AUDITED ACCOUNTS - MCB Leasing

AUDITED ACCOUNTS

FINLEASE COMPANY LIMITED

YEAR ENDED JUNE 30, 2016

Dear Shareholder

The Board of Directors is pleased to present the Annual Report of Finlease Company Limited for the yearended June 30, 2016, the contents of which are listed below.

This report was approved thiBd~fDifë~tors on . .. .16 0 2816

Directo ;.:“~.~

CONTENTS PAGE

Statutory disclosures 2

Secretary’s certificate 3

Corporate governance report 4 - 4(j)

Management discussion and analysis 5 - 5(k)

Statement of Management’s Responsibility for Financial Reporting 6

Independent auditors’ report to the member 7 and 7(a)

Statement of fmancial position 8

Statement of profit or loss and other comprehensive income 9

Statement of changes in equity 10

Statement of cash flows 11

Notes to the fmancial statements 12 - 37

FINLEASE COMPANY LIMITED 2

STATUTORY DISCLOSURES - YEAR ENDED JUNE 30, 2016

All shareholders agree that the Annual Report need not comply with the paragraphs (a), and (d) to (i) ofSection 22 1(1) of the Companies Act 2001.

BY ORDER OF THE BOAR-i)

MCB ~egistry & Securities LtdSECI&ETARY

Date: ~

FINLEASE COMPANY LIMITED3

SECRETARY’S CERTIFICATE - YEAR ENDED JUNE 30, 2016

I certif~’ that, to the best of my knowledge and belief, the Company has filed with the Registrar ofCompanies all such returns as are required of the company under the Companies Act 2001.

MCB Registry &SECRETARY

Date:


CORPORATE GOVERNANCE REPORT - YEAR ENDED JUNE 30, 2016

COMPLIANCE STATEMENT

It is the policy ofthe Company to ensure the highest standard ofbusiness integrity, transparency and professionalismin all its activities to ensure that the activities within the Company are managed ethically and responsibly to enhancebusiness value for all stakeholders. As an essential part of this commitment, the board subscribes to and is fullycommitted to comply with the Code of Corporate Governance and the Guideline on Corporate Governance issuedby the Bank of Mauritius.

The board of directors has given and will continue to give due consideration to the principles of good corporategovernance which are applicable to the Company under the Code of Corporate Governance and fonris the opinionthat the Company complies with the Code of Corporate Governance in all material aspects except for sections 2(2.10), 3 (3.5), and (3.9.1).

The reasons for non compliance to the above are as follows:

• No board appraisal has been conducted since the Board was constituted in October 2014 and the Directors feelthat the composition of the board is efficient in monitoring the affairs of the company.

• All corporate governance matters are taken up at Board level as such the Company does not have a separateCorporate Governance committee.

• The Chairman of the Board is also a member of the audit committee due to the relatively small size of theCompany.

COMPANY STRUCTURE AND COMMON DIRECTORS

Finlease Co. Ltd (Finlease) is a wholly owned subsidiary of Fincorp Investment Ltd (Fincorp). The MCB GroupLimited (MCBG) owns 57% of the shares of Fincorp.

There are no common directors on the Boards of Finlease, Fincorp and MCBG.

SHAREHOLDERS HOLDING MORE THAN 5% OF THE COMPANY

The Company is wholly owned by Fincorp Investment Ltd.

DWIDEND POLICY

The Company aims to provide its shareholder with ongoing returns in the form of stable dividends. The dividendcover over the past five years is as shown below.

1.04

2015 1.38

2014 1.46

2013 0.82

2012 -

2016

FINLEASE COMPANY LIMITED4(a)


THE BOARD OF DIRECTORS

The Company’s ‘Articles of Association’ provides that the board of the company shall consist of a minimum ofthree and a maximum often directors.

Currently the board consists of six directors, made up of three executive and three independent directors. They comefrom diverse business backgrounds and possess the necessary knowledge, skills, objectivity, integrity, experienceand commitment to make sound judgments on key issues relevant to the business of the Company.

All directors are required to submit themselves for re-election every year.

DIRECTORS’ PROFILE

Bernard D’Hotman de Vihiers — Age 55 —Independent Director- Chairman ofthe Board

Holds a “Licence en Droit” delivered by the “Faculté de Droit de l’Université de la Reunion”. He was appointednotary in 1987 and has been practising as such ever since. Bernard has been the Chairman of the Chamber ofNotaries in 2003 and 2004. He also holds directorship positions in various private companies.

Sow Man (Claude) Ah Yuk Shing — Age 63 — Independent Director

Holds practicing certificates from ACCA (UK), Financial Reporting Council and MIPA to act as a publicAccountant. He has a wide and extensive experience in all fields of the accountancy profession, mainly in auditing,accounting and business consulting and has acquired practical experience in the application of IAS/IFRS. He is themanaging partner of CAYS Associates which provides Audit, Accounting and Business Consulting Services.

Main Chamary — Age 51 — Managing Director

Holds an ACII3/BSC Financial Services and an MBA in International Marketing from the University of Surrey. Hehas been appointed as General Manager of Finlease Company Limited in July 2009. Prior to joining the company,he was Manager at the Port Louis Branch of The Mauritius Commercial Bank Ltd since October 2004. Alain hasworked for the MCB Group for the last 29 years and held various positions in different sectors such as BusinessAnalyst in Financial Management Section, Senior Executive Officer in the International Division and BFCOISeychelles.

Main Law Miii — Age 57—Executive Director

Graduated in Economics with a BA (Honours) and is an Associate member of the Institute of Chartered Accountantsin England and Wales. He also holds an MBA from Cranfield University. Alain has been appointed as Deputy ChiefExecutive Officer of The Mauritius Commercial Bank Limited in July 2015 and is the Head of Retail SBU. Priorto his current position, Alain launched leasing, factoring and private banking services and acted as Project Directorfor the Business Process Re-engineering exercise initiated with Accenture. Before joining the MCB, Alain wasSenior Manager at De Chazal Du Mée’ s consulting division. He is also an Executive Director of the Board of TheMauritius Commercial Bank Ltd.

FINLEASE COMPANY LIMITED4(b)


E. Jean Mamet - Age 71 Non-Executive Director (Up to December 2015)Certified Accountant since 1975. He has worked for 40 years in the field of auditing having retired in 2003 asManaging Partner ofErnst & Young in Mauritius. He was appointed to the Board of MCB from 2003 to 2013 wherehe held the position of Vice President.

Directorship in other listed companiesUnited Basalt Products LtdIPRO Growth Fund Ltd

Francois Montocchio — Age 71 — Independent Director

Fellow of the Association of International Accountants (UK). He occupied senior positions in the Harel MallacGroup of Companies until he was appointed Chief Executive Officer of Harel Mallac & Co Ltd in 2005 up to hisretirement in 2007. He remained a Board member until May 2010. He is a past Chairperson of The MauritiusChemical and Fertiliser Industry Ltd, The Mount Sugar Estates Company Ltd and Union Sugar Estates Ltd.

Directorship in other listed companiesTerra Mauricia LtdMauritius Development Investment Trust Ltd

Jean-Michel Ng Tseung — Age 48 Executive Director

Graduated with a First Class Honours in Mathematics at the Imperial College of Science and Technology, London.He qualified as a Chartered Accountant out of the London office ofArthur Andersen in 1990 and was made a partnerthereof in Mauritius in 1997, acting during his last 4 years with the firm as Head of Audit and Business Advisorydivision. Jean-Michel joined the MCB in July 2003, coming from Ernst & Young. He has been appointed ChiefExecutive Officer of MCB Investment Holding Ltd in July 2015 and is a Non-Executive Director on the Board ofThe Mauritius Con~unercia1 Bank Limited.

DIRECTORS’ INTEREST AND DEALINGS IN SHARES

The Directors do not hold shares either directly or indirectly in the Company.

DIRECTORS’ REMUNERATION

. 2015-2016Directors (Rs)

Bernard D’Hotman De Villiers 130,000

Claude Ah Yuk Shing 130,000

Jean Mamet (Up to December 2015) 130,000

Francois Montocchio 110,000

~ Alain Chamary 4,313,679

None of the other directors received remuneration from the company.

FINLEASE COMPANY LIMITED4(c)


STATEMENT OF REMUNERATION PifiLOSOPHY

Previously directors’ remuneration was based on attendance at Board Meetings and sub-committees. At a BoardMeeting held in November 2011 a fixed fee policy was approved for the remuneration of non executive andindependent directors.

DIRECTORS’ SERVICE CONTRACTS

There are no service contracts between the company and its directors.

BOARD ATTENDANCE

Attendance for Board Meetings

Directors 28.09.2015 23.12.2015 22.03.2016 28.06.2016Bernard D’Hotman De Villiers Y Y Y YClaude Ah Yuk Shing Y N N NAlain Chamary Y Y Y YAlain Law Mm Y V Y VJean Mamet (Up to December 2015) Y Y N/A N/AFrancois Montocchio N V V VJean Michel Ng Tseung N Y Y Y

RELATED PARTY TRANSACTIONS

Related Party Transactions are taken up by the Risk Management and Conduct Review Committee. Details ofRelated Party Transactions are included in note 25 to the Financial Statements.

COMMITTEES

The Board resolved on 2 July 2010 to dissolve the Corporate Governance Committee and to take up CorporateGovernance issues at the level of the Board. The Audit Committee has been maintained and a Risk Managementand Conduct Review Committee to take up Risk Management matters and Related Party Transactions.

AUDIT COMMITTEE

Currently the members of the Audit Committee are Messrs Claude Ah Yuk Shing (Chairman), Bernard D’Hotmande Villiers and Francois Montocchio. Three Audit Committees were held on the (i) 28th September 2015, (ii) 21stDecember 2015 and, (iii) 29th March 2016

Attendance for Audit Committee

Directors 28.09.15 21.12.15 29.03.16Claude Ah Yuk Shing V Y VBernard D’Hotman De Villiers V V VFrancois Montocchio N V V

FINLEASE COMPANY LIMITED (d)


Role of the Audit Committee

The main roles and responsibilities of the committee are:

• to monitor the integrity of the financial statements of the company and any formal announcements relatmg tothe Company’s fmancial performance;

• to monitor and review the effectiveness of the Company’s Internal Audit System;

• to monitor the external auditors’ independence, objectivity and effectiveness and to make recommendations tothe Board in relation to the appointment of the external auditors and their remuneration.

The terms of reference of the Audit Committee have been approved by the Board and the Committee has satisfiedits responsibilities for the year.

RISK MANAGEMENT AND CONDUCT REVIEW COMMITTEE

The members of the Risk Management and Conduct Review Committee are. Messrs Francois Montocchio(Chairman), Claude Ah Yuk Shing, Bernard D’Hotman de Villiers, and Alain Chamary. Two meetings were heldon the (i) 21st December 2015 and, (ii) 29th March 2016.

Attendance for Risk Management and ConductCommittee

Directors 21.12.15 29.03.16Francois Montocchio Y YClaude Ah Yuk Shing Y YBernard D’Hotman De Villiers Y VAlain Chamary Y YJean Marnet (Up to December 2015) V N/A

Role of the Risk Management and Conduct Review Committee

The principal duties of the Committee shall consist in reviewing and recommending to the Board for approval therisk appetite, reviewing and exercising oversight of capital management, monitoring the risk of the differentportfolios against the set risk appetite, and advising the Board on corresponding strategies, as well as reviewing therisk management framework.

The Committee is also responsible for monitoring and reviewing related party transactions, their terms andconditions, and ensuring the effectiveness of the established procedures and compliance to the Bank of MauritiusGuidelines.

SHAREHOLDER AGREEMENT AFFECTING THE GOVERNANCE OF THE COMPANY BY THEBOARD

There is currently no such agreement.

FINLEASE COMPANY LIMITED4(e)


THIRD PARTY MANAGEMENT AGREEMENT

No such agreement presently exists.

MATERIAL CLAUSES OF THE CONSTITUTION

There are no clauses of the Memorandum and Articles of the Company deemed material enough for specialdisclosure.

AUDITORS’ FEES

The fees payable to the auditors BDO & Co Ltd for audit services were Rs. 483,000 (net of vat) (2015: Rs 460,000).

Non-audit fees payable to BDO & Co Ltd were Rs. 120,750 (net of vat) for internal control review (2015: Rs.115,000 for internal control review and certificate in respect of dividends).

RISK MANAGEMENT

RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM

The Risk Management and Conduct Review Committee, under the supervision of the board, is responsible for riskmanagement, the procedures in place within the organisation and the definition of the overall strategy for risktolerance Management and the assurance process on risk management are delegated to management which isresponsible for the design and implementation of the risk management processes and day-to-day management ofrisk. Monitoring of the risk management process is performed at the Risk Management and Conduct ReviewCommittee level.

The Company’s policy on risk management encompasses all significant business risks including physical,operational, human resources, business continuity, financial, compliance and reputational which could influencethe achievement of the Company’s objectives.

The risk management mechanisms in place include:

o A system for the ongoing identification and assessment of risk;o Development of strategies in respect of risk and definition of acceptable and non-acceptable levels of risk;o The communication of risk management policies to all levels of the organisation as appropriate, and methods

to ensure commitment, of all relevant stakeholders, to the process;o The implementation of a system of internal control that closely aligns the control effort to the nature and

importance of the risk; ando Processes to reduce or mitigate identified risks and contain them within the levels of tolerance defined by the

board and management.

FINLEASE COMPANY LIMITED4(f)


RISK IDENTIFIED

Credit Risk

The Committee shall be responsible for carrying out a regular review of the credit portfolio against credit risk appetitetargets (e.g. split of exposures between domestic and international activities, retail and corporate investors, andbetween tl~e different sectors of the economy).

In that respect, the report shall put the emphasis on credit concentration and large exposures, risk profiles of thedifferent portfolios, and asset quality of the different portfolios, measured though non-performing rates.

Furthermore, the main impaired exposures shall be disclosed to the Board with a particular focus on residual risksafter taking into consideration risk mitigating factors such as the net realizable value of collaterals, and correspondingprovisions which are to be validated by the Committee prior to submission to the Board.

Market Risk

The Committee shall review the market risk against market risk appetite approved by the Board.

It shall thus be responsible for regularly reviewing the split between the different market risk categories, that is,between short-term, medium-term, long-term borrowings.

Market Risk also covers liquidity risks, whereas in that respect, the Committee shall monitor the different liquiditytargets (such as liquid asset ratio, maturity gaps, loan to deposits ratio, depositor’s concentration, etc) against setrisk appetite.

Operational Risk

The Committee shall review the assessments and reports on operational risk against the risk tolerances approved bythe Board and ensure that the Company’s Business Continuity Plan is up-to-date.

Operational risk includes technical, human resources, security, and business continuity risks.

Furthermore, the Committee shall consider and make appropriate reports and recommendations to the Board on anysignificant departure from the pre-set risk tolerance targets, risk mitigation (e.g. insurance), and on the allocation ofcapital, if any, to the different business lines.

• Integration of internal control and risk management

The system of internal control, which is embedded in all key operations, provides reasonable rather thanabsolute assurance that the Company’s business objectives will be achieved within the risk tolerance levelsdefined by the Board. The effectiveness of the internal control systems (including financial, operational,compliance and risk management) are normally reviewed quarterly by the Committee and the review covers allinternal control systems.

• Assurance on the effectiveness of the risk management process

Regular management reporting, which provides a balanced assessment of key risks and controls, is an importantcomponent of board assurance.

FINLEASE COMPANY LIMITED4(g)


INTERNAL AUDIT RESPONSIBILITIES AND FUNCTIONS

The Internal Audit BU ofMCB Limited provides, under a service level agreement, internal audit services to FinleaseCompany Limited. As such, the Internal Audit BU ensures that the quality of internal audit services provided toFinlease Company Limited is aligned with recognized best practices. The Internal Audit BU leverages on asystematic and disciplined approach, notably through the use of well-focused audit work programs and computeraided audit techniques to evaluate and improve the effectiveness of risk management control and governanceprocesses within the Company.

It is worthwhile to note that the Institute of Internal Auditors requires each internal audit function to have an externalquality assessment conducted at least once every five years. This exercise has been carried out in 2009 and2013 respectively, by an internationally recognized auditing firm which confirmed the Internal Audit BU’scompliance with the International Standards for the Professional Practice of Internal Audit issued by the abovementioned institute.

Internal Audit BU reports to the Audit Committee and the last audit was conducted in January 2015 and inaccordance with the Internal Audit Plan approved by the Audit Committee in conformance with the InternationalStandards for the Professional Practice of Internal Auditing — hA Standards 2430.

It has been mutually agreed that Internal Audit BU would not perform a standard audit during FY 2016 given thatFinlease Company Limited was undergoing a major restructuring of its Core Leasing System. However, a closemonitoring of the action plan submitted by management following January 2015 audit was effected in that period.The next audit is scheduled in October 2016 in accordance with the FY 2017 approved audit plan for MCB Group.

In line with the system implementation of “Borrowings module in T24”, Internal Audit BU has also been solicitedto perform a data migration audit scheduled in October 2016 so as to confer reasonable level of assurance to thebusiness on the completeness, integrity and accuracy of migrated data from the source platform to the targetplatform. In addition, a review of the logical access rights configuration will be performed.

SHARE OPTION PLAN

No such scheme currently exists within the company.

IMPORTANT EVENTS -timetable

Some of the key milestones are as follows:

o Declaration of final dividend — June 2016o Annual Meeting of Shareholders — December 2016

POLITICAL DONATIONS

No donations were made by the company during the period under review.

CHARITABLE DONATIONS

Rs 10,300 was given to charitable associations by the company during the year.

FINLEASE COMPANY LIMITED4(h)


CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility contributions are made to the MCB Forward Foundation, the entity set up withinthe MCB Group for these very purposes and contributions made during the year amounted to Rs. 1,122,921.

CARBON REDUCTION REPORTING

The Company is committed towards reducing its carbon footprint and is doing so by engaging itself in the financingof Green leases in collaboration with AFD (Agence Francaise de Development) and the Mauritius CommercialBank Limited. Furthermore, the Company is fostering on green attitude in-house by closely monitoring its energyconsumption with the introducing of LED lights. The online filing method is also contributing to the on-goingreduction in our environmental footprint.

STAKEHOLDERS’ RELATIONS ANT) COMMUNICATION

The Board aims to properly understand the information needs of all stakeholders and places great importance on anopen and meaningful dialogue with all those involved with the Company. The Company’s website is used to provide.relevant information. Open lines of communication are maintained to ensure transparency and optimal disclosure.All Board members are requested to attend Annual General Meeting, to which all shareholders are invited.

CODE OF ETifiCS

The Company is committed to the highest standards of integrity and ethical conduct in dealing with all itsshareholders. Staff at all levels drew up the Group’s code ofethics. Adequate grievances and disciplinary proceduresare in place to enable enforcement of the Code of Ethics.

HEALTH AND ENVIRONMENT SAFETY

The Company has applied social, safety, health and environmental policies and practices of the MCB Group that inall material respects comply with existing legislative and regulatory frameworks.

FINLEASE COMPANY LIMITED4(i)


STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The directors acknowledge their responsibilities for:

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

ii) the re aration of financial statements which fairly present the state of affairs of the company as at the end ofthe financial year and the results of its operations and cash flows for that period and which comply withInternational Financial Reporting Standards (TFRS);

iii) the selection of appropriate accounting policies supported by reasonable and prudent judgements.

iv) the preparation of the financial statements on a going concern basis.

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

The directors report that:

i) adequate accounting records and an effective system of internal controls and risk management have beenmaintained;

ii) appropriate accounting policies supported by reasonable and prudent judgements and estimates have been usedconsistently;

iii) applicable accounting standards have been adhered to. Any departure in the interest in fair presentation hasbeen disclosed, explained and quantified.

iv) the Company complies with the requirements of the Code of Corporate Governance in all material respects.

Signed by

For and on behalf of ‘e : • d fDirectors

Chairman Mana~~~to~

Date: 16 -09- 2O~ Date: ~

FINLEASE COMPANY LIMITED4(j)


STATEMENT OF COMPLIANCE

(Section 75 (3) of the Financial Reporting Act)

Name of PIE: FINLEASE COMPANY LIMITED

Reporting Period: l’~ July 2015 — 30th June 2016

We, the Directors of Finlease Company Limited, confirm that to the best of our knowledge that Finlease CompanyLimited has materially complied with the Code of Corporate Governance except for section 2 (2.10), 3 (3.5), and(3.9.1). Reasons for non compliance with section 2 (2.10), 3(3.5) and (3.9.1) of the Code are set out in the secondparagraph under Compliance Statement of the Corporate Governance Report.

SIGNED BY:

Alain ChamaryjName: NameCHAIRMAN MANAGING DIRECTOR

16 -n~_ ~‘w• 16 ~DATE ..~‘ DATE

FJNLEASE COMPANY LIMITED5

MANAGEMENT DISCUSSION AND ANALYSIS DOCIJMENT — YEAR ENDEDJUNE 30, 2016

Cautionary Note to the reader

This Management Discussion Analysis can include forward-looking statements and the risk exists thatforecastprojections and other postulations contained therein might not materialize and that actual results may vaiymaterially from plans and expectations. Hence the reader should stand cautioned not to place undue relianceon such statements. The Board ofFinlease Company Limited does not undertake to update anyforward-lookingstatementfrom time to time upon becoming aware that the actual results ofthe company shall be differentfromthose projected.

Macroeconomic overview

OverviewThe operating environment has remained very challenging over the past year. Although global economyhas witnessed a slight improvement, there are still enduring vulnerabilities ranging from debt overhang inadvanced economies and increasing corporate leverage in emerging economies to long-term unemploymentand low investment across the world. To add insult to injury, the surprise vote of the United Kingdom toleave the European Union has cast more shadow on business confidence worldwide. Given our over-reliability on exports to traditional markets, local economic activities have therefore remained subdued.However, the services sector has performed well, more specifically tourism and financial services.

The International ContextGlobal economic recovery has remained moderate from a country and regional perspective. In the US, whileeconomic activity, underpinned by buoyant consumer confidence, staged a mild pick-up in the secondquarter of the year, further dollar depreciation, tepid global demand, weaker business sentiment as well asgrowing uncertainties surrounding the November Presidential elections could offset these gains. Accordingto IMF estimates, GDP growth should drop to 2.2% this year before rising to 2.7% in 2017. In the euro area,barring the better-than-expected growth during the first quarter of 2016, economic prospects remainrelatively weak against the backdrop of subdued net exports, persistantly low inflation and longstandingissues in the banking sector. Given these developments, the IMF forecasts that growth will remain low at1.6% in 2016 and could even be go down to 1.4% in 2017. Turning to emerging market and developingeconomies, performance has been diverse with China posting stronger-than-expected real activityindicators, reflecting renewed policy support. On the heels of recent pickup in global oil prices, Brazilshowed preliminary indications of an easing off from recession while Russia registered a relativestabilisation of its economy. India is poised to grow at a robust pace of 7.5 per cent on the back ofeconomic reforms. With regard to sub-Saharan Africa, the region exhibits circumstantial economicdifficulties, with slower growth at 1.6% in 2016, before edging to 3.3% in 2017. That said, while SouthAfrica may record growth of only 0.6 per cent, weighed down by low commodity prices, increased policyuncertainty and tighter monetary and fiscal policies, the growth picture is rosier upon excluding Nigeriaalso. Indeed, real GDP growth rates would stand at 4.4% and 5.5% for 2016 and 2017 respectively,reflecting hence good economic fundamentals.

The Mauritian EconomyAfter attaining a GDP growth rate of 3.5% in 2015, the Mauritian economy should remain in challengingterritories this year, against the backdrop of a persistant delicate global environment as well as enduringdomestic structural weaknesses. Indeed, according to estimates made by MCB, growth forecast will remainat 3.8%, a slight improvement from last year. Looking over at the past 15 years, economic growthperformance has been restrained in recent times, averaging 3.6% over the period 2011-15, compared to4.4% in 2000-10, notably reflecting sluggish investment trends and subdued exports.

FINLEASE COMPANY LIMITED5(a)

MANAGEMENT DISCUSSION AND ANALYSIS DOCUMENT - YEAR ENDED JUNE 30, 2016

1. Macroeconomic overview (cont’d)

The Mauritian Economy (cont’d)

From a sectorial point of view, the tertiary sector, mainly the services sector, performed well in general andthe main contributors are Accomodation and Food service activities (+9.3%), Information andCommunication (+6.9%) and Financial and Insurance activities (+5.2%). The contribution of the‘Accommodation and food service activities’ sector to growth doubled in 2015 in the wake of a more openair access policy and targeted promotion campaigns. Tourist arrivals for 2015 stood at 1,151,723 andtourism earnings are estimated at about Rs50.2 billion. For 2016, according to MCB estimates, theAccomodation and Food sector should continue to perform well, duly supported by intensified promotionaland market diversification endeavours. For its part, the ICT sector is expected to sustain its performanceduring 2016 while the Financial and Insurance sector, in spite of the revision of the India-Mauritius DTAA,should continue on its track during the current year thanks to sound fundamentals and further sectordeepening. In the secondary sector, performance remains weaker-than-expected in general, especiallyConstruction (-4.7%) and Manufacturing (+0.2%). Within the Manufacturing sector, while Food Processingposted a satisfactory performance at 3.9%, expansion in Sugar (-7.2%) and Textile (-2.9%) sub-sectorsremain sluggish.

On account of the above soft economic landscape and existing labour market imperfections, the nationwideunemployment rate is likely to remain high at 7.7%. Amid low energy and food prices, soft global economicactivity, subdued domestic demand and a fairly stable rupee, inflation maintained its downward trajectoryto stand at 0.9% in June 2016, compared to 1.3% in December 2015 . Reflecting the evolution of majorcurrencies in international markets and domestic demand and supply conditions, in March 2016, the rupeeappreciated by 4.5 per cent vis-à-vis the Pound sterling but depreciated by 1.1 per cent and 3.2 per centagainst the US dollar and euro, respectively, compared to a year ago.

Looking ahead, the domestic economy is expected to improve to 4.2% in 2017, assuming a progressivemending of the global economy and the prompt operationalisation of articulated budgetary measures,complemented by enhanced public-private collaboration. Specifically, economic growth will be fuelled bygrowth in public investment to strengthen the infrastructure set-ups such as land transport, airport and portamenities, water storage capacity and supply upgrades, increased power generation and distribution set-upsas well as social housing and community developments. In parallel, the economy is set to benefit from arebound in private investment, driven mainly by growth in the residential segment, backed by the recentmonetary policy action.

The Banking SectorThe banking sector remained resilient despite negative spillover effects that have emanated from thecollapse of a large financial conglomerate, the BAI group. Banks were financially sound and adequatelycapitalised with capital adequacy ratio at a comfortable level of 17.9%. However, during the year 2015,profitability of the banking sector has gradually declined with Return on Equity and Return on Assets edgingat 1.2% and 12.1% respectively as at 31st December 2015 compared to 1.4% and 15.4% for the previousperiod. While he total assets of the banking sector increased by 3.3 per cent only at end-December 2015,Liquid Assets to Total Assets rose from 24.1% to 27.2% over the period, indicating that the banking systemremained flushed with excess liquidity. The ratio of NPL to Gross Loans also increase from 4.9% as at 3 15t

December 2014 to reach 7.2% as at 3lS~ December 2015, emanating mainly from credit extended outsideMauritius. The ratio of impaired credit to total credit extended in Mauritius rose from 6.8 per cent as at end-December2014 to 7.9 per cent as at end-December 2015. On a sectoral basis, Traders and Construction arethe most affected while in the tourism sector, there were some signs of improvement. The coverage ratioimproved from 37.3 per cent as at end-December 2014 to 48.7 per cent as at end-December 2015, indicatingthat the level of provisioning went up to cater for the increasing NPL.

FINLEASE COMPANY LIMITED5(b)


1. Macroeconomic overview (cont’d)

The Non-Bank Deposit Taking SectorNon-bank deposit-taking institutions (NBDTIs) remained sound, stable and relatively liquid during theperiod under review. These institutions were well-capitalized with a Capital Adequacy Ratio of 29% as atend-December 2015 and their activities continued to grow steadily. Indeed, Total Assets grew by 7.5% overthe year ended December 2015, with both loan and leasing facilities following the same pace of growth overthe period under review. On the liabilities side, deposits comprised 58.9 per cent of the total and recordeda lower y.o.y growth as at end-December 2015 compared to the last corresponding period (+9.3%).

Over the period ended 31st December 2015, NBDTIs remained relatively liquid. The liquid assets to totalassets ratio increased from 12.7 per cent a year ago to 12.8 per cent as at end-December 2015. The liquidassets to total deposits ratio tracked the same pace and improved to 21.7 per cent compared with a ratio of21.4 per cent in the previous year.

Credit extended by NBDTIs went up by 16.1 per cent as at end-December 2015. Credit granted by NBDTIswas mainly directed to the personal and construction sectors, with shares of 64.5 per cent and 13.8 per cent,respectively.

Asset quality ofNBDTIs remain stable, with the ratio of NPL to total credit staying at 6 per cent as at end-December2015. Among the main sectors, the construction sector faced the highest NPL ratio which stoodat 24.3 per cent as at end-December 2015. While credit extended was mostly concentrated to the personalsector, the NPL ratio at end-December 2015 stood at 2.0 per cent compared to 1.9 per cent as at end-December 2014. The coverage ratio of NBDTIs dropped from 38.0 per cent to 36.7 per cent as at end-December2015, indicating an increased vulnerability to their exposures.

The Leasing Sector

After a period of consolidation, the number of players on the market remained stable. On the supply side,the vehicles’ market increased by 4.5% over the year ended December 2015 compared to 4.9% for the lastcorresponding period. In terms of type of vehicles, ‘Cars’ has the lion share with an increase of 8%. On thecontrary, vehicles such as Vans, Buses, Lorries and other heavy duty vehicles increased modestly by 1%,reflecting below-par performance in the transport and construction sectors.

On the demand side, whilst requests for financing of vehicles, particularly cars remain satisfactory, we havenoted a decline in requests fOr financing of equipment in general, the reasons being the abolition of thegovernment-backed leasing schemes and the low level of investment in general. As a result, the leasingmarket continued to be marked by aggressive campaigns and price war as well as excess liquidity leadingto compression on profit margins.

With the potential re-introduction of government-backed leasing schemes as announced in the budget, weexpect a pick-up in the financing of equipment in the manufacturing sector. A further boost in the leasingsector could hopefully come from public investment in infrastructure as announced in the budget.

F1NLEASE COMPANY LIMITED5(c)


2 Review of Operations

This financial year was marked by the implementation of a new leasing software. Nevertheless, we havenot neglected the business development side as evidenced by participation in roadshows with our businesspartners to promote our brand and active presence on the field.

Despite challenging economic environment and focus on the new software implementation , our leaseportfolio has increased by 6%. However, our fmancing to the two major market segments has not changedmaterially as depicted in table below:

Retail 15.75 17.40 17.03 16.81

Business 84.25 82.60 82.97 83.19

During the year under review, we also revisited our customer service structure to cater for the requirementsof various customer segments. The operational processes and the management of risks associated with ouractivities have however not been neglected. Human capital management remained high on the agenda withthe provision of specialised and targeted training to staff, permanent communication and regular teamactivities

On the whole, we remained committed to duly assisting our customers, backed by effective riskmanagement practices, operational efficiency measures and adequate investment in people whileunleashing synergistic possibilities with the various functions of the MCB Group.



3 Financial Review

a) Performance against objectives

5(d)

An expected growth of 25% in The operating income only grew by JAn expected growth of 7% isline with effective business 10.9% owing to cut throat ~tnticipated against the backdrop ofdevelopment strategies competition which has forced us to ~hallenging economic--—-—---— vinmm

NON INTEREST EXPENSESA growth of 26% was~~ Non interest expenses have grown A rise of 5% is budgeted in lineexpected in line with an by 29% which is slightly above with the increase in activities.enhancement in the budget.information technologyplatform -

COST TO INCOME RATIOA rise in cost to income of Given the lower-than-expected Cost to income ratio will therefore63.87% as a result of increased in operating income improve slightly to reach 67.71%.enhanced information coupled with higher non interesttechnology expenses, the cost to income ratio

— -— — — LLEASE PORTFOLIO~~TT~n I i~nportfolio in view of continued by 7%, well behind budget. given lease portfolio in view of ourstartetegy to leverage on the tough economic climate. The continued leverage on existingexisting customer base. Company has nevertheless known a customer base.

relatively good sales performance

~DEPOSITS GROWTHSignificant increase of Following the abolition of the The Company anticipates a28.4% in line with expected different Government-backed growth of 21% in deposits toincrease in business leasing schemes, the Company has sustain business growth.activities, reverted back to its traditional

deposits to raise funds. As a result,the portfolio has risen by 15.4%,lower than expected but in line with

.---- ~ -

RETURN ON E~(ROE) - -

Expected rise to reach ROE stands at 14.94% as a result of An expected ROE of 19.54% in22.07% given the rise in the 32% fall in profits. line with rise in profitability.~ — ---- ••-------—~-- —

RETURN ONAVERAGEASSETS(ROA -

Expected to reach 1.59%. ROA stands at 1.08% in line with ROA is expected to reach 1.33%.fall in profitability.

OPERATING INCOME

FINLEASE COMPANY LIMITED5(e)


b) Analysis of results

In spite of a very challenging operating environment, Total Assets increased by 4.9%, with the Total Leaseportfolio increasing by the similar magnitude (+6.1%). On the other side, Total Deposits increased by 15.4%followed by a decrease of 28% in borrowings, reflecting our renewed reliance on traditional deposits toraise funds. After having recorded a sustainable growth over the past years, Net profit before tax declinedby 32% during this year to reach Rs 51.8, mainly due to compression on margins, accelerated depreciationcosts related to our legacy system, higher impairment costs, as well as an exceptional write off on assets.

. 2012 2013 2014 2015 2016Five years summary

Rsm Rsm Rsm Rsm RsmTotal assets 3,351.20 3,604.50 3,949.15 4,568.16 4,793.11Totalleaseportfolio 2,930.62 3,174.50 3,593.63 4,100.88 4,351.51Total deposits 2,744.75 2,957.07 2,801.62 2,980.87 3,440.30Total borrowings 222.04 221.66 689.60 1,085.77 787.16Capital and Reserves 314.80 298.70 324.17 345.07 346.90Profit before Tax 74.40 87.90 95.45 90.73 66.09

c) Revenue growth

Interest Income rose by 7.2% to stand at Rs 304.7m while Total Interest expense grew by 11.6%. As a result,Net Interest Income decreased from Rs 95 .8m to Rs 94.4m as compared to last fmancial year.

Operating Lease Income, afler taking into account related depreciation charges decreased by 7.96 % overthe year while Processing Fees dropped by 12.3% on account of cut-throat competition and limited businessopportunities. However, Other Operating Income increased by 41% to reach Rs 9.4m.

As a result, Operating Income net of related depreciated charges increased by only 2.8% over the year. Themain cause of this performance is the continuing compression on margins resulting from the twin effects ofmobilisation of higher cost of deposits and deploying leases at lower yields in a declining interest rateenvironment.

d) Cost control

At the same tinie, Operating Costs has increased by Rs 18.1 m, driven by higher impairment costs (+ Rs8.8m for specific provisions and + Rs 6.8m for portfolio provisions), accelerated depreciation costs relatedto our legacy core leasing system (+Rs 4.5m) and increase in other Operating costs (+Rs 3 .5m).

FINLEASE COMPANY LIMITED5(f)

MANAGEMENT DISCUSSION AND ANALYSIS DOCUMENT — YEAR ENDED JUNE 30, 2016

e) Credit exposure

In terms of industry fmancing, our overall exposure remained stable. In line with the economicperformance of the country, we have however noted an increase in the Manufacturing and Services sectorsas well as a decrease in the Construction sector.

The exposure in sectors in terms of percentage of total lease portfolio is summarised as follows:

.. .. ~.

1) Asset type analysis

For the year under review, our Cars portfolio has remained stable at 51.6%, while our financing of Buses,Vans & Lorries increased from 6.9% to 9.5%. The two categories reflect our financing ofvehicles in general,which still represents the lion share of the portfolio (61.1%). The Industrial Equipment portfolio pursues itsgrowth pattern, to increase by 10% to reach 26% of the portfolio. This performance indeed reflects ourcommitment to support and fmance the Business sector at large. Otherwise, our asset mix remains more orless stable, with a decrease in Civil Engineering Equipment fmancing, largely explained by a slowdown inthe Construction sector.

The main assets being financed, both in % and in value terms are depicted below:

Asset Category

Cars

Industrial equipment 18.95 19.29 23.40 26.00

Civil Engineering Equipment 13.14 9.25 6.40 4.20

Buses, vans, lorries 8.15 8.05 6.90 9.50

Computers 3.71 3.37 2.90 2.30

Others 4.14 9.34 8.80 6.40

Manufacturing 19.64 15.97 20.77 23.13

Personal& Professional 16.37 21.30 18.39 15.87

Traders 17.96 18.33 16.53 17.89

Services 7.70 10.12 9.65 12.89

Agriculture 10.45 8.81 7.77 7.01

Construction 8.69 7.98 12.27 8.80

Tourism 8.14 7.28 5.34 4.60

Transport 4.92 4.98 4.72 4.56

Others 6.13 5.23 4.54 5.25

51.92 50.70 51.50 51.60

FINLEASE COMPANY LIMITED5(g)


g) Credit Quality

Given the challenging economic situation, the level of Non Performing Leases has increased significantlyby 55% over the year from Rs 66m to Rs 1 03m. In view of this situation, it was deemed appropriate toincrease the level of Specific provisions to Rs 1 7.5m while Portfolio provisions increased in line with thegrowth in lease portfolio. As a further prudential measure, after assessing the level of specific provisionsmade during the year and given the increase in Non Performing Leases, the company has provided for anadditional Rs5m to the General Risk Reserve.

Specific 17,500 - 8,704 5,334

For~’folio 37,643 30,892 27,774

Non performing leases 103,211 66,403 40,448

Repossessed assets 8,976 10,363 7,529

General risk reserve 19,658 14,642 10,000

Ratios

Totalprovisions to Lease For~’folio (%) 1.27% 0.97% 0.92%

NFL to Lease por~’folio (%) 2.37% 1.62% 1.13%

Overall, the quality of our portfolio has deteriorated slightly as evidenced by the ratio of NPL to leaseportfolio which increased slightly to 2.37%, up from 1.62% last year. The Board is satisfied with the abovemeasures as well as the current level of both the specific and portfolio provisions.

The specific provision is determined based on the company’s best estimate of impairment in respect ofBalance sheet items in line with lAS 39 while portfolio provision is calculated on the remaining portfoliowhich has not been assessed individually for impairment.

h) Funding

Following the abolition of the government-backed leasing schemes, the funding structure has changed overthe past two years with higher reliance on traditional deposits. Indeed, while our lease portfolio hasincreased from Rs 4.1 bn at June 2015 to Rs 4.3 bn this financial year (+6.1%), borrowings dropped fromRs 1,085 million at June 2015 to reach Rs 787m at June 2016. At the same time, Total Deposits grew by15.4% over the period.

Total Provisions as at June 30, 55,143 I 39,596 I 33,108

5,000.00

4,000.00

3,000.00 ~Total lease portfolio

2,000.00 ~Total deposits1,000.00

raTotal borrowings

FINLEASE COMPANY LIMITED5(h)


h) Funding (cont’d)

As a Non-Bank Deposit Taking institution, we are required to maintain liquid assets equivalent to not lessthan 10% of deposit liabilities. The statement of liquid funds and deposits for the week ended 30 June 2016showed liquid assets to deposits ratio of 11.59%.

i) Capital resources

Total Equity increased by 0.5 3% to reach Rs 346.9m as at June 2016. At the same time, Shareholder’s Loanincreased from Rs 50m to Rs lOOm.

As a Non-Bank Deposit Taking institution, we are required to maintain a minimum capital adequacy ratioof 10%. The ratio as at 3O~~ June 2016 was 10.46%.

j) Concluding remarks

With the replacement of the Core Leasing System behind us, our main strategic focus will be to reverse thetendency of falling profits. Although the environment will remain challenging, we trust that businessopportunities will arise through the potential re-introduction of the government-backed leasing fmancingschemes and public investment in infrastructure as announced in the recent budget. By optimising furtherour sales network and increasing our presence on the field, we also anticipate to grow our lease portfolio.On the other hand, thanks to tight liquidity management and close debtors’ monitoring, we intend to upliftour risk management capabilities in view of improving our operating efficiency. The key to the successfulimplementation of the above avenues will however be proper leadership development and increasedemployee engagement.

4 Capital Structure

As a non bank deposit taking institution, we are required to comply with the following:a) Maintain a minimum capital adequacy ratio of 10%. The ratio as at 30th June 2016 was 10.46%.b) Maintain liquid assets equivalent to not less than 10% of deposit liabilities. The statement of liquid

funds and deposits for the week ended 30 June 2016 showed liquid assets to deposits ratio of 11.59%.

In addition to complying strictly with the above, we have maintained a minimum capital requirement of Rs200m and transferred to a Reserve Account each year an amount equal to not less than 15% of the net profituntil the balance in the Reserve account is equal to the amount paid as stated capital.

The capital adequacy ratio is computed as follows:

Rs’OOO

Total Capital 450,707

Risk Weighted assets 4,310,468

Capital adequacy ratio 10.46%

FINLEASE COMPANY LIMITED5(i)


4. Capital Structure (cont’d)

Further details of the total capital and risk weighted assets are shown below:

Tier 1Paid up capitalStatutory ReserveRetained earningsIntangible assets

293,405

Tier 2General & portfolio Provision 57,301Subordinated debt 100,000

157,301

Total Capital 450,707

Claims on or guaranteed by Government of Mauritius 42,755 0% -

Claims on, or claims guaranteed or accepted orendorsed by, banks licensed under the Banking Act 339,507 20% 67,9012004

Investments in Finance leases <=Rs 5.0 million 679,612 75% 509,709

Investments in operating leases <=Rs 5.0 million 8,761 75% 6,571

Other leases including corporates 3,580,323 100% 3,580,323

Other assets 145,964 100% 145,964

4,796,922 4,310,468

200,00079,25447,985

(33,834)

Risk Weighted assets

FINLEASE COMPANY LIMITED5(j)


5 Risk Management policies and controls

The Risk Management and Conduct Review Committee, under the stewardship of the board of directors,is responsible for risk management, the procedures in place within the organisation and the definition ofthe overall strategy for risk tolerance.

Please refer to Corporate Governance Report for further information on risk management and internalcontrol system.

Credit RiskCredit Risk is defined as ‘the risk of loss arising from the non-performance by a customer, client orcounterparty in any of its obligations towards the Company’.

The company has well-defined approval and authority limits for lease facilities, as well as policies on creditconcentration. Regular debtors meetings are also held to monitor and control default customers.

Interest Rate RiskInterest Rate Risk is the risk arising from fluctuations in interest rates.

For interest bearing assets and liabilities, the company’s income and operating cash flows are mostlyindependent of changes in market interest rates as the implicit interest rates on leases and interest ratesoffered to depositors are mostly fixed.

Liquidity RiskLiquidity Risk is defined as ‘the risk that, at any time, the Company does not have sufficient realizablefinancial assets to meet its financial obligations as they fall due’.

Management monitors rolling forecasts of the Company’s liquidity reserve on the basis of expected cashflow and does not foresee any major liquidity risk over the next two years. For the year ended June 30,2016, the Company has complied with the liquidity ratio of 11.59%, as per Bank ofMauritius requirementsfor the deposit-taking licence.

Operational RiskOperational risk is defined as ‘the risk of loss resulting from inadequate or failed internal processes, peopleand systems or from external events’.

The Board of Directors has set up sub-committees such as the Audit Committee and the OperationsCommittee which overlook the efficiency and effectiveness of the internal control system. The InternalAuditors also report directly to the Audit Committee on their fmdings and recommendations. Furthermore,the Company is also certified ISO 9001:2008 and regular surveillance visits are carried out to ensure theeffectiveness of established procedures.

Foreign Exchange RiskLeases are being granted in foreign currencies together with corresponding borrowings in the samecurrency. Therefore, there is no maj or currency mismatch with the foreign exchange exposure beinginsignificant.

FINLEASE COMPANY LiMITED5(k)


6 Concentration of risk policies

Policies and practices for credit concentration are governed by the guideline on credit concentrationlimits. Our 6 most significant exposures as at June 30, 2016 are as follows: -

2 145,268 32.23%

3 158,828 35.24%

4 112,177 24.89%

5 95,966 21.29%

6 81,283 18.03%

7 Related Party Transactions policies and practices

The company adheres to the Guideline on Related Party Transactions issued by the Bank of Mauritius andeffective as from January 2009. The company has policies and procedures in place to review and approveexposure to related parties and ensure that market terms and conditions are applied. The Risk Managementand Conduct Review Committee oversees that the policies and procedures are being followed.

The company has respected the regulatory limit as set out in the Guideline. Credit exposure to relatedparties, at June 30, 2016, amounts to Rs.89M, i.e.30% of our tier 1 capital of Rs.293.4M. Transactions withrelated parties are in normal course of business and under normal commercial terms.

8 Statement of Corporate Governance practices

The Board of Directors and the management of Finlease Company Limited are fully aware of their rolesand responsibilities with regard to enhancing good corporate governance in line with the guidelines set outby the Bank of Mauritius under cover of their letter BSD 307 dated ~ April 2001.

As a non bank deposit-taking institution every action is taken to ensure that the standards of corporategovernance as laid down by the Central Bank are adhered to in particular that our business is run withintegrity and with due respect to all its stakeholders’ interest and welfare.



Statement of Management’s Responsibility for Financial Reporting

The Company’s financial statements for the operations in Mauritius presented in this annual report havebeen prepared by management, which esponsible o th& integrity, consistency, objectivity andreliability. International Financial Reporting Standards as well as the applicable requirements of theBanking Act 2004 and the guidelines issued thereunder, have been applied and management has exercisedits judgement and made best estimates where deemed necessary.

The Company has designed and maintained its accounting systems, related internal controls and supportingprocedures, to provide reasonable assurance that financial records are complete and accurate and that assetsare safeguarded against loss from unauthorised use or disposal. These supporting procedures includecareful selection and training of qualified staff~ the implementation of organisation and governancestructures providing a well defined division of responsibilities, authorisation levels, and accountability forperformance, and the communication of the Company’s policies, procedures manual and guidelines of theBank of Mauritius throughout the Company.

The Company’s board of directors, acting in part through the Audit Committee and the Risk Managementand Conduct Review Committee, which comprise independent directors, oversees management’sresponsibility for financial reporting, internal controls, assessment and control of major risk areas, andassessment of significant and related party transactions.

The Company’s Internal Auditor, who has full and free access to the Audit Committee, conducts a welldesigned program of internal audits in coordination with the external auditors. In addition, the company’scompliance function maintains policies, procedures and programs directed at ensuring compliance withregulatory requirements.

Pursuant to the provisions of the Banking Act 2004, the Bank of Mauritius makes such examination andinquiry into the operations and affairs of the company as it deems necessary.

The Company’s e ternal auditors, Messrs BDO & Co, have full and free access to the Board of Directorsand its commi s t discuss the audit and matters arising therefrom, such as their observations on thefairness o~~lr otting and the adequacy of internal cj ols. .

Chairman ector Managing Director

• ~ Tel : +230 21)2 3000 10, Frere Felix de Valois StreetI I~I )( 1 Fax: +230 202 9993 Port Louis, Mauritius

www.bdo.mu RO. Box 799


7INDEPENDENT AUDITORS’ REPORT TO THE MEMBER

This report is made solely to the member of Finlease Company Limited (the “Company”), as a body, inaccordance with Section 205 of the Companies Act 2001. Our audit work has been undertaken so that wemight state to the Company’s member those matters we are required to state to them in an auditors’ reportand for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibilityto anyone other than the Company and the Company’s member as a body, for our audit work, for this report,or for the opinions we have formed.

Report on the Financial Statements

We have audited the financial statements of Finlease Company Limited (the “Company”) on pages 8 to 37which comprise the statement of financial position at June 30, 2016, the statement of profit or loss and othercomprehensive income, statement of changes in equity and statement of cash flows for the year then ended,and a summary of significant accounting policies and other explanatory notes.

Directors’ Responsibilityfor the Financial Statements

The directors are responsible for the preparation and fair presentation of these financial statements inaccordance with International Financial Reporting Standards and in compliance with the requirements of theCompanies Act 2001 and Banking Act 2004, and for such internal control as the directors determine isnecessary to enable the preparation of the financial statements that are free from material misstatement,whether due to fraud or error.

Auditors ‘Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conductedour audit in accordance with International Standards on Auditing. Those Standards require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assurance whether thefmancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefmancial statements. The procedures selected depend on the auditors’ judgement, including the assessmentof the risks of material misstatement of the financial statements, whether due to fraud or error. In makingthose risk assessments, the auditors consider internal control relevant to the Company’s preparation and fairpresentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’sinternal control. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by the directors, as well as evaluating the overall presentationof the financial statements.

BDO & Co, a firm of Chartered Accountants in Mauritius, is a member of BOO International Limited, a UK company limited byguarantee, and forms part of the international BOO network of independent member firms.

800 is the brand name for the BDO network and for each of the 800 Membei Firms.

IBDOFINLEASE COMPANY LIMITED

7(a)INDEPENDENT AUDITORS’ REPORT TO THE MEMBER

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit opinion.

Opinion

In our opinion, the financial statements on pages 8 to 37 give a true and fair view of the fmancial position ofthe Company at June 30, 2016, and of its financial performance and its cash flows for the year then ended inaccordance with International Financial Reporting Standards and comply with the Companies Act 2001.

Report on Other Legal and Regulatory Requirements

Companies Act 2001

We have no relationship with, or interests in, the Company, other than in our capacity as auditors anddealings in the ordinary course of business.

We have obtained all information and explanations we have required.

In our opinion, proper accounting records have been kept by the Company as far as it appears from ourexamination of those records.

Banking Act 2004

In our opinion, the fmancial statements have been prepared on a basis consistent with that of the precedingyear and are complete, fair and properly drawn up and comply with the Banicing Act 2004 and theregulations and guidelines of the Bank of Mauritius.

The explanations or information called for or given to us by the officers or agents of the Company weresatisfactory.

The Financial Reporting Act 2004

The directors are responsible for preparing the Corporate Governance Report. Our responsibility is to reporton the extent of compliance with the Code of Corporate Governance as disclosed in the annual report and onwhether the disclosure is consistent with the requirements of the Code.

In our opinion, the disclosure in the annual report is consistent with the requirements of the Code.

BDO &COChartered

Port Louis,Mauritius.

Jacques Pougnet, FCALicensed by FRC

1 8 SEP 2016


STATEMENT OF FINANCIAL POSITION AS AT JUNE 30, 2016

Notes 2016 2015 2014Rs. Rs. Rs.

ASSETSCash and cash equivalents 23 139,506,742 266,433,450 65,971,977Deposits with fmancial institutions 4 212,641,365 107,315,274 260,042,671Net lease receivables 5 3,8j7~,’Z0A,21$_3,645,393,6j~__3,2ii,49_Q,Qi4_Plant and equipment 6 472,696,227 456,164,393 322,662,168Intangible assets 7 33,833,735 5,783,146 5,085,355Current tax assets 12(b) - 2,868,844 -

Other assets 8 54,729,391 84,290,682 23,895,447

Total assets Rs. 4,793,112,378 4,568,159,408 3,949,147,692

LIABILITIESDeposits from customers 9 3,440,297,205 2,980,873,749 2,801,616,412Borrowings 10 787,158,118 1,085,771,865 689,601,447Shareholder’s loan 11 102,584,115 56,392,671 29,739,495Current tax liabilities 12(b) 2,414,423 - 5,825,642Deferred tax liabilities 13 24,648,328 19,503,684 13,132,155Proposed dividends 22 50,000,000 55,000,000 55,000,000Other liabilities 14 39,112,929 25,544,753 30,058,286Total liabilities 4,446,215,118 4,223,086,722 3,624,973,437

Shareholders’ equityShare capital 200,000,000 200,000,000 200,000,000General risk reserve 19,657,776 14,642,000 10,000,000Statutory reserve 79,254,260 71,480,574 60,095,809Retained earnings 47,985,224 58,950,112 54,078,446Total equity 346,897,260 345,072,686 324,174,255

Total equity and liabilities Rs. 4,793,112,378 4,568,159,408 3,949,147,692

These financial stat n have been approved for issue by the board of directors on: 1 5 —09- zo i~

ICha r. to Mana:~.~

The notes on pages 12 to 37 form an integral part of these financial statements.Auditors’ report on pages 7 and 7(a).


Notes 2016 2015 2014Rs. Rs. Rs.

flhI.C1 c~ I uI’.AJI11~

Interest expenseNet interest income

Operating lease incomeProcessing feesOther operating income

304,667,846 284,146,003 279,670,769(210,264,400) (188,363,529) (187,496,942)

16 94,403,446 95,782,474 92,173,827

134,147,957 110,278,723 108,011,5837,500,878 8,554,930 9,242,2989,413,833 6,659,708 5,856,637

151,062,668 125,493,361 123,110,518

Operating income 245,466,114 221,275,835 215,284,345

Net impairment of financial assetsPersonnel expensesLoss on disposal of assetsDepreciation and amortisationOther expenses

Profit before exceptional itemExceptional itemProfit before taxIncome tax expense

(17,145,232) (7,049,775) (4,529,600)(25,290,621) (22,253,674) (19,514,247)

(2,873,391) (2,376,197) (789,448)(109,284,098) (84,066,629) (81,271,646)

(14,311,436) (14,798,291) (13,734,265)

76,561,336 90,731,269 95,445,13920 (10,466,817) - -

18 66,094,519 90,731,269 95,445,13912 (14,269,945) (14,832,838) (15,028,759)

Profit for the year

Other comprehensive income

Rs. 51,824,574 75,898,431 80,416,380

Total comprehensive income for the year

Earnings per share

Transfer to statutory reserve

Rs. 51,824,574 75,898,431 80,416,380

21 Rs. 2.59 3.79 4.02

Rs. 7,773,686 11,384,765 12,062,457

The notes on pages 12 to 37 form an integral part of these fmancial statements.Auditor& report on pages 7 and 7(a).

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME -


9

Revenue 2(f) 1,935,876,963 1,857,011,297 1,712,615,299

1719

6&7


STATEMENT OF CHANGES IN EQUITY - YEAR ENDED JUNE 30, 2016

StatutoryNote Capital Reserve Reserve Earnings Total

Rs. Rs. Rs. Rs. Rs.

200,000,000 6,100,000 48,033,352 44,624,523 298,757,875- - - 80,416,380 80,416,380

- 3,900,000 12,062,457 (15,962,457) -

22 - - - (55,000,000) (55,000,000)Rs. 200,000,000 10,000,000 60,095,809 54,078,446 324,174,255

200,000,000 14,642,000 71,480,574 58,950,112- - - 51,824,574

- 5,015,776 7,773,686 (12,789,462)22 - - - (50,000,000) _______________

Rs. 200,000,000 19,657,776 79,254,260 47,985,224 ______________

15% of the profit after tax is transferred to the Statutory Reserve in compliance with the requirements of the Banking Act 2004.The General Risk Reserve consists of amounts set aside in respect of impairment of the lease portfolio, in addition to the specific and portfolio provision.

Share General Risk Retained

Balance at July 1, 2013Profit for the yearTransferDividendsBalance at June 30, 2014



200,000,000 10,000,000 60,095,809 54,078,446 324,174,255- - - 75,898,431 75,898,431

- 4,642,000 11,384,765 (16,026,765) -

22 - - - (55,000,000) (55,000,000)Rs. 200,000,000 14,642,000 71,480,574 58,950,112 345,072,686

The notes on pages 12 to 37 forAuditors’ report on pages 7 and

345,072,68651,824,574

(50,000,000)346,897,260

i an integral part of these financial statements.7(a).


STATEMENT OF CASH FLOWS - YEAR ENDED JUNE 30, 2016

11

Profit before income tax

Adjustments for:Profit on disposal of plant and equipmentLoss on disposal of repossessed leased assetsAmortisationDepreciationWrite off of plant and equipmentNet impairment of financial assets(Increase)/decrease in interest receivable(Decrease)/increase in interest payableDecrease/(increase) in other assetsIncrease/(decrease) in other liabilities

66,094,519 90,731,269 95,445,139

Changes in operating assets and liabilities:- net increase in investment in finance leases- net increase/(decrease) in deposits

(251,546,530)459,423,456

(381,021,669) (462,802,077)179,257,337 (155,438,402)

Cash generated from! (absorbed in) operationsTax paidTax refundNet cash generated from! (absorbed in) operating activities

435,878,900 (65,402,794)(6,305,781). (17,155,795)2,463,747 -

432,036,866 (82,558,589)

(440,366,557)(13,655,939)

(454,022,496)

Cash flows from investing activitiesDeposits with financial institutionsProceeds from fmancial institutionsProceeds from sale of repossessed leased assetsProceeds from sale of plant and equipmentPurchase of intangible assetsPurchase of plant and equipmentNet cash used in investing activities

(100,000,000) - (100,000,000)- 150,000,000 100,000,000

8,939,131 8,826,087 6,682,81339,432,767 51,127,890 58,041,588

(34,451,546) (2,112,091) (74,761)(169,270,181) (265,992,242) (107,403,634)(255,349,829) (58,150,356) (42,753,994)

Cash flows from financing activitiesDividends paidPayments on long term borrowingsProceeds from long term borrowingsProceeds from shareholder’s loanPayments from short term borrowingsProceeds from short term borrowingsNet cash (used in)/generated from financing activities

Movement in cash and cash equivalentsAt July 1,(Decrease)/increaseAt June 30,

(55,000,000)(266,276,130)118,493,63950,000,000

(150,000,000)- 150,000,000

(302,782,491) 340,339,164 417,934,690

265,602,196 65,971,977 144,813,777(126,095,454) 199,630,219 (78,841,800)

23 Rs. 139,506,742 265,602,196 65,971,977

The notes on pages 12 to 37 form an integral part of these fmancial statements.Auditors’ report on pages 7 and 7(a).

Note 2016Rs.

2015 2014Rs. Rs.

(44,378) (1,290,202)2,917,769 3,666,399

(1,162,930)1,952,378

6,400,957 1,414,iUU 1,244,! Ri102,883,141 82,652,329 80,026,876

10,466,817 - -

17,145,232 7,049,775 4,529,600(5,326,091) (3,026,026) 2,627,813(3,808,556) 1,653,176 1,785,34217,704,391 (41,975,949) (7,120,008)13,568,173 (4,513,533) (1,455,058)

(55,000,000)(234,830,761)480,169,925

(50,000,000)(102,134,043)570,068,733

(Decrease)! increase in cash and cash equivalents Rs. (126,095,454) 199,630,219 (78,841,800)


12NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED JUNE 30, 2016

1. GENERAL INFORMATION

Finlease Company Limited is a limited liability company domiciled and incorporated in Mauritius inAugust 1994.

The activities of the company consist mainly in providing leases for equipment and motor vehicles anddeposit taking.

The address of its registered office is 9-15 Sir William Newton Street, Port-Louis.

These fmancial statements will be submitted for consideration and approval at the forthcoming AnnualMeeting of shareholders of the company.

2. SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these fmancial statements are set outbelow. These policies have been consistently applied to all the years presented unless otherwise stated.

(a) Basis of preparation

The fmancial statements of Finlease Company Limited comply with the Companies Act 2001 and havebeen prepared in accordance with International Financial Reporting Standards (IFRS). Where necessary,comparative figures have been amended to conform with change in presentation in the current year. Thefmancial statements are prepared under the historical cost convention.

Standards, Amendments to published Standards and Interpretations effective in the reportingperiod

There are no standards, amendments to published standards and interpretations effective for the firsttime in the reporting period.

Standards, Amendments to published Standards and Interpretations issued but not yet effective

Certain standards, amendments to published standards and interpretations have been issued that aremandatoiy for accounting periods beginning on or after January 1, 2016 or later periods, but which theCompany has not early adopted.

At the reporting date of these fmancial statements, the following were in issue but not yet effective:

IFRS 9 Financial InstrumentsIFRS 14 Regulatory Deferral AccountsAccounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to lAS 16 andlAS 38)IFRS 15 Revenue from Contract with CustomersAgriculture: Bearer Plants (Amendments to LAS 16 and lAS 41)Equity Method in Separate Financial Statements (Amendments to lAS 27)


NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED JUNE 30, 2016

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(a) Basis of preparation (cont’d)

Standards, Amendments to published Standards and Interpretations issued but not yet effective(cont’d)

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendmentsto IFRS 10 and lAS 28)Annual Improvements to IFRSs 2012-2014 CycleInvestment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 andlAS 28)Disclosure Initiative (Amendments to lAS 1)IFRS 16 LeasesRecognition of Deferred Tax Assets for Unrealised Losses (Amendments to lAS 12)Amendments to lAS 7 Statement of Cash FlowsClarifications to IFRS 15 Revenue from Contracts with CustomersClassification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2)

Where relevant, the Company is still evaluating the effect of these Standards, amendments to publishedStandards and Interpretations issued but not yet effective, on the presentation of its fmancial statements.

The preparation of financial statements in conformity with IFRS requires the use of certain criticalaccounting estimates. It also requires management to exercise its judgement in the process of applyingthe Company’s accounting policies. The areas involving a higher degree ofjudgement or complexity, orareas where assumptions and estimates are significant to the fmancial statements, are disclosed inNote3.3.

(b) Plant and equipment

All plant and equipment is initially recorded at cost and stated at historical cost less depreciation.Historical cost includes expenditure that is directly attributable to the acquisition of the items.Subsequent costs are included in the assets carrying amount or recognised as a separate asset asappropriate, only when it is probable that future economic benefits associated with the item will flowto the Company and the cost of the item can be measured reliably.

Depreciation is calculated on the straight line method to write off the cost of the assets to their residualvalues over their estimated useful lives as follows:

Per annumOffice equipment 20%Computer equipment 30%Furniture & fittings 20%Motor vehicles 15%-20%Plant and equipment 15%-33.33%




(b) Plant and equipment (cont’d)

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end ofeach reporting period.

Assets under operating leases are depreciated over their expected useful lives net of any residual value.

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is writtendown immediately to its recoverable amount.

Gains and losses on disposal of plant and equipment are determined by comparing proceeds withcarrying amount and are included in the statement of profit or loss and other comprehensive income.

(c) Intangible assets

Computer SoftwareAcquired computer software licences are capitalised on the basis of costs incurred to acquire and bringto use the specific software and are amortised over their estimated useful lives as follows:

Per annumComputer Software 1O%-30%

(d) Impairment of assets

At the end of each reporting period, the company reviews the carrying amounts of its assets to determinewhether there is any indication that those assets have suffered an impairment loss. If any suchindication exists, the recoverable amount of the asset is estimated in order to determine the extent of theimpairment loss (if any). An impairment loss is recognised for the amount by which the carrying amountof the asset exceeds its recoverable amount which is the higher of an asset’s fair value less costs to selland value in use. For the purposes of assessing impairment, assets are grouped at the lowest level forwhich there are separately identifiable cash flows.

(e) Accounting for leases

Finance leasesWhen assets are leased out under a finance lease, the present value of the lease payments is recognisedas a receivable, the amount being equal to the net investment in the leases after specific provision forbad and doubtful debt in respect of all identified impaired leases in the light of periodical reviews. Thedifference between the gross receivable and the present value of the receivable is recognised as unearnedfmance income. Lease income is recognised over the term of the lease using the net investment method,which reflects a constant periodic rate of return.

Operating leasesAssets leased out under operating leases are included in plant and equipment in the statement offmancial position. They are depreciated over their expected useful lives on a basis consistent withsimilar fixed assets. Rental income is recognised on a straight line basis over the lease term.

Material leasing arrangementsThe leasing contracts carry interest rates varying from 5.5% to 14.25% for MUR denominated contracts,2.75% to 5.97% for foreign currency denominated contracts. The contracts periods range between 1and 7 years and have varying options at the end of the term. The types of assets financed are mostlymotor vehicles and equipment. Lease facilities are effectively secured as the rights to the leased assetrevert to the lessor in the event of default.




(e) Accounting for leases (cont’d)

Assets repossessed pending disposalsAssets repossessed from non performing clients pending disposals are stated at their net realisable value.

(f) Revenue recognition

Revenue consists of gross rental income receivable under finance leases and income receivable fromoperating leases net of value added taxes and discounts, afler deducting the relevant amounts forcancelled leases.

Other revenues earned by the company are recognised on the following bases:• Interest income as it accrues (taking into account the effective yield on the asset) unless

collectibility is in doubt.

(g) Financial assets

(a) Categories offinancial assetsFinancial assets are recognised on the company’s statement of financial position when the companyhas become a party to the contractual provisions of the instrument. The Company classifies itsfmancial assets as held-to-maturity investments. The classification depends on the purpose forwhich the investments were acquired. Management determines the classification of its financialassets at initial recognition.

(i) Held-to-maturity investmentsHeld-to-maturity investments are non-derivative fmancial assets with fixed or determinablepayments and fixed maturities that the company’s management has the positive intention andability to hold to maturity. Held-to-maturity investments are recognised initially at fair value plusdirectly attributable transaction costs. Subsequent to initial recognition, held-to-maturityinvestments are measured at amortised cost using the effective interest method less anyimpairment.

(b) Recognition and measurementPurchases and sales of financial assets are recognised on trade-date, the date on which theCompany commits to purchase or sell the asset. Investments are initially measured at fair valueplus transaction costs.

The annual amortisation of any discount or premium on the acquisition of a held-to-maturitysecurity is aggregated with other investment income receivable over the term of the instrument sothat the revenue recognised in each period represents a constant yield on the investment.

(c) DerecognitionFinancial assets are derecognised when the rights to receive cash flows from the investments haveexpired or have been transferred and the Company has transferred substantially all risks andrewards of ownership.

(d) Assets carried at amortised costThe Company assesses at the end of each reporting period whether there is objective evidencethat a financial asset or group of financial assets is impaired. A financial asset or a group offinancial assets is impaired and impairment losses are incurred only if there is objective evidence ofimpairment as a result of one or more events that occurred afier the initial recognition of the asset(a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows ofthe financial asset or group of financial assets that can be reliably estimated.



2. SIGNIFICANT ACCOIJNTING POLICIES (CONT’D)

(g) Financial assets (cont’d)

(d) Assets carried at amortised cost (cont’d)

Evidence of impairment may include indications that the debtors or a group of debtors isexperiencing significant financial difficulty, default or delinquency in interest or principal payments.the probability that they will enter bankruptcy or other financial reorganisation, and whereobservable data indicate that there is a measurable decrease in the estimated future cash flows,such as changes in arrears or economic conditions that correlate with defaults.

For receivables category, the amount of the loss is measured as the difference betweenthe asset’s carrying amount and the present value of estimated future cash flows (excluding futurecredit losses that have not been incurred) discounted at the financial asset’s original effectiveinterest rate. The carrying amount of the asset is reduced and the amount of the loss is recognisedin profit or loss.

If~, in a subsequent period, the amount of the impairment loss decreases and the decrease can berelated objectively to an event occurring after the impairment was recognised (such as animprovement in the debtor’s credit rating), the reversal of the previously recognised impairment lossis recognised in profit or loss.

(h) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised costusing the effective interest method, less provision for impairment.

A provision for impairment of trade receivables is established when there is objective evidence that theCompany will not be able to collect all amounts due according to the original terms of receivables. Theamount of the provision is the difference between the asset’s acrrying amount and the present value ofestimated future cash flows, discounted at the effective interest rate. The amount of provision isrecognised in the statement of profit or loss and other comprehensive income.

(i) Trade and other payables

Trade and other payables are stated at fair value and subsequently measured at amortised cost usingthe effective method.

(j) Borrowings

Borrowings are recorded initially at fair value being their issue proceeds net of transaction costsincurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds(net of transaction costs) and the redemption value is recognised in the statement of comprehensiveincome over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the company has an unconditional right to defersettlement of the liability for at least twelve months after the end of the reporting period.

(k) Equity instruments

Equity instruments are recorded at the proceeds received, net of direct issue costs.

(1) Cash and cash equivalents

Cash and cash equivalents include cash in hand and balances held with banks.


NOTES TO TIlE FINANCIAL STATEMENTS - YEAR ENDED JUNE 30, 2016


(m) Share capital

Ordinary sharesOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of newshares are shown in equity as deduction, net of tax, from proceeds.

(n) Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss,except to the extent that it relates to items recognised in other comprehensive income or directly inequity.

The current income tax charged is based on taxable income for the year calculated on the basis of taxlaws enacted or substantively enacted by the end of the reporting period.

Deferred income tax is provided, using the liability method, for all temporary differences arisingbetween the tax bases of assets and liabilities and their carrying values in the financial statements.However, if the deferred income tax arises from initial recognition of an asset or liability in atransaction, other than a business combination, that at the time of the transaction affects neitheraccounting nor taxable profit or loss, it is not accounted for.

Deferred income tax is determined using tax rates that have been enacted or substantively enacted atthe reporting date and are expected to apply in the period when the related deferred income tax assetis realised or the deferred income tax liability is settled.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will beavailable against which deductible temporary differences can be utilised.

(o) Provisions

Provisions are recognised when: the Company has a present legal or constructive obligation as a resultof past events and it is probable that an outflow of resources that can be reliably estimated will berequired to settle the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle thepresent obligation at the end of the reporting period, taking into account the risks and uncertaintiessurrounding the obligation. When a provision is measured using the cash flows estimated to settle thepresent obligation, its carrying amount is the present value of those cash flows (when the effect of thetime value of money is material).

(p) Deposits from customers

Deposits from customers are classified as financial liabilities at amortised cost. They are initiallymeasured at fair value and subsequently carried at amortised cost.


NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED TUNE 30, 2016


(q) Dividend distribution

Dividend distribution to the company’s shareholders is recognised as a liability in the company’sfinancial statements in the period in which the dividends are declared.

(r) Impairment of leases

Allowance for credit losses consists of specific and portfolio provision for credit losses and isdetermined based on the company’s best estimate of impairment in respect of statement of financialposition items.

An allowance for impairment is established if there is objective evidence that the company will not beable to collect the amount due according to the original contractual terms of the lease. The amount ofthe provision is the difference between the carrying amount at the time the lease is considered doubtfuland the recoverable amount.

The provision amount also covers losses when there is objective evidence that probable losses arepresent in components of the lease portfolio at the end of the reporting period. They have beenestimated based on the future specific losses inherent in the leases and upon historical patterns oflosses in each component and the economic climate in which the clients operate. When a lease isuncollectible, it is written off against the related provision for impairment; subsequent recoveries arecredited to the provision for losses in the statement of profit or loss and other comprehensive income.

Statutory and regulatory loss reserve requirements that exceed these amounts are dealt with in thegeneral risk reserve as an appropriation of retained earnings.

(s) Foreign currencies

(a) Functional and presentation currencyItems included in the financial statements are measured using Mauritian rupees, the currency of theprimary economic environment in which the entity operates (“functional currency”). The financialstatements are presented in Mauritian rupees, which is the company functional and presentationcurrency.

(b) Transactions and balancesForeign currency transactions are translated into the functional currency using the exchange ratesprevailing on the dates of the transactions. Foreign exchange gains and losses resulting from thesettlement of such transactions and from the translation of year-end exchange rates of monetaryassets and liabilities denominated in foreign currencies are recognised in the statement of profit orloss and other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are translated usingthe exchange rate at the date of the transaction.



3. FINANCIAL RISK MANAGEMENT

3.1 Financial Risk Factors

The Company’s activities expose it to a variety of fmancial risks, including:- Credit risk;- Interest rate risk;- Liquidity risk; and- Currency risk.

A description of the significant risk factors is given below together with the risk management policiesapplicable.

(a) Credit RiskCredit risk is the risk of financial loss to the Company if a customer or counterparty to a fmancialinstrument fails to meet its contractual obligations, and arises principally from the Company’s trade andlease receivables. The amounts presented in the statement of fmancial position are net of allowancesfor doubtful receivables, estimated by management based on prior experience and the current economicenvironment.

The Company has policies in place to ensure that leases are granted to customers with appropriatecredit history. The Company has policies that limit the amount of credit exposure to any one fmancialposition.

The Company has no significant concentration of credit risk, with exposure spread over a large numberof counterparties and customers.

Lease facilities to customers are monitored and the company has policies in place to identify defaultsand recover amounts due. Leases granted are also effectively secured as the rights to the leased assetsrevert to the lessor in the event of default. The maximum exposure to credit risk at the reporting date isthe fair value of the receivables. Specific provision and portfolio provision comply with requirementsof the Bank of Mauritius.

An analysis of the financial assets that are individually determined to be impaired is given below:

2016 2015 Collateral heldRs’OOO R&000

Heavy Equipment,Finance leases 103,211 66,402 Vehicles and other

103,211 66,402 Equipment

The Company also holds fixed and floating charges on assets for some exposures.The fair value of collaterals for the impaired facilities amounts to Rs 82.61 m for 2016 (2015: 61 .93m).The lease facilities are effectively secured as the rights to the leased asset revert to the lessor in theevent of default.

Impaired assets are identified on the basis where there are objective evidence that the Companywill not be able to collect all amounts due according to the original terms of the lease agreement.A specific provision of Rs. 17.5 million (2015: Rs. 8.7 million) has been made on the impairedreceivables.



3. FINANCIAL RISK MANAGEMENT (CONT’D)

3.1 Financial Risk Factors (cont’d)

(a) Credit Risk (cont’d)

Past due but not impaired is as follows: 2016 2015 2014Rs’OOO Rs’OOO Rs’OOO

Less than6 months 52,189 39,721 24,591Over 6 months 14,295 3,632 2,558

66,484 43,353 27,149

The Company’s maximum exposure to credit risk is as follows:2016 2015 2014

Rs’OOO Rs’OOO Rs’OOOLease receivables 3,879,705 3,645,304 3,271,490Other assets 54,729 84,291 23,895

3,934,434 3,729,595 3,295,385

The Company aslo grants facilities under operating leases. The net book values of the assets underoperating leases amounted to Rs.472m as at June 30, 2016 (2015: Rs.456m, 2014: Rs.322m).

The collaterals held as security are mainly vehicles and equipment.

The Company also grants leasing facilities to enterprises which benefit from preferential rates under theLeasing Equipment Modernisation Scheme (LEMS). Losses incurred on the disposal of assets fallingunder LEMS are guaranteed up to a maximum of l5%-30% of the original cost of asset. Leasingfacilities granted under LEMS are funded through loans received from the State Investment CorporationLimited.

(b) Interest rate riskFor interest bearing assets and liabilities, the company’s income and operating cash flows are mostlyindependent of changes in market interest rates as the implicit interest rates on leases, interest ratesoffered to depositors and debenture holders are mostly fixed.

(c) Liquidity riskLiquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associatedwith its financial liabilities that are settled by delivery of cash or another financial asset.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, theavailability of funding and the ability to close out market positions.

Management monitors rolling forecasts of the company’s liquidity reserve on the basis of expected cashflow and does not foresee any major liquidity risk over the next two years.




3.1 Financial Risk Factors (cont’d)Up to 1 year 1 to 5 years Over 5 years Total

(c) Liquidity risk (cont’d) Rs. Rs. Rs. Rs.Maturities of assets and liabilitiesAt June 30, 2016 V

AssetsCash and cash equivalents 139,506,742 - - 139,506,742Deposits with financial institutions - 212,641,365 212,641,365Other assets V 54,729,391 - - 54,729,391Net lease receivables 1,307,839,508 2,589,320,482 37,687,566 3,934,847,556Total assets 1,502,075,641 2,801,961,847 37,687,566 4,341,725,054Less portfolio provision (37 643 000)

specific provision (17,499,638)4,286,582,416

LiabilitiesDeposits from customers 722,707,037 2,717,590,168 3,440,297,205Borrowings 253,137,562 524,227,679 9,792,877 787,158,118Other liabilities 39,112,929 - - 39,112,929Shareholder’s loan 25,881,484 76,702,631 102,584,115Proposed dividends 50,000,000 50,000,000Current tax liabilities 2,414,423 - - 2,414,423Total liabilities 1,067,371,951 3,267,699,331 86,495,508 4,421,566,790

Net liquidity gap 434,703,690 (465,737,484) (48,807,942) (134,984,374)

AtJune3O 2015Total assets 1,571,245,774 2,515,915,374 58,645,939 4,145,807,087Total liabilities 2 062 324 012 2 091 259 026 50 000 000 4 203 583 038

(491,078,23~) 424,656,34g ~,645,939 (57,775,951)Less : Total provision (39,595,218)Net liquidity gap (97,371,169)

At June 30, 2014Total assets 1,396,512,852 2,224,186,797 33,808,792 3,654,508,441Total liabilities V 964,589,670 2,622,251,612 25,000,000 3,611,841,282

431,923,182 (398,064,815) 8,808,792 42,667,159Less : Total provision (33,108,272)Net liquidity gap 9,558,887




3.1 Financial Risk Factors (cont’d)

(d) Currency riskThe company’s foreign currency profile is as follows:

2016EURO GBP USD

Rs. Rs. Rs.

Bank balances 4,609,074 3,677 -

Net lease receivables 215,113,110 - 306,171,364219,722,184 3,677 306,171,364

LiabilitiesOther liabilities 6,645,108 776 1,545,356Borrowings 221,603,923 - 306,153,832

228,249,031 776 307,699,188

2015EURO GBP USD

Rs. Rs. Rs.AssetsBank balances - 2,583 4,166,039Net lease receivables 204,192,063 - 329,304,229

204,192,063 2,583 333,470,268LiabilitiesOther liabilities 587,510 719 429,818Borrowings 214,982,799 - 344,993,841

215,570,309 719 345,423,659

A 3% fluctuation in the exchange rate of EURO/GBP/USD against the rupee will have an impact ofRs.302k (2015: Rs.700k) on the results of the company. The company borrows in foreign currency togrant foreign currency facilities. The risk of currency mismatch is thus not significant.

(e) Fair values of financial assets and liabilitiesThe carrying amounts of bank balances, trade and other receivables, borrowings, trade and otherpayables, dividends approximate their fair values. The nominal value less estimated credit adjustmentsof trade receivables and payables are assumed to approximate their fair values.

3.2 Capital Risk Management

The Company’s objectives when managing capital are:- to comply with the capital requirements set by the Bank of Mauritius, which include maintaining aminimum capital requirement of Rs.200 m and respecting the required capital adequacy ratio of 10%,

- to safeguard the company’s ability to continue as a going concern so that it can continue to providereturns for shareholders and benefit~ for other stakeholders; and

- to maintain a strong capital base to support the development of its business.

In order to maintain the capital structure, the company may adjust the amount of dividends paid toshareholders.

There were no changes in the Company’s approach to capital risk management during the year.



3. FINANCIAL RISK MANAGEMENT (CONVD)

3.3 Critical accounting estimates and judgements

Estimates and judgements are based on historical experience and other factors, including expectationsof future events that are believed to be reasonable under the circumstances.

~ Provisions for credit losses

The company makes a provision against its portfolio of leases. The company follows the guidance ofInternational Financial Reporting Standards and the Bank of Mauritius Guidelines in order to determineits best estimate of the provision required. In making this estimate, the company looks, among otherfactors, at future specific losses inherent in the leases, historical patterns of losses and the economicclimate in which clients operate.

(b) Asset lives, residual values and depreciation policiesPlant and equipment are depreciated over their useful lives taking into account residual values. Theactual lives of the assets and residual values are assessed annually and may vary depending on a numberof factors (maintenance, future market conditions, projected disposal values, among other things). Thedirectors make estimates based on historical experience and use best judgement to assess the usefullives of assets and to forecast the expected residual values of the assets at the end of their expecteduseful lives.

4. DEPOSITS WITH FINANCIAL 2016 2015 2014INSTITUTIONS Rs. Rs. Rs.

At June 30, 212,641,365 107,315,274 260,042,671

The above consists of a deposit which carry interest rates ranging between 3.90% - 4.75%(2015: 3.60% - 5% p.a, 2014: 4.25% - 5.4% p.a) and have maturity dates of 11 February 2019,11 May 2020 and 11 May 2021.

5. NET LEASE RECEIVABLES 2016 2015 2014Rs. Rs. Rs.

(a) Gross investment in finance leasesNot later than 1 year 1,495,076,891 1,397,960,909 1,322,364,143Later than 1 year and not later than 5 years 2,893,553,916 2,696,704,499 2,369,184,452Later than 5 years 40,240,601 62,433,993 36,038,573

4,428,871,408 4,157,099,401 3,727,587,168Unearned future fmance incomeon fmance leases (561,321,248) (528,757,56,3) (466,454,791)

3,867,550,160 3,628,341,838 3,261,132,377

(b) Rental receivablesRental receivables on fmance and operating leases 67,297,396 56,556,999 43,465,969

Less allowances for credit impairment- Portfolio provision (37,643,000) (30,891,610) (27,773,932)- Specific provision (17,499,638) (8,703,608) (5,334,340)Net lease receivables Rs. 3,879,704,918 3,645,303,619 3,271,490,074



5. NET LEASE RECEIVABLES (CONT’D)

24

(c) Remaining term to maturity

Up to 3 monthsOver 3 months and up to 6 monthsOver 6 months and up to 12 monthsOver 1 year and up to 5 yearsOver 5 years

2016 2015 2014Rs. Rs. Rs.

352,737,655305,306,593582,497,864

2,589,320,48237,687,566 58,645,939 33,808,792

Rs. 3,867,550,160 3,628,341,838 3,261,132,377

(d) Allowance for credit impairment

Portfolio provisionAtJuly I,Provision for the year (note 17)At June 30,

Specific provisionAt July 1,Provision for the year (note 17)Written offAt June 30,

(e) Credit concentration of risk by industry sectors

ofwhich EPZTourismTransportConstructionTradersInformation,Communication and TechnologyFinancial and business servicesInfrastructureFreeport Enterprise Certificate HoldersPersonalProfessionalMedia entertainment and recreational activitiesOthers

2016 2015 2014Rs. Rs. Rs.

30,891,610 27,773,932 24,242,8286,751,390 3,117,678 3,531,104

Rs. 37,643,000 30,891,610 27,773,932

8,703,608 5,334,340 7,191,65710,393,842 3,932,097 998,496(1,597,812) (562,829) (2,855,813)

Rs. 17,499,638 8,703,608 5,334,340

2016 2015 2014Rs.’000 Rs.’OOO Rs.’OOO

96,034 97,61074,925 71,055

254,221 289,934 232,322Rs. 3,867,550 3,628,342 3,261,132

325,416,373288,018,188540,345,964

2,415,915,374

362,065,677262,153,462478,917,649

2,124,186,797

Agriculture and fishingManufacturing

297,246995,230

190,464186,424144,912684,37437,984

118,01584,32083,204

673,61837,65479,884

326,925949,686

194,516131,089121,048594,488

21,31555,27188,75548,568

635,788

293,566785,163

230,084135,996147,846515,638

31,58356,51851,71557,080

554,956



5. NET LEASE RECEIVABLES (CONT’D)

25

Agriculture and fishingManufacturingofwhich EPZTourismTransportConstructionTradersInformation,Communication and TechnologyFinancial and business servicesInfrastructureFreeport Enterprise Certificate HoldersPersonalProfessionalMedia entertainment and recreational activitiesOthers

2016 2015 .2014Specific Portfolio Total Total Total

Gross Non allowances allowances allowances allowances allowancesamount Performing for credit for credit for credit for ciedit for creditof leases Leases impairment impairment impairment impairment impairmentRs.’OOO Rs.’OOO Rs.’000 Rs.’OOO Rs.’OOO Rs.’OOO Rs.000

297,246 36,438 - 2,609 2,609 4,254 234995,230 1,706 3,407 9,935 13,342 8,390 8,008

(f) Allowance for credit impairment by industry sectors

190,464 - - 1,428 1,428186,424 614 175 929 1,104144,912 40,118 3,400 3,144 6,544684,374 5,008 4,270 7,428 11,69837,984 1,660 50 454 504

118,015 - - 590 59084,320 - - 422 42283,204 - - 416 416

673,618 10,479 4,718 6,631 11,34937,654 - - 188 18879,884 7,188 935 963 1,898

254,221 - 545 2,506 3,0513,867,550 103,211 17,500 37,643 55,143

1,407 1,831992 1,078

6,012 5,9085,174 3,101

574 472275 309443 263242 285

6,179 6,483959 585

1,373 8363,321 3,714

19,595 33,107



6. PLANT AND EQUIPMENT Assets under operating leasesComputer Office Furniture & Motor Plant and

(a) ~Qj~ Equipment Equipment Fittings Vehicles Equipment TotalCOST Rs. Rs. Rs. Rs. Rs. Rs.

At July 1,2015 5,881,249 2,919,918 2,007,508 412,769,052 256,965,086 680,542,813Additions 119,375 388,232 73,417 138,153,393 30,535,764 169,270,181Disposals - - - (91,610,686) (21,644,199) (113,254,885)Assets written off (note 20) - - - (14,522,514) (11,317,647) (25,840,161)At June 30, 2016 6,000,624 3,308,150 2,080,925 444,789,245 254,539,004 710,717,948

DEPRECIATION

At July 1,2015 5,814,757 2,642,705 1,761,224 132,710,905 81,448,829 224,378,420Charge for the year 53,066 126,245 96,295 67,060,914 35,546,621 102,883,141Disposal adjustments - - - (60,038,959) (13,827,537) (73,866,496)Assets written off (note 20) - - - 986,602 (16,359,946) (15,373,344)At June 30, 2016 5,867,823 2,768,950 1,857,519 140,719,462 86,807,967 238,021,721

NET BOOK VALUE

At June 30, 2016 Rs. 132,801 539,200 223,406 304,069,783 167,731,037 472,696,227


27NOTES TO THE FINANCIAL STATEMENTS - YEAR ENDED JUNE 30, 2016

6. PLANT AND EQUIPMENT (CONT’D) Assets under operating leases -

Computer Office Furniture & Motor Plant and(b) ~Qj~ Equipment Equipment Fittings Vehicles Equipment Total

COST Rs. Rs. Rs. Rs. Rs. Rs.

At July 1, 2014 5,831,571 2,880,364 1,754,991 353,810,575 163,272,659 527,550,160Additions 49678 39554 252517 156289097 109361396 265992242Disposals - - - (97,330,620) (15,668,969) (112,999,589)At June 30, 2015 5,881,249 2,919,918 2,007,508 412,769,052 256,965,086 680,542,813

DEPRECIATION

At July 1,2014 5,787,449 2,516,390 1,643,497 126,588,144 68,352,512 204,887,992Charge for the year 27,308 126,315 117,727 56,058,889 26,322,090 82,652,329Disposal adjustments - - - (49,936,128) (13,225,773) (63,161,901)At June 30, 2015 5,814,757 2,642,705 1,761,224 132,710,905 81,448,829 224,378,420

NET BOOK VALUE

At June 30, 2015 Rs. 66,492 277,213 246,284 280,058,147 175,516,257 456,164,393



6. PLANT AND EQUIPMENT (CONT’D) Assets under operating leasesComputer Office Furniture & Motor Plant and

(c) 2014 Equipment Equipment Fittings Vehicles Equipment TotalCOST Rs. Rs. Rs. Rs. Rs. Rs.

At July 1, 2013 5,831,571 2,758,351 1,754,991 359,506,372 186,463,516 556,314,801Additions - 122,013 - 98,090,606 9,191,015 107,403,634Disposals - - - (103,786,403) (32,381,872) (136,168,275)At June 30, 2014 5,831,571 2,880,364 1,754,991 353,810,575 163,272,659 527,550,160

DEPRECIATION

At July 1, 2013 5,740,320 2,370,302 1,548,285 129,466,469 65,025,357 204,150,733Charge for the year 47,129 146,088 95,212 55,046,915 24,691,532 80,026,876Disposal adjustments - - - (57,925,240) (21,364,377) (79,289,617)At June 30, 2014 5,787,449 2,516,390 1,643,497 126,588,144 68,352,512 204,887,992

NET BOOK VALUE

At June 30, 2014 Rs. 44,122 363,974 111,494 227,222,431 94,920,147 322,662,168

FINLEASE COMPANY LiMITED


29

7. INTANGIBLE ASSETS

COST

Computer Sofiware2016 2015 2014Rs. Rs. Rs.

AMORTISATION

At July 1,

Charge for the year __________________________________________At June 30, ____________________________________

NET BOOK VALUEAt June 30, __________________________________________

Rental income and interest receivableAssets repossessed pending disposalsOther receivables and prepaymentsAmount receivable from group companies:-Holding company __________________________________________

(a) The carrying amount of receivables approximate their fair value.

(b) The carrying amounts of receivables are denominated in rupees.

2016 2015 2014Rs. Rs. Rs.

268,415,854 379,682,394 147,653,43893,399,901 190,306,378 92,637,598

271,845,235 445,630,372 250,997,1352,029,182,723 1,346,480,086 1,910,867,6802,662,843,713 2,362,099,230 2,402,155,851

16,502,780 333,491,519 34,875,59017,650,719 85,070,644 5,812,14154,892,548 84,566,389 53,099,039

688,407,445 115,645,967 305,673,791777,453,492 618,774,519 399,460,561

Rs. 3,440,297,205 2,980,873,749 2,801,616,412

At July 1, 29,248,072 27,135,981 27,061,220Additions 34,451,546 2,112,091 74,761At June 30, 63,699,618 29,248,072 27,135,981

23,464,926 22,050,626 20,805,8566,400,957 1,414,300 1,244,770

29,865,883 23,464,926 22,050,626

8. OTHER ASSETS

Rs. 33,833,735 5,783,146 5,085,355

• 2016 2015 2014Rs. Rs. Rs.5,646,966 5,960,383 4,598,684

8,976,498 10,362,967 7,528,59240,105,927 42,967,332 11,768,171

- 25,000,000 -

Rs. 54,729,391 84,290,682 23,895,447

9. DEPOSITS

Time deposits with remaining term to maturityRetail customersWithin 3 monthsOver 3 up to 6 monthsOver 6 up to 12 monthsOver 1 up to 5 years ____________________________________________

Corporate customersWithin 3 monthsOver 3 up to 6 monthsOver 6 up to 12 monthsOver 1 up to 5 years ____________________________________________

The above consists of deposits bearing interest at the rates of 2.75 % - 9.00% per annum (2015: 3.00%- 9.00%, 2014: 3.15% - 9.50% per annum).

Deposits are denominated in rupees.



10. BORROWINGS 2016

Rs.

30

CurrentBank overdraftBank loans (note 10(a))Other loans (note 10(a))

Non-currentBank loans (note 10(a))Other loans (note 10(a))

60,836,117192,301,445253,137,562

182,266,093351,754,463534,020,556

831,254193,697,187215,564,323410,092,764

136,687,597538,991,504675,679,101

18,345,098157,729,568176,074,666

51,050,373462,476,408513,526,781

(a) Bank and other loans

Borrowings can be analysed as follows:Within one yearOne to two yearsAfter two years to five years

Rs. 787,158,118 1,085,771,865 689,601,447

2016 2015 2014Rs. Rs. Rs.

253,137,562 410,092,764 176,074,666241,053,558 228,700,060 159,853,043292,966,998 446,979,041 353,673,738

Rs. 787,158,118 1,085,771,865 689,601,447

(b) The carrying amounts of borrowings are not materially different from their fair values.

The bank borrowings are secured by a floating charge on the company’s assets for Rs.250m.

The rates of interest on borrowings range from 4.25% to 5.00%, 0.90% to 3.33% and 0.75% to 2.90%p.a on the borrowings denominated in MIJR, USD and EURO respectively. (2015: 4.25% to 5.00%,0.90% to 3.33% and 0.75% to 2.90% and 2014: 0.75% to 5.25%).

(c) Borrowings are denominated in Mauritian rupees, Euro and US dollar. The currency risk profile isprovided in note 3(d)

(d) Other loans consists of loans from State Investment Corporation Limited obtained in order to financeleasing facilities granted under the different Leasing Equipment Modernisation Schemes.

11. SHAREHOLDEWS LOAN

Shareholder’s loans consist of Rs25M granted in December 2011 and Rs25M granted in June 2015 andRs5OM granted in June 2016 and they all have a term of 10 years as from grant date. The interest rateon the shareholder’s loans shall be the Mauritius Commercial Bank Ltd’s prime lending rate (currentlyat 6.9% per annum). Interest is payable yearly. At any time before the fifth anniversary of the respectiveloans, the parties shall have an option to convert the capital amount due on the loans into renew sharesor to the facilities for further periods of 10 years. The shareholder’s loans are subordinated loans andqualify as Tier 2 capital. The loans may be redeemed before maturity only at the option of Finlease andwith the prior approval of the Bank of Mauritius.

Rs.2015 2014

Rs.



12. INCOME TAX

(a) Current tax on the adjusted profit for theyear at 15% (2015/2014:15%)Deferred tax (note 13).

2016 2015 2014Rs. Rs. Rs.

9,125,301 8,461,309 15,105,4995,144,644 6,371,529 (76,740)

Rs. 14,269,945 14,832,838 15,028,759

The tax on the company’s profit before tax differs from the theoretical amount that would arise usingthe basic tax rate of the company as follows:

Profit before tax

Tax calculated at a rate of 15 %Tax effect on:Expenses not deductible for tax purpOsesIncome not subject to tax

(b) At July 1,Charge for the yearTax refundTax paidAt June 30,

13. DEFERRED INCOME TAXES

Rs.

Rs.

2016 . 2015 2014Rs. Rs. Rs.

66,094,519 90,731,269 95,445,139

9,914,178 13,609,690 14,316,771

4,362,424 1,223,148 941,145(6,657) - (229,157)

14,269,945 14,832,838 15,028,759

2016 2015 2014Rs. Rs. Rs.

(2,868,844) 5,825,642 4,376,0829,125,301 8,461,309 15,105,4992,463,747 - -

(6,305,781) (17,155,795) (13,655,939)2,414,423 (2,868,844) 5,825,642

Deferred income taxes are calculated on all temporary differences under the liability method at 15%(2015 and 2014: 15%).

(a) The movement on the deferred income tax account is as follows:2016

At July 1,Statement of profit or loss and othercomprehensive income charge/(credit) (note 12)- Accelerated tax depreciation ________________________________________________At June 30, Rs.

(b) There is a legally enforceable right to offset current tax assets and liabilities and deferred income taxassets and liabilities when the deferred income taxes relate to the same fiscal authority. The followingamounts are shown in the balance sheet:

Deferred tax liabilitiesAccelerated tax depreciation

Rs. Rs. Rs.

24,648,328 19,503,684 13,132,155

2015 2014Rs. Rs. Rs.

19,503,684 13,132,155 13,208,895

5,144,644 6,371,529 (76,740)24,648,328 19,503,684 13,132,155

2016 2015 2014

Rs.



14. OTHER LIABILITIES

Other payables and accrualsAmounts due to group companies:-Entities under common control-Holding company

Rs.

2016 2015 2014Rs. Rs. Rs.

37,103,814 23,317,886 26,159,995

1,336,305 1,554,057 2,534,287~ 672,810 672,810 1,364,00439112.929 25S447~ ~Ofl~R7R~

The carrying amounts of trade and other payables approximate their fair value.

15. SHARE CAPITAL

Authorisedof Rs.10 each

Issued and fully paidAt July 1 and June 30,

Rs.

Rs.

2016 2015 2014Rs. Rs. Rs.

• 250,000,000 250,000,000 250,000,000

200,000,000 200,000,000 200,000,000

Issued share capital consists of 20,000,000 (2015/2014: 20,000,000) ordinary shares of Rs.10 each.

16. NET INTEREST INCOME

Interest incomePlacements with fmancial institutionsFinance leases

Interest expenseDepositsBorrowings from financial institutions

Net interest income

17. NET IMPAIRMENT OF FINANCIALASSETS

Allowance for credit impairment- Specific (note 5(d))- Portfolio (note 5 (d))

2016 2015 2014Rs. Rs. Rs.

16,074,029 13,938,602 16,185,609288,593,817 270,207,401 263,485,160304,667,846 284,146,003 279,670,769

181,398,251 159,100,749 172,320,66728,866,149 29,262,780 15,176,275

210,264,400 188,363,529 187,496,942

Rs. 94,403,446 95,782,474 92,173,827

2016 2015 2014Rs. Rs. Rs.

10,393,842 3,932,097 998,4966,751,390 3,117,678 3,531,104

Rs. 17,145,232 7,049,775 4,529,600


NOTES TO TUE FINANCIAL STATEMENTS - YEAR ENDED JUNE 30, 2016

18. PROFIT BEFORE INCOME TAX

Net income before taxation is arrived at after:crediting:Profit on disposal of plant and equipmentOperating lease rentals-plant and equipment

33

and charging:Loss on disposal of repossessed leased assetsExceptional itemAmortisation of intangible assetsDepreciation- owned assets- owned assets leased out under operating

leasesAudit feesCorporate social responsibilitySoftware licensing & otherinformation technology

Employee benefit expense (note 19)

19. EMPLOYEE BENEFIT EXPENSE

Personnel expensesWages and salariesSocial security obligationsContribution to pension costs

2,917,769 3,666,399 1,952,37810,466,817 - -

6,400,957 1,414,300 1,244,770

275,606 271,350 288,429

102,607,535 82,380,979 79,738,447555,450 529,000 507,150

1,122,921 2,014,073 1,649,753

2,529,123 3,064,103 2,706,371

25,290,621 22,253,674 19,514,247

2016 2015 2014Rs. Rs. Rs.

21,614,388 18,784,498 17,071,218

709,739 574,725 481,720

2,966,494 2,894,451 1,961,309Rs. 25,290,621 22,253,674 19,514,247

MCB group has a multi employer plan and contributions made have been accounted as a definedcontribution plan.

20. EXCEPTIONAL ITEM ________________________________

Equipment written off

Earnings per share is based on:Net profit attributable to shareholders ________________________________________________

Number of ordinary shares in issue

2016Rs.

2015Rs.

2014Rs.

44,378 1,290,202 1,162,930134,147,957 110,278,723 108,011,583

2016 2015

21. EARNINGS PER ShARE

2014

Rs.

Rs.

10,466,817 - -

2016 2015 2014

51,824,574 75,898,431 80,416,380

20,000,000 20,000,000 20,000,000

2.59 3.79 4.02Earnings per share Rs.


NOTES TO TIlE FINANCIAL STATEMENTS - YEAR ENDED JUNE 30, 2016

22. PROPOSED DIVIDENDS 2016 2015 2014Rs. Rs. Rs.

Final ordinary dividend payable 2016: Rs.2.50per share (2015: Rs.2.75 per share) Rs. 50,000,000 55,000,000 55,000,000

Rs. 50,000,000 55,000,000 55,000,000

23. CASH AND CASH EQUIVALENTS 2016 2015 2014Rs. Rs. Rs.

Bank balances 139,506,742 266,433,450 65,971,977Bank overdrafi - (831,254) -

139,506,742 265,602,196 65,971,977

24. COMMITMENTS FOR FUTURE LEASES

At June 30, 2016, the company had commitments amounting to Rs.767,336,740 in respect of fiatureleases (2015: Rs.1,173,000,000 and 2014: Rs.657,550,866).


NOTES TO THE FI]~ANCIAL STATEMENTS - YEAR ENDED JUNE 30, 2016

25. RELATE]) PARTY TRANSACTIONS

(a) The following transactions were carried out by the company with related parties.

2015Holding companyEntities under common controlDirectors and close family membersEnterprises in which directors havesignificant influence


35


Reimbursable InterestRent Expenses IncomeRs. Rs. Rs.672,810

1,342,926

Interest Rental— Expense Income

Rs. Rs.3,401,718

10,392,83416,074,029

- - 7,435,818 - 1,699,618

672,8101,554,057 9,192,027

1,653,1768,205,943

- - 10,589,166 - 3,283,062

672,8101,981,569 10,935,609

1,785,7283,698,614

900,000

- - 15,219,898 - 3,450,185

The above transactions have been made on normal commercial tenns and in the normal course of business.


NOTES TO THE FiNANCIAL STATEMENTS - YEAR ENDED JUNE 30, 2016

25. RELATED PARTY TRANSACTIONS (CONT’D)

36




Salaries and short-term employee benefits

1,345,6201,981,569

224,384

2016 2015 2014Rs. Rs. Rs.

4,813,679 4,465,027 3,897,312

Outstanding balances in respect of related party transactions at the end of the reporting period were as follows: Deposit andDividends Amount Amount Loan Deposit BankPayable Receivable Payable Due Balance Receivables Balances

Rs Rs Rs Rs Rs Rs Rs50,000,000 - 672,810 102,584,115 - -

- - 2,019,133 243,107,210 -

- - - - 18,000,000 2,368,580 -

- - - 20,000,000 86,666,385 -

Finance Lease

352,144,807

55,000,000 25,000,000 672,810 56,392,671 - - -

- - 3,039,584 330,384,784 - - 373,745,400- - - - - 623,426 -

- - - - - 123,452,400 -

55,000,000 - 29,739,495 - -

4,289,247 69,395,671 - - 222,172,945- - - 18,000,000 - -

- - - - - 141,596,293 -

(b) Key management personnel compensation and directors remuneration:

(c) Facilities with the related parties represents about 30% of Tier 1. None of the credit facilities to related parties were non-parties are unsecured. No guarantees have been given by the company.

erforming. Amounts due to related



200,000,000

47,985,224

66,094,519

51,824,574

50,000,000

126,810,968247,575,481

4,377,504Rs. 378,763,953

2015 2014Rs. Rs.

200,000,000 200,000,000

58,950,112 54,078,446

90,731,269 95,445,139

75,898,431 80,416,380

55,000,000 55,000,000

103 ,986,b42 86,950,752338,372,504 226,501,673

13,873,431 6,281,122456,232,577 319,733,547

2013 2012Rs. Rs.

200,000,000 200,000,000

44624523 71744489

87 933 702 74 371 107

73976510 63111759

90,000,000 -

ipanies are

26. OPERATING LEASES

Future minimum lease payments under non-cancellableoperating leases may be analysed as follows:Not later than 1 yearLater than 1 year and not later than 5 yearsLater than 5 years

27. FINANCIAL REVIEW

Issued and paid up share capital

37

2016 2015 2014Rs. Rs. Rs.

2016Rs.

Retained earnings

Profit before taxation

Profit after taxation

Dividends

28. HOLDING AND ULTIMATE HOLDING COMPANIES

The directors regard Fincorp Investment Ltd as the holding company and MCB Group L~•~ted as the ultimate holding company. Both coiincorporated in Mauritius.

Documents

AUDITED ACCOUNTS - MCB Leasing