Leal & Co. Ltd | Annual Report 2012 · 8 Leal & Co. Ltd | Annual Report 2012 Chairman’s Statement (cont’d) Overview of our Automobile Sector Activities (Cont’d) Sales of Passenger

Leal & Co. Ltd | Annual Report 2012 1

Leal & Co. Ltd | Annual Report 20122


About Us

The Leal Group is a diverse group of companies contributing to the economic development of Mauritius.

During the last nine decades, the Leal Group has expanded into a wide range of industries including medical, consumer goods, automotive, information technology, engineering and tourism.

Committed to Excellence


Corporate Data

Directors: Date Appointed

Michael Joseph Clency Leal, C.B.E(Chairman)

29 January 1976

Eric Georges Michel Leal (Chief Executive Officer) (Alternate to Michael Joseph Clency Leal)

01 July 1998

Joseph Jacques Vivian Collet Serret (Deputy Chief Executive Officer)

20 October 1995

Bernard Aimé Jacques Rochecouste Collet 27 November 1995

Gérald Edgar Raymond Joseph Lincoln 30 December 1997

Virrsing Ramdeny 30 December 1997

Marie Louis Désiré René France Ducasse (Alternate to Jean Marie Eugène Grégoire)

31 January 2007

Louis Désiré Christian Ferrière 31 January 2007

Jean Marie Eugène Grégoire 04 May 2007

Clency Michael Arnaud Leal (Alternate to Eric Georges Michel Leal)

08 January 2008

Senior management team: Position

Eric Leal Chief Executive Officer

Vivian Serret Deputy Chief Executive Officer

Yousouf Rehmally Chief Finance Officer

Noel Marion COO – Car Rental

Michael Carey COO – BMW Sales

Christian Ferrière COO – After Sales Service

Louis – Philippe Guého COO – Renault Sales

Francois Gellé COO – Parts and Distribution

Yousouf Elahee Doomun CIO - Chief Information Officer

Virginie Quevauvilliers COO – Marketing

Suresh Seegobin COO – Vehicle D’occasion (VO)

Didier Jauffret Executive Director

Neemalen Gopal IT Cluster Director

Company secretary:

Navitas Corporate Services Ltd13, St Clément StreetCurepipeRepublic of Mauritius


Corporate Data (cont’d)

Registered office:

Motorway M1PaillesRepublic of Mauritius

Legal advisers:

Me Gavin Glover6, River CourtSt Denis StreetPort LouisRepublic of Mauritius

Me Maxime Sauzier5th Floor, Chancery HouseLislet Geoffroy StreetPort LouisRepublic of Mauritius

Me Danielle LagesseChancery HouseLislet Geoffroy StreetPort LouisRepublic of Mauritius

Etude Mungroo3rd Floor, 304 Sterling HouseLislet Geoffroy StreetPort LouisRepublic of Mauritius

Auditors:

Grant ThorntonEbène Tower52 Cybercity EbèneRepublic of Mauritius

Bankers:

The Mauritius Commercial Bank Limited

The State Bank of Mauritius Limited

Barclays Bank Plc

Bank One Ltd

AfrAsia Bank Limited

The Mauritius Post and Cooperative Bank Ltd

Bank of Baroda (Mauritius Branch)


Chairman’s Statement

BOARD OFDirectors

1 092009 Annual Report

Mr Clency Leal C.B.E - Chairman

Mr Virrsingh Ramdeny

Mr Bernard Rochecouste Collet

Mr Gérald Lincoln

Mr Eric Leal

Dear Shareholders,

I am proud to report that in the 2011/2012 financial year the Group has again performed remarkably well.

Group net profit before tax has increased by 11% thanks to strong growth in the automobile sector, breaking the one hundred million rupees barrier for the first time. Total assets grew in the period to a record high, at about two point eight billion rupees.

Our strategy of growing within our already well diversified core activities, by improving our product offer and services, has paid off. We will continue concentrating on these core activities and ensuring we are the best partner in our field.

% Contribution of each sector in Leal Group turnover

Overview of our Automobile Sector Activities

In the 2011 calendar year the automobile market reached its highest level ever at 7,958 units. The introduction of the CO2 tax, which encouraged the public to buy fuel efficient cars, had a positive impact on the market.

Leal Group at the same time became the leader in the passenger vehicle segment with a market share of 24%.

Although we do not sell mini buses and are only present in two niches of the truck market, our success in the Passenger car market, also made us the market leader in the total market (Passenger and commercial vehicle markets) with a market share of 20.50%.

The continued success of BMW and GWM, and the amazing success of KIA made this success possible.

With the market still growing in 2012, to reach already 2011 whole year levels by the end of October, the Group has invested heavily in aftersales. In September we have opened a new workshop of 1300sqm for United Motors Limited. The investment of Rs 85 millions in this workshop will ensure a higher quality of service for GWM and KIA customers, while freeing more space to serve BMW, Mini and Renault at our head office and garage.

48%

24%

19%

8%

1%

Automotive

IT

Heavy Engineering

Pharmaceutical and Consumer Goods

Energy

Group net profit before tax has increased by 11% thanks to strong growth in the automobile sector


Chairman’s Statement (cont’d)

Overview of our Automobile Sector Activities (Cont’d)

A secondary sales outlet for GWM and KIA was opened at Motor City – Forbach in September 2012. A service outlet at the same location now caters for the quick service needs of GWM, KIA and Renault.

Sales of Passenger Cars by Dealer - Calendar year 2011 2010 20111 LEAL GROUP 610 1,3122 CFAO GROUP 632 9923 IFRAMAC GROUP 769 7584 ABC GROUP 614 7355 AXESS 597 6986 TOYOTA MTIUS 305 3087 EAL MAN HIN & SONS LTD 335 2648 ALLIED MOTORS 246 200

Sales of Passenger Cars by Brand - Calendar year 20111 NISSAN 6902 KIA 6113 HYUNDAI 5664 CHEVROLET 4215 BMW 3706 MERCEDES 3477 TOYOTA 3088 HONDA 2649 MITSUBISHI 25810 SUZUKI / MARUTI 22411 FORD 21812 RENAULT 20513 PROTON 16814 GWM 14615 CITROEN 14216 VOLKSWAGEN 13917 PEUGEOT 11618 MAZDA 6319 AUDI 6120 CHERY 30

Sales of Passenger Cars & Goods Vehicle by Brand - Calendar year 20111 NISSAN 1,1792 TOYOTA 9423 KIA 6794 HYUNDAI 6025 MITSUBISHI 5666 FORD 4467 CHEVROLET 4218 GWM 3729 BMW 37010 MERCEDES 34811 HONDA 26412 SUZUKI / MARUTI 25013 RENAULT 20514 CITROEN 19515 PROTON 16816 PEUGEOT 15017 VOLKSWAGEN 14118 JMC 7919 CHEVROLET / ISUZU 6920 MAZDA 63




Sales of Passenger Cars & Goods Vehicle by Group - January to August

BMW Record Sales

In 2011, our sales reached 370 units, an increase of 21% with a peak of 63 units in December. BMW was thus the 5th passenger car brand and the market leader in its segment. This is due mainly to the continuing success of the 5 series, with its sportiness and elegance and to the introduction of the New 1 Series with a new Twin Power Turbo engine; the car being now available with new BMW Lines, each with a different personality.

The arrival of the new 3 series, the most successful premium model series in the world, and the 6 series Gran Coupé 4 doors with its elegant design and its outstanding functionality, will ensure that the BMW brand keeps its segment leadership in Mauritius in 2012.

Renault-Reduced range and sales

Sales of Renault dropped by 14% compared to financial year 2010-2011 mainly due to the drop of Megane’s sales, this model having suffered from a lack of price competitiveness against Korean brands.

Our sales of Renault have also been affected in a growing market as we are absent from the fast growing small car segments, absent from the SUV segment as the CO2 tax is too high on the Koleos, and most of the range being available in manual gearbox only.

Sales should be boosted in 2013 by the return of the Renault commercial vehicle range and of the Clio.

GWM- successful in passenger cars too

With the introduction of higher technology engines, including the award winning 2.0 VGT, the brand is moving to a higher price positioning in the pick up market.

Sales of pick ups increased compared to financial year 2010-2011. The sales of 4x2 increased by 18.5% and the sales of 4x4 by 47%. This was a good performance being given that our previous best seller, the entry level Sailor, has been discontinued.

After being a market leader, the Florid has come to the end of its life cycle in 2012. Unfortunately since the introduction of the CO2 tax in July 2011 sales of Florid have declined as it was a 1500 cc rather than a 1200 cc like most of its competitors, thus attracting more CO2 tax.

1200

1400

LEAL

GRO

UP

1282

ABC

GRO

UP

963

IFRA

MAC

GRO

UP

808

AXES

S72

4

CFAO

GRO

UP

884

TOYO

TA M

TIU

S85

8

EAL

MAN

HIN

&

SO

NS

LTD

193

ALLI

ED M

OTO

RS14

1

RAO

UF

DUSM

OH

AMU

D19

1

SAM

MO

TORS

LTD

28

1000

400

800

200

600

0

2011

2012




Kia – Best-selling passenger car

In 2012, for the first ten months, KIA is positioned as the best-selling passenger car brand in Mauritius and the all new KIA Rio is actually leading the race for the best-selling model of the year, we are confident to maintain these positions till the end of the year 2012.

By December 2012, the newly built Red Cube showroom will be operational. This new development has necessitated an investment of around Rs 100 millions in terms of building construction and land acquisition. The new magnificent eco-friendly building is located alongside the Leal & Co. Ltd headquarters.

This new green showroom is designed to meet the International KIA standard and will enable us to excel in customer service.

Report on IT Cluster

Leal Communications & Informatics Ltd (LCI), being among the first ICT companies operating in Mauritius celebrated its 35 years existence in June 2012.

The revenue generated during financial year 2011/2012 by the IT Cluster has exceeded for the first time the Rs 900 millions barrier. This figure includes only the activities of LCI, Distripc Ltd and SOLINFO SARL (Reunion).

During financial year 2011/2012, a number of private companies across all sectors of activities have rescheduled their ICT infrastructure renewal/upgrade on the account of the difficult economic situation prevailing at national and international level. There has thus been a drop of about 4 % on GP in a more competitive market.

We have brought some important changes at LCI that will bring results over the medium term period. We are operating a shift in our business model from a purely ICT infrastructure equipment provider to a turnkey ICT solution provider. We introduced at the end of calendar year 2011 HP Trim, a Document Management System, within our product portfolio. We have also been appointed AVAYA connect partner in April 2012. AVAYA is a worldwide leader in Voice Over IP solutions (VOIP) and Telephony. We will continue to introduce other turnkey solutions offerings at LCI during financial year 2012/2013.

Distripc Ltd too was affected by the difficult market conditions prevailing in Mauritius. The decision of Lexmark to stop its inkjet line of printers since the beginning of 2012, and the increased use of Laptops which reduces the market for computer components (Hard Disk, Motherboards, Processor, …) have both affected negatively our revenue. The hardware business at Distripc Ltd also suffered from the implementation in Mauritius of our previous Dell South African partner. To compensate for this loss of business we initiated discussions with Samsung at the beginning of 2012 to position Distripc Ltd as the local Distributor and Service Partner for Samsung ICT products (Notebooks, Monitors and Printers). The impact of Samsung products on our accounts will be impacted in financial year 2012/2013.

The software business at Elytis suffered both the economic pressure in the French Pacific countries. On the other hand we have improved significantly our software distribution business in Reunion to partially compensate for the loss of business from the French Pacific region. Unfortunately Microsoft has advised us that the French Pacific sub-distributors will be appointed MS distributors as from July 2012, thus reducing our territory. We are in this context exploring other business alternatives to secure the medium/long term.


Report on IT Cluster (Cont’d)

Our turnover in Reunion Island, SOLINFO SARL, has progressed by 50% compared to financial year 2010/2011. For financial year 2011/2012 SOLINFO has shown an operational profit of some Euros 43K. This shows a remarkable improvement of Euros 85K in our bottom line compared to the preceding financial year. Unfortunately, we have had to pay some Euros 45K associated with compensations for departures of two non performing staff from the previous team.

We have introduced a new line of activity with musical instruments connected to IT equipment since the second quarter of calendar year 2012. We have also recruited a senior/experienced staff to support our COO in the day to day business with a prime focus on marketing through social media. We are confident that SOLINFO SARL will continue its progress through financial year 2012/2013. While the total Reunion market is stagnant for Apple, our market share is increasing at the expense of our main competitor. In the Reunion Apple market we now have a market share of over 30% compared to less than 10% two years back.

CiSolve International Ltd, our associate company specialised in the software business, has also faced a challenging year with no major IT projects awarded at national level. We started to make a breakthrough in the local private sector market with a project implementation in the Floreal group. We have continued providing some of our high level competencies to major international players like Satyam Computers for projects implementation in Africa. Overview of our Engineering Cluster

Our results are better than expected with a larger range of products offered to our customers.

Despite the new comers on the local market, we have once more confirmed our strong position in the “transport sector’ and in the “civil & construction sector” with our 3 mains brands Volvo Construction Equipment, Atlas Copco and Renault Trucks.

The future looks promising for Leal Equipements Compagnie Ltée with the launching, beginning of 2013, of a new administrative area and a new workshop dedicated to Renault to sustain the growth of our activities. We strongly believe that the new facilities will give a boost to our team.

The regional activities are improving with interesting deals which shall be finalised during our new financial year, mainly in Madagascar but also in the Seychelles where our subsidiary Leal Equipements Compagnie (Seychelles) Ltée is still focusing on the after-sales support.

A new subsidiary, Equipment Provider Solutions Company Ltd, has also been incorporated with the objective to trade mainly the bulldozers SHANTUI. This supplier has been very aggressive in Africa with the opening of their own regional offices in 2011 in South Africa.

Pharmacie Nouvelle Ltd

This year has been a very critical one for Pharmacie Nouvelle Ltd as we started the implementation of our long term strategy to maximize organisational efficiency to better serve our partners and stakeholders. This strategy was designed around three pillars, namely the re-engineering of the existing organisational structure, a clearer segmentation of our activities and extensions to the product line.




Overview of our Engineering Cluster (Cont’d)

Pharmacie Nouvelle Ltd (Cont’d)

The long term strategy is starting to give its results as for the year ended 30 June 2012, The Pharmacie Nouvelle Group achieved a relatively stable turnover of Rs 1,151 millions but its profit before tax rose from Rs 30.8 millions in 2011 to Rs 46.6 millions in 2012.

Tourism Cluster

In the present difficult times, car hire companies are fighting for a reducing number of customers. On the other hand a number of small operators are entering the market without any new specific product, and are thus putting downward pressure on margins.

Our car hire business, the business with which Leal & Co. Ltd was born, has again strived to remain a sustainable performer within the Group. We have been able to increase sales by 22.85 % and despite the removal of the customs duty rebate on limousine type motor cars for tourists, our fleet standards have been maintained.

Unfortunately, in a very difficult economic environment, we had to revisit the operations of Halcyon Days.

Group Strategy

Focus on our core activities will remain the main motivator of our strategy. Partnerships, service and products of high quality will remain the core strength of our Group. By steadily and reliably increasing these core strengths we believe our Group will continue having a strong image locally, regionally and with our suppliers.

We thank the directors of the Group for all the support and guidance across the years. The strong support of our shareholders is a good sign of trust in our staff and management; we are very thankful for this.

We will always strive to remain a successful business administered by competent staff and management. Our final thanks thus go to all the people working in the Group. Please continue to make our pride.

Michael Joseph Clency LEAL, C.B.EChairman

Date: 29 November 2012


Annual Report

The Board of Directors of Leal & Co. Ltd, the “Company”, is pleased to present the annual report together with the consolidated financial statements of the Company and its subsidiaries, collectively referred to as the “Group”, for the year ended 30 June 2012.

Incorporation

The Company was incorporated in the Republic of Mauritius on 29 January 1976 as a private company with liability limited by shares. The status of the Company was subsequently changed to a public company with liability limited by shares on 14 April 1981.

Principal activities

The principal activities of the Group are:

(i) to deal in motor vehicles, spare parts and rental of cars; (ii) to deal in all kinds of mechanical engineering and agricultural equipment and spares; (iii) to deal in computer hardware and software;(iv) to deal in computer accessories, systems and peripherals;(v) to engage in the tourism industry;(vi) to engage in the distribution of pharmaceutical products, consumer goods and products for the textile industry;(vii) to manufacture cosmetics;(viii) to engage in the general retailing business; and(ix) to provide renewable energy services.

Results and dividends

The results for the year are as shown on page 35.

The directors have recommended the payment of a dividend of Rs 38,475,084 for the year under review (2011: Rs 27,102,668).

Directors

The present membership of the Board is set out on page 4.

Statement of directors’ responsibilities in respect of the consolidated financial statements

Company law requires the directors to prepare consolidated financial statements for each financial year which present fairly the financial position, financial performance and the cash flows of the Group and the Company. The directors are also responsible for keeping accounting records which:

• correctly record and explain the transactions of the Group and the Company;• disclose with reasonable accuracy at any time the financial position of the Group and the Company; and• would enable them to ensure that the consolidated financial statements comply with the Mauritius Companies Act 2001.

The directors confirm that they have complied with the above requirements in preparing the consolidated financial statements. Internal Control

The directors are responsible for the Group’s systems of internal control. The systems have been designed to provide the directors with reasonable assurance that assets are safeguarded, that transactions are authorised and properly recorded and that there are no material errors and irregularities. An internal audit system is in place to assist management in the effective discharge of its responsibilities, and it is independent of management and reports to the Audit Committee.

Risk Management

The Board of Directors has overall responsibility for risk management. Through the Audit Committee, the directors are made aware of the risk areas which affect the Group and ensure that management has taken appropriate measures to mitigate these risks.


Annual Report (cont’d)

Contracts of significance

There was no contract of significance to which the Company or its subsidiaries was a party and in which a director had a material interest either directly or indirectly.

Directors’ share interests

The directors’ direct and indirect interests in the share capital of the Company or its subsidiaries are provided in the Corporate Governance Report.

Directors’ remuneration

Total emoluments and other benefits paid to the directors were as follows:

Donations

Donations made by the Group are provided in the Corporate Governance Report.

Auditors

The auditors, Grant Thornton, have indicated their willingness to continue in office and a resolution concerning their re-appointment will be proposed at the Annual Meeting.

2012 2011Rs Rs

Full time executive directors - Company 34,888,682 27,986,317

- Group 56,031,084 39,312,459

Non-executive directors- Company 6,054,600 4,586,090

- Group 12,564,456 5,415,470

The Group The Company2012 2011 2012 2011Rs Rs Rs Rs

Fees for:- Audit services (VAT exclusive) 2,745,000 2,120,000 580,000 525,000

On behalf of the Board of Directors

M. G. Eric Leal J. J. Vivian Collet Serret Virrsingh RamdenyChief Executive Officer Deputy Chief Executive Officer Chairman of Audit Committee




Corporate Governance Report

Statement of compliance

The Board of Directors (the “Board”) of Leal & Co. Ltd, the “Company”, considers good governance practices to be essential in developing and sustaining any successful business. The Board also ensures the proper running of the Company and at the same time enhances the interaction between senior management, its Board, its shareholders and all other stakeholders.

For the year under review, the Board is of the view that the Company has complied with the principles of the Code of Corporate Governance for Mauritius (the “Code”). Regarding areas of non-compliance with the Code, reasons and alternate practice which has been adopted, have been disclosed.

Substantial shareholders as at 30 June 2012

The share capital of the Company as at 30 June 2012 consisted of 2,581,042 ordinary shares of par value Rs 100 each held by 49 shareholders. As at 30 June 2012, the following shareholders held more than 5% of the share capital of the Company:

Shareholders agreement affecting the governance of the Company by the Board

The Board has no knowledge of any such agreement entered by the shareholders.

Cascade holding structure

Name of shareholder No. of ordinary shares % Holding

The Anglo-Mauritius Assurance Society Limited 130,993 5.08Valorous Holdings Ltd 287,690 11.15Michael Leal Ltd 251,806 9.76Eric M.G. Leal 511,690 19.83Société Clency Leal 1,240,504 48.06

Cisolve : Cisolve International Ltd Distripc : Distripc Ltd EI Ltd : Exclusive Island Ltd EPSCO : Equipment Provider Solutions Company Ltd FD : Flexi Drive Ltd LCI : Leal Communications & Informatics Ltd LEC : Leal Equipements Compagnie Ltée LEC Seychelles : Leal Equipements Compagnie (Seychelles) Ltd Luxury Cars : Luxury Cars & Co Ltd LA Co Ltd : Luxury Automobiles Co Ltd Leal Logistics : Leal Logistics & Shipping Ltd PNL : Pharmacie Nouvelle Limited SCPL : Société Clency and Patrick Leal SETL : Solar-Ernte-Technik Ltd SR : Supreme Refinement (EU) Ltd UML : United Motors Ltd

*EPSCO incorporated on 17 January 2012 **SETL Outremer Ltd incorporated on 11 June 2012

48.06% 19.83% 11.15% 5.08% 9.76% 6.12%

*

SETL OutremerLtd **


Corporate Governance Report (cont’d)

Dividend policy

The Company has adopted a formal policy for the declaration and payment of dividend on 12 November 2010 whereby dividends declared and payable annually to shareholders would amount to a minimum of 10% of the par value of the shares payable in 2 installments (i.e. in 30 June and 31 December). Payment of dividends is approved by the Board. The aim of the Board is to provide to its shareholders a fair return on their investment.

In line with sound management principles, dividend declaration is subject to positive results and solvency test. For the year under review, the Company declared an interim dividend of 6% per share for shareholders registered at the close of business on 29 November 2011 and a final dividend of 9% per share for shareholders registered as shareholders as at 31 May 2012.

Constitution

The directors consider Sections 10.1(b), (d) and (f) of the Company’s Constitution as material clauses and these sections provide for the following pre-emption rights:

1. Unless otherwise approved by Ordinary Resolution or where the terms of issue of any class of shares specifically provide otherwise, when the Board of Directors issues shares which rank equally with, or in priority to existing shares as to voting or distribution rights, those shares shall first be offered to the holders of existing shares in a manner which would, if the offer was accepted, maintain the relative voting and distribution rights of those shareholders.

2. The balance of any shares offered, but not taken up, shall be offered for subscription to shareholders who have accepted all the shares to which they are entitled to and who shall, if more than one, be entitled to subscribe for such balance of shares in the proportion as nearly as the circumstances will permit to the number of shares held by each of them.

3. In case there still remain shares that have not been taken up by the existing shareholders, the Board of Directors may allot such remaining shares to any person and in such numbers and on such terms as it may deem fit.

The board of directors

The Company is headed by a unitary Board which comprises of ten directors under the Chairmanship of Mr. Michael Joseph Clency Leal, C.B.E, who has no executive responsibilities. Four board members are executive, one is non-executive and five board members are independent non-executive. The names of all directors, their profile and their categorisation as well as their directorship details in listed companies are set out in the following sections of this corporate governance report.

There is a clear separation of the roles and functions of (i) the Group Chairman and (ii) the Group Chief Executive Officer and the Deputy Chief Executive Officer. The Group Chairman leads the Board whereas the Group Chief Executive Officer and the Deputy Chief Executive Officer have the day-to-day management responsibility of the Group’s operations, implementing the strategies and policies approved by the Board. The position of the Group Chief Executive Officer and the Deputy Chief Executive Officer are held by 2 executive directors.

The Board is of the view that this composition is adequately balanced and that current directors have the range of skills, expertise and experience to carry out their duties properly. Directors who have attained or are over the age of 70 years are re-elected by separate resolution at the Annual Meeting of the Company. As per Section 23.6 of the Company’s Constitution, one third of the non-executive directors shall also stand for re-election at Annual Meeting of the Company as from the financial year 2011/2012.

An induction program is in place for newly appointed directors. The induction program meets the specific needs of both the Company and the newly appointed director and enables any new director to make the maximum contribution as quickly as possible.

Board meetings

The Board meetings are held at least once every quarter. For the year under review the Board met 3 times. The Board meetings are conducted in accordance with the Company’s Constitution and the Mauritius Companies Act 2001.

Board meetings are organised in such a way that directors receive all the information important to their understanding of the business to be conducted at the meeting. Furthermore, the directors have the right to request independent professional advice at the expense of the Company.



Assessment of directors

For the year under review, no evaluation of the Board or its committees was carried out. The directors forming part of the Board, especially those who are members of Board committees, have been appointed in the light of their wide range of skills and competence acquired through several years of working experience and professional background.

Group company secretary

Directors have direct access to the advice and services of officials of the company acting as Company Secretary, namely Navitas Corporate Services Ltd, represented by qualified company secretaries.

The Company Secretary is responsible for the proper coordination and conduct of the Board and Shareholders Meetings and the recording of proceedings. The Company Secretary also advises the Board on corporate governance policies and practices, application of the Mauritius Companies Act 2001 and other legal matters.

Director’s service contract

Executive directors of the Company and of its subsidiaries have a service contract in the form of an employment contract with the Company or with its subsidiaries.

Board attendance

The following table gives the record of attendance at Board meetings and at meetings of Board committees for the year under review.

Board Committees

Directors CategoryBoard

meetings Audit CommitteeCorporate Governance

Committee

M.J. Clency LEAL, C.B.E(Group Chairman)

NED 3/3 N/A 2/3

Eric M.G. LEAL (Group Chief Executive Officer and alternate to M.J. Clency LEAL)

ED 3/3 N/A N/A

J. J. Vivian COLLET-SERRET (Deputy Chief Executive Officer)

ED 3/3 N/A N/A

L. D. Christian FERRIERE (Chief Operating Officer, After Sales Service)

ED 2/3 N/A N/A

C. M. Arnaud LEAL (Market & Product Research Manager and alternate to Eric M.G. LEAL)

ED 3/3 N/A N/A

Virrsing RAMDENY (Chairman of the Audit Committee)

INED 2/3 4/4 N/A

Bernard A.J. ROCHECOUSTE COLLET (Alternate to M. L. D. René France DUCASSE since 18 April 2012)

INED 3/3 N/A N/A

Jean Marie E. GREGOIRE (Chairman of the Corporate Governance Committee)

INED 2/3 3 / 4 3/3

M. L. D. René France DUCASSE (Alternate to Bernard A.J. ROCHECOUSTE COLLET since 11 May 2012) (Alternate to Jean Marie E. GREGOIRE up to 11 May 2012)

INED 2/3 4/4 3/3

Gérald E. R. J. LINCOLN (Alternate to Jean Marie E. GREGOIRE since 18 April 2012)

INED 3/3 N/A 3/3

ED: Executive Director NED: Non-Executive Director INED: Independent Non-Executive Director



Directors of the company’s subsidiaries

The directors of the Company’s subsidiaries for the year under review are as follows:

Directors Distripc LCI LEC Leal Logistics SETL SR UML PNL

M.J. Clency LEAL, C.B.E (Group Chairman)

N/A √ √ N/A N/A √ √ √

Eric M.G. LEAL * (Group Chief Executive Officer)

√ √ √ √ √ √ √ √

J. J. Vivian COLLET-SERRET(Deputy Chief Executive Officer)

√ √ √ √ √ √ √ N/A

L. D. Christian FERRIERE (Chief Operating Officer -After Sales Service)

N/A N/A N/A N/A N/A N/A N/A N/A

Bernard A.J. ROCHECOUSTE COLLET N/A N/A N/A N/A N/A N/A √ √

Jean Marie E. GREGOIRE √ √ √ N/A N/A N/A √ √

Gérald E. R. J. LINCOLN*** √ √ √ N/A √ N/A N/A N/A

Dr. Ashveen Kumar KISSOONAH** √ N/A N/A N/A √ N/A N/A N/A

Neemalen GOPAL √ √ N/A N/A N/A N/A N/A N/A

Kemraz MOHEE √ N/A N/A N/A N/A N/A N/A N/A

Didier JAUFFRET N/A N/A √ N/A N/A N/A N/A N/A

M. Yousouf REHMALLY, FCCA (Chief Finance Officer)

N/A N/A N/A N/A √ √ N/A N/A

Marie Noel MARION (Chief Operation Officer, Car Rental)

N/A N/A N/A N/A N/A √ N/A N/A

Himmunt Kumar JUGDUTH N/A N/A N/A √ N/A N/A N/A N/A

Devendra MAULLOO N/A N/A N/A N/A √ N/A N/A N/A

Dr. Mukund Krishna OOLUN N/A N/A N/A N/A √ N/A N/A N/A

Naraindath RAMNAWAZ N/A N/A N/A N/A √ N/A N/A N/A

Daniel DE LABAUVE D’ARIFAT(Deputy Chief Executive Officer of PNL)

N/A N/A N/A N/A N/A N/A N/A √

Guy Paul Jean Marie GUERANDEL (Up to 29 June 2012)

N/A N/A N/A N/A N/A N/A N/A √

Georges LEUNG SHING N/A N/A N/A N/A N/A N/A N/A √

Marie Joseph Jean Paul CHASTEAU DE BALYON N/A N/A N/A N/A N/A N/A N/A √

Virrsing RAMDENY N/A N/A N/A N/A N/A N/A N/A √

Marie Louis Désiré René France DUCASSE N/A N/A N/A N/A N/A N/A N/A √

Gilbert Patrick Stephane LEAL N/A N/A N/A N/A N/A N/A N/A √

Marie Octave Regis NICOLIN N/A N/A N/A N/A N/A N/A N/A √

*Eric M. G. Leal is the alternate director of Mr. M. J. Clency Leal, C.B.E on LCI, LEC, Supreme Refinement and UML*Eric M. G. Leal is the Chairman of Solar- Ernte- Technik Ltd** Dr. Ashveen Kumar Kissoonah is the Chairman of Distripc Ltd *** Mr. Gerald E. R. J. Lincoln is the alternate director of Mr. Jean Marie Grégoire on UML




BOARD OFDirectors

1 092009 Annual Report




Mr Gérald Lincoln

Mr Eric Leal

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Mr Eric Leal

Mr Gérald Lincoln



Mr Jean-Marie Grégoire

Mr France Ducasse

Mr Arnaud Leal

Mr Vivian Collet Serret

Mr Christian Ferrière

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Directors’ profile



Directors’ profile (Cont’d)

M. J. Clency LEAL (C.B.E)Group Chairman

M. J. Clency LEAL holds an MBA from Harvard Business School, U.S.A. He started his career as Assistant Pharmacist in 1957. In 1977, he founded Leal & Co. Ltd and founded COMANU Ltee in 1982. He also co-founded United Motors Limited in 1985. He was decorated as Commander of the British Empire – C.B.E. by her majesty, Queen Elizabeth II. He is also the Chairman of the Pharmacie Nouvelle Group.

Eric M. G. LEALGroup Chief Executive Officer

Eric M. G. LEAL holds a bachelor degree in Arts & Science from the Boston College, U.S.A, where he specialised in Business Administration. He started his career as Service Director at Leal & Co. Ltd in 1993 and is also the Chief Executive Officer of the Pharmacie Nouvelle Group.

J. J. Vivian COLLET-SERRETDeputy Chief Executive Officer

J. J. Vivian SERRET joined the Mauritius Commercial Bank Ltd in 1977 and pursued banking studies with the London Institute of Bankers. He joined the Beachcomber group as Financial Controller of the Paradis Hotel in 1988 and joined the Leal Group as Deputy Chief Executive Officer in 1995 to date.

L. D. Christian FERRIEREChief Operating Officer -After Sales Service

L. D. Christian FERRIERE is a fellow member of the Mauritius Institute of Directors. He has accumulated 21 years experience in management position and has followed training courses in motors and electrics as well as in management and marketing. He was appointed as director of the parts department of Leal & Co. Ltd in 1996 and as Chief Operating Officer of the after sales department of Leal & Co. Ltd in 2000.

C. M. Arnaud LEALMarket & Product Research Manager

C. M. Arnaud LEAL holds a degree in Business and E-Commerce from the International University of Monaco. He has been employed as new projects manager for Pharmacie Nouvelle Limited and thereafter as manager for Ocean Indien Distribution Ltee before joining Leal & Co. Ltd as Market & Product Research Manager since June 2010.

Virrsing RAMDENYIndependent Non-Executive Director, Chairman of the Audit Committee

Virrsing RAMDENY is a Fellow of the Chartered Association of Certified Accountants, Member of the Institute of Chartered Accountants of England and Wales and holder of a Master’s Degree in Management. He has more than 25 years post qualification experience and is presently the Managing Partner of De Chazal & Associates, a firm of Chartered Accountants and Business Advisers. Mr. Ramdeny has also worked for the Mauritius Tax Authorities occupying various senior positions and the Mauritius Port Authority as Finance Manager.

Bernard A.J. ROCHECOUSTE COLLETIndependent Non-Executive Director

Bernard A.J. ROCHECOUSTE COLLET has joined Leal & Co. Ltd in 1972. He has occupied the position of Sales Director of Leal & Co Ltd for years until his retirement. He has also assisted in the setting-up of United Motors Limited. He is presently one of the directors of Leal & Co. Ltd, United Motors Limited and Pharmacie Nouvelle Limited. He is also the owner and Director of Zazou Ltee and Albazazou Ltee.

Jean Marie E. GREGOIREIndependent Non-Executive Director, Chairman of the Corporate Governance Committee

Jean Marie E. GREGOIRE followed a marketing course at La Chambre de Commerce de Paris and a technical one at L’Ecole des Arts et Métiers Paris. He has accumulated 30 years experience as director of various companies in France and in other countries. He has also provided consultancy services during 5 years to companies specialized in hydrocarbures.

M. L. D. René France DUCASSEIndependent Non-Executive Director

M. L. D. R. France DUCASSE joined Pharmacie Nouvelle Limited at the age of 20 and has been working for several departments before retiring as Deputy Managing Director after 40 years of service in 2000. He was then appointed as independent director on the Board of Pharmacie Nouvelle Limited and also as member of the Corporate Governance Committee of Pharmacie Nouvelle Limited.

Gérald E. R. J. LINCOLN Independent Non-Executive Director

Gérald E. R. J. LINCOLN joined The Anglo-Mauritius Assurance Society Limited in December 1971 after having worked in the sugar industry for 12 years as accountant/secretary. On retirement, he held the post of Executive Manager. In 2002, he was appointed as Consultant for the Group Chief Executive of the Swan Group up to the end of 2007. He is also a Director of a number of companies involved in various economic activities and quoted on the D.E.M market.



Directors of subsidiaries

The profile of M.J. Clency Leal, Eric M. G. Leal, J. J. Vivian Collet-Serret, Jean Marie E. Gregoire ,Gérald E.R.J Lincoln, M. L. D. R. France Ducasse, Virrsing Ramdeny and Bernard A.J. Rochecouste Collet appear in the Directors’ profile section.

Dr. Ashveen Kumar KISSOONAHChairman of Distripc Ltd, Director of Solar-Ernte-Technik Ltd

Dr. Ashveen Kumar KISSOONAH is an industrious, dynamic and thorough professional with strong ICT and business management background. He holds a Doctorate in Computer Networks and Information Security and a Master of Science in User Interface Design. He is also a Fellow member of The British Computer Society (UK) – FBCS, also a Chartered Practitioner CITP, a Fellow member of The Chartered Institute of Marketing (UK) – MCIM and a full member of The Institute for the Management of Information Systems (UK) – MIMIS, The Association of Computer Professionals (UK) – MACP, and the Institute of Commercial Management (UK) – Minst.CM. He is currently the Chairperson of State Informatics Limited (SIL), SILNAM –Subsidiary of SIL in Namibia, SILBOTS – Subsidiary of SIL in Botswana and ELYTIS – Subsidiary of SIL in Mauritius. He is also a freelance IT consultant, a MQA registered trainer and a visiting lecturer at the Mauritius Institute of Education. Neemalen GOPALIT Cluster Director –Director of Distripc Ltd and LCI

Neemalen GOPAL holds a Diplôme Etudes Approfondies (DEA) Informatique from the University of Grenoble, France and a MaÎtrise Informatique Appliquée Gestion (MIAG). He has accumulated 24 years working experience in the Information Technology field. He has worked as Adviser in ICT to the Minister of Finance -Government of Mauritius from November 1989 to August 1996 before joining the Leal Group. He is the IT Cluster director of Leal Group since July 2008.

Kemraz MOHEEDirector of Distripc Ltd

Kemraz MOHEE is presently the General Manager of the State Informatics Ltd. He has over 22 years of experience in the field of ICT. Before joining the State Informatics Ltd, he was the Executive Director of the National Computer Board. Kemraz Mohee holds a degree in Computer Science from the University of Grenoble in France and a master’s degree in Artificial Intelligence from the University of Savoie in France.

Didier JAUFFRET Director of LEC

Didier JAUFFRET followed a BTS Action Commerciale course from the University of Reunion and has accumulated 22 years working experience in the BTP sector (Batiments Travaux Publics). He has been appointed as Director of LEC since 2003.

Marie Noël MARIONDirector of Supreme Refinement (EU) Ltd, (Chief Operation Officer, Car Rental

Marie Noël MARION followed a tourism management course at the Centre D’Etudes de promotion du Tourisme, Paris, France. He has accumulated 36 years service in the Car Hire department (Europcar) of Leal & Co. Ltd and has been promoted as Chief Operation Officer since 2007.

M. Yousouf REHMALLY (FCCA)Chief Finance Officer of Leal & Co. Ltd, Director of Supreme Refinement (EU) Ltd and Solar-Ernte-Technik Ltd

M. Yousouf REHMALLY is a Fellow of the Chartered Association of Certified Accountants. He is also a member of the Certified Accounting Technician of the Association of Chartered Certified Accountant and has more than 20 years working experience. He joined Leal & Co. Ltd in 1998 as Finance Manager and is presently occupying the post of Chief Finance Officer.

Devendra MAULLOODirector and General Manager of Solar-Ernte-Technik Ltd

Multi-disciplinary entrepreneur, Mr. MAULLOO has started his professional career as a secondary and primary school teacher back in 1978. His passion for technology and audio-visual communications prompted him to read through several university programmes: he holds a Diploma in Social Work (Mauritius), a BA in Communications Studies (UK) and a ‘Brevet Technique Communications Audio-Visuelles’ (France). After heading the Mauritius Film Development Corporation over a decade, Mr Maulloo diversified his portfolio of activities in ICT, Digital Education, Technology and Renewable Energy, in Mauritius and overseas. He is now a full-fledged professional in ‘renewable energy’ with extensive expert-training in Solar Photovoltaic in Germany. He is today General Manager of the ‘energy cluster’ of the Group. Naraindath RAMNAWAZDirector of Solar-Ernte-Technik Ltd

M. Naraindath RAMNAWAZ is the holder of an Advanced Certificate in Business Management from the Mauritius Institute of Management. He has accumulated more than 20 years working experience in the Human Resource Department of Mauritius Telecom.

Daniel DE LABAUVE D’ARIFATDeputy Chief Executive Officer of Pharmacie Nouvelle Limited

Daniel De Labauve D’Arifat holds a Diploma in Commercial Management and a Brevet de Technicien de l’Ecole des Cadres. He has significant experience of the whole chain of marketing, sales and distribution. He was employed as regional manager for The Coca-Cola Company for the Mid African and Islands region and for the last 4 years was the Commercial & Marketing Director at Brasseries STAR Madagascar.



Guy Paul Jean Marie GUERANDEL Director of Pharmacie Nouvelle Limited up to 29 June 2012

Guy Paul Jean Marie Guerandel holds an advanced Certificate in Business Management (MEF). He has worked for various departments within the Group during several years before being appointed as director of Comanu Ltée and Pharmacie Nouvelle Limited. He is currently a fellow member of MIOD.

Georges LEUNG SHINGDirector of Pharmacie Nouvelle Limited

Georges Leung Shing holds a Bachelor’s degree in Economics and is a Chartered Tax Adviser and a Fellow of the Institute of Chartered Accountants of England and Wales. He was the Senior Economist of The Mauritius Chamber of Agriculture (MCA), Executive Chairman of Lonrho and Ilovo Mauritius, and Managing Director of Omnicane Ltd. He was also a member of the Joint Economic Council, Mauritius Employers’ Federation and Stock Exchange of Mauritius Ltd, and Chairman of MCA in 1998/99 and 2002/03 and the Mauritius Sugar Producers’ Association in 2001. He is presently the Chairman of the Mauritius Institute of Directors and The Mauritius Development Investment Trust Co Ltd and a Director of Mauritius Molasses Co Ltd, Mauritius Stationery Manufacturers Ltd, Omnicane Ltd and Standard Bank Mauritius Ltd. He is also a member of the Financial Reporting Council, Financial Reporting Monitoring Panel and Sugar Insurance Fund Board.

Marie Joseph Jean Paul CHASTEAU DE BALYON Director of Pharmacie Nouvelle Limited

Marie Joseph Jean Paul Chasteau De Balyon is member of the Chartered Insurance Institute (C.I.I.), U.K, of the Association of Company Secretaries of Mauritius and a Fellow of Mauritius Institute of Directors (M.I.o.D). He joined the Swan Insurance in 1969 and is currently Director and Company Secretary of Swan Group Corporate Services Limited. He is Council Member of the Mauritius Chamber of Commerce and Industry (Member of its Nomination and Remuneration Committee and of the Board of Governors, Centre D’Etudes Commerciales), member of the SEM Consultative Committee, as well as the Chairperson of the sub-committee of the Insurer’s Association on issues linked to the World Trade Organisation (WTO). He acts as director of a number of companies in the commercial and hotel sectors.

Gilbert Patrick Stéphane LEALDirector of Pharmacie Nouvelle Limited

Gilbert Patrick Stéphane LEAL holds a Bachelor of Science Degree from Boston College, USA, with double majors in Marketing and Finance. He is the Managing Director of Mauritours Ltd, one of the largest tour-operating companies in Mauritius and has an extensive knowledge of the tourism industry, particularly its Marketing aspect, having held various positions in this field over the past 19 years.

Marie Octave Regis NICOLINDirector of Pharmacie Nouvelle Limited

Marie Octave Regis Nicolin worked for the British Admiralty for 5 years. He worked for Pfizer and Boehringer Ingelheim in East Africa for 3 years and then worked for Boehringer Ingelheim at Pharmacie Nouvelle Limited until his retirement.


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1. Mr Yousuf Elahee Doomun2. Mr François Gellé3. Mr Eric Leal4. Mrs Virginie Quevauvilliers5. Mr Vivian Collet Serret6. Mr Noël Marion7. Mr Christian Ferrière8. Mr Neemalen Gopal

9. Mr Suresh Seegobin 10. Mr Yousouf Rehmally11. Mr Didier Jauffret12. Mr Michael Carey13. Mr Louis-Philippe Guého


Senior Management Profile


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Profile of senior management team

The profile of M. G. Eric Leal, J. J. Vivian Collet-Serret, L. D. Christian Ferrière, Neemalen Gopal, Didier Jauffret, M. Noël Marion and M. Yousouf Rehmally appears in the Directors’ profile section.

Michael CAREYChief Operating Officer, Sales BMW/Mini

Michael CAREY holds an advance certificate in business management. He joined Leal & Co. Ltd in 1987 as Sales Manager (BMW-Daihatsu-Iveco-Piaggio). He was promoted as Sales Director (BMW) in 1995 and thereafter as Chief Operating Officer BMW/Mini in 2007.

Louis-Philippe GUÉHOChief Operating Officer, Renault Sales

Louis-Philippe GUÉHO has accumulated 21 years experience in the automobile sector. In 1995, he was nominated as sales representative for Renault trucks and was promoted as Sales Manager for Renault and Renault trucks in December 1998. In September 2004, he was promoted as Sales Director of Renault at Leal & Co. Ltd and since August 2008 as Chief Operating Officer of United Motors Limited sales.

François GELLÉChief Operating Officer, Parts and Distribution

François GELLÉ holds a degree in Business Administration / Marketing / Finance from the University of Natal Durban South Africa and followed various training courses in vehicle mechanics and in service/parts administration. He was promoted as Parts Manager of Leal & Co. Ltd in 1994, then as Chief Operating Officer of the Parts and Distribution Department since 2000, and as Chief Operating Officer of the Parts Department of United Motors Limited since 2008.

Yousuf Elahee DOOMUNChief Information Officer

Mr. Yousuf Elahee DOOMUN holds a Maîtrise en Informatique from The University of Bordeaux. He also holds the ITIL V3 Foundation Certificate. He joined Leal & Co. Ltd in 1987 and has more than 21 years working experience in Information Technology, ranging from networking to ERP implementations. He is currently occupying the post of Chief Information Officer, overseeing IT operations and delivering technology resources to development projects. Virginie QUEVAUVILLIERSChief Operating Officer, Marketing Department

Virginie QUEVAUVILLIERS holds a licence de lettres Modernes from University of Sorbonne, Paris, a Diploma de l’ Ecole Sup de Pub (Groupe Inseec) and a Master in Advertising and Marketing. She was employed as Marketing Manager in 1994 for Leal & Co. Ltd and then promoted to Chief Operations Officer of the Marketing department in 2009.

Suresh SEEGOBINChief Operating Officer, Vehicule D’occasion

After occupying various posts in marketing and sales in two international airlines, he joined Air Mauritius in 1979 as Assistant to Chairman and Managing Director and became Commercial Director of the National Airline in 1983. Retired in 2001, he served as director on several boards and was also Chairman of the Mauritius Tourism Promotion Agency. He joined Leal & Co. Ltd in November 2007.



Interest of directors in the shares of the Company

The following table gives the direct and indirect interests of the Directors in the shares of the Company as well as details of other directorship in listed companies for the year under review:

*Percentages rounded to 2 decimal places.

DirectorsDirect Interest

%*Indirect Interest

%*No. of other directorship in

listed Companies

M.J. Clency LEAL, C.B.E Group Chairman

N/A 1.61 N/A

Eric M.G. LEAL Group Chief Executive Officer and alternate to M.J. Clency LEAL

19.83 14.02 N/A

J. J. Vivian COLLET-SERRET Deputy Chief Executive Officer

0.29 N/A N/A

L. D. Christian FERRIERE Chief Operating Officer, After Sales Service

N/A 14.09 N/A

C. M. Arnaud LEALMarket & Product Research Manager and alternate to Eric M.G. LEAL

0.11 14.02 N/A

Virrsing RAMDENY Chairman of the Audit Committee

N/A 3.45 N/A

Bernard A. J. ROCHECOUSTE COLLET 0.15 0.03 N/A

Jean-Marie E. GREGOIRE Chairman of the Corporate Governance Committee

0.37 N/A N/A

M. L. D. René-France DUCASSE Alternate to Jean-Marie E. GREGOIRE

0.16 N/A N/A

Gérald E. R. J. LINCOLN N/A N/A 3

Board committees

1. Board Committees

In accordance with the Code, the Board has set up two committees to assist it in the execution of its responsibilities, namely the Corporate Governance Committee and the Risk and Audit Committee.

The 2 Board Committees have access to expert advice at the expense of the Company as and when required.

2. The Corporate Governance Committee

Chairman- Jean-Marie E. GREGOIRE Members- M.J. Clency LEAL,C.B.E, M. L. D. René France DUCASSE and Gérald E. R. J. LINCOLN

The Corporate Governance Committee is chaired by an independent non-executive director and is composed of 1 non-executive director, 2 independent non-executive directors. The Corporate Governance Committee met 3 times during the financial year under review. The Corporate Governance Committee members are subject to re-appointment at each financial year end.

The Board has revoked its Corporate Governance Charter and has adopted a new one on 11 February 2011 which is more in line with the provisions of the Code of Corporate Governance. The Corporate Governance Committee is responsible to provide guidance to the Board on aspects of corporate governance and for recommending the adoption of policies and best practices as appropriate for the Company.

The Corporate Governance Committee also performs the duties of the Nomination and Remuneration Committee.


Board committees (Cont’d)

3. The Audit Committee

Chairman- Virrsing RAMDENYMembers- Jean-Marie E. GREGOIRE and M. L. D. René France DUCASSE

The Risk and Audit Committee is chaired by an independent non-executive director and is composed of 2 independent directors. Mr. Virrsing Ramdeny is a member of the Institute of Chartered Accountants of England and Wales and a Fellow of the Association of Chartered Certified Accountants and has substantial accounting and financial experience and background. The Audit Committee members are subject to re-appointment at each financial year end. The Board has revoked its Audit Charter and adopted a new one on 12 May 2011 which is more in line with the provisions of the Code of Corporate Governance. The Audit Committee is responsible for the review and assessment of the internal and external audit work and for the appointment of external auditors. The Audit Committee met 4 times during the financial year under review.

Directors’ fees

Since January 2011, the Group Chief Executive Officer is wholly paid by the Company and a management fee is paid by Pharmacie Nouvelle Limited to Leal & Co. Ltd.

All non-executive and independent non-executive directors receive a Board remuneration consisting of a fixed fee, as well as an additional fee for each Board attended and the Committee members receive a fixed fee.

The Board is of the opinion that the individual remuneration of its Non-Executive and Executive directors is a sensitive information and has resolved not to disclose such information in the annual report. Remuneration philosophy

The Board is responsible for the remuneration strategy of the Company and duties are delegated to the Corporate Governance Committee.

Remuneration is reviewed regularly after taking cognizance of market norms and practices as well as additional responsibilities placed on directors. The remuneration package of Executive Directors consists of base salary, fringe benefits and performance bonuses. There is no formal policy for Executive Directors approaching retirement since the remuneration for the Executive Directors approaching retirement is at the discretion of the Board.

However, the Board believes that it is a prerequisite that the Executive Directors and all other staff members be regularly assessed on their performance and deliverables, that salaries and pay packages be in line with best practices and be encouraging enough to promote total dedication of its people. Also the Board follows closely the career path of top management and ensures planning of future retirements and replacements.

Share option

The Group has no share option plan.

Related party transactions

Please refer to Note 30 of the consolidated financial statements.

Corporate social responsibility (CSR)

Leal Group has continued its valuable contribution to the National E Inclusion Foundation in line with its philosophy of bringing empowerment, education and training to the more vulnerable groups in Mauritius. The Foundation has now distributed more than 4,500 PC’s throughout Mauritius to all NGO’s, Pre Primary schools in poor areas and also to more than 3,000 students at HSC and tertiary education level.

In order to further speed up the capacity building of NGO’s, the Foundation has financed and run many high level ICT training academy all around the island for ladies and young people. With also the help of the Rotary Club of Riviere Noire, the Foundation has completed its allocation of PC’s to La Valette training centre where everyday classes are being run for training of vulnerable groups in IT.



Corporate social responsibility (CSR) (Cont’d)

For the next financial year, the Foundation will launch an important program where complete applications using latest technology and equipment such as tablet PC’s will be developed by the Foundation for free distribution to Pre-Primary schools and children in the primary level who have not passed their CPE. We are confident that most of these children could still be extremely talented in IT in spite of the fact that they are not gifted for school studies.

In addition to our contribution to the Foundation we have also provided financing to many NGO’s engaged in child protection, women cancer, etc. Again the main objectives of our donations are not to finance only an NGO but mostly contribute in depth to the education and training of our people. Today thanks to our continuous efforts there exists more than 15 training centers in NGO’s and other organization which are solely equipped and financed by us for the improvement of people’s education. Internal audit function

Internal Control and Risk Management

The Board recognises that a risk management programme integrated across the Group and embedded in its culture is not just a protective tool but is capable of creating a competitive edge in a dynamic environment. The management of risk is therefore vital to the Group’s strategy and to achieving its long-term goal. The Board is responsible for the establishment and oversight of the Group’s risks management programme which incorporates internal control and risks management procedures. The Board has delegated to the Audit Committee (AC) its overall responsibility to translate its vision on risks management. The AC is reviewing the risks philosophy, strategy and policies recommended by management. Compliance with policies and procedures is constantly monitored . Management is accountable to the Board to establish processes and procedures for identifying, evaluating and managing the significant risks faced by the Group. The Chief Executive Officer is responsible to report such risks as and when identified. Internal Control

The system of internal control is primarily designed to manage rather than eliminate the risk of failure in the achievement of business objectives. Internal control can provide only reasonable assurance against material misstatement or loss. A hierarchical reporting has been established to provide a documented and auditable trail of accountability. An independent and objective opinion is provided to AC and management to ensure that appropriate procedures and control are in place to protect the Group’s income and assets. The audit department operates within the framework of the Charter of AC and in line with its approved audit plan, and all departments and subsidiaries are audited at least once annually. Given its commitment to enhance value, the audit department aims at providing a high quality audit service by adopting up to date audit and business international standards. A follow up mechanism is in place so as to ensure that all the international standards are adopted in a pragmatic way and within a reasonable time frame.

Every month the Audit Committee is remitted detailed audit reports with follow up actions and these reports shall be shortly available online to all directors of the Board via our Intranet.



Internal audit function (Cont’d)

Risk Management

The Group has clearly identified its risks areas and has decided to put in place a clear framework geared at achieving the Group’s risk controls which are classified in four categories namely operational, financial, customer, people and system. It is the responsibility of management to assess the full array of risks and capture them in the business risks register with mitigating actions, ownership and completion dates. These registers will be tabled at the Board of each respective company of the Group and the key risks reported to the AC .

Risks are managed within an established two lines of defence:

- Internal Audit independently reviews, monitors and tests business units compliance with policies and procedures, as well as Quality Standards; and

- AC operates within a formal charter and is chaired by a non-executive director instead of an independent director. The current economic and financial crisis has created a significant decline in economic activities. The businesses within the Group are not immune to the prevailing economic climate and some key revenue sectors have been affected. The Group has reviewed the risks in line with its strategic objectives through control assessment workshops in order to better absorb exogenous shocks and to seize opportunities.

Management monitors risks in the day-to-day operations and the most important ones are listed hereunder: Financial risks

The Group is exposed to various risks namely cash liquidity, interest rate, obsolescence, credit, and foreign exchange. Operational risk

The Group is continuously updating its policies and control procedures to minimize its exposure to operational risks. Such risks materialises into losses when, for instance, internal processes are inadequate or fail, or when external events cause damage or disruption to the business. Those risks are mitigated by ensuring that clear guidelines are provided through documented policies and procedures, which have been communicated, distributed and assessed by the Internal Auditor.

All our procedures, processes and job descriptions are fully accessible to all our personnel via our Intranet. Information systems and information security

The Group’s businesses may be severely impacted by a failure in the confidentiality, integrity or availability of the information system resulting from an intentional or accidental event. A code of conduct concerning the handling of information has been enforced and priority is placed on maintaining a high level of security. Appropriate firewalls, security guidelines and extensive back up facilities are in place to counter potential threats. Again the IT procedural manual is accessible via the Group’s Intranet. Human capital

The risk that personnel will not be sufficient to attain the organisation’s objectives are real. Specific risks elements would include quality and quantity of personnel, competitive pay packages to retain best employees etc.

Donations

Donations made by the Company for the year ended 30 June 2012 and 2011 were as follows:


Category 2012 (Rs) 2011 (Rs)

Charitable 1,332,478 1,191,068Non-Charitable 1,459,636 1,171,925



Ethics

The Board has not adopted a code of conduct for its directors and employees but is mindful of its interest for other stakeholders such as suppliers, clients and the public at large when running its operations. However it is deeply impregnated in the philosophy of Leal Group to be committed to very high standards of integrity and ethical conduct in dealing with all stakeholders, shareholders, and employees.

The Board will adopt a code of conduct and will report accordingly in the next financial year.

Safety, health and environment

The health of our employees is of prime importance for us. For this reason, for many years now we have a Doctor who calls at our offices twice a week and ensure a strict follow up on our people health.

In addition to this, our Human Resource Department (HR) spares no effort to provide excellent advice and care to our employees who suffer from chronic diseases and these employees are not penalised for their days off work at the same time being closely monitored and their health followed by our Doctor. Similarly all employees willing to dispose of a regular check up before winter and needs a flue vaccination may ask for same from our HR department who shall ensure such is done at the Company’s expense.

In the course of the year the Company has also recruited a full time health and safety manager and the HR department is closely monitoring all such issues on a daily basis.

However, we have been extremely shocked and saddened by the death of one of our employees on a client’s site at the end of 2011. Unfortunately, this employee did not follow our training and work guidelines and put his own life at risk on that day. Nonetheless we are proud of the immediate reaction of our senior staff who attended to the deceased employee’s family and took immediately care of all issues linked with this sad event.

Shareholder relations

Our website is continuously updated to provide maximum information both to our business partners as well as our shareholders.

Time table of important forthcoming events

December 2012 Interim dividend for financial year 2012/2013December 2012 Annual MeetingJune 2013 Financial year endJune 2013 Final dividend for financial year 2012/2013

Navitas Corporate Services LtdCompany Secretary



Certificate from the Secretary to the members of Leal & Co. Ltd

We certify, to the best of our knowledge and belief, that we have filed with the Registrar of Companies all such returns as are required of Leal & Co. Ltd, under the Mauritius Companies Act 2001, in terms of Section 166 (d), during the financial year ended 30 June 2012.

Navitas Corporate Services LtdSecretary

Registered office:

13, St Clément StreetCurepipeRepublic of Mauritius



Independent Auditors’ Report to the Members of Leal & Co. Ltd

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of Leal & Co. Ltd, “the Company”, and its subsidiaries, together referred to as “the Group”, which comprise the consolidated statement of financial position as at 30 June 2012, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended and a summary of significant accounting policies and other explanatory information.

Directors’ Responsibilities for the Consolidated Financial Statements

The directors are responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards and in compliance with the requirements of the Mauritius Companies Act 2001 and the Financial Reporting Act 2004, and for such control as the directors determine is necessary to enable the preparation of consolidated 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 consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the consolidated financial statements.

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

Opinion

In our opinion, the consolidated financial statements on pages 35 to 84 give a true and fair view of the financial position of the Group and the Company as at 30 June 2012, and of their financial performance and cash flows for the year then ended in

accordance with International Financial Reporting Standards and the requirements of the Mauritius Companies Act 2001 and the Financial Reporting Act 2004.

Report on Other Legal and Regulatory Requirements

(a) Mauritius Companies Act 2001

In accordance with the requirements of Mauritius Companies Act 2001, we report as follows:

• we have no relationship with, or any interests in, the Company and its subsidiaries other than in our capacity as auditors;

• we have obtained all the information and explanations that we have required; and

• in our opinion, proper accounting records have been kept by the Company as far as appears from our examination of those records.

(b) Financial Reporting Act 2004

The directors are responsible for preparing the Corporate Governance Report and making the disclosures required by Section 8.4 of the Code of Corporate Governance, (the “Code”). Our responsibility is to report on these disclosures.

In our opinion, the disclosures in the Corporate Governance Report comply with the requirements of the Code except that individual directors’ remuneration has not been disclosed for reasons given in the Corporate Governance Report.

Other Matters

This report is made solely to the members of the Company as a body, in accordance with Section 205 of the Mauritius Companies Act 2001. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinion we have formed.

Grant Thornton Y NUBEE, FCCAChartered Accountants Licensed by FRC


Ebène, Republic of Mauritius


Consolidated Financial StatementsYear ended 30 June 2012


Consolidated Statement of Financial Position as at 30 June 2012

The Group The CompanyNotes 2012 2011 2012 2011

Rs Rs Rs RsAssetsNon-current Goodwill 7 245,853 265,240 - -Intangible assets 8 10,753,409 9,818,578 2,138,833 2,949,340Property, plant and equipment 9 918,188,555 832,495,667 508,961,527 475,263,950Investment property 10 70,300,000 70,300,000 118,527,630 47,755,605Investments in subsidiaries 11 - - 151,883,097 135,579,072Investments in associates 12 2,217,590 3,064,818 9,125,000 7,961,000Available-for-sale investments 13 1,706,738 1,580,088 139,500 65,000Loan 14 2,159,696 2,159,696 - -Deferred tax assets 27 12,358,006 6,924,796 - -Non-current assets 1,017,929,847 926,608,883 790,775,587 669,573,967

Current Inventories 15 933,751,559 804,837,002 276,009,678 258,635,399Trade and other receivables 16 801,337,026 756,730,882 251,147,626 222,368,490Current tax assets 27 361,966 266,019 - -Cash and cash equivalents 17 67,128,428 22,557,812 8,643,568 2,480,199Current assets 1,802,578,979 1,584,391,715 535,800,872 483,484,088

Total assets 2,820,508,826 2,511,000,598 1,326,576,459 1,153,058,055

Equity and liabilitiesEquityShare capital 18 258,104,200 227,739,000 258,104,200 227,739,000Share premium 18 21,719,820 12,610,260 21,719,820 12,610,260Share application monies 18 - 22,271,650 - 22,271,650Other components of equity 18 166,260,813 156,799,625 72,033,602 71,959,102Retained earnings 315,255,627 229,467,258 261,045,526 199,234,851Equity attributable to owners of the parent 761,340,460 648,887,793 612,903,148 533,814,863

Non-controlling interest 135,511,090 160,946,806 - -Total equity 896,851,550 809,834,599 612,903,148 533,814,863

LiabilitiesNon-current Retirement benefit obligations 19 44,265,123 39,539,934 25,296,429 21,482,255Borrowings 20 203,893,653 188,331,758 150,082,546 132,186,059Deferred tax liabilities 27 16,994,804 15,408,218 12,306,206 11,207,282Non-current liabilities 265,153,580 243,279,910 187,685,181 164,875,596Current Trade and other payables 21 890,211,525 752,138,210 353,577,694 298,123,177Borrowings 20 751,547,599 690,330,875 170,849,088 156,168,880Current tax liabilities 27 8,834,572 6,102,004 1,561,348 75,539Dividends 22 7,910,000 9,315,000 - -Current liabilities 1,658,503,696 1,457,886,089 525,988,130 454,367,596

Total liabilities 1,923,657,276 1,701,165,999 713,673,311 619,243,192Total equity and liabilities 2,820,508,826 2,511,000,598 1,326,576,459 1,153,058,055

Approved by the Board of Directors on 29 November 2012 and signed on its behalf by:

The notes on pages 41 to 84 form an integral part of these consolidated financial statements.

M. G. Eric Leal J. J. Vivian Collet Serret Virrsingh RamdenyChief Executive Officer Deputy Chief Executive Officer Chairman of Audit Committee


Consolidated Statement of Comprehensive Income for the year ended 30 June 2012

The Group The CompanyNotes 2012 2011 2012 2011

Rs Rs Rs Rs

Revenue 23 4,773,731,621 3,179,523,522 1,371,236,273 1,302,697,363Cost of sales (3,867,531,037) (2,585,642,278) (1,088,298,993) (1,039,927,935)Gross profit 906,200,584 593,881,244 282,937,280 262,769,428Other income 25 91,785,018 29,654,659 112,449,467 77,975,898Selling expenses (190,477,325) (107,865,368) (62,018,827) (49,228,197)Administrative expenses (600,910,962) (383,845,415) (195,478,245) (174,568,375)Impairment loss 11 - - (12,600,000) -Operating profit 206,597,315 131,825,120 125,289,675 116,948,754Net foreign exchange gains 57,003,680 47,315,977 20,888,666 19,112,417Finance income 26 1,414,352 400,871 763,527 165,784Finance costs 26 (106,308,018) (60,806,760) (34,989,524) (32,598,422)Share of (loss)/profit of associates 12 (2,011,228) 3,268,469 - -Negative goodwill 29 - 59,198,326 - -Loss on derecognition of investment in associate 12 - (39,975,716) - -

Profit before tax 24 156,696,101 141,226,287 111,952,344 103,628,533Tax expense 27 (33,384,300) (22,837,416) (11,666,585) (10,313,073)Profit for the year 123,311,801 118,388,871 100,285,759 93,315,460

Other comprehensive income:Revaluation reserve arising on:Revaluation of land and building 9 4,499,402 68,414,728 - 58,625,134Revaluation of available-for-sale investments -Current year gain 13 126,650 - 74,500 -Retranslation of foreign operations (66,975) (17,550) - -Other comprehensive income for the year, net of tax 4,559,077 68,397,178 74,500 58,625,134

Total comprehensive income for the year 127,870,878 186,786,049 100,360,259 151,940,594

Profit for the year attributable to:Owners of the parent 123,291,350 110,708,734 100,285,759 93,315,460Non-controlling interest 20,451 7,680,137 - -

123,311,801 118,388,871 100,285,759 93,315,460Total comprehensive income for the year attributable to:Owners of the parent 127,853,960 176,027,104 100,360,259 151,940,594Non-controlling interest 16,918 10,758,945 - -

127,870,878 186,786,049 100,360,259 151,940,594

Earnings per share 28 52.67 54.01 42.85 45.52



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Consolidated Statement of Cash Flows for the year ended 30 June 2012


Operating activitiesProfit before tax 156,696,101 141,226,287 111,952,344 103,628,533

Adjustment for:Depreciation 91,597,822 67,038,198 55,675,061 48,590,664Amortisation 2,259,531 1,084,037 810,507 810,507Profit on disposal of property, plant and equipment (2,881,792) (6,307,886) (3,645,782) (3,495,863)Impairment losses 182,070 - 12,600,000 -Building written off 2,504,008 - - -Share of loss/(profit) of associates 2,011,228 (3,268,469) - -Negative goodwill - (59,198,326) - -Exchange differences 369,760 1,857,938 - -Loss on derecognition of investment in associate - 39,975,716 - -Provisions 780,000 780,000 - -Bad debts written off - 463,208 - -Dividend income (5,100) (4,675) (77,049,943) (92,449,712)Interest expense 97,975,529 53,055,496 33,139,498 30,680,337Interest income (1,414,352) (400,871) (763,527) (165,784)Movement in retirement benefit obligations 4,725,189 2,070,927 3,814,174 2,070,927Total adjustments 198,103,893 97,145,293 24,579,988 (13,958,924)

Net changes in working capital:Changes in inventories (128,914,557) (95,058,452) (17,374,279) (53,034,108)Changes in trade and other receivables (45,633,110) (58,563,798) (35,031,631) 25,585,218Changes in trade and other payables 130,101,003 43,858,704 5,443,038 (6,604,713)Total changes in working capital (44,446,664) (109,763,546) (46,962,872) (34,053,603)

Tax paid (34,594,302) (23,452,232) (9,081,852) (11,507,908)Net cash from operating activities 275,759,028 105,155,802 80,487,608 44,108,098

Investing activitiesPurchase of property, plant and equipment (103,146,650) (75,878,210) (26,390,597) (37,350,216)Purchase of investments (10,068,024) (250,000) (30,068,025) (14,185,080)Purchase of intangible assets (3,625,789) (402,161) - -Acquisition of subsidiary, net of cash acquired - (205,320,275) - -Proceeds from disposal of property, plant and equipment 45,988,757 27,879,149 27,548,955 21,111,655Purchase of investment property (772,025) - (20,760,548) (27,455,605)Dividends received 5,100 4,675 84,044,943 31,447,304Interest received 1,414,352 400,871 21,023 165,784Net cash (used in)/from investing activities (70,204,279) (253,565,951) 34,395,751 (26,266,158)


Consolidated Statement of Cash Flows for the year ended 30 June 2012 (cont’d)


Financing activitiesProceeds from bank loans 173,971,833 167,214,554 94,972,000 165,000,000Repayment of bank loans (95,029,860) (144,888,383) (82,958,044) (140,120,768)Repayment of finance leases (83,450,648) (42,287,830) (56,995,256) (27,152,333)Proceeds from issue of shares 17,203,110 29,585,660 17,203,110 29,585,660Share application monies - 34,970 - 34,970Interest paid (97,975,529) (53,055,495) (33,139,498) (30,680,337)Dividends paid (50,558,013) (35,930,100) (38,475,084) (27,102,668)Net cash used in financing activities (135,839,107) (79,326,624) (99,392,772) (30,435,476)

Net change in cash and cash equivalents 69,715,642 (227,736,773) 15,490,587 (12,593,536)

Movement in cash and cash equivalents:At 01 July (278,927,200) (51,172,877) (14,319,831) (1,726,295)Exchange differences - (17,550) - -Net change in cash and cash equivalents 69,715,642 (227,736,773) 15,490,587 (12,593,536)At 30 June (209,211,558) (278,927,200) 1,170,756 (14,319,831)

(a) Cash and cash equivalents made up of:Cash in hand and at bank 67,128,428 22,557,812 8,643,568 2,480,199Bank overdrafts (276,339,986) (301,485,012) (7,472,812) (16,800,030)

(209,211,558) (278,927,200) 1,170,756 (14,319,831)

(b) Acquisition of subsidiaryNet assets:-Share capital - 137,676,614 - -Retained earnings - 56,187,429 - -Revaluation reserves - 81,264,549 - -

- 275,128,592 - -

% of net assets acquired (49.50%) - 136,188,653 - -

(c) Net cash outflow on acquisition of subsidiary:Purchase consideration settled in cash - (2,835,080) - -Cash and cash equivalents of subsidiaryCash in hand and at bank - 7,612,646 - -Bank overdrafts - (210,097,841) - -

- (205,320,275) - -


Notes to the Consolidated Financial Statements for the year ended 30 June 2012


1. General information and statement of compliance with IFRS

Leal & Co. Ltd, the “Company”, was incorporated in the Republic of Mauritius on 29 January 1976 as a private company with liability limited by shares. The status of the Company was subsequently changed to a public company with liability limited by shares on 14 April 1981. The Company’s registered office is Motorway M1, Les Pailles, Republic of Mauritius.

The Company and its subsidiaries are together referred to as “the Group”.

The principal activities of the Group are:

(i) to deal in motor vehicles, spare parts and rental of cars; (ii) to deal in all kinds of mechanical engineering and agricultural equipment and spares; (iii) to deal in computer hardware and software;(iv) to deal in computer accessories, systems and peripherals;(v) to act as tour operator and travel agent;(vi) to engage in the distribution of pharmaceutical products, consumer goods and products for the textile industry;(vii) to manufacture cosmetics;(viii) to engage in the manufacture and general retailing business; and(ix) to provide renewable energy services.

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by International Accounting Standards Board (IASB).

2. Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Group

At the date of authorisation of these consolidated financial statements, certain new standards, amendments and interpretations to existing standards have been published by the IASB but not yet effective, and have not been adopted early by the Group.

Management anticipates that all of the relevant pronouncements will be adopted in the Group’s accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Group’s financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group’s financial statements.

IFRS 13 Fair Value MeasurementIFRS 12 Disclosure of Interests in Other EntitiesIFRS 11 Joint ArrangementsIFRS 10 Consolidated Financial Statements IAS 32 Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32)IAS 27 Separate Financial Statements (Revised 2011)IAS 28 Investments in Associates and Joint Ventures (Revised 2011)IAS 19 Employee Benefits (Revised 2011)IFRS 9 Financial InstrumentsIAS 1 Presentation of Items of Other Comprehensive Income (Amendments to IAS 1)IAS 12 Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12)IFRS 1 Government Loans (Amendments to IFRS 1) IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7)

The directors anticipate that the adoption of these standards and interpretations in the future years will have no material impact on the Group’s financial performance and financial position. 3. Summary of accounting policies

3.1 Overall considerations

The consolidated financial statements have been prepared using the significant accounting policies and measurement bases summarised below.



3. Summary of accounting policies (cont’d)

3.2 Basis of consolidation

The Group financial statements consolidate those of the parent company and of its subsidiaries as of 30 June 2012. Subsidiaries are all entities over which the Group has the power to control the financial and operating policies. The Group obtains and exercises control through more than half of the voting rights. All subsidiaries have a reporting date of 30 June.

All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on these transactions. Where unrealised losses/gains on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Profit or loss and other comprehensive income of subsidiary acquired or disposed of during the year are recognised from the effective date of acquisition, or up to the effective date of disposal, as appropriate.

Non-controlling interest, presented as part of equity, represents the portion of the subsidiaries’ profit or loss and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interest based on their respective ownership interests.

3.3 Business combinations

The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred.

The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree’s financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values.

Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of a) fair value of consideration transferred, b) the recognised amount of any non-controlling interest in the acquiree and c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (ie gain on a bargain purchase) is recognised in profit or loss immediately.

3.4 Investments in subsidiaries

Investments in subsidiaries are shown at cost less impairment losses in the separate financial statements. Where the carrying amount of the investment is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount and the difference is charged to the statement of comprehensive income. On disposal of the investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the statement of comprehensive income. 3.5 Investments in associates

Associates are those entities over which the Group is able to exert significant influence but which are neither subsidiaries nor joint ventures.

Investments in associates are initially recognised at cost and subsequently accounted for using the equity method. Any goodwill or fair value adjustment attributable to the Group’s share in the associate is not recognised separately and is included in the amount recognised as investment in associates.

The carrying amount of the investments in associates are increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the associate, adjusted where necessary to ensure consistency with the accounting policies of the Group.




3.5 Investments in associates (cont’d)

However, when the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. If the associate subsequently reports profits, the investor resumes recognising its share of those profits only after its share of the profits exceeds the accumulated share of losses that has previously not been recognised.

Unrealised gains and losses on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are eliminated, the underlying asset is also tested for impairment.

3.6 Goodwill

Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognised. See note 3.3 for information on how goodwill is initially determined. Goodwill is carried at cost less accumulated impairment losses.

3.7 Foreign currency

Functional and presentation currency

The consolidated financial statements are presented in currency MUR, which is also the functional currency of the Company.

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency of the Group, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at year-end exchange rates are recognised in profit or loss.

Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.

Foreign operations

In the Group’s financial statements, all assets, liabilities and transactions of the Group entities with a functional currency other than the MUR are translated into MUR upon consolidation. The functional currency of the entities in the Group has remained unchanged during the reporting period.

On consolidation, assets and liabilities have been translated into MUR at the closing rate at the reporting date. Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into MUR at the closing rate. Income and expenses have been translated into MUR at the average rate over the reporting rate.

Exchange differences are charged/credited to other comprehensive income and recognised in the currency translation reserve in equity. On disposal of a foreign operation, the related cumulative translation differences recognised in equity are reclassified to profit or loss and are recognised as part of the gain or loss on disposal.

The average exchange rates for the year ended 30 June 2012 were as follows:

RsEURO/MUR 38.77SCR/MUR 2.03




3.8 Revenue

Revenue arises from the sale of goods and the rendering of services. It is measured by reference to the fair value of consideration received or receivable, excluding value added tax, rebates, and trade discounts.

Revenue is recognised when the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transactions will flow to the Group, the costs incurred can be measured reliably and the Group has transferred to the buyer the significant risks and rewards of ownership. In determining risks and rewards of ownership, the Group also considers ‘Bill and hold sales’, in which delivery is delayed at the buyer’s request but the buyer takes title and accepts billing.

Interest income is reported on an accrual basis using effective interest method.

Rental income is recognised on a straight-line basis over the term of the lease.

Dividend income is recognised when the right to receive payment is established.

Management fees and commission earned are recognised on an accrual basis.

3.9 Operating expenses

Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin. Expenditure for warranties is recognised and charged against the associated provision when the related revenue is recognised. 3.10 Borrowing costs

Borrowing costs are expensed in the period in which they are incurred and reported in finance costs.

3.11 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined by the weighted average cost method. The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct costs and related production overheads, but exclude interest expenses. Net realisable value is the estimate of the selling price in the ordinary course of business less any applicable selling expenses. Provision for obsolete and slow moving inventories is made for inventories over 3 years, where necessary.

3.12 Property, plant and equipment

Land and building

Property, plant and equipment are initially recorded at cost. Land and buildings are subsequently shown at market value, based on periodic valuations by external independent valuers, less subsequent depreciation for buildings. Any revaluation surplus is recognised in other comprehensive income and credited to the revaluation reserve in equity. To the extent that any revaluation decrease or impairment loss has previously been recognised in profit or loss, a revaluation increase is credited to profit or loss with the remaining part of the increase recognised in other comprehensive income. Downward revaluations of land are recognised upon appraisal or impairment testing, with the decrease being charged to other comprehensive income to the extent of any revaluation surplus in equity relating to this asset and any remaining decrease recognised in profit or loss. Any revaluation surplus remaining in equity on disposal of the asset is transferred to retained earnings.

As no finite useful life for land can be determined, related carrying amounts are not depreciated.

Other property, plant and equipment

Property, plant and equipment are initially recognised at acquisition cost or manufacturing cost, including any costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management. Property, plant and equipment are subsequently measured using the cost model, cost less subsequent depreciation and impairment losses.




3.12 Property, plant and equipment (cont’d)

Other property, plant and equipment (cont’d)

Depreciation is recognised on a straight-line basis to write down the cost less estimated residual values. The following useful lives are as follows:

Building - 2%Building on leasehold land - 2%Furniture and equipment - 10 - 50%Computer equipment - 10 - 33¹/3%Motor vehicles - 10 - 30%Tools and other equipment - 10 - 33¹/3%

No depreciation is provided on freehold land and on assets under the course of construction. All acquisitions not exceeding Rs 3,000 are expensed in the same period of acquisition.

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

Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss within other income or other expenses.

The assets’ residual values, useful lives and methods of depreciation are reviewed and adjusted, if appropriate, at each reporting date. Repairs and maintenance costs are expensed as incurred.

3.13 Leased assets

Finance leases

The economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards of ownership of the leased asset. Where the Group is a lessee in this type of arrangement, the related asset is recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any. A corresponding amount is recognised as a finance lease liability.

The corresponding finance lease liability is reduced by lease payments net of finance charges. The interest element of lease payments represents a constant proportion of the outstanding capital balance and is charged to statement of comprehensive income, as finance costs over the period of the lease.

Operating leases

All other leases are treated as operating leases. Where the Group is a lessee, payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred. Where the Group is a lessor, rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

3.14 Intangible assets

Intangible assets comprise of brand names, computer software, website costs and customers lists and technical knowhow. Website costs are included within computer software.

The intangible assets are amortised over a period of 3 to 10 years.

The method of amortisation reflects the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up and where such pattern cannot be reliably determined, a straight line amortisation method is used. Intangible assets are also subject to impairment testing.



3. Summary of accounting policies (Cont’d)

3.15 Impairment of assets

At each reporting date, the Group reviews the carrying amount of its assets to determine whether there is any indication that these assets have suffered an impairment loss. When an indication of impairment loss exists, the carrying amount of the asset is assessed and written down to its recoverable amount.

3.16 Investment property

Investment properties are properties held to earn rentals and/or for capital appreciation, and are accounted for using the fair value model.

Investment properties are revalued every two years and are included in the consolidated statement of financial position at their open market values. These values are supported by market evidence and are determined by external professional valuers with sufficient experience with respect to both the location and the nature of the investment property.

Any gain or loss resulting from either a change in the fair value or the sale of an investment property is immediately recognised in profit or loss within change in fair value of investment property.

Rental income and operating expenses from investment property are reported within other income and administrative expenses.

3.17 Financial instruments

Recognition, initial measurement and derecognition

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities are described below.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expired.

Classification and subsequent measurement of financial assets

For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments, are classified into loans and receivables and available-for-sale financial assets.

All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each reporting date to identify whether there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets.

The category determines subsequent measurement and whether any resulting income and expense is recognised in profit or loss or in other comprehensive income.

All income and expenses relating to financial assets that are recognised in statement of comprehensive income are presented within finance income and finance costs, except for impairment of receivables which is presented within administrative expenses.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

An allowance for credit losses is established if there is objective evidence that the Group will be unable to collect all amounts due.




3.17 Financial instruments (Cont’d)

Classification and subsequent measurement of financial assets (Cont’d)

Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of a counterparty and other shared credit risk characteristics. The impairment loss estimate is then based on recent historical counterparty default rates for each identified group.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that do not qualify for inclusion in any of the other categories. The Group’s available-for-sale financial assets include quoted and unquoted investments.

The Group’s unquoted available-for-sale financial assets are stated at cost which is a reflection of the fair value. Quoted investment is measured at fair value and gains or losses are recognised in other comprehensive income and reported within their components of equity in the consolidated statement of financial position. When the asset is disposed of or is determined to be impaired, the cumulative gain or loss is recognised in other comprehensive income is reclassified from the equity reserve to profit or loss.

Reversals of impairment losses are recognised in other comprehensive income, except for financial assets that are debt securities which are recognised in profit or loss only if the reversal can be objectively related to an event occurring after the impairment loss was recognised.

Classification and subsequent measurement of financial liabilities

The Group’s financial liabilities include borrowings and trade and other payables.

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

All interest-related charges on financial liabilities are included within finance costs or finance income.

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. 3.18 Derivative financial instruments

The Group enters into derivative financial instruments to manage its exposure of foreign exchange risks. The derivative financial instruments used are mainly forward exchange rate contracts. Derivatives are initially measured at fair value at the date the derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss.

3.19 Post employment benefits

The Group provides post employment benefits through defined contribution and defined benefit plans.

Defined contribution plan

A defined contribution plan is a pension plan under which the Group pays fixed contributions into an independent entity. The Group has no legal or constructive obligations to pay further contributions after its payment of the fixed contribution. Contributions to this plan are recognised as an expense in the period that relevant employee services are received.

Contributions to the National Pension Scheme are expensed to the consolidated statement of comprehensive income in the year in which they fall due.




3.19 Post employment benefits (Cont’d)

Defined benefit plan

Plans that do not meet the definition of a defined contribution plan are defined benefit plans. The defined benefit plan sponsored by the Group defines the amount of pension benefit that an employee will receive on retirement by reference to length of service and final salary. The legal obligation for any benefits remains with the Group, even if plan assets for funding the defined benefit plan have been set aside. Plan assets may include assets specifically designated to a long-term benefit fund as well as qualifying insurance policies.

The liability recognised in the statement of financial position for defined benefit plans is the present value of the defined benefit obligation (DBO) at the reporting date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs.

Management estimates the DBO annually with the assistance of independent actuaries. The estimate of its post-retirement benefit obligations is based on standard rates of inflation, future salary increase, future guaranteed pension increase and post retirement mortality rates. It also takes into account the Group’s specific anticipation of future salary increase. Discount factors are determined close to each year-end by reference to high quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension liability.

Actuarial gains and losses are not recognised as an expense unless the total unrecognised gain or loss exceeds 10% of the greater of the obligation and related plan assets. The amount exceeding this 10% corridor is charged or credited to profit or loss over the employees’ expected average remaining working lives. Actuarial gains and losses within the 10% corridor are disclosed separately. Past service costs are recognised immediately in profit or loss, unless the changes to the pension plan are conditional on the employees remaining in services for a specified period of time (the vesting period). In this case, the past service costs are amortised on a straight-line basis over the vesting period. 3.20 Income taxes

Tax expense recognised in profit or loss comprises the sum of deferred tax, current tax and CSR (Corporate Social Responsibility Fund) not recognised in other comprehensive income or directly in equity.

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

The Company and its Mauritian subsidiaries are subject to Corporate Social Responsibility Fund and the contribution is at a rate of 2% on the book profit of the preceding financial year.

The foreign subsidiaries are subject to tax laws applicable in the jurisdiction where they are incorporated.

Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases.

Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting period.

Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future taxable income, based on the Group’s forecast of future operating results which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. Deferred tax liabilities are always provided for in full.

Deferred tax assets and liabilities are offset only when the Group has a right and intention to set off current tax assets and liabilities from the same taxation authority.

Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income (such as the revaluation of building) or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively.




3.21 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. At the time of the effective payment, the provision is deducted from the corresponding expenses. All known risks at reporting date are reviewed in detail and provision is made where necessary.

3.22 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

Bank overdrafts are shown within borrowings under current liabilities. 3.23 Equity, reserves and dividend payments

Share capital is determined using the nominal value of shares that have been issued.

Share premium represents the excess amount received on the nominal value of shares issued.

Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

Share application monies represents funds received from shareholders and for which shares have yet to be allotted.

All transactions with owners of the parent are recorded separately within equity.

Other components of equity include the surplus on the revaluation of land and building, retranslation of foreign operations and revaluation of available-for-sale investment.

Retained earnings include the retained profits for both the current and prior periods.

Dividend distributions payable to equity shareholders are included in current liabilities when the dividends have been approved by the Board prior to the reporting date.

3.24 Trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business and are classified as current assets if settlement is expected within one year.

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

3.25 Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers and are classified as current liabilities if payment is due within one year.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

3.26 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

Fees paid on loan facilities are recognised as transaction costs.




3.27 Comparatives

Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year. 3.28 Significant management judgement in applying accounting policies

When preparing the consolidated financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.

Significant management judgement

The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the consolidated financial statements.

Recognition of service

Determining when to recognise revenues from after-sales services requires an understanding of the customer’s use of the related products, historical experience and knowledge of the market.

Deferred tax assets

The assessment of the probability of future taxable income in which deferred tax assets can be utilised is based on each entity’s latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilised without a time limit, that deferred tax asset is usually recognised in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances.

Estimation uncertainty

Defined benefit liability

Management estimates the defined benefit liability annually with the assistance of independent actuaries; however, the actual outcome may vary due to estimation uncertainties. The estimate of its defined benefit liability Rs 44,265,123 (2011: Rs 39,539,934) is based on standard rates of inflation, future salary increases, future guaranteed pension increase and post retirement mortality rates. It also takes into account the Group’s specific anticipation of future salary increases. Discount factors are determined close to each year-end by reference to high quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related pension liability. Estimation uncertainties exist particularly with regard to salary escalation (analysis given in Note 19), which may vary significantly in future appraisals of the Group’s defined benefit obligations.

Useful lives of depreciable assets

Management reviews the useful lives of depreciable assets at each reporting date. At the reporting date, management assesses that the useful lives represent the expected utility of the assets to the Group. The carrying amounts are analysed in Notes 8 and 9. Actual results, however, may vary due to technical obsolescence, particularly relating to software and IT equipment.

Intangible assets

Management uses its judgement when determining whether the recognition requirements for the capitalisation of intangible assets are met. After capitalisation management monitors whether the recognition requirements continue to be met and whether there are indicators that these assets may be impaired.

Inventories

Inventories are measured at the lower of cost and net realisable value. In estimating net realisable values, management takes into account the most reliable evidence available at the times the estimates are made. Actual prices may differ from these estimates.




3.28 Significant management judgement in applying accounting policies (Cont’d)

Estimation uncertainty (Cont’d)

Available-for-sale investments

The Group follows the guidance of IAS 39 on determining when an investment is other than temporarily impaired. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost and the financial health and near-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.

4. Financial instrument risk

Risk management objectives and policies

The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls, and to monitor the risks and adherence to limits by means of reliable and up-to date information systems.

The Group’s risks are managed at the level of the Board of Directors. The Board is responsible for overseeing the establishment and implementation of effective risk management systems and the monitoring of internal compliance and controls.

The most significant financial risks to which the Group is exposed are described below.

4.1 Market risk analysis

The Group is exposed to market risk through its use of financial instruments and specifically to currency risk, which result from both its operating and investing activities.

Foreign currency sensitivity

The Group is exposed to foreign exchange risk arising from its currency exposures, primarily with respect to the Euro (“EUR”) and the US Dollar (“USD”). Consequently, the Group is exposed to the risk that the exchange rates of the Mauritian rupee relative to the EUR and USD may change in a manner which has a material effect on the reported value of the Group’s assets and liabilities which are in EUR and USD.

The Group manages its foreign currency exposures by forecasting its need for foreign currencies and retaining such amounts that will be necessary to settle purchases denominated in foreign currencies. The Group also has a banking facility to negotiate better rates for spot transactions.

To mitigate the Group’s exposure to foreign currency risk, non-MUR cash flows are monitored and forward exchange contracts are entered into in accordance with the Group’s risk management policies.

Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts shown are those reported to key management translated into MUR at the closing rate:

30 June 2012 The Group The CompanyFinancial

assetsFinancial liabilities

Financial assets

Financial liabilities

Rs Rs Rs RsUnited States Dollar (USD) 38,805,893 92,119,539 5,706 253,151Euro (EUR) 91,232,106 297,621,631 10,343,186 117,624,077South African Rand (ZAR) 2,571,850 7,818,043 - 62,018Pounds Sterling (GBP) 335,497 1,028,906 335,497 2,588Seychelles Rupee (SCR) 594,947 438,346 - -Others 12,331 - - -Total 133,552,624 399,026,465 10,684,389 117,941,834



30 June 2011 The Group The CompanyFinancial

assetsFinancial liabilities

Financial assets

Financial liabilities

Rs Rs Rs RsUnited States Dollar (USD) 55,177,918 95,160,292 16,614 24,754Euro (EUR) 92,095,424 326,269,024 9,226,532 188,206,410South African Rand (ZAR) 8,517,509 13,307,938 - 2,579,433Pounds Sterling (GBP) 424,677 1,266,805 391,106 -Seychelles Rupee (SCR) 320,870 22,592 - -Others 10,649 - - -Total 156,547,047 436,026,651 9,634,252 190,810,597

4. Financial instrument risk (Cont’d)

4.1 Market risk analysis (Cont’d)

Foreign currency sensitivity (Cont’d)

The exchange rates for the year ended 30 June 2012 and 30 June 2011 were as shown below:

The Group

The following table illustrates principally the sensitivity of profit and equity in regards to the Group’s financial assets and financial liabilities and the USD/MUR, EUR/MUR and ZAR/MUR exchange rate, “all other things being equal”.

It assumes a 9% change of the USD/MUR exchange rate for the year ended 30 June 2012 (2011: 8%), a 6% change for the EUR/MUR (2011: 8%) exchange rate and a 12% change for ZAR/MUR (2011: 1%). These percentages have been determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Group’s foreign currency financial instruments held at each reporting date and also takes into account forward exchange contracts that offset effects from changes in currency exchange rates.

If the MUR had strengthened against the USD by 9%, Euro by 6% and ZAR 12% respectively, then this would have the following impact:

If the MUR had weakened against the USD by 9%, Euro by 6% and ZAR by 12% respectively, then this would have the following impact:

The Company

If the MUR had strengthened/weakened against EURO by 6% (2011: 8%), the impact would have been a decrease/increase of MUR 6,436,853 respectively on the Company’s profit and equity (2011: decrease/increase of MUR 14,284,177).

2012 2011Rs Rs

EURO/MUR 39.42 41.85USD/MUR 31.35 28.85ZAR/MUR 3.81 4.31

2012 2011Profit Equity Profit Equity

Rs Rs Rs RsEURO 12,383,372 12,383,372 18,733,888 18,733,888USD 4,798,225 4,798,225 3,198,590 3,198,590ZAR 629,543 629,543 47,904 47,904


Rs Rs Rs RsEURO (12,383,372) (12,383,372) (18,733,888) (18,733,888)USD (4,798,225) (4,798,225) (3,198,590) (3,198,590)ZAR (629,543) (629,543) (47,904) (47,904)




4.1 Market risk analysis (Cont’d)

Foreign currency sensitivity (Cont’d)

The following table details the forward foreign currency contracts outstanding for the Group as at the reporting date:

Average spot exchange rate Foreign currency Contract value Fair value

2012 2011 2012 2011 2012 2011 2012 2011Rs Rs Rs Rs

Outstanding contracts:

Buy EUR CurrencyLess than 3 months 39.42 - 750,000 - 29,415,000 - 29,565,000 -3 to 6 months 39.73 - 1,000,000 - 39,220,000 - 39,730,000 -

Buy USD CurrencyLess than 3 months 31.35 - 300,000 - 9,471,000 - 9,405,000 -3 to 6 months 31.35 - 450,000 - 14,206,500 - 14,107,500 -

Buy ZAR CurrencyLess than 3 months 3.81 - 2,400,000 - 8,843,673 - 9,144,000 -3 to 6 months 3.81 - 2,000,000 - 7,369,727 - 7,620,000 -

- - 108,525,900 - 109,571,500 -

One of the Company’s subsidiaries, Pharmacie Nouvelle Limited, has entered into forward foreign exchange contracts (for terms not exceeding 6 months) to minimise the exchange rate risk arising from future purchases. The derivative financial asset arising from these transactions was MUR 1,045,600 for the year ended 30 June 2012 (2011: Nil). Interest rate sensitivity

The Group’s policy is to minimise interest rate cash flow risk exposures on long-term financing. Long-term borrowings are therefore usually at fixed rates. At 30 June 2012, the Group has interest bearing financial liabilities in the form of bank overdrafts, bank loans, import loans and finance leases. The Group is exposed to interest rate risk as it also borrowed funds at floating interest rates. The interest on bank loans are based on the market rates. The Group is not exposed to interest rate on finance leases since they carry fixed rate of interest.

The sensitivity analysis below has been determined based on the exposure to interest rates at the reporting date. The analysis is prepared assuming that the amount of liability outstanding at the reporting date was as such outstanding for the whole period.

If interest rate had been 25 basis points higher/lower, the effect on profit and equity would have been as follows:

The Group The Company2012 2012

Profit Equity Profit EquityRs Rs Rs Rs

+25% (1,685,458) (1,685,458) (616,044) (616,044)- 25% 1,685,458 1,685,458 616,044 616,044


Rs Rs Rs Rs

+25% (1,249,924) (1,249,924) (433,599) (433,599)- 25% 1,249,924 1,249,924 433,599 433,599




4.2 Credit risk analysis

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has policies in place to deal with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Group uses publicly available financial information and its own trading records to rate its major customers. The Group continuously monitors defaults of customers and incorporates this information into its credit risk controls.

The Group’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognised at the reporting date, as summarised below:

In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large number of customers in various industries and geographical areas. Based on historical information about customer default rates, management considers the credit quality of trade receivables that are not past due or impaired to be good. The Group also works on leasing conditions for capital goods sold in order to minimise risk of default.

Details of unimpaired trade receivables are described in Note 16.

The carrying amount of financial assets recorded in the consolidated financial statements represents the Group’s maximum exposure to credit risk.

The credit risk for the bank balances is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

4.3 Liquidity risk analysis

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

Ultimate responsibility for liquidity risk management rests with the Board of Directors who also monitors the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by ensuring timely recovery of receivables and also by securing credit facilities from financial institutions and related parties.


Non-current assetsAvailable-for-sale investments 1,706,738 1,580,088 139,500 65,000

Current assetsTrade and other receivables 714,061,144 678,109,453 184,005,274 152,786,670Cash and cash equivalents 67,128,428 22,557,812 8,643,568 2,480,199

781,189,572 700,667,265 192,648,842 155,266,869

Total 782,896,310 702,247,353 192,788,342 155,331,869




4.3 Liquidity risk analysis (Cont’d)

The following are the contractual maturities of financial liabilities including interest payments:

The Group

The Company

30 June 2012Carrying amount

Contractual cash flows

Less than one year 1-5 years

Rs Rs Rs Rs

Bills payable 207,436,079 360,133,280 360,133,280 -Obligations under finance leases 209,898,505 244,644,620 79,988,816 164,655,804Bank overdrafts 276,339,986 276,339,986 276,339,986 -Bank loans 469,202,761 511,183,433 440,281,327 70,902,106Trade and other payables 671,790,292 671,790,292 671,790,292 -Total 1,834,667,623 2,064,091,611 1,828,533,701 235,557,910

30 June 2011

Bills payable 110,143,794 112,301,913 112,301,913 -Obligations under finance leases 186,916,833 219,018,800 75,716,401 143,302,399Bank overdrafts 301,485,012 301,485,012 301,485,012 -Bank loans 390,260,788 407,568,273 336,129,376 71,438,897Trade and other payables 589,569,438 589,569,438 589,569,438 -Total 1,578,375,865 1,629,943,436 1,415,202,140 214,741,296

30 June 2012

Bills payable 83,568,642 83,924,488 83,924,488 -Obligations under finance leases 150,375,010 176,097,538 56,081,829 120,015,709Bank overdrafts 7,472,812 7,472,812 7,472,812 -Bank loans 163,083,812 178,016,576 125,277,627 52,738,949Trade and other payables 222,341,117 222,341,117 222,341,117 -Total 626,841,393 667,852,531 495,097,873 172,754,658

30 June 2011

Bills payable 22,605,319 22,926,790 22,926,790 -Obligations under finance leases 120,485,053 140,540,735 51,196,398 89,344,337Bank overdrafts 16,800,030 16,800,030 16,800,030 -Bank loans 151,069,856 167,985,580 105,855,659 62,129,921Trade and other payables 250,312,918 250,312,918 250,312,918 -Total 561,273,176 598,566,053 447,091,795 151,474,258



5. Capital management policies and procedures

The Company’s capital management objectives are:

• to ensure its ability and that of its subsidiaries to continue as a going concern; and• to provide an adequate return to the shareholders

by pricing products and services commensurately with the level of risk.

The Company monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of the statement of financial position.

The Company sets the amount of capital in proportion to its overall financing structure, that is, equity and financial liabilities. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, reduce capital, issue new shares, or sell assets to reduce debts.

The gearing ratio for the Group and the Company are as follows:

The Group 2012 2011Rs Rs

Debt 955,144,252 878,662,633Cash and cash equivalents (67,128,428) (22,557,812)

Net debt 888,015,824 856,104,821

Equity 896,851,550 809,834,599

Total capital 1,784,867,374 1,665,939,420

Gearing ratio 49.75% 51.39%

The Company 2012 2011Rs Rs

Debt 320,931,634 288,354,939Cash and cash equivalents (8,643,568) (2,480,199)

Net debt 312,288,066 285,874,740

Equity 612,903,148 533,814,863

Total capital 925,191,214 819,689,603

Gearing ratio (Net debt to total capital) 33.75% 34.88%

Debt is defined as long and short-term borrowings, as detailed in Note 20.

Equity includes both capital and reserves.



6. Financial instruments measured at fair value

The Group’s quoted investment is measured at fair value. The Group’s unquoted investments are measured at cost since their fair values cannot be reliably measured. The Group’s unquoted investments, other financial assets and liabilities are measured at their carrying amounts, approximate their fair values

The financial assets measured at fair value in the consolidated statement of financial position are grouped into three levels of fair value hierarchy. This hierarchy groups financial assets into three levels based on the significance of inputs used in measuring the fair value of the financial assets. The fair value hierarchy has the following levels:

-Level 1: quoted prices (unadjusted) in active markets for identical assets;- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset, either directly (that is, as prices) or indirectly (that is, derived from prices); and

-Level 3: inputs for the asset that are not based on observable market data (unobservable inputs).

The hierarchy of the fair value measurement of the Group’s financial assets is as follows:

The Group

30 June 2012 Level 1 Level 2 Level 3 TotalRs Rs Rs Rs

AssetsAvailable-for-sale investments 139,400 - - 139,400

The Company

30 June 2012 Level 1 Level 2 Level 3 TotalRs Rs Rs Rs

AssetsAvailable-for-sale investments 82,000 - - 82,000

Listed security

The listed equity security is publicly traded on the Stock Exchange of Mauritius in the Republic of Mauritius. Fair value has been determined by reference to quoted bid price of the investment at the reporting date.

7. Goodwill

The directors are of the opinion that the goodwill has not suffered any impairment at 30 June 2012.

2012 2011Rs Rs

At 01 July 265,240 -On acquisition of subsidiary - 265,240

265,240 265,240Exchange differences (19,387) -At 30 June 245,853 265,240



8. Intangible assets

Intangible assets have been pledged as security for bank and other credit facilities.

The Group Brand name

Computer software Others Total

Rs Rs Rs Rs

CostAt 01 July 2011 15,541,395 1,855,781 - 17,397,176Additions - 625,789 3,000,000 3,625,789Exchange differences (248,394) (18,567) - (266,961)Impairment losses - (182,070) - (182,070)At 30 June 2012 15,293,001 2,280,933 3,000,000 20,573,934

Amortisation At 01 July 2011 6,867,987 710,611 - 7,578,598Charge for the year 1,065,735 193,796 1,000,000 2,259,531Exchange differences - (17,604) - (17,604)At 30 June 2012 7,933,722 886,803 1,000,000 9,820,525

Net book valuesAt 30 June 2012 7,359,279 1,394,130 2,000,000 10,753,409

CostAt 01 July 2010 14,766,184 1,594,421 - 16,360,605Additions - 261,360 - 261,360Exchange differences 140,801 - - 140,801Acquisition through business combination 634,410 - - 634,410At 30 June 2011 15,541,395 1,855,781 - 17,397,176

Amortisation At 01 July 2010 5,745,006 586,574 - 6,331,580Charge for the year 960,000 124,037 - 1,084,037Exchange differences 57,245 - - 57,245Acquisition through business combination 105,736 - - 105,736At 30 June 2011 6,867,987 710,611 - 7,578,598Net book valuesAt 30 June 2011 8,673,408 1,145,170 - 9,818,578

The CompanyBrand name

Computer software Total

Rs Rs Rs

CostAt 01 July 2011 and 30 June 2012 6,708,000 1,225,071 7,933,071

AmortisationAt 01 July 2011 4,644,000 339,731 4,983,731Charge for the year 688,000 122,507 810,507At 30 June 2012 5,332,000 462,238 5,794,238

Net book valuesAt 30 June 2012 1,376,000 762,833 2,138,833

CostAt 01 July 2010 and 30 June 2011 6,708,000 1,225,071 7,933,071

Amortisation At 01 July 2010 3,956,000 217,224 4,173,224Charge for the year 688,000 122,507 810,507At 30 June 2011 4,644,000 339,731 4,983,731

Net book valuesAt 30 June 2011 2,064,000 885,340 2,949,340


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re a

nd

equi

pmen

tTo

ols

and

equi

pmen

tCo

mpu

ter

equi

pmen

tTo

tal

RsRs

RsRs

RsRs

RsCo

stAt

01

July

201

053

,200

,000

163,

507,

878

240,

763,

937

52,9

08,5

9329

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38,8

70,0

1557

8,45

9,03

4Ad

ditio

ns15

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4,00

5,57

953

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598

3,93

3,67

22,

693,

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6,01

4,16

685

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Disp

osal

s (1

5,80

6,47

2)(2

,450

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)(3

9,35

6,40

3)(6

,054

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)(7

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)(1

0,09

0,03

7)(8

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7,36

3)Re

valu

atio

n su

rplu

s44

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5,21

0,66

1-

--

-49

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At 3

0 Ju

ne 2

011

97,3

00,0

0017

0,27

4,11

825

4,57

3,13

250

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24,3

82,8

0434

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632,

111,

624

Depr

ecia

tion

At 0

1 Ju

ly 2

010

-6,

305,

738

99,8

83,7

1622

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16,8

83,0

2220

,043

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165,

426,

580

Char

ge fo

r the

yea

r-

3,30

6,23

631

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5,09

0,37

12,

301,

652

6,01

1,71

548

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Disp

osal

s ad

just

men

t-

(13,

833)

(24,

176,

775)

(6,0

54,8

39)

(7,5

19,6

12)

(10,

090,

037)

(47,

855,

096)

Reva

luat

ion

adju

stm

ent

-(9

,314

,474

)-

--

-(9

,314

,474

)At

30

June

201

1-

283,

667

107,

587,

631

21,3

46,5

9311

,665

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15,9

64,7

2115

6,84

7,67

4N

et b

ook

valu

esAt

30

June

201

197

,300

,000

169,

990,

451

146,

985,

501

29,4

40,8

3312

,717

,742

18,8

29,4

2347

5,26

3,95

0

The

free

hold

land

and

bui

ldin

gs w

ere

reva

lued

in M

arch

201

1 by

Mes

srs

Alan

Tin

kler

, Ram

lack

han,

Cha

rter

ed V

alua

tion

Surv

eyor

s. Th

e va

luat

ion

was

mad

e on

the

bas

is o

f th

e m

arke

t va

lue

for

exis

ting

use.

If th

e fr

eeho

ld la

nd a

nd b

uild

ings

wer

e st

ated

on

the

hist

oric

al c

ost

basi

s, th

e am

ount

s w

ould

be

as fo

llow

s:

The

Grou

pTh

e Co

mpa

ny20

1220

1120

1220

11Rs

RsRs

Rs

Cost

242,

519,

544

238,

192,

809

176,

257,

275

175,

892,

162

Accu

mul

ated

dep

reci

atio

n(2

2,83

7,67

1)(2

7,25

7,82

1)(1

6,89

8,39

9)(1

4,06

0,07

0)N

et b

ook

valu

es21

9,68

1,87

321

0,93

4,98

815

9,35

8,87

616

1,83

2,09

2




Motor vehicles 220,231,292 199,366,953 162,150,758 136,066,107Furniture and equipment 3,239,398 4,096,334 - -Tools and equipment 4,606,422 3,512,115 3,441,689 1,809,880Computer equipment 2,195,136 2,797,866 1,978,978 2,797,866At 30 June 230,272,248 209,773,268 167,571,425 140,673,853

9. Property, plant and equipment (Cont’d)

The net book values of property, plant and equipment held under finance leases comprise of:

Property, plant and equipment have been pledged as security for bank and other credit facilities.

10. Investment property

The investment property is leased out on operating leases. Rental income amounted to Rs 4,189,476 (2011: Rs 4,067,460) is included within other income. Direct operating expenses of Rs 414,163 are reported within administrative expenses.

Investment property has been pledged as security for bank and other credit facilities.

11. Investments in subsidiaries

11.1 Unquoted and at cost


At 01 July 70,300,000 - 47,755,605 -Additions 70,772,025 47,755,605 70,772,025 47,755,605Transfers to property, plant and equipment (70,772,025) (47,755,605) - -Acquisition through business combination - 70,300,000 - -At 30 June 70,300,000 70,300,000 118,527,630 47,755,605

2012 2011Rs Rs

At 01 July 135,579,072 64,753,868Additions 28,904,025 36,171,760Reclassification - 34,653,444Impairment loss (12,600,000) -At 30 June 151,883,097 135,579,072



11. Investments in subsidiaries (Cont’d)

11.2 Details pertaining to the subsidiaries are as follows:

Direct holding

* Subsequent to year end, the name was changed to Heavy Duty Motors Ltd.

Indirect holding through Leal Equipements Compagnie Ltée

Indirect holding through Solar-Ernte-Technik Ltd

Indirect holding through Pharmacie Nouvelle Limited

Proportion of voting rights held

Name of subsidiaries Principal activitiesNo. of ordinary

shares held 2012 2011

Leal Communications & Informatics Ltd IT Services 1,302,500 90% 90%Leal Equipements Compagnie Ltée (see note below)

Mechanical engineering and agricultural equipment

211,765 75% 75%

United Motors Limited Dealer in motor vehicles and spare parts

570,167 100% 100%

Societe Clency & Patrick Leal Investment holding - 91% 91%DistriPc Ltd Softwares and hardwares 60,000 75% 75%Leal Logistics & Shipping Ltd Investment holding 33,538 92% 92%SARL Solinfo IT Services 6,000 50% 50%Supreme Refinement (EU) Ltd* Tour operator & travel agent 80,000 100% 100%Pharmacie Nouvelle Limited (see note below)

Distributor of pharmaceutical products

7,469,074 55.20% 49.5%

Solar-Ernte-Technik Ltd (see note below)

Renewable energy 15,000 60% 60%




Leal Equipements Compagnie (Seychelles) Ltée

Mechanical and hydraulic after sales services

9,999 100% 100%

Equipment Provider Solutions Company Ltd

Dealer in motor vehicles ,spare parts, commercial and industrial equipment and accessories and electronic appliances

1,000 100% -




Compagnie Mauricienne D’Exportation Limitee

Import and distribution of textile products

10,435 100% 100%

Compagnie Manufacturière de Produits Cosmétiques Limitée

Manufacturing of cosmetics 109,368 100% 100%

Océan Indien Distribution (Ile Maurice) Ltée

Retailing of imported flat packed furniture

- 100% 100%

Distrimed Ltée Dormant 160,000 100% 100%


Name of subsidiary Principal activityNo. of ordinary


SETL Outremer Ltd Export of equipment 10,000 100% -


12. I

nves

tmen

ts in

ass

ocia

tes

Deta

ils p

erta

inin

g to

the

Gro

up’s

asso

ciat

es a

re a

s fo

llow

s:

* The

sha

re o

f los

ses

has

been

lim

ited

to t

he in

tere

st in

the

ass

ocia

tes.

2012

2011

The

Grou

pRs

Rs

At 0

1 Ju

ly3,

064,

818

91,3

97,9

52Ad

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ns

1,16

4,00

025

0,00

0Sh

are

of (l

oss)

/pro

fit fo

r the

yea

r(2

,011

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)3,

268,

469

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s re

ceiv

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(2,2

57,3

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Tran

sfer

from

/(to)

ava

ilabl

e-fo

r-sa

le in

vest

men

ts-

2,30

0,00

0Fa

ir va

lue

adju

stm

ents

bef

ore

dere

cogn

ition

as

asso

ciat

e-

17,2

65,12

2D

erec

ogni

tion

of

asso

ciat

e:Fa

ir va

lue

of in

vest

men

ts t

rans

fer t

o in

vest

men

t in

sub

sidi

arie

s-

(51,

918,

566)

Shar

e of

pro

fit o

f ass

ocia

tes

-(5

7,24

0,83

8)At

30

June

2,

217,

590

3,06

4,81

8

Not

es to

the

Cons

olid

ated

Fin

anci

al S

tate

men

ts

for t

he y

ear e

nded

30

June

201

2

Nam

e of

ass

ocia

tes

Prin

cipa

l act

iviti

esAs

sets

Liab

ilitie

sRe

venu

ePr

ofit/

(lo

ss)

% in

tere

st h

eld

Grou

p sh

are

of

profi

t/ (

loss

)Re

cogn

ised

sha

re

of p

rofit

/ (lo

ss)

Unre

cogn

ised

sh

are

of lo

ss30

Jun

e 20

12Rs

RsRs

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usiv

e Is

land

Ltd

To

ur O

pera

tor

2,04

1,66

11,

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524

11,7

21,6

36(7

61,9

22)

27%

(205

,719

)(2

05,7

19)

-

Ciso

lve

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rnat

iona

l Ltd

Info

rmat

ion

&

Com

mun

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serv

ices

7,69

3,35

312

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15,8

98(7

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%(2

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)(1

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,359

)(1

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idriv

e Lt

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ent

2,88

9,69

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125,

449

7,83

2,03

5(1

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%(8

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73)

(250

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)(6

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Luxu

ry A

utom

obile

s Co

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Sale

of c

ars

9,56

3,50

04,

696,

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41,9

56,4

2419

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ry C

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tdSa

le o

f car

s1,

077,

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l

23,2

65,9

9623

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25,9

93(9

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)(3

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(2,0

11,2

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12. I

nves

tmen

ts in

ass

ocia

tes

(Con

t’d)

All a

ssoc

iate

s ar

e in

corp

orat

ed in

the

Rep

ublic

of M

aurit

ius.

Not

es to

the

Cons

olid

ated

Fin

anci

al S

tate

men

ts

for t

he y

ear e

nded

30

June

201

2

Nam

e of

ass

ocia

tes

Prin

cipa

l act

iviti

esAs

sets

Liab

ilitie

sRe

venu

ePr

ofit

/(lo

ss)

% in

tere

st h

eld

Grou

p sh

are

of

profi

t/ (

loss

)30

Jun

e 20

11Rs

RsRs

RsRs

Excl

usiv

e Is

land

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To

ur O

pera

tor

2,

556,

313

1,

640,

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1

2,95

3,07

9 (3

17,7

62)

27%

(85,

796)

Phar

mac

ie N

ouve

lle L

imite

d*Di

strib

utor

of p

harm

aceu

tical

pro

duct

s89

3,02

3,77

961

6,05

6,76

11,1

58,6

80,8

8123

,552

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33.4

0% 6

,555

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Ciso

lve

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rnat

iona

l Ltd

Info

rmat

ion

& C

omm

unic

atio

n se

rvic

es11

,412

,222

10,3

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2310

,345

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(7,5

68,3

82)

40%

(3,0

27,3

53)

Flex

idriv

e Lt

dFl

eetm

aste

r

-

-

-

-

50

%

-

Luxu

ry A

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s Co

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Sale

of c

ars

6

,615

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1

,939

,368

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,538

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214,

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(107

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ry C

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tdSa

le o

f car

s

1,14

3,81

8

25

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-

(133

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50%

(66,

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l

914

,751

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63

0,20

0,15

8 1,

193,

517,

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15

,318

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3,2

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69

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rmac

ie N

ouve

lle L

imite

d ha

s be

en c

onso

lidat

ed u

sing

the

equ

ity m

etho

d up

to

30 A

pril

2011

, the

dat

e w

hen

cont

rol w

as o

btai

ned

and

ther

eaft

er it

has

bee

n de

reco

gnis

ed a

s an

ass

ocia

te.

The

effe

ct o

f thi

s de

reco

gniti

on a

s an

ass

ocia

te w

as a

s fo

llow

s:

2011 Rs

Fair

valu

e of

inve

stm

ent

in P

harm

acie

Nou

velle

Lim

ited

befo

re d

erec

ogni

tion

51,9

18,5

66Ca

rryi

ng a

mou

nt o

f inv

estm

ent

at d

ate

cont

rol i

s ob

tain

ed(9

1,89

4,28

2)Lo

ss o

n de

reco

gniti

on(3

9,97

5,71

6)

The

Com

pany

2012

2011

RsRs

At 0

1 Ju

ly7,

961,

000

40,0

64,4

44Ad

ditio

ns

1,16

4,00

025

0,00

0Tr

ansf

er to

inve

stm

ent

in s

ubsi

diar

y-

(34,

653,

444)

Tran

sfer

from

/(to)

ava

ilabl

e-fo

r-sa

le in

vest

men

ts-

2,30

0,00

0At

30

June

9,

125,

000

7,96

1,00

0



13. Available-for-sale investments

Details of the investments are as follows:

The above investments are stated at cost which is a reflection of the fair values except for the State Bank of Mauritius Ltd which is stated at its fair value based on closing bid price at year end.

14. Loan

The loan to a related company is interest free, unsecured and receivable after more than one year.

15. Inventories (At cost)

The cost of inventories expensed during the year was as follows:

The above inventories have been pledged as security for bank and other credit facilities.


At 01 July 1,580,088 3,880,088 65,000 2,365,000Transfer (to)/from investments in associates - (2,300,000) - (2,300,000)

Fair value gain 126,650 - 74,500 -At 30 June 1,706,738 1,580,088 139,500 65,000

2012The Group The Company

Name of companies Class of shares Fair value Cost Fair value CostRs Rs Rs Rs

Progos Ltd Ordinary shares 50,000 50,000 50,000 50,000State Bank of Mauritius Ltd Ordinary shares 139,400 12,750 82,000 7,500Ariva Ltee Ordinary shares 1,478,838 1,478,838 - -Other investments Ordinary shares 38,500 38,500 7,500 7,500Total 1,706,738 1,580,088 139,500 65,000


Motor vehicles 146,201,395 152,939,452 88,443,826 114,777,944Machines and equipment 32,655,369 22,430,296 - -General goods 66,432,151 60,796,769 - -Spare parts 141,118,527 124,918,672 80,516,250 79,188,619Raw materials 31,729,517 67,616,666 - -Work-in-progress 948,959 4,273,168 109,663 107,733Finished goods 310,702,066 252,278,621 - -Goods in transit 226,834,383 138,015,970 112,189,844 68,814,074

956,622,367 823,269,614 281,259,583 262,888,370Less provision for write down (22,870,808) (18,432,612) (5,249,905) (4,252,971)Total 933,751,559 804,837,002 276,009,678 258,635,399


Cost of inventories 3,496,368,106 2,310,865,589 947,370,529 921,199,244



16. Trade and other receivables

All amounts are short-term. The net carrying value of trade receivables is considered a reasonable approximation of fair value.

All of the Group’s trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables were found to be impaired and an allowance for credit losses of Rs 23,466,167 (2011: Rs 20,197,570) has been recorded accordingly within other expenses.

The impaired trade receivables are mostly due from customers in the business-to-business market that are experiencing financial difficulties.

The movements in the allowance for credit losses are presented below:

Included in trade receivables balance are trade debtors with a carrying amount of Rs 91,367,031 (2011: Rs 146,418,153) which are past due at year end for which the Group has not provided as there has not been a significant change in the credit quality and the amounts are fully recoverable. An analysis of unimpaired trade receivables that are past due is given below:

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the directors believe that no further credit provision is required in excess of the existing provision.

The amounts due by the related parties are unsecured, interest free and receivable on demand. Trade and other receivables have been pledged as security for bank and other credit facilities.

The Group The Company 2012 2011 2012 2011 Rs Rs Rs Rs

Trade receivables, gross 705,934,350 658,354,083 169,722,530 141,936,854 Allowance for credit losses (23,466,167) (20,197,570) (9,810,198) (4,954,583)Trade receivables, net 682,468,183 638,156,513 159,912,332 136,982,271 Due by related parties 649,849 2,294,120 18,968,177 12,898,280 Other receivables 30,943,212 37,658,820 5,124,765 2,906,119 Financial assets 714,061,244 678,109,453 184,005,274 152,786,670Advances to suppliers 32,618,769 29,852,111 1,235,313 1,455,648 Other receivables and prepayments 54,657,013 48,769,318 65,907,039 68,126,172 Non-financial assets 87,275,782 78,621,429 67,142,352 69,581,820Total 801,337,026 756,730,882 251,147,626 222,368,490


At 01 July 20,197,570 7,094,230 4,954,583 1,679,871Transfer - 4,500,000 - 4,500,000Impairment loss 11,670,295 6,422,168 7,967,631 4,352,942Amounts written off (uncollectible) (8,401,698) (8,691,827) (3,112,016) (5,578,230)Provision through business combination - 10,872,999 - -At 30 June 23,466,167 20,197,570 9,810,198 4,954,583


60-90 days 41,343,011 27,866,591 22,703,264 8,147,119Over 90 days 50,024,020 118,551,562 33,439,262 54,025,215Total 91,367,031 146,418,153 56,142,526 62,172,334



17. Cash and cash equivalents

The cash and cash equivalents above have been pledged as security for bank and other credit facilities.

18. Equity

18.1 Share capital

The share capital of the Company consists only of fully paid ordinary shares with a nominal value of Rs 100. All shares are equally eligible to receive dividends and the repayment of capital and one share represents one vote at the shareholders’ meeting.

The share capital was increased during the year by the issue of 303,652 ordinary shares of Rs 100 each at a premium of Rs 30 each.

18.2 Share premium

The Group The Company 2012 2011 2012 2011 Rs Rs Rs RsCash at bank and in handMUR 49,182,622 8,639,050 8,179,748 675,351 USD 7,508,473 3,731,853 5,706 16,607 EURO 9,812,012 9,461,116 122,617 1,397,135 GBP 335,497 391,106 335,497 391,106 ZAR 1,708 128,816 - - SCR 12,331 10,649 - - Others 275,785 195,222 - - Total 67,128,428 22,557,812 8,643,568 2,480,199

2012 2011 Rs Rs

At 01 July 227,739,000 204,980,800 Issue of shares 30,365,200 22,758,200 At 30 June 258,104,200 227,739,000

2012 2011 Rs Rs

At 01 July 12,610,260 5,782,800 Issue of shares 9,109,560 6,827,460 At 30 June 21,719,820 12,610,260



18. Equity (Cont’d)

18.3 Other component of equity

The Group The Company Revaluation and other reserves Revaluation and other reserves 2012 2011 2012 2011 Rs Rs Rs Rs

At 01 July 156,799,625 91,481,254 71,959,102 13,333,968

Transfer from non-controlling interests on additional investments in subsidiaries 4,898,578 - - -

Other comprehensive incomeRevaluation of land 4,499,402 65,328,716 - 58,625,134 Available-for-sale investments- Current year gain 126,650 - 74,500 -Exchange differences on translation of foreign operations (63,442) (10,345) - -Total other comprehensive income 4,562,610 65,318,371 74,500 58,625,134

At 30 June 166,260,813 156,799,625 72,033,602 71,959,102

18.4 Share application monies

Share application monies represented funds received from the shareholders and for which shares have been issued during the year.

19. Retirement benefit obligations

19.1 Defined benefit plan

The Group The Company 2012 2011 2012 2011 Rs Rs Rs RsAmounts recognised in the statement of financial position Present value of funded obligations 223,461,551 127,954,914 150,120,518 127,954,914 Fair value of plan assets (130,983,051) (80,137,592) (91,107,342) (80,137,592)Deficit of plan assets 92,478,500 47,817,322 59,013,176 47,817,322 Unrecognised actuarial loss (48,213,377) (26,335,067) (33,716,747) (26,335,067)Liability recognised 44,265,123 21,482,255 25,296,429 21,482,255 Liability arising on business combination - 18,057,679 - -Total 44,265,123 39,539,934 25,296,429 21,482,255



19. Retirement benefit obligations (Cont’d)

19.1 Defined benefit plan (Cont’d) The Group The Company 2012 2011 2012 2011 Rs Rs Rs RsAmounts recognised in the statement of comprehensive income

Current service cost 9,856,707 8,737,461 7,228,585 6,437,188 Interest cost 20,594,882 17,500,645 12,777,903 10,915,186 Expected return on plan assets (12,748,611) (12,346,525) (8,331,224) (7,435,064)Recognised actuarial losses 1,039,739 351,715 870,713 353,623 Scheme expenses 709,964 551,657 468,680 365,912 Cost of insuring risk benefits 2,525,451 1,815,944 1,869,921 1,157,805 Effect of curtailment (1,648) (108,606) - - Total included in staff costs 21,976,484 16,502,291 14,884,578 11,794,650

Movement in liability recognised in the statement of financial position

At 01 July 39,539,934 19,411,328 21,482,255 19,411,328 Total expenses 21,976,464 11,794,650 14,884,558 11,794,650 Contributions paid (17,251,275) (9,723,723) (11,070,384) (9,723,723)Liability arising on business combination - 18,057,679 - -At 30 June 44,265,123 39,539,934 25,296,429 21,482,255

Change in defined benefit obligations

Present value of defined benefit obligation at 01 July 207,721,747 102,872,629 127,954,914 102,872,629Current service cost 9,856,707 6,437,188 7,228,585 6,437,188 Interest cost 20,594,882 10,915,186 12,777,903 10,915,186Benefits paid (19,452,721) - - -Actuarial losses 7,537,953 7,949,943 4,956,133 7,949,943Net transfer in (2,797,017) (220,032) (2,797,017) (220,032)Present value of defined benefit obligations at 30 June 223,461,551 127,954,914 150,120,518 127,954,914On acquisition of subsidiary - 79,766,833 - -Total 223,461,551 207,721,747 150,120,518 127,954,914




19.1 Defined benefit plan (Cont’d)

The Group The Company 2012 2011 2012 2011 Rs Rs Rs RsChange in plan assets Fair value of plan assets at 01 July 131,391,631 67,611,759 80,137,592 67,611,759 Expected return on plan assets 12,748,611 7,435,064 8,331,224 7,435,064 Employer’s contribution 17,251,275 9,723,723 11,070,384 9,723,723 Scheme expenses (709,944) (365,912) (468,660) (365,912)Cost of insuring risk benefits (2,525,451) (1,157,805) (1,869,921) (1,157,805)Actuarial losses (4,926,213) (2,889,205) (3,296,260) (2,889,205)Benefits paid (19,449,841) - - -Net transfer in (2,797,017) (220,032) (2,797,017) (220,032)Fair value of plan assets at 30 June 130,983,051 80,137,592 91,107,342 80,137,592 On acquisition of subsidiary - 51,254,039 - -Total 130,983,051 131,391,631 91,107,342 80,137,592

The assets in the plan and the expected rate of return were:


Local equities 49,118,643 49,271,861 34,165,253 30,051,597Overseas equities 29,471,187 29,563,119 20,499,152 18,030,959Fixed interest 45,844,068 45,987,070 31,887,569 28,048,157Properties 6,549,153 6,569,582 4,555,368 4,006,880Total market value of assets 130,983,051 131,391,632 91,107,342 80,137,593Present value of plan liability (223,461,551) (207,721,747) (150,120,518) (127,954,914)Deficit (92,478,500) (76,330,115) (59,013,176) (47,817,321)Unrecognised actuarial gain 48,213,376 36,790,182 33,716,746 26,335,067

Net liability for retirement obligations recognised in the statement of financial position (44,265,124) (39,539,933) (25,296,430) (21,482,254)





Amounts for the current and previous periods

The Group 2008 2009 2010 2011 2012Rs Rs Rs Rs Rs

Defined benefit obligations (140,547,359) (153,124,575) (166,327,336) (207,721,747) (223,461,551)Plan Assets 90,580,233 98,289,797 112,792,660 131,391,631 130,983,051Surplus/(deficit) (49,967,126) (54,834,778) (53,534,676) (76,330,116) (92,478,500)Experience (gains)/losses on plan liabilities (14,283,057) 2,238,731 7,973,301 (16,040,567) (7,533,877)Experience l(gains)/losses on plan assets (1,172,345) (3,857,742) (3,259,888) (5,001,084) (4,926,213)

The Company 2008 2009 2010 2011 2012Rs Rs Rs Rs Rs

Defined benefit obligations (75,254,439) (87,391,754) (102,872,629) (127,954,914) (150,120,518)Plan Assets 48,203,442 57,257,904 67,611,759 80,137,592 91,107,342Surplus/(deficit) (27,050,997) (30,133,850) (35,260,870) (47,817,322) (59,013,176)Experience (gains)/losses on plan liabilities (9,313,762) 2,238,731 (695,414) (7,949,943) (4,956,133)Experience l(gains)/losses on plan assets (602,795) (2,286,274) (1,934,902) (2,889,205) (3,296,260)

The assets of the plan are invested in Anglo-Mauritius Deposit Administration fund. The latter is expected to produce a smooth progression of return from one year to the next. The breakdown of the assets above corresponds to a notional allocation of the underlying investments based on the long-term strategy of the fund.

As the fund is expected to produce a smooth return, a fairly reasonable indication of future returns can be obtained by looking at historical ones. Therefore, the long term expected return on asset assumption has been based on historical performance of the fund.

In terms of the individual expected returns, the expected return on equities has been based on an equity risk premium above a risk free rate. The risk free rate has been measured in accordance to the yields on government bonds at the measurement date.

The fixed interest portfolio includes government bonds, debentures, mortgages and cash. The expected return for this asset class has been based on yields of government bonds at the measurement date

The main actuarial assumptions used for accounting purposes were as follows:The Group and the Company

Discount rate 9.5%Expected return on plan assets 9.5%Future salary increase 7.5%Future guaranteed pension increase 0.0%





General description of the plan

The scheme is a final salary Defined Benefit Plan. The plan provides for a pension at retirement and a benefit on death or disablement in service before retirement. The scheme for managers and directors are included in the holding company scheme and the contributions were paid by the respective group companies.

Retirement benefit obligations have been calculated using the Projected Unit Credit method and are based on the latest actuarial report dated September 2012 submitted by Anglo-Mauritius Assurance Society Limited.

The actual return on plan assets was Rs 11,022,303 for the year ended 30 June 2012 for the Group (2011: Rs 9,439,315).

The Group expects to make a contribution of Rs 17,236,554 to the defined benefit plans during the next financial year (2011: Rs 16,962,690).

19.2 Defined contribution scheme

The Group also operates a defined contribution scheme for its employees who joined as from 01 July 2004 and no pension liability arises from this scheme. The Group has made a contribution of Rs 7,957,485 to the defined contribution scheme during the year ended 30 June 2012 (2011: Rs 2,208,286).

20. Borrowings


Non-currentBank loans 59,016,612 62,234,425 44,171,212 52,983,908Obligations under finance leases (see note below) 144,642,041 125,862,333 105,676,334 78,967,151Other loans 235,000 235,000 235,000 235,000

203,893,653 188,331,758 150,082,546 132,186,059CurrentBank overdrafts 276,339,986 301,485,012 7,472,812 16,800,030Bank loans 271,563,106 327,591,363 118,677,600 97,850,948Obligations under finance leases (see note below) 65,256,464 61,054,500 44,698,676 41,517,902Import loans 138,388,043 200,000 - -

751,547,599 690,330,875 170,849,088 156,168,880

Total borrowings 955,441,252 878,662,633 320,931,634 288,354,939



20. Borrowings (Cont’d)

Obligations under finance leases


Not later than 1 year 79,988,816 77,415,401 56,081,829 51,196,398Later than 1 year and not later than 5 years 164,655,802 141,803,399 120,015,708 89,344,337

244,644,618 219,218,800 176,097,537 140,540,735Future finance charges (34,746,113) (32,301,967) (25,722,527) (20,055,682)Present value of finance lease liabilities 209,898,505 186,916,833 150,375,010 120,485,053

Apportioned as follows:


Portion repayable within 1 year 65,256,464 61,054,500 44,698,676 41,517,902Portion repayable after more than 1 year 144,642,041 125,862,333 105,676,334 78,967,151

209,898,505 186,916,833 150,375,010 120,485,053

Fair value

The fair value of the finance lease liabilities is approximately equal to their carrying amount.

Summary of borrowings arrangements

Bank loans

The loans are secured by fixed and floating charges on the assets of the Group and the rates of interest vary between 8% and 12.25% at 30 June 2012.

Bank overdrafts

The bank overdrafts are secured by fixed and floating charges on the Group’s assets.

Leasing arrangements

Finance leases relate to motor vehicles, furniture and equipment, tools and equipment and computer equipment with leases varying from 3 to 5 years. The Group has options to purchase the leased assets for a nominal amount at the conclusion of the lease arrangements. The Group’s obligations under finance leases are secured by the lessors’ title to the leased assets.



21. Trade and other payablesThe Group The Company

2012 2011 2012 2011Rs Rs Rs Rs

Bills payable 207,436,079 110,143,794 83,568,642 22,605,319Trade payables 504,279,502 502,717,388 117,941,834 180,409,205Due to related parties 6,528,852 4,769,203 50,929,989 21,648,829Other payables and accruals 160,981,938 122,384,500 101,137,229 73,459,824Advances from customers 10,985,154 12,123,325 - -Total 890,211,525 752,138,210 353,577,694 298,123,177

The average credit period for payment is 30 days. No interest is charged on trade payables for overdue balances. The Group has financial risk management policies in place to ensure that all payables are settled within the credit timeframe.

The amounts due to related parties are unsecured, interest free and repayable on demand.

The carrying amount of trade and other payables is considered to be a reasonable approximation of the fair value.

Bill payables are secured by floating charges on the Group’s assets.

22. Dividends

During the year, the Company paid interim dividend of Rs 15,245,706 to its equity shareholders which represent a payment of Rs 6.69 per share (2,277,390 ordinary shares). A final dividend of Rs 23,229,378 was paid representing a payment of Rs 9 per share (2,581,042 ordinary shares).

23. Revenue

Revenue represents amounts invoiced to clients in respect of goods sold and services provided, net of returns and taxes.


Interim dividend paid 15,245,706 22,547,888 15,245,706 22,547,888Final dividend paid 23,229,378 4,554,780 23,229,378 4,554,780

38,475,084 27,102,668 38,475,084 27,102,668

Dividends payable 7,910,000 9,315,000 - -


Sales of new vehicles 2,059,986,985 1,555,829,719 978,987,548 935,888,059Sales of spare parts 371,798,752 343,505,691 224,836,910 223,220,768Sales of services 206,460,392 156,913,858 76,944,526 67,614,811Rental services 100,362,532 82,513,840 86,427,654 70,263,114Sales of solar panels 39,033,076 - - -Sales of IT products 802,519,401 835,026,138 - -Tour operator & travel agency services 3,525,388 2,142,844 - -Others 38,741,948 32,429,228 4,039,635 5,710,611Consumer goods 828,399,493 113,254,304 - -Pharmaceutical products 274,466,054 47,367,263 - -Textile and chemical auxiliaries 48,437,600 10,540,637 - -Total 4,773,731,621 3,179,523,522 1,371,236,273 1,302,697,363



24. Profit before tax

Analysis of staff costs (excluding directors’ remuneration and fees) and number of employees

25. Other income


The above is stated after charging /(crediting):Cost of inventories expensed 3,496,368,106 2,310,865,589 947,370,529 921,199,244Depreciation and amortisation 93,857,353 67,038,198 56,485,568 48,590,664Profit on disposals of property, plant and equipment 2,881,792 (6,307,886) (3,645,782) (3,495,863)Other services 149,720 228,027 - -Auditors’ remuneration 2,745,000 2,120,000 580,000 525,000Directors’ remuneration (note below) 68,595,540 44,727,929 40,943,282 32,572,407Staff costs (note below) 304,188,551 190,247,574 79,104,870 72,130,714Net foreign exchange gains (57,003,680) (47,315,977) (20,888,666) (19,112,417)Impairment losses 182,070 - 12,600,000 -Interest expense (Note 26) 97,975,529 53,055,496 33,139,498 30,683,337

Directors’ remuneration The Group The Company2012 2011 2012 2011Rs Rs Rs Rs

- Full-time directors 56,031,084 39,312,459 34,888,682 27,986,317- Part-time directors 12,564,456 5,415,470 6,054,600 4,586,090

68,595,540 44,727,929 40,943,282 32,572,407


Salaries and relevant contributions 284,646,234 179,723,802 74,289,139 68,015,727Social security costs 19,542,317 10,523,772 4,815,731 4,114,987

304,188,551 190,247,574 79,104,870 72,130,714

Number of employees at end of year 885 913 316 310


Dividend income 5,100 4,675 77,049,943 51,252,408Rental income 300,000 319,558 12,568,832 12,195,964Management fees - - 3,820,000 3,820,000Profit on disposals of property, plant and equipment 2,881,792 6,307,886 3,645,782 3,495,863Commission earned 52,833,188 - - -Others 35,764,938 23,022,540 15,364,910 7,211,663Total 91,785,018 29,654,659 112,449,467 77,975,898



26. Finance income/(costs)


26.1 Finance incomeInterest income on:- Bank deposits 21,022 61,863 21,022 61,863- Other loans 1,393,330 339,008 742,505 103,921Total 1,414,352 400,871 763,527 165,784

26.2 Finance costsInterest expense on:Bank overdrafts (20,398,597) (8,278,275) (1,023,660) (590,631)Bank loans (33,250,143) (13,626,539) (10,513,712) (11,730,274)Finance leases (22,660,063) (17,177,800) (13,021,307) (11,979,058)Others (4,550,524) (3,220,278) (1,263,127) (1,625,493)Import loans (17,116,202) (10,752,604) (7,317,692) (4,757,881)

(97,975,529) (53,055,496) (33,139,498) (30,683,337)Bank charges (8,332,489) (7,751,264) (1,850,026) (1,915,085)Total (106,308,018) (60,806,760) (34,989,524) (32,598,422)

27. Taxation

27.1 Income tax expense

The Company

The Company is liable to income tax at the rate of 15% and at 30 June 2012 it had an income tax liability of Rs 9,597,094 (2011: Rs 9,106,838). The income tax liability is calculated according to the tax rate and tax laws applicable to the fiscal period which it relates, based on the taxable profit for the year.

At 30 June 2012, the Company had a tax liability of Rs 1,866,308 for CSR. During the year, the Company has made qualified donations of Rs 1,332,477.

The Subsidiaries

The subsidiaries incorporated in the Republic of Mauritius are liable to income tax at the rate of 15% and at 30 June 2012, they had income tax liabilities of Rs 25,135,949 (2011: Rs 10,140,200).

The subsidiary incorporated in Reunion Island is liable to income tax at the rate of 33 1/3% and at 30 June 2012 it had no income tax liability (2011: Nil).

The subsidiary incorporated in the Republic of Seychelles is liable to income tax at the rate of 25% on the first SCR 1,000,000 chargeable income and 33% on all chargeable income above SCR 1,000,000 and at 30 June 2012, it had no income tax liability.



27. Taxation (Cont’d)

27.1 Income tax expense (Cont’d)

The Subsidiaries

The Company and its local subsidiaries are subject to the Alternative Minimum Tax (AMT). The AMT applies where a company’s “normal tax payable” is less than 7.5% of its book profit. It is not applicable where a company is exempt from tax or where 10% of any dividend declared does not exceed the “normal tax payable”. At 30 June 2012, the AMT did not apply to either the Company or its local subsidiaries.

The Company and its local subsidiaries are also subject to the Advanced Payment Scheme (APS) whereby they are required to submit an APS Statement and pay tax quarterly on the basis of either last year’s income or the income for the current quarter.

One of the subsidiaries had a CSR liability of Rs 679,063 for year ended 30 June 2012.

Statement of comprehensive incomeThe Group The Company

2012 2011 2012 2011Rs Rs Rs Rs

Income tax on the adjusted profit 34,733,044 20,458,563 9,597,094 9,106,838CSR 1,212,894 - 533,831 -Movement on deferred taxation (Note 27.2) (3,846,624) 1,538,949 1,098,924 292,810Under provision for prior year 1,284,986 839,904 436,736 913,425Tax expense 33,384,300 22,837,416 11,666,585 10,313,073

Statement of financial position


At 01 July 5,835,985 7,774,023 75,539 2,172,980Tax liability for the year 34,733,043 20,458,563 9,597,094 9,106,838Tax paid during the year (7,391,353) (8,154,898) (512,275) (3,086,405)Refund for tax overpaid 173,596 - - -Tax deducted at source (1,222,108) (690,797) (752,929) (609,796)Tax overpaid in prior year - (833,300) - -Tax paid under APS (26,154,437) (15,297,334) (7,816,648) (8,421,503)CSR 1,212,894 - 533,831 -Tax liability arising through business combination - 1,739,824 - -Under provision for prior year 1,284,986 839,904 436,736 913,425At 30 June 8,472,606 5,835,985 1,561,348 75,539

Tax payable 8,834,572 6,102,004 1,561,348 75,539Tax recoverable (361,966) (266,019) - -Net tax 8,472,606 5,835,985 1,561,348 75,539



27. Taxation (Cont’d)

27.1 Income tax expense (Cont’d)

Income tax reconciliation

The tax on the Group’s and the Company’s profit before taxation differs from the theoretical amount that would arise using the basic tax rate as follows:

27.2 Deferred taxation

Deferred income taxes are calculated on all temporary differences under the liability method at the rate of 15%.

The movement on the deferred taxation is as follows:


Profit before tax 156,696,101 141,226,287 111,952,344 103,628,533

Tax at 15 % 23,504,415 21,183,943 16,792,852 15,544,280Non-allowable expenses 21,440,949 13,272,039 14,352,212 9,442,926Unrecognised tax losses 5,024,673 - - -Under provision for prior year 1,284,986 839,903 436,736 913,425Deferred tax assets not recognised 545,653 1,020,338 - -Exempt income (696,096) (3,556,976) (12,104,329) (8,212,241)Movement in deferred taxation (3,846,624) 1,538,949 1,098,924 292,810Share of profit of associates - (490,270) - -Other items 139,393 - - -CSR 1,212,894 - 533,831 -Annual allowances (15,225,943) (10,970,510) (9,443,641) (7,668,127)Tax expense 33,384,300 22,837,416 11,666,585 10,313,073


At 01 July (8,483,422) (13,131,503) (11,207,282) (10,914,472)Movement for the year 3,846,624 (1,538,949) (1,098,924) (292,810)Deferred tax on acquisition of subsidiary - 6,187,030 - -At 30 June (4,636,798) (8,483,422) (12,306,206) (11,207,282)

Deferred tax assets 12,358,006 6,924,796 - -Deferred tax liabilities (16,994,804) (15,408,218) (12,306,206) (11,207,282)Net (4,636,798) (8,483,422) (12,306,206) (11,207,282)



28. Earnings per share

The earnings and number of ordinary shares in issue used in the calculation of earnings per share are as follows:

Last year, the number of ordinary shares has not been weighted for the calculation of earnings per share since the issue of share was made on 28 June 2011.

29.2 Goodwill on acquisition for year ended 30 June 2011

Goodwill of Rs 265,240 was from the acquisition of Leal Equipements Compagnie (Seychelles) Ltd on 31 March 2011. The negative goodwill of Rs 59,198,326 was on account of the derecognition of Pharmacie Nouvelle Limited as associate in the consolidated financial statements.

29. Consolidation

29.1 Details regarding the new subsidiaries, their activities, their total assets and liabilities as at 30 June 2012, and revenues and net operating profit/(loss) for its period then ended are as follows:


Profit for the year attributable to equity holders 123,291,350 110,708,734 100,285,759 93,315,460

Number Number Number Number

Weighted average number of ordinary shares in issue 2,340,651 2,049,808 2,340,651 2,049,808

Rs Rs Rs Rs

Earnings per share 52.67 54.01 42.85 45.52

Equipment Provider Solutions Company Ltd SETL OUTREMER LTD

Country of incorporation Republic of Mauritius Republic of Mauritius

Proportion of ownership interest 100% 100%

Activities

Dealer in motor vehicles, spare parts, commercial and industrial equipment and accessories and

electronic appliances Export of equipment

Total assets 969 4,000,000

Total liabilities 32,665 15,480

Operating revenues - -

Operating loss (32,705) (15,480)

Rs RsPurchase considerationFair value of previously held equity interest 51,918,568 -Cost of shares acquired 25,071,759 26,247Total consideration 76,990,327 26,247

Fair value of net assets at date of acquisition:Share capital 68,149,923 21,189Pre-acquisition reserve 68,038,730 (267,723)

136,188,653 (246,534)

Goodwill (59,198,326) 272,781

Currency retranslation difference - (7,541)

At 30 June 2011 (59,198,326) 265,240



30. Related party transactions

For the year ended 30 June 2012, both the Company and its subsidiaries entered into the following transactions with related parties:

The Group

The amounts receivable from related parties are unsecured, interest free and receivable on demand.

The amounts payable to related parties are unsecured, interest free and repayable on demand.

All the other transactions are carried out on commercial terms.

The Company

Nature of relationship Nature of transactionsVolume of

transactions

Debit/(credit)balances at

30 June 2012

Debit/(credit) balances at

30 June 2011Rs Rs Rs

Associates Sales of goods and services 172,456 873,958 701,502Associates Financing 176,500 (257,443) (80,943)Associates Purchase of goods 48,300 - (48,300)Associates Loans 95,960 95,960 -Key management personnel Remuneration and other benefits 110,996,797 - -Common directorship Loans - 2,159,696 2,159,696

Shareholder Corporate services 39,606 39,606 -Subsidiaries Purchases of goods 18,906,349 (296,519) (2,128,897)Subsidiaries Corporate services 18,744,596 - -Subsidiaries Sales of goods 25,967,181 6,254,938 1,717,109Sub subsidiary Sales of land and building 70,000,000 (50,011,478) -Subsidiaries Other services 7,774,168 1,336,083 1,575,261Subsidiaries Rental income 12,568,832 - -Subsidiaries Loans 4,984,471 13,737,053 8,752,582Subsidiaries Dividend income 77,046,943 50,990,000 57,985,000Associates Sales of goods and services 172,456 873,958 701,502Associates Financing 176,500 (257,443) (80,943)Associates Purchase of goods 48,300 - (48,300)Associates Loans 95,960 95,960 -Key management personnel Remuneration and other benefits 69,597,371 - -

Directors fees 40,943,282 - -



31. Commitments

The Group

Operating lease arrangements where the Group is a lessee

At the reporting date, the Group had outstanding commitments under non-cancellable operating leases which fall due as follows:

At the reporting date, the Group had outstanding commitments under non-cancellable operating leases which fall due as follows:

Operating lease payments represent rental for motor vehicles, offices and land. The lease is negotiated for an average term of 5 years and rentals are fixed for an average of 5 years.

The Company

Operating lease arrangements where the Company is a lessee

Operating lease payments represent rental for motor vehicles, offices and land. The lease is negotiated for an average term of 5 years and rentals are fixed for an average of 5 years.

Operating lease arrangement where the Company is a lessor

Rental income for the year amounted to Rs 12,568,832 (2011: Rs 12,195,964).

2012 2011 Rs Rs

Minimum lease payment under operating lease recognised in statement of comprehensive income 38,449,211 18,039,288

2012 2011 Rs Rs

Minimum lease payment under operating lease recognised in statement of comprehensive income 10,061,806 9,896,432

2012 2011 Rs Rs

Within one year 44,039,456 21,024,905

Between 2 to 5 years 71,893,093 56,899,143

2012 2011 Rs Rs

Within one year 10,197,247 9,575,385

Between 2 to 5 years 9,161,878 31,466,287



31. Commitments

The Company

Operating lease arrangement where the Company is a lessor

The freehold land and building was leased out on operating leases. Future maximum lease payments are as follows:

2012 2011Rs Rs

Within 1 year 12,794,121 10,124,0481 to 5 years 9,402,080 21,963,134

22,196,201 32,087,182

32. Other commitments

The GroupRs

Capital CommitmentsApproved and contracted for 70,743,028

The capital commitments comprise of commitments for acquisition of office equipment and IT equipment and for the construction of a building.

33. Contingent liabilities

At 30 June 2012, the Group had given bank guarantees of Rs 121,298,239 in favour of third parties, for which no material adverse effect on the Group’s financial position or results of operations is anticipated by the directors.

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Documents

Leal & Co. Ltd | Annual Report 2012 · 8 Leal & Co. Ltd | Annual Report 2012 Chairman’s Statement (cont’d) Overview of our Automobile Sector Activities (Cont’d) Sales of Passenger