Publication of this newsletter has been done with reasonable care and diligence. However the Stock Exchange of Mauritius Ltd. makes no

representations gives no warranty and disclaims all liability in respect thereof and shall not be held liable for any damage, loss or costs incurred

resulting from any error in the information or any use of the said information. Appropriate independent advice should be obtained before making any investment decision.

Stock Exchange of

Mauritius: Newsletter

September 2017

INSIDE

THIS ISSUE:

1 EXCHANGE

INSIGHT

Investor Education -

SEM Young Investor

Awards 2017: Real

investor experience,

Real competition,

Real investor

learning

2 INDUSTRY

FOCUS:

Understanding

IAS19 information

in companies'

Annual Report and

Accounts

3 SEM

DASHBOARD

2

1. EXCHANGE INSIGHT:

Investor Education - SEM Young Investor Awards 2017: Real investor experience, Real competition, Real investor learning

Introduction:

The Stock Exchange of Mauritius (SEM) held the Awards Ceremony for the 25th edition of the SEM Young

Investor Award Competition (SEMYIA) 2017 at the Octave Wiehé Auditorium, Réduit, on 16 August 2017.

This Investor Education initiative is now a well-established annual national event, with this year’s

competition attracting 208 teams of five students each from 104 colleges across the country, representing

1040 students. Bel Air SSS, Team B won the first prize of Rs 200,000 and the Challenge Trophy offered by

the Stock Exchange of Mauritius. The second and third prizes of Rs 100,000 and Rs 50,000 went to

Sodnac SSS, Team A and Team B respectively. The MCB Grouo, the National Mutual Fund and Aon

Hewitt Ltd sponsored the three cash prizes respectively. Ebene SSS Girls, Team B won the challenge

trophy for the Best Report, sponsored by the CFA Society Mauritius.

Initiated in 1993, the SEM Young Investor Award Competition stood this year at its 25th edition.

Throughout the years, this annual event generated a growing interest from high school lower 6 students

across the country, and the number of participants and schools considerably increased over the last 25 years. This Investor Education initiative is now a well-established annual national event.

This year, a keen interest by students was also noted since the very beginning of the competition, through

their frequent interactions with the Stock Exchange, stockbrokers and asset managers to obtain

information and stock market advice, as well as through the active management of their portfolios.

Broadly speaking, the aims of the competition are to inculcate an investment culture among college

students by giving them a hands-on exposure to a key component of the financial services sector, namely

the securities industry; to give participants an opportunity to understand the operational aspects of the

Exchange; and trigger the interests of college students in the financial sector activities, so that they hopefully pursue higher studies and professional careers in this growing sector of the Mauritian economy.

SEMYIA Awards Ceremony 2017 at the Octave Wiehé Auditorium

3

The competition started on 3rd

April 2017 and ended on 30th June 2017, spreading over a period of 3

months. This year’s competition has attracted 208 teams of five students each from a record number of

104 colleges across the country, representing 1040 students. A technical briefing was initially held at

Octavié, on 15th March 2017 for all participating students to explain them the steps of competition, key

aspects of portfolio management and stock market technicalities they need to master, as well as

investment plan and report writing. This technical briefing was followed by a briefing given by Anglo

Mauritius Stockbrokers Ltd for all participating team leaders.

Each team was required to invest an investment fund of Rs 200,000 of token money in a portfolio

consisting of the shares of 5 companies listed on the Official Market of the Stock Exchange of Mauritius.

Each team was allowed to make up to ten investment swaps at any time during the period of the

competition. Portfolios were updated on a daily basis. On the 30th of June, each portfolio was valued and

the rate of return on each portfolio was calculated against the value of the initial portfolio. Besides, each

team was required to present a Report (in 2 parts: an Investment Plan and an Investment Report) at the

end of the competition. The Report carried 30% of the marks, the remaining 70% having been allotted to

the profits realised on the portfolio.

During the 3-month period of this year’s competition, starting from 3rd

April 2017 to 30th June 2017, the

all-share index SEMDEX increased by 9.66% and the Total Return Index SEMTRI increased by 10.50%

In this regard, it is particularly noteworthy that a commendable number of teams were able to outperform

the main stock market indices during this period. In fact, as many as 93 teams outperformed the all-share

index SEMDEX and 68 teams have outperformed the Total Return Index SEMTRI over the 3-month

period. The best team realised an outstanding portfolio performance of 22.15% over the 3-month period.

In his welcome address to participating students and the broader audience, Mr. Sunil Benimadhu said:

“There are a few pertinent objectives underpinning the SEM Young Investor Award. One of them is

SEM’s conviction in the importance of extracurricular activities for high-school students, with a view to

providing students with opportunities for personal development and growth outside the classroom and

complementing students’ academic endeavours. This is why, this national share market game is of direct

relevance to you as many of you will be thinking of joining university soon. For admission in top

universities, these institutions indeed look first at your academic grades and performance. But, you must

be aware that next, they are also interested in students’ extracurricular activities – in other words, how

you spend your time outside classes.’’

Address of Mr Sunil Benimadhu,

Chief Executive of the Stock Exchange of Mauritius

4

In his speech, Hon. Sudhir Sesungkur, Minister of Financial Services and Good Governance, said:“In

today’s world of increasingly complex financial decisions, financial literacy is a vital skill for everyone. It

is important that learning about money management begins at an early age, so that every school leaver

has the necessary basic financial skills to assist them in managing their future.SEM is praised for this

yearly national Investor Education Initiative for the young generation and it is interesting to see that an

astounding number of 98 teams were able to outperform SEMDEX and the best team realised a stunning

portfolio performance of 22.15% over a 3-month period.”

The winning team of the SEMYIA Edition 2017, namely Bel Air SSS Team B received the Challenge Trophy

offered by the SEM. The winning team won the cash prize of Rs 200,000 offered by the MCB Group, MCB

shares to the value of Rs 2500, MCB luxury bags, an individual MCB shield as well as a one-week traineeship

within the MCB Group represented at the Awards Ceremony by Mr. Gilbert Gnany, Chief Strategy Officer and Director of the MCB Group.

Mr. Gilbert Gnany, Chief Strategy Officer and Director of MCB Group, with Bel Air SSS Team B:

Bheekhun Bibi Huzeifah, Jokhoo Varsha Devi, Gooljar Aisha, Raojee Seeteexsha, Goolvaden Bibi Shaheen

Address of Hon. Sudhir Sesungkur, Minister of Financial Services and Good Governance

5

The runners-up of SEMYIA Edition 2017, namely Sodnac SSS, Team A, received a shield offered by the

SEM. The runners-up also won the cash prize of Rs 100,000 offered by NMF, NMF General Fund units to the

value of Rs 5000 as well as a one-day visit within the NMF Savings and Investments Department, as part of the

package offered by NMF, represented, at the Awards Ceremony by Mr. Bertrand Casteres, Director of

National Mutual Fund and CEO of the Mauritius Union Group.

Mr.Jerome Katz, Head of Financial Services of MUA Group with Sodnac SSS Team A:

Seetaram Riddhi Devi, Baijnath Meghna, Cunniapen Amy Nathania, Gopaul Chikirsha,Takoordyal Hansita

The third prize comprising a cash-prize of of Rs 50,000 and corporate gifts has been offered by Aon

Hewitt Ltd represented by Mr. Imrith Ramtohul, Senior Investment Consultant of Aon Hewitt Ltd and went

to Sodnac SSS,Team B. Ebene SSS Girls, Team B won a shield offered by the SEM as well as the

challenge trophy for the Best Report, offered by CFA Society Mauritius, represented by its Chairman

Nousher Sait.

The Stock Exchange of Mauritius congratulates the winners in this year’s competition and all participants,

as well as extends its thanks to the sponsors of this competition namely, the MCB, the NMF, Aon Hewitt,

and CFA Society Mauritius, for having played an instrumental role in supporting this annual Investor

Education initiative to develop an investment culture in Mauritius and the SEM is very grateful to them.

Hon.Sudhir Sesungkur, Minister of Financial Services and Good Governance, Harvesh Seegolam, CEO of FSC, Sunil

Benimadhu, SEM CEO, Gilbert Gnany, Chief Strategy Officer of MCB Group and Prof. Donald Ah-Chuen, Vice

Chairman of the SEM with 2017 SEMYIA winning team.

6

2 INDUSTRY FOCUS

Understanding IAS19 information in companies' Annual

Report and Accounts

Introduction

Companies in Mauritius must disclose their financial obligations in relation to benefits promised to their

employees on an annual basis in their accounts. These benefits can take various forms and include

pension and retirement gratuities, medical benefits, long-service and jubilee awards among others.

There are certain rules that should be followed in providing this kind of information in the accounts and

this article aims to explain the core principles to help shareholders and potential investors better

understand them so that they can make informed decisions about whether to invest in a company.

What does IAS 19 prescribe?

In Mauritius, IAS 19 first became mandatory for accounting periods ending in 2001 but the latest changes

were made in 2011 and became mandatory for accounting periods starting on or after 1 January 2013. It

sets out the detailed accounting and disclosure rules. The core principle is that the cost of employee

benefits must be recognised over the period over which the benefits are earned by the employee rather

than when it is paid. A typical example in Mauritius is the Employment Rights Act 2008 retirement

gratuity which is paid when an employee retires but companies must disclose a provision for benefits

earned for service rendered to date and an annual cost every year.

It is also important to bear in mind that IAS 19 covers all employee benefits whether this is funded in

advance (eg via a pension scheme) or unfunded.

What employee benefits are covered?

IAS 19 breaks down employee benefits into 4 main categories:

- Short-term benefits (Wages etc)

- Post-employment benefits (pension, retirement gratuities, medical benefits)

- Other long-term benefits (service awards, passage benefits)

- Termination benefits (lump sums)

Defined-Benefit (DB) schemes are the most common category. In this case, the company must disclose

the extent of any shortfall of assets relative to the liabilities calculated using the method and assumptions

prescribed by IAS 19. This is generally referred to as a 'provision' and works in a similar way to

'provision for bad debts'.

Generally DC schemes pose little or no issues. However, certain DC schemes may in fact be hybrid

schemes whereby the benefit provided at retirement is subject to some form of guarantee which is

provided by the Company. This could either be a minimum level of benefit based on a formula or a

minimum level of return achieved on the contributions paid. In this case, an actuarial valuation is

required to assess the level of underfunding.

7

Who sets the assumptions?

In a typical actuarial valuation carried out to determining funding requirements, assumptions are set with

the aim of achieving a stable long term contribution rate for the company. This also typically includes

margins for future adverse experience. Usually, it is the Trustees of the schemes who sets the assumptions

subject to actuarial advice (and could also be subject to company input).

For an IAS 19 assessment, the directors of the company have the responsibility to set the assumptions

taking into account key IAS 19 requirements. One such assumption is the 'discount rate'. In Mauritius, a

deep and developed market for Corporate Bonds is not existent and so reference is made to long-dated

Government Bonds. Recently, the Bank of Mauritius has started to issue bonds with a 20-year term and

the yields on these bonds are used.

Users of accounts should remember that the mean duration of such bonds is lower than 20 years. For

example, the effective duration of the latest issue of the 6.95% 20-year Government of Mauritius Bonds

due 15 April 2036 is approximately 11 years and the weighted yield is 7.09% pa. In deciding whether this

yield is appropriate to assess the IAS 19 provision, the directors should consider the mean term of the

liabilities and seek actuarial advice if necessary.

Another key assumption for defined-benefit scheme is the future rate of salary growth. Generally, the

directors of a company will have some idea of their future salary increase policies and these should be

factored in if known.

What is an asset ceiling?

Instances whereby a surplus of assets over the liabilities exists are rare in Mauritius but they do exist.

IAS 19 prescribes what is called an 'asset ceiling'. Generally, this limits the amount of asset that the

company can recognise since it is only able to recoup some of this by reducing future contributions to the

scheme. Any excess over this amount is locked in the scheme and cannot be recognised as an asset.

Conclusion

There detailed rules under IAS 19 would require more than a short article like this one to go over.

However, this article has shed some light over the key principles underlying IAS 19 disclosures. In my

next article, I will glean over what users of accounts must look for in company accounts when making

investment decisions.

About the author:

Noor Hotee is a Fellow of the Institute and Faculty of Actuaries and works as

Senior Consulting Actuary for Aon Hewitt Ltd. Prior to his current position, Noor

worked for Towers Watson in the United-Kingdom from 2001 to 2013.

8

3 SEM DASHBOARD:

Official Market Data

Market Summary & Highlights

Sectorial Performance

Sectors Index Volume (000) Turnover (Rs M) DY PER

BANKS, INSURANCE & OTHER FINANCE 3,409.03 19,734 699.95 3.56 10.01

COMMERCE 2,127.02 15,201 158.34 1.86 13.81 Index Performance

INDUSTRY 1,886.83 278 17.86 2.62 23.59 Return (%)

INVESTMENTS 1,013.55 41,024 295.40 2.79 17.42 31-Aug-17 1 Month YTD

LEISURE AND HOTELS 318.27 4,335 84.02 2.56 17.18 SEM-ASI 2,133.09 (0.15) 15.14

PROPERTY DEVELOPMENT 13.61 205 0.47 - - SEMTRI-ASI 7,495.71 (0.09) 17.34

SUGAR 1,167.08 70 4.53 3.21 26.34 SEMDEX 2,193.01 0.35 21.27

TRANSPORT 49.24 706 11.27 6.27 1.50 SEMTRI (Rs) 7,775.33 0.43 23.24

FOREIGN 6.84 1,170 2.85 - - SEMTRI (US$) 3,699.29 2.75 34.78

FUNDS/GBL 1 COMPANIES 114.10 8,479 386.90 0.74 55.34 SEM-10 422.53 (0.93) 22.46

DEBENTURES/GMTB 52 68.36 SEMSI 117.99 (0.19) 17.47

EXCHANGE TRADED FUND (ETF) 13 4.52 Market Capitalisation ( Rs Bn ) - SEM-ASI 331.85 3.78

DUAL CURRENCY TRADING - -

TOTAL 91,267 1,734.47

Top 5 Companies:

Official Market Indicators

Market Capitalisation % of Total August-17

Stocks Rs Billion Market Cap Market Capitalisation ( Rs Bn ) - SEM-ASI 331.85

MCB Group Limited 64.40 19.41 Market Cap / GDP (%) 92

Greenbay Properties Ltd 47.51 14.32 No. of Companies 56

IBL Ltd 30.95 9.33

SBM Holdings Ltd 23.75 7.16 Total Value Traded (Rs Million ) 1,734.47

ENL Land Ltd 13.76 4.15 Total Volume Traded (Million) 91.27

No. of Trading Sessions 23

Turnover % of Total Market PER 12.94

Stocks Rs Million Turnover Market Dividend Yield 2.55

MCB Group Ltd 292.91 33.09

Sanlam Africa Fund Ltd (Class A Shares) 132.74 15.00 Top Ten Companies in terms of Total Return - August 2017

SBM Holdings Ltd 110.30 12.46 Total Return

CIM Financial Services Ltd 40.58 4.58 Companies YTD

CIEL Limited 29.40 3.32

United Docks Ltd 68.93%

Volume % of Total IBL Ltd 49.47%

Stocks Million Volume Fincorp Investment Ltd 45.36%

SBM Holdings Ltd 14.73 41.37 Promotion and Development Ltd 40.17%

CIM Financial Services Ltd 4.35 12.23 Vivo Energy Mauritius Ltd 34.15%

CIEL Limited 3.91 10.98 Gamma Civic Ltd 32.36%

P. O. L. I. C. Y Ltd 2.07 5.82 United Basalt Products Ltd 30.28%

Sanlam Africa Fund Ltd (Class A Shares) 1.10 3.10 CIM Financial Services Ltd 30.02%

MCB Group Limited 27.56%

Lottotech Ltd 27.18%

Official Market

7,660.00

7,680.00

7,700.00

7,720.00

7,740.00

7,760.00

7,780.00

7,800.00

2,170.00

2,175.00

2,180.00

2,185.00

2,190.00

2,195.00

2,200.00 Evolution of SEMDEX & SEMTRI (Rs)

SEMDEX SEMTRI (RS)

9

Development and Enterprise Market Data

Market Statistics

Sectorial Performance

Sectors Index Volume Turnover (Rs) DY PER

BANKS AND INSURANCE AND OTHER FINANCE 586.74 108,527 3,468,179 3.04 11.94

COMMERCE 393.42 164,683 3,283,260 2.79 7.18

INDUSTRY 425.36 121,749 3,542,055 3.58 7.52

INVESTMENTS 329.54 3,328,901 47,351,561 3.31 7.48

LEISURE AND HOTELS 125.20 241,605 6,232,926 1.74 49.44

OTHERS 137.17 271,302 7,379,961 3.96 10.73

PROPERTY DEVELOPMENT 107.94 547,600 5,830,085 4.68 21.88

SUGAR 128.99 659,264 42,753,365 3.27 11.09

TRANSPORT 43.77 2,436 81,606 2.99 7.30

DEBENTURES / DEBT 262,722 29,019,868

5,708,789 148,942,866

Top 5 Companies:

Market Capitalisation % of Total

Stocks Rs Billion Market Cap

Medine Ltd 6.69 13.35

Ascencia Ltd (Class A Shares) 4.98 9.92

Ciel Textile Ltd 4.87 9.71

Constance Hotels Services Ltd 3.67 7.32

Swan Life Ltd 3.32 6.61

Turnover % of Total

Stocks Rs Million Turnover

Medine Limited (Ordinary) 42.68 28.66

United investment - Bond 25.23 16.94 Index Performance

United Investment Ltd 20.22 13.58

Excelsior United Development Companies Limited 12.55 8.43 31-Aug-17 1 Month YTD

ENL Ltd (Preference) 6.84 4.59 DEMEX 219.91 2.29 8.14

DEMTRI (Rs) 293.14 2.37 10.33

Volume % of Total DEMTRI (US$) 280.58 4.74 20.66

Stocks Thousands Volume Market Capitalisation ( Rs Bn ) 50.41 0.54 7.59

United Investment Ltd 1,901 33.29

Excelsior United Development Companies Limited 677 11.86

Medine Limited (Ordinary) 659 11.54

Attitude Property Ltd 543 9.50

Ascencia Co. Ltd 366 6.41

DEM Indicators

Trading Frequency % of Total August-17

Stocks No of Sessions Quoted Trading Days DEMEX 219.91

- DEMTRI (Rs) 293.14

- DEMTRI (US$) 280.58

- Market Capitalisation ( Rs Bn ) 50.41

- No. of Companies 41

- Total Value Traded (Rs Million ) 148.94

Total Volume Traded (Million) 5.71

No. of Trading Sessions 23

Market PER 9.82

Market Dividend Yield 3..31

Return (%)

Development & Enterprise Market (DEM)

212

213

214

215

216

217

218

219

220

221

1-Aug

2-Aug

3-Aug

4-Aug

5-Aug

6-Aug

7-Aug

8-Aug

9-Aug

10-Aug

11-Aug

12-Aug

13-Aug

14-Aug

15-Aug

16-Aug

17-Aug

18-Aug

19-Aug

20-Aug

21-Aug

22-Aug

23-Aug

24-Aug

25-Aug

26-Aug

27-Aug

28-Aug

29-Aug

30-Aug

31-Aug

DEMEX

282

284

286

288

290

292

294

1-Aug

2-Aug

3-Aug

4-Aug

5-Aug

6-Aug

7-Aug

8-Aug

9-Aug

10-Aug

11-Aug

12-Aug

13-Aug

14-Aug

15-Aug

16-Aug

17-Aug

18-Aug

19-Aug

20-Aug

21-Aug

22-Aug

23-Aug

24-Aug

25-Aug

26-Aug

27-Aug

28-Aug

29-Aug

30-Aug

31-Aug

DEMTRI (RS)