managing director - harel mallac group...limited on 29 may 2013. other directorships (listed...

ANNUAL REPORT 2016 0101ANNUAL REPORT 2016

Dear Shareholder,

The Board of Directors of Bychemex Limited is pleased to present the Annual Report for the year ended 31 December 2016, the contents of which are listed below.

This report was approved by the Board of Directors at its meeting held on 8 May 2017.

Antoine L. HarelChairman

Shemboosingh CheekhooreeManaging Director

060708

02 1503 1604

05

17

18what’sinside

visionmissionguiding principles

company profilebusiness segmentscorporate information

chairman’s statement

managing director’s report

board of directors 21 statement of financial position

senior managementprofile

corporate governancereport

222324

statement of profit or loss and other comprehensive income

statement of changes in equity

notes to the financial statementssecretary’s certificate

statement of directors’ responsibilities statement of compliance

independent auditors’ report

statutory disclosures

25statement of cash flows

BYCHEMEX LIMITED02

To be a regional leader in textile chemicals and auxiliaries.

vision

missionTo provide the Mauritian textile industry with a cost effective, innovative textile auxiliaries, while working towards shareholders and employees’ expectations.

• Agility and Determination in achieving• Care and Engagement in what we do• Trust and Responsibility in our relationships

guiding principles

BYCHEMEX LIMITED02

ANNUAL REPORT 2016 03

company profile

corporateinformation

SECRETARYHM Secretaries Ltd.18 Edith Cavell StreetPort Louis

AUDITORSBDO & Co

BANKERSABC Banking Corporation LtdThe Mauritius Commercial Bank Ltd

LEGAL ADVISERSIvan Collendavelloo ChambersÉtude Georges Robert

NOTARYMr Didier MaigrotNotary Public

REGISTRYHarel Mallac Corporate Services Ltd18 Edith Cavell StreetPort Louis

REGISTERED OFFICEChaussée TromelinFort GeorgePort Louis

BUSINESS REGISTRATION NUMBERC07006253

Set up in 1987, Bychemex has established itself as a key and reliable supplier of speciality high-end chemicals and auxiliaries for the textile industry in Mauritius. Bychemex is listed on the Development and Enterprise Market (DEM) since 2007 and is a subsidiary of Harel Mallac & Co. Ltd.

Bychemex represents worldwide recognised principals which includes CHT (Chemische Fabrik Tubingen) in Germany, Evonik South-Africa, Formosa Group and Arabian Alkali.

business segments

DetergentsWetting Agents

Anticrease Agents Sequestrants Dispersants Softeners

Hydrogen Peroxide Brine Solution

Dyestuffs

Caustic Solutions

Textile Auxiliaries

Bleaching and Dyeing

Chemicals

Scouring Chemicals


BYCHEMEX LIMITED04

chairman’s statement

Dear Shareholder,

The Company maintained its revenue despite a 8.6% contraction in exports of the textile and apparel sectors. The impact of Brexit and its repercussions across the whole industry further exacerbated the woes of the operators. Management focussed on cost reduction and implemented strategies to retain market share. The Company ended the year on a positive bottom line. A dividend of Re 0.08 per share was declared in December 2016.

Acknowledgements

The Board would like to thank the Management and the staff for their dedication and hard work. The Board renews its confidence in the Management to improve the Company’s profitability and meet its goals next year.


The Managementfocused on market

share and costreduction to ensure that

the Companyremained profitable.


managing director’s report

The Company remained profitable despite continued contraction of the textile and apparel sector (2.8% last year and 3% in 2016). Revenue for 2016 reached Rs 59.2M, from Rs 58.9M during the previous period. Lower operating costs (down by 5%) contributed to keeping the Company profitable.

The continued relocation of the above sectors to more competitive manufacturing bases in the region requires the Company to expand its market base into the region.

Management will continue to improve operational efficiencies and provide cost-effective and innovative chemicals to its customers, whilst keeping a leaner chemical footprint.

The Company’s long association with CHT-Bezema will be further strengthened. A range of new products has been introduced during the second semester of 2016. They are expected to help us provide a more differentiated range of products to our customers during the course of 2017.


BYCHEMEX LIMITED06

board of directorsAntoine L. Harel (59)Chairman (Non-Executive)

Antoine L. Harel is a Fellow Member of the Institute of Chartered Accountants in England and Wales and holds a BA (Hons) degree in Accounting and Computing. He joined Harel Mallac & Co. Ltd in 1987. In 1997, he was appointed Group CEO and has been Chairman of the Board since April 2005. He was President of the Mauritius Chamber of Commerce and Industry in 1992/1993. He was appointed to the Board of Directors of Bychemex Limited on 30 November 1999.

Other Directorships (listed Companies):Harel Mallac & Co. Ltd (Chairman), Compagnie des Magasins Populaires Limitée (Chairman), The Mauritius Chemical and Fertilizer Industry Limited (Chairman), Chemco Limited (Chairman) and Les Gaz Industriels Ltd (Chairman).

Charles Harel (49)Non-Executive Director

Charles Harel holds an MBA from the University of Birmingham and a National Diploma in Management and Finance from Cape Technikon, South Africa. He joined the Harel Mallac Group in 1993 and was nominated CEO of the Group effective January 2014. He was appointed to the Board of Directors of Bychemex Limited on 29 May 2013.

Other Directorships (listed companies):Harel Mallac & Co. Ltd, Compagnie des Magasins Populaires Limitée, The Mauritius Chemical and Fertilizer Industry Limited and Chemco Limited.

Shemboosingh Cheekhooree (55)Executive Director

Shemboosingh Cheekhooree holds a bachelor’s degree in Chemical Engineering from the North East London Polytechnic, United Kingdom. He has over 25 years’ experience in the textile and apparel sector and has served in various senior management positions during the last 15 years in the textile industry, in Mauritius and in India, before joining the Harel Mallac Group in 2012 as Managing Director of Harel Mallac Export Ltd, a company forming part of the Chemicals and Fertilisers Sub-Division of the Harel Mallac Group. In October 2013, he was appointed General Manager of the MCFI Group of Companies. Since October 2014, he is the Managing Director of Harel Mallac Export Ltd, Harel Mallac (Tanzania) Limited and the MCFI Group of Companies. He was appointed to the Board of Directors of Bychemex Limited on 31 October 2014.

Other Directorships (listed Companies):Chemco Limited and The Mauritius Chemical and Fertilizer Industry Limited.

Suie Sen Hock Meen Ah Kine (55)Executive Director

Suie Sen Hock Meen Ah Kine is an Associate Member of the Institute of Chartered Accountants in England and Wales and holder of a BSc (Hons) Management Science from the University of Ottawa. He joined Harel Mallac in 2005 as Financial Controller of Harel Mallac Bureautique Ltd and was appointed Group Financial Controller in February 2007. Since 15 November 2015, he holds the position of Finance Director of the Chemicals and Fertilisers Sub-Division of the Harel Mallac Group. He was appointed to the Board of Directors of Bychemex Limited on 6 November 2015.


Guy Harel (68)Independent Director

Guy Harel joined the Harel Mallac Group in 1981 as Managing Director of Fapcom Ltd. In 1983, he created Henkel Chemicals (Mauritius) Limited and took over as Managing Director in 1996. Following the acquisition of the company in 2007 by the Harel Mallac Group, he became the Managing Director of Archemics Ltd and held the position until 31 December 2012. He was appointed to the Board of Bychemex Limited on 29 May 2013.

Other Directorships (listed companies):Chemco Limited and The Mauritius Chemical and Fertilizer Industry Limited.


Vincent Labat (54)Independent Director

Vincent Labat graduated as a Chemical Engineer. From 1996 to 2009, he was the Managing Director of the listed company, Les Gaz Industriels Ltd. In 2010, he joined Medine Ltd as Project Development Executive. In July the following year, he was appointed as Managing Director of the Agriculture Cluster. He was appointed to the Board of Directors of Bychemex Limited on 12 August 2010.


senior management profile

Ajay LuximunOperations Manager

Ajay Luximun holds a degree in Business Studies and a master’s in International Business Management. He joined Chemco Limited in May 1993 and has held various positions within the Company. He was appointed Operations Manager of Bychemex Limited in January 2015.

Suie Sen Hock Meen Ah KineFinance Director

Suie Sen Hock Meen Ah Kine is an Associate Member of the Institute of Chartered Accountants in England and Wales and holder of a BSc (Hons) Management Science from the University of Ottawa. He joined Harel Mallac in 2005 as Financial Controller of Harel Mallac Bureautique Ltd and was appointed Group Financial Controller in February 2007. Since 15 November 2015, he is the Finance Director of the Chemicals and Fertilisers Sub-Division of Harel Mallac Group.

Michel Rivalland G.O.S.K. (63)Non-Executive Director

Michel Rivalland G.O.S.K. is a Fellow Member of the Chartered Association of Certified Accountants. He joined the Board of Directors of The Mauritius Chemical and Fertilizer Industry Limited on 1 June 2006 and served as Managing Director from October 2006 to 30 June 2009. He is currently an Executive Director of Harel Mallac & Co. Ltd. He was appointed to the Board of Directors of Bychemex Limited on 21 December 2006.

Other Directorships (listed companies):Compagnie des Magasins Populaires Limitée, Harel Mallac & Co. Ltd, Chemco Limited and The Mauritius Chemical and Fertilizer Industry Limited.


Shemboosingh Cheekhooree holds a degree in Chemical Engineering from the North East London Polytechnic, United Kingdom. He joined the Harel Mallac Group in 2012 as Managing Director of Harel Mallac Export Ltd, a company forming part of the Chemicals and Fertilisers Sub-Division of Harel Mallac Group after spending 25 years at senior positions within the textile industry. He was appointed Managing Director of Bychemex Limited in October 2014.

BYCHEMEX LIMITED08

Bychemex Limited (the ‘Company’) is committed to the highest standards of business integrity, transparency and professionalism in all its activities and ensures that the activities within the Company are managed ethically and responsibly to enhance business value for all stakeholders.

the board of directorsThe Board endeavours to exercise leadership, entrepreneurship, integrity and judgement in directing the Company, so as to achieve continuing prosperity for the organisation while embracing both performance and compliance.

The Board also ensures that the activities of the Company comply with all legal and regulatory requirements as well as with its constitution from which the Board derives its authority to act.

The Board inter alia oversees the development and implementation of the Company’s corporate strategy and reviews performance objectives. It provides for succession plans for key individuals, ensures effective communication with the Company’s stakeholders, promotes the Company’s Code of Ethics, and oversees financial and capital management. As such, it reviews and approves quarterly and annual financial reports, monitors financial results and approves major capital expenditure, acquisitions, divestitures and material commitments. The Board finally oversees compliance and risk management.

At 31 December 2016, the Board of Directors consisted of seven members, of whom two are Independent Directors and two are Executive Directors.

Non-Executive Directors have free access to members of the senior management team. All Directors have access to the Company Secretary. The Directors are elected as per the provisions of the Company’s constitution that do not provide for a definite term of office.

With a view to enhancing the Board’s effectiveness, a Board performance review is carried out yearly to assess the Directors’ appreciation of the Board’s performance, its procedures and practices. The results of the assessment are examined by the Corporate Governance Committee. This Committee makes its recommendations to the Board on any required remedial action.

Since the Company has a management contract with The Mauritius Chemical and Fertilizer Industry Limited (MCFI), the Board has delegated authority to MCFI’s Audit Committee and Corporate Governance Committee to provide assistance in discharging its duties and responsibilities. This is done through a more comprehensive evaluation of specific issues that are the remit of such committees. The Board regularly receives the reports and recommendations of these committees and takes appropriate action.

The Board entrusts the day-to-day management of the Company to MCFI through its Managing Director, who ensures the smooth running of the organisation. The composition of the Board of Directors and other directorships held by the Directors in other listed companies are given on pages 6 and 7.

board meetingsThe Board meets regularly during the year. For the period under review, the Board met five times. Board meetings are conducted in accordance with the Company’s constitution and the Companies Act. Board meetings are organised in such a way as to allow Directors to receive all relevant information critical to their understanding of the business to be conducted at the Board meeting, and therefore to participate fully in the decision-making process. The Board may invite management or external consultants to attend Board meetings whenever required.

responsibilities entrusted to MCFI’s corporate governance committeeThe Board has entrusted to MCFI’s Corporate Governance Committee the key areas that are the remit of a nomination and remuneration committee. The Committee’s main responsibilities include establishing a formal and transparent procedure for developing policy on senior management remuneration. The Committee also fixes the fees of the Company’s non-executive and independent non-executive Directors. It oversees the process regarding recommendation of potential candidates as Directors, ensures that proposed Directors are not disqualified from holding that position, and monitors the balance and effectiveness of the Board. The Committee met three times in 2016.




attendance at board meetings held in 2016

Directors AttendanceAntoine L. Harel 5/5

Suie Sen Hock Meen Ahkine 5/5

Shemboosingh Cheekhooree 5/5

Charles Harel 5/5

Guy Harel 5/5

Vincent Labat 4/5

Michel Rivalland G.O.S.K. 5/5

risk managementThe Board regularly addresses and evaluates physical, HR, IT, business, financial, reputational as well as regulatory and compliance risks. In the course of 2016, the internal audit function examined and evaluated the adequacy and effectiveness of control systems in place. Reports were subsequently produced and submitted to the Audit Committee, which, when applicable, made relevant recommendations to the Board.

In 2010, a Risk Management Framework for the Company was adopted followed by the implementation of a continuous and dynamic system of risk assessment through compliance checks and discussions with the management for enhanced risk mitigation strategies. Some of the major risk areas entail:

physical risks

Among the physical risks identified are unavoidable events such as riots, cyclones and other natural calamities. Mitigating actions such as the adoption of cyclone and fire procedures, subscription to a relevant insurance cover, and the identification of a business continuity plan and disaster recovery plan have been taken.

To limit the occurrence of on-site accidents, health and safety as well as security procedures have been implemented. The Company also draws upon the expertise of both an Occupational Physician Consultant and a full-time Health and Safety Officer.

business (market) risks

As a result of a continued contraction in the Mauritian textile sector and the relocation of textile companies, the business environment of Bychemex Limited has become more competitive and difficult.

human resources risks

Loss of key personnel has been identified as a major risk factor. In view of mitigating this risk, retention policies have been adopted as well as a formal performance assessment and reward system implemented within the Company. Furthermore, a Code of Ethics has been adopted, so as to limit reputational risks. Health surveillance is performed at regular intervals on employees in high risks jobs in line with the Company’s Health and Safety policy.

responsibilities entrusted to MCFI’s audit committeeThe Board has entrusted to MCFI’s Audit Committee the key areas that are the remit of an Audit Committee as detailed in the formal terms of reference approved by the Board. The Committee thus assists the Board in discharging its duties relating to the safeguarding of assets, the operation of adequate systems and control processes, and the preparation of accurate financial reports and statements, in compliance with all applicable legal requirements and accounting standards. The Committee also addresses issues relating to risk management and provides a forum for discussing business risks and control issues, and formulates relevant recommendations for consideration by the Board. During the period under review, the Committee met four times.

BYCHEMEX LIMITED10

risk management (cont’d)technology risks

In order to mitigate the risk of an IT crash or major breakdown, back-up and restriction procedures have been set up withinthe Company.

internal control

Internal control is a process designed to provide reasonable assurance regarding the achievement of organisational objectives with respect to:

• effectiveness and efficiency of operations;• safeguarding of assets and data of the organisation;• reliability of financial and other reporting;• prevention of fraud and irregularities;• acceptance and management of risk;• conformity with the codes of practice and ethics adopted by the organisation;• compliance with applicable laws and regulations; and• supporting business sustainability under normal as well as adverse operating conditions.

Internal Control is applicable to and is built into various business processes so as to cover all significant enterprise areas.

During the year, one internal control review was performed by Internal Audit.

The Board has set appropriate policies to ensure that the above control measures are implemented.

internal audit

Internal Audit is an objective assurance function reporting to the Board of Directors and Management. The Internal Audit function is performed by the Harel Mallac Group’s Internal Auditor.

Internal Audit provides assurance as to the adequacy and effectiveness of the risk management and internal control framework of an organisation. Internal Audit assists the Board and Management to maintain and improve the process by which risks are identified and managed, and helps the Board discharge its responsibilities to maintain and strengthen the internal control framework.

The Internal Auditor has examined the current control systems to check their suitability and to ensure that they are being adhered to. The Internal Auditor conducts its assignments based on a yearly plan which is validated by the Audit Committee and has unrestricted access to the Company’s records, Management and employees. Systems reviewed in 2016 at Company level include sales, debtors and cash cycles, fixed assets cycles, procurement and expenses as well as the stock cycle and cover all significant areas of the Company’s internal control.

In 2016, the Internal Auditor has regularly submitted to the Audit Committee reports for discussion and follow-up of the implementation of recommended actions.

group structureThe Directors recognise that the parent entity is Harel Mallac & Co. Ltd and that the ultimate parent entity is Société Pronema. The Directors common to the aforesaid entities are Mr Antoine L. Harel who is gérant of Société Pronema and Director of Harel Mallac & Co. Ltd and Messrs Charles Harel and Michel Rivalland G.O.S.K. who sit on the Board of Directors of Harel Mallac & Co. Ltd.

shareholders holding more than 5 percent of the companyShareholders directly or indirectly interested in 5 percent or more of the ordinary share capital of the Company are detailed on page 15.



share price index from January 2015 to December 2016

directors’ interest in sharesThe direct and indirect interests of Directors in the ordinary shares of the Company are to be found on page 15.

directors’ dealings in shares of the companyThe Directors are aware of Appendix 6 of the Listing Rules of the Stock Exchange of Mauritius Ltd which provides for restrictions on dealings during a closed period as well as the provisions of the Companies Act 2001 on disclosure and restrictions on share dealings by Directors. All the disclosures made by the Directors are entered into an Interest Register.

During the year under review, none of the Directors bought or sold any of the Company’s shares.

Year Dividend per share Dividend Cover Dividend Yield(Rs) (Times) (%)

2012 0.5 0.6 3.6

2013 0.6 0.4 5.6

2014 0.7 0.2 5.8

2015 0.1 0.1 1.5

2016 0.08 0.3 2.0

dividend policyDividends are distributed after considering the Company’s performance and profitability, gearing, investment needs, capital expenditure requirements and growth opportunities.


Bychemex Share Price v/s Demex from January 2015 to December 2016

170

180

190

200

210

220

230

Bychemex Demex

0

5

10

15

20

25

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15

Jul-15

Aug-15

Sep-15

Oct-15

Nov-15

Dec-15

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Jun-16

Jul-16

Aug-16

Sep-16

Oct-16

Nov-16

Dec-16

Byc

hem

ex S

hare

Pri

ce (R

s)

DE

ME

X

Months

BYCHEMEX LIMITED12

related party transactionsRelated party transactions are detailed on pages 48 and 49.

senior management profileThe profile of the senior management members is given on page 7.

company’s constitutionThe constitution of the Company does not provide any ownership restrictions or pre-emption rights. It is in agreement with the Companies Act 2001 and the DEM rules, and does not contain any material clause that needs to be disclosed.

shareholders’ agreement affecting the governance of the company by the boardThe Company is not aware of any such agreement during the period under review.

third party management agreementThe Company has a management agreement with The Mauritius Chemical and Fertilizer Industry Limited for management support services including but not limited to the financial, accounting, legal, internal audit and human resources fields. The agreement is renewable on a yearly basis.

directors’ feesDirectors are paid Directors’ fees with the exception of the Executive Directors and one of the Non-Executive Directors.

directors’ remunerationDirectors’ remuneration is given on page 15. It has been disclosed globally due to the sensitivity of the information.

remuneration policyThe Company’s remuneration policy recommends that the Company provides competitive rewards for its senior management staff, taking into account the Company’s performance and external market data from independent sources, in particular, where available, salary levels for similar positions in comparable companies. The remuneration package consists of base salary, fringe benefits and an annual individual performance bonus. The remuneration package is determined by the Board of Directors upon recommendations of the Corporate Governance Committee.

employee share option planNo employee share option plan is available within the Company.

code of ethicsThe Company abides to the Code of Ethics of Harel Mallac Group.



summary of shareholding category as at 31 March 2017Category of Shareholders Number of Shareholders Number of Shares Owned % Holding

Individual 557 1,161,879 23.24

Insurance and assurance companies 2 267,140 5.34Pension and provident funds 4 379,939 7.60Investment and trust companies 4 171,506 3.43Other corporate bodies 48 3,019,536 60.39Total 615 5,000,000 100.00

shareholder information Forthcoming Annual Meeting

A proxy form is enclosed for those shareholders unable to attend. Shareholders are requested to bring their identity cards or passports to the meeting, as these are required for registration.

Schedule of Events

Publication of condensed audited results for previous year March 2017

Annual Meeting May/June 2017

Publication of condensed results for the 1st quarter May 2017

Publication of condensed results for the 2nd quarter August 2017

Publication of condensed results for the 3rd quarter November 2017

Dividend declaration and payment December 2017/January 2018

Shareholders’ Practical Guide

Issues Action

Change of address Contact the Company’s secretariat

If shares are deposited with CDS Contact the personal broker

Change of name Contact the Company’s secretariat

Acquisition or disposal of shares Contact the personal broker

Lost share certificate Contact the Company’s secretariat

Direct dividend credit Forward the relevant form to the Company’s secretariat

profile of company’s shareholders as at 31 March 2017

Size of Shareholding Number of Shareholders Number of Shares Owned % Holding1-500 282 38,573 0.77501-1,000 111 95,596 1.911,001-5,000 172 356,617 7.135,001-10,000 14 99,098 1.9810,001-50,000 24 498,411 9.9750,001-100,000 3 197,363 3.95100,001-250,000 7 1,171,420 23.43250,001-500,000 1 297,439 5.95Over 500,000 1 2,245,483 44.91Total 615 5,000,000 100.00


BYCHEMEX LIMITED14


social, health and safetyMaintaining a high standard of Health & Safety at work is a key objective for the Company in ensuring the welfare of its employees. Thus, the Company strives to continuously improve the workplace environment whilst driving injuries, occupational illnesses and operational incidents as close to zero as possible. It has in place on-going hazard and risk assessment processes, control systems and preventive measures against any occupational diseases in compliance with OSHA 2005.

In 2017, the work environment will be further enhanced by instigating a sustainable change in employees’ safety-oriented behaviours at the workplace.

The Company also ensures that its recruitment and promotion policies are fair and that procedures adopted are both transparent as well as competency and merit based. We also promote honest and transparent business practices.

corporate social responsibilityAs a member of the Harel Mallac Group, Bychemex Limited fully supports the causes embraced by the Fondation Harel Mallac (FHM), which focuses on improving the education and living conditions of underprivileged children, in particular in the localities where the Group companies operate, since its inception in 2009.

In 2016, the FHM has partnered with four major non-governmental organisations working with children: SOS Children’s Village in Bambous, Ecole Sainte Famille in Roche Bois, APEIM School in Port Louis, and Collège Technique Saint Gabriel in Sainte Croix. This financial support was complemented by regular employee volunteering activities ranging from Music and Arts days to the Christmas “Wish in a Box” celebration.

The FHM has also supported sports-related projects led by the Trust Fund for Excellence in Sports and the Northern Pirates Sports Club.


2016Rs’000

2015Rs’000

Executive DirectorsNon-executive Directors

-613

-426

Total 613 426

directors’ interests in sharesThe interests of the Directors in the shares of the Company as at 31 December 2016 were:

DirectorsDirect

InterestIndirectInterest

Antoine L. Harel - 112,775Charles Harel - 110,191

The other Directors have no shares either directly or indirectly in the Company.

contracts of significanceThere was no contract of significance to which the Company has been a party and in which a Director of the Company was materially interested, be it directly or indirectly.

third party management agreementThe Company has a management contract with The Mauritius Chemical and Fertilizer Industry Limited.

principal activitiesThe principal activities of the Company during the year have remained unchanged and consist of the trading of specialised chemical products for the textile industry.

directorsThe Directors of the Company as at 31 December 2016 are listed on pages 6 and 7.

directors’ service contractsThere are no service contracts between the Company and its Directors.

directors’ remuneration and benefitsRemuneration and benefits received, or due from the Company were:


Shareholders Interest %

Harel Mallac & Co. Ltd. 44.91%

The State Investment Corporation 9.53%

National Pension Fund 5.95%

shareholdersAt 31 December 2016, the following shareholders were directly or indirectly interested in more than 5 percent of the Company’s share capital.

BYCHEMEX LIMITED16

corporate social responsibility

Donations 2016 2015

Rs’000 Rs’000

Political - -

Other - -

Corporate Social Responsibility 15 35

auditors’ feesThe fees payable to the auditors for the audit and other services were:

2016 2015

Rs’000 Rs’000

Auditors’ fees payable:-BDO & Co. 138 130

Fees paid for other services provided by:-BDO & Co. - -


secretary’scertificate

We certify that, to the best of our knowledge and belief, the Company has filed with the Registrar of Companies all such returns as are required of the Company under the Companies Act 2001.

HM Secretaries LtdSecretary

20 March 2017


statement of compliance

Directors acknowledge their responsibilities for:

1. Adequate accounting records and maintenance of effective internal control systems;2. The preparation of financial statements which fairly present the state of affairs of the Company as

at the end of the financial year, the results of its operations, and cash flow for that year and which comply with International Financial Reporting Standards (IFRS); and

3. The selection of appropriate accounting policies supported by reasonable and prudent judgements.

The External Auditors are responsible for reporting on whether the Company’s financial statements are fairly presented.

The Directors report that:

1. Adequate accounting records and an effective system of internal controls and risk management have been maintained;

2. Appropriate accounting policies supported by reasonable and prudent judgements and estimates have been used consistently;

3. International Financial Reporting Standards have been adhered to. Any departure in the interest of fair presentation has been disclosed, explained and quantified; and

4. The Code of Corporate Governance has been adhered to. Reasons have been provided where there has not been compliance.

Signed on behalf of the Board of Directors on 20 March 2017.



NAME OF PIE: BYCHEMEX LIMITED

REPORTING PERIOD: Year ended 31 December 2016

We, the Directors of Bychemex Limited, confirm that to the best of our knowledge, the PIE has not complied with Section 2.8.2 of the Code of Corporate Governance. The reasons for non-compliance are detailed on page 12 of the Corporate Governance Report.


20 March 2017


statement of compliance

statement of directors’ responsibilities

To the Shareholders of Bychemex Limitedindependent auditors’ report

BYCHEMEX LIMITED18

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

We have audited the financial statements of Bychemex Limited (the “Company”), on pages 21 to 50 which comprise the statement of financial position as at 31 December 2016, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the financial statements on pages 21 to 50 give a true and fair view of the financial position of the Company as at 31 December 2016, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the Companies Act 2001. Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Mauritius, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1 Valuation of Inventory Key Audit Matter Inventory is carried in the financial statements at the lower of cost and net realisable value. The net carrying value of inventory at 31 December 2016 was Rs 10,107,561. Sales in

the industry can be extremely volatile with consumer demand changing significantly based on current trends. As a result there is a risk that the carrying value of inventory exceeds its net realisable value.

Related Disclosures Refer to note 2.3 (accounting policy note) and note 8 (financial statement disclosures). Audit Response Our audit procedures were designed to challenge the adequacy of the Company’s provisions against inventory and included: • Examining the Company’s historical trading patterns of

inventory sold at full price and inventory sold below full price, together with the related margins achieved for each product lines in order to gain comfort that stock has not been sold below cost; and

• Assessing the appropriateness of the provision percentages applied by challenging the assumptions made by the Directors on the extent to which older season inventory can be sold.

We have also considered the adequacy of the Company’s disclosures in respect of the levels of provisions against inventory.

2 Valuation of buildings on leasehold landKey Audit Matter The Company measures its buildings on leasehold land at fair value which is a significant accounting estimate and involves a range of judgemental assumptions and the use of external valuation expertise. Property, plant and equipment is valued at Rs 6,153,316 as at 31 December 2016. All Property, plant and equipment are measured initially at cost, with land and buildings subsequently measured at fair value. Valuations are performed by an independent valuer, Professional Valuers Co Ltd, Chartered Valuation Surveyors and the valuation resulted in a net increase in the value of the buildings by Rs 2,322,630. Related Disclosures Refer to the critical accounting estimates and judgements in note 4.1, and in note 5 of the accompanying financial statements. Audit Response We have reviewed the valuation report issued by Professional Valuers Co Ltd and have challenged the key assumptions used such as the estimated useful lives and the valuation techniques.

for the year ended 31 December 2016

To the shareholders of Bychemex Limited

independent auditors’ report


We confirmed that the adjustments arising from the valuation were correctly accounted for and disclosed in the financial statements. The results of these procedures did not identify any issues with the valuation of land and buildings in the financial statements. Other information Directors are responsible for the other information. The other information comprises the Corporate Governance Report, Board of Directors, Senior Management Profile, Statutory Disclosures, Statement of Directors’ Responsibilities and Statement of Compliance (but does not include the financial statements and our auditor’s report thereon), which we obtained prior to the date of this auditor’s report, and the Vision, Mission and guiding principles, Company Profile, Corporate Information, Business Segments, Chairman’s and Managing Director’s Report (together referred as the ‘other statements’), which is expected to be made available to us after that date. Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the Corporate Governance Report, Board of Directors, Senior Management Profile, Statutory Disclosures, Statement of Directors’ Responsibilities and Statement of Compliance, that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

When we read the ‘other statements’ which will be made available to us after that date, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Directors and Those Charged with Governance for the Financial Statements The directors are responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards and in compliance with the requirements of the Companies Act 2001, and for such internal control as the directors determine is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue

as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by directors.

• Conclude on the appropriateness of directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements


2 Valuation of buildings on leasehold land (cont’d)

Audit Response (cont’d)


To the Shareholders of Bychemex Limitedindependent auditors’ report

BYCHEMEX LIMITED20

or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements Companies Act 2001 We have no relationship with, or interests in, the Company, other than in our capacity as auditors and dealings in the ordinary course of business.

We have obtained all information and explanations we have required. In our opinion, proper accounting records have been kept by the Company as far as it appears from our examination of those records.

Financial Reporting Act 2004 The Directors are responsible for preparing the corporate governance report. Our responsibility is to report the extent of compliance with the Code of Corporate Governance as disclosed in the annual report and on whether the disclosure is consistent with the requirements of the Code. In our opinion, the disclosure in the annual report is consistent with the requirements of the Code.

BDO & CoChartered Accountants

Rookaya Ghanty, FCCALicensed by FRC

Port Louis,Mauritius.

20 March 2017



Auditor’s Responsibilities for the Audit of the Financial Statements (cont’d)


Notes 2016 2015ASSETS Rs Rs

Non-current assetsProperty, plant and equipment 5 6,153,316 4,702,805 Intangible assets 6 213,480 335,259 Investment in financial assets 7 100,000 100,000

6,466,796 5,138,064 Current assetsInventories 8 10,107,561 9,526,906 Trade and other receivables 9 19,799,207 19,216,094 Cash and cash equivalents 26(b) 8,179,641 10,183,890

38,086,409 38,926,890

Total assets 44,553,205 44,064,954

EQUITY AND LIABILITIESCapital and reservesShare capital 10 5,000,000 5,000,000 Revaluation reserves 1,974,237 - Actuarial reserves (220,542) (374,243)Retained earnings 24,413,553 24,697,187 Owners’ interest 31,167,248 29,322,944

LIABILITIESNon-current liabilitiesObligations under finance lease 12 433,640 577,679 Deferred tax liabilities 13 589,534 288,930 Retirement benefit obligations 14 1,303,394 1,330,032

2,326,568 2,196,641 Current liabilitiesTrade and other payables 15 10,495,041 11,805,316 Current tax liabilities 16 20,310 106,391 Obligations under finance lease 12 144,038 133,662 Dividends 17 400,000 500,000

11,059,389 12,545,369

Total liabilities 13,385,957 14,742,010

Total equity and liabilities 44,553,205 44,064,954

These financial statements have been approved for issue by the Board of Directors on 20 March 2017.

The notes on pages 25 to 50 form an integral part of these financial statements.Auditors’ report on pages 18 to 20.



statement of financial positionat 31 December 2016

BYCHEMEX LIMITED22

The notes on pages 25 to 50 form an integral part of these financial statements. Auditors’ report on pages 18 to 20.

Notes 2016 2015

Rs Rs

Revenue 2.16 59,229,117 58,882,354

Cost of sales 24 (46,454,117) (45,643,047)

Gross profit 12,775,000 13,239,307

Other income 18 618,666 326,819

Other (losses)/gains 19 (16,650) 465,043

Operating expenses 24 (13,467,162) (14,169,341)

(90,146) (138,172)

Net finance income 20 242,216 273,129

Profit before taxation 22 152,070 134,957

Income tax expense 16 (35,704) (99,473)

Profit for the year 116,366 35,484

Other comprehensive income:

Items that will not be reclassified to profit and loss:

Remeasurements of post employment benefit obligations, net of deferred tax 11 153,701 61,801

Gains on revaluation of buildings, net of deferred tax 11 1,974,237 -

Other comprehensive income for the year, net of tax 2,127,938 61,801

Total comprehensive income for the year 2,244,304 97,285

Earnings per share (Re/share) 25 0.02 0.01

statement of profit or loss and other comprehensive incomeyear ended 31 December 2016


NotesShare capital

Revaluationreserves

Actuarialgains/(losses)

Retainedearnings Total

Rs Rs Rs Rs Rs

Balance at 01 January 2016 5,000,000 - (374,243) 24,697,187 29,322,944

Profit for the year - - - 116,366 116,366

Other comprehensive income for the year 11 - 1,974,237 153,701 - 2,127,938

Total comprehensive income for the year - 1,974,237 153,701 116,366 2,244,304

Dividends - 2016 17 - - - (400,000) (400,000)

Balance at 31 December 2016 5,000,000 1,974,237 (220,542) 24,413,553 31,167,248

Balance at 01 January 2015 5,000,000 - (436,044) 25,161,703 29,725,659

Profit for the year - - - 35,484 35,484

Other comprehensive income for the year 11 - - 61,801 - 61,801

Total comprehensive income for the year - - 61,801 35,484 97,285

Dividends - 2015 17 - - - (500,000) (500,000)

Balance at 31 December 2015 5,000,000 - (374,243) 24,697,187 29,322,944

statement of changes in equityyear ended 31 December 2016

The notes on pages 25 to 50 form an integral part of these financial statements.Auditors’ report on pages 18 to 20.

notes to the financial statements

BYCHEMEX LIMITED24

The notes on pages 25 to 50 form an integral part of these financial statements. Auditors’ report on pages 18 to 20.

Notes 2016 2015

Rs Rs

Cash flows from operating activities

Cash (used in)/generated from operations 26(a) (1,629,221) 5,636,240

Interest received 414,082 -

Interest paid (50,301) (23,224)

Tax paid (196,700) (81,212)

Net cash (used in)/ generated from operating activities (1,462,140) 5,531,804

Cash flows from investing activities

Purchase of property, plant and equipment 5 (200,963) (368,250)

Purchase of intangible assets 6 - (365,704)

Proceeds from sale of property, plant and equipment - 289,652

Net cash used in investing activities (200,963) (444,302)

Cash flows from financing activities

Finance lease principal payments (133,663) (52,810)

Dividends paid 17 (500,000) (3,500,000)

Net cash used in financing activities (633,663) (3,552,810)

Net (decrease)/increase in cash and cash equivalents (2,296,766) 1,534,692

Movement in cash and cash equivalents

At 1 January, 10,183,890 8,352,845

(Decrease)/increase (2,296,766) 1,534,692

Effect of foreign exchange rate changes 292,517 296,353

At 31 December, 26(b) 8,179,641 10,183,890

year ended 31 December 2016statement of cash flows

year ended 31 December 2016notes to the financial statementsnotes to the financial statements


1. GENERAL INFORMATION

Bychemex Limited is a public limited liability company incorporated and domiciled in Mauritius. The address of its registered office is Chaussée Tromelin, Fort George, Port Louis. Its main activities consist of the trading of specialised chemical products for the textile industry. The Company is listed on the Development & Enterprise Market (DEM) of the Stock Exchange of Mauritius. The directors consider Harel Mallac & Co. Ltd, incorporated in the Republic of Mauritius as the holding company and Société Pronema, an entity registered in the Republic of Mauritius as the ultimate parent entity. 2. SIGNIFICANT 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 of Bychemex Limited comply with the Companies Act 2001 and have been prepared in accordance with International Financial Reporting Standards (IFRS). These financial statements are that of an individual entity and are presented in Mauritian Rupees. Where necessary, comparative figures have been amended to conform with change in presentation in the current year. The financial statements are prepared under the historical cost convention, except that: (i) Buildings are carried at revalued amounts (ii) Relevant financial assets and financial liabilities are stated at their fair value. Standards, Amendments to published Standards and Interpretations effective in the reporting period IFRS 14 Regulatory Deferral Accounts provides relief for first-adopters of IFRS in relation to accounting for certain balances that arise from rate-regulated activities (‘regulatory deferral accounts’). IFRS 14 permits these entities to apply their previous accounting policies for the recognition, measurement, impairment and derecognition of regulatory deferral accounts. The standard is not expected to have any impact on the Company’s financial statements. Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11). The amendments clarify the accounting for the acquisition of an interest in a joint operation where the activities of the operation constitute a business. They require an investor to apply the principles of business combination accounting when it acquires an interest in a joint operation that constitutes a business. Existing interests in the joint operation are not remeasured on acquisition of an additional interest, provided joint control is maintained. The amendments also apply when a joint operation is formed and an existing business is contributed. The amendment has no impact on the Company’s financial statements.

Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38). The amendments clarify that a revenue-based method of depreciation or amortisation is generally not appropriate. Amendments clarify that a revenue-based method should not be used to calculate the depreciation of items of property, plant and equipment. IAS 38 now includes a rebuttable presumption that the amortisation of intangible assets based on revenue is inappropriate. This presumption can be overcome under specific conditions. The amendment has no impact on the Company’s financial statements.

Equity method in separate financial statements (Amendments to IAS 27). The amendments allow entities to use the equity method in their separate financial statements to measure investments in subsidiaries, joint ventures and associates. IAS 27 currently allows entities to measure their investments in subsidiaries, joint ventures and associates either at cost or at fair value in their separate FS. The amendments introduce the equity method as a third option. The election can be made independently for each category of investment (subsidiaries, joint ventures and associates). Entities wishing to change to the equity method must do so retrospectively. The amendment has no impact on the Company’s financial statements.

year ended 31 December 2016notes to the financial statements

BYCHEMEX LIMITED26

2. SIGNIFICANT 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) Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41). IAS 41 now distinguishes between bearer plants and other biological asset. Bearer plants must be accounted for as property plant and equipment and measured either at cost or revalued amounts, less accumulated depreciation and impairment losses. The amendment has no impact on the Company’s financial statements. Annual Improvements to IFRSs 2012-2014 cycle • IFRS 5 is amended to clarify that when an asset (or disposal group) is reclassified from ‘held for sale’ to ‘held for distribution’

or vice versa, this does not constitute a change to a plan of sale or distribution and does not have to be accounted for as such. The amendment has no impact on the Company’s financial statements.

• IFRS 7 amendment provides specific guidance for transferred financial assets to help management determine whether

the terms of a servicing arrangement constitute ‘continuing involvement’ and, therefore, whether the asset qualifies for derecognition. The amendment has no impact on the Company’s financial statements.

• IFRS 7 is amended to clarify that the additional disclosures relating to the offsetting of financial assets and financial liabilities only need to be included in interim reports if required by IAS 34. The amendment has no impact on the Company’s financial statements.

• IAS 19 amendment clarifies that when determining the discount rate for post-employment benefit obligations, it is the

currency that the liabilities are denominated in that is important and not the country where they arise. The amendment has no impact on the Company’s financial statements.

• IAS 34 amendment clarifies what is meant by the reference in the standard to ‘information disclosed elsewhere in the

interim financial report’ and adds a requirement to cross-reference from the interim financial statements to the location of that information. The amendment has no impact on the Company’s financial statements.

Disclosure Initiative (Amendments to IAS 1). The amendments to IAS 1 provide clarifications on a number of issues. An entity should not aggregate or disaggregate information in a manner that obscures useful information. Where items are material, sufficient information must be provided to explain the impact on the financial position or performance. Line items specified in IAS 1 may need to be disaggregated where this is relevant to an understanding of the entity’s financial position or performance. There is also new guidance on the use of subtotals. Confirmation that the notes do not need to be presented in a particular order. The share of OCI arising from equity-accounted investments is grouped based on whether the items will or will not subsequently be reclassified to profit or loss. Each group should then be presented as a single line item in the statement of other comprehensive income.

Investment entities: Applying the consolidation exception (Amendments to IFRS 10, IFRS 12 and IAS 28). The amendments clarify that the exception from preparing consolidated financial statements is also available to intermediate parent entities which are subsidiaries of investment entities. An investment entity should consolidate a subsidiary which is not an investment entity and whose main purpose and activity is to provide services in support of the investment entity’s investment activities. Entities which are not investment entities but have an interest in an associate or joint venture which is an investment entity have a policy choice when applying the equity method of accounting. The fair value measurement applied by the investment entity associate or joint venture can either be retained, or a consolidation may be performed at the level of the associate or joint venture, which would then unwind the fair value measurement. The amendment has no impact on the Company’s 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 January 1, 2017 or later periods, but which the Company has not early adopted.



2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 2.1 Basis of preparation (cont’d) Standards, Amendments to published Standards and Interpretations issued but not yet effective (cont’d)

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

IFRS 9 Financial Instruments IFRS 15 Revenue from Contract with Customers Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) IFRS 16 Leases Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12) Amendments to IAS 7 Statement of Cash Flows Clarifications to IFRS 15 Revenue from Contracts with Customers Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2) Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4) Annual Improvements to IFRSs 2014-2016 Cycle IFRIC 22 Foreign Currency Transactions and Advance Consideration Transfers of Investment Property (Amendments to IAS 40) Where relevant, the Company 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. 2.2 Property, plant and equipment All property, plant and equipment are initially recorded at historical cost. Buildings were subsequently revalued based on the average replacement cost respectively by independent valuers. All other property, plant and equipment are stated at historical cost less subsequent depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the assets’ carrying amount or recognised as a separate asset as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.

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; all other decreases are charged to profit or loss. Each year, the difference between depreciation based on the revalued carrying amount of the asset and depreciation based on the asset’s original cost is transferred from revaluation surplus to retained earnings.


BYCHEMEX LIMITED28


2.2 Property, plant and equipment (cont’d)

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

YearsImprovement to Leasehold land 40Buildings 40Plant and Machinery 10Forklift 5Furniture and Office equipment 3.5 - 10Motor vehicles 5

The assets’ residual values, useful lives and depreciation method are reviewed, and adjusted prospectively, if appropriate, at the end of each reporting period. When the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Gains and losses on disposal of property, plant and equipment are determined by comparing proceeds with the carrying amount and included in the profit or loss. On disposal of revalued assets, the amounts included in revaluation surplus are transferred to retained earnings. 2.3 Inventories Inventories are stated at lower of cost and net realisable value. Cost is determined on a weighted average basis. The cost of finished goods and work in progress comprises of purchase cost of raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business less the costs of completion and applicable variable selling expenses.

2.4 Foreign currencies (i) Functional and presentation currencyItems included in the financial statements are measured using Mauritian Rupees, the currency of the primary economic environment in which the entity operates (“functional currency”). The financial statements are presented in Mauritian rupees, which is the Company’s functional and presentation currency. (ii) Transactions and balancesForeign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the transactions. 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 profit or loss.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in profit or loss within ‘net finance income’. Foreign exchange gains that relate to purchases and trade payables are presented in profit or loss within ‘cost of sales’. All other foreign exchange gains and losses are presented in profit or loss within ‘other gains/(losses)-net’.

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

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date the fair value was determined.

2.5 Current and deferred income tax The tax expense for the period comprises of current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. Current tax The current income tax charge is based on taxable income for the year calculated on the basis of tax laws enacted or substantively enacted by the end of the reporting period.




2.5 Current and deferred income tax (cont’d)

Deferred tax Deferred income tax is provided in full, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, if the deferred income tax 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, it is not accounted for. Deferred income tax is determined using tax rates that have been enacted or substantively enacted at the reporting date and are expected to apply in the period when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilised. 2.6 Alternative Minimum Tax (AMT) Alternative Minimum Tax (AMT) is provided for, where the Company, which has a tax liability of less than 7.5% of its book profit, pays a dividend. AMT is calculated as the lower of 10% of the dividend paid or 7.5% of book profit. 2.7 Intangible assets Computer software Costs incurred to acquire and bring to use computer software are capitalised and are amortised using the straight line method over its estimated useful life (3 years). 2.8 Retirement benefit obligations (i) Defined contribution plans A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The Company 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. The Company operates a defined contribution retirement benefit plan for all qualifying employees. Payments to deferred contribution retirement plans are recognised as an expense when employees have rendered service that entitle them to the contributions.

(ii) Gratuity on retirement For employees who are not covered by the pension plan (or who are insufficiently covered by the above pension plans), the net present value of gratuity on retirement payable under the Employment Rights Act 2008 is calculated by a qualified actuary and provided for. The obligations arising under this item are not funded. (iii) Termination benefits Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

2.9 Impairment of non-financial assets Assets that have an indefinite useful life 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 carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows (cash-generating units).


BYCHEMEX LIMITED30

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 2.10 Leases (a) Leases are classified as finance leases where the terms of the lease transfer substantially all risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease. (b) Finance leases are capitalised at the lease’s inception 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 so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. 2.11 Financial assets (a) Categories of financial assets The Company classifies its financial assets in the following categories : available-for-sale financial assets and loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its financial assets at initial recognition. (i) 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 management intends to dispose of the investment within twelve months of the end of the reporting period.

(ii) 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 recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost less any impairment. They are included in current assets when maturity is within twelve months after the end of the reporting period or non-current assets for maturities greater than twelve months. The Company’s loans and receivables comprise of cash and cash equivalents, and trade and other receivables. (b) Recognition and measurement Purchases and sales of financial assets are recognised on trade-date (or settlement date), the date on which the Company commits to purchase or sell the asset. Investments are initially measured at fair value plus transaction costs. Unrealised gains and losses arising from changes in the fair value of financial assets classified as available-for-sale are recognised in other comprehensive income.

When financial assets classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in profit or loss as gains and losses on financial assets.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Company establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same and capitalised earnings method.

(c) Impairment of financial assets (i) Financial assets classified as available-for-sale The Company 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. 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 considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss, measured as the difference between 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.




2.11 Financial assets (cont’d)

(c) Impairment of financial assets (cont’d)

(i) Financial assets classified as available-for-sale (cont’d)

Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale are not reversed through profit or loss.

(ii) Financial assets carried at amortised cost 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 profit or loss. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

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 previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

2.12 Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows. The amount of provision is recognised in the statement of profit or loss.

2.13 Trade and other payables Trade and other payables are stated at fair value and subsequently measured at amortised cost using the effective interest method.

2.14 Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of 3 months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position. 2.15 Share capital Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as deduction, net of tax, from proceeds. 2.16 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, value added taxes, rebates and other similar allowances.


BYCHEMEX LIMITED32

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 2.16 Revenue recognition (cont’d)

(a) Sale of goods

Sales of goods are recognised when the goods are delivered and titles have passed, at which time all of the following conditions are satisfied: (i) The Company has transferred to the buyer the significant risks and rewards of ownership of the goods; (ii) The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (iii) The amount of revenue can be measured reliably; (iv) It is probable that the economic benefits associated with the transaction will flow to the Company; and (v) The costs incurred or to be incurred in respect of the transaction can be measured reliably.

(b) Other revenues earned by the Company are recognised on the following bases:- Interest income - on a time proportion basis using the effective interest rate method. - Dividend income - when the shareholder’s right to receive payment is established.

2.17 Provisions Provisions are recognised when the Company has a present or constructive obligation as a result of past events and it is probable that an outflow of resources that can be reasonably estimated will be required to settle the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

2.18 Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements in the period in which the dividends are declared. 2.19 Related parties Related parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the party making financial or operational decisions. 2.20 Derivative financial instruments The Company enters into derivative financial instruments to manage their exposure to foreign exchange rate risk. Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured at their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. A derivative presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within twelve months. Other derivatives are presented as current assets or current liabilities. (a) Fair value hedges

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable at the hedged risk.



3. FINANCIAL RISK MANAGEMENT

3.1 Financial Risk Factors

The Company’s activities expose it to a variety of financial risks, namely market risk (including currency risk), credit risk and liquidity risk.

The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial performance.

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

(a) Market risk

(i) Currency risk

The company operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarily with respect to US Dollar and Euro.

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities.

Management has set up a policy to require the Company to manage its foreign exchange risk exposure. The Company uses forward contracts to hedge its exposure to foreign currency risk.

Currency profile

The currency profile of the Company’s financial assets and liabilities is summarised below:

2016 2015

Financial assets

Financialliabilities

Financial assets


Rs Rs Rs Rs

US Dollar 1,888,768 2,618,671 3,828,823 3,448,397

Euro 2,975,850 2,575,899 4,904,746 3,418,786

CHF - 167,292 - -

Mauritian Rupee 22,884,237 4,786,195 20,541,415 3,897,181

27,748,855 10,148,057 29,274,984 10,764,364

The table above excludes prepayments and accruals.

At 31 December 2016, if the rupee had weakened/strengthened by 5% against the following currencies with all other variables held constant, post tax profit for the year would have been as shown in the table, mainly as a result of foreign exchange gains/losses on translation of foreign currency denominated financial assets and liabilities.


BYCHEMEX LIMITED34

3. FINANCIAL RISK MANAGEMENT (CONT’D)

3.1 Financial Risk Factors (cont’d)

(a) Market risk (cont’d) 2016 2015

Financial assets


Financial assets


Rs Rs Rs Rs

Impact on post-tax results:

US Dollar 80,272 111,294 162,725 146,557

Euro 126,474 109,476 208,452 145,298

CHF - 7,110 - -

206,746 227,880 371,177 291,855

(ii) Cash flow and fair value interest rate risk

The Company’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Company to cash flow interest-rate risk. Borrowings issued at fixed rates expose the Company to fair value interest-rate risk. The Company has only fair value interest rate risk.

Sensitivity Analysis

At 31 December 2016 and 2015, if interest rates on both fixed borrowings had been 50 basis point higher/lower with all other variables held constant, the impact on post-tax profit would not have been material.

(b) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s trade and other receivables. The amounts presented in the statement of financial position are net of allowances for doubtful receivables, estimated by the company’s management based on prior experience and the current economic environment.

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

The Company has policies in place to ensure that sales of products are made to customers with an appropriate credit history.

(c) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivery of cash or another financial asset. Risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities. The Company aims at maintaining flexibility in funding by keeping committed credit lines available.



3. FINANCIAL RISK MANAGEMENT (CONT’D)

3.1 Financial Risk Factors (cont’d)

(c) Liquidity risk (cont’d)

Management monitors rolling forecasts of the Company’s liquidity reserve on the basis of expected cash flow.

The table below analyses the company’s financial liabilities based on the remaining period at the end of the reporting period:

Less than1 year

Between 1 and 2 years

Between 2and 3 years

Between 3and 5 years

Rs Rs Rs Rs

At 31 December 2016

Obligations under finance lease 182,480 182,480 182,480 114,199

Trade and other payables 10,495,041 - - -

At 31 December 2015

Obligations under finance lease 182,480 182,480 182,480 296,568

Trade and other payables 11,805,316 - - -

3.2 Capital risk management

The Company’s objective when managing capital is to safeguard the entity’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders.

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

3.3 Fair value estimation

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques, such as estimated discounted cash flows or capitalised earnings and is not based on observable market data. This instrument is included in level 3.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

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

4.1 Critical accounting estimates and assumptions

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed below.

(a) Depreciation policies

Property, plant and equipment are depreciated to their residual values over their estimated useful lives. The residual value of an asset is the estimated net amount that the company 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 and to forecast the expected residual values of the assets at the end of their expected useful lives.


BYCHEMEX LIMITED36

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONT’D)

4.1 Critical accounting estimates and assumptions (cont’d)

(b) 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 Company`s assets and liabilities are managed. Other limitations include the use of hypothetical market movements to demonstrate potential risk that only represent the company`s view of possible near-term market changes that cannot be predicted with any certainty.

(c) Asset lives and residual values

Property, plant and equipment are depreciated over its useful life taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In reassessing asset lives, factors such as technological innovation and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. Consideration is also given to the extent of current profits and losses on the disposal of similar assets.

(d) Impairment of financial assets

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

(e) Fair value of securities not quoted in an active market

The fair value of securities not quoted in an active market may be determined by the Company using valuation techniques including third party transaction values, earnings, net asset value or discounted cash flows, whichever is considered to be appropriate. The Company would exercise judgement and estimates on the quantity and quality of pricing sources used. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

(f) Revaluation of buildings

The company measures land and buildings at revalued amounts with changes in fair value being recognised in other comprehensive income. In preparing these financial statements, the Directors have obtained from independent professional valuers the estimated fair value of the Company’s land and buildings which is disclosed in the notes to the financial statements. These estimates have been based on the market data regarding current yield on similar properties. The actual amounts of revaluation could therefore differ significantly from the estimates in the future.

(g) Pension benefits

The present value of the pension obligations depend 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 Company determines the appropriate discount rate 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 of high-quality corporate 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 liability.

Other key assumptions for pension obligations are based in part on current market conditions. Additional information is disclosed in note 14.



5. PROPERTY, PLANT AND EQUIPMENT

Improvement to Leasehold

Land

Buildings on Leasehold

LandPlant and Machinery Forklift

Furnitureand Officeequipment

Motorvehicles Total

Rs Rs Rs Rs Rs Rs Rs (a) COST

At 1 January 2016 22,691 2,303,048 15,590,620 550,000 2,464,139 1,958,070 22,888,568 Additions - 7,000 193,963 - - - 200,963 Revaluation surplus - 1,102,452 - - - - 1,102,452 At 31 December 2016 22,691 3,412,500 15,784,583 550,000 2,464,139 1,958,070 24,191,983

DEPRECIATION

At 1 January 2016 16,168 1,162,602 13,394,609 550,000 2,010,373 1,052,011 18,185,763 Charge for the year 567 57,576 577,955 - 149,304 287,680 1,073,082 Revaluation adjustment - (1,220,178) - - - - (1,220,178)At 31 December 2016 16,735 - 13,972,564 550,000 2,159,677 1,339,691 18,038,667

NET BOOK VALUES

At 31 December 2016 5,956 3,412,500 1,812,019 - 304,462 618,379 6,153,316

(b) COST

At 1 January 2015 22,691 2,303,048 15,590,620 550,000 2,215,139 2,942,275 23,623,773

Additions - - - - 249,000 883,400 1,132,400

Disposals - - - - - (1,867,605) (1,867,605)

At 31 December 2015 22,691 2,303,048 15,590,620 550,000 2,464,139 1,958,070 22,888,568

DEPRECIATION

At 1 January 2015 15,601 1,105,026 12,634,206 550,000 1,899,607 2,720,276 18,924,716

Charge for the year 567 57,576 760,403 - 110,766 199,340 1,128,652

Disposal adjustment - - - - - (1,867,605) (1,867,605)

At 31 December 2015 16,168 1,162,602 13,394,609 550,000 2,010,373 1,052,011 18,185,763

NET BOOK VALUES

At 31 December 2015 6,523 1,140,446 2,196,011 - 453,766 906,059 4,702,805

(c) There is no addition to assets under finance lease during the year ended 31 December 2016 (2015: Rs 883,400).


BYCHEMEX LIMITED38

(d) Leased assets included above comprise motor vehicles: 2016 2015

Rs Rs

Cost-capitalised under finance lease 883,400 883,400

Accumulated depreciation (265,020) (88,340)

Net book value 618,380 795,060

(e) Depreciation charge of Rs 1,073,082 (2015: Rs 1,128,652) has been charged in operating expenses. (f) The Company’s buildings were revalued at 31 December 2016 by an independent valuer, Professional Valuers Co Ltd. The revaluation surplus, net of applicable deferred income taxes, was credited to revaluation surplus in shareholders’ equity (note 11). (g) Details of the Company’s buildings measure at fair value and information about fair value hierarchy are as follows:

Level 1 Level 2 Level 3

31 December 2016 Rs Rs Rs

Buildings - 3,412,500 -

(h) If the buildings were stated on the historical cost basis, the amounts would be as follows:

2016 2015

Rs Rs

Cost 2,310,048 2,303,048

Accumulated depreciation (1,220,178) (1,162,602)

Net book value 1,089,870 1,140,446 6. INTANGIBLE ASSETS

Computer software

2016 2015

(a) COST Rs Rs

At 1 January, 365,704 -

Addition - 365,704

At 31 December, 365,704 365,704

AMORTISATION

At 1 January, 30,445 -

Charge for the year 121,779 30,445

At 31 December, 152,224 30,445

NET BOOK VALUEAt 31 December, 213,480 335,259 (b) Amortisation charge of Rs 121,779 (2015: Rs 30,445) has been charged in operating expenses.

5. PROPERTY, PLANT AND EQUIPMENT (CONT’D)



7. INVESTMENT IN FINANCIAL ASSETS 2016 2015

Rs Rs

(a) At 1 January and 31 December 100,000 100,000 (b) The investment in financial assets is denominated in Mauritian Rupees and is classified under level 3.

8. INVENTORIES 2016 2015

Rs Rs

(a) Raw materials 96,480 427,812

Finished goods 10,011,081 9,099,094

10,107,561 9,526,906 (b) The cost of inventories recognised as expense and included in cost of sales amounted to Rs 46,454,117 (2015: Rs 45,643,047).

9. TRADE AND OTHER RECEIVABLES 2016 2015

Rs Rs

Trade receivables 19,850,104 19,623,307

Less: provision for impairment (711,422) (859,468)

Trade receivables - net 19,138,682 18,763,839

Prepayments 329,993 225,000

Receivables from related companies (note 29) 330,532 224,241

Other receivables - 3,014

19,799,207 19,216,094

The carrying amount of trade and other receivables approximate their fair value. As of 31 December 2016, trade receivables of Rs 711,422 (2015: Rs 859,468) were impaired. The amount of the provision was Rs 711,422 as of 31 December 2016 (2015: Rs 859,468).

The ageing of these receivables is as follows: 2016 2015

Rs Rs

Over 6 months 711,422 859,468 As of 31 December 2016, trade receivables of Rs 3,950,476 (2015: Rs 927,230) were past due but not impaired. These relates to a number of independent customers for whom there is no recent history of default.


BYCHEMEX LIMITED40

The ageing analysis of these trade receivables is as follows: 2016 2015

Rs Rs

3 to 6 months 3,387,480 540,808

Over 6 months 562,996 386,422

3,950,476 927,230 The carrying amounts of the Company`s trade and other receivables are denominated in the following currencies:

2016 2015

Rs Rs

Rupee 16,384,600 12,516,879

US Dollar 1,888,768 3,828,823

Euro 1,525,839 2,870,392

19,799,207 19,216,094 Movements on the provision for impairment of trade receivables are as follows:

2016 2015

Rs Rs

At 1 January, 859,468 441,054

Provision for receivable impairment 152,169 418,414

Reversal of provision for receivables impairment (300,215) -

At 31 December, 711,422 859,468

The other classes of trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The Company does not hold any collateral as security. 10. SHARE CAPITAL

2016 2015

Rs Rs

Issued and fully paid ordinary shares

5,000,000 ordinary shares of Rs 1.00 each 5,000,000 5,000,000 11. OTHER COMPREHENSIVE INCOME

Notes

Actuarial gains/

(losses)Revaluation

Surplus

2016 Rs Rs

Items that will not be reclassified to profit or loss:

Remeasurement of defined benefit obligations 14 180,825 -

Deferred tax on remeasurements of post

retirement benefit obligations and revaluation of buildings 13 (27,124) (348,395)

Revaluation of buildings - 2,322,632

Other comprehensive income for the year 2016 153,701 1,974,237

9. TRADE AND OTHER RECEIVABLES (CONT’D)



11. OTHER COMPREHENSIVE INCOME (CONT’D) Actuarial gains/

(losses)Revaluation

SurplusNotesRs Rs

2015Items that will not be reclassified to profit or loss:

Remeasurement of defined benefit obligations 14 72,707 - Deferred tax on remeasurements of postretirement benefit obligations 13 (10,906) - Other comprehensive income for the year 2015 61,801 - Actuarial gains/(losses) The actuarial gains/(losses) reserve represents the cumulative remeasurement of defined benefit obligation recognised. 12. OBLIGATIONS UNDER FINANCE LEASE

2016 2015Rs Rs

Non-current

Obligations under finance lease 433,640 577,679

CurrentObligations under finance lease 144,038 133,662

577,678 711,341

(a) Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default. The rate of interest on the lease is 7.5% per annum. (b) Finance lease liabilities - minimum lease payments

2016 2015Rs Rs

Not later than one year 182,480 182,480 Later than one year and not later than two years 182,480 182,480 Later than two years and not later than three years 182,480 182,480 Later than three years and not later than five years 114,199 296,568

661,639 844,008 Future finance charges on finance lease (83,961) (132,667)Present value of finance lease liabilities 577,678 711,341

The present value of finance lease liabilities may be analysed as follows:

2016 2015Rs Rs

Not later than one year 144,038 133,662 Later than one year and not later than two years 155,220 144,038 Later than two years and not later than three years 167,270 155,220 Later than three years and not later than five years 111,150 278,421

577,678 711,341


BYCHEMEX LIMITED42

12. OBLIGATIONS UNDER FINANCE LEASE (CONT’D)

(c) The Company leases a motor vehicle under finance lease. The lease has purchase options on termination. There are no restrictions imposed on the Company by lease arrangements. (d) The carrying amounts of borrowings are denominated in Mauritian Rupees and are not materially different from their fair value. 13. DEFERRED INCOME TAX Deferred income tax is calclulated on all temporary differences under the liability method at 15% (2015: 15%). (a) There is a legally enforceable right to offset current tax assets against current tax liabilities and deferred income tax assets and liabilities when the deferred income taxes relate to the same fiscal authority on the same entity. The following amounts are shown in the statement of financial position:

2016 2015

Rs Rs

Deferred tax assets (195,509) (199,505)

Deferred tax liabilities 785,043 488,435

589,534 288,930

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

2016 2015

Rs Rs

At 1 January, 288,930 284,942

Credited to profit or loss (note 16(b)) (74,915) (6,918)

Charged to other comprehensive income 375,519 10,906

At 31 December, 589,534 288,930

(c) Deferred tax liabilities

Deferred tax assets

Accelerated tax

depreciation

Retirement benefit

obligations Total

Rs Rs Rs

At 1 January 2015 471,907 (186,965) 284,942

Charged/(credited) to profit or loss 16,528 (23,446) (6,918)

Charged to other comprehensive income - 10,906 10,906

At 31 December 2015 488,435 (199,505) 288,930

Credited to profit or loss (51,787) (23,128) (74,915)

Charged to other comprehensive income 348,395 27,124 375,519

At 31 December 2016 785,043 (195,509) 589,534



14. RETIREMENT BENEFIT OBLIGATIONS

2016 2015

Rs Rs

Amount recognised in the statement of financial position as

non-current liabilities:

Other post-retirement benefits (note 14(ii)) 1,303,394 1,330,032

Amount charged to profit or loss:

Other post-retirement benefits (note 14(iv)) 154,187 156,305

Amount credited to other comprehensive income:

Other post-retirement benefits (note 14(v)) (180,825) (72,707) (i) Other post-retirement benefits comprise of retirement gratuity payable under the Employment Rights Act and other benefits. (ii) The amounts recognised in the statement of financial position are as follows:

2016 2015

Rs Rs

Present value of unfunded obligations 1,303,394 1,330,032

The reconciliation of the opening balances to the closing balances for other post-retirement benefits is as follows:

2016 2015

Rs Rs

At 1 January, 1,330,032 1,246,434

Charged to profit or loss 154,187 156,305

Credited to other comprehensive income (180,825) (72,707)

At 31 December, 1,303,394 1,330,032

(iii) The movement in the retirement benefit obligations over the year is as follows:

2016 2015

Rs Rs

At 1 January, 1,330,032 1,246,434

Current service cost 57,089 64,537

Interest cost 97,098 91,768

Actuarial gains (180,825) (72,707)

At 31 December, 1,303,394 1,330,032

(iv) The amounts recognised in profit or loss are as follows:

2016 2015

Rs Rs

Current service cost 57,089 64,537

Interest cost 97,098 91,768

Total included in employee benefit expense (note 23) 154,187 156,305

The total charges were included in operating expenses.


BYCHEMEX LIMITED44

(v) The amounts recognised in other comprehensive income are as follows: 2016 2015

Rs Rs

Experience gains (180,825) (72,707)

(vi) The main actuarial assumptions used for accounting purposes: 2016 2015

% %

Discount rate 6.00 7.00

Future long term salary increase 4.00 5.00

(vii) Sensitivity analysis on defined benefit obligations to changes in the weighted principal assumptions is:

Increase Decrease

31 December 2016 Rs Rs

Discount rate (1% increase) - 81,441

Future salary growth (1% increase) 96,505 -

31 December 2015

Discount rate (1% increase) - 91,771

Future salary growth (1% increase) 110,597 -

The sensitivity analysis above has been determined on sensibly possible changes of the discount rate occuring at the end of the reporting period if all other assumptions remained unchanged.

It is based on a method that extrapolates the impact on the net 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 were no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

(viii) The weighted average duration of the other post-employment benefit plans is 6 years at the end of the reporting period (2015: 6 years).

15. TRADE AND OTHER PAYABLES 2016 2015

Rs Rs

Trade payables 5,835,976 7,296,118

Payables to related companies (note 29) 3,609,359 2,722,742

Accrued expenses 924,662 1,140,370

Other payables 125,044 646,086

10,495,041 11,805,316

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

14. RETIREMENT BENEFIT OBLIGATIONS (CONT’D)



16. CURRENT TAX LIABILITIES 2016 2015

Rs Rs (a) Statement of financial position

At 1 January, 106,391 81,212 Current tax on adjusted profit for the year

at 15% (2015: 15%) 104,610 106,391 Underprovision of tax in previous years 6,009 - Tax paid during the year (112,400) (81,212)Tax paid under advance payment scheme (84,300) -

At 31 December, 20,310 106,391

2016 2015

(b) Statement of profit or loss Rs Rs

Current tax on the adjusted profit for the year

at 15% (2015: 15%) 104,610 106,391

Underprovision of tax in previous years 6,009 -

Deferred tax credit (note 13) (74,915) (6,918)

Tax charge 35,704 99,473

(c) The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the basic tax rate of the Company as follows:

2016 2015

Rs Rs

Profit before taxation 152,070 134,957

Tax calculated at 15% (2015: 15%) 22,811 20,244

Expenses not deductible for tax purposes 29,091 79,229

Underprovision of tax in previous years 6,009 -

Income not subject to tax (22,207) -

Tax charge 35,704 99,473

17. DIVIDENDS 2016 2015

Rs Rs

At 1 January, 500,000 3,500,000

Proposed dividend per share Rs 0.08 (2015: Rs 0.10) 400,000 500,000

Dividend paid (500,000) (3,500,000)

At 31 December, 400,000 500,000

18. OTHER INCOME 2016 2015

Rs Rs

Interest income 414,082 37,167

Profit on sale of property, plant and equipment - 289,652

Others 204,584 -

618,666 326,819


BYCHEMEX LIMITED46

19. OTHER (LOSSES)/GAINS 2016 2015

Rs Rs

Net foreign exchange (losses)/gains (note 21) (16,650) 465,043

20. NET FINANCE INCOME 2016 2015

Rs Rs

Interest expense:

- Bank overdraft (1,483) -

- Finance lease (48,818) (23,224)

Net foreign exchange gains on financing activities (note 21) 292,517 296,353

242,216 273,129

21. NET FOREIGN EXCHANGE GAINS/(LOSSES)

The exchange differences credited/(charged) to the statement of profit or loss are included as follows:

2016 2015

Rs Rs

Cost of sales 608,682 (516,949)

Other (losses)/gains (note 19) (16,650) 465,043

Net finance income (note 20) 292,517 296,353

22. PROFIT BEFORE TAXATION 2016 2015

Rs Rs

Profit before taxation is arrived at after:

Crediting:

Profit on sale of property, plant and equipment - 289,652

Charging:

Lease rentals - property 450,000 450,000

Depreciation on property, plant and equipment (note 5)

- owned assets 896,402 1,040,312

- assets under finance lease 176,680 88,340

Amortisation of intangible assets (note 6) 121,779 30,445

Employee benefit expense (note 23) 3,546,422 4,672,049

23. EMPLOYEE BENEFIT EXPENSE 2016 2015

Rs Rs

Wages and salaries 3,132,423 4,261,504

Social security cost 184,078 184,384

Pension costs - defined contribution plans 75,734 69,856

Pension costs - other retirement benefit obligations (note 14) 154,187 156,305

3,546,422 4,672,049



24. EXPENSES BY NATURE 2016 2015

Rs Rs

Depreciation (note 5) 1,073,082 1,128,652

Amortisation (note 6) 121,779 30,445

Employment benefit expense (note 23) 3,546,422 4,672,049

Changes in inventories of finished goods (580,655) 8,803,327

Raw materials used and consumed 47,034,772 36,839,720

Other expenses 8,725,879 8,338,195

Total cost of sales and operating expenses 59,921,279 59,812,388

25. EARNINGS PER SHARE 2016 2015

Net profit attributable to shareholders (Rs) 116,366 35,484

Number of ordinary shares in issue 5,000,000 5,000,000

Earnings per share (Rs/share) 0.02 0.01

26. NOTES TO THE STATEMENT OF CASH FLOWS 2016 2015

Rs Rs

(a) Cash generated from operations

Profit before taxation 152,070 134,957

Adjustments for:

Depreciation on property, plant and equipment 1,073,082 1,128,652

Amortisation of intangible assets 121,779 30,445

Profit on sale of property, plant and equipment - (289,652)

Interest income (414,082) (37,167)

Interest expense 50,301 23,224

Impairment loss recognised on inventory - 64,628

Provision for impairment on trade receivables (152,168) 418,414

Retirement benefit obligations 154,187 156,305

Unrealised exchange gains (329,866) (290,988)

655,303 1,338,818

Changes in working capital:

- inventories (580,655) 8,738,699

- trade and other receivables (463,116) 1,093,270

- trade and other payables (1,240,753) (5,534,547)

Cash (used in)/generated from operations (1,629,221) 5,636,240

(b) Cash and cash equivalents 2016 2015

Rs Rs

Cash in hand and at bank 8,179,641 10,183,890


BYCHEMEX LIMITED48

27. COMMITMENTS

The Company leases land it occupies, from the Mauritius Ports Authority under non cancellable operating lease agreements. The lease has varying terms, escalating clauses and renewal rights.

Operating lease commitments

The future aggregate minimum lease payments under operating leases (in respect of leasehold land) are as follows: 2016 2015

Rs Rs

Not later than one year 225,000 450,000

Later than one year and not later than five years - 225,000

225,000 675,000

Capital commitments

Capital expenditure contracted for at the end of the reporting period but not yet incurred is as follows:

2016 2015

Rs Rs

Intangible assets 595,000 -

28. SEGMENTAL INFORMATION

Due to the nature of the manufacturing process and to the type of products, the risks and rewards for the range of products manufactured cannot be separately identified. No separate reporting segment is therefore identifiable.

29. RELATED PARTY TRANSACTIONS

Remuneration and benefits

(note a)

Purchase of goods and services

Sales of goods and services

Management services and fees payable

Loan at call owed by related

party

Amount owed by related party

Amount owed to related party

2016 Rs Rs Rs Rs Rs Rs RsHolding company - 587,134 - 940,822 2,000,000 - 100,710 Fellow subsidiaries - 13,754,341 824,459 1,907,832 4,800,000 330,532 3,462,397 Associate of holding company - 256,372 - - - - 46,252 Directors and key management personnel 615,463 - - - - - -

2015Holding company - - - - 8,500,000 37,167 24,638 Fellow subsidiaries - 10,828,236 4,745,623 1,880,004 - 187,074 2,698,104 Associate of holding company - 219,918 - - - - - Directors and key management personnel 426,360 - - - - - -



29. RELATED PARTY TRANSACTIONS (CONT’D)

The sales to and purchases from related parties are made in the normal course of business. Outstanding trade balances at the year-end are unsecured, interest free (with the exception of loan at call) and settlement occurs in cash.

There has been no guarantees provided or received for any related party receivables or payables. For the year ended 31 December 2016, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (2015: Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

(a) Remuneration and benefits for directors and key management personnel relate to directors fees.

30. EVENTS AFTER THE REPORTING DATE

There are no event after the end of the reporting period which the directors consider may materially affect the financial statements for the year ended 31 December 2016.

31. CONTINGENT LIABILITIES

As at 31 December 2016, the Company had contingent liabilities in respect of bank and other guarantees arising in the ordinary course of business from which it is anticipated that no material liabilities would arise.


BYCHEMEX LIMITED50

32. THREE-YEAR SUMMARY OF PUBLISHED RESULTS AND ASSETS AND LIABILITIES

2016 2015 2014(a) Statements of profit or loss Rs Rs Rs

Continuing operationsRevenue 59,229,117 58,882,354 57,792,330

Profit before taxation 152,070 134,957 819,203 Income tax expense (35,704) (99,473) (219,934)Profit for the year from continuing operations 116,366 35,484 599,269

Profit attributable to:- Owners of the parent 116,366 35,484 599,269

(b) Statements of profit or loss and other comprehensive income

Profit for the year from continuing operations 116,366 35,484 599,269 Other comprehensive income for the year 2,127,938 61,801 (383,283)Total comprehensive income for the year 2,244,304 97,285 215,986

Total comprehensive income attributable to:- Owners of the parent 2,244,304 97,285 215,986

Dividend per share (Rs) 0.08 0.10 0.70 Earnings per share from continuing operations(Rs/share) 0.02 0.01 0.12

(c) Statements of financial position 2016 2015 2014Rs Rs Rs

ASSETSNon-current assets 6,466,796 5,138,064 4,799,057 Current assets 38,086,409 38,926,890 47,355,424 Total assets 44,553,205 44,064,954 52,154,481

EQUITY AND LIABILITIESCapital and reserves 31,167,248 29,322,944 29,725,659

LIABILITIESNon-current liabilities 2,326,568 2,196,641 1,531,376 Current liabilities 11,059,389 12,545,369 20,897,446 Total liabilities 13,385,957 14,742,010 22,428,822

Total equity and liabilities 44,553,205 44,064,954 52,154,481

managing director - harel mallac group...limited on 29 may 2013. other directorships (listed...

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