aquarel mail

Transcription

aquarel mail

CONTENTS
02
04
06
08
10
12
30
32
38
53
58
60
62
64
65
66
67
69
70
142
145
147
Group Profile
Group Structure
Corporate Information
Group Financial Highlights and Ratios
Chairman’s Statement
Executive’s Report
Chairman’s Award for Manufacturing Excellence
Corporate Social and Environmental Responsibility
Corporate Governance Report
Other Statutory Disclosures
Statement of Directors’ Responsibilities
Certificate of Company Secretary
Independent Auditors’ Report
Statements of Financial Position
Income Statements
Statements of Comprehensive Income
Statements of Changes in Equity
Statements of Cash Flows
Notes to the Financial Statements
Notice of Annual Meeting
Proxy Form
Postal Vote
CIEL TEXTILE LIMITED - ANNUAL REPORT 2014
1
Rs.
9.6bn
GROUP
TURNOVER
GROUP PROFILE
CIEL Textile Limited is a subsidiary of CIEL Limited.
Listed on the Development and Enterprise Market
of the Stock Exchange of Mauritius Ltd since 2006,
CIEL Textile Limited is a world-class global player
in textile and garment operations, spanned across
Mauritius, Madagascar, India and Bangladesh. It has
developed into a regional one-stop shop for textiles,
with vertically integrated business units, from yarn
spinning to finish garments.
3
CLUSTERS
WOVEN
FINE KNITS
KNITWEAR
18,000
COMMITTED
EMPLOYEES
2
33
M
GARMENTS
EXPORTED
EUROPE • USA
INDIA • SOUTH AFRICA
19
PRODUCTION UNITS
MAURITIUS • MADAGASCAR
INDIA • BANGLADESH
3
WOVEN
100%
AQUARELLE CLOTHING LTD
FINE KNITS
100%
TROPIC KNITS LTD
100%
AQUARELLE LTÉE
79.99%
TROPIC MAD S.A
50%
LAGUNA CLOTHING (MAURITIUS) LTD
100%
FLOREAL MANUFACTURING LTD
98.80%
NEW ISLAND CLOTHING
MADAGASCAR S.A
100%
DE NYON LTD
82.97%
CDL KNITS LTD
100 %
AQUARELLE INTERNATIONAL LTD
49.93%
LAGUNA CLOTHING (PRIVATE) LTD
99.99%
AQUARELLE INDIA (PRIVATE) LTD
99.90%
AQUARELLE MADAGASCAR S.A
33.33%
TINKA INTERNATIONAL LTD
33.33%
CIELTEX SA (PTY) LTD
100%
INTERNATIONAL FABRICS LTD
100%
CONSOLIDATED FABRICS LTD
4
100%
TKL INTERNATIONAL LTD
19.99%
TROPIC MAD S.A
33.33%
99.67%
SOCIÉTÉ BONNETERIE MALAGASY
(SOBOMA S.A)
0.22%
FLOREAL MADAGASCAR S.A
33.33%
17.03%
CDL KNITS LTD
GROUP STRUCTURE
30 June 2014
KNITWEAR
100%
FLOREAL KNITWEAR LTD
RETAIL
100%
FLOREAL CREATION S.A
0.20%
SOCIÉTÉ CIVILE IMMOBILIÈRE
DES MASCAREIGNES
0.10%
AJAX SWEATERS LTD
100%
CTL RETAIL LTD
100%
FLOREAL INTERNATIONAL LTD
99.80%
SOCIÉTÉ CIVILE IMMOBILIÈRE
DES MASCAREIGNES
83.53%
SOCIÉTÉ TEXTILE D’AMDRAHARO
(TEXARO S.A)
99.90%
AJAX SWEATERS LTD
99.48%
FLOREAL MADAGASCAR S.A
33.33%
LOCAL COMPANIES
GBL 1 COMPANIES
33.33%
INTERNATIONAL COMPANIES
0.32%
SOCIÉTÉ BONNETERIE MALAGASY
(SOBOMA S.A)
100%
FERNEY SPINNING MILLS LTD
5
CORPORATE
INFORMATION
6
BOARD OF DIRECTORS
P. Arnaud Dalais (Chairman)
Jean-Pierre Dalais
Maurice Dalais
Antoine Delaporte
Henri de Simard de Pitray
Eric Dorchies
Roger Espitalier Noël
J. Harold Mayer
Alain Rey
Eddy Yeung Kan Ching
Jérôme De Chasteauneuf (Alternate to P. Arnaud Dalais)
BOARD COMMITTEES
CORPORATE GOVERNANCE, NOMINATION &
REMUNERATION COMMITTEE
Henri de Simard de Pitray (Chairman)
P. Arnaud Dalais
Antoine Delaporte
AUDIT & RISK COMMITTEE
Alain Rey (Chairman)
Jean-Pierre Dalais
Jérôme De Chasteauneuf
FINANCIAL & SECRETARIAL SERVICES
CIEL Corporate Services Ltd
5th Floor, Ebène Skies,
Rue de l’Institut, Ebène
Mauritius
Tel : +230 404 2200
Fax: +230 404 2201
TREASURY SERVICES
Azur Financial Services Limited
5th Floor, Ebène Skies,
Rue de l’Institut, Ebène
Mauritius
REGISTERED OFFICE
5th Floor, Ebène Skies
Rue de l’Institut
Ebène
Tel: +230 404-2200
Fax: +230 404-2201
Email: info@cielgroup.com
MAIN BANKERS
The Mauritius Commercial Bank Ltd
The Hong Kong and Shanghai Banking Corporation Limited
Barclays Bank Plc
Bank One Ltd
Standard Bank (Mauritius) Ltd
The State Bank of Mauritius Ltd
AfrAsia Bank Ltd
EXTERNAL AUDITORS
PricewaterhouseCoopers
18 CyberCity
Ebène
INTERNAL AUDITORS
BDO & Co
10, Frère Félix de Valois Street
Port Louis
NOTARY
Etude Montocchio – d’Hotman
LEGAL ADVISORS
Me. Thierry Koenig, SA
Me. Maxime Sauzier, SC
Me. Patrice Doger de Spéville, SC
WEBSITE
www.cielgroup.com
REGISTRAR AND TRANSFER OFFICE
If you are a shareholder and have inquiries regarding
your account, wish to change your name and address, or
have questions about lost certificates, share transfers
or dividends, please contact our Registrar and Transfer
Office:
MCB Registry & Securities Limited
2nd Floor MCB Centre
Sir William Newton Street
Port Louis
Tel: +230 202 5397
Fax: +230 208 1167
7
GROUP FINANCIAL HIGHLIGHTS AND RATIOS
AS AT 30 JUNE
THE GROUP
2014
2013
2012
2011
2010
FINANCIAL HIGHLIGHTS
Turnover (Rs. M)
EBITDA (Rs. M)
9,565
8,686
8,643
7,876
7,054
946
861
900
550
578
359
EBIT (Rs. M)
727
661
698
353
Profit before Taxation (Rs. M)
651
607
611
232
287
Profit after Taxation (Rs. M)
551
516
516
214
229
Ordinary Dividends (Rs. M)
204
153
102
Net Cash Flow from Operations (Rs. M)
505
292
1,228
56
(299)
46
405
Capital Expenditure (Rs. M)
599
209
138
170
215
Shareholder’s Funds (Rs. M)
3,624
3,109
2,874
2,501
2,452
-
-
405
449
449
Capital Employed (Rs. M)
4,372
3,724
3,447
3,526
3,523
Net Borrowings (Rs. M)
1,658
1,395
887
1,790
1,218
83
63
93
99
84
1.39
1.44
1.42
1.39
1.42
Redeemable Preference Shares (Rs. M)
Interest Expense (Rs. M)
LIQUIDITY AND GEARING RATIOS
Current Ratio
Acid Test Ratio
0.71
0.73
0.68
0.68
0.78
Net Borrowings to Shareholders Funds
0.46
0.45
0.31
0.72
0.50
Interest Cover (times)
8.84
10.63
7.57
3.34
4.42
Return on Capital Employed (%)
16.8
18.0
20.4
9.4
10.5
Return on Shareholder’s Funds (%)
15.2
16.5
17.2
7.7
8.4
5.8
5.9
6.0
2.7
3.2
PROFITABILITY RATIOS
Net Profit Margin (%)
8
Return on Capital Employed (%)
2014
16.8
2013
18.0
2012
2011
20.4
9.4
2010
10.5
Turnover (Rs. M)
2014
9,565
2013
8,686
2012
8,643
2011
7,876
2010
7,054
Net Borrowings (Rs. M)
2014
1,658
2013
1,395
2012
887
2011
1,790
2010
1,218
Profit after Taxation (Rs. M)
2014
551
2013
516
2012
2011
2010
516
214
229
Net Profit Margin (%)
2014
5.8
2013
5.9
2012
6.0
2011
2010
2.7
3.2
9
CHAIRMAN’S
STATEMENT
Going forward, the
main strategic focus
of the Group will be
geared towards a
prudent international
expansion strategy,
achieving operational
excellence at
all levels and a
successful market
diversification.
10
Dear shareholder,
On behalf of the Board of Directors (“the Board”), it is
my pleasure to submit to you the Annual Report and
audited results of CIEL Textile Limited (“CIEL Textile”/“the
Company”) for the year ended 30 June 2014.
Group Financial Results
The Group’s turnover has increased by 10.1% to reach
Rs. 9.6bn whilst profit before non-recurring expenses
and tax grew by 17% attaining Rs. 674M against Rs. 576M
last year. Net profit after tax improved by 6.8% and
reached Rs. 551M, despite challenging market conditions.
Profitability wise, local operations have contributed to
20% of the net results, with the remaining 80% being
generated by international operations. The Group’s
turnover is geographically spread almost equally between
Mauritius, Madagascar and Asia. Shareholders’ funds
have now reached Rs. 3,624M compared to Rs. 3,109M
as at the end of last financial year whilst net borrowings
have increased to Rs. 1,658M, mainly due to additional
working capital requirements generated by the growth in
turnover.
The knitwear cluster’s financial performance showed
a year on year improvement. Both turnover and profits
were on the rise, thanks to a shift towards higher
value garments yielding better margins, increased
volume in the ladieswear segment, the turnaround of
the operations in Bangladesh which delivered a small
profit after three years of consecutive losses and
better loading in the factories resulting in improved
operational efficiency.
Turnover for the woven cluster has increased by nearly
14% over last year and crossed the Rs. 5bn mark for
the first time. However, net profits registered a slight
drop of 3.2%. Laguna Clothing (Mauritius) Ltd has had a
difficult year as the company did not achieve quality
requirements on the non-iron shirt segment on bulk
orders, leading to major leakages and significant
losses. Lack of orders for fabrics, especially during the
last quarter of the year, has also negatively impacted
on performance, but the cluster has since scaled
down capacity to align with the weaker demand.
also some challenges ahead with the sorting out of
costly teething problems which occurred at the level
of its non-iron formal shirt cluster at Laguna Clothing
(Mauritius) Ltd, a partnership with Tessitura Monti, a
world class cotton fabric supplier from Europe and
India.
On a more positive note, the reinstatement of
Madagascar’s eligibility for African Growth and
Opportunity Act (AGOA) benefits should open new
opportunities in the United States.
Going forward, the main strategic focus of the Group
will be geared towards a prudent international
expansion strategy, achieving operational excellence
at all levels and a successful market diversification.
As mentioned in last year’s report we will consolidate
our three clusters’ position in their respective field of
activities to further consolidate CIEL Textile as a true
global player and a world class operator.
Dividend
For the past two years, the fine knits division has been
working on improving its operational and financial
performance. 2014 has been another positive year
with a 43% increase in operational profits despite
a slight reduction in turnover. The cluster has also
embarked on a new five-year strategic plan which
includes expansion plans in Asia.
Outlook and Prospects
Market conditions, especially in Europe and in the
Republic of South Africa, remain challenging with a
weakening of some major export currencies like the
euro and the rand.
Global market conditions are even more difficult in
our knitwear operations through Floreal Knitwear
which is registering a drop in volumes in its menswear
division while the ladies segment is showing some
improvement.
The Company has declared an interim dividend of
Rs. 0.75 per ordinary share on 12 December 2013 (2012:
Rs. 0.50) and a final dividend of Rs. 1.25 per ordinary
share on 23 June 2014 (2012: Rs 1.00).
Appreciation
On behalf of the Board of Directors and in my own
personal name, I would like to express my thanks
and appreciation to the CEO, Mr. J. Harold Mayer and
the very committed team of CIEL Textile executives,
management and our staff for the good results
achieved over the year.
I invite you to go through the Executive’s Report
for information on the operations of the different
clusters of the Group.
The knits cluster, recently rebranded “Tropic Knits
Group”, is confirming its improved performance and
is now ready to implement its international expansion
with the setting-up of a new factory in India hopefully
by the end of the calendar year 2015.
Aquarelle group, which has shown major growth
in its operations during recent years through its
successful ventures in India, will consolidate its
position through the marked improvement at the
level of Pastel Blue, its ladies cluster as well as for its
well established menswear division. Aquarelle has
P. Arnaud Dalais
Chairman
29 September 2014
11
EXECUTIVE’S
REPORT
“Manufacturing
Excellence” is
considered as a major
strength across our
Group today, thanks
to world-class
manufacturing and
factory management
teams and culture.
12
Dear shareholder,
I am pleased to inform you that CIEL Textile Limited
has posted excellent overall results, with turnover
increasing by 10% to Rs. 9.5 bn, operational profits before
non-recurring items increasing by 17% to Rs. 674M and
profit after taxation increasing by 6.8% to Rs. 551M. All
three clusters posted positive and improved earnings.
The geographical spread of our turnover was 36% in
Mauritius, 36% in Madagascar and 28% in Asia, whilst the
geographical spread of profitability was 20% in Mauritius
and 80% in our international operations.
The Aquarelle group performed well with a 14% increase
in sales (Rs. 5bn) and a healthy profit after taxation of
Rs. 309M (3% down on previous year). Its operations in India,
once again, had an outstanding year and were the major
contributor to sales’ growth and profitability. Aquarelle’s
group operations in India are the real benchmarks for
the Group in many respects. However, Aquarelle group’s
regional operations (Mauritius and Madagascar) had a
more difficult year in terms of profitability. Whilst the
Indian operations remain solid, the priority and challenge
for the management team will be to tackle the managerial
and operational issues at Consolidated Fabrics Limited
and Laguna Clothing (Mauritius) Limited, whilst boosting
marketing activity in Mauritius and Madagascar so as to
load our factories appropriately.
The Knitwear division had a very good year with profit
after taxation at Rs. 129M, representing a 33% increase
on last year and sales up 13%, as a result of higher
sales in expensive yarns such as cashmere. All the
divisions showed positive results: Floreal Mauritius and
Madagascar improved their performance by selling more
value added products, Ferney Spinning Mills Limited
developed new export markets for its yarns and Floreal
Bangladesh’s operations performed well under a new
management team and posted modest profits for the
first time. Unfortunately, “volume” of sales at Floreal
Knitwear has regressed slightly and is not meeting
budgeted and growth expectations. Thus, sales and
marketing will be management team’s focus and priority
for the next few years.
The Fine Knits cluster (Tropic Knits group) continues its
improvement journey with a 43% increase in operational
profits before tax and non-recurring items. The young
and talented management team went through a
“rebranding” exercise and presented its 5 years’ strategy,
which focuses on an upmarket move and the start of its
operations in India. Most key performance indicators in
the Tropic Knits group improved over the year, except
for CDL Knits Limited (formerly known as Consolidated
Dyeing & Fabrics Limited), the
fabric operations,
whose manufacturing inconsistencies had a negative
impact on profitability and delivery performance. The
management team’s priority in the next year will be to
stabilise operational performance at CDL Knits Limited,
increase marketing activity to keep loading the factories
at optimal levels and put a world-class management
team in place to launch the TKL India operations.
The performance of our divisions on the non-financial
scoreboards can be summarised as follows:
• On the “customer satisfaction” scoreboard, the results
are generally good and improving except on pricing,
which means that, as a Group, we need to address
“costs” and eliminate non-productive – non-value
added costs.
The Aquarelle group scoreboard looks very good in
general (Aquarelle India being a benchmark) except
in its “Formal” division where reliability was poor due
to growth and technical issues. The Knitwear cluster
showed excellent results overall except on pricing,
thus, the need to address costs. The Fine Knits division
keeps improving yearly.
• Generally, “operational effectiveness” in manufacturing,
once again, improved across the board. Aquarelle group
is leading the way in manufacturing excellence and
won the majority of the awards at the yearly award
ceremony. Both Knitwear and Fine Knits divisions also
showed great “operational excellence” and are on the
improvement trend. “Manufacturing Excellence” is
considered as a major strength across our Group today,
thanks to world-class manufacturing and factory
management teams and culture.
• On the “Front-end” (marketing, back-office and admin)
scoreboards as a group, we need to improve (except in
India). Our Indian operations are both lean (cost efficient)
and constantly having more “sales” potential than
capacity. In the Mauritius/Madagascar region, we have a
constant challenge because of our isolation and lack of
visibility and, as a result, we have a significantly higher
cost of marketing. Furthermore, our administrative
costs in the region are also significantly higher than
our Asian competitors. Therefore, all our management
teams in the region need to constantly work on
simplifying systems, eliminating non-value added
activities and aggressively marketing so that our sales
and margins are appropriate. Within the CIEL Textile
Group, Floreal Knitwear faces the biggest challenge in
this area, whilst the Aquarelle and Tropic Knits groups
also have a lot to do.
•
On the “Human Capital” front, once again, the
competence and attitude of our teams are very good
and getting better. People management in CIEL Textile
is a major strength and is the major reason why we
move into the future with a lot of confidence. Particular
attention will be put in building strong leadership
teams in Asia, where most of our growth is planned
for the years ahead. Our “talent pool” is more and more
international, and this is considered as a strength. Once
again, stability in our key leadership teams has been
excellent.
•
From a management infrastructure point of view,
we are reaching excellent results in all clusters. Top
management team understands the importance of it in
achieving results. However, the emphasis in the shortterm is to “simplify” and “eliminate non-value added
activities” in Mauritius and Madagascar so as to address
our overheads’ challenge.
13
EXECUTIVE’S REPORT (CONT’D)
To conclude, the financial year ended 30 June 2014 has shown good non-financial scoreboard results. However,
we need to listen to our customers and our customers are telling us that our prices (therefore our costs) are
too high on the Mauritius/Madagascar region. These alarm bells will therefore be addressed in the front-end
simplification processes and by selling more aggressively.
External Factors
At the time of writing this report, external factors affecting our operations are more negative than they were
at the same time last year.
• Our major market, Europe (60% of our sales) is stagnant and bordering recession. Some of our major customers
are looking aggressively for lower prices to address their profitability issues. The South African market (25% of
our sales) is stagnating as a result of the weak currency, hence, higher retail prices.
• On the currency front, the Mauritian Rupee is continuing to strengthen v/s our competitor’s basket of
currencies. On the positive side, both the Indian Rupee and the Madagascar Ariary have gained competitiveness
although inflation is high in both countries.
• On the competitive front, we are definitely in a “buyers’ market” and the pace of cost increase from China has
slowed down significantly. This is putting pressure on prices.
• Raw material prices have been stable & have showed signs of decreasing recently. This can help to partly
mitigate the potential drop in margins due to lower demand and increased competitors activity.
Our Strategy
Our 5 years’ strategic plans in our clusters, all go in the same direction:
(a) A “globalisation” strategy, which will focus on new operations in India and Bangladesh.
In line with this strategy we are working towards:
• The start of Tropic Knits India in 2015 or 2016;;
• The start of a new factory for Floreal Knitwear in Bangladesh for 2016 or 2017;
• Two new factories for the Aquarelle group in India in 2016 or 2017; and
• The start of Aquarelle Bangladesh factory in 2016 or 2017.
This will result in sales and profitability growth in the medium-term. However, capital expenditure and startup costs over the next few years will be significant. Each of these new investments will only be triggered if, at
the time of decision making, we consider that we have both the financial resources and manpower to make it
a medium-term success.
(b) In the Mauritius/Madagascar region, the strategic focus will be on “operational improvements” and
“upmarket” move. Its components will include:
• Transmission of know-how to Madagascar;
• Addressing our high overheads to be more in line with market requirements and international benchmarks;
and
•
Bringing our front-end activity to another level so as to constantly move upmarket and satisfy more
demanding customers’ product & service requirements.
The above strategy should provide a platform for medium-term moderate growth, at a pace, which is
commensurate with our financial and manpower resources. Furthermore, we will not allow our ‘getting
bigger’ to negatively impact our ‘getting better’ priority.
Outlook
• In the first semester, we expect results to be close to those of last year.
• As regards the second semester, we expect an important drop in the Knitwear cluster’s results due to lower
sales. The results from the Woven and Fine Knits clusters will depend on the quality of our order books and
the operational effectiveness across our operations.
• In the medium-term, growth is expected to be driven by our globalisation process. We are confident that the
investments and start up costs invested in this globalisation strategy will yield positive results in the medium
term.
14
Appreciation
I would like to use this opportunity to express my gratitude to our leadership teams for their incredible level
of commitment to satisfying our customers and moving their operations forward. The same expression of
gratitude goes to our 18,000 employees who live our “winning family” values on a daily basis.
Last but not least, my appreciation goes to our Chairman, Mr. P. Arnaud Dalais, and the Board of Directors for
their trust and support on our journey.
I invite you to read the individual report of our Executive Operational Directors, which gives more details on
each of our three clusters.
J. Harold Mayer
Chief Executive Officer
29 September 2014
15
FINE
KNITS
16
TROPIC KNITS LTD
TKL INTERNATIONAL LTD
TROPIC MADAGASCAR SA
CDL KNITS LTD
(Formerly known as Consolidated
Dyeing & Fabrics Ltd)
Rs. 2.1bn
TURNOVER
3
TEXTILE FACTORIES
Production of
Jersey Wear
Garments
2,900
COMMITTED
EMPLOYEES
3,600
TONS KNITTED
FABRIC
14,2M
GARMENTS
PRODUCED
17
Jean-Baptiste de Spéville
Chief Executive Officer of the Fine Knits and Knitwear clusters
Guillaume Dalais
Executive Director of Tropic Knits Ltd and CDL Knits Ltd
Bertrand Thevenau
Executive Director of Tropic Knits Ltd and CDL Knits Ltd
For the financial year ended 30 June 2014, the Fine Knits
cluster’s operational profit increased by 43% despite a
slight reduction in turnover. However, net profit after
tax has been lower than the previous year due to fair
value adjustments on financial derivatives. On the back
of the general improvement of operational and financial
performance, the Fine Knits cluster has embarked on a
new five-year strategic plan. A rebranding exercise has
also been done to align our corporate image with our
new strategy.
Operational effectiveness has been good for the year
2013-2014. The operational team has been able to
adapt to the change in our customer and order profile.
Generally, all the key performance indicators are
improving and our cost per piece also improved slightly,
despite a more complex order book. The team has
been reinforced and emphasis is being put on people
development in order to bring the expected results. We
are continuing our investment plan in new technologies
and we recently implemented a new ERP system.
The management has created the Tropic Knits Group,
which is the umbrella for Tropic Knits Ltd, our garment
division, and CDL Knits Ltd, our fabric division. It will also
enable us to gear ourselves for our expansion plans in
Asia, which is scheduled for mid-2015.
TKL’s balance sheet and gearing ratio are at a
satisfactory level.
Tropic Knits Group’s balance sheet is at a satisfactory
level with a low gearing ratio, thus, enabling us to
finance our future growth.
We are now confident that TKL’s operational
performance is stable and allows us to look at the
future with serenity. However, the market conditions,
particularly in Europe, remain challenging. Therefore,
despite a current stable customer base, we remain
cautious as margin may come under pressure.
Tropic Knits Ltd (“TKL”)
CDL Knits Ltd (“CDL Knits”)
TKL has recorded a significant improvement in
profitability whilst turnover has remained stable.
For the past financial year, CDL Knits enjoyed a stable
order book from both TKL and the export market.
Despite very competitive conditions, we have seen a
slight improvement in margin by moving to more value
added products.
The Management Team’s focus on product innovation,
reliability and speed in delivery performance is
bringing positive results on our customer satisfaction
scoreboard. The Marketing and Product Team has
succeeded in maintaining a strong demand from our
customers, therefore ensuring constant loading in our
factories.
In line with our strategy to move into “better” value
products, our margin has improved despite the very
competitive environment.
18
Customer satisfaction, which is our key objective,
remains at satisfactory level.
The company faced some operational challenges which have had
a negative impact on our cost and profitability. The necessary
action plan is being implemented to ensure better operational
performance. ‘CDL Knits’ profitability for the financial year ended
30 June 2014 was below expectations. However, its gearing ratio
improved significantly during the financial year, on the back of
rigorous cash flow management, and remain at satisfactory level.
We are continuing our investment plan in new technologies and people
development with the aim to improve further on product quality,
productivity, and energy management. We are maintaining our Carbon
Footprint Emission monitoring program and we are satisfied with the
continuous progress.
The order book for the first semester of the financial year is in line with
our estimates. However, we remain cautious as we are facing pressure
on our basic programs margins.
19
5bn
TURNOVER
Rs.
Production of
Formal, Casual
and Ladies
Shirts
10
TEXTILE FACTORIES
INDIA • BANGLADESH
9,600
COMMITTED
EMPLOYEES
8,1 M
MTS FABRIC
PRODUCTION
13,5 M
GARMENTS
PRODUCED
20
AQUARELLE CLOTHING LTD
AQUARELLE INTERNATIONAL LTD
WOVEN
CONSOLIDATED FABRICS LTD
LAGUNA CLOTHING (MAURITIUS) LTD
AQUARELLE (INDIA) PRIVATE LTD
AQUARELLE MADAGASCAR SA
LAGUNA CLOTHING LTD
21
Aquarelle group’s turnover has increased by nearly 14%
to reach for the first time the Rs. 5bn mark. However,
the profitability was slightly lower than last year, mainly
due to losses from three business units (Laguna Mauritius,
Aquarelle Bangladesh and Consolidated Fabrics Limited),
offset by improved profitability of other business units.
Casual Shirt Cluster
With 8.9M pieces and a turnover of Rs. 3bn, the casual
cluster accounts for 60% of Aquarelle group’s total
turnover.
The overall customer satisfaction’s performance
remained excellent from our operations in India,
Mauritius and Madagascar, where we have experienced a
very healthy growth and profitability.
A reorganisation of our activities in Bangladesh has been
put into place, to move away from a pure trading activity
to a more controlled operation: we have signed a leased
agreement with a small local factory, which we have
started to manage since April 2014.
Our objective is to improve our product quality and
delivery performance and build up a customer base in
anticipation to a direct investment in our own factory in
the next two years.
We might be buying a plot of land near Dhaka
(Bangladesh) in the next couple of months as an initial
step. Furthermore, the construction of a new factory
in India is scheduled to start early next year. Located at
about 100 km away from Bangalore, this new factory will
be in the vicinity of the Laguna Clothing Factory.
On the operations front, our key challenges are:
• Generating more demand for our regional operations
(Mauritius and Madagascar) to increase margins
and demand for Consolidated Fabrics Limited - we
are looking at strengthening our overall marketing
organisation. With the AGOA about to be back to
Madagascar, we will surely explore new business
opportunities in the USA.
•
Overhead cost reduction mainly in the region, to
improve our competitiveness.
22
Eric Dorchies
Chief Executive Officer of the Woven cluster
(also known as Aquarelle Group)
Elvis Cateaux
General Manager of Laguna Clothing (Mauritius) Ltd
Nagesh Badida
Deputy Executive Director of the Aquarelle Casual cluster
and General Manager of Aquarelle India (Private) Ltd
Eric Eynaud
General Manager of Pastel Blue
Sarbajit Ghose
Managing Director of Laguna Clothing Ltd
Pascal Walter
Executive Director of Consolidated Fabrics Ltd
The financial year 2014-2015 will be challenging in the
region from a margin and volume perspective, while
India is likely to continue to grow and maintain a good
profitability.
The team has been very dynamic on the marketing
front, with the acquisition of two main customers,
Marks and Spencer and Esprit, and the identification of
meaningful pipelines.
We expect to reduce Bangladesh losses in financial year
2014-2015, and potentially achieve a profit as from
financial year 2015-2016.
We can expect a solid turnover and profitability increase
of Pastel blue in 2014-2015.
Formal Shirt Cluster
Our formal shirt cluster, which operates under the name
of Laguna Clothing (joint venture with Tessitura Monti,
Italy) has reached a turnover of Rs. 1.5bn and total sales
of 3.6M pieces (3M in India and 0.6M in Mauritius).
The customer satisfaction performance on our India
operation has been affected by more than expected
difficulties in building up capacities at the Kanakapura
factory, while profitability remained excellent. The
manufacturing team has been strengthened there, and
productivity and quality are now improving.
The order book and margins remain very solid, and we can
expect an increased turnover and profitability in India.
On the other hand, Laguna Mauritius experienced an
extremely difficult year.
Despite positive trial orders performed on the non-iron
shirt segment, the team could not achieve our main
customer’s quality requirements on bulk orders. This
has led to major leakages and very heavy losses.
We are now working on reducing quickly our exposure
to that customer, which will come with a high one-off
cost and a business reorganisation.
Woven Fabrics
Consolidated Fabrics Ltd (“CFL”) has achieved
remarkable progress during the financial year
2013-2014 on customer satisfaction performance,
mainly on the ‘delivery on time’ front. The quality
improvement process journey is progressing
positively as well.
On the other hand, high overheads and lack of orders
mainly in the last quarter have led to a loss at the end of
the financial year 2013-2014.
We have recently scaled down CFL’s capacity in
alignment with the weaker demand and have started
a very focus process on overhead and variable cost
management. We have also launched a new upper
market collection called “Opera”, to reposition CFL in
the European mills’ market segment, where we expect
to achieve better margins.
While demand remains quite soft in the first quarter,
we should be able to improve the bottom line during
the financial year 2014-2015.
However, CFL still need to upgrade its machines and
equipments pro-actively, though maintaining a healthy
balance sheet remains the primary focus.
Outlook
The first two quarters of the financial year 2014-2015
will still be very difficult and we expect to stabilise the
business as from early next year.
Overall, Aquarelle Group will continue to grow during
2014-2015, though at a slower pace than financial year
2013-2014.
Ladies’ Wear Division
The financial year 2013-2014 was a transitional year for
our ladies’ wear division, Pastel Blue, which has reached
a turnover of Rs. 320M, 1M pieces shipped and a small
profit against a loss in 2012-2013.
Our profitability improvement will mainly depend on
our capability to turn around current business units
with losses into profits.
Customer satisfaction is generally good, while we
still need to strengthen our manufacturing team in
Antananarivo, Madagascar, where Pastel Blue’s main
manufacturing base is located.
23
FLOREAL KNITWEAR LTD
KNITWEAR
FLOREAL MADAGASCAR SA
AJAX SWEATERS LTD
FLOREAL INTERNATIONAL LTD
FERNEY SPINNING MILLS LTD
24
Rs.
2.4bn
TURNOVER
6
TEXTILE FACTORIES
Production of
Sweaters
MAURITIUS•MADAGASCAR•BANGLADESH
5,500
COMMITTED
EMPLOYEES
1,500
TONS WOOLLEN
YARN
5,4M
GARMENTS
PRODUCED
25
Chief Executive Officer of the Fine Knits and Knitwear clusters
Mushtaq Sooltangos
General Manager of Ferney Spinning Mills Ltd
The knitwear cluster’s financial performance for the
year showed a year on year improvement, with all our
operations generating positive results.
Our energy consumption monitoring has been
strengthened and several opportunities of savings
obtained.
Our turnover increased from Rs. 2.1bn to Rs. 2.4bn, and
profits after tax from Rs. 97.6M to Rs. 129.4 M.
Human Resources
On the Human Resources side, we are actively looking
for young talents with leadership skills in Madagascar
for coaching. The objective being for them to acquire the
necessary competency to enable a knowhow transfer
from Mauritius and reducing the level of support services
required.
These improved results came from:
• A shift towards higher value garments (lambswool
and cashmere), yielding better margins.
• An increased volume in ladies’ wear segment where
Floreal has historically been weak.
•
The turnaround of our operations in Bangladesh,
which is delivering a small profit after three years of
consecutive losses.
•
A better loading in our factories and an excellent
manufacturing KPIs result.
•
Much improved results of Ferney Spinning Mills
Limited.
Floreal Knitwear Ltd (“FKL”)
FKL’s product quality and reliability have been high
and our design team strengthened, with a high level of
customer satisfaction.
To keep up with the market needs for more fancy
stitched garments, investments were made in
automatic knitting machines located both in Mauritius
and Bangladesh factories. This is enabling us to widen
our product offer competitively and we should keep
increasing our park of automatic machines in the
coming years.
On the marketing front, we consolidated Floreal
Bangladesh as a “Marketing Platform” and most of their
orders are now sold and merchandised locally. Due to
the high density of “customer traffic” in Bangladesh, we
expect to capture new markets which were previously
out of reach. FKL Bangladesh is getting a new exposure
and the feedback from customers visiting our facilities
is extremely encouraging. We are in the process of
finalising the acquisition of a new land site, which will
cater for our future factory expansion in this country.
Environment
In line with our Environmental Policy and our customer
standards, we have invested in an Effluent Treatment
Plant in our wash plant in Bangladesh. Several
recycling schemes for cartons, plastics, raw material
and batteries have also been put in place with the
associated awareness campaign for our staffs.
26
Outlook
The mild winter in both Europe and South Africa, coupled
with the difficult economic situation in those countries
are creating a soft market for knitwear with pressure on
margins.
We are reinforcing our marketing efforts to mitigate this
situation but it will be challenging to maintain current
profitability level in the short term.
Ferney Spinning Mills Limited (“FSM”)
The financial year under review has been better than
budgeted due to the following concurring factors:
• The critical inter-season loading was reasonable with
the active non-captive weaving market and the late
winter orders for FKL.
• The margins on the non-captive market have improved
and FKL’s margins have been positive.
•
The intelligent purchase of raw material, the blend
engineering and the positive yield in production have
positively influenced the financial results.
The high customer satisfaction has also resulted in
repeat and increased orders. Customers appreciate the
service and the quality of FSM. In the UK, our local delivery
from our customs bonded warehouse is highly valued.
Customers have also used our special airfreight service for
fast track delivery from our warehouse in Mauritius. With
the support of our weaving and knitting collections, we
keep gaining market share with European weavers.
The market for woollen yarns in the weaving market in Europe has been
buoyant. The demand for Lambswool, Shetland, Tweed yarns and innovative
woollen yarns is high. FSM’s image as a woollen yarn specialist is now well
established in the U.K. and Italian markets. In the knitting market segment,
FSM is now perceived as a credible woollen yarn manufacturer for the ladies’
wear.
Our customers have exhibited this year at Première Vision, Milano Unica,
Ideabiella, Mood and Heimtextil products made with FSM woollen yarns.
In 2014, we boosted our marketing firepower with the appointment of two
additional agents in Italy and U.K. With our renewed efforts in Italy, we are
optimistic to achieve our ambitious sales targets in this market. We are also
strengthening our marketing team in Mauritius.
FSM has invested a lot in product development and blend engineering. Our
cooperation with the yarn design and colour forecasting specialist ‘Stylprojet’
in Italy has been strengthened with the new contract signed with FKL.
The investments in our production capacity have allowed us to work with
more flexibility in our low and peak seasons. We are continuously keeping our
machinery updated and also keeping the existing plant fully operational with
world class maintenance. A new generation of leaders is now fully settled and
the results are already positive.
Environment
In 2014, we have continued to invest in eco-friendly processes and green
energy will be our future target. Our dyeing plant today has one of the
lowest water consumption process for wool dyeing. Porcelain coating of our
dyeing vessels for energy saving, solar energy and optimisation of rain water
utilisation will lower our utilisation of electricity, steam and water.
Human Resources
FSM’s Human Resource Department is now finalising the flexi-time and shift
change. They are also working on a smooth succession and transition plan
to bring new blood and talent in the company. Training from management
to “grassroot” has been high on the agenda. The Management is also fully
involved in the CSR programme to make our organisation socially responsible
to meet the demands of our shareholders and that of the national authorities.
Outlook
With the current positive trends on the non-captive market, the forecast
of FKL, the stable wool market and the strong fundamentals of FSM, we are
expecting further improved financial results from FSM.
27
RETAIL
28
Harris Wilson
Blu River
Floreal Boutique
Peter Gilmour
General Manager
8
SHOPS AND LOCATIONS
Sunset Boulevard - Grand Bay,
Caudan Waterfront – Port Louis,
Floreal Square - Floreal,
Orchard Centre - Quatre Bornes,
VIP Way - Flacq,
Anahita – Beau Champ,
Mangalkhan – Floreal.
39
COMMITTED
EMPLOYEES
Trading conditions continue to be challenging. Shops
are closing on the high streets and in shopping malls
and are not finding new tenants. The tourist spend is
still declining but the Mauritian market share in our
brands continues to grow. As a result, revenue grew
by 2.5%, year on year.
The difficult trading environment led to greater
emphasis on promotions to generate revenue, putting
additional pressure on margins. This reduction in gross
margins was however offset by the reduced operating
overheads following the savings made in reduced
shop floor space and administration expenses.
The perspectives for the financial year 2014-2015
remain uncertain and will depend on a return in tourist
spend and the availability of a new placement within
the Bagatelle Mall.
29
CHAIRMAN’S AWARD
FOR MANUFACTURING
EXCELLENCE
In an international context which is more and more competitive,
the textile industry needs more than ever to be irreproachable in
the levels of quality and services offered to its customers. This is
why CIEL Textile has launched, since seven years, the Chairman’s
Awards to reward its best employees and garment making units
but also the textile operations with capital-intensive activities such
as weaving, spinning and dyeing in the wake of a series of rigorous
audits conducted in all plants.
Vertical Integration, Textile Division: 3 units in competition
Garment Division: 16 units in competition
Excellence at Grassroots: 30 best employees rewarded for their
excellent performance at work
“Our People, Our Gold”
30
“Winning Family”
“Strive for Excellence:
Coaching, Learning
& Continuous
Improvement”
The Chairman’s Award also aims to generate a spirit of
dynamism, performance and competitiveness among all
employees of CIEL Textile, as well as the aim of promoting
a culture of excellence.
As an opportunity to develop a culture of knowledge
sharing between companies of the same group, to better
cope with competition, The Chairman’s Award encourages
the different production units to share experiences,
successes and technology through presentations prepared
and conducted by staff from various departments.
31
J
H
I
32
F
G
CORPORATE SOCIAL
AND ENVIRONMENTAL
RESPONSIBILITY
A
B
The Fondation CIEL Nouveau Regard
supports alternative education for
students experiencing difficulties at
school through the ANFEN network.
G
At Cité Mangalkhan, the ‘Vent d’un
Rêve’ students receive music classes
from Leslie Merven and the team.
C
Through the NGO Kinouété, women
released from prison are offered
rehabilitation programmes at Palma.
I
Though the pre-vocational section
of the Society for the Welfare of the
Deaf, impaired students have seeked
and found employment within their
aspirations and interests.
D
La Caze Lespwar, a project managed
by Caritas Solitude, is the largest
community development project
funded since 4 years by Fondation
CIEL Nouveau Regard.
J
The Fondation Cours Jeanne d’Arc de
St Patrick delivers quality training to
students with special needs.
E
E
DLD Teen Hope at Cité La Cure assist
pupils, who failed at CPE, through
alternative education.
C
F
The Zippy programme supported by
l’Institut Cardinal Jean Margéot is
concerned with the psychological
development of primary students.
D
A&H
Aquarelle Quatre-Bornes supports
the team at nursery/day-care centre
for Solidarité Maman at Résidence
Père Laval.
B
Main projects supported by the Fondation CIEL Nouveau Regard
33
CORPORATE SOCIAL
AND ENVIRONMENTAL
RESPONSIBILITY
Sustainability development aims at meeting the needs
of the present without comprising the ability of future
generations to meet their own needs. At the level of
CIEL Textile, we are striving to make our operations
sustainable through a series of measures directed to
our stakeholders while ensuring that they are being
conducted within legal parameters and other regulatory
requirements.
Our Engagement for 2013-2014
CTL has been closely involved in community
development projects and the protection of the
environment at national and also international level, as
it has operations in Madagascar, Bangladesh and India
as well. A reforestation programme has been launched
this year at companies’ level and a contribution of Rs. 1M
made to the “Fondation CIEL Nouveau Regard” (“FCNR”),
to support local NGOs in Mauritius.
Fondation CIEL Nouveau Regard (“FCNR”)
The FCNR is accredited by the National CSR Committee
as a Special Purpose Vehicle (“SPV”), and is empowered
to receive the Corporate Social Responsibility (“CSR”) tax
contributions of CIEL’s subsidiaries and associates since
February 2010.
Engaged mainly in the fight against poverty and
exclusion, FCNR has celebrated its 10th years of existence
in 2014. During the past decade, the foundation has spent
some Rs. 50M in various projects, at regional and national
level, which are in line with the criteria set by its Board of
Directors, while following the legal guidelines of the law
governing this tax.
This year some Rs. 6M, 82 % of the amount received
from CSR tax contributions from CIEL’s subsidiaries
and associate companies were used to finance projects
managed by local NGOs in areas such as the fight against
poverty, education, disability and health.
The table below gives an indication of the percentage of
amount distributed over the year.
Distribution of Financing by Activity Sector for 2014
Handicap
In line with Government policy, FCNR has, again this year,
concentrated its actions towards the fight against poverty.
The foundation that launched the integrated community
development project with Caritas, La Caze Lespwar in 2010,
renewed its full support to this project.
Based in Solitude, La Caze Lespwar assists communities
living in poverty and facing difficulties in the regions of
Solitude, Triolet, Plaine des Papayes, Pointe aux Piments
and Arsenal. It provides services that are adapted to their
needs, among which education and training, community
gardening, breakfast for pupils, sports, holiday activities for
children, activities for women, emergency service, solidarity
shop and a pre-school centre/creativity centre.
FCNR provides its support to other NGOs:
• Kinouété - rehabilitation of ex-female prisoners - financing
salary of social worker; and
•
ICJM Counseling Department (Cellule d’écoute et de
counseling) at Bamboo Virieux.
Education
FCNR supports alternative education. Thanks to the ANFEN
network and to the Zippy programme of ICJM, children with
learning difficulties can have access to education.
• Vent d’un Rêve (école de musique);
• Solidarité Maman;
• Teen Hope; and
• Fondation Cours Jeanne d’Arc.
Disability
FNCR is strongly committed to providing disabled children
with access to education. With the collaboration of the NGO
Society for the Welfare of the Deaf (SWD), FCNR launched
in January 2010 the first pre-vocational school for deaf
children. For the first year the school hosted 20 students, all
of them in Form I. In 2012, two new classes were launched:
Form II and Form III. FCNR has renewed its support to the
SWD in 2014.
• Autisme Maurice; and
• Mille Soleil
Health
Education
FCNR has supported in 2014 the NGO T1 Diams in its
endeavor to educate people suffering from diabetes of
Type 1 and members.
Total number of beneficiaries: 3,800 among which
1,200 direct beneficiaries
Fight Against Poverty
Poverty
Health
34
Main Projects supported by FCNR
ACTogether
Environment
www.ACTogether.mu is a web portal launched
and managed by FCNR. The web portal hosts
non-governmental organisations that aim at reducing
all forms of exclusions that exist in Mauritius.
ACTogether has organised and participated in a series
of activities throughout the year.
CTL encourages its companies, subsidiaries and
stakeholders to endorse environmentally conscious
practices in their operations and activities. We have
introduced control systems at companies’ level to better
manage water and energy consumption as well as waste
and affluent.
Participation in Major Events
Some Examples of Environmental Practices at CIEL
•
July 2013: Mobilisation of more than fifteen NGOs
for a walk in favour of l’APEIM in Port-Louis for the
Ministry of Education to resume its supports to these
specialized schools;
• October 2013: Talk on Financial Education for NGOs
in collaboration with “l’Association des Emprunteurs
Abusés” at the Financial Services Commission, Ebène;
•
November 2013: 3rd edition of « Marché de Noël
Solidaire ACTogether » at Caudan Waterfront and
Bagatelle;
•
November 2013: Presentation of services offered
by ACTogether during Decentralised Cooperation
training programme by the European Union;
• February 2014: Presence of ACTogether at « Salon de
l’Emploi et de l’Etudiant » through participation of
several NGOs (TIPA, Caritas, PILS…); and
•
May 2014: Presence of ACTogether at the UTM’s
Recruitment Day at La Tour Koenig. In collaboration
with the SOS Children’s Village possibilities of job
offers were presented to student in the field of Social
Studies, Communication, Psychology and Counseling.
• Environmental Policy Statement;
•
Procedures are established, implemented and
maintained to ensure compliance with the Emergency
Preparedness & Response;
• Ongoing collaboration with Ministry of Environment,
and local NGOs such as Mission Verte in Mauritius and
Spoorthivana in India;
•
Employee engagement campaign aiming to raise
awareness, train, inform and inspire all employees
about Eco-Green Project;
• Distribution of plants to employees;
• Policies and guidelines for reducing water and energy
use;
•
Regular monitoring to identify and manage
environmental risks;
• Water & Effluents Management System;
• Solid waste Management System; and
• Rainwater harvesting and solar energy production
Awards
•
For example, Aquarelle Surinam and Grand Bois
factories have been awarded a Platinum Certificate
of Commerce by Worldwide Responsible Accredited
Production Award (“WRAP”).
35
Ethics
The decision to behave ethically is a moral
one; employers and employees must decide
what they think is the correct course of
action. Ethics applies to all aspects of business
conduct and is relevant to the conduct of
individuals and the organisation as a whole.
This could mean that the organisation rejects
the route that would lead to the biggest
short-term profit. Together with good
corporate governance, ethical behaviour is an
integral part of everything that CIEL does.
Some examples of Ethical Practices at CIEL:
•
Businesses are conducted within the
framework of relevant laws, regulations
and internal policies;
36
• Codes of conduct for employees;
•
Ensuring that all our business partners
follow same standard of ethics in terms of
employee welfare, society and environment;
•
Regular awareness campaign on antibribery, anti-corruption and privacy and
data protection policies;
•
Continuous efforts to promote clean,
high performing, more accountable and
transparent control at all levels;
• Responsible procurements procedures;
• Occupational health, Safety and Welfare of
employees are of prime concern; and
•
No discrimination is practiced, Freedom
of association and the right to collective
bargaining are respected.
People Commitment
The Chairman’s Manufacturing Excellence Award
Our people are our greatest asset. We provide our
employees with a wide-range of training and development
programmes, to help them develop their talents and
achieve their full potential in a collaborative, safe and
healthy workplace.
The Chairman’s Manufacturing Excellence Award was
introduced in 2007 to reward excelling employees and
companies of CIEL Textile. Rewards are awarded based
on productivity, quality, human resources management,
leadership and environmental sustainability among others.
Some examples of Employee Welfare:
• Free medical tests once a year;
• Leisure and sports activities;
• Health and Social Insurances; and
• Talks on themes like tuberculosis, HIV/AIDS, Malaria and
EBOLA.
Some examples of Training and Talent Development:
•
Ongoing training programmes for better performance
and self-development; and
• Regular team building exercises.
Some examples of Occupational Health & Safety:
• Occupational and Safety Committee in place;
• Health and Safety Policy;
• Risk assessment, Fire drill and First Aid training; and
• Awareness sessions on Health Care.
Work Accidents:
• No serious injuries were reported.
37
CORPORATE
GOVERNANCE
REPORT
38
CORPORATE GOVERNANCE REPORT
Year ended 30 June 2014
Statement of Compliance
(Section 75 (3) of the Financial Reporting Act)
Name of Public Interest Entity (“PIE”): CIEL Textile Limited
Reporting Period: 1 July 2013 to 30 June 2014
We, the Directors of CIEL Textile Limited, confirm that to the best of our knowledge:
The PIE has not complied with the following sections of the Code. Reasons for non-compliance are listed below:
Sections not complied with
Reasons for non-compliance
2.8 - Remuneration of Direcors
The Board of Directors has resolved not to disclose the
remuneration paid to each Director on an individual basis due
to the commercial sensitivity of such information.
2.10.3 - Board and Director Appraisal
No board appraisal has been conducted as the directors feel
that the composition of the Board is stable and efficient in
monitoring the affairs of the Group.
2.5.5 – Role and Function of the Chairman
Although the role of the Chairman is assumed by an executive,
the CEO reports directly to him and to the Board, giving
therefore sufficient segregation of power between the
Chairman and the management. The Chairman has the primary
responsibility for running the Board and ensuring that the
corporate strategy and the related execution are aligned
together with operational efficiencies. With his experience
and strong knowledge of the Company, the Chairman is in an
excellent position to oversee the affairs of the Company while
ensuring that value is being created for all stakeholders.
P. Arnaud DalaisAlain Rey
ChairmanDirector
29 September 2014
39
CORPORATE GOVERNANCE REPORT (CONT’D)
CIEL Textile Limited (“CTL” or “the Company”) is pleased to present its Annual Report for the year ended
30 June 2014.
Incorporated on 19 January 1971, CTL is a public company listed on the Development & Enterprise Market (“DEM”) of
the Stock Exchange of Mauritius Ltd. CTL is registered as a Reporting Issuer with the Financial Services Commission
since the promulgation of the Securities Act 2005.
Compliance Statement
The Board and Management of CTL reiterate their commitment to ensuring and maintaining a high standard of
corporate governance within the Company and the Group to ensure transparency and protection of the interests
of CTL’s shareholders and all stakeholders at large.
They also recognise the need to adapt and improve the principles and practices in light of their experience,
regulatory requirements and investor expectations.
Except as specifically set out in this report, the Board considers that the Company and the Group have complied in
all material respects with the provisions of the Code of Corporate Governance for Mauritius for the financial year
ended 30 June 2014.
Constitution
The Constitution of the Company is in conformity with the provisions of the Companies Act 2001 and the DEM
Rules of the Stock Exchange of Mauritius Ltd. Its salient features are:
• There shall be no restriction on the transfer of fully paid up shares.
• The Board may authorise a distribution by the Company to shareholders if it is satisfied on reasonable grounds
that the Company will satisfy the solvency test immediately after the distribution.
• When shareholders exercise a power to approve any of the following, that power may only be exercised by a
Special Resolution:
(i) an alteration to or revocation of this Constitution or the adoption of a new Constitution;
(ii) a major transaction as defined by the Companies Act 2001 (‘the Act’);
(iii) an amalgamation;
(iv) the liquidation of the Company;
(v) a reduction of the stated capital under Section 62 of the Act.
• There shall be a quorum for a meeting of the Ordinary Shareholders where two Ordinary Shareholders holding at
least thirty four (34) percent of the Ordinary shares in issue are present or represented or have cast postal votes.
• The Board shall consist of not less than 3 or more than 12 Directors.
• The Directors shall have the power to appoint any person to a Director, either to fill a casual vacancy or as an
addition to the existing Directors. The Director appointed to fill up the vacancy shall hold office only until the next
following Annual Meeting and shall then be eligible for re-election.
• A Director having an interest shall not be counted in a quorum.
• Every Director shall have one vote and the Chairperson shall not be entitled to a casting vote.
A copy of the Company’s Constitution is available upon request in writing to the Company Secretary at the
Registered Office of the Company, 5th Floor, Ebène Skies, rue de l’Institut, Ebène.
Shareholding
As at 30 June 2014, the stated capital of the Company was made up as follows:
• Rs. 685,865,487 represented by 101,807,589 no par value ordinary shares; and
• Rs. 3,500,100 represented by 100 Redeemable B shares.
40
Shareholding (cont’d)
As communicated in an official communiqué released by CTL on 19 July 2013, the following events took place
during the year under review:
• The sale by IP Textile Holding Limited (“IPTH’’) to CIEL Investment Limited (now amalgamated with Deep River
Investment Limited and renamed CIEL Limited) on 19 July 2013, of 8,181,818 shares of CTL, representing 8.03%
in CTL;
• The sale by IPTH to Orchestra Asia Ltd on 19 July 2013, of 1,136,364 shares of CTL representing 1.12% in CTL;
• The sale by IPTH to members of the Executive team of CTL on 19 July 2013, of 4,863,636 shares of CTL
representing 4.78% in CTL; and
• The sale by I&P Capital (II) Ltd to Deep River Investment Limited (now amalgamated with CIEL Investment
Limited and renamed CIEL Limited) of 100% of the shares held by IPTH on 25 July 2013.
The holding structure of CTL as at 30 June 2014 was as follows:
CIEL
Limited
100%
IP Textile
Holding
Ltd
Others
11.77%
CIEL
Textile
Limited
44.54%
43.69%
A detailed Group structure, including the subsidiaries and associates of the Company as at 30 June 2014, has been
disclosed under the section Group Structure.
Common Directors
The names of the common Directors within the holding structure as at reporting date are as follows:
P. Arnaud Dalais
Jean-Pierre Dalais
Antoine Delaporte***
Harold Mayer
CTL
•*
•
• **
•
•
•
CIEL Limited
•*
•
•
•
•
•
IP Textile Holding Ltd
•
•
•
•
* Chairman
** Alternate Director
*** Resigned on 19 July 2013 following the sale of I&P Capital (ii) Ltd to Deep River Investment Limited (now
amalgamated with CIEL Investment Limited and renamed CIEL Limited) of 100% of the shares held by IPTH in CTL on
25 July 2013 and appointed again on 25 September 2013 upon the recommendation of the Corporate Governance,
Nomination and Remuneration Committee of CTL.
41
Substantial Shareholders
The shareholders holding more than 5% of the share capital of CTL as at 30 June 2014 were as follows:
Shareholder
Number of Shares Held
CIEL Limited
IP Textile Holding Ltd
% Held
45,349,716
11,982,294
44.54
11.77
Data Analysis of Shareholding
The ownership of ordinary share capital by size of shareholding was as follows as at 30 June 2014:
Size of Shareholding (No. of shares)
Number of Shareholders
Number of Shares Owned
% Holding
808
155
385
121
214
53
43
12
4
13
1,808
108,455
121,232
963,508
888,267
4,912,187
3,721,386
6,633,076
4,102,383
2,962,628
77,394,467
101,807,589
0.11
0.12
0.95
0.87
4.82
3.66
6.52
4.03
2.91
76.01
100.00
1 - 500
501 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 50,000
50,001 - 100,000
100,001 - 250,000
250,001 - 500,000
500,001 - 1,000,000
Over 1,000,000
Total
Summary by Shareholder Category
The ownership of ordinary share capital by category of shareholding was as follows as at 30 June 2014:
Category
Number of Shareholders
Number of Shares Owned
% Holding
1,616
10
31
41
110
1,808
26,206,668
2,269,489
3,754,625
5,236,015
64,340,792
101,807,589
25.74%
2.23%
3.69%
5.14%
63.20%
100.00%
Individuals
Insurance & Assurance Companies
Pensions and Provident Funds
Investment and Trust Companies
Other Corporate Bodies
Total
Nb: The above number of shareholders is indicative due to consolidation of multi portfolios for reporting purposes.
The total number of active shareholders as at 30 June 2014 was 1,907.
Shareholders’ Agreement
To the best knowledge of the Company, there has been no such agreement with any of its shareholders.
Share Option Plan
CTL has no Employee Share Option plan.
Share Registry and Transfer Office
The Share Registry and Transfer Office of CTL are administered by MCB Registry & Securities Limited. For any
queries regarding an account and/or change in names or addresses, and/or questions about lost certificates, share
transfers or dividends, you are invited to contact the Share Registry and Transfer Office, details of which are found
under the section Corporate Information of the Annual Report.
Shares in Public Hands
In accordance with the DEM Rules of the Stock Exchange of Mauritius Ltd, at least 10% of the shareholding of CTL
is in the hands of the public.
42
Communication with the Shareholders
The Company understands the importance of communicating with its shareholders and ensures that shareholders
are kept informed on matters affecting the Company and the Group.
The Company and the Group communicates to its shareholders through its Annual Report, circulars issued in
compliance with the DEM Rules of the Stock Exchange of Mauritius Ltd, press announcements, publication of
quarterly, half-yearly and audited annual financial results of the Group, dividend declaration and at the Annual
Meeting to which all shareholders are invited.
All official news release of relevance to the investors are also posted on the CIEL Group’s website: www.cielgroup.com.
The calendar of events is as follows:
Event
Month
Financial year end
Last Annual Meeting of the shareholders
Declaration of dividend (for the financial year ended 30 June 2014):
- Interim
- Final
Publication of first quarter results
Publication of half yearly results
Publication of third quarter results
Publication of full year results
June
December
November/December
June
November
February
May
September
Dividend Policy
Dividend payments are determined by the profitability of the Company, its cash flows, its future investments and
growth opportunities.
Directors make sure that the Company satisfies the solvency test for each declaration of dividend. A certificate of
compliance with the solvency test is signed by all Directors when a dividend is declared by the Board.
For the financial year ended 30 June 2014, the Company has declared an interim dividend of Rs. 0.75 per ordinary
share on 12 December 2013 and a final dividend of Rs. 1.25 per ordinary share on 23 June 2014.
Dividends declared in respect of Redeemable B shares during the year under review were as follows:
• Interim dividend of Rs. 15,271.14 per Redeemable B share on 12 December 2013; and
• Final Dividend of Rs. 25,451.90 per Redeemable B share on 23 June 2014
Board of Directors
The Board as a whole is ultimately responsible and accountable for the affairs and overall performance of the Group.
It must ensure that proper systems and controls are in place to protect the Group’s assets and its good reputation.
Having regard to recommendations made by the management team, the Board makes strategic decisions and
identifies key risk areas, monitors and evaluates the implementation of policies and business plans, approves the
Group’s capital expenditure, investments and operating budgets.
The Board of CTL is aware of its responsibility to ensure that the Company adheres to all relevant legislation,
complies with the DEM Rules of the SEM and applies the principles of good governance throughout the Group.
The roles of the Chairman and Chief Executive Officer are separate and each of them has clearly defined
responsibilities. This ensures a proper balance of power, increased accountability and greater capacity for the Board
for independent decision-making.
Although the role of the Chairman is assumed by an executive, the CEO reports directly to him and to the Board,
giving therefore sufficient segregation of power between the Chairman and the management. The Chairman has
the primary responsibility for running the Board and ensuring that the corporate strategy and the related execution
are aligned together with operational efficiencies. With his experience and strong knowledge of the Company,
the Chairman is in an excellent position to oversee the affairs of the Company while ensuring that value is being
created for all stakeholders.
The Company’s Constitution provides that the Board shall consist of not less than 3 and not more than 12 Directors.
CTL is currently managed by a unitary Board of 10 Directors, 3 of whom are executive, 5 are non-executive and
2 are independent.
43
Board of Directors (cont’d)
The Independent Directors bring to the Board a wide range of experience and skills. They are free from any business
or other relationships, which could materially affect their ability to exercise independent judgement.
None of the Executive Directors nor the executive Chairman are nearing the statutory retirement age.
The following changes occurred on the Board during the year under review:
• Mr. Antoine Delaporte resigned on 19 July 2013 and was re-appointed Director on 25 September 2013.
• Mr. Jérome Lagesse resigned on 19 July 2013.
• Mr. Jean-Pierre Dalais was appointed Director on 13 February 2014.
• Mr. Eric Dorchies was appointed Director on 29 September 2014.
No Board appraisal has been conducted as the Directors feel that the composition of the Board is stable and
efficient in monitoring the affairs of the Group.
The names of the Directors in office as at reporting date, their categories, profiles and directorships in other
companies listed on the Official Market of the Stock Exchange of Mauritius Ltd are provided below.
P. Arnaud Dalais
Chairman
Executive Director
Mr. P. Arnaud Dalais joined the CIEL Group in August 1977. Under his leadership, the CIEL Group at large has gone
through an important growth both locally and internationally. He has played and continues to play an active
role at the level of the Mauritian private sector and has assumed the chairmanship of a number of organisations
including the Joint Economic Council from 2000 to 2002. He has in 2010 been appointed Group Chairman of the
CIEL Group. Since the amalgamation of CIEL Investment Limited with and into Deep River Investment Limited
effective on 24 January 2014, Mr. P. Arnaud Dalais acts as Chairman of CIEL Limited (formerly known as Deep
River Investment Limited, the surviving company). He is also the Chairman of Sun Resorts Limited and Group
Chief Executive of Alteo Limited.
Directorship in other listed companies: CIEL Limited, Caudan Development Ltd, Sun Resorts Limited, Promotion
and Development Ltd, Alteo Limited
Jean-Pierre Dalais
Non-Executive Director
Mr. Jean-Pierre Dalais was appointed Director on 13 February 2014. He is the Executive Director of CIEL Limited.
With an MBA from The International University of America, Mr. Dalais acquired some working experience from
Arthur Andersen (Mauritius and France) before joining the CIEL Group. He played and continues to play an active
role in the development of the Group’s operations both in Mauritius and internationally.
Directorship in other listed companies: CIEL Limited, IPRO Growth Fund Ltd, Phoenix Beverages Limited (Alternate
Director), Sun Resorts Limited, Alteo Limited
Maurice P. Dalais
Mr. Maurice P. Dalais was appointed Director of the Company on 18 June 2012. He is the Managing Director of
Circonstance Estates Ltd, a family-owned enterprise.
Directorship in other listed companies: none
Antoine Delaporte
Mr. Antoine Delaporte resigned as Director of CIEL Textile Limited following the sale by I&P Capital (ii) Ltd to
Deep River Investment Limited of 100% of the shares held by IPTH in CTL on 25 July 2013. He was nominated
again on the Board of the Company on 25 September 2013 following the recommendation of the Corporate
Governance, Nomination and Remuneration Committee of CTL. He is also a member of that committee. He is
the founder and Managing Director of Adenia Partners Ltd, a private company managing private equity funds
in the Indian Ocean and West African regions. He is also Director of Karina International Limited and C.E.A.L. in
Mauritius as well as Antenne Réunion in Reunion Island. Mr. Delaporte is the Chairman of Newpack, Grand Hotel
du Louvre and Socolait in Madagascar.
Directorship in other listed companies: CIEL Limited
44
Board of Directors (cont’d)
Eric Dorchies
Executive Director
Mr. Dorchies was appointed Director on 29 September 2014. Holder of a diploma from the “Ecole Supérieure de
Commerce” in Paris, he joined the Group in1998 as General Manager of Consolidated Fabrics Ltd and was appointed
Managing Director of Aquarelle Clothing Ltd in 2003. He was appointed Chief Executive Officer of the woven
cluster of the CIEL Textile Group on 1 July 2008.
Directorship in other listed companies: None
Mr. Roger Espitalier Noël was appointed Director of the Company on 18 June 2012. He holds a Certificate in Textile
and Knitwear Technology from the City of Leicester Polytechnic. He was nominated as General Manager of Floreal
Knitwear Ltd in 1998 and retired on June 2010 after 36 years of services in that company. He is now acting as
consultant for the CIEL Textile Group. He is a Director of ENL Land Limited, ENL Investment Limited and ENL Limited.
Directorship in other listed companies: CIEL Limited, ENL Land Ltd
Independent Director
Mr. Henri de Simard de Pitray was appointed Director of the Company on 27 October 2003. He has been during
eight years a member of the Board of Spencer Stuart Inc., one of the leading global executive search firms, of
which he also chaired the Governance Committee. He currently advises several listed European companies on
the functioning of their Boards. He is the Chairman of the Corporate Governance, Nomination and Remuneration
Committee of the Company.
Directorship in other listed companies: None
J. Harold Mayer
Executive Director
Mr. J. Harold Mayer was appointed Director of the Company on 7 July 2003. He holds a Bachelor in Commerce and
qualified as Chartered Accountant - South Africa. He has been very active in the management team of various
companies of CIEL Textile Group since 1990 and was appointed Chief Executive Officer in 2006.
Directorship in other listed companies: CIEL Limited, Sun Resorts Limited
Alain Rey
Independent Director
Mr. Alain Rey was appointed Director of the Company on 12 November 2007. He is a member of the Institute of
Chartered Accountants of England and Wales and holds a BSc in Economics. He is the Chief Executive Officer of
Compagnie de Mont Choisy and has a long experience in the textile industry. He is the Chairman of the Company’s
Audit and Risk Committee.
Directorship in other listed companies: State Bank of Mauritius Ltd, Rogers Co. Ltd
Mr. Eddy Yeung Kan Ching was appointed Director of the Company on 24 June 2003. He has been an active member
of the management team of the Group since 1978 when he joined Ferney Spinning Mills Ltd and has been the Chief
Operating Officer of the spinning, weaving and dyeing operations of the Group until 30 June 2008, when he retired.
He now works as a consultant for the CIEL Textile Group.
Directorship in other listed companies: none
45
Alternate Director
Mr. Jérôme De Chasteauneuf was appointed Alternate Director of Mr. P. Arnaud Dalais on 1 November 2006. He is
a Chartered Accountant of England and Wales and holds a BSc honours in Economics from the London School of
Economics and Political Science. He joined the CIEL Group in 1993 as Corporate Finance Advisor and became Head
of Finance of the CIEL Group in 2000 where he effectively acts as Group Treasurer. Mr. De Chasteauneuf is the
Executive Director of CIEL Limited.
Directorship in other listed companies: Alteo Limited, CIEL Limited, Harel Mallac & Co. Ltd
Newly-Appointed Directors
In accordance with the Company’s Constitution, the Board may fill vacancies or newly-created directorships on
the Board that may occur between Annual Meetings of shareholders, but so that the total number of Directors
shall not at any time exceed the number fixed in accordance with the Constitution.
Under its nomination function, the Corporate Governance, Nomination & Remuneration Committee is responsible
for identifying and recommending potential director(s) to the Board. Thereafter, newly appointed Directors are
subject to election by shareholders at the Company’s Annual Meeting in their first year of appointment.
On appointment to the Board and any Committees, newly appointed Directors receive a complete induction pack
from the Company Secretary in order to rapidly acquire a comprehensive view of the Company’s current operations
practises, acceptable risks level and medium and long term strategy.
Profiles of the Senior Management Team
J. Harold Mayer
Please refer to the section Board of Directors.
Eric Dorchies
Chief Executive Officer of the Woven Cluster
Please refer to the section Board of Directors.
Chief Executive Officer of the Knits and Knitwear clusters
Holder of a B.Sc in Mechanical Engineering from the University of Natal, RSA and an MBA from the Edinburgh
Business School, Mr. de Spéville joined Ferney Spinning Mills Limited in May 2006 as General Manger after 13 years
spent in the beverages industry. He was nominated Chief Executive Officer of the knits and knitwear clusters on
1 July 2011.
Board Attendance
The Board has four scheduled meetings each year. Other meetings may nevertheless be called from time to time
as may be determined and required.
Board meetings are convened by giving appropriate notice after obtaining approval of the Chairman and of the
Chief Executive Officer. As a general rule, detailed agenda, management reports and other explanatory statements
are circulated in advance amongst the Directors to facilitate meaningful, informed and focused decisions at the
meetings.
The Directors may ask for any explanations or the production of additional information and, more generally, submit
to the Chairman any request for information or access to information which might appear to be appropriate to him.
In addition to Directors, key management personnel and outside consultants may be invited to attend Board
meetings when deemed necessary. During the year under review, the Board met five times. Decisions were also
taken by way of resolutions in writing, agreed and signed by all the Directors then entitled to receive the notice of
the meeting.
46
Board Attendance (cont’d)
The attendance of the Directors at Board Meetings during the financial year ended 30 June 2014 was as follows:
Directors
Number of Meetings Attended
P. Arnaud Dalais, Chairman
Jean-Pierre Dalais*
Maurice P. Dalais
Antoine Delaporte**
P. Jérôme Lagesse***
J. Harold Mayer
Alain Rey
6 out of 6
1 out of 6
6 out of 6
4 out of 6
4 out of 6
6 out of 6
1 out of 6
6 out of 6
4 out of 6
5 out of 6
* Appointed on 13 February 2014
** Resigned on 19 July 2013 and appointed again on 25 September 2013
*** Resigned on 19 July 2013
The minutes of the proceedings of each Board meeting are recorded by the Company Secretary and are entered in
the Minutes Book of the Company. The minutes of each Board meeting are submitted for confirmation at its next
meeting and these are then signed by the Chairman and Company Secretary.
Board Committees
The Code provides that Board committees are a mechanism to assist the Board of Directors in discharging its duties
and responsibilities through a more comprehensive evaluation of specific issues, followed by well-considered
recommendations to the Board.
The Board committees operate independently from the Board and report to the Board on matters discussed at the
committee meetings.
Two committees of the Board have been constituted namely, the Audit & Risk Committee and the Corporate
Governance, Nomination & Remuneration Committee, which operate within clearly defined terms of reference
approved by the Board. The Committees may, at the Company’s expense, request such internal/external
professional advice that they consider necessary to perform their duties in the best interest of the Company.
The Company Secretary acts as secretary to Board Committees and works on the minutes, which are thereafter
tabled at the following respective Board Committee for approval. Simultaneously, the Chairmen of the committees
report orally on the proceedings of their committees at the Board meetings of the Company.
Audit & Risk Committee
The Committee is chaired by an Independent Director and currently consists of three members, namely:
• Mr. Alain Rey (Chairman)
• Mr. Jean-Pierre Dalais (nominated on the Committee on 13 February 2014)
• Mr. Jérôme De Chasteauneuf
Mr. P. Jérôme Lagesse stepped down as member on 19 July 2013.
During the year under review, the Committee met six times. The composition of the Committee as well as the
particulars of attendance at meetings during the year are given in the table below:
Members
Alain Rey, Chairman
Jean-Pierre Dalais (appointed on 13 February 2014)
P. Jérôme Lagesse (Resigned on 19 July 2013)
6 out of 6
1 out of 6
6 out of 6
-
47
Board Committees (cont’d)
Audit & Risk Committee (cont’d)
The broad terms of reference of the Committee are to:
(i) Review the integrity of quarterly financial statements and recommend their adoption to the Board of Directors
prior to filing and publication;
(ii) Review the effectiveness of the Company’s internal control and risk management systems;
(iii) Monitor and supervise the effective function of the internal audit; and
(iv) Oversee the process for selecting the external auditor, assesses the continuing independence of the external
auditor and approve the audit fees.
The Committee examined and made recommendations to the Board on the Company’s interim results, audited
accounts, budget and dividend. The findings of the internal auditor were also lengthily discussed and adequate
recommendations made.
The fees of the external and internal auditors were reviewed by the Committee who proposed same for approval
to the Board.
The Financial Controller of CTL Group also attended the meetings. In addition, internal and external auditors were
invited to explain the internal audit reports and audited accounts.
Sub-Committees of the Audit and Risk Committee were established at the level of the knits, knitwear and woven
clusters. These meetings serve as forum to discuss reports from internal/external auditors and monitor progress
on corrective actions prescribed by the auditors in view of eliminating/controlling high risk issues identified. The
management of each cluster is also invited to report at these meetings.
Following the resignation of Mr. Jérome Lagesse, the sub-committees currently consist of two members,
namely, Mr. Jérôme De Chasteauneuf (Head of Finance of the CIEL Group) and Mr. Bertrand Rivalland (Financial
Controller of CTL Group). No candidate has yet been nominated to replace the vacancy created by the resignation
of Mr. Jérôme Lagesse.
Corporate Governance, Nomination & Remuneration Committee
The Committee is composed of three members and has met once during the year. The attendance of the members
was as follows:
Members
P. Arnaud Dalais
Antoine Delaporte
1 out of 1
1 out of 1
1 out of 1
The main attribution of the Corporate Governance, Nomination & Remuneration Committee is 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.
Together with its duties, the Corporate Governance Committee is also responsible for remuneration and
nomination matters. The Directors believe that the success of the Company depends to a large extent
on its ability to attract and retain the best performing people and to provide a stimulating and motivating
environment. The Corporate Governance, Nomination & Remuneration Committee makes recommendations
based on this conviction.
Directors’ & Officers’ Liability Insurance
As permitted by its Constitution, the Company has contracted a Directors’ and Officers’ Liability Insurance,
renewed on a yearly basis.
48
Directors’ Interests in Shares
The Directors’ interests in the capital of the Company as at 30 June 2014 were as follows:
Name of Director
P. Arnaud Dalais
Maurice P. Dalais
Antoine Delaporte
Eric Dorchies
J. Harold Mayer
Alain Rey
Direct Shareholding
Number of Shares
Indirect Shareholding
Number of Shares
1,813,840
106,729
2,512,511
1,812,000
1,978,291
3,052
13,140
227,691
1,550,097
56,723
1,244,171
97,578
1,300
2,389
-
The Directors and officers of the Company have been made aware of their responsibilities in disclosing to the
Company any acquisition or disposal in the Company’s securities, as per the Securities Act 2005 and DEM rules.
Share dealings by Directors during the year under review were as follows:
Name of Director
P. Arnaud Dalais
Maurice P. Dalais
Antoine Delaporte
J. Harold Mayer
Alain Rey
Direct Shareholding
Number of Shares
200,032
227,273
Indirect Shareholding
Number of Shares
2,065
1,300
-
Risk Management
Risk Management refers to the process used by the Group and the Company to monitor and mitigate its exposure
to risk. The objective of risk management is not to eliminate risk altogether, but to reduce it to an acceptable level
having regard to the objectives of the Group and the Company.
The Board is ultimately responsible for the system of internal control and for reviewing its effectiveness. The Board
confirms that there is an ongoing process for identifying, evaluating and managing the various risks faced by the
Group and the Company.
Risk is managed on the day-to-day by management whilst the internal auditors assist the Board and management
with the monitoring of the risk management process. Regular management reporting, which provides a balanced
assessment of key risks and controls, is an important component of the Board Assurance.
The finance department provides confirmation that financial and accounting control frameworks have operated
satisfactorily. In addition, the Board receives assurance from the Audit and Risk Committee, which derives its
information, in part, from regular internal and external audit reports on risk and internal control throughout the
Company.
The Group’s and Company’s principal liabilities comprise of bank loans and overdrafts, finance leases, bills
discounted and trade payables and other payables to finance the operations of the Group and the Company
The activities of the Company and the Group are exposed to a variety of financial risks: market risks, credit risk and
liquidity risk. The overall risk management programme focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the Group’s and Company’s financial performance.
49
Risk Management (cont’d)
A description of the risk factors is disclosed in note 35 to the financial statements as well the risk management
policies which have been applied.
Some of the prominent risks to which the Company is exposed are:
• Financial - The Company is exposed to a wide range of financial risks, including currency risks and price risks,
credit risks, liquidity risks as reported in note 35 to the financial statements.
• Operational risk defined as the risk of loss resulting from inadequate or failed internal processes, people and
systems or from external events.
• Compliance risk defined as the risk of not complying with laws, regulations and policies.
• Reputational risk defined as the risk of losses due to unintentional or negligent failure to meet a professional
obligation to stakeholders.
Statement of Remuneration Philosophy
The Board has delegated to the Corporate Governance, Nomination and Remuneration Committee, the
responsibility of determining the adequate remuneration to be paid to the Board members and Senior Management.
The Group’s underlying philosophy is to set remuneration at an appropriate level to attract, retain and motivate
high calibre personnel and directors and to reward them in accordance with their individual as well as collective
contribution towards the achievement of the Group’s objectives and performance, whilst taking into account
current market conditions. The Directors are remunerated for their knowledge, experience and insight given to
Board and Committees.
Retirement Benefit Obligations
The details of the total amount of provisions booked or otherwise recognised by the Company are provided in note
17 of the financial statements.
External Auditors
Shareholders rely on the external auditors to act in the long-term interest of the Group and the Company in which
they have invested their money such that the independence of auditors is paramount in making sure the necessary
safeguards are in place.
The Board assesses and reviews on a regular basis the independence of the external auditor,
PricewaterhouseCoopers.
Internal Audit
The mission of the internal audit is to provide independent, objective assurance services designed to add value and
improve the Group’s operations.
The scope of the internal audit function is to assist the Board of Directors and Management to maintain and improve
the process by which risks are identified and managed and to help the Board to discharge its responsibilities and to
maintain and strengthen the internal control framework.
The internal audit function has been outsourced to Messrs. BDO & Co which carries its functions independently
and has a direct reporting line to the Audit and Risk Committee. The internal auditor also maintains an open and
constructive communication channel with the executive management. The reporting structure allows the internal
auditors to remain independent and to report all items of significance.
The internal audit plan, which is approved by the Audit and Risk Committee, is based on the principles of risk
management to align coverage and effort with the degree of risk attributable to the areas audited.
Company Secretariat
The Company has entered into a service agreement with CIEL Corporate Services Ltd (‘CCS’) for company
secretariat and legal services. The Company Secretary is responsible for the smooth operation of the Company’s
formal decision making and reporting.
All Directors have access to the advice and services of the Company Secretary who is accountable to the Board
for ensuring that the Board procedures are complied with and that the Board is properly guided on all governance
matters. Under the direction of the Chairman, the Company Secretary’s responsibilities include ensuring good
information flow within the Board and its Committees, between senior management and the Directors, as well as
facilitating induction and assisting with professional development.
50
Company Secretariat (cont’d)
Moreover, the Company Secretary is the primary channel of communication between the Company and the
regulatory authorities.
Agreements
In addition to providing company secretarial and legal services to CTL Group of companies, CCS also acts as its head
office and offers other services such as finance, treasury, legal, payroll, communication and strategic support.
The Company also holds an agreement with Azur Financial Services Ltd, a subsidiary of CIEL Corporate Services
Limited for the provision of treasury management services to the Group.
No major agreements, other than those in the ordinary course of business, were contracted by the Company during
the year under review. There is no agreement in place which affects the governance of the Company.
Financial Risk Factors
Please refer to note 35 of the Financial Statements.
Related Party Transactions
Please refer to note 34 of the Financial Statements.
Share Price Information
The Company’s ordinary shares are listed on the Development & Enterprise Market of the Stock Exchange of
Mauritius Ltd.
The evolution of the share price over the year has been as follows:
41
38
36.50
35
33.90
33.40
Jun 14
Jul 14
37.00
32.10
32
Rs.
26
30.00
29.35
Mar 14
Apr 14
28.85
29
27.00
23.75
24.00
23.60
Jul 13
Aug 13
Sep 13
25.10
24.80
25.80
Oct 13
Nov 13
Dec 13
23
20
Jan 14
Feb 14
Months
May 14
Aug 14
Sep 14
Shareholders’ Relations and Communication
CTL Group understands the importance of communicating with its shareholders and ensures that shareholders are
kept informed on matters affecting the Group.
The Group communicates to its shareholders through its Annual Report, circulars issued in compliance with the
DEM Rules of the Stock Exchange of Mauritius Ltd, press announcements, publication of unaudited quarterly and
audited condensed financial statements of the Group, dividend declaration and the Annual Meeting, to which all
shareholders are invited.
Annual Meeting of Shareholders
The Board strongly encourage shareholders to attend the Annual Meeting which provides an opportunity for the
latter to receive copies of the Group and Company’s accounts and to keep abreast of the overall strategy and goals.
The Chairman, Chief Executive Officer and Board members assist the Annual meeting and invite shareholders to
put questions on different aspects of the Group’s activities and directions the business will take in the future.
The notice included in the annual report clearly explains the procedures regarding proxy and postal voting. The
deadlines as to when these should be received by the Company Secretary are also stated.
51
Sustainability Reporting
CTL Group recognises that it operates within a broader social and economic community. Consequently, when
it takes decisions and carries out activities, it is committed to considering not only economic viability but also
environmental consequences and social implications. The Group recognises its key role regarding job and wealth
creation in the Mauritian society.
Ethics and Business Conduct
CTL Group together with its employees adhere to sound principles of morality for ensuring corporate responsibility,
quality assurance and customer satisfaction. These principles act as a guiding framework for motivating and
regulating the employees, in addition to providing a focus for achieving the business goals.
The Group is committed to a policy for fair, honest dealing and integrity in the conduct of its business.
This commitment is based on a fundamental belief that business should be conducted honestly, fairly and legally.
Environment, Health and Safety Policy
CTL Group remains sensible to the climatic change to which the globe is subject to and takes environmental
responsibility at heart and recognizes the importance of preserving the integrity of natural heritage. In its endeavor
to preserve the environment, it continuously aims at improving processes in its various operations.
The Group also recognises its role in providing a healthy, sound, safe and secure working environment for all
its employees and any authorised third party. Safety implications are therefore taken into account before any
operational and strategic decisions are taken.
In compliance with the Health and Safety legislation, the Group has implemented recommended policies and
practices to ensure that the plants, machinery and equipment provided for use at work are safe to operate;
information instructions and training, as necessary, are provided to enable its employees to perform their duties
efficiently and safely; and continuous improvement in the performance of its Health and Safety management
systems are maintained.
Corporate Social Responsibility (“CSR”)
CSR activities were carried out and aligned with the CTL Group’s values.
Initiatives in that context were again geared towards the contribution of funds to Fondation CIEL Nouveau
Regard (“FCNR”), the CSR arm of the CIEL Group. FCNR has been involved over the past years in community
development projects throughout the island, focusing on children in distress, including those who grow up in
the streets and those facing difficult family situations.
Clothilde de Comarmond, ACIS
Per CIEL Corporate Services Ltd
Company Secretary
29 September 2014
52
OTHER STATUTORY DISCLOSURES
(Pursuant to Section 221 of the Companies Act 2001)
Nature of Business
The principal activity of the Company is that of an investment holding company with interests in a number of
companies involved in textile activities.
Remuneration of the Directors
The emoluments of the Executive Directors have not been disclosed on an individual basis due to the commercial
sensitivity of that information.
Remuneration and benefits of the Directors received from the Company and its subsidiaries were as follows:
The Company
2014
2013
Rs.’000
Rs.’000
Executive Directors
Non-Executive & Independent Directors
Subsidiaries
2014
2013
Rs.’000
Rs.’000
Nil
2,077
Nil
1,600
64,888
1,593
42,804
1,610
Nil
Nil
81,120
57,972
Executive Directors of Subsidiaries
The Non-Executive and Independent Directors were paid a fixed annual fee of Rs. 150,000 as well as an attendance
fee of Rs. 22,500 per meeting during the year ended 30 June 2014.
Following the recommendation of the Corporate Governance, Nomination & Remuneration committee, it was
decided that the members of the Board committees would be remunerated as follows:
Corporate Governance, Nomination & Remuneration Committee:
• Rs. 150,000 per year for the Chairman of the Committee and
• Rs. 100,000 per year for the other members.
Audit & Risk Committee:
• Rs. 225,000 per year for the Chairman of the Committee and
• Rs. 150,000 per year for the other members.
Executives sitting on the Board Committees did not perceive any fee.
Directorship of Subsidiary Companies as at 30 June 2014
Dora Brocchetto Cieltex SA Pty Ltd
Elvis Cateaux
New Island Clothing Madagascar SA
P. Arnaud DalaisAquarelle Clothing Ltd
Aquarelle India (Private) Ltd
Aquarelle International Ltd
Aquarelle Madagascar SA
CDL Knits Ltd (Formely known as Consolidated Dyeing and Fabrics Ltd)
Consolidated Fabrics Ltd
CTL Retail Ltd
De Nyon Ltd
Ferney Spinning Mills Ltd
Floreal International Ltd
Floreal Knitwear Ltd
Floreal Madagascar SA
Floreal Manufacturing Ltd
International Fabrics Ltd
Laguna Clothing (Mauritius) Ltd
TKL International Ltd
Tropic Knits Ltd
Tropic Mad SA
Société Textile d’Andraharo SA - Texaro
Société Bonneterie Malagasy - SOBOMA
53
OTHER STATUTORY DISCLOSURES (CONT’D)
Guillaume Dalais
Tropic Mad SA
Tropic Knits Limited
Jean-Pierre Dalais
Aquarelle Clothing Ltd
CTL Retail Ltd
Ferney Spinning Mills Limited Floreal Knitwear Ltd
Tropic Knits Ltd
Aquarelle Clothing Ltd
Ajax Sweaters Ltd
Consolidated Fabrics Ltd (Alt Director of Eddy Yeung Kan Ching)
CTL Retail Ltd
De Nyon Ltd
Tropic Knits Ltd
Tropic Mad SA
Jean-Baptiste Doger de Spéville Ajax Sweaters Ltd
Tropic Knits Ltd
Eric DorchiesAquarelle Clothing Ltd
Laguna Clothing Private Ltd
Tinka International Ltd
Jacques Edouard-Betsy
New Island Clothing Madagacar SA
Tropic Mad SA
Louis Baron Stephane Fromet De Rosnay
Sarbajit Ghose
Françoise IpAjax Sweaters Ltd
Tropic Mad SA
54
Baboo Daneshwarsingh Jagarnath
Rajesh KumarLaguna Clothing Private Ltd
Michel André Kim Shin Loo Chin Moy
Tropic Mad SA
Nicolas MaigrotFloreal Knitwear Ltd
J. Harold MayerAquarelle Clothing Ltd
CDL Knits Ltd (Formely known as Consolidated
Dyeing and Fabrics Ltd)
CTL Retail Ltd
De Nyon Ltd
Tropic Knits Ltd
Tropic Mad SA
Bruno MontiLaguna Clothing Private Ltd
Paolo MontiLaguna Clothing Private Ltd
Manuel MontiLaguna Clothing (Mauritius) Ltd
Neera MunisamyAjax Sweaters Ltd
Murali NageshAquarelle India (Private) Ltd
Bertrand RivallandAquarelle Madagascar SA
Ajax Sweaters Ltd
Cieltex Pty SA
Tropic Mad SA
Vaidyanathan Pudugramam Venkata Subramanian
Bertrand ThevenauTropic Knits Ltd
Tropic Mad SA
55
OTHER STATUTORY DISCLOSURES (CONT’D)
Eddy Yeung Kan ChingAquarelle Clothing Ltd
CTL Retail Ltd
De Nyon Ltd
Tropic Knits Ltd
Pascal WalterConsolidated Fabrics Ltd
Directors’ Service Contracts
The Chief Executive Officer of CTL, Chief Executive Officer of the knits and knitwear clusters and Chief Executive
Officer of the woven cluster hold service contracts with Company, with no expiry terms. Executive Directors of
the subsidiaries of the Company also hold service contracts with either the Company or the subsidiaries of the
Company, with no expiry terms.
Donations
Donations made during the year by the Company and its subsidiaries were as follows:
Company (Rs.’000)
2014
2013
-
Political
Others
-
Subsidiaries (Rs.’000)
2014
2013
57
1,213
In addition to the above, CTL Group has contributed Rs. 487,402 as Corporate Social Responsibility, channelled to
FCNR, registered as a special purpose vehicle accredited to receive CSR contribution. CTL is one of the promoters
of FCNR.
Contract of Significance
There were no contracts of significance subsisting during or at the end of the year in which a Director of the
Company is or was materially interested, either directly or indirectly.
56
External Audit Fees
External Audit fees for the year were as follows:
The Company (Rs.’000)
2014
2013
Audit fees paid to:
Overseas auditors
Fees paid for other services provided by:
PricewaterhouseCoopers*
BDO & Co**
Overseas auditors
Subsidiaries (Rs.’000)
2014
2013
600
600
600
600
4,900
2,826
7,726
4,900
2,937
7,837
37
900
937
37
775
812
1,500
726
2,226
963
150
426
1,539
Note: Fees are exclusive of VAT
* Includes Tax compliance fees and IFRS training fees.
** Includes Group accounts consolidation fees.
Internal Audit Fees
Fees paid in respect of the internal audit for the year under review was Rs. 900,000.
ON BEHALF OF THE BOARD
ChairmanDirector
29 September 2014
57
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT
OF THE PREPARATION OF FINANCIAL STATEMENTS
Directors acknowledge their responsibilities for:
(i) adequate accounting records and maintenance of effective internal control systems;
(ii) T
he preparation of financial statements which fairly present the state of affairs of the Company as at the end
of the financial year and the results of its operations and cash flows for that comply with International Financial
Reporting Standards (IFRS);
(iii) The selection of appropriate accounting policies supported by reasonable and prudent judgments.
The external auditors are responsible for reporting on whether the financial statements are fairly presented.
The Directors report that:
(i) adequate accounting records and an effective system of internal controls and risk management have been
maintained;
(ii) appropriate accounting policies supported by reasonable and prudent judgments and estimates have been
used consistently;
(iii) International Financial Reporting Standards have been adhered to. Any departure in the interest in fair
presentation has been disclosed, explained and quantified.
(iv) The code of Corporate Governance has been adhered to in all material aspects and reasons provided for noncompliance.
ON BEHALF OF THE BOARD
ChairmanDirector
29 September 2014
58
59
CERTIFICATE OF
COMPANY SECRETARY
60
In our capacity as Company Secretary, we hereby certify, to the best of our knowledge
and belief, that CIEL Textile Limited has filed with the Registrar of Companies, for the
financial year ended 30 June 2014, all such returns as are required of the company
under The Companies Act 2001, and that all such returns are true, correct and up to
date.
Company Secretary
29 September 2014
61
INDEPENDENT
AUDITOR’S REPORT
TO THE MEMBERS OF
CIEL TEXTILE LIMITED
62
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF CIEL TEXTILE LIMITED
Report on the Financial Statements
Report on Other Legal and Regulatory Requirements
We have audited the consolidated financial statements
of CIEL Textile Limited (the “Company”) and its
subsidiaries (together the “Group”) and separate
financial statements of the Company on pages 64 to
140 which comprise the Group’s and the Company’s
statements of financial position at 30 June 2014 and
their respective statements of income, comprehensive
income, changes in equity and cash flows for the year
then ended, and a summary of significant accounting
policies and other explanatory notes.
Mauritian Companies Act 2001
The Mauritian Companies Act 2001 requires that in
carrying out our audit we consider and report to you on
the following matters. We confirm that:
(a) we have no relationship with or interests in the
Company or any of its subsidiaries other than in our
capacities as auditor and tax advisor of the Company
and some of its subsidiaries;
(b) we have obtained all the information and
explanations we have required; and
(c) in our opinion, proper accounting records have been
kept by the Company as far as appears from our
examination of those records.
Directors’ Responsibility for the Financial Statements
The Company’s directors are responsible for the
preparation and fair presentation of these financial
statements in accordance with International Financial
Reporting Standards and in compliance with the
requirements of the Mauritian Companies Act 2001,
and for such internal control as the directors determine
is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error.
Financial Reporting Act 2004
The directors are responsible for preparing the
corporate governance report. Our responsibility is to
report on the extent of compliance with the Code of
Corporate Governance (the ‘Code’) as disclosed in the
corporate governance report on whether the disclosure
is consistent with the requirements of the Code.
Auditor’s Responsibility
In our opinion, the disclosure in the corporate
governance report is consistent with the requirements
of the Code.
Our responsibility is to express an opinion on these
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 financial statements are free from material
misstatement.
An audit involves performing procedures to obtain
audit evidence about the amounts and disclosures
in the financial statements. The procedures selected
depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation and
fair presentation of the 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 financial statements.
Other Matter
This report, including the opinion, has been prepared
for and only for the Company’s shareholders, as a
body, in accordance with Section 205 of the Mauritian
Companies Act 2001 and for no other purpose. We
do not, in giving this opinion, accept or assume
responsibility for any other purpose or to any other
person to whom this report is shown or into whose
hands it may come save where expressly agreed by our
prior consent in writing.
Mushtaq Oosman,
licensed by FRC
29 September 2014
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 financial statements on pages 64 to
140 give a true and fair view of the financial position of
the Group and of the Company at 30 June 2014 and of
their financial performance and cash flows for the year
then ended in accordance with International Financial
Reporting Standards and comply with the Mauritian
Companies Act 2001.
63
STATEMENTS OF FINANCIAL POSITION
As at 30 June 2014
Notes
ASSETS
Non-current assets
Property, plant and equipment
- at fair value
Property, plant and equipment - at cost
3
3
Intangible assets
Investments in:
- Subsidiary companies
- Available for sale investments
4
Non-current receivables
Deferred income tax assets
8
9
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
(excluding bank overdrafts)
Non-current assets classified
as held for sale
5
7
10
11
THE GROUP
As at
30 June,
2014
2013
Restated
Rs.’000
Rs.’000
THE COMPANY
As at
30 June,
2014
2013
As at
1 July,
2012
Restated
Rs.’000
Rs.’000
Rs.’000
1,907,413
920,695
2,828,108
16,164
1,417,127
782,644
2,199,771
16,876
1,415,843
784,342
2,200,185
9,416
122,414
122,414
-
112,625
112,625
-
6,712
6,712
58,308
49,998
2,959,290
6,712
6,712
24,976
41,457
2,289,792
3,477
3,477
12,998
32,824
2,258,900
1,201,801
6,712
1,208,513
1,330,927
1,201,801
6,712
1,208,513
1,321,138
2,462,406
2,339,194
2,281,292
2,143,618
2,036,376
1,643,122
156,893
117,774
247,892
5,049,492
166,706
4,591,616
241,768
3,921,266
3,972
160,865
461
118,235
-
22,366
22,366
-
-
8,008,782
6,903,774
6,202,532
1,491,792
1,439,373
13
685,865
759,213
2,179,233
3,624,311
179,390
3,803,701
685,865
579,657
1,843,260
3,108,782
217,311
3,326,093
685,865
653,596
1,534,899
2,874,360
177,237
3,051,597
685,865
131,874
98,086
915,825
915,825
685,865
121,396
98,103
905,364
905,364
Non-current liabilities
Borrowings
Deferred income tax liabilities
Retirement benefit obligations
15
9
17
153,615
236,573
177,804
567,992
71,275
182,194
144,215
397,684
149,852
175,519
70,305
395,676
20,554
20,554
14,000
18,408
32,408
Current liabilities
Trade and other payables
Provisions
Borrowings
Redeemable preference share capital
Current income tax liabilities
Employee benefit liability
Dividends payable
19
20
15
14
21
18
27
1,697,321
20,528
1,751,969
40,012
127,259
3,637,089
1,509,758
37,990
1,490,867
39,574
101,808
3,179,997
1,185,814
35,188
979,287
404,937
48,761
9,760
91,512
2,755,259
428,112
6
36
127,259
555,413
385,789
14,004
101,808
501,601
12
TOTAL ASSETS
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Revaluation and other reserves
Retained earnings
Owners’ interest
Non-controlling interests
Total equity
Total liabilities
4,205,081
3,577,681
3,150,935
575,967
534,009
TOTAL EQUITY AND LIABILITIES
8,008,782
6,903,774
6,202,532
1,491,792
1,439,373
These financial statements have been approved for issue by the Board of Directors on 29 September 2014.
ChairmanDirector
The notes on pages 70 to 140 form an integral part of these financial statements.
Auditors’ report on page 63.
64
INCOME STATEMENTS
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
Notes
Revenue
Earnings before interest, tax, depreciation and
amortisation
Depreciation and amortisation
Earnings before interest and tax
Finance income
Finance costs
Net finance costs
9,565,100
33
8,685,727
THE COMPANY
2014
2013
Rs.’000
Rs.’000
207,687
155,766
22 a
25
25
25
Profit from Ordinary Activities
22 c
Non Recurring Items
22 b
969,945
(219,322)
750,623
829,906
(199,208)
630,698
210,164
(2,835)
207,329
158,275
(2,835)
155,440
6,494
(83,108)
(76,614)
9,036
(63,412)
(54,376)
4,370
(8,065)
(3,695)
3,165
(6,090)
(2,925)
674,009
(23,449)
576,322
203,634
152,515
30,712
-
-
Profit before taxation
24
650,560
607,034
203,634
152,515
Income tax (expense)/credit
21
(99,472)
(91,177)
(36)
482
551,088
515,857
203,598
152,997
2014
Rs.’000
2013
Restated
Rs.’000
517,195
33,893
551,088
464,138
51,719
515,857
5.08
4.53
Profit for the year
Profit attributable to :
Owners of the company
Basic and diluted earnings per share
26
Rs.
65
STATEMENTS OF COMPREHENSIVE INCOME
Notes
Profit for the year
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
551,088
515,857
THE COMPANY
2014
2013
Rs.’000
Rs.’000
203,598
152,997
Other comprehensive income
Items that will not be reclassified to profit or loss
Revaluation surplus
Deferred tax on revaluation surplus
Remeasurements of post retirement benefit
obligations
Deferred tax on remeasurements of post
retirement benefit obligations
Items that may be subsequently reclassified to
profit or loss
Amount recognised in cash flow hedge reserve
Deferred tax on cash flow hedge reserve
Exchange differences
16
9
276,473
(44,593)
2,167
(329)
16
(11,819)
(58,381)
-
-
8,695
(47,848)
10,478
-
(36,970)
(36,970)
-
-
9
9
16
3,359
223,420
(40,230)
2,003
(39,558)
(77,785)
Other comprehensive income/(loss) for the year
145,635
Total comprehensive income for the year
696,723
431,039
2014
Rs.’000
2013
Restated
Rs.’000
650,958
45,765
696,723
390,199
40,840
431,039
Total comprehensive income attributable to:
Owners of the company
(84,818)
66
12,624
(2,146)
-
10,478
-
214,076
152,997
STATEMENTS OF CHANGES IN EQUITY
THE GROUP
(Attributable to the owners of the company)
At 30 June 2014
Notes
Balance as at
1 July 2013
(restated)
Capital
Redemption
Reserve
Stated
Capital
Rs.’000
Rs.’000
Revaluation General
Surplus
Reserve
Cash
Flow
Hedge
Reserve
Actuarial
losses
Rs.’000 Rs.’000
Rs.’000
(49,655)
Translation
of foreign
operations
Retained
Earnings
Rs.’000
Rs.’000
-
1,843,260
-
517,195
Sub-Total
Rs.’000
Rs.’000
3,108,782
217,311
3,326,093
517,195
33,893
551,088
133,763
11,872
145,635
(83,686)
685,865
75,000
602,890
1,505
-
-
-
-
Other
comprehensive
income
-
-
215,408
-
29(a)
-
-
45,793
-
-
-
22,393
-
68,186
27
-
-
-
-
-
-
(203,615)
-
(203,615)
685,865
75,000
864,091
1,505
(8,199)
(38,227)
-
(50,083)
Total
Equity
Rs.’000
Rs.’000
Profit for the year
-
Noncontrolling
interests
-
(35,219)
Transactions with
owners:
Changes in
ownership interest
in subsidiaries
that do not result
in a loss of control
Ordinary
dividends
Balance as at
30 June 2014
(57,854)
(38,227)
2,179,233
(85,302)
3,624,311
-
(15,500)
(203,615)
179,390
3,803,701
177,507
3,052,924
At 30 June 2013
Balance as at 1 July
2012 (as previously
reported)
Effect of changes
in accounting
policies
38
Balance as at
1 July 2012
(restated)
Profit for the year
(as previously
reported)
Effect of changes
in accounting
policies
75,000
601,052
1,505
-
-
-
-
685,865
75,000
601,052
1,505
-
-
-
-
-
-
1,534,899
(22,904)
(1,057)
-
-
(1,057)
-
1,534,899
-
-
462,335
-
2,875,417
(1,057)
-
(22,904) 2,874,360
(270)
(1,327)
177,237
3,051,597
462,335
51,702
514,037
-
-
-
-
-
-
1,803
-
1,803
17
1,820
Profit for the year
(restated)
-
-
-
-
-
-
464,138
-
464,138
51,719
515,857
Other
comprehensive
income (as
previously
reported)
-
-
1,838
-
-
-
-
Effect of changes
in accounting
policies
38
685,865
38
(27,179)
-
(25,341)
(9,791)
(35,132)
(48,598)
(1,088)
(49,686)
(73,939)
(10,879)
(84,818)
(766)
(3,832)
-
-
-
-
(48,598)
-
-
Other
comprehensive
income (restated)
-
-
1,838
-
(48,598)
-
-
Preference
dividends
-
-
-
-
-
-
(3,066)
-
(3,066)
-
-
-
-
-
-
(152,711)
-
(152,711)
685,865
75,000
602,890
1,505
(27,179)
Transactions with
owners:
Ordinary dividends
27
Balance as at
30 June 2013
(restated)
(49,655)
-
1,843,260
(50,083) 3,108,782
-
217,311
(152,711)
3,326,093
-
67
STATEMENTS OF CHANGES IN EQUITY
THE COMPANY
Notes
At 1 July 2013
Profit for the year
Transactions with owners:
Ordinary dividends
At 30 June 2014
At 1 July 2012
Profit for the year
Transactions with owners:
Ordinary dividends
At 30 June 2013
27
27
Stated
Capital
Rs.’000
Revaluation
Surplus
Rs.’000
Retained
Earnings
Rs.’000
685,865
-
121,396
10,478
98,103
203,598
-
905,364
203,598
10,478
685,865
131,874
(203,615)
98,086
(203,615)
915,825
685,865
-
121,396
-
97,817
152,997
-
905,078
152,997
-
685,865
121,396
(152,711)
98,103
(152,711)
905,364
68
Total
Rs.’000
STATEMENTS OF CASH FLOWS
Notes
OPERATING ACTIVITIES
Cash generated from operations
Interest received
Tax paid
Interest paid
Net cash generated from operating activities
INVESTING ACTIVITIES
Acquisition of subsidiary, net of cash acquired
Purchase of additional shares in subsidiary
Proceeds from disposal of non current assets held
for sale
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment in subsidiary company
Purchase of available for sale investments
Net movement in non-current receivables
Proceeds from disposal of property,
plant and equipment
Net cash used in investing activities
FINANCING ACTIVITIES
Net movement in bank and import loans
Net movement in bills discounted
Net movement on finance leases
Net movement in debentures
Redemption of Redeemable preference shares
Net movement in loans from related companies
Ordinary Dividends paid to owners of the parent
B shares dividends paid
Preference dividends paid to financial institutions
Net cash used in financing activities
THE COMPANY
2014
2013
Rs.’000
Rs.’000
213,368
4,370
(8,065)
209,673
183,961
3,165
(63)
(6,090)
180,973
28(a)
690,822
6,494
(109,389)
(83,108)
504,819
29(b)
29(a)
(114,957)
(15,500)
12
3
4
53,700
(326,688)
(4,532)
(33,332)
(209,146)
(11,821)
(3,235)
(11,978)
-
(50,000)
(3,235)
-
7,730
(433,579)
2,743
(233,437)
-
(53,235)
1,837
173,612
(18,908)
(28,000)
(30,000)
(178,164)
(3,563)
(83,186)
202,129
90,474
(15,654)
(14,000)
(404,937)
(122,168)
(2,443)
(24,079)
(290,678)
(11,946)
(8,601)
(256,783)
(232,298)
(12,818)
(11,667)
3,509
457
(277,330)
(256,783)
3,966
27(b)
Net (decrease)/increase in cash and cash equivalents
At 1 July
At 30 June,
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
28(b)
437,230
9,036
(91,037)
(63,412)
291,817
-
-
(28,000)
(178,164)
(206,164)
-
(14,000)
(82)
(122,168)
(136,250)
(8,512)
8,969
457
69
NOTES TO THE FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
CIEL Textile Limited is a public Company incorporated and domiciled in Mauritius. It is quoted on the Development
and Enterprise Market (DEM). Its registered office is situated on the 5th Floor Ebène Skies, rue de L’Institut, Ebène.
The main activity of the Company is that of investment holding while the Group is engaged in the manufacture and
sales of knitted and woven garments.
These financial statements will be submitted for consideration and approval at the forthcoming Annual Meeting of
Shareholders of the Company.
2. ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of Preparation
The financial statements have been prepared on a historical cost basis as modified by the revaluation of land and
buildings and available-for-sale investments. The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also requires management to exercise its judgement
in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or
complexity or areas where assumptions and estimates are significant to the consolidated financial statements are
disclosed on pages xx and xx. The financial statements are presented in thousand rupees except where otherwise
indicated. Where necessary, comparative figures have been regrouped and/or restated to conform to the current
year’s presentation.
The financial statements include the consolidated financial statements of the parent company and its subsidiaries
(together the “Group”) and the separate financial statements of the parent company (the “Company”).
Statement of Compliance
The financial statements of CIEL Textile Limited have been prepared in accordance with International Financial
Reporting Standards (IFRSs) and comply with the Companies Act 2001.
Standards, Amendments to published Standards and Interpretations effective in the reporting period
IFRS 10, ‘Consolidated financial statements’ builds on existing principles by identifying the concept of control as
the determining factor in whether an entity should be included within the consolidated financial statements of the
parent company. The standard provides additional guidance to assist in the determination of control where this is
difficult to assess. The standard did not have any impact on the Group’s financial statements.
IAS 27, ‘Separate Financial Statements’ deals solely with separate financial statements. The standard has no impact
on the Group’s financial statements, as IFRS 10 has been adopted.
IFRS 11, ‘Joint arrangements’ focuses on the rights and obligations of the parties to the arrangement rather than its
legal form. There are two types of joint arrangements: joint operations and joint ventures. Joint operations arise
where the investors have rights to the assets and obligations for the liabilities of an arrangement. A joint operator
accounts for its share of the assets, liabilities, revenue and expenses. Joint ventures arise where the investors have
rights to the net assets of the arrangement; joint ventures are accounted for under the equity method. Accounting
for an interest in a joint venture using the proportionate consolidation method is not permitted under IFRS 11. The
standard is not expected to have any impact on the Group’s financial statements.
Amendment to IAS 1, ‘Financial statement presentation’, regarding ‘other comprehensive income’. The main change
resulting from these amendments is a requirement for entities to group items presented in ‘other comprehensive
income’ (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification
adjustments). The Group and the Company have adopted this amendment.
Amendments to IAS 36, ‘Impairment of assets’, on the recoverable amount disclosures for non-financial assets. The
amendment removed certain disclosures of the recoverable amount of CGU’s which had been included in IAS 36 by
the issue of IFRS 13. The amendment is not mandatory until 01 July 2014 and does not affect the Group’s and the
Company’s financial statements.
IAS 28, ‘Investments in Associates and Joint Ventures’. The scope of the revised standard covers investments in
joint ventures as well. IFRS 11 requires investments in joint ventures to be accounted for using the equity method
of accounting. The standard has no impact on the Group’s financial statements.
70
2. ACCOUNTING POLICIES (CONT’D)
2.1 Basis of Preparation (cont’d)
Standards, Amendments to published Standards and Interpretations effective in the reporting period (cont’d )
IFRS 12, ‘Disclosures of interests in other entities’ includes the disclosure requirements for all forms of interests in
other entities, including joint arrangements, associates, structured entities and other off balance sheet vehicles.
The standard has no impact on the Group’s financial statements.
IFRS 13, ‘Fair value measurement’, aims to improve consistency and reduce complexity by providing a precise
definition of fair value and a single source of fair value measurement and disclosure requirements for use across
IFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be
applied where its use is already required or permitted by other standards within IFRSs. The Group and the Company
have made the required disclosures in the financial statements.
IAS 19, ‘Employee benefits’ was revised in June 2011. The changes on the Group’s accounting policies has been as
follows: to immediately recognise all past service costs; and to replace interest cost and expected return on plan
assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability
(asset). See note 17 and 38 for the impact on the financial statements.
IFRIC 20, ‘Stripping costs in the production phase of a surface mine’, has no impact on the Group’s financial
statements.
Amendment to IFRS 7, ‘Financial instruments: Disclosures’, on asset and liability offsetting. This amendment
includes new disclosures and is not expected to have any impact on the Group’s financial statements.
Amendment to IFRS 1 (Government Loans) has no impact on the Group’s financial statements.
Annual Improvements to IFRSs 2009-2011 Cycle
IFRS 1 (Amendment), ‘First time adoption of IFRS’, has no impact on the Group’s operations.
IAS 1 (Amendment), ‘Presentation of financial statements’, clarifies the disclosure requirements for comparative
information when an entity provides a third statement of financial position either as required by IAS 8, ‘Accounting
policies, changes in accounting estimates and errors’ or voluntarily.
IAS 16 (Amendment), ‘Property, plant and equipment’, clarifies that spare parts and servicing equipment are
classified as property, plant and equipment rather than inventory when they meet the definition of property, plant
and equipment. The amendment does not have an impact on the Group’s operations.
IAS 32 (Amendment), ‘Financial instruments: Presentation’, clarifies the treatment of income tax relating to
distributions and transaction costs. The amendment does not have an impact on the Group’s operations.
IAS 34 (Amendment), ‘Interim financial reporting’, clarifies the disclosure requirements for segment assets and
liabilities in interim financial statements.
Standards, Amendments to published Standards and Interpretations issued but not yet effective
Certain standards, amendments to published standards and interpretations have been issued that are mandatory
for accounting periods beginning on or after 1 January 2014 or later periods, but which the Group has not early
adopted.
At the reporting date of these financial statements, the following were in issue but not yet effective and not
relevant to the Group’s operations:
IAS 32 Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32)
Recoverable Amount Disclosures for Non-financial Assets (Amendments to IAS 36)
Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39)
Annual Improvements to IFRSs 2010-2012 cycle
Annual Improvements to IFRSs 2011-2013 cycle
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)
The Group has early adopted the following standards and interpretations for the year ended 30 June 2014:
IFRS 9 Financial instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39). Refer to Note 36
where the impact of the application of IFRS 9 is disclosed.
71
NOTES TO THE FINANCIAL STATEMENTS (CONT’D)
Standards, Amendments to published Standards and Interpretations issued but not yet effective (cont’d)
Where relevant, the Group is still evaluating the effect of these Standards, amendments to published Standards
and Interpretations issued but not yet effective, on the presentation of its financial statements.
Significant Accounting Judgements and Estimates
Judgments
In the process of applying the Group’s accounting policies, the directors have made the following judgements,
apart from those involving estimations, which have the most significant effect on the amounts recognised in the
financial statements:
Operating Lease Commitments - Group as Lessee
The entity’s subsidiaries have entered into leases for motor vehicles and computer equipment. The directors have
considered the terms and conditions of the lease agreements and determined that the Group does not retain all
the significant risks and rewards of ownership of these assets, and therefore, such lease agreements have been
recorded as operating leases, rather than finance leases.
Consolidation of Laguna Clothing (Mauritius) Ltd (formerly known as New Island Clothing Limited) and Laguna
Clothing Ltd
Laguna Clothing (Mauritius) Ltd (formerly known as New Island Clothing Limited) and Laguna Clothing Ltd have
been consolidated in the Group’s financial statements, albeit holdings of 50% in each respective company, as the
power to govern the financial and operating policies of each of those subsidiaries remains with the Group, under
an agreement.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the
reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are discussed below.
Deferred tax assets
Deferred tax assets are recognised for all unused tax losses and unused tax credits to the extent that it is probable
that taxable profits will be available against which the losses can be utilised. Significant management judgement is
required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and
level of future taxable profits together with future tax planning strategies.
Pension benefits
The present value of the pension obligations depends on a number of factors that are determined on an actuarial
basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions
include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.
The subsidiaries in their respective countries of operations determine their appropriate discount rates at the end
of each year. This is the interest rate that should be used to determine the present value of estimated future cash
outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate,
the Company considers the interest rates to high-quality government bonds that are denominated in the currency
in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension
obligation.
Other key assumptions for pension obligations are based in part on current market conditions.
Revaluation of property
Property is measured at revalued amounts with changes in fair value being recognised in ‘other comprehensive
income’. The Group engaged independent valuation specialists to determine fair value as at 30 June 2014.
Provision for slow-moving inventories
Management is required to exercise significant judgement in estimating the provision for slow-moving inventories.
The following are considered to provide for inventories write-off:
• Apply appropriate procedures to identify slow-moving and obsolete stocks;
• Make reasonable and prudent estimates of the prices obtainable in the market in which the goods are expected to
be sold at the time at which they will be available for sale; and
• Take into account projected time to completion and sale (for example, repair costs for damaged stocks and sales
commission).
72
Significant Accounting Judgements and Estimates (cont’d)
Depreciation and amortisation rates
The Group depreciates or amortises its assets to their residual values over their estimated useful lives. The estimation
of useful lives is based on historical performance and expectation about future use and requires significant degree
of judgement. The residual value of an asset is the estimated net amount that the Group would currently obtain
from disposal of the asset, if the asset were already of the age and in condition expected at the end of its useful life.
The directors therefore make estimates based on historical experience and use best judgement to assess the useful
lives of assets and to forecast the expected residual values of the assets at the end of their expected useful lives.
Limitation of sensitivity analysis
Sensitivity analysis in respect of market risk demonstrates the effect of a change in a key assumption while other
assumptions remain unchanged. In reality, there is a correlation between the assumptions and other factors. It
should also be noted that these sensitivities are non-linear and larger or smaller impacts should not be interpolated
or extrapolated from these results.
Sensitivity analysis does not take into consideration that the Group’s assets and liabilities are managed. Other
limitations include the use of hypothetical market movements to demonstrate potential risk that only represent
the Group’s view of possible near-term market changes that cannot be predicted with any certainty.
• Summary of Significant Accounting Policies
(a) Segment reporting
Segment information presented relate to operating segments that engage in business activities for which revenues
are earned and expenses incurred.
The Chief Operating Officer (CEO) of the different clusters of the Group (Fine Knits, Knitwear, Woven and Retail)
are the Chief Operating Decision Makers (CODM). Management has determined the operating segments based on
the information reviewed by the above CEOs for the purposes of allocating resources and assessing performance.
The CEOs consider the business from both a geographic and product perspective. Geographically, management
considers the performance in Mauritius, Madagascar, Asia and South Africa. From a product perspective,
management separately considers the activities in the Fine Knits, Knitwear, Woven and Retail clusters. The CEOs
assess performance of the operating segments based on revenue and profit metrics.
Operating segments are reported in a manner consistent with the internal reporting provided to the CODM.
(b) Foreign currencies
Functional currency and presentation currency
The companies in the Group prepare their financial reports in the currency used in the primary economic
environment in which they operate which is known as the functional currency. These reports provide the basis for
the consolidated financial statements. The consolidated financial statements are presented in Mauritian Rupees
being the Parent Company’s functional currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in
‘other comprehensive income’ as qualifying cash flow hedges.
Foreign exchange gains and losses are presented in profit or loss within ‘Earnings before interest, tax, depreciation
and amortisation’.
73
(b) Foreign currencies (cont’d)
Transactions and balances (cont’d)
Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are
analysed between translation differences resulting from changes in the amortised cost of the security and other
changes in the carrying amount of the security. Translation differences related to changes in amortised cost are
recognised in profit or loss and other changes in carrying amount are recognised in ‘other comprehensive income’.
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through
profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on nonmonetary financial assets such as equities classified as available for sale are included in the fair value reserve in
‘other comprehensive income’.
The statements of financial position and income statements for all foreign operations (none of which has the
currency of a hyperinflationary economy) whose functional currency is not the presentation currency are translated
into the presentation currency using the following procedures:
• assets and liabilities for each reporting period presented are translated at the closing rate at the date of that
statement of financial position;
• income and expenses for each income statement presented are translated at the average exchange rate for
the respective year, unless this average is not a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of
the transactions;
• equity items are translated at closing rate; and
• all exchange differences that arise are reported in ‘other comprehensive income’.
Translation of foreign operations
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities
of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in ‘other
comprehensive income’.
(c) Property, plant and equipment
Land and buildings comprise mainly factories, retail outlets and offices. Land and buildings are shown at fair value,
based on valuations by external independent valuers, less subsequent depreciation for buildings. Valuations are
performed with sufficient regularity to ensure that the fair value of a revalued asset does not differ materially
from its carrying amount. Any accumulated depreciation at the date of revaluation is eliminated against the
gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. All other
property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any
gains/losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Subsequent costs are included in the assets’ carrying amount or recognised as a separate asset as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of
the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and
maintenance are charged to the profit or loss during the financial period in which they are incurred.
Increases in the carrying amount arising on revaluation are credited to ‘other comprehensive income’ and shown as
revaluation surplus in shareholders’ equity. Decreases that offset previous increases of the same asset are charged
against the revaluation surplus directly in equity; all other decreases are charged to profit or loss. Any accumulated
depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net
amount restated to the revaluated amount of the asset.
The land and buildings are revalued by an independent Land Surveyor every 3 years and assessed annually to ensure
that the fair value of the revalued asset does not differ materially from its carrying amount.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be recoverable.
Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying
amount and are included in profit or loss. On disposal of revalued assets, amounts in revaluation and other reserves
relating to that asset are transferred to retained earnings.
74
(c) Property, plant and equipment (cont’d)
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount.
Land is not depreciated. Depreciation on other assets is calculated on the straight-line method to write off the cost
of assets, or the revalued amounts, to their residual values over their estimated useful life as follows:
Buildings
Buildings on leasehold land
Plant and machinery
Motor vehicles
Furniture and equipment
Computer equipment
Other items
-
2% p.a
2% p.a
10% - 20% p.a
20% p.a
5% - 20% p.a
20% p.a
10% - 20% p.a
The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting
period.
(d) Investments in subsidiaries
Separate financial statements of the Company
In the separate financial statements of the Company, investments in subsidiary companies are carried at cost. The
carrying amount is reduced to recognise any impairment in the value of individual investments.
Consolidated financial statements
(a) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls
an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred
for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former
owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair
value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values
at the acquisition date. The Group recognises any non-controlling interest in the acquire on an acquisition-byacquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised
amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously
held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising
from such re-measurement are recognised in profit or loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability
is recognised in accordance with IAS 39 either in profit or loss or as a change to ‘other comprehensive income’.
Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is
accounted for within equity.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable
net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest
recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary
acquired in the case of a bargain purchase, the difference is recognised directly in the income statement.
75
(d) Investments in subsidiaries (cont’d)
Inter-company transactions, balances and unrealised gains on transactions between group companies are
eliminated. Unrealised losses are also eliminated. When necessary amounts reported by subsidiaries have been
adjusted to conform with the Group’s accounting policies.
(b) Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity
transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair
value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary
is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
(c) Disposal of subsidiaries
When the Group ceases to have control any retained interest in the entity is remeasured to its fair value at the
date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the
initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate,
joint venture or financial asset. In addition, any amounts previously recognised in ‘other comprehensive income’ in
respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This
may mean that amounts previously recognised in ‘other comprehensive income’ are reclassified to profit or loss.
(e) Investments in associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying
a shareholding of between 20% and 50% of the voting rights.
Separate financial statements of the Company
Investments in associates are carried at cost. The carrying amounts are reduced to recognise any impairment in the
value of individual investments. The impairment loss is taken to income statement.
Consolidated financial statements
The Group’s investments in associated companies are accounted for using the equity method of accounting. The
investment in associate is thus carried in the statement of financial position at cost plus post-acquisition changes
in the Group’s share of net assets of the associated companies, less any impairment loss. Goodwill relating to an
associate is included in the carrying amount of the investment and is not amortised.
The income statement reflects the share of the results of operations of the associates. Where there has been
a change recognised directly in the equity of the associates, the Group recognises its share of any changes and
discloses this, when applicable, in the statement of changes in equity.
When the Group’s share of losses exceeds the carrying amount of the investment, the investment is reported at nil
value and recognition is discontinued except to the extent of the Group’s commitment on behalf of the associated
company.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s
interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting policies of associates have been changed where necessary to
ensure consistency with the policies adopted by the Group.
Dilution gains and losses arising in investments in associates are recognised in income statement.
(f) Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to
amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in
use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely
independent cash inflows (cash-generating units). Prior impairments of non financial assets (other than goodwill)
are reviewed for possible reversal at each reporting date.
76
(g) Intangible assets
Goodwill
Goodwill acquired in a business combination is initially measured at cost, being the excess of the cost of the
business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and
contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment
losses. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to
benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are
assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated:
• represents the lowest level within the Group at which the goodwill is monitored for internal management
purposes; and
• is not larger than an operating segment in accordance with IFRS 8 Operating Segments.
Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cashgenerating units), to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group
of cash-generating units) is less than the carrying amount, an impairment loss is recognised.
Where goodwill forms part of a cash-generating unit (group of cash-generating units) and part of the operation
within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying
amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in
this circumstance is measured based on the relative values of the operation disposed of and the portion of the
cash-generating unit retained.
Negative goodwill on a bargain purchase represents the excess of the acquirer’s interest in the fair values of the
identifiable net assets and liabilities acquired over the cost of acquisition. It is recognised immediately as gain from
bargain purchase in the income statement.
Negative goodwill arising from the acquisition of an associated company is excluded from the carrying amount of
the investment and is included as income in the determination of the Group’s share of associate’s profit or loss in
the period the investment was acquired.
Other intangible assets
Computer software
Costs associated with maintaining computer software programmes are recognised as an expense as incurred.
Development costs that are directly attributable to the design and testing of identifiable and unique software
products controlled by the Group are recognised as intangible assets when the following criteria are met:
• it is technically feasible to complete the software product so that it will be available for use;
• management intends to complete the software product and use or sell it;
• there is an ability to use or sell the software product;
• it can be demonstrated how the software product will generate probable future economic benefits;
• adequate technical, financial and other resources to complete the development and to use or sell the software
product are available; and
• the expenditure attributable to the software product during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software product include the software development
employee costs and an appropriate portion of relevant overheads.
Other development expenditures that do not meet these criteria are recognised as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Computer software development costs recognised as assets are amortised over their estimated useful lives,
which does not exceed three years.
77
(h) Other investments and other financial assets
Classification
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and
receivables, and available for sale. The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at initial recognition.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified
in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised
as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if
expected to be settled within 12 months, otherwise they are classified as non-current.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They are included in current assets, except for maturities greater than 12 months after the end
of the reporting period. These are classified as non-current assets. The Group’s loans and receivables comprise
‘trade and other receivables’ and ‘cash and cash equivalents’ in the statement of financial position.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in
any of the other categories. They are included in non-current assets unless the investment matures or management
intends to dispose of it within 12 months of the end of the reporting period.
Recognition and measurement
Regular purchases and sales of financial assets are recognised on the trade-date –the date on which the Group
commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for
all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit
or loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial
assets are derecognised when the rights to receive cash flows from the investments have expired or have been
transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale
financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans
and receivables are subsequently carried at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’
category are presented in profit or loss in the period in which they arise. Dividend income from financial assets
at fair value through profit or loss is recognised in profit or loss when the Group’s right to receive payments is
established.
Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognised in
‘other comprehensive income’.
When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments
recognised in equity are included in the income statement as ‘Gains and losses from investment securities’.
Interest on available-for-sale securities calculated using the effective interest method is recognised in profit or
loss. Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group’s right to
receive payments is established.
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.
78
(i) Trade and other receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary
course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if
longer), they are classified as current assets. If not, they are presented as non-current assets.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment. A provision for impairment of trade receivables is
established when there is objective evidence that the Group will not be able to collect all amounts due according
to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor
will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 60 - 90
days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the
difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted
at the original effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance for credit losses account, and the
amount of the loss is recognised in profit or loss within selling and marketing costs. When a trade receivable is
uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of
amounts previously written off are credited against selling and marketing costs in profit or loss.
(j) Interest-bearing loans, debentures and 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 the income statement over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it
is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down
occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the
fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it
relates.
Preference shares, which are mandatorily redeemable on a specific date, are classified as liabilities. The dividends
on these preference shares are recognised in the income statement as interest expense.
(k) Cash and cash equivalents
Cash and short-term deposits in the statement of financial position comprise cash at banks and in hand and shortterm deposits with an original maturity of three months or less. Bank overdrafts are shown within borrowings in
current liabilities on the statement of financial position.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as
defined above, net of outstanding bank overdrafts.
(l) Redeemable Share Capital
(1) Redeemable preference shares
The redeemable preference shares in subsidiaries are not transferable, carry no voting rights and are redeemable
at subscription price at the option of the Company. In the prior years, as the Group did not have any obligation
to deliver cash or another financial asset to another entity in respect of the redeemable preference shares, the
instrument evidenced characteristics of equity. However, the redeemable preference shares did not entitle any
control over the net assets of the respective subsidiaries and belong to shareholders outside the Group. They
were thus carried at cost and were disclosed separately from equity holders of the parent. At 30 June 2013, these
preference shares were fully redeemed and paid for.
(2) Redeemable B and C Shares
The component of the non-cumulative redeemable shares that exhibits characteristics of a liability is recognised
as a liability in the statement of financial position, net of transaction costs.
The redeemable shares also give rise to benefits in respect of future dividends payable. These dividends are
classified within administrative expenses.
79
(m) Derecognition of financial assets and liabilities
Financial assets
A financial asset (or, where applicable a part of a financial asset or part of a Group of similar financial assets) is
derecognised where:
• the rights to receive cash flows from the asset have expired;
• the Company or the Group retains the right to receive cash flows from the asset, but has assumed an obligation to
pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or
• the Company or the Group has transferred its rights to receive cash flows from the asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred control of the asset.
Where the Company or the Group has transferred its rights to receive cash flows from an asset and has neither
transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the
asset is recognised to the extent of the Company or the Group’s continuing involvement in the asset. Continuing
involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original
carrying amount of the asset and the maximum amount of consideration that the Company or the Group could be
required to repay.
Where continuing involvement takes the form of a written and/or purchased option (including a cash-settled option
or similar provision) on the transferred asset, the extent of the Group’s continuing involvement is the amount of
the transferred asset that the Group may repurchase, except that in the case of a written put option (including a
cash-settled option or similar provision) on an asset measured at fair value, the extent of the Group’s continuing
involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new liability, and the difference in the respective
carrying amounts is recognised in profit or loss.
(n) Impairment of financial assets
Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset
or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment
losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred
after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated
future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant
financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter
bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable
decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with
defaults.
For loans and receivables category, the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future credit losses that have
not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the
asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or heldto-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the
current effective interest rate determined under the contract. As a practical expedient, the Group may measure
impairment on the basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively
to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating),
the reversal of the previously recognised impairment loss is recognised in the consolidated income statement.
80
(n) Impairment of financial assets (cont’d)
Assets classified as available for sale
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or
a group of financial assets is impaired. For debt securities, the Group uses the criteria referred to in (a) above. In the
case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the
security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-forsale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current
fair value, less any impairment loss on that financial asset previously recognised in profit or loss– is removed from
equity and recognised in profit or loss. Impairment losses recognised in the consolidated income statement on
equity instruments are not reversed through the consolidated income statement. If, in a subsequent period, the
fair value of a debt instrument classified as available for sale increases and the increase can be objectively related
to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed
through the consolidated income statement.
(o) Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is determined using the first in, first out
(FIFO) method.
Costs incurred in bringing each product to its present location and condition is accounted for as follows:
Raw materials
Finished goods and work in progress
− purchase cost on a weighted average cost basis;
− cost of direct materials and labour and a proportion of manufacturing
overheads based on normal operating capacity but excluding
borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale. (p) Provisions
Provisions are recognised when the Group or Company has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group or Company
expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement
is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to
any provision is presented in the income statement net of any reimbursement. If the effect of the time value of
money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the
risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is
recognised as a borrowing cost.
(q) Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative is entered into and are subsequently remeasured at their fair value. All derivatives are carried in current assets when amounts are receivable by the Group
and the Company and in current liabilities when amounts are payable by the Group and the Company.
Cash flow hedge
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The
Group designates certain derivatives as: hedges of a particular risk associated with a recognised asset or liability or
a highly probable forecast transaction (cash flow hedge).
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged
items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group
also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are
used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of derivative instruments used for hedging purposes are disclosed in note 35 and 36. Movements
on the hedging reserve in ‘other comprehensive income’ are shown in note 16. The full fair value of a hedging
derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months
and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading
derivatives are classified as a current asset or liability.
81
(q) Derivative financial instruments and hedging activities (cont’d)
Cash flow hedge (cont’d)
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
is recognised in ‘other comprehensive income’. The gain or loss relating to the ineffective portion is recognised
immediately in profit or loss.
Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit
or loss (for example, when the forecast sale that is hedged takes place). The gain or loss relating to the effective
portion of currency forward contracts is recognised in profit or loss. However, when the forecast transaction that
is hedged results in the recognition of a non-financial asset (for example, inventory or fixed assets), the gains and
losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost
of the asset. The deferred amounts are ultimately recognised in cost of goods sold in the case of inventory or in
depreciation in the case of fixed assets.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting,
any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast
transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur,
the cumulative gain or loss that was reported in equity is immediately transferred to profit or loss.
(r) Employee benefits
The Group operates various post-employment schemes, including both defined benefit and defined contribution
pension plans and post-employment plans.
Pension obligations
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity.
The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient
assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined
benefit plan is a pension plan that is not a defined contribution plan.
Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement,
usually dependent on one or more factors such as age, years of service and compensation.
The liability recognised in the statement of financial position in respect of defined benefit pension plans is the
present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets.
The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit
method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows using interest rates of high quality corporate bonds that are denominated in the currency in which the
benefits will be paid, and that have terms of maturity approximately to the terms of the related pension obligation.
In countries where there is no deep market in such bonds, the market rates on government bonds are used.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged
or credited to equity in ‘other comprehensive income’ in the period in which they arise.
Past-service costs are recognised immediately in income. For defined contribution plans, the Group pays contributions to publicly or privately administered pension
insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once
the contributions have been paid. The contributions are recognised as employee benefit expense when they are
due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future
payments is available.
Other post-employment obligations
Some retired employees are paid benefits directly by the Group’s subsidiaries. The entitlement to these benefits is
usually conditional on the employee remaining in service up to retirement age and the completion of a minimum
service period. The expected costs of these benefits are accrued over the period of employment using the same
accounting methodology as used for defined benefit pension plans.
82
(r) Employee benefits (cont’d)
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged
or credited to equity in ‘other comprehensive income’ in the period in which they arise. These obligations are valued
annually by independent qualified actuaries.
Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement
date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises
termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of
those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and
involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy,
the termination benefits are measured based on the number of employees expected to accept the offer. Benefits
falling due more than 12 months after the end of the reporting period are discounted to their present value.
Profit sharing and bonus plans
The Group recognises a liability and an expense for bonuses and performance based bonuses, based on a formula
that takes into consideration the profit attributable to the Company’s shareholders after certain adjustments.
The Group recognises a provision where contractually obliged or where there is a past practice that has created a
constructive obligation.
(s) Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement,
except to the extent that it relates to items recognised in ‘other comprehensive income’ or directly in equity. In this
case, the tax is also recognised in ‘other comprehensive income’ or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
statement of financial position date in the countries where the Company and its subsidiaries operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not
recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises
from initial recognition of an asset or liability in a transaction other than a business combination that at the time of
the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and
are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is
settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable temporary differences arising from investments in
subsidiaries, associates and joint arrangements, except for deferred income tax liability where the timing of the
reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference
will not reverse in the foreseeable future. Generally the Group is unable to control the reversal of the temporary
difference for associates. Only where there is an agreement in place that gives the Group the ability to control the
reversal of the temporary difference not recognised.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in
subsidiaries, associates and joint arrangements only to the extent that it is probable the temporary difference will
reverse in the future and there is sufficient taxable profit available against which the temporary difference can be
utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income
taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where
there is an intention to settle the balances on a net basis.
83
(s) Current and deferred income tax (cont’d)
Value Added Tax
Revenues, expenses and assets are recognised net of the amount of value added tax except:
• where the value added tax incurred on a purchase of assets or services is not recoverable from the taxation
authority, in which case the value added tax is recognised as part of the cost of acquisition of the asset or as part
of the expense item as applicable; and
• receivables and payables that are stated with the amount of value added tax included.
The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of
accounts receivables or payables in the statement of financial position.
(t) Finance Lease
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are
charged to the income statement on a straight-line basis over the period of the lease.
The Group leases certain property, plant and equipment. Leases of property, plant and equipment where the
Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are
capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value
of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations,
net of finance charges, are included in other long-term payables. The interest element of the finance cost is
charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases
is depreciated over the shorter of the useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term.
(u) Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of
qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended
use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their
intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
(v) Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or
less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are stated at fair value and subsequently measured at amortised cost using the effective interest
method.
(w) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable
for goods supplied, stated net of discounts, returns and value added taxes. The Group recognises revenue when
the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to
the entity; and when specific criteria have been met for each of the Group’s activities. The Group bases its estimate
of return on historical results, taking into consideration the type of customer, the type of transaction and the
specifics of each arrangement.
84
(w) Revenue recognition (cont’d)
(i) Sale of goods and services
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
and upon customer acceptance, if any, or performance of services, net of value added taxes and discounts, and
after eliminating sales within the Group. The Group turnover reflects the invoiced values of knitted and woven
garments and fabrics, inclusive of insurance and freight when sold on a ‘cost, insurance and freight’ basis and in
other cases on its ‘free on board’ value for sales on ‘free on board’ basis.
(ii) Other operating income
Other operating income earned by the Group are recognised on the following basis:
• Interest income - as it accrues (taking into account the effective yield on the asset) unless collectability is in doubt.
• Dividend income - when the shareholder’s right to receive payment is established.
(x) Share capital
Ordinary shares are classified as equity. Mandatorily redeemable preference shares are classified as liabilities.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as deduction,
net of tax, from proceeds. Where any group company purchases its equity share capital (treasury shares), the
consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from
equity attributable to the Company’s equity holders until the shares are cancelled or reissued. When such shares
are subsequently reissued, any net consideration received, is included in equity attributable to the Company’s
equity holders.
(y) Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements
in the period in which the dividends are approved by the Company’s shareholders.
(z) Non-current assets held for sale
Non –current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be
recovered principally through a sale transaction and a sale is considered highly probable. They are stated at lower
of carrying amount and fair value less costs to sell.
(aa) Grant related to income
The Group (foreign subsidiaries) receives grants in relation to income which has been presented as a credit in the
statement of comprehensive income under the heading ‘Other operating income – net’.
85
3. PROPERTY, PLANT AND EQUIPMENT
(a) THE GROUP
Freehold
Land and
Buildings
Buildings
on
Leasehold
Land
Plant and
Machinery
Motor
Vehicles
Furniture
and
Equipment
Computer
Equipment
Assets Under
Construction
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Other
Items
Total
Rs.’000
Rs.’000
At 30 June 2014
COST OR
VALUATION
907,707
752,190
2,808,493
102,436
430,569
63,087
15,216
9,572
5,089,270
Additions
84,035
3,316
270,877
19,058
25,184
12,833
9,976
6,378
431,657
Disposals
-
-
(29,870)
(4,869)
Assets written off
-
-
(33,505)
At 1 July 2013
-
(133)
(454)
-
-
(35,326)
(37,436)
(2,842)
-
-
(73,783)
Acquisition through
business
combination
(Note 29(b))
167,500
-
-
-
-
-
-
-
167,500
Revaluation surplus
235,394
14,642
-
-
-
-
-
-
250,036
Translation
adjustments
At 30 June 2014
(24,073)
-
(36,912)
1,370,563
770,148
2,979,083
At 1 July 2013
99,833
142,937
Charge for the year
14,280
12,429
-
-
(2,779)
(5,006)
(2,390)
-
(212)
(71,372)
113,846
413,178
70,234
25,192
15,738
5,757,982
2,174,548
55,913
362,826
48,539
2,453
2,450
2,889,499
142,252
15,922
16,588
7,163
4,737
833
214,204
-
-
(32,291)
-
-
(26,437)
-
-
(73,545)
DEPRECIATION
Disposals
Revaluation
adjustments
Assets written off
(8,133)
-
(18,304)
-
(15,957)
(33,366)
(4,372)
-
(11,739)
(37,349)
(223)
(2,830)
Translation
adjustments
(9,744)
-
At 30 June 2014
96,236
137,062
2,242,809
65,555
326,586
51,202
7,190
3,234
2,929,874
1,274,327
633,086
736,274
48,291
86,592
19,032
18,002
12,504
2,828,108
(24,668)
(1,908)
(3,740)
(1,447)
-
(49)
(41,556)
NET BOOK VALUES
At 30 June 2014
86
3. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
(a) THE GROUP
Freehold
Land and
Buildings
Buildings
on
Leasehold
Land
Plant and
Machinery
Motor
Vehicles
Furniture
and
Equipment
Computer
Equipment
Assets Under
Construction
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Other
Items
Total
Rs.’000
Rs.’000
At 30 June 2013
COST OR
VALUATION
892,529
739,507
2,735,542
93,946
475,003
101,050
18,522
7,277
5,063,376
Additions
15,964
12,683
127,478
23,854
19,738
7,453
-
1,976
209,146
Disposals
-
-
(9,374)
Reclassifications
-
-
7,648
-
(37,603)
At 1 July 2012
Assets written off
Transfer to
intangible assets
(Note 4)
Revaluation
surplus
Translation
adjustments
At 30 June 2013
(742)
(12,753)
(1,241)
(1,151)
(425)
(5,392)
651
(56,011)
-
-
-
-
-
2,167
-
-
-
-
(2,211)
-
(15,198)
-
-
-
(152)
-
(136,878)
-
-
(3,497)
-
-
2,167
(20,975)
-
438
63,087
15,216
9,572
5,089,270
2,091,485
54,411
409,749
87,128
2,453
1,772
2,863,191
127,638
14,196
16,165
6,734
-
695
195,412
(335)
-
(119)
(20,644)
346
2,808,493
89,269
126,924
13,971
16,013
-
-
-
-
4,950
-
(35,566)
(1,016)
(24,069)
(2,907)
430,569
752,190
(1,618)
(3,497)
(119)
102,436
907,707
(1,370)
(41,129)
(247)
DEPRECIATION
At 1 July 2012
Charge for the year
Disposals
Reclassifications
Assets written off
Transfer to
intangible assets
(Note 4)
Translation
adjustments
At 30 June 2013
(187)
(3,220)
-
(8,390)
(5,569)
(10,977)
(1,241)
(476)
(823)
(5,296)
(55,866)
(1,103)
-
-
-
(41,077)
-
-
(133,937)
(3,487)
-
-
(3,487)
(770)
(11,036)
-
102
99,833
142,937
2,174,548
55,913
362,826
48,539
2,453
2,450
2,889,499
807,874
609,253
633,945
46,523
67,743
14,548
12,763
7,122
2,199,771
NET BOOK VALUES
At 30 June 2013
87
(b) THE COMPANY
Buildings
on
Leasehold
Land
Rs.’000
Plant and
Machinery
Rs.’000
Total
Rs.’000
143,857
12,624
156,481
5,748
5,748
149,605
12,624
162,229
DEPRECIATION
At 1 July 2013
Charge for the year
At 30 June 2014
31,232
2,835
34,067
5,748
5,748
36,980
2,835
39,815
NET BOOK VALUES
At 30 June 2014
122,414
-
122,414
Buildings
on
Leasehold
Land
Rs.’000
Plant and
Machinery
Rs.’000
Total
Rs.’000
143,857
5,748
149,605
DEPRECIATION
At 1 July 2012
Charge for the year
At 30 June 2013
28,397
2,835
31,232
5,748
5,748
34,145
2,835
36,980
NET BOOK VALUES
At 30 June 2013
112,625
-
112,625
At 30 June 2014
COST OR VALUATION
At 1 July 2013
Revaluation surplus
At 30 June 2014
At 30 June 2013
COST OR VALUATION
At 1 July 2012 and 30 June 2013
88
(c) Fair value of land and buildings
An independent valuation of the Group’s and the Company’s land and buildings was performed by professional
land valuers to determine the fair value of the land and buildings as at 30 June 2014 and 2013. The revaluation
surplus was credited to the other comprehensive income and is shown in revaluation surplus’ in statements
of changes in equity. The following table analyses the non-financial assets carried at fair value, by valuation
method. The different levels have been defined as follows:
- Quoted prices (unadjusted) in active market for identical assets or liabilities (Level 1)
- Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from process) (Level 2)
- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
(Level 3)
Fair value measurements at
30 June 2014 using
Level 1
Level 2
Level 3
Rs.’000
Rs.’000
Rs.’000
THE GROUP
Recurring fair value measurements
Freehold land and buildings
THE COMPANY
Recurring fair value measurements
-
-
1,274,327
633,086
1,907,413
-
-
122,414
122,414
(i) Fair value measurements using significant unobservable inputs (Level 3)
THE GROUP
Manufacturing sites
Mauritius
Madagascar
Asia
Rs.’000
Rs.’000
Rs.’000
Opening balance
Acquisition through business combination (Note 29)
Additions
Depreciation
Translation adjustments
Gains and losses recognised in other comprehensive
income
Closing balance
THE COMPANY
Opening balance
Depreciation
Gains and losses recognised in other comprehensive income
Closing balance
920,692
167,500
72,330
(17,957)
-
361,831
13,229
(6,472)
(10,342)
134,604
1,792
(2,280)
(3,987)
69,584
1,212,149
157,076
515,322
49,813
179,942
Total
Rs.’000
1,417,127
167,500
87,351
(26,709)
(14,329)
276,473
1,907,413
Manufacturing
site
Mauritius
Rs.’000
112,625
(2,835)
12,624
122,414
89
(ii) Valuation processes of the Group
On an annual basis, the Group engages external, independent and qualified valuers to determine the fair value of the
Group’s and the Company’s land and buildings. At 30 June 2014, the fair value of the land and buildings have been
determined by SDDS Sworn Land Surveyors, Ratsimbazafy Ihanta Evelyne and Advisory Valuation & Consultancy for
land and buildings held in Mauritius, Madagascar and India respectively.
The external valuations of level 3 land and buildings have been performed using:
(i) a sales comparison approach, and
(ii) replacement cost less depreciation approach,
Given that there are limited or no similar sites in the vicinity in which the land and buildings of the Group are located,
the external valuers have determined the unobservable inputs based on the size, age and condition of the land and
buildings, the state of the local economy and comparable prices where relevant.
Information about fair value measurements using significant unobservable inputs (Level 3)
Description
Manufacturing and
retail sites –
Mauritius
Manufacturing sites
– Madagascar
Manufacturing sites
– Asia
90
Fair value at
30 June 2014
Valuation
techniques
1,212,149
Sales comparison
and replacement
cost less
depreciation
approach
Unobservable
inputs
Price per
square metre
Price per
acres and
square feet
Rs. 332 Rs. 3,419/square
metre (land) and
Rs. 1,906 Rs. 248,564/
square metre
(buildings)
Rs. 1,742 Rs. 5,354/square
metre (land) and
Rs. 1,799 Rs. 5,132
(buildings)
515,322
179,942
1,907,413
Range of
unobservable
inputs
(probability
– weighted
average)
Rs.
Rs. 3,050,400/
acre (land) and
Rs. 713/square
feet (buildings)
Relationship of
unobservable
inputs to fair
value
The higher the
price per square
metre, the
higher the fair
value
The higher the
price per square
feet and acre,
the higher the
fair value
(d) If the land and buildings were stated on the historical cost basis, the amounts would be as follows:THE GROUP
2014
2013
Rs.’000
Rs.’000
Cost
Accumulated depreciation
Net book values
1,494,497
(1,035,409)
459,088
1,407,146
(1,005,519)
401,627
THE COMPANY
2014
2013
Rs.’000
Rs.’000
18,364
(10,943)
7,421
18,364
(10,575)
7,789
(e) Property, plant and equipment above include leased assets as follows:
THE GROUP
Plant and
Machinery
Rs.’000
Motor
Vehicles
Rs.’000
2014
Total
Rs.’000
Cost
Accumulated depreciation
Net book values at 30 June 2014
150,830
(29,961)
120,869
45,115
(27,985)
17,130
195,945
(57,946)
137,999
Net book values at 30 June 2013
38,730
14,951
53,681
Leased assets are pledged as security for the related finance lease liabilities.
(f) Borrowings are guaranteed by fixed and floating charges over the assets of the Group.
(g) The acquisition of property, plant and equipment includes purchases under finance leases obligations
amounting to Rs. 104,969,220 (2013: Rs. Nil).
91
4. INTANGIBLE ASSETS
THE GROUP
COST
At 1 July 2013
Additions
Write off
Translation adjustment
At 30 June 2014
Computer
Software
Rs.’000
Development
Cost
Rs.’000
Total
Rs.’000
38,007
4,532
(62)
(116)
42,361
4,435
4,435
42,442
4,532
(62)
(116)
46,796
At 1 July 2012
Additions
Reclassification
Transfer from property, plant and equipment (Note 3)
Write off
At 30 June 2013
25,904
7,611
1,888
3,497
(752)
(141)
38,007
2,113
4,210
(1,888)
4,435
28,017
11,821
3,497
(752)
(141)
42,442
AMORTISATION
At 1 July 2013
Charge for the year
Write off
At 30 June 2014
25,402
4,201
(9)
(43)
29,551
164
917
1,081
25,566
5,118
(9)
(43)
30,632
At 1 July 2012
Charge for the year
Transfer from property, plant and equipment (Note 3)
Write off
At 30 June 2013
18,584
3,649
3,487
(237)
(81)
25,402
17
147
164
18,601
3,796
3,487
(237)
(81)
25,566
NET BOOK VALUES at 30 June 2014
12,810
3,354
16,164
NET BOOK VALUES at 30 June 2013
12,605
4,271
16,876
The average remaining useful life of the computer software range between 2 and 5 years.
5. INVESTMENTS IN SUBSIDIARY COMPANIES
THE COMPANY
(a) COST
At 1 July
Additions
At 30 June
IMPAIRMENT PROVISIONS
At 1 July
Reversal of impairment
Write off of investment
At 30 June
Unquoted
2014
Rs.’000
1,210,431
1,210,431
(8,630)
8,630
(8,630)
(8,630)
1,201,801
2013
Rs.’000
1,110,431
100,000
1,210,431
(8,630)
(8,630)
1,201,801
The Directors have carried out an impairment assessment as at 30 June 2014 and no impairment indicator has
been identified, except as disclosed above.
92
5. INVESTMENTS IN SUBSIDIARY COMPANIES (CONT’D)
(b) The subsidiary companies are as follows:
YEAR 2014
Name of Company
Ajax Sweaters Limited
Floreal Creation SA
Ferney Spinning Mills Limited
Société Civile Immobilières des
Mascareignes
Texaro
CielTex SA (Proprietary) Limited
CTL Retail Ltd
De Nyon Limited
Tropic Madagascar SA
Consolidated Dyeing & Fabrics
Limited
Floreal Manufacturing Limited
Societe Bonnetiere Malagasy
Aquarelle Clothing Limited
Aquarelle Madagascar SARL
Aquarelle International Limited
Aquarelle India Private Limited (4)
Aquarelle Limitee (3) (4)
Consolidated Fabrics Ltd (2)
International Fabrics Ltd (2)
Laguna Clothing Ltd (1) (4)
Laguna Clothing (Mauritius)
Ltd (1)
New Island Clothing
Madagascar SA
Class of
Shares
Held
Year
ended
Denominated
Currency
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
30 June
30 June
30 June
30 June
30 June
30 June
Taka
Rs.
MGA
Euro
Rs.
Rs.
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
30 June
30 June
30 June
30 June
30 June
30 June
30 June
MGA
MGA
ZAR
Rs.
Rs.
Rs.
MGA
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
30 June
30 June
30 June
30 June
30 June
30 June
30 June
31 March
31 March
30 June
30 June
31 March
31 March
Rs.
Rs.
Rs.
MGA
Rs.
MGA
Rs.
INR
Rs.
Rs.
USD
INR
HKG
Direct
Indirect
Proportion
percentage percentage of ownership
holding
holding
interest held by
Stated
Country of
and voting and voting non-controlling
Capital
Incorporation
power
power
interest
000’s
%
%
%
36,036 Bangladesh
100.00
216,450
Mauritius
100.00
300,000 Madagascar
99.70
0.30
50
France
100.00
15,314
Mauritius
100.00
14,000
Mauritius
100.00
2,000 Madagascar
260,000 Madagascar
1 South Africa
10,001
Mauritius
33,547
Mauritius
115,000
Mauritius
6,500,000 Madagascar
173,000
3,814
5,750
390,000
180,000
225,000
7,404
24,000
5,000
25,743
11,328
74,900
100
Mauritius
Mauritius
Mauritius
Madagascar
Mauritius
Madagascar
Mauritius
India
Mauritius
Mauritius
Mauritius
India
Hong Kong
Main
Business
Knitwear
Knitwear
Knitwear
Knitwear
Knitwear
Knitwear
0.20
100.00
-
99.80
83.55
100.00
100.00
100.00
100.00
- Knitwear
16.45 Knitwear
- Retail
- Retail
Knits
Knits
Knits
17.00
100.00
100.00
100.00
-
83.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
50.00
100.00
50.00
-
Knits
Knits
Knits
Knits
Woven
Woven
Woven
Woven
Woven
Woven
Woven
Woven
Woven
Ordinary 30 June
Rs.
20,000
Mauritius
-
50.00
50.00
Woven
Ordinary 30 June
MGA
10,000
Madagascar
-
98.80
1.20
Woven
(1) The companies are deemed to be subsidiaries of the Group, as the Group maintains control over those companies.
(2) In March 2014, the Group acquired additional 20 per cent interest in International Fabrics Ltd and its subsidiary, Consolidated Fabrics Ltd.
(3) Effective January 1, 2014, the Group acquired 100 per cent of the issued share capital and obtained control of Aquarelle Limitée.
(4) The Group’s financial statements have been prepared based on the financial statements of the companies at 30 June 2014.
93
(b) The subsidiary companies are as follows:
Bangladesh
Mauritius
Madagascar
France
Direct
percentage
holding
and voting
power
%
100.00
100.00
Madagascar
-
-
Mauritius
100.00
-
- Knitwear
Mauritius
100.00
-
- Knitwear
-
-
- Knitwear
Madagascar
Mauritius
Madagascar
0.20
-
99.80
83.55
- Knitwear
- Knitwear
16.45 Knitwear
South Africa
Mauritius
Mauritius
Mauritius
Madagascar
100.00
-
100.00
100.00
100.00
100.00
-
Retail
Retail
Knits
Knits
Knits
173,000
3,814
Mauritius
Mauritius
17.00
100.00
83.00
-
-
Knits
Knits
5,750
Mauritius
-
100.00
-
Knits
YEAR 2013
Name of Company
Ajax Sweaters Limited
Floreal Creation SA
Floreal Boutique
SARL (3)
Ferney Spinning Mills
Limited
Floreal International
Ltd
Floreal Knowledge
Centre Limited (2)
Société Civile
Immobilières des
Mascareignes
Infoclick Limited (2)
Texaro
CielTex SA (Proprietary)
Limited
CTL Retail Ltd
De Nyon Limited
Tropic Madagascar SA
Consolidated Dyeing &
Fabrics Limited
Floreal Manufacturing
Limited
Societe Bonnetiere
Malagasy
Aquarelle Clothing
Limited
Aquarelle Madagascar
SARL
Aquarelle International
Limited
Aquarelle India Private
Limited (4)
Consolidated Fabrics
Ltd
International Fabrics
Ltd
Laguna Clothing Ltd
(1),(4)
Industrial Consultancy
Services Ltd (2)
Laguna Clothing
(Mauritius) Ltd (1),(5)
New Island Clothing
Madagascar SA
Class of
Shares
Held
Year
ended
Ordinary
Ordinary
Ordinary
Ordinary
30 June
30 June
30 June
30 June
Taka
Rs.
MGA
Euro
Stated
Capital
000’s
36,036
216,450
300,000
50
Ordinary
30 June
MGA
2,000
Ordinary
30 June
Rs.
15,314
Ordinary
30 June
Rs.
14,000
Ordinary
30 June
Rs.
25
Mauritius
Ordinary
Ordinary
Ordinary
30 June
30 June
30 June
MGA
Rs.
MGA
2,000
10
260,000
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
30 June
30 June
30 June
30 June
30 June
ZAR
Rs.
Rs.
Rs.
MGA
1
10,001
33,547
115,000
6,500,000
Ordinary
Ordinary
30 June
30 June
Rs.
Rs.
Ordinary
30 June
Rs.
Ordinary
30 June
MGA
390,000
Madagascar
Ordinary
30 June
Rs.
180,000
Mauritius
Ordinary
30 June
MGA
225,000
Madagascar
Ordinary
30 June
Rs.
7,404
Ordinary
31 March
INR
24,000
Ordinary
30 June
Rs.
25,743
Denominated
Currency
Country of
Incorporation
Indirect
Proportion
percentage
of ownership
holding
interest held by
and voting non-controlling
Main
power
interest
Business
%
%
100.00
- Knitwear
- Knitwear
99.70
0.30 Knitwear
- Knitwear
- Knitwear
-
100.00
-
Knits
100.00
-
-
Woven
-
100.00
-
Woven
100.00
-
-
Woven
India
-
100.00
-
Woven
Mauritius
-
80.00
20.00
Woven
Mauritius
Ordinary
30 June
USD
11,328
Mauritius
-
80.00
20.00
Woven
Ordinary
Ordinary
31 March
31 March
INR
HKG
74,900
100
India
Hong Kong
-
50.00
100.00
50.00
-
Woven
Woven
Ordinary
30 June
Rs.
25
Mauritius
-
-
-
Woven
Ordinary
30 June
Rs.
20,000
Mauritius
-
50.00
50.00
Woven
Ordinary
30 June
MGA
10,000
Madagascar
-
98.80
1.20
Woven
(1) The companies are deemed to be subsidiaries of the Group, as the Group maintains control over those companies.
(2) Infoclick Limited, Floreal Knowledge Centre Limited and Industrial Consultancy Services Ltd have been amalgamated with CIEL Textile Limited (the
“Company”) during the financial year ended 30 June 2013.
(3) Floreal Boutique SARL and Azzurri Company Ltd have been liquidated during the financial year ended 30 June 2013.
(4) Aquarelle India Private Limited and Laguna Clothing Ltd have been consolidated for 12 month period from 1 July 2012 to 30 June 2013 whereas
comparatives were for a 15 month period from 1 January 2011 to 30 June 2012.
(5) New Island Clothing Limited changed its name to Laguna Clothing (Mauritius) Ltd during the year 2013.
94
(c) Subsidiaries with material non-controlling interests
Details for subsidiaries that have non-controlling interests that are material to the entity are disclosed below:
Name
Profit/(loss)
allocated to
non-controlling
interests
during the year
Accumulated
non-controlling
interests at 30
June 2014
Rs.’000
Rs.’000
2014
Laguna Clothing Ltd
57,379
157,790
(20,742)
(22,440)
(d) Summarised financial information on subsidiaries with material non-controlling interests
(i) Summarised statement of financial position and statement of profit or loss and other comprehensive income.
Current
assets
Non-current
assets
Current
liabilities
Non-current
liabilities
Rs.’000
Rs.’000
Rs.’000
Rs.’000
643,309
142,425
(426,138)
139,213
29,875
(180,912)
Laguna Clothing Ltd
370,137
138,752
(251,569)
90,801
13,177
(84,882)
Name
Revenue
Profit/
(loss) for
the year
Other
Comprehensive
Loss
Rs.’000
Rs.’000
Rs.’000
1,172,293
114,757
32,877
2014
Laguna Clothing Ltd
(7,166)
16,292
290,174
(41,485)
(11,113)
999,087
99,632
(5,206)
186,046
(521)
2013
-
(3,452)
-
35,596
-
-
-
-
404,776
522,291
296,481
91,052
883,314
18,292
(5,627)
(4,947)
(ii) Summarised cash flow information:
2014
Laguna Clothing Ltd
Laguna Clothing
(Mauritius) Ltd
2013
Operating
activities
Investing
activities
Financing
activities
Net
increase/
(decrease)
in cash
and cash
equivalent
Rs.’000
Operating
activities
Investing
activities
Financing
activities
Net
increase/
(decrease)
in cash
and cash
equivalent
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Rs.’000
(5,325)
(28,129)
60,877
27,423
101,582
(31,079)
(47,438)
23,065
(85,418)
(19,833)
52,253
(52,998)
25,552
(6,969)
-
-
-
-
-
-
-
-
-
61,003
(53,312)
-
18,583
(108,152)
(100,461)
The summarised financial information disclosed above is before intra-group eliminations
(e) All subsidiary undertakings are included in the consolidation. The proportion of the voting rights in the subsidiary undertakings
held directly by the parent company do not differ from the proportion of ordinary shares held.
(f) The total non-controlling interest for the year ended 30 June 2014 is Rs. 179,390,000, of which, Rs. 178,594,960 is for Monti.
The non-controlling interests in respect of Floreal Madagascar SA, Texaro and New Island Clothing Madagascar SA are not
material.
(g) There are no significant restrictions for South Africa, Madagascar, India and Bangladesh.
95
6. INVESTMENTS IN ASSOCIATES
Unquoted
2014
2013
Rs.’000
Rs.’000
(a) THE GROUP
At 1 July and at 30 June
-
-
2014
% Holding
Indirect
2013
% Holding
Indirect
-
-
(b) The associates are as follows:
Name of Company
AMTECS (International) Ltd
Year ended
Country of
Incorporation
30 June 2014
Mauritius
The investment in AMTECS (International) Ltd has been fully impaired and is not of a material nature for the Group.
7. AVAILABLE FOR SALE INVESTMENTS
THE GROUP
2014
2013
Rs.’000
Rs.’000
At 1 July
Additions
At 30 June
6,712
6,712
3,477
3,235
6,712
THE COMPANY
2014
2013
Rs.’000
Rs.’000
6,712
6,712
3,477
3,235
6,712
The directors believe that the fair value of the available-for-sale investments approximates the cost of these
investments as the prices of these investments have remained the same.
All investments are denominated in Mauritian Rupees.
8. NON CURRENT RECEIVABLES
THE GROUP
2014
2013
Rs.’000
Rs.’000
58,308
Long-term deposits
24,976
All non-current receivables are due within 2 to 5 years from the end of the reporting period.
The fair value of the non-current receivables does not differ significantly from its carrying amount.
9. DEFERRED TAX LIABILITIES/(ASSETS)
Deferred tax liabilities
Deferred tax assets
Net deferred tax liabilities
THE GROUP
2014
2013
Rs.’000
Rs.’000
THE COMPANY
2014
2013
Rs.’000
Rs.’000
236,573
(49,998)
186,575
20,554
20,554
182,194
(41,457)
140,737
18,408
18,408
(a) The movement in deferred tax during the year is as follows:
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
At 1 July
- as previously reported
- effect of adopting IAS 19 (Revised)
-as restated
Acquisition through business combination (note 29(b))
Income statement (Note 21(b))
At 30 June
96
149,628
(8,891)
140,737
17,584
248
39,231
(11,225)
186,575
142,891
(196)
142,695
(1,229)
(8,366)
7,637
140,737
THE COMPANY
2014
2013
Rs.’000
Rs.’000
18,408
18,408
2,146
20,554
18,883
18,883
(475)
18,408
9. DEFERRED TAX LIABILITIES/(ASSETS) (CONT’D)
(b) Deferred tax assets and liabilities, deferred tax charge/(credit) in the Statement of Comprehensive Income are attributable to
the following items:
At 1 July 2013
(i) THE GROUP
- 2014
As
previously
reported
Effect of
adopting
IAS 19
(Revised)
As
restated
Acquisition
through
business
combination
Translation
Adjustment
Income
Statement
Other
Comprehensive
Income
At
30 June
2014
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Rs.’000
119,494
-
119,494
9,170
-
123,276
63,050
-
63,050
8,414
-
44,593
116,057
-
-
Deferred
tax liabilities
Accelerated tax
depreciation
Revaluation
of properties
Others
(350)
-
(350)
182,194
-
182,194
17,584
(433)
(433)
(4,955)
-
(2,760)
(2,410)
-
(7,365)
44,593
236,573
Deferred
tax assets
Retirement
benefit
obligations
6,806
8,891
15,697
-
1,979
3,359
21,035
Tax losses
1,292
-
1,292
-
(127)
3,508
-
4,673
Provisions
6,635
-
6,635
-
(24)
650
-
7,261
Investment
tax credit
5,308
-
5,308
-
(530)
(1,722)
-
3,056
Cash flow
hedge reserves
Others
Net deferred
tax liabilities
-
-
-
-
-
-
3,515
12,525
-
12,525
-
-
(4,070)
32,566
8,891
41,457
-
149,628
(8,891)
140,737
17,584
2,003
5,518
-
8,455
(681)
3,860
5,362
49,998
248
(11,225)
39,231
186,575
97
At 1 July 2012
Effect of
As
adopting
previously
IAS 19
As
reported
(Revised)
restated
Rs.’000
Rs.’000
Rs.’000
(i) THE GROUP
- 2013
Deferred tax
liabilities
Accelerated tax
depreciation
Revaluation of
properties
Others
Deferred tax
assets
Retirement
benefit
obligations
Tax losses
Provisions
Investment
tax credit
Others
Net deferred
tax liabilities
106,829
-
Other
Comprehensive
Income
Rs.’000
At
30 June
2013
Rs.’000
(1,125)
13,790
-
119,494
63,050
(350)
182,194
68,780
(90)
175,519
-
68,780
(90)
175,519
112
(1,013)
(6,059)
(372)
7,359
329
329
1,240
(1,799)
13,555
196
-
1,436
(1,799)
13,555
(23)
-
5,566
3,114
(6,920)
8,695
-
15,697
1,292
6,635
4,700
14,932
32,628
196
4,700
14,932
32,824
245
(6)
216
363
(2,401)
(278)
8,695
5,308
12,525
41,457
142,891
(196)
142,695
(1,229)
7,637
(8,366)
140,737
(ii) THE COMPANY - 2014
Accelerated tax depreciation
98
106,829
Income
Statement
Rs.’000
Translation
Adjustment
Rs.’000
At 1 July
2013
Rs.’000
Income
Statement
Rs.’000
Other
Comprehensive
Income
Rs.’000
At
30 June
2014
Rs.’000
12,790
5,618
18,408
-
2,146
2,146
12,790
7,764
20,554
Accelerated tax depreciation
At
1 July
2012
Rs.’000
13,265
5,618
18,883
Income
Statement
Rs.’000
Other
Comprehensive
Income
Rs.’000
At
30 June
2013
Rs.’000
-
12,790
5,618
18,408
(475)
(475)
THE GROUP
2014
2013
Rs.’000
Rs.’000
(c) Unused tax losses available for offset against future taxable profits.
82,303
78,177
The tax losses are available for set off against future taxable profits of the Group are as follows:
THE
GROUP
Rs.’000
Up to year ending:
17,387
9
264
58,048
75,708
6,595
82,303
30 June 2015
30 June 2017
30 June 2018
30 June 2019
No expiry
(d) At the end of the reporting period, the Group had unused tax losses of Rs. 82,302,902 (2013: Rs. 78,176,726)
available to offset against future profits. A deferred tax assets has been recognised in respect of Rs. 27,488,000
(2013: Rs. 7,600,000) of such losses. No deferred tax assets has been recognised in respect of the remaining
Rs. 54,814,902 (2013: Rs. 70,576,726) due to unpredictability of future profit streams.
10. INVENTORIES
THE GROUP
2014
2013
Rs.’000
Rs.’000
Raw materials
Other stocks
Work in progress
Finished goods
Goods in transit
Less provision for obsolescence
800,700
105,369
1,351,377
118,268
166,918
(80,226)
2,462,406
771,337
107,193
1,265,780
81,479
144,444
(88,941)
2,281,292
The amount of inventories recognised as an expense during the year is Rs. 4,897,849,537 (2013: Rs. 4,521,834,470).
99
11. TRADE AND OTHER RECEIVABLES
THE GROUP
2014
2013
Rs.’000
Rs.’000
1,961,354
(24,762)
1,936,592
6
3,912
4,861
393,823
2,339,194
Trade receivables
Less: provision for impairment
Trade receivables - net
Amount receivable from subsidiaries
Amount receivable from related companies
Advances to Executive Directors
Fair value asset on forward contracts
Other receivables and prepayments (Note 11 (viii))
1,741,825
(23,900)
1,717,925
2,905
4,337
81,657
336,794
2,143,618
THE COMPANY
2014
2013
Rs.’000
Rs.’000
153,865
3,028
156,893
117,076
698
117,774
Included in amount receivable from subsidiaries is an amount of Rs. 129,804,676 (2013: Rs. 103,843,741) representing
dividend receivable from subsidiaries at 30 June 2014. The dividends have been received after year end.
The carrying amount of trade and other receivables approximate their fair values.
The maximum exposure to credit risk at the end of the reporting period is equal to the carrying value of each class
of trade and other receivables mentioned above.
(i) Trade receivables are not secured, non interest bearing and are generally on 60 days term. At 30 June 2014, trade
receivables at nominal value of Rs. 24,762,000 (2013: Rs. 23,900,000) were impaired and fully provided for based
on the financial difficulties of the customers.
(ii) At 30 June 2014 and 2013, the ageing analysis of trade receivables is as follows:
Past Due not Impaired
Total
Rs.’000
Neither
Past Due
nor
Impaired
Rs.’000
< 30 days
Rs.’000
30 - 60
days
Rs.’000
60 - 90
days
Rs.’000
> 90 days
Rs.’000
2014
1,936,592
1,634,042
172,407
57,703
21,658
50,782
2013
1,717,925
1,451,423
196,716
34,808
22,793
12,185
The credit quality of those receivables have been assessed by management who is satisfied as to their recoverability.
100
11. TRADE AND OTHER RECEIVABLES (CONT’D)
(iii) The carrying amount of the Group’s trade and other receivables are denominated in the following currencies:
THE GROUP
2014
2013
Rs.’000
Rs.’000
Rupee
US Dollar
UK Pound
Euro
ZAR
INR
Other currencies
195,360
628,531
671,541
341,776
233,622
153,768
114,596
2,339,194
216,607
637,864
408,504
224,592
363,578
178,053
114,420
2,143,618
THE COMPANY
2014
2013
Rs.’000
Rs.’000
156,893
156,893
112,381
5,364
29
117,774
(iv) Movements on the provision for impairment of trade receivables are as follows:
THE GROUP
2014
2013
Rs.’000
Rs.’000
(23,900)
137
(999)
(24,762)
At 1 July
Receivables written off during the year as uncollectible
Unused amounts reversed
Increase in provision for the year
At 30 June
(26,794)
2,994
432
(532)
(23,900)
(v) The other classes within trade and other receivables do not contain impaired assets.
(vi) All other classes of trade and other receivables are neither past due nor impaired. No collaterals are held in
respect of those receivables.
(vii) The advances to Directors are secured by charges on their respective personal assets.
(viii) Other receivables and prepayments
THE GROUP
2014
2013
Rs.’000
Rs.’000
Other receivables and prepayments consist of:
Deposits
Taxes and grants
Advance payments to suppliers
Advances to employees
Others
14,469
152,031
129,729
16,820
80,774
393,823
8,425
103,287
105,324
27,340
92,418
336,794
THE COMPANY
2014
2013
Rs.’000
Rs.’000
3,028
3,028
698
698
101
12. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE
THE GROUP
2014
2013
Rs.’000
Rs.’000
At 1 July
Disposals
At 30 June
22,366
(22,366)
-
22,366
22,366
(a) On 20 February 2014, the Group disposed of its 21.9% stake in Harris Wilson Textile SA, realising a gain on disposal
of Rs. 31.7 M. The 21.9% stake, previously accounted for as an investment in associate and was classified as a held
for sale financial asset in 2013 as the conditions set by IFRS 5 were fulfilled.
13. SHARE CAPITAL
Stated capital
101,807,589 no par value ordinary shares
2014
Rs.’000
2013
Rs.’000
685,865
685,865
14. REDEEMABLE PREFERENCE SHARE CAPITAL
THE GROUP
2014
2013
Rs.’000
Rs.’000
Redeemable Preference Shares at Rs. 1,000 each
At 1 July
Repaid during the year
At 30 June
-
404,937
(404,937)
-
Analysed as follows:
Current
-
(404,937)
During the year ended 30 June 2013, the redeemable preference shares of Rs. 260 M in Tropic Knits Limited (TKL)
and Rs. 144.9 M in Consolidated Fabrics Ltd (CFL) were repaid on 5 July 2012 and 10 January 2013 respectively.
These preference shares were not transferable, carried no voting rights and were redeemable at subscription
price at the option of the issuing subsidiary company.
Subject to the satisfaction of the Solvency Test, they entitled the holder to an annual dividend up to a maximum
of 5% up to 2012, and thereafter a participating dividend as well as an annual dividend up to a maximum of 10%
until redemption.
102
15. BORROWINGS
THE GROUP
2014
2013
Rs.’000
Rs.’000
(a) Non-current
Bank loans - Note (b)
Obligations under finance leases - Note (d)
Debentures - Note (f)
Others
Current
Bank overdrafts - Note (e)
Bills discounted - Note (g)
Bank loans - Note (b)
9% Redeemable preference shares - Note (c)
Import loan - Note (g)
Debentures - Note (f)
Obligations under finance leases - Note (d)
Others
Total borrowings
THE COMPANY
2014
2013
Rs.’000
Rs.’000
61,549
91,521
545
153,615
34,095
22,635
14,000
545
71,275
-
14,000
14,000
525,222
680,307
9,839
503,105
33,496
1,751,969
423,489
506,695
8,855
30,000
489,717
14,000
16,321
1,790
1,490,867
6
6
4
14,000
14,004
1,905,584
1,562,142
6
28,004
Bills discounted of Rs. 506,695,000 and Rs. 416,221,000 have been reclassified from current liabilities in the
statement of financial position to borrowings in 2013 and 2012 respectively. Refer to note 38 for impact on the
financial statements.
(b) Bank loans
THE GROUP
2014
2013
Rs.’000
Rs.’000
Within one year
After one year and before two years
After two years and before three years
After three years and before five years
After five years
9,839
14,006
15,510
16,866
15,167
71,388
8,855
6,795
7,151
13,731
6,418
42,950
THE COMPANY
2014
2013
Rs.’000
Rs.’000
-
-
The loans are secured by fixed and floating charges over the assets of the Group and the Company and bear
interest as disclosed in note 35.
(c) 9% redeemable preference shares
During the year 2013, the preference shares were redeemed at par value. These preference shares were entitled
to a fixed cumulative preferential dividend of 9% per annum.
(d) Obligations under finance leases
THE GROUP
2014
2013
Rs.’000
Rs.’000
Finance lease liabilities - minimum lease payments:
Within one year
After five years
Finance charges allocated to future periods
Present value of finance lease liabilities
38,108
27,931
25,184
43,786
928
135,937
(10,920)
125,017
19,175
15,051
5,935
3,918
44,079
(5,123)
38,956
THE COMPANY
2014
2013
Rs.’000
Rs.’000
-
-
103
15. BORROWINGS (CONT’D)
The present value of finance lease liabilities may be analysed as follows:
THE GROUP
2014
2013
Rs.’000
Rs.’000
Within one year
After five years
33,496
25,202
23,738
41,684
897
125,017
16,321
13,655
5,348
3,632
38,956
THE COMPANY
2014
2013
Rs.’000
Rs.’000
-
-
(e) The bank overdrafts are secured by fixed and floating charges over the assets of the Group and the Company.
(f) Debentures
THE GROUP
2014
2013
Rs.’000
Rs.’000
Within one year
-
14,000
14,000
28,000
THE COMPANY
2014
2013
Rs.’000
Rs.’000
-
14,000
14,000
28,000
During the year 30 June 2014, the debentures have been fully repaid. The debentures were bearing interest at 1%
above prime lending rate (PLR).
(g) The bills discounted are secured by fixed and floating charges over the assets of the Group and the Company
and bear interest as disclosed in notes 35.
(h) The import loans are secured by fixed and floating charges over the assets of the Group and the Company and
bear interest as disclosed in note 35.
(i) The carrying amounts of the Group’s and Company’s borrowings are denominated in the following currencies:
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
Rupee
US Dollar
Euro
UK Pound
INR
Other currencies
231,285
979,503
220,030
447,167
24,600
2,999
1,905,584
203,415
837,103
242,058
230,681
19,807
29,078
1,562,142
THE COMPANY
2014
2013
Rs.’000
Rs.’000
6
6
28,004
28,004
(j) The fair values of the non-current borrowings are approximately equal to their carrying value as the impact of
discounting is not significant.
104
16. OTHER COMPREHENSIVE INCOME
(a) THE GROUP
2014
Revaluation surplus
Deferred tax on revaluation reserve (Note 9(a))
liabilities net of tax
profit or loss
Deferred tax on cash flow hedge reserve
Translation differences on foreign subsidiaries
Other comprehensive (loss)/income for year 2014
2013
Revaluation surplus
Deferred tax on revaluation reserve (Note 9(a))
liabilities net of tax
profit or loss
Translation differences on foreign subsidiaries
Other comprehensive income/(loss) for year 2013
Revaluation
Surplus
Rs.’000
276,473
(44,593)
Actuarial
(losses)/
gains
Rs.’000
Translation
of foreign
operations
Rs.’000
Cash
Flow
Reserve
Rs.’000
-
-
-
276,473
(44,593)
Total
Rs.’000
-
(11,819)
-
-
(11,819)
-
3,359
-
-
3,359
231,880
2,167
(329)
(8,460)
-
(39,558)
(39,558)
(40,230)
2,003
(38,227)
(40,230)
2,003
(39,558)
145,635
-
-
2,167
(329)
-
(58,381)
-
-
(58,381)
-
8,695
-
-
8,695
-
(36,970)
(84,818)
1,838
(49,686)
(36,970)
(36,970)
(b) THE COMPANY
Revaluation surplus
2014
2013
Rs.’000
Rs.’000
Revaluation surplus
Deferred tax on revaluation reserve
Other comprehensive income for year
12,624
(2,146)
10,478
-
17. RETIREMENT BENEFIT OBLIGATIONS
Amounts recognised in the statement of financial position:
Pension benefits (Note (a))
Other post retirement benefits (Note (b))
Amounts charged to profit or loss
Amounts charged to other comprehensive income
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
47,889
129,915
177,804
39,296
104,919
144,215
9,488
21,303
30,791
6,807
23,799
30,606
(269)
(11,550)
(11,819)
(20,191)
(38,190)
(58,381)
105
17. RETIREMENT BENEFIT OBLIGATIONS (CONT’D)
(a) Pension benefits
The Group has two defined benefit plans, one funded and one unfunded, covering substantially all of its employees,
both being administered separately. The Group has also provided for an unfunded retirement benefit plan to
former employees. The following tables summarise the funded status and amounts recognised in the statement
of financial position and the component of net benefit expense recognised in the statement of comprehensive
income for the respective plans.
(i) The amounts recognised in the statements of financial position are as follows:
Benefit liability
Defined benefit
obligation
Fair value of
plan assets
Benefit liability
Funded retirement
benefit plan for
existing employees
2014
2013
Restated
Rs.’000
Rs.’000
Unfunded retirement
benefit plan for
existing employees
2014
2013
Restated
Rs.’000
Rs.’000
Unfunded retirement
benefit plan for
former employees
2014
2013
Restated
Rs.’000
Rs.’000
Total
2014
2013
Restated
Rs.’000
Rs.’000
(108,020)
(93,432)
(2,442)
(2,312)
(12,195)
(12,385)
(122,657)
(108,129)
74,768
(33,252)
68,833
(24,599)
(2,442)
(2,312)
(12,195)
(12,385)
74,768
(47,889)
68,833
(39,296)
(ii) Amounts recognised in income statement are as follows:
Net benefit
expense
Current service
cost
Scheme
expenses
Cost of insuring
risk benefits
Interest cost
on benefit
obligation
Expected
return on plan
assets
Net benefit
expense
Funded retirement
benefit plan for
existing employees
2014
2013
Rs.’000
Rs.’000
Unfunded retirement
benefit plan for
former employees
2014
2013
Rs.’000
Rs.’000
Total
2014
2013
Rs.’000
Rs.’000
4,829
3,801
70
48
-
-
4,899
3,849
774
663
-
-
-
-
774
663
527
560
-
-
-
-
527
560
5,876
4,911
179
145
868
959
6,923
6,015
(3,635)
(4,280)
-
-
-
-
(3,635)
(4,280)
8,371
5,655
249
193
868
959
9,488
6,807
7,904
7,477
(iii) Actual return on plan assets
106
Unfunded retirement
benefit plan for
existing employees
2014
2013
Rs.’000
Rs.’000
(a) Pension benefits (cont’d)
(iv) The reconciliation of the opening balances to the closing balances for the defined benefit liability is as follows:
Funded
retirement
benefit
plan for
existing
employees
Rs.’000
At 1 July 2012
- as restated
Total expense
Actuarial losses recognised in other comprehensive
income
Employer contributions
At 30 June 2013 (restated)
At 1 July 2013
- as restated
Total expense
Actuarial losses recognised in other comprehensive
income
Employer contributions
At 30 June 2014
Unfunded
retirement
benefit
plan for
existing
employees
Rs.’000
Unfunded
retirement
benefit
plan for
former
employees
Rs.’000
Total
Rs.’000
(4,771)
1,811
(2,960)
(5,655)
(2,365)
880
(1,485)
(193)
(9,722)
(994)
(10,716)
(959)
(16,858)
1,697
(15,161)
(6,807)
(17,690)
1,706
(24,599)
(634)
(2,312)
(1,867)
1,157
(12,385)
(20,191)
2,863
(39,296)
(8,699)
(15,900)
(24,599)
(8,371)
(2,503)
191
(2,312)
(249)
(9,546)
(2,839)
(12,385)
(868)
(20,748)
(18,548)
(39,296)
(9,488)
(288)
6
(33,252)
119
(2,442)
(100)
1,158
(12,195)
(269)
1,164
(47,889)
(v) Changes in the present value of the defined benefit obligation are as follows:
Funded
retirement
benefit
plan for
existing
employees
Rs.’000
At 1 July 2012
Interest cost
Current service cost
Changes in assumptions underlying the present value
of the scheme
Experience (gains)/losses
Benefits paid
At 30 June 2013
Interest cost
Experience (gains)/losses
Benefits paid
At 30 June 2014
Unfunded
retirement
benefit
plan for
existing
employees
Rs.’000
Unfunded
retirement
benefit
plan for
former
employees
Rs.’000
Total
Rs.’000
(65,599)
(6,556)
(3,801)
(1,485)
(145)
(48)
(10,716)
(959)
-
(77,800)
(7,660)
(3,849)
(19,241)
1,765
(93,432)
(7,344)
(4,829)
(3,089)
674
(108,020)
(751)
117
(2,312)
(179)
(70)
119
(2,442)
(1,248)
(619)
1,157
(12,385)
(870)
(100)
1,160
(12,195)
(1,999)
(19,743)
2,922
(108,129)
(8,393)
(4,899)
(3,070)
1,834
(122,657)
107
(vi) Changes in the fair value of plan assets of the funded retirement benefit plan are as follows:
THE GROUP
2014
2013
Rs.’000
Rs.’000
At 1 July
Implied return on plan assets
Remeasurements:
– Return on plan assets, excluding amounts included in interest expense
– Experience losses
Expected return
Contributions by employer
Scheme expenses
Benefits paid
Cost of insuring risk benefits
At 30 June
68,833
1,470
62,640
1,645
3,635
2,801
4,280
1,550
5
(774)
(675)
(527)
74,768
1,707
(663)
(1,766)
(560)
68,833
(vii) The fair value of the plan assets at the end of the reporting period is as follows:
Local equities
Overseas equities
Fixed interest
Total market value of assets
2014
Rs.’000
THE GROUP
2014
2013
%
Rs.’000
2013
%
19,440
39,627
15,701
74,768
26%
53%
21%
100%
25%
47%
28%
100%
17,208
32,352
19,273
68,833
The fair values of the above equity and debt instruments are determined based on quoted market prices in active
markets whereas the fair values of properties and derivatives are not based on quoted market prices in active markets.
The assets of the plan are invested in the CIEL Group Segregated Fund. The breakdown of the assets above
correspond to a notional allocation of the underlying investments based on the long term strategy of the Fund.
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 local and foreign deposits. The expected return for this asset class has been
based on these fixed deposits at the measurement date.
(viii) The amounts recognised in other comprehensive income are as follows:
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
Losses on pension scheme assets
Experience gain on liabilities
Changes in assumptions underlying the present value of the scheme
2,800
(3,069)
(269)
(ix) The Group expects to contribute Rs.7m to the pension scheme for the year ending 30 June 2015.
108
1,551
(3,951)
(17,791)
(20,191)
(x) The principal assumptions used in determining pension for the Group are shown below:
Discount rates
Expected rate of return on assets
Future salary increases
Future pension increases
2014
2013
2012
2011
7.5%
7.5%
5.5%
0.0%
7.5%
7.5%
5.5%
0.0%
9.5%
10.0%
7.5% - 8.0%
0.0%
9.5%
10.0%
7.5% - 8.0%
0.0%
Increase
Rs.’000
Decrease
Rs.’000
7,848
17,498
-
(xi) Sensitivity analysis on defined benefit obligations at end of the reporting date:
At 30 June 2014
Discount rate (1% increase)
Future long term salary assumption (1% increase)
An increase/decrease of 1% in other principal actuarial assumptions would not have a material impact on defined
benefit obligations at the end of the reporting period.
The sensitivity above have been determined based on a method that extrapolates the impact on net defined
benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting
period. The present value of the defined benefit obligation has been calculated using the projected unit credit
method.
The sensitivity analysis may not be representative of the actual change in the defined benefit obligation as it is
unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may
be correlated.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
(xii) The weighted average duration of the defined benefit obligations ranges between 7 to 23 years at the end of
the reporting period.
109
(xiii) The defined benefit pension plan exposes the Group to actuarial risks, such as longevity risk, currency risk,
interest rate risk and market (investment) risk.
(xiv) The funding requirements are based on the pension fund’s actuarial measurement framework set out in the
funding policies of the plan.
(xv) Amounts for the current and previous years are as follows:
Defined benefit obligation
Plan assets
Deficit
2014
Rs.’000
2013
Rs.’000
2012
Rs.’000
2011
Rs.’000
2010
Rs.’000
(122,657)
74,768
(47,889)
(108,129)
68,833
(39,296)
(77,800)
62,640
(15,160)
(71,153)
64,044
(7,109)
(66,650)
58,630
(8,020)
(269)
(20,191)
(7,662)
(2,538)
(6,848)
Experience losses on plan liabilities
(b) Other post retirement benefits
Other post retirement benefits comprise retirement gratuities payable under the Employment Rights Act 2008.
(i) The amounts recognised in the statement of financial position are as follows:
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
Present value of plan liability
Liability in the statement of financial position
(129,915)
(129,915)
(104,919)
(104,919)
(ii) The amounts recognised in the income statement are as follows:
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
Interest cost
Past service cost
Total, included in employee benefit expense
12,903
8,400
21,303
4,736
4,611
14,452
23,799
(iii) Movement in the liability recognised in the statement of financial position:
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
- reclassification to other payables
- as restated
Total expense as above
Actuarial losses recognised in other comprehensive income
Benefits paid
At 30 June
110
(74,222)
8,841
(39,538)
(104,919)
(21,303)
(11,550)
7,857
(129,915)
(57,933)
6,011
(3,222)
(55,144)
(23,799)
(38,190)
12,214
(104,919)
(b) Other post retirement benefits (cont’d)
(iv) The amounts recognised in other comprehensive income are as follows:
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
Experience loss on liabilities
(11,550)
(11,550)
(38,190)
(38,190)
(41,412)
(11,550)
(52,962)
(3,222)
(38,190)
(41,412)
Movement in other comprehensive income
At 1 July
Actuarial losses recognised during the year
At 30 June
(v) The movement in the defined benefit obligation over the year is as follows:
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
(104,919)
(12,903)
(8,400)
(11,550)
7,857
(129,915)
(55,144)
(4,736)
(4,611)
(14,452)
(38,190)
12,214
(104,919)
2014
Rs.’000
2013
Rs.’000
2012
Rs.’000
(129,915)
(104,919)
(55,144)
At 1 July
Current Service Cost
Interest Cost
Past service cost
Actuarial losses recognised during the year
Benefits paid
At 30 June
(vi) Amounts for the current and previous years are as follows:
Defined benefit obligation
(vii) The principal actuarial assumptions used for accounting purposes were:
THE GROUP
2014
2013
Discount rates
Future long term salary increases
(viii) Sensitivity analysis on defined benefit obligations at end of the reporting date:
At 30 June 2014
Discount rate (1% increase)
Future long term salary assumption (1% increase)
7.5%
5.5%
7.5%
5.5%
Increase
Rs.’000
Decrease
Rs.’000
12,423
10,744
-
An increase/decrease of 1% in other principal actuarial assumptions would not have a material impact on defined
benefit obligations at the end of the reporting period.
The sensitivity above have been determined based on a method that extrapolates the impact on net defined benefit
obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The
present value of the defined benefit obligation has been calculated using the projected unit credit method.
The sensitivity analysis may not be representative of the actual change in the defined benefit obligation as it is
unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may
be correlated.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years. (ix) The weighted average duration of the defined benefit obligations ranges between 7 to 16 years at the end of
the reporting period.
111
18. EMPLOYEE BENEFIT LIABILITY
The Company and some of its subsidiaries issued redeemable shares for executives pursuant to resolutions of the
Board approved on 28 February 2005 and approved by the shareholders on 13 April 2005. Under the scheme, a fixed
number of Redeemable B shares and Redeemable C shares were issued at a fixed price per share.
The shares have the following specificities:
Redeemable B Shares
100 redeemable shares were issued to the Chief Executive Officer of the Woven Cluster at a consideration of
Rs. 35,001 each. The shares are not transferable, carry no voting rights and are redeemable at subscription price at
the option of the Company.
The shares will entitle the holder to a non-cumulative annual dividend equivalent to 0.02% of the dividend paid to
ordinary shareholders.
As the overall contract does not evidence any residual interest to the shareholder, the directors are thus of opinion
that the contract is a financial liability. Dividends payable are recognised as an expense in profit or loss over the
term of the contract.
Redeemable C Shares
Some subsidiaries of the Company have also issued redeemable shares for executives pursuant to resolutions
approved by the Board on 20 June 2005 and approved by the shareholders on 1 July 2005.
Under the scheme, a fixed number of Redeemable C shares has been issued at a fixed price per share.
The shares have the following specificities:
The following redeemable shares were issued to the Chief Executive Officer of CIEL Textile Limited and also to the
Chief Executive Officer of the Woven Cluster:
No. Shares
Issue Price
Rs.
In FKL
Chief Executive Officer - CIEL Textile
200
1,113
In ACL
Chief Executive Officer of the Woven Cluster
200
300
6,824
6,824
In TKL
200
33,439
The shares will each entitle the holder to a non-cumulative annual dividend equivalent to:
- 0.02% of the dividend paid to ordinary shareholders in the first three years following the issue (i.e. up to
30 June 2008)
- 0.002% of the increase in the retained earnings of the respective subsidiary company between 30 June 2003 and
30 June 2008.
The dividends were payable over a five year period from 2009 to 2013.
However, the dividends were paid in full during 2009, at which point a financial asset (advance) was recognised in
the statement of financial position. The employee benefit expense related to the dividends is recognised in the
income statement on a straight-line basis from the date of inception of the scheme up to 30 June 2013.
112
18. EMPLOYEE BENEFIT LIABILITY (CONT’D)
Total employee benefit liabilities recognised in the statement of financial position are as follows:
Redeemable C Shares
THE GROUP
2014
2013
Rs.’000
Rs.’000
-
THE COMPANY
2014
2013
Rs.’000
Rs.’000
-
Analysed as follows:
Current
-
-
-
-
19. TRADE AND OTHER PAYABLES
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
Trade payables
Amount payable to related parties
Amount payable to associates
Fair value liability on forward contracts
Other payables and accruals (Note 19(a))
764,185
129,524
42,534
761,078
1,697,321
758,452
52,581
23,935
674,790
1,509,758
THE COMPANY
2014
2013
Rs.’000
Rs.’000
421,964
393
5,755
428,112
381,381
4,408
385,789
Gratuity leaves of Rs. 8,839,000 and Rs. 6,009,000 have been reclassified from retirement benefit obligations to
trade and other payables in 2013 and 2012 respectively. Refer to note 38 for impact on the financial statements.
Provisions of Rs. 37,990,000 and Rs. 35,188,000 have been reclassified from trade and other payables to current
liabilities on the statement of financial position in 2013 and 2012 respectively. Refer to note 38 for impact on the
financial statements.
(a) Other payables and accruals
Other payables and accruals consist of:
Accrued expenses
Deposits from customers
Goods in transit
Employees related expenses
Directors’ fees
Other payables
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
147,660
7,324
24,603
395,177
4,505
181,809
761,078
125,675
6,603
43,255
309,134
1,600
188,523
674,790
THE COMPANY
2014
2013
Rs.’000
Rs.’000
1,600
4,155
5,755
1,600
2,808
4,408
113
19. TRADE AND OTHER PAYABLES (CONT’D)
(b) The carrying amount of the Group’s and the Company’s trade and other payables are denominated in the
following currencies:
THE GROUP
THE COMPANY
2014
2013
2014
2013
Restated
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Rupee
US Dollar
UK Pound
Euro
INR
Other currencies
647,467
495,144
82,090
60,750
313,771
98,099
1,697,321
588,026
433,219
68,426
51,280
216,729
152,078
1,509,758
428,112
428,112
385,789
385,789
20. PROVISIONS
Movement in provisions during the year is as follows:
THE GROUP
2014
2013
Rs.’000
Rs.’000
At 1 July
Additional provisions
Amounts incurred and charged against provisions
At 30 June
37,990
528
(17,990)
20,528
35,188
8,752
(5,828)
(122)
37,990
Provisions consist mainly of severance allowances, penalties and legal claims.
21. INCOME TAX
(a) Income Tax - Statement of financial position
At 1 July
Current tax on adjusted profits for the year
Over provision of prior years
Corporate Social Responsibility
Paid during the year
At 30 June
(b) Income Tax - Income statement
Current tax on adjusted profits for the year
Corporate Social Responsibility
Over provision of prior years
Deferred tax (Note 9)
114
THE GROUP
2014
2013
Rs.’000
Rs.’000
39,574
114,141
(870)
(5,434)
1,990
(109,389)
40,012
48,761
86,454
(1,690)
(4,236)
1,322
(91,037)
39,574
THE GROUP
2014
2013
Rs.’000
Rs.’000
114,141
1,990
(5,434)
110,697
(11,225)
99,472
86,454
1,322
(4,236)
83,540
7,637
91,177
THE COMPANY
2014
2013
Rs.’000
Rs.’000
36
36
70
(7)
(63)
-
THE COMPANY
2014
2013
Rs.’000
Rs.’000
36
36
36
(7)
(7)
(475)
(482)
21. INCOME TAX (CONT’D)
(c) The tax on the Group’s and Company’s profit before tax differs from the theoretical amount that would arise
using the basic tax rate of the Group as follows:
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
Profit before tax
Tax calculated at a rate of 17% (2013: 17%)
Adjustments for:
Non-deductible expenses
Exempt income
Tax on turnover of overseas subsidiaries
Effect of different tax rate
Under provision of deferred tax in prior years
Over provision of prior years income tax
Foreign tax credit
Investment tax relief
Others
THE COMPANY
2014
2013
Rs.’000
Rs.’000
650,560
607,034
203,634
152,515
110,595
103,196
34,618
25,928
36
(34,618)
36
538
(26,941)
(7)
(482)
2,907
(8,231)
(225)
35,814
4,670
(5,434)
(35,038)
(9,192)
3,606
99,472
5,475
(412)
4,328
36,597
(4,599)
(4,236)
(33,175)
(8,690)
(7,307)
91,177
22(a). EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (EBITDA)
THE GROUP
2014
2013
Rs.’000
Rs.’000
Revenue
Cost of goods produced
Logistics
Utilities
Repairs and maintenance
Employee benefit expense (note 23)
Transport expenses
International business
Rental and leases
Office expenses
Services
Social and events
Fees and commission
Other operating income
Earnings before interest tax, depreciation and amortisation
(EBITDA)
9,565,100
(4,897,850)
(308,946)
(350,777)
(144,386)
(2,274,488)
(132,754)
(182,568)
(102,436)
(116,996)
(134,393)
(57,590)
(142,348)
250,377
969,945
THE COMPANY
2014
2013
Rs.’000
Rs.’000
8,685,727
(4,521,834)
(326,815)
(350,663)
(129,832)
(1,851,359)
(134,019)
(170,336)
(100,115)
(111,700)
(123,311)
(52,742)
(191,746)
208,651
207,687
(177)
(108)
2,762
155,766
(65)
2,574
829,906
210,164
158,275
EBITDA refers to revenue adjusted for all operating expenses before accounting for depreciation, amortisation,
interest and non-recurring items.
Included in ‘Other operating income’ are duty drawback and scripts amounting to Rs. 129,038,347
(2013:Rs. 123,444,000) relating to export incentives obtained from Indian authorities and recognised on an
accrual basis.
115
22(b). NON RECURRING ITEMS
THE GROUP
2014
2013
Rs.’000
Rs.’000
Fair value (loss)/gain on forward contracts
Profit on disposal of investments held for sale
(55,178)
31,729
(23,449)
30,712
30,712
THE COMPANY
2014
2013
Rs.’000
Rs.’000
-
-
The fair value (loss)/gain on forward contracts consists of both realised loss (Rs. 57,722,000) and unrealised gain
(Rs. 2,544,000)
Non recurring items are exceptional items that relate to the sale of an investment in foreign associate and fair value
gain/loss on forward contracts which are considered to be one-off items.
22(c). PROFIT FROM ORDINARY ACTIVITIES
Profit from ordinary activities is derived from operational profits adjusted for net finance costs and before nonrecurring items and income tax (expense)/credit.
23. EMPLOYEE BENEFIT EXPENSE
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
Wages and salaries
Social security costs
Other post retirement benefits (Note 17(b))
Pension costs-defined benefit plans (Note 17(a))
Pension costs- defined contribution plans
Others
116
2,109,927
102,569
21,303
9,488
15,754
15,447
2,274,488
1,671,508
92,004
23,799
6,807
16,414
40,827
1,851,359
24. PROFIT BEFORE TAXATION
THE GROUP
2014
2013
Rs.’000
Rs.’000
Profit before taxation is arrived at after
crediting:
Profit on disposal of non-current assets
classified as held for sale
Profit on disposal of property, plant and equipment
and charging:
Loss on disposal of property, plant and equipment
Depreciation on property, plant and equipment
- owned assets
- leased assets
Amortisation of intangible assets
Cost of raw materials
Employee benefit expense (Note 23)
No. of employees at year end
THE COMPANY
2014
2013
Rs.’000
Rs.’000
31,729
4,695
-
-
-
-
682
-
-
188,816
25,388
5,118
4,897,850
2,274,488
182,912
12,500
3,796
4,521,834
1,851,359
2,835
-
2,835
-
19,140
17,247
-
-
25. NET FINANCE COSTS
THE GROUP
2014
2013
Rs.’000
Rs.’000
Interest expense on:
- Bank overdrafts
- Bills discounted
- Bank and other loans
- Import loans
- Finance leases
- Debentures
- B shares dividends
- Preference share dividend
- Loans from related parties
- Others
Finance costs
Interest income on:
- Loans and advances
- Bank balances
- Loans to related parties
- Others
Finance income
Net finance costs
THE COMPANY
2014
2013
Rs.’000
Rs.’000
(25,035)
(17,220)
(8,519)
(15,143)
(3,845)
(1,741)
(4,072)
(2,700)
(4,833)
(83,108)
(20,519)
(13,882)
(5,303)
(7,922)
(4,667)
(2,987)
(3,054)
(2,700)
(2,378)
(63,412)
(29)
(1,741)
(4,072)
(1,236)
(987)
(8,065)
(49)
(2,987)
(3,054)
(6,090)
74
5,821
599
6,494
39
6,727
2,270
9,036
3,964
406
4,370
2,992
173
3,165
(76,614)
(54,376)
(3,695)
(2,925)
117
26. EARNINGS PER SHARE
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
517,195
517,195
Profit attributable to owners of the parent
Preference dividends attributable to owners of the parent
Number of shares in issue
Basic and diluted earnings per share
Rs.
464,138
(3,066)
461,072
101,807,589
101,807,589
5.08
4.53
27. DIVIDENDS
(a) Amounts recognised as distribution to owners of the
parent in the year:
Interim dividend of Rs. 0.75 (2013: Rs. 0.50) per share
Final dividend of Rs. 1.25 (2013: Rs. 1.00) per share
THE GROUP
2014
2013
Rs.’000
Rs.’000
THE COMPANY
2014
2013
Rs.’000
Rs.’000
76,356
127,259
203,615
50,903
101,808
152,711
76,356
127,259
203,615
50,903
101,808
152,711
At 1 July
2013
Rs.’000
Declared
during the
year
Rs.’000
Paid during
the year
Rs.’000
At 30 June
2014
Rs.’000
101,808
203,615
At 1 July
2012
Rs.’000
Declared
during the
year
Rs.’000
71,265
152,711
(122,168)
101,808
20,247
91,512
3,832
156,543
(24,079)
(146,247)
101,808
At 1 July
2013
Rs.’000
Declared
during the
year
Rs.’000
101,808
203,615
At 1 July
2012
Rs.’000
Declared
during the
year
Rs.’000
71,265
152,711
(b) Dividends payable at year end 30 June:
(i) THE GROUP - 2014
Dividend to ordinary shareholders (payable by the holding
company)
THE GROUP - 2013
company)
Preference dividend to financial institutions (payable by
the Group)
company)
THE COMPANY - 2013
company)
118
(178,164)
Paid during
the year
Rs.’000
Paid during
the year
Rs.’000
(178,164)
Paid during
the year
Rs.’000
(122,168)
127,259
At 30 June
2013
Rs.’000
At 30 June
2014
Rs.’000
127,259
At 30 June
2013
Rs.’000
101,808
28. NOTES TO THE STATEMENTS OF CASH FLOWS
(a) Cash generated from operations
Adjustments for:
- Depreciation of property, plant and equipment
- (Profit)/loss on disposal of property, plant and equipment
- Property, plant and equipment written off
- Amortisation of intangible assets
- Intangible assets written off
- Profit on disposal of non-current assets classified as held
for sale
- Bargain on purchase
- Retirement benefit obligations
- Employee benefit liability
- Provisions
- Unrealised foreign exchange differences
- Interest income
- Interest expense
Cash generated from operations before changes in working
capital
Changes in working capital:
- Inventories
- Trade and other receivables
- Trade and other payables
Cash generated from operations
(b) Cash and cash equivalents
Cash in hand and at bank
Bank overdrafts (Note 15 - Borrowings)
THE GROUP
2014
2013
Restated
Rs.’000
Rs.’000
THE COMPANY
2014
2013
Rs.’000
Rs.’000
650,560
607,034
203,634
152,515
214,204
(4,695)
238
5,118
53
195,412
682
2,941
3,796
515
2,835
-
2,835
-
(4,370)
8,065
(3,165)
6,090
(31,729)
(67)
21,770
(17,462)
(1,691)
(6,494)
83,108
18,359
(9,760)
2,802
(17,072)
(9,036)
63,412
912,913
859,085
210,164
158,275
(181,114)
(180,883)
139,906
690,822
(244,916)
(500,496)
323,557
437,230
(39,119)
42,323
213,368
7,755
17,931
183,961
2014
Rs.’000
2013
Rs.’000
2014
Rs.’000
2013
Rs.’000
247,892
(525,222)
(277,330)
166,706
(423,489)
(256,783)
3,972
(6)
3,966
461
(4)
457
29. BUSINESS COMBINATIONS
(a) Acquisition of additional interest of International Fabrics Ltd and its subsidiary
On 26 March 2014, the Group acquired additional interest in International Fabrics Ltd and its subsidiary for
a cash consideration of Rs. 15.5 million, increasing its ownership from 80% to 100%. The carrying amount
of International Fabrics Ltd and its subsidiary’s net assets in the consolidated financial statements on the
date of the acquisition was Rs. 418,428,967. The Group recognised a decrease in non-controlling interest of
Rs. 83,685,793 and an increase in retained earnings and revaluation reserves attributable to the parent of
Rs. 22,392,541 and Rs. 45,793,252 respectively.
119
29. BUSINESS COMBINATIONS (CONT’D)
The following summarises the effect of changes in the parent’s ownership interest:
2014
Rs.’000
Parent’s ownership interest at 1 July 2013
Effect of increase in parent’s ownership interest
Share of profit for the year after deducting for share of profit attributable to non-controlling
interest prior to acquisition
Parent’s ownership interest at 30 June 2014
344,302
68,186
(21,318)
391,170
(b) Acquisition of Aquarelle Limitée
Effective 1 January 2014, the Group acquired 100 per cent of the issued share capital and obtained control of
Aquarelle Limitée for a cash consideration of Rs. 115,000,000, which resulted in a gain on bargain purchase of
Rs. 66,688.
The following table summarises the consideration paid for Aquarelle Limited and the amounts of the assets
acquired and liabilities assumed recognised at the acquisition date.
Consideration
At 1 January 2014
Cash consideration
Recognised amounts of identifiable assets acquired and liabilities assumed
Property, plant and equipment (note 3(a))
Trade and other receivables, net of provision
Cash and cash equivalents
Deferred tax liabilities (note 9(a))
Borrowings - current
Borrowings - non-current
Total identifiable net assets
Bargain on purchase
2014
Rs.’000
115,000
167,500
10,778
43
(184)
(17,584)
(2,941)
(42,545)
115,067
(67)
115,000
Net cash outflow on acquisition of subsidiary
2014
Rs.’000
Cash consideration
Less: cash and cash equivalent balances acquired-net
Net outflow
115,000
(43)
114,957
The revenue included in the consolidated statement of comprehensive income since 1 January 2014, contributed
by Aquarelle Limited was Rs. 5,002,098. The subsidiary’s profit for the year was Rs. 2,290,456 over the same
period.
120
30. CONTINGENT LIABILITIES
At 30 June 2014, the Group had bank guarantees amounting to Rs. 67 M (2013: Rs. 111 M) to third parties in respect
of expatriates.
31. COMMITMENTS
(a) Capital commitments
Capital commitments amounting to Rs. 592 M (2013: Rs. 380 M) have been approved by the Board of Directors but
not yet contracted for.
(b) Operating lease commitments
The Group leases land and motor vehicles under non-cancellable operating lease agreements. The future
aggregate minimum lease payments under non-cancellable operating leases are as follows:
THE GROUP
2014
2013
Rs.’000
Rs.’000
Not later than one year
Later than one year and not later than five years
14,824
13,034
27,858
10,794
11,419
22,213
The average lease terms range from three to ten years.
121
32. SEGMENTAL INFORMATION - GROUP
THE GROUP
Segment information
The following is an analysis of the Group’s revenue and results from continuing operations by reportable segment:
30 June 2014
Knitwear
Rs.’000
Fine Knits
Rs.’000
Woven
Rs.’000
Retail
Rs.’000
Total
Rs.’000
Total segment revenues
Revenues from external customers
2,400,117
2,400,117
2,097,374
2,097,374
5,012,927
5,012,927
54,682
54,682
9,565,100
9,565,100
Net finance costs
Profit from ordinary activities
Non recurring items (Note(a))
Income tax expense
Profit after taxation
185,369
(29,027)
156,342
(20,465)
135,877
(6,414)
129,463
129,463
135,057
(9,872)
125,185
(35,757)
89,428
(12,052)
77,376
77,376
426,376
(36,888)
389,488
1,044
390,532
(81,010)
309,522
(33,893)
275,629
3,821
(827)
2,994
31,729
34,723
4
34,727
34,727
750,623
(76,614)
674,009
(23,449)
650,560
(99,472)
551,088
(33,893)
517,195
30 June 2013
Knitwear
Rs.’000
Fine Knits
Rs.’000
Woven
Rs.’000
Retail
Rs.’000
Total
Rs.’000
Total segment revenues
Revenues from external customers
2,114,074
2,114,074
2,124,698
2,124,698
4,393,617
4,393,617
53,338
53,338
8,685,727
8,685,727
Net finance costs
Profit from ordinary activities
Non recurring items
Income tax expense
Profit after taxation
104,152
(27,637)
76,515
17,217
93,732
3,784
97,516
97,516
97,323
(10,172)
87,151
18,254
105,405
(7,119)
98,286
98,286
428,264
(15,843)
412,421
(4,759)
407,662
(87,835)
319,827
(51,719)
268,108
959
(724)
235
235
(7)
228
228
630,698
(54,376)
576,322
30,712
607,034
(91,177)
515,857
(51,719)
464,138
(a) Included in the retail segment is an amount of Rs. 31,729,961 representing profit on disposal of shares in Harris
Wilson Textile SA. and a reversal of impairment of Rs. 1,801,577 on consolidation.
Other non recurring item in Knitwear, Knits and Woven clusters consist of fair value gains / (losses) on forward
contracts and disposal of investment in foreign associate.
122
32. SEGMENTAL INFORMATION - GROUP (CONT’D)
30 June 2014
Knitwear
Rs.’000
Fine Knits
Rs.’000
Woven
Rs.’000
Retail
Rs.’000
ASSETS
Other segment assets
Consolidated total assets
2,825,123
19,238
64,690
2,909,051
1,391,793
6,079
23,767
1,421,639
3,655,817
23,312
158,941
3,838,070
88,247
1,369
494
90,110
LIABILITIES
Other segment liabilities
Borrowings
Consolidated total liabilities
722,257
6,271
99,457
897,222
1,725,207
453,398
9,090
28,036
185,879
676,403
1,021,774
24,651
109,080
812,596
1,968,101
38,583
9,887
48,470
Consolidation
Adjustments
Rs.’000
(250,088)
7,710,892
49,998
247,892
(250,088) 8,008,782
(213,100)
(213,100)
Equity attributable to
shareholders of parent
OTHER INFORMATION
Capital additions
Total
Rs.’000
2,022,912
40,012
236,573
1,905,584
4,205,081
3,624,311
179,390
8,008,782
123,433
58,733
118,656
54,091
Knitwear
Rs.’000
Fine Knits
Rs.’000
Woven
Rs.’000
Retail
Rs.’000
ASSETS
Other segment assets
Consolidated total assets
2,464,535
14,477
38,234
2,517,246
1,463,258
6,600
7,679
1,477,537
2,941,560
19,014
120,076
3,080,650
82,686
1,366
717
84,769
(256,428)
(256,428)
6,695,611
41,457
166,706
6,903,774
LIABILITIES
Other segment liabilities
Borrowings
Consolidated total liabilities
637,270
1,717
84,984
839,060
1,563,031
443,237
2,701
23,916
245,492
715,346
865,916
35,156
73,294
468,115
1,442,481
42,719
9,475
52,194
(195,371)
(195,371)
1,793,771
39,574
182,194
1,562,142
3,577,681
30 June 2013
188,943
104,744
625
1,754
Equity attributable to
shareholders of parent
OTHER INFORMATION
Capital additions
431,657
219,322
Consolidation
Adjustments
Rs.’000
Total
Rs.’000
3,108,782
217,311
6,903,774
45,145
54,013
26,060
56,084
132,806
87,472
5,135
1,639
209,146
199,208
123
32. SEGMENTAL INFORMATION - GROUP (CONT’D)
Geographical information
Mauritius
Madagascar
Asia
South Africa
Total
Revenues from
External Customers
2014
2013
Rs.’000
Rs.’000
7,316,235
4,538
1,832,068
412,259
9,565,100
6,631,398
4,878
1,589,873
459,578
8,685,727
Non-current assets
2014
2013
Rs.’000
Rs.’000
2,012,751
452,557
443,734
250
2,909,292
1,637,029
297,680
313,298
328
2,248,335
Capital Additions
2014
2013
Rs.’000
Rs.’000
295,679
44,975
90,904
99
431,657
136,434
18,583
53,911
218
209,146
Revenues from external customers are presented based on the respective subsidiaries’ country of domicile.
The cluster CEO’s and executive directors form the Group’s CODM. They have determined operating segments
based on the information reviewed by the business units meetings (BUM) for the purpose of allocating resources
and assessing performance.
The BUM considers business from a cluster and geographic perspective. Geographically, the CODM considers the
revenue from Mauritius, Madagascar, Asia and South Africa. From a product perspective, the CODM separately
considers Knitwear, Knits, Woven and Retail clusters.
The CODM assesses the performance of the operating segments based on a measure of ‘Earnings before interest
and tax’ and ‘Profit after tax’.
33. REVENUE
All revenue of the Group relate to sale of goods.
The revenue for the Company comprises dividend income from subsidiary companies.
124
34. RELATED PARTY TRANSACTIONS
The Group is controlled by CIEL Limited which owns 56.31% of the Company’s shares. The remaining shares are
widely held. The following transactions were carried out with related parties.
THE GROUP
30 June 2014
Treasury and corporate management fees (fellow subsidiaries)
Purchase of goods (shareholder of a subsidiary)
Amount due to (shareholder of a subsidiary)
Amount due from
Acquisition of subsidiary (Note 29)
Acquisition of property
Wages and salaries
Other post employment benefits
Dividend
30 June 2013
Treasury and corporate management fees (fellow subsidiaries)
Purchase of goods (shareholder of a subsidiary)
Amount due to (shareholder of a subsidiary)
Amount due from
Wages and salaries
Other post employment benefits
Dividend
Holding
company
Rs.’000
Related
Companies
Rs.’000
Key
Management
Personnel
Rs.’000
-
28,731
-
115,000
65,000
-
356,427
129,524
6
-
3,912
136,619
3,442
4,052
Related
Companies
Rs.’000
Key
Management
Personnel
Rs.’000
25,582
-
276,010
52,581
2,905
-
4,337
113,733
3,747
3,054
Director’s interests in an employee incentive scheme
Certain key management personnel receive benefits through employee incentive schemes. Note 18 of these
financial statements sets out the details of the schemes.
THE COMPANY
2014
Rs.’000
2013
Rs.’000
Amount due from subsidiaries (Note 11)
Amount due to subsidiaries (Note 19)
Dividend received from subsidiaries
153,865
421,964
207,687
117,076
381,381
151,558
Terms and conditions:
Outstanding balances at the year-end are unsecured, interest free and settlement occurs in cash. There has been
no guarantees provided except for the advances made to the Executive Directors or received for any related party
receivables or payables.
For the years ended 30 June 2014 and 2013, the Company has not recorded any impairment of receivables relating
to amounts owed by related parties. This assessment is undertaken each financial period through examining the
financial position of the related party and the market in which the related party operates.
125
35. FINANCIAL RISK MANAGEMENT AND POLICIES
The Group’s and Company’s principal financial liabilities comprise bank loans and overdrafts, bills discounted,
finance leases and trade and other payables. The main purpose of these financial liabilities is to raise finance for the
Group’s and the Company’s operations. The Group and Company have various financial assets, such as trade and
other receivables and cash and cash equivalent which arise directly from its operations.
The Group’s and the Company’s activities, therefore, expose it to a variety of financial risks: market risk (including
currency risk, cash flow interest rate risk), credit risk and liquidity risk. The Group’s and Company’s overall risk
management programme focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the Group’s and Company’s financial performance.
The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below.
35.1 Financial risk factors
A description of the significant risk factors is given below together with the risk management policies applicable.
(a) Currency risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures
primarily with respect to British pound, Euro, US Dollar, SA Rand and Indian Rupee. Foreign exchange risk arises
from future commercial transactions. The Group hedges its foreign currency risk of sales by entering into forward
contracts.
(b) Cash flow and fair value interest rate risk
The Group borrows at fixed and variable rates. In respect of the latter, it is exposed to risk associated with effect
of fluctuations in the prevailing label of market interest rates on its financial position and cash flows. The interest
rate risk profile is on the following main liabilities:
Bank Overdrafts Floating
2014
2013
Mauritian Rupee
Euro
US Dollar
Indian Rupee
Prime lending rate
Euribor + 1.5%/+ 3.5%
Libor + 1.5%/+ 3.5%
12%
Prime lending rate
Euribor + 1.5%/+ 3.5%
Libor + 1.5%/+ 3.5%
12%
Loans - Fixed
Mauritian Rupee
Euro
Prime lending rate + 1%
Euribor + 3%
Euribor + 3%
Finance Lease
Mauritian Rupee
US Dollar
Euro
7.5% - 10.5%
2.9%
2.75%
8% - 10.5%
-
Bills Discounted
Mauritian Rupee
Euro
US Dollar
Indian Rupee
Prime lending rate
Euribor + 1.5%/+ 3.5%
Libor + 1.5%/+ 3.5%
10.45 % - 13.00 %
Prime lending rate
Euribor + 1.5%/+ 3.5%
Libor + 1.5%/+ 3.5%
10.70 % - 13.00 %
9%
5% - 9%
Preference Shares
Mauritian Rupee
Debentures
Mauritian Rupee
126
35. FINANCIAL RISK MANAGEMENT AND POLICIES (CONT’D)
35.1 Financial risk factors (cont’d)
At 30 June 2014, if interest rates on borrowings had been 50 basis points higher/lower with all other variables
held constant, pre-tax profit for the year would have been lower/higher as shown in the table below, mainly as a
result of higher/lower interest expense on floating rate borrowings as shown below. Management believes that
a 50 basis point movement is a reasonable basis to determine the sensitivity for the Group’s liquidity risk.
Effect higher/lower on pre-tax profit
Rupee
USD
Euro
UK Pound
INR
Other currencies
THE GROUP
2014
2013
Rs.’000
Rs.’000
531
4,898
1,100
2,236
123
15
8,903
822
4,186
1,210
1,153
99
146
7,616
THE COMPANY
2014
2013
Rs.’000
Rs.’000
-
140
140
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an
adequate amount of committed credit facilities. The Group and the Company aims at maintaining flexibility in
funding by keeping reliable credit lines available. Management monitors rolling forecasts of the Group’s liquidity
reserve on the basis of expected cash flow.
The table below analyses the non-derivative financial liabilities into relevant maturity groupings based on the
remaining period at the end of the reporting period to the contractual maturity date.
At call
Rs.’000
Less than
3 months
Rs.’000
Between
3 months
and 1 year
Rs.’000
Over 1
year
Rs.’000
At 30 June 2014
Borrowings
Dividend payable
827,166
156,845
-
562,155
1,235,660
127,259
362,648
295,614
-
153,615
9,202
-
At 30 June 2013
Borrowings
Dividend payable
423,489
94,175
-
757,187
1,164,410
101,808
310,191
247,036
-
71,275
4,137
-
THE GROUP
127
At call
Rs.’000
Less than
3 months
Rs.’000
Between
3 months
and 1 year
Rs.’000
Over 1
year
Rs.’000
At 30 June 2014
Borrowings
Dividend payable
6
5,754
-
487
127,259
421,871
-
-
At 30 June 2013
Borrowings
Dividend payable
4
-
4,408
101,808
14,000
381,381
-
14,000
-
THE COMPANY
(d) Credit risk
The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the statement
of financial position are net of allowances for doubtful receivables, estimated by the Group’s management based
on prior experience and the current economic environment.
The Group has no significant concentration of credit risk, with exposure spread over a large number of
counterparties and customers. The Group has policies in place to ensure that sales of products and services are
made to customers with an appropriate credit history.
The maximum exposure to credit risk at the end of the reporting period is equal to the carrying value of each
financial asset.
(e) Fair value risk
Financial assets and liabilities, which are accounted for at historical cost, are not significantly different from their
fair values.
128
The following table details the forward foreign currency (FC) contracts outstanding at the end of the reporting period:
Average exchange
rate
Outstanding contracts
2014
2013
2014
2013
Contract value
Fair value
Sell
Buy
Sell
Buy
2014
2013
2014
2013
FC’000
FC’000
FC’000
FC’000
Rs.’000
Rs.’000
Rs.’000
Rs.’000
Sell currency EUR
and buy currency USD
1.37
1.31
3,000
4,113
4,137
5,404
122,610
164,484
1,061
549
Sell currency EUR
and buy currency MUR
41.95
40.32
6,355
266,622
8,590
346,338
266,622
346,338
6,801
4,641
Sell currency GBP
and buy currency EUR
0.80
0.85
680
851
250
213
34,498
9,887
75
Sell currency GBP
1.63
1.54
22,655
36,920
11,038
16,989
1,100,586
517,147
Sell currency GBP
51.00
47.82
10,370
528,827
11,840
566,172
528,827
566,172
1,579
14,535
Sell currency ZAR
and buy currency EUR
14.47
-
318
22
-
-
892
-
12
-
Sell currency ZAR
11.00
10.79
159,002
14,451
1,611
149
430,769
4,850
Sell currency ZAR
2.79
3.29
58,960
164,618
182,612
600,751
164,618
600,751
2,638
53,262
Sell currency USD
31.24
30.94
404
12,622
4,895
151,470
12,622
151,470
898
2,315
Sell currency USD
and buy currency INR
61.89
56.70
1,550
95,936
8,500
481,938
46,798
481,938
(136)
(17,200)
Sell currency GBP
105.03
87.29
540
56,716
1,305
113,909
27,666
113,909
(462)
(3,141)
Sell currency EUR
84.63
75.06
1,300
110,013
1,650
123,851
53,664
123,851
Total
Recognised as follows:
On statement of financial position
Fair value asset on forward contracts
Fair value liability on forward contracts
(45,088)
(4,134)
(917)
(37,673)
(19)
6,355
(51)
(3,524)
57,722
2014
2013
Rs.’000
Rs.’000
4,861
81,657
(42,534)
(23,935)
(37,673)
57,722
2,557
57,722
In income statement
Fair value movement on outstanding financial derivatives
In statement of other comprehensive income
(40,230)
-
(37,673)
57,722
At 30 June 2014, if rupee had weakened/strengthened by 5% against Euro/UK Pound/US Dollar with all other variables held constant,
pre-tax profit for the year would have been Rs. 32,142,000 (2013: Rs. 29,590,000) higher/lower as a result of foreign exchange gains/losses
on translation of Euro/UK Pound/US Dollar denominated trade receivables, trade payables and borrowings and is as follows:
2014
Rs.’000
Euro
UK Pound
US Dollar
3,050
7,114
2013
Rs.’000
(3,437)
5,470
(42,306)
(31,623)
(32,142)
(29,590)
129
35.2 Fair value estimation of financial instruments
The fair value of financial instruments traded in active markets is based on quoted market prices at the end
of the reporting period. The fair value of financial instruments that are not traded in an active market is
determined using valuation techniques. The Group uses a variety of methods namely the capitalised earnings,
net asset basis and dividend yield and makes assumptions that are based on market conditions existing at the
end of each reporting date.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to
approximate their fair values.
The fair value of those financial assets and liabilities not presented on the Group’s statements of financial
position at the fair values are not materially different from their carrying amounts.
The following table provides an analysis of financial instruments that are measured subsequent to
initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is
observable:
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for
identical assets and liabilities;
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within
level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from
prices); and
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset
or liability that are not based on observable market data (unobservable inputs).
THE GROUP AND THE COMPANY
Level 1
Rs.’000
130
Level 2
Rs.’000
Level 3
Rs.’000
As at 30 June 2014
Forward exchange contracts (Hedged items)
Total
-
(37,673)
(37,673)
6,712
6,712
As at 30 June 2013
Forward exchange contracts
Total
-
57,722
57,722
6,712
6,712
35.3 Capital risk management
The primary objectives of the Group and Company, when managing capital, are to safeguard the entity’s ability to
continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to
provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The Group and the Company manage its capital structure and makes adjustment to it, in light of changes in economic
conditions. In order to maintain or adjust the capital structure, the Group and the Company may adjust the amount
of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. No
changes were made in the objectives, policies or processes during the years ended 30 June 2014 and 30 June 2013.
The Group and the Company monitors capital on the basis of the debt-to-capital ratio. This ratio is calculated as net
debt adjusted capital. Total debt comprise of borrowings and bills discounted. Net debt is calculated as total debt
(as shown in the statement of financial position) less cash and bank balances.
Adjusted capital comprises all components of equity (i.e. share capital, non-controlling interests, retained earnings,
revaluation surplus and the redeemable preference shares).
The gearing ratios at 30 June 2014 and 30 June 2013 were as follows:
THE GROUP
2014
2013
Rs.’000
Rs.’000
THE COMPANY
2014
2013
Rs.’000
Rs.’000
Total debt
Less: cash and bank balances (Note 28(b))
Net Debt
1,905,584
(247,892)
1,657,692
1,562,142
(166,706)
1,395,436
Total equity
3,803,701
3,326,093
915,825
905,364
43.58%
41.95%
N/A
3.04%
Gearing Ratio
6
(3,972)
(3,966)
28,004
(461)
27,543
36. CASH FLOW HEDGE
The Group is involved in the production and selling of textile apparel, most of which is done through exports to
foreign countries. The Group is made up of Knitwear Cluster; Fine knits Cluster and Woven Cluster and is exposed to
foreign exchange risk on the sale of textile products denominated in foreign currency. The Group exports almost
all of its production in foreign currencies (South African Rand ‘ZAR’, United States Dollars ‘USD’, Great Britain Pound
‘GBP’ and Euro ‘EUR’).
The Group is mainly faced to the following foreign exchange exposures:
Pre-transaction foreign currency risk
This arises before the transaction (‘sales’) becomes contractual while a quote is given to the client in foreign
currency. Even though the transaction is not confirmed, movement in exchange rate to the disfavour of the Group
signifies a potential risk. If a customer later accepts the quote received, there is a risk that the foreign currency
price then converted to MUR will not bring the desired margin.
Transaction foreign currency risk
Transactional foreign currency risk arises as soon as a there is a contractual obligation between the Group and
the foreign customers. If nothing is done, there is a certain risk that the foreign exchange rate may weaken and
if it so happens, the Group may only lose the intended margin on the transaction and may even incur losses if the
exchange rate variations are drastically in disfavour of the Group.
The Group adopted the following strategy:
The treasury Committee/Chief Executive of the Group are responsible for the decision making, with the intention
to take cover, through forward exchange contracts with a view to cover for sale transactions that are judged as
being highly probable. The intention is to cover for transactional exposures as they are unveiled. Prerogative is
given to the treasury Committee/Chief Executive of the Group to decide if they would keep part of this position
uncovered with the view of benefiting from potential currency appreciation against the MUR.
The Group enters into forward covers to manage its foreign exchange risk on foreign denominated sales. Forward
exchange covers are taken for orders received and which are highly probable and this is designated as a cash flow
hedge. Forward covers are used as a mechanism to fix the amount of foreign currency denominated sales which
are used to modify cashflow between financial instrument and sales receipts upon realisation.
131
36. CASH FLOW HEDGE (CONT’D)
Transaction foreign currency risk (cont’d)
Financial instruments taken to hedge the Group’s sales are fair valued and recognised in the statement of financial
position as financial assets /liability. For those sales on which a forward has been taken and which has materialised,
the resulting fair value gain/loss on re-measurement is accounted for in profit or loss while for those transactions
for which the underlying sale has not yet materialised, the fair value gain/loss is recorded in other comprehensive
income. The latter is then recycled to profit or loss as soon as the sale materialise and the goods are shipped.
The Group enters into forward contracts (hedge instrument) to buy or to sell foreign currencies at a specified
future time at a price agreed upon the contract date. The price is locked until delivery of sales order which normally
will not exceed 9 months.
Hedge instruments, in this case forward exchange contracts, are expected to be highly effective to mitigate the
foreign currency risk exposure on sales (hedge item). By selling forward, the Group expects to mitigate long term
currency exchange risk and will revalue in the opposite direction to the underlying transaction.
The objective of the Group is to cover identified exposures (i.e. confirmed orders or highly probable sales orders) to
the minimum of 75% and a maximum of 125%. However, this bench mark is determined on a case to case basis by
the CEO and treasury committees of the respective business clusters while taking into consideration the specific
transaction requirements.
For all sales not yet shipped and for which a forward exchange contract cover has been taken, the Group performs a
revaluation of outstanding forward contracts relating to cash flow hedges which is then recorded in the statement
of other comprehensive income.
Revaluation of outstanding forex contracts relating to transaction for which an asset has already crystallised in the
statement of financial position (sales already shipped and debtors raised) will be recorded in profit or loss.
Subsequently, the cash flow hedge recognised in other comprehensive income will be reversed profit or loss in the
following year, as an underlying asset would already have crystallised upon the orders being shipped ( Sales not
shipped last year would have been shipped this year).
Hedge instruments in the form of forward foreign exchange contracts is expected to be highly effective as the
unshipped sales, which represents the hedged item, has a direct economic relationship to the forward foreign
exchange contract entered into to mitigate the foreign exchange exposure on the Group’s unshipped and
confirmed sales orders at year end.
Although effectiveness is certain to be 100 % as long as plain vanilla forward contracts are used, a 10 % error margin
in the hedge effectiveness is considered as acceptable. To determine effectiveness of the hedge, the list of hedge
instruments (Forward contracts) are matched with list of sales not yet shipped / highly probable sales (hedge
items).
132
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Apr-15
May-15
Jun-15
-
-
-
-
-
-
-
-
-
- 850,000
-
260,000
-
-
-
1.63
-
1.69
-
1.70
-
-
-
2,000,000
500,000
-
750,000
-
-
-
-
-
Notional
amount
USD
-
664,000
-
-
-
-
-
-
Average
hedged
rate to
MUR
-
30.90
-
-
-
-
-
Notional
amount
GBP
12,120,000
4,700,000
1,200,000
500,000
750,000
Average
hedged
rate USD
1.62
1.63
1.63
1.66
Notional
amount
GBP
500,000
500,000
500,000
Average
hedged
rate MUR
Mar-15
49.32
50.00
51.21
51.24
51.40
-
51.27
-
-
-
-
-
Notional
amount
EUR
-
175,000
-
-
-
3,000,000
-
-
-
-
-
-
Average
hedged
rate to
MUR
-
42.00
-
-
-
41.68
-
-
-
-
-
-
Notional
amount
EUR
750,000
750,000
1,000,000
-
-
-
-
-
-
-
-
-
Average
hedged
rate to
USD
1.38
1.36
1.37
-
-
-
-
-
-
-
-
-
Notional
amount
ZAR
2,179,450
20,758,353
19,536,000
8,360,000 13,928,000
6,470,000
-
-
-
-
-
-
Average
hedged
rate to
USD
11.08
11.10
11.04
10.82
11.04
10.93
-
-
-
-
-
-
Notional
amount
ZAR
600,000
415,000
3,527,502
2,000,000
-
-
-
-
-
-
-
-
Average
hedged
rate to
MUR
2.80
2.70
2.79
2.86
-
-
-
-
-
-
-
-
The Group has a single risk category which is the foreign exchange risk on foreign denominated sales.
Effectiveness is expected to be 100 % as long as plain vanilla forward contracts are used.
The Group does not have any forecast transaction for which hedge accounting had been used in the previous period but which is no longer expected
to occur.
133
The impact of hedging instruments (forward exchange contracts) designated in hedging relationships as of
30 June 2014 on the statement of financial position of CIEL Textile Limited (the Group), is as follows:
Cash flow hedges
Notional amount
(FCY) 000
Forward exchange
contract (USD)
664
Forward exchange
contract (GBP)
25,130
Forward exchange
contract (EUR)
5,675
Forward exchange
contract (ZAR)
77,774
Line item in the
statement of
financial position
Carrying amount
Rs.’000
654
(43,834)
3,074
(124)
Change in fair value
used for measuring
ineffectiveness for
the period
Trade and other
payables/Trade and
other receivables
Trade and other
payables/Trade and
other receivables
Trade and other
payables/Trade and
other receivables
Trade and other
payables/Trade and
other receivables
-
-
-
-
The impact of hedged items designated in hedging relationships as of 30 June 2014 on the statement of financial
position of the Group is, as follows:
Change in value used for measuring
ineffectiveness
Cash flow hedges
Foreign exchange risk
Unshipped sales
Cash flow hedge
Cash flow hedge reserve
Rs.’000
-
Carrying amount
Forward exchange
contract (USD)
Thereof
accumulated fair
value adjustments
654
Forward exchange
contract (GBP)
654
(43,834)
Forward exchange
contract (EUR)
(43,834)
3,074
Forward exchange
contract (ZAR)
40,230
3,074
(124)
(124)
Line item in the
statement of
financial position
Change in fair value
used for measuring
ineffectiveness for
the year
Trade and other
payables/Trade and
other receivables
Trade and other
payables/Trade and
other receivables
Trade and other
payables/Trade and
other receivables
Trade and other
payables/Trade and
other receivables
-
-
-
-
The above hedging relationships affect other comprehensive income as follows:
Cash flow
hedges
Foreign
exchange risk
Unshipped sales
134
Hedging gain/
(loss) recognized
in OCI
Ineffectiveness
recognized in
profit or loss
(40,230)
-
Line item in
profit or loss
Amount
reclassified from
OCI to profit or
loss
Line item in
profit or loss
None
-
-
37. THREE YEAR SUMMARY
2014
Rs.’000
2013
Restated
Rs.’000
2012
Restated
Rs.’000
685,865
2,179,233
759,213
3,624,311
650,560
551,088
685,865
1,843,260
579,657
3,108,782
607,034
515,857
685,865
1,534,899
653,596
2,874,360
610,679
515,888
Dividends to Ordinary Shareholders
203,615
152,711
101,808
(b) THE COMPANY
2014
Rs.’000
2013
Rs.’000
2012
Rs.’000
Stated capital/Issued and paid up share capital
Revaluation surplus
Retained earnings
Total equity
Profit for the year
685,865
131,874
98,086
915,825
203,634
203,598
685,865
121,396
98,103
905,364
152,515
152,997
685,865
121,396
97,817
905,078
104,008
101,515
Dividends to Ordinary Shareholders
203,615
152,711
101,808
(a) THE GROUP
Stated capital/Issued and paid up share capital
Retained earnings
Other reserves
Amount attributable to owners
Profit for the year
38. CHANGES IN ACCOUNTING POLICIES
(a) Adoption of IAS 19 (revised 2011)
In the current year, the Group has adopted IAS 19 Employee Benefits (Revised 2011). The Group has applied IAS 19
(Revised 2011) retrospectively in accordance with the transitional provisions as set out in IAS 19 (Revised 2011),
paragraph 173. These transitional provisions do not have an impact on future periods. The opening statement of
financial position of the earliest comparative period presented (1 January 2012) has been restated.
The revised employee benefit standard introduces changes to the recognition, measurement, presentation
and disclosure of post-employment benefits. The standard also requires net interest expenses/income to be
calculated as the product of the net defined benefit liability/asset and the discount rate as determined at the
beginning of the year. The effect of this is to remove the previous concept of recognising an expected return on
plan assets.
The effects of the changes to the accounting policies is shown in the following tables.
(i) The effect on the statements of financial position are as follows:
THE GROUP
Deferred
Retirement
tax
benefit
liabilities obligations
net
Rs.’000
Rs.’000
Balance as at 1 July 2012 (as previously reported)
Reclassification to other payables
Effect of adopting IAS 19 (Revised 2011)
Balance as at 1 July 2012 (restated)
Balance as at 30 June 2013 (as previously reported)
Reclassification to payables on 2012 figures
Reclassification to payables on 2013 figures
Effect of adopting IAS 19 (Revised) on 2012 figures
Effect of adopting IAS 19 (Revised) on 2013 figures
Balance as at 30 June 2013 (restated)
74,791
(6,011)
1,525
70,305
142,891
(196)
142,695
94,970
(6,011)
(2,830)
1,525
56,561
144,215
149,628
(196)
(8,695)
140,737
135
38. CHANGES IN ACCOUNTING POLICIES (CONT’D)
(a) Adoption of IAS 19 (revised 2011) (cont’d)
(ii) The effect on profit or loss is as follows:
THE GROUP
2013
Rs.’000
Increase in administrative expenses
Decrease in income tax expense
Increase in profit for the year
1,820
1,820
(iii) The effect on the statement of other comprehensive income is as follows:
THE GROUP
2013
Rs.’000
Remeasurement of defined benefit obligations
Increase in deferred tax relating to remeasurement of defined benefit obligations
Decrease in other comprehensive income
(58,381)
8,695
(49,686)
(b) The following table summarises the adjustments made to the Group’s statements of financial position at
1 July 2012 and 30 June 2013, and its income statements, statements of comprehensive income and cash flows
for the year ended 30 June 2013 as result of the adoption of IAS 19 (revised 2011) and reclassification of leave
schemes from retirement benefit obligation to trade payables.
Statement of financial position
July 01, 2012
As
previously
reported
Rs.’000
Deferred income tax assets (Note 9)
Overall impact on total assets
Retirement benefit obligations (Note 17)
Trade and other payables (Note 19)
Provision
Bills discounted
Overall impact on total liabilities
Actuarial losses
Overall impact on total equity
32,628
Adjustments
Rs.’000
As restated
Rs.’000
196
196
32,824
74,791
1,214,993
563,066
416,221
(4,486)
(29,179)
35,188
416,221
(416,221)
1,523
177,507
(1,057)
(270)
(1,327)
70,305
1,185,814
35,188
979,287
(1,057)
177,237
30 June 2013
As
previously
reported
Rs.’000
Deferred income tax assets (Note 9)
Overall impact on total assets
Retirement benefit obligations (Note 17)
Trade and other payables (Note 19)
Provision
Bills discounted
Overall impact on total liabilities
Actuarial losses
Retained earnings
Overall impact on total equity
136
32,566
Adjustments
Rs.’000
As restated
Rs.’000
8,891
8,891
41,457
94,970
1,538,909
984,172
506,695
49,245
(29,151)
37,990
506,695
(506,695)
58,084
1,841,457
218,652
(49,655)
1,803
(1,341)
(49,193)
144,215
1,509,758
37,990
1,490,867
(49,655)
1,843,260
217,311
38. CHANGES IN ACCOUNTING POLICIES (CONT’D)
Income statement
Earnings before interest, tax, depreciation and amortisation
Overall impact in the income statement
Earnings per share (Rs’)
Overall impact on earnings per share (Rs’)
Statement of comprehensive income
Remeasurements of post retirement benefit obligations
Deferred tax on remeasurements of post retirement benefit
obligations
Overall impact on ‘other comprehensive income’
Statement of cash flows
Adjustments for:
- Retirement benefit obligations
Overall impact on cash and cash equivalents
For the year ended 30 June 2013
As
previously
reported
Adjustments As restated
Rs.’000
Rs.’000
Rs.’000
858,798
1,820
1,820
860,618
4.51
0.02
0.02
4.53
As
previously
reported
Rs.’000
Rs.’000
Rs.’000
-
(58,381)
(58,381)
-
8,695
(49,686)
8,695
As
previously
reported
Rs.’000
Rs.’000
Rs.’000
605,214
20,179
1,820
(1,820)
-
607,034
18,359
137
39. CHANGE IN PRESENTATION OF INCOME STATEMENT
The Group and the Company have changed the presentation of the income statement and comparative figures
have been restated accordingly to reflect the change in presentation, which will be applied consistently from one
period to the next. The change in presentation did not have any impact on the prior period results of the Group
and its subsidiaries.
(i) 2013 - As previously presented
Revenue
Cost of sales
Gross profit
Other operating income/(losses)
Fair value movement on outstanding forward exchange contracts
Administrative and selling expenses
Finance income
Finance costs
Net finance costs
Profit for the year
(i) 2013 - As currently presented
Revenue
Earnings before interest, tax, depreciation and amortisation
Finance income
Finance costs
Net finance costs
Profit for the year
138
THE
GROUP
Restated
Rs.’000
8,685,727
(7,022,280)
1,663,447
185,296
THE
COMPANY
Rs.’000
155,766
155,766
(261)
30,712
(1,218,045)
661,410
(65)
155,440
9,036
(63,412)
(54,376)
3,165
(6,090)
(2,925)
607,034
(91,177)
152,515
482
515,857
152,997
THE
GROUP
Restated
Rs.’000
THE
COMPANY
8,685,727
860,618
(199,208)
661,410
9,036
(63,412)
(54,376)
607,034
(91,177)
515,857
Rs.’000
155,766
155,440
155,440
3,165
(6,090)
(2,925)
152,515
482
152,997
40. FINANCIAL INSTRUMENTS
THE GROUP
Financial instruments by category
Assets as per statement of financial position
Derivative financial instruments
Trade and other receivables excluding prepayments
Cash and cash equivalents (excluding bank overdrafts)
Total
Loans and
receivables
Rs.’000
2,313,315
247,892
2,561,207
Liabilities as per statement of financial position
Borrowings (excluding finance lease liabilities)
Finance lease liabilities
Dividend payable
Total
Total
Finance lease liabilities
Dividend payable
Total
Loans and
receivables
Rs.’000
2,040,092
166,706
2,206,798
30 June 2014
Derivatives
used for
Available
hedging
for sale
Rs.’000
Rs.’000
Total
Rs.’000
4,861
4,861
6,712
6,712
6,712
4,861
2,313,315
247,892
2,572,780
Derivatives
used for
hedging
Rs.’000
Other
financial
liabilities at
amortised
cost
Rs.’000
Total
Rs.’000
42,534
42,534
1,780,567
125,017
1,697,321
127,259
3,730,164
1,780,567
125,017
42,534
1,697,321
127,259
3,772,698
30 June 2013 (Restated)
Derivatives
used for
Available
hedging
for sale
Rs.’000
Rs.’000
Total
Rs.’000
81,657
81,657
29,078
29,078
29,078
81,657
2,040,092
166,706
2,317,533
Derivatives
used for
hedging
Rs.’000
Other
financial
liabilities at
amortised
cost
Rs.’000
Total
Rs.’000
23,935
23,935
1,523,186
38,956
1,509,758
101,808
3,173,708
1,523,186
38,956
23,935
1,509,758
101,808
3,197,643
139
40. FINANCIAL INSTRUMENTS (CONT’D)
THE COMPANY
Financial instruments by category (cont’d)
Total
Dividend payable
Total
Total
Borrowings
Dividend payable
Total
140
Loans and
receivables
Rs.’000
156,893
3,972
160,865
30 June 2014
Available
for sale
Rs.’000
Total
Rs.’000
6,712
6,712
6,712
156,893
3,972
167,577
Other
financial
liabilities at
amortised
cost
Rs.’000
Total
Rs.’000
6
428,112
127,259
555,377
6
428,112
127,259
555,377
30 June 2013 (Restated)
Loans and
receivables
Total
Rs.’000
Rs.’000
117,774
461
118,235
117,774
461
118,235
Other
financial
liabilities at
amortised
cost
Rs.’000
Total
Rs.’000
28,004
385,789
101,808
515,601
28,004
385,789
101,808
515,601
141
NOTICE OF
ANNUAL MEETING
142
Notice is hereby given that the Annual Meeting (“the Meeting”) of the shareholders of
CIEL Textile Limited (“the Company’’) will be held on 17 December 2014 at 15.00 hours at the
Registered Office of the Company, 5th floor, Ebène Skies, rue de l’Institut, Ebène to transact
the following business in the manner required for passing Ordinary Resolutions:
AGENDA
1. To receive, consider and approve the Group’s and the Company’s audited Financial
Statements for the year ended 30 June 2014, including the annual report and the auditors’
report, in accordance with section 115(4) of the Companies Act 2001.
2. To appoint Mr. Jean-Pierre Dalais as Director of the Company.
3. To appoint Mr. Eric Dorchies as Director of the Company.
4. To authorise, in accordance with section 138(6) of the Companies Act 2001, Mr. Maurice
Dalais to continue to hold office as a Director until the next Annual Meeting of the
shareholders of the Company.
5-11. To re-elect, as Directors of the Company to hold office until the next Annual Meeting,
the following persons who offer themselves for re-election (as separate resolutions):
5. Mr. P. Arnaud Dalais
6. Mr. Antoine Delaporte
7. Mr. Henri de Simard de Pitray
8. Mr. Roger Espitalier Noël
9. Mr. J. Harold Mayer
10. Mr. Alain Rey
11. Mr. Eddy Yeung Kan Ching
12. To take note of the automatic re-appointment of Messrs. PricewaterhouseCoopers as
auditors in accordance with Section 200 of the Companies Act 2001 and to authorise the
Directors to fix their remuneration.
13. To ratify the remuneration paid to the auditors for the year ended 30 June 2014.
Company Secretary
31 October 2014
Notes:
(a) A shareholder of the Company entitled to attend and vote at the Meeting may appoint a proxy, whether a
member or not, to attend and vote in his/her stead. A proxy need not be a shareholder of the Company.
(b) Proxy Forms should be deposited at the Company’s Share Registry and Transfer Office, MCB Registry & Securities
Limited, 2nd Floor, MCB Centre, Sir William Newton Street, Port Louis, not less than 24 hours before the Meeting,
and in default, the instrument of proxy shall not be treated as valid.
(c) Postal votes shall reach the Company’s Share Registry and Transfer Office, MCB Registry & Securities Limited,
2nd Floor, MCB Centre, Sir William Newton Street, Port Louis, not less than 48 hours before the Meeting, and in
default, the postal vote shall not be treated as valid.
(d) A proxy form and postal vote are included in this annual report and are also available at the Registered Office of
the Company.
(e) For the purpose of this Meeting, the shareholders who are entitled to receive notice and attend the Meeting shall
be those shareholders whose names are registered in the share register of the Company as at 19 November 2014.
(f) The minutes of the Annual Meeting held on 12 December 2013 are available for consultation by the shareholders
of the Company during normal trading office hours, at the Registered Office of the Company.
(g) The profiles and categories of Directors proposed for appointment and re-election are set out in the Corporate
Governance Report.
143
144
PROXY FORM
I/We
of
being shareholder(s) of CIEL Textile Limited hereby appoint
of
or, failing him/her
of
or, failing him/her the Chairman of the Meeting, as my/our proxy to represent me/us and vote for me/us and on my/our
behalf at the Annual Meeting of the shareholders of the Company to be held on 17 December 2014 at 15.00 hours at the
Company’s Registered Office, 5th Floor, Ebène Skies, rue de l’Institut, Ebène and at any adjournment thereof.
I/We direct my/our proxy to vote in the following manner (Please vote with a tick):
RESOLUTIONS
FOR
1.
To receive, consider and approve the Group’s and the Company’s audited Financial
Statements for the year ended 30 June 2014, including the annual report and the
auditors’ report, in accordance with section 115(4) of the Companies Act 2001.
2.
To appoint Mr. Jean-Pierre Dalais as Director of the Company.
3.
To appoint Mr. Eric Dorchies as Director of the Company
4.
To authorise, in accordance with section 138(6) of the Companies Act 2001,
Mr. Maurice Dalais to continue to hold office as a Director until the next Annual
Meeting of the shareholders of the Company.
AGAINST ABSTAIN
5-11 To re-elect, as Directors of the Company to hold office until the next Annual
Meeting, the following persons who offer themselves for re-election
(as separate resolutions):
10. Mr. Alain Rey
12.
To take note of the automatic re-appointment of Messrs. PricewaterhouseCoopers
as auditors in accordance with Section 200 of the Companies Act 2001 and to
authorise the Directors to fix their remuneration.
13.
To ratify the remuneration paid to the auditors for the year ended 30 June 2014.
Signed this
day of 2014.
Signature/s
Notes:
1. Any shareholder entitled to attend and vote at the Meeting may appoint a proxy, whether a member or not, to attend
and vote in his/her stead.
2. If the instrument appointing the proxy is returned without any indication as how the proxy shall vote on any particular
resolution, the proxy will exercise his/her discretion as to whether, and if so, how he/she votes.
3. Proxy forms should be deposited at the Company’s Share Registry and Transfer Office, MCB Registry & Securities
Limited, 2nd Floor, MCB Centre, Sir William Newton Street, Port Louis, not less than 24 hours before the Meeting, and
in default, the instrument of proxy shall not be treated as valid.
145
146
POSTAL VOTE
I/We
of
being shareholders of CIEL Textile Limited (“the Company’’), do hereby cast my/our vote by post, by virtue of section
19.10 of the constitution of the Company, for the Annual Meeting of the shareholders of the Company to be held on
17 December 2014 at 15.00 hours at the Company’s Registered Office, 5th Floor, Ebène Skies, rue de l’Institut, Ebène
and at any adjournment thereof.
I/We desire my/our vote to be cast on the Resolutions as follows (please vote with a tick):
RESOLUTIONS
FOR
1.
To receive, consider and approve the Group’s and the Company’s audited
Financial Statements for the year ended 30 June 2014, including the annual
report and the auditors’ report, in accordance with section 115(4) of the
Companies Act 2001.
2.
To appoint Mr. Jean-Pierre Dalais as Director of the Company.
3.
To appoint Mr. Eric Dorchies as Director of the Company
4.
To authorise, in accordance with section 138(6) of the Companies Act 2001,
Mr. Maurice Dalais to continue to hold office as a Director until the next Annual
Meeting of the shareholders of the Company.
AGAINST ABSTAIN
5-11 To re-elect, as Directors of the Company to hold office until the next Annual
Meeting, the following persons who offer themselves for re-election (as
separate resolutions):
10. Mr. Alain Rey
12.
To take note of the automatic re-appointment of Messrs. PricewaterhouseCoopers
as auditors in accordance with Section 200 of the Companies Act 2001 and to
authorise the Directors to fix their remuneration.
13.
To ratify the remuneration paid to the auditors for the year ended 30 June 2014.
Signed this
day of 2014.
Signature/s
Note:
1. Duly signed postal votes shall reach the Company’s Share Registry and Transfer Office, MCB Registry & Securities
Limited, 2nd Floor, MCB Centre, Sir William Newton Street, Port Louis, not less than 48 hours before the Meeting, and
in default, the postal vote shall not be treated as valid.
147
148

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Transcription

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