a result of write down. The write down is included in ‘cost of sales’.

20.(b) BIOLOGICAL ASSETS

The classification of biological assets between non-current and current is as follows:

CONSOLIDATED

2018 2017

Rs’000 Rs’000

Bearer biological assetsNon – current 7,702 5,673 Current 43,569 33,422

At June 30 51,271 39,095

Consumable biological assetsNon – current - - Current 42,446 38,778

At June 30 42,446 38,778

Total Biological Assets at 30 June 93,717 77,873


111


20. (b) BIOLOGICAL ASSETS (CONTINUED)

The reconciliation of biological asset movement:

CONSOLIDATED

2018 2017

Rs’000 Rs’000

At July 1 77,873 75,620 Purchases 231,256 149,361 Sales/transfer to inventories (443,432) (459,794)Net increase due to hatching 222,686 311,073 Change in fair value less estimated costs to sell 5,335 1,613 At June 30 93,718 77,873

CONSOLIDATED

2018 2017

Rs’000 Rs’000

At July 1 39,095 46,509 Additions 17,724 12,361 Depletion (3,991) (4,948)Depreciation charge (1,556) (14,827)At June 30 51,272 39,095

(i) Measurement of fair values

Fair value hierarchy

The fair value measurements for consumable biological assets amounting to Rs 42,446,000 (2017 : Rs 38,778,000) 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.



20.(b) BIOLOGICAL ASSETS (CONTINUED)

(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 techniquesSignificant unobservable inputs

Livestock

Livestock 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 rateHatchability rateYield rate

Type Valuation techniqueSignificant unobservable inputs

Output produced during the period

Sensitivity of the input to value

Hatchable eggs Marked to market Hatchability rate (%) 2018: 824,282 2017: 688,236

5% increase/(decrease) in hatchability rate would result in increase/(decrease) in fair value by Rs 754,647

Livebroilers Marked to market Mortality rate (%) 2018: 216,925 2017: 234,176

5% increase/(decrease) in mortality rate would result in (decrease)/increase in fair value by Rs (1,439,013)

Yield rate (%) 2018: 216,925 2017: 234,176

5% increase/(decrease) in yield rate would result in increase/(decrease) in fair value by Rs 951,316

21 TRADE AND OTHER RECEIVABLES


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Trade receivables – gross 669,765 482,559 419,396 316,607 Less: accumulated impairment (47,438) (40,179) (6,284) (7,887)Trade receivables – net 622,327 442,380 413,112 308,720 Amounts owed by subsidiaries - - 144,648 350,225 Amounts owed by associate 1,835 1,835 1,835 1,835 Amounts owed by related parties 516 60,080 - 319 Other receivables and prepayments 183,346 261,083 101,105 193,066

808,024 765,378 660,700 854,165

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).


113


22 SHAREHOLDERS’ EQUITY

Share capital2018 2017 2018 2017

Number Number Rs’000 Rs’000

AuthorisedOrdinary shares of Rs 10 each 50,000,000 50,000,000 500,000 500,000

Issued and fully paidOrdinary shares of Rs 10 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 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.

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.


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

As at 1 July 355,909 342,963 317,992 321,979 Revaluation 123,385 33,737 11,970 - Foreign currency translation difference/foreign operations (4,026) (6,978) - -

475,268 369,722 329,962 321,979

Deferred taxation arising on revaluation of land and building (13,582) (7,030) (2,427) 1,488 Release to retained earnings (6,783) (6,783) (5,475) (5,475)As at 30 June 454,903 355,909 322,060 317,992

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.



23 BORROWINGS


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

CurrentSecured bank loans 748,025 724,558 606,758 532,928 Lease liabilities 19,350 23,710 17,944 22,204

767,375 748,268 624,702 555,132

Non-currentSecured bank loans 24,200 23,555 - 6,378 Lease liabilities 30,234 41,414 29,761 39,546

54,434 64,969 29,761 45,924

Total borrowings 821,809 813,237 654,463 601,056

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

2018 2018 2017 2017

Rs’000 Rs’000 Rs’000 Rs’000

Short Term Loan MUR 3.5% - 5.0% 2018 520,390 520,390 629,305 629,305 Import Loan USD 5.5% - 6.5% 2018 163,371 163,371 35,654 35,654 Import Loan EUR 5.5% - 6.5% 2018 14,168 14,168 24,402 24,402 Import Loan ZAR 5.5% - 6.5% 2018 50,096 50,096 29,103 29,103 Import Loan AUD 5.5% - 6.5% 2018 - - 5,262 5,262 Import Loan SGD 5.5% - 6.5% 2018 - - 832 832 Long term loan MUR 7.25% 2020 24,200 24,200 23,555 23,555 Obligation under finance lease MUR 5.80% - 7.25% - 19,350 19,350 23,710 23,710 Obligation under finance lease MUR 5.80% - 7.25% - 30,234 30,234 41,414 41,414

821,809 821,809 813,237 813,237


115


23 BORROWINGS (CONTINUED)

Terms and repayment schedules (Continued)

Separate CurrencyNominal interest rate

Year of maturity

Face value

Carrying value

Face value

Carrying value

2018 2018 2017 2017

Rs’000 Rs’000 Rs’000 Rs’000

Short Term Loan MUR 3.5% - 5.0% 2018 507,190 507,190 439,990 439,990 Import Loan USD 5.5% - 6.5% 2018 35,304 35,304 33,339 33,339 Import Loan EUR 5.5% - 6.5% 2018 14,168 14,168 24,412 24,412 Import Loan ZAR 5.5% - 6.5% 2018 50,096 50,096 29,103 29,103 Import Loan AUD 5.5% - 6.5% 2018 - - 5,252 5,252 Import Loan SGD 5.5% - 6.5% 2018 - - 832 832 Long term loan MUR 7.25% 2020 - - 6,378 6,378 Obligation under finance lease MUR 17,944 17,944 22,204 22,204 Obligation under finance lease MUR 29,761 29,761 39,546 39,546

654,463 654,463 601,056 601,056

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 3.5% and 6.5% (2017 – between 3.80% and 6.25%) per annum.

Bank overdrafts

The bank overdrafts and other facilities are secured by floating charges of Rs 1,795,000,000 (2017 – Rs 906,900,000) 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


payments Interest


lease payments

2018 2018 2018 2017 2017 2017

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

Less than one year 22,019 2,669 19,350 28,119 4,409 23,710 Between one and five years 32,605 2,371 30,234 46,203 4,789 41,414

54,624 5,040 49,584 74,322 9,198 65,124

Separate Future

minimum lease payments Interest


lease payments


payments Interest


lease payments

2018 2018 2018 2017 2017 2017

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

Not later than one year 20,525 2,581 17,944 25,834 3,630 22,204 Later than one year and not later than five years 32,124 2,363 29,761 43,447 3,901 39,546

52,649 4,944 47,705 69,281 7,531 61,750

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.



24 RETIREMENT BENEFITS OBLIGATIONS


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Amounts recognised in the statements of financial position at year endPresent value of funded obligations 376,435 340,150 296,279 267,847 Less amount deductible in accordance with ERA (56,768) (52,268) (22,532) (22,532)

319,667 287,882 273,747 245,315 Fair value of plan assets (243,162) (209,732) (239,994) (209,732)Present value of net obligations 76,505 78,150 33,753 35,583

Liability recognised in statement of financial position at year end 76,505 78,150 33,753 35,583

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


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Current service costs 15,782 13,823 13,318 11,404 Interest costs 4,555 5,696 2,019 3,438 Fund expenses & life insurance 1,121 1,296 1,075 1,296 Contributions by employees (4,380) (3,727) (4,380) (3,727)Past service cost - (113) - (91)Curtailment/settlement (gain) (788) (38) - - Net cost for the year recognised in profit or loss 16,290 16,937 12,032 12,320 Remeasurement recognised in OCI 2,130 (4,248) 4,416 (11,838)Net cost for the year 18,420 12,689 16,448 482

Net interest cost for the year Interest on obligation 29,492 363 26,956 (1,895)Expected return on plan assets (24,937) 5,333 (24,937) 5,333 Net interest cost 4,555 5,696 2,019 3,438


117


24 RETIREMENT BENEFITS OBLIGATIONS (CONTINUED)


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Remeasurement recognised in other comprehensive income for the year:Actuarial gains/(losses) on the obligation - (13,901) - (6,311)Actuarial (losses)/ gains on the plan assets (3,068) 18,149 (3,068) 18,149 Actuarial (losses)/ gains arising from:- Financial assumptions 6,160 - 715 - - Experience adjustment (5,222) - (2,063) - Remeasurement recognised in OCI – (Loss)/Gain (2,130) 4,248 (4,416) 11,838

Changes in the Present Value of the ObligationPresent value of obligation at start of year 287,882 279,976 245,315 246,150 Effect in recognising a Defined Benefit member 2,786 - - - Past service cost - (113) - (91)Interest cost 29,492 363 26,956 (1,895)Current service cost 15,828 13,823 13,318 11,404 Benefits paid (14,549) (20,030) (13,190) (16,564)Fund expenses & life insurance (46) - - - Curtailment / settlement (gain) on obligation (788) (38) - - Expected obligation at end of year 320,605 273,981 272,399 239,004 Present value of obligation at end of year 319,667 287,882 273,747 245,315

Remeasurement recognised in OCI at end of year – gain/(loss) 938 (13,901) (1,348) (6,311)

Changes in the Fair Value of the Plan AssetsFair value of plan assets at start of period 209,732 191,223 209,732 191,223 Effect of recognising Defined Benefit member 3,063 - - - Expected return on plan assets 24,937 (5,333) 24,937 (5,333)Contributions to plan assets 20,793 20,620 20,641 20,620 Benefits paid out of plan assets (11,174) (13,629) (11,173) (13,629)Fund expenses & life insurance (1,121) (1,296) (1,075) (1,296)Expected fair value at end of year 246,230 191,585 243,062 191,585 Fair value of plan assets at end of year 243,162 209,732 239,994 209,732 Remeasurement recognised in OCI at end of year – Losses/ (Gain) 3,068 (18,147) 3,068 (18,147)

Movement in liability recognised in the statement of financial positionAt 1 July 78,150 88,653 35,583 54,927 Effect of recognising Defined Benefit member (277) - Expense recognised in the statement of comprehensive income 16,290 16,937 12,032 12,320 Actuarial loss/(gain) on unfunded retirement benefit 2,130 (4,248) 4,416 (11,838)Contributions paid (19,788) (23,192) (18,278) (19,826)At 30 June 76,505 78,150 33,753 35,583

Principal actuarial assumptions at end of yearDiscount rate (%) 6 7 6 7 Expected rate of return on plan assets (%) 6 7 6 7 Future salary increases (%) 2 3 2 3





2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Experience adjustments on:Plan liabilities (938) 13,901 1,348 6,309 Plan assets 3,068 (18,149) 3,068 (18,147)

SensitivityEffect on present value of unfunded obligations

1% Increase in Discount Rate 295,518 262,373 264,801 236,323

1% Decrease in Discount Rate 328,517 294,020 284,170 255,992

1% Increase in Salary Increase 319,952 286,487 277,000 248,703

1% Decrease in Salary Increase 302,989 268,928 271,040 242,531

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 Rs 56.7 million (2017: Rs 52.2 million) for the Group and Rs 22.5 million (2017: Rs 22.5 million) for the Company as at 30 June 2018 in respect of the Defined Contribution fund.

The major categories of plan assets at the reporting date for each category are as follows:

SEPARATE

2018 2017

Rs’000 Rs’000

Local equities 97,918 73,826 Overseas equities 86,878 75,713 Fixed interest 32,639 32,509 Cash and others 22,559 27,684

Total market value of assets 239,994 209,732 Present value of plan liability (273,747) (245,315)

Deficit (33,753) (35,583)Unrecognised actuarial loss - -

(33,753) (35,583)Reconciliation of the present value of obligationPresent value of obligation at start of year 245,315 246,150 Current service cost 13,318 11,404 Interest cost 26,956 (1,895)Past service costs - (91)Benefits paid (13,190) (16,564) Curtailment/settlement (gain) on obligation - -

Actuarial loss/ (gain) on obligation 1,348 6,311 Present value of obligation at end of year 273,747 245,315


119



SEPARATE

2018 2017

Rs’000 Rs’000

Reconciliation of fair value of plan assetsFair value of plan assets at start of year 209,732 191,223 Expected return 24,937 (5,333)Contributions paid 20,641 20,620 Benefits paid (11,173) (13,629)Actuarial loss (3,068) 18,147 Fund expenses and life insurance (1,075) (1,296)Fair value of plan assets at end of year 239,994 209,732

Expected contribution for next year

The Group and the Company are expected to contribute Rs 6 million and Rs 4 million respectively to the pension scheme for the year ending 30 June 2018 (2017 : Rs 6 million and Rs 4 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.

25 DEFERRED TAX ASSETS AND LIABILITIES

The movement in temporary differences during the year were as follows:

Consolidated

ASSETS LIABILITIES NET

2018 2017 2018 2017 2018 2017

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

Tax losses carried forward 26,395 35,267 - - 26,395 35,267 Accelerated capital allowances - - (111,690) (92,360) (111,690) (92,360)Surplus on revaluation of building - - (59,245) (48,449) (59,245) (48,449)Retirement and other obligations 13,006 13,285 - - 13,006 13,285 Provision for impairment of receivables 50,925 24,277 - - 50,925 24,277

90,326 72,829 (170,935) (140,809) (80,609) (67,980)



25 DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED)

Included in the net balance of the deferred tax liabilities as at 30 June 2018, is an amount of deferred tax assets relating to Innodis Ltd and Supercash Ltd amounting to Rs 0.5 million and Rs 6.7 million respectively which has been disclosed on a gross basis in the statement of financial position.

Separate

ASSETS LIABILITIES NET

2018 2017 2018 2017 2018 2017

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

Accelerated capital allowances - - (17,711) (26,170) (17,711) (26,170)Surplus on revaluation of building - - (45,100) (42,673) (45,100) (42,673)Retirement and other obligations 5,738 6,049 - - 5,738 6,049 Provision for impairment of investment 44,201 44,201 - - 44,201 44,201 Tax loss 13,376 15,368 - - 13,376 15,368

63,315 65,618 (62,811) (68,843) 504 (3,225)

The movements in temporary differences during the year were as follows:

Consolidated

Balance at 01 July 2016

Recognised in profit or loss

Recognised in equity

Balance at 30 June 2017




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

Property, plant and equipment (74,108) (18,252) - (92,360) (19,330) - (111,690)Revaluation of property, plant and equipment (42,992) 1,573 (7,030) (48,449) 2,786 (13,582) (59,245)Employee benefits 15,071 (1,064) (722) 13,285 (641) 362 13,006 Provisions 20,604 3,673 - 24,277 26,648 - 50,925 Tax losses carried forward 17,584 17,683 - 35,267 (8,872) - 26,395

(63,841) 3,613 (7,752) (67,980) 591 (13,220) (80,609)

Separate

Balance at 01 July 2016







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

Property, plant and equipment (16,663) (9,507) - (26,170) 8,459 - (17,711)Revaluation adjustment (44,161) - 1,488 (42,673) - (2,427) (45,100)Employee benefits 9,338 (1,277) (2,012) 6,049 (1,061) 750 5,738 Provisions 19,420 24,781 - 44,201 - - 44,201 Tax losses - 15,368 - 15,368 (1,992) - 13,376

(32,066) 29,365 (524) (3,225) 5,406 (1,677) 504


121


26 TRADE AND OTHER PAYABLESCONSOLIDATED SEPARATE

2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Trade payables 236,325 131,223 36,548 35,210 Bills payable 44,028 53,433 44,028 53,433 Accruals and other payables 106,750 105,068 62,857 69,220 Amounts owed to subsidiaries - - 15,670 198,798 Amount owed to related parties - - - -

387,103 289,724 159,103 356,661

Amounts owed to subsidiaries and related parties are unsecured, interest free and with no fixed repayment terms.

27 DIVIDENDSSEPARATE

2018 2017

Rs’000 Rs’000

Paid 31,220 31,220 Authorised and declared for payment 36,731 36,731

67,951 67,951

SEPARATE

2018 2017

Rs Rs

Dividend per share 1.85 1.85

28 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 June

2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Consolidated

Sales/(Purchases) of goods and services Associate

Salière de l’Ouest Limitée

Normal course of business (6,549) (13,176) 1,835 1,835

(6,549) (13,176) 1,835 1,835

Sales of goods and services Shareholder Altima Ltd

Normal course of business - 5 - 319

Payment for services received Shareholder Altima Ltd

Technical fees of 0.35 % of turnover is charged (8,287) (7,121) (2,337) (3,100)

Current account Shareholder Altima LtdRepayable on demand 516 62,861 516 62,861



28 RELATED PARTY TRANSACTIONS (CONTINUED)


Nature of relationship Name of related party


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Separate

Sales/(Purchases) of goods and services Subsidiary

Challenge Hypermarkets Ltd

Normal course of business - - (646) (63,025)

Subsidiary Poulet Arc en Ciel LtéeNormal course of business - (9,273) - 6,130

Subsidiary Innodis Poultry LtdNormal course of business 437,673 (632,208) (15,024) (135,773)

437,673 (641,481) (15,670) (192,668)

Payment for services received Shareholder Altima Ltd

Technical fees of 0.35 % of turnover is charged (8,287) (7,121) - -

Sales/(Purchases) of goods and services Subsidiary Supercash Ltd

Normal course of business - 4,330 37,462 53,692

Subsidiary Mauritius Farm LtdNormal course of business - (46,461) 47,884 67,072

SubsidiaryPeninsula Rice Milling Ltd

Normal course of business 37,684 37,496 3,466 46,142

SubsidiaryPoint Frais Franchise Ltd

Normal course of business - 5,825 7,209 7,153

Subsidiary Innodis Poultry LtdNormal course of business - - - 125,424

SubsidiaryRedbridge Investments Ltd

Normal course of business - - - 96


123




Nature of relationship Name of related party


2018 2017 2018 2017Separate (continued) Rs’000 Rs’000 Rs’000 Rs’000

Sales/(Purchases) of goods and services Subsidiary

Moçambique Farms Limitada

Normal course of business - - 2,893 589

SubsidiaryHWFRL Investments Ltd

Normal course of business - - - 2,890

Subsidiary Essentia LtdNormal course of business - - - 32

Subsidiary Meaders Feeds LtdNormal course of business - - 10,469 -

Subsidiary Poulet Arc en Ciel LtéeNormal course of business - - 35,249 40,988

Subsidiary Green Island Milling LtdNormal course of business - - 16 17

37,684 1,190 144,648 344,095

Sales/(Purchases) of goods and services

AssociateSalière de l’Ouest Limitée

Normal course of business - - 1,835 1,835

- - 1,835 1,835

Current account Shareholder Altima LtdNormal course of business - 5 - 319





2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Directors remuneration 31,090 47,200 16,441 34,947


Key management personnel’s emoluments 2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Short-term employment benefit 33,567 37,778 28,475 28,002 Post-employment benefit 2,451 16,152 1,942 15,516

36,018 53,930 30,417 43,518

29 OPERATING LEASE COMMITMENTS

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

Leases as Lessee


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Not later than 1 year 54,733 54,237 54,733 54,237 Later than 1 year and not later than 2 years 57,470 56,949 57,470 56,949 Later than 2 years and not later than 5 years 181,029 179,390 181,029 179,390

293,232 290,576 293,232 290,576

Leases as Lessor

2018 2017

Rs’000 Rs’000

Not later than 1 year 10,694 8,305 Later than 1 year and not later than 2 years 11,763 4,331 Later than 2 years and not later than 5 years 12,939 12,993

35,396 25,629

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.


125


30 ACQUISITION OF NON-CONTROLLING INTERESTS

Acquisition of non-controlling interest in Poulet Arc-en-Ciel Ltée

On 15 June 2017, the Group acquired the remaining 43.6% interest in the share capital of Poulet Arc-en-Ciel Ltée. Cash consideration of Rs. 46,443,000 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 Rs. 138,821,839.

2017

Rs’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:

2,017

Rs’000

Gain recognised in revaluation reserve (14,685)Loss recognised in retained earnings 1,004 Net gain recognised directly in equity (13,681)



30 ACQUISITION OF NON-CONTROLLING INTERESTS (CONTINUED)

Acquisition of non-controlling interest in Mozambique Farms Limitada

On 1 July 2017, Mozambique Farms Limitada became a wholly owned subsidiary of HWFRL Investment Ltd. Cash consideration of Rs735,813 was paid to the non-controlling shareholders.

2018

Rs’000

Recognised amounts of identifiable assets acquired at acquisition dateFinancial assets 10,813 Inventory 17,242 Property, plant and equipment 103,984 Financial liabilities (319,746)Total identifiable assets 187,707

Additional interest acquired in Poulet Arc-en-Ciel Ltée is as follows:2018

Rs’000

Cash consideration payable to non-controlling shareholders 736 Fair value of the additional interest in Poulet Arc-en-Ciel Ltée 187,707 Net gain recognised directly in equity 188,443

Net gain has been recognised directly in equity as follows:

31 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%


127


32 CAPITAL COMMITMENTS

Capital expenditure authorised at the reporting date but not yet contracted for is as follows:


2018 2017 2018 2017

Rs’000 Rs’000 Rs’000 Rs’000

Property, plant and equipment 207,415 148,400 100,380 79,575

33 CONTINGENT LIABILITIES

At 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 Rs 2.1 million (2017 - Rs 5.3 million) in favour of third parties.

34 FINANCIAL GUARANTEE

Innodis 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.

35 EVENTS AFTER THE REPORTING DATE

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 2018.


128

GPO Box 841Innodis BuildingCaudan, Port-LouisMauritius

T. (+230) 206 0800F. (+230) 466 5253

[email protected]

Documents

2018 annual report - Innodis