annual report 2015 - ciel group · and madagascar. the management team is taking appropriate...

A N N U A L R E P O R T 2 0 1 5

CIE

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EX

TIL

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015

C O N T E N T SCIEL TEXTILE AT A GLANCE 02

GROUP STRUCTURE 04

KEY FINANCIAL HIGHLIGHTS 06

CHAIRMAN’S STATEMENT 08

EXECUTIVE’S REPORT 10

FINE KNITS CLUSTER 14

KNITWEAR CLUSTER 18

WOVEN CLUSTER 22

CORPORATE SUSTAINABILITY REPORT 26

STATEMENT OF COMPLIANCE 34

CORPORATE GOVERNANCE REPORT 35

OTHER STATUTORY DISCLOSURES 50

STATEMENT OF DIRECTORS’ RESPONSIBILITIES 52

CERTIFICATE OF COMPANY SECRETARY 53

INDEPENDENT AUDITOR’S REPORT 56

STATEMENTS OF FINANCIAL POSITION 58

INCOME STATEMENTS 59

STATEMENTS OF COMPREHENSIVE INCOME 60

STATEMENTS OF CHANGES IN EQUITY 61

STATEMENTS OF CASH FLOWS 63

NOTES TO THE FINANCIAL STATEMENTS 64

CORPORATE INFORMATION 131

DIRECTORSHIPS OF SUBSIDIARIES 132

NOTICE OF ANNUAL MEETING 136

PROXY FORM 137

POSTAL VOTE 138

FINE KNITS

WOVEN

KNITWEAR

C I E L T E X T I L E A T A G L A N C E

CIEL TEXTILE LIMITED IS A SUBSIDIARY OF CIEL LIMITED.

LISTED ON THE DEVELOPMENT AND ENTERPRISE MARKET OF THE STOCK EXCHANGE OF MAURITIUS SINCE 2006, CIEL TEXTILE LIMITED IS A WORLD-CLASS GLOBAL PLAYER IN TEXTILE AND GARMENT OPERATIONS, SPANNED ACROSS MAURITIUS, MADAGASCAR, INDIA AND BANGLADESH. IT HAS DEVELOPED INTO A REGIONAL ONE-STOP SHOP FOR TEXTILES, WITH VERTICALLY INTEGRATED BUSINESS UNITS, FROM YARN SPINNING TO FINISH GARMENTS.

CLUSTERS

CIEL Textile - Annual Report 2015

2

O V E R

18,000E M P LOY E E S

P R O D U C T I O N U N I T S

BangladeshIndiaMadagascar

8

Mauritius

7 4 1

Rs. 10.1 bn

Rs. 762M

Rs. 8.9 bn

TURNOVER

PROFIT AFTER TAX

TOTAL ASSETS

2014: Rs. 9.6 bn

2014: Rs. 551M

2014: Rs. 8.0 bn

31MILLION

Exportsgarments annually to Europe, India, South Africa and USA


3


4

W O V E N

G R O U P S T R U C T U R EAS AT 30 JUNE 2015

F I N E K N I T S

1 0 0 %

A Q U A R E L L E C L O T H I N G L T D

1 0 0 %

T R O P I C K N I T S L T D

1 7 . 0 3 %

C D L K N I T S L T D1 0 0 %

A Q U A R E L L E I N T E R N A T I O N A L L T D

5 0 %L A G U N A C L O T H I N G ( M A U R I T I U S ) L T D

8 2 . 9 7 %C D L K N I T S L T D

7 9 . 9 9 %T R O P I C M A D S A

9 8 . 8 0 %N E W I S L A N D C L O T H I N G M A D A G A S C A R S A

1 0 0 %

T K L I N T E R N A T I O N A L L T D

9 9 . 9 9 %T K L K N I T S ( I N D I A ) P R I V A T E L T D

1 9 . 9 9 %T R O P I C M A D S A

3 3 . 3 3 %T I N K A I N T E R N A T I O N A L L T D

9 9 . 6 6 %S O C I E T E S O B O M A

0 . 2 2 %F L O R E A L M A D A G A S C A R S A

3 3 . 3 3 %C I E L T E X S A P T Y L T D

9 9 . 9 9 %A Q U A R E L L E I N D I A( P R I V A T E ) L T D

4 9 . 9 3 %L A G U N A

C L O T H I N G P R I V A T E L T D

9 9 . 9 9 %

A Q U A R E L L E M A D A G A S C A R S A

3 3 . 3 3 %T I N K A

I N T E R N A T I O N A L L T D


1 0 0 %I N T E R N A T I O N A L F A B R I C S L T D

1 0 0 %C O N S O L I D A T E DF A B R I C S L T D


5

K N I T W E A R R E T A I L

O T H E R

1 0 0 %

F L O R E A L K N I T W E A R L T D

1 0 0 %

F L O R E A L K N I T W E A R L T D

3 3 . 3 3 %

F O N D A T I O N C I E L N O U V E A U R E G A R D

1 0 0 %

F L O R E A L C R E A T I O N S A ( I N P R O C E S S O F L I Q U I D A T I O N )

1 0 0 %F L O R E A L P R O P E R T Y L T D

0 . 2 0 %S O C I E T E C I V I L E I M M O B I L I E R E D E S M A S C A R E I G N E S

0 . 0 6 %A J A X S W E A T E R S L T D

8 3 . 5 3 %T E X A R O S A

1 0 0 %

F L O R E A L I N T E R N A T I O N A L L T D

1 0 0 %

F E R N E Y S P I N N I N G M I L L S L T D

0 . 3 2 %S O B O M A S A

3 3 . 3 3 %T I N K A I N T E R N A T I O N A L L T D

9 9 . 8 0 %S O C I E T E C I V I L E I M M O B I L I E R E D E S M A S C A R E I G N E S

9 9 . 4 8 %F L O R E A L M A D A G A S C A R S A

9 9 . 9 4 %A J A X S W E A T E R S L T D


1 0 0 %C T L R E T A I L L T D

K E Y F I N A N C I A L H I G H L I G H T SGroup Financial Highlights and Ratios - As at 30 June

THE GROUP

2015 2014 2013 2012 2011

RESULTS

Turnover (Rs. M) 10,119 9,565 8,686 8,643 7,876

EBIT (Rs. M) 913 727 661 698 326

Profit after Taxation (Rs. M) 762 551 516 516 214

Net Profit Margin (%) 7.5 5.8 5.9 6.0 2.7

Return on Capital Employed (%) 15.1 13.3 14.0 16.1 6.7

INTEREST BEARING DEBT

Debt (Rs. M) 1,699 1,658 1,395 1,292 2,239

Capital Employed (Rs. M) 6,042 5,461 4,722 4,344 4,894

Debt to Capital Employed (%) 28 30 30 30 46

Interest Cover (times) 16.3 9.4 12.2 7.9 3.4

SHARE DATA

Share Price (Rs. cs) 38.00 33.90 22.50 16.00 16.00

Net Assets Value per Share (Rs. cs) 40.09 35.60 30.54 28.23 24.57

Earnings per Share (Rs. cs) 6.90 5.08 4.53 4.50 1.86

Dividend per Share (Rs. cs) 2.50 2.00 1.50 1.00 0.55

P/E Ratio (times) 5.5 6.7 5.0 3.6 8.6

Dividend Yield (%) 6.6 5.9 6.7 6.3 3.4


6

2015

10,119

2014

9,565

2013

8,686

2012

8,643

2011

7,876

T u r n o v e r ( R s . M ) P r o f i t a f t e r t a x a t i o n ( R s . M )

2011

762

2012

551

2013

516

2014

516

2015

214

D e b t ( R s . M )2011

1,699

2012

1,658

2013

1,395

2014

1,292

2015

2,239

Share Price (Rs. cs) Net Assets Value per Share (Rs. cs)

15

20

25

30

35

40

45

20152013201320122011

Earnings per Share (Rs. cs)Dividend per Share (Rs. cs)

0

1

2

3

4

5

6

7

20152014201320122011

RESULTS

SHARE DATA


7

Dear Shareholder,

On behalf of the Board of Directors, it gives me great pleasure to present to you the Annual Report and audited results of CIEL Textile Limited (“CIEL Textile”/“the Group”) for the year ended 30 June 2015.

Group Financial Results as at 30 June 2015

I am pleased to acknowledge the excellent results achieved by CIEL Textile for the year under review. The Group’s turnover increased by 5.8% to reach Rs. 10.1bn, while profit after tax increased by 38.3% to Rs. 762.4M. It has to be noted that such growth was mainly driven by our Asian operations which performed extremely well. Our regional operations also managed to show satisfying results despite a very competitive environment. Cluster wise, we have witnessed an outstanding performance in knits and woven while in knitwear, the results have been below expectations.

Our woven cluster, the Aquarelle Group, had a very good year, with a 37% increase in profit after tax. The notable performance of our operations in India contributed significantly to the improved results which were partly mitigated by the underperformance of our operations in Mauritius and Madagascar. The management team is taking appropriate actions to increase the cluster’s cost competitiveness at regional level, while at the same time focussing on its continued growth in Asia.

The performance of our knitwear cluster, the Floreal group, was somewhat disappointing. The cluster had a difficult year on account of various external and internal factors which had impacted our sales and drove down profitability. Again, management has been proactive and is taking appropriate measures to

turnaround the situation. In fact, the Floreal group will undergo a complete overhaul over the next two years with an emphasis on cost reduction, increased automation and simplified processes.

Finally, we are pleased to report that the Group’s strategy for its fine knits cluster, the Tropic Knits group (“TKL”), is now bearing fruit. Though sales remained at the level of Rs. 2.1bn, the cluster delivered significant margin gains as a result of an upmarket move, operational excellence and a strong performance from CDL Knits Limited, its fabric export division. TKL has also initiated its globalisation strategy with the opening of its first factory in Coimbatore, India, by the end of the year.

Outlook and Prospects

Though Europe is showing signs of recovery, market conditions remain challenging. Exchange rate volatility in Europe and South Africa is a concern. Moreover, China, our major competitor, has seen its currency depreciate for the first time in three years, thus accentuating the competition. However, as at date, our capacities are well loaded and our results for the first semester should be in line with those of same period last year. Operational excellence in our region, together with expansion in Asia, will remain the main areas of strategic focus for the Group for the coming year.

Dividend

The Group declared an interim dividend of Rs. 0.75 per ordinary share on 15 December 2014 (2013: Rs. 0.75) and a final dividend of Rs. 1.75 per ordinary share on 2 June 2015 (2014: Rs. 1.25).

C H A I R M A N ’ S S T A T E M E N T


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I AM PLEASED TO ACKNOWLEDGE THE EXCELLENT RESULTS ACHIEVED BY CIEL TEXTILE FOR THE YEAR UNDER REVIEW. THE GROUP’S TURNOVER INCREASED BY 5.8% TO REACH RS. 10.1BN, WHILE PROFIT AFTER TAX INCREASED BY 38.3% TO RS. 762.4M.

Stock Exchange of Mauritius Sustainability Index (“SEMSI”)

Launched by the Stock Exchange of Mauritius Ltd in September 2015, the SEMSI tracks the price-performance of those companies which demonstrate strong sustainability practices. It offers a useful tool for domestic and international investors with an appetite for responsible investment.

I am pleased to acknowledge that CIEL Textile has been among the few pioneer companies to be listed on the SEMSI, following an audit performed by EY Mauritius.

Appreciation

On behalf of the Board of Directors as well as in a personal capacity, I would like to express my thanks and appreciation to my colleagues on the Board of Directors, to the CEO, Mr. J. Harold Mayer and to CIEL Textile’s very committed Executive team, management and staff for the positive results achieved over the year.

I invite you to go through the Executive’s Report for information about the operations of the Group’s various clusters.

P. Arnaud Dalais

Chairman

25 September 2015


9

E X E C U T I V E ’ S R E P O R TDear Shareholder,

I am pleased to inform you that CIEL Textile Limited has reported excellent results with turnover increasing by 5.8% to Rs. 10.1bn (mainly in Asia) and profit after tax increasing by 38.3% to Rs. 762.4M. Both Aquarelle and Tropic Knits groups have posted record results, whilst Floreal group’s profitability regressed as a result of a drop in sales. The geographical spread of our turnover was 34% in Mauritius, 36% in Madagascar and 30% in Asia, whilst the spread of profitability was 35% in Mauritius and 65% in our international operations.

The Aquarelle group performed very well with an increase in sales by 11.5% to Rs. 5.6bn and a healthy increase in profit after tax to Rs. 423.7M (37% up on last year). The Indian operations achieved world-class results and contributed to 70% of its profit after tax (“PAT”). Aquarelle India’s operations are the benchmark for the Group in many aspects and have paved the way for our internationalisation process. Although profitable, Aquarelle’s regional operations, in Mauritius and Madagascar, underperformed their potential due to operational effectiveness issues and a very high cost base. Regarded as a priority for the leadership team, a strategy has already been put in place to bring cost competitiveness to more competitive levels through “procurement of Asia prices” and “overheads”. However, the group will also focus on its continued growth in Asia, using it as a marketing and sourcing platform for the region.

PAT of the Floreal group dropped by 10.9% to Rs. 115.4M, mainly as a result of a reduction of units sold which resulted from a mixture of internal and external factors. Appropriate actions are being undertaken by the leadership team to reverse this trend, especially on the marketing front. Positive aspects in this year’s results were: (i) the increased

profitability in Ferney Spinning Mills (“FSM”) as a result of yarn exports to Europe; and (ii) Floreal Bangladesh’s operations, which are now “autonomous” in marketing and delivering great customer satisfaction. The next two years will be a transition period for the Floreal group, which should lead to significant cost reduction, automation of production and simplification of its processes. Once this transition phase is executed by December 2017, the group will be in a strong position to grow and deliver good profitability.

The Tropic Knits group (“TKL”) delivered record results due to an upmarket move, improved operational excellence and a great performance from its fabric export division, CDL Knits Limited. TKL has become the regional benchmark in many aspects, namely for its profitability, sophisticated marketing, management infrastructure and its very dynamic and forward-thinking leadership team. TKL’s regional priority in the coming year will be to keep delivering unbeatable value to its customers, despite a more complex order book due to TKL’s upmarket move. However, this year will see the start of its operations in Coimbatore, in India, where a factory, with a potential capacity of more or less 12M garments, will start production before the end of the year. Early signs of good sales’ potential for TKL India are very encouraging.

The performance of our divisions on the non-financial scoreboards can be summarised as follows:

• The customer satisfaction scoreboard remains very good in general and particularly in Asia, except on pricing. Therefore, our major focus in the region is to reduce our costs via better “procurement at Asia prices”, simplification of our processes and improvement of our People Value Management.


10

THE FINANCIAL YEAR ENDED 30 JUNE 2015 HAS SHOWN MUCH IMPROVED RESULTS IN BOTH FINANCIAL AND NON-FINANCIAL SCOREBOARDS. OUR NO.1 CHALLENGE AND PRIORITY IN THE GROUP, SPECIALLY AQUARELLE AND FLOREAL, IS TO BRING COSTS BACK TO COMPETITIVE LEVELS, WHILST AGGRESSIVELY DEVELOPING THE NICHE MARKETS OF TOMORROW.

• Whilst Aquarelle India and Tropic Knits remain the benchmarks in terms of customer satisfaction and product development respectively, we are cross-fertilising these standards within the Group with the aim of satisfying all our customers better than competition does.

• Generally, “operational effectiveness” remains a major strength in our 17 factories and progress is still being achieved. Aquarelle Grand Bois factory and Tropic Knits Mauritius are world - class benchmarks which, once again, are being used for cross-fertilisation of best practices. Aquarelle’s regional factories, except Grand Bois, had to face operational issues this year and these are being addressed with great professionalism and energy. The yearly Chairman’s Manufacturing Excellence Award remains an excellent tool for continuous improvement and cross-fertilisation of best practices.

• On the front-end, i.e. marketing, back office and administration scoreboards, our Indian operations lead the way with Laguna Clothing and Aquarelle India. The aggressive marketing, constant upmarket move, cost-effectiveness of our front-end structures and wide variety of fabrics/product offered are resulting in both sales and profitability growth. Tropic Knits’ regional front-end has also reached excellent levels by targeting and developing niche markets where we compete with Turkey (v/s low cost countries), providing world-class fast fashion product development support and also very “aggressive” and “Top man driven” sophisticated marketing. Whilst our Asian marketing platforms are poised for growth, our challenge as a Group remains to develop the right target customer-base for the region, away from low cost competition.


11

• On the “Human Capital” and “Corporate Culture” fronts, CIEL Textile is getting stronger and stronger. We are attracting great talent from Asia, whilst achieving very good stability in our key leadership teams. The CIEL Textile culture is highly focused on customer satisfaction, accountability, results-driven attitude, champion culture, aiming to be the best, excellence and a “winning family” approach to team work.... and, our strong leadership teams are leading these values by example. “Our People, our Gold” will remain the No.1 priority in our day-to-day management.

• From a “management infrastructure” point of view, once again, there is continuous progress across the Group. Our Asian operations are considered as benchmarks in “hands on” approach and “daily/monthly routines”, closely followed by Tropic Knits in the region. Our top leadership teams are encouraged to become “coaches” in management infrastructure, so as to develop their teams and get better and more consistent results.

To conclude, the financial year ended 30 June 2015 has shown much improved results in both financial and non-financial scoreboards. Our No.1 challenge and priority in the Group, specially Aquarelle and Floreal, is to bring costs back to competitive levels, whilst aggressively developing the niche markets of tomorrow.

External Factors

• During the current financial year, on balance, we benefited from favorable external factors which helped improve our results. The major factor was the “foreign currency” where, in our three major countries of operations, i.e. Madagascar, Mauritius and India, the currency movement v/s competition was positive. Also, raw material prices remained low.

As we look forward to the coming financial year, there are more “negative” than “positive” external factors.

• China, our major competitor, saw its currency being depreciated for the first time in three years.

• South Africa, a major market for us, saw the Rand being significantly depreciated, posing “pricing” challenges and possible reduction in units.

• On the “positive” side, raw material prices remained stable and the UK and European markets are showing signs of recovery.

Our Strategy

Our strategic plan for all divisions, all go in the same direction:

• A “globalisation strategy” which focuses on new operations and growth in India and Bangladesh. In line with this strategy:

- Tropic Knits India will start operations this year in Coimbatore;

- Aquarelle will start the building of a “green field” plant in India for Casual shirts; and

- Floreal and Aquarelle will buy land in Bangladesh in view of establishing in 2017-2018 new production capacities.

• In the Mauritius/Madagascar region, the strategic focus will be on “upmarket move” and “cost competitiveness” improvements. Its components will include:

- Transmission of know-how to Madagascar;

- Procurement at Asia prices in all our operations;

- Simplifying our organisations and processes to address our high overheads (v/s competition and market requirements); and

E X E C U T I V E ’ S R E P O R T (CONT’D)


12

- Bringing sophisticated marketing and front end activity to another level.

The above strategy should provide a platform for medium-term moderate growth, at a pace, which is commensurate with our financial and manpower resources.

Furthermore, as a rule of thumb, we will not allow our “getting bigger” objectives to negatively impact our “getting better” priority.

Outlook

In the first semester, we expect results to be close to those of last year. As regards the second semester, the results will depend on the quality of our order books and our operational effectiveness in all divisions. Start-up costs of Tropic Knits India and some regional restructuring costs will be incurred, but are expected to provide a platform for improved results in the medium-term.

Appreciation

I would like to place on record my gratitude to our leadership teams for their incredible level of commitment to satisfying our customers better than competition and moving their operations forward. All our divisions aim to be “The Best” in their respective fields, and this ambition is increasingly being backed up with the efforts required to reach this goal. The same expression of gratitude goes to our 18,000 employees who live our “winning family” values on a daily basis.

Last, but not least, my appreciation goes to our Chairman, Mr. P. Arnaud Dalais and the Board of Directors for their trust and support on the journey.

I invite you to read the individual report of our Executive Operational Directors, which gives more details on each of our three divisions.

J. Harold Mayer

Chief Executive Officer

25 September 2015


13

TROPIC KNITS LIMITED IS ONE OF

THE LARGEST MANUFACTURERS OF

QUALITY JERSEY-WEAR GARMENTS

IN THE INDIAN OCEAN. WITH A

DYNAMIC AND PROACTIVE DESIGN

DEPARTMENT, TROPIC KNITS

LIMITED PROPOSES FAST AND HIGH

QUALITY INTEGRATED PRODUCT

DEVELOPMENTS AND SAMPLING

TO INTERNATIONAL MARKET

LEADERS. TROPIC KNITS LIMITED IS

VERTICALLY INTEGRATED WITH

CDL KNITS LIMITED, A KNITTING,

DYEING AND FINISHING MILL

PRODUCING FABRIC FOR THE FINE

KNITS GARMENT MAKING INDUSTRY.

F I N E

K N I T S

P R O D U C T I O N O F J E R S E Y W E A R G A R M E N T S A N D K N I T T E D F A B R I C

3,100C O M M I T E DE M P LOY E E S

F A C T O R I E S I N

Madagascar IndiaMauritius

2.1bnRS.TURNOVER

12MGARMENTS PRODUCED

TO N S O F K N I T T E D FA B R I C

3,600


16

The Fine Knits Cluster showed significant improvement and achieved record profitability for this financial year. In 2015, profit after tax nearly doubled compared to the last year whereas turnover remained flat, year on year.

The cluster’s performance is in line with the five-year strategic plan presented last year, where the salient points are as follows:

• Reposition Tropic Knits image through a rebranding exercise;

• Ensure customer satisfaction;

• Move up-market in terms of product offering and service;

• Focus on operational effectiveness in the Mauritius/Madagascar region, instead of growth; and

• Start operations in India, which will be our “growth platform”.

On the front-end side, progress has been constant. Executive Directors are driving marketing actions to ensure alignment with our declared strategy. This has resulted in:

• Reinforcement of the offshore marketing offices;

• Excellent performance on product development;

• Strong investment in research and development; and

• Much improved performance in the merchandising and back office departments.

On the operational front, strong focus is being put on continuous improvement at all levels. Our objective remains to increase productivity so as to absorb any cost increase. Tropic Knits Mauritius is progressing well in its operational effectiveness. Management is now focusing on the operations in Madagascar to level them to the cluster’s standards.

Our fabric mill, CDL Knits Limited, had a positive year with increased sales to “non-captive” customers and good customer satisfaction. The management is today concentrating on the mill’s product innovation capabilities and operational excellence. A modernisation and automation program has been launched in that respect.

Tropic Knits India started its operations in June 2015. The cluster acquired a 200,000 square feet building in Coimbatore, South West India. Tropic Knits India is currently enjoying a full order book until February 2016, which is a very encouraging start. Priority is set on:

• Putting in place the right “Management Infrastructure”;

• Deliver unbeatable value to our customers; and

• Gear ourselves for future growth.

The top management team of Tropic Knits India is in place and is composed of a mix of new recruits and existing CIEL Textile’s executives.

Tropic Group has today a young, dynamic and talented team. Emphasis is being laid on constant training at all levels of the enterprise so that we continue to build - up excellence within our company.

Our two major markets, Europe and South Africa, are facing challenging trading conditions which constantly put pressure on our order book. Furthermore, the weakness of the South African Rand has impacted negatively our competitiveness on that market. Raw material price has been stable.

Our strategy remains to move up-market and offer unbeatable value in the “fast fashion” segment. We are positioning ourselves as a best alternative to Turkey. Therefore, strong emphasis is being put on product offering, speed, service and cost competitiveness. Furthermore, with the launch of our operations in India we are now a “Global Player”

F I N E K N I T S


17

operating from Asia as well. We strongly believe that this global offering will enable us to reach new markets, customers and product segment.

Outlook

In the first semester, we expect results to be close to those of last year as we are currently enjoying a good order book. We remain cautious for the remaining of the year as market conditions are toug. Tropic Knits India ’s build-up phase will involve additional costs which we expect to be mitigated by a reasonable order book.

JEAN-BAPTISTE DOGER DE SPÉVILLE CHIEF EXECUTIVE OFFICER OF THE FINE KNITS AND KNITWEAR CLUSTERS

BERTRAND THEVENAUEXECUTIVE DIRECTOR OF TROPIC KNITS GROUP

GUILLAUME DALAIS EXECUTIVE DIRECTOR OF TROPIC KNITS GROUP

THE FINE KNITS CLUSTER SHOWED SIGNIFICANT IMPROVEMENT AND ACHIEVED RECORD PROFITABILITY FOR THIS FINANCIAL YEAR.

SINCE ITS CREATION IN 1972

AND OVER THE LAST, 40 YEARS

FLOREAL KNITWEAR LTD HAS

BEEN PRODUCING HIGH QUALITY

SWEATERS AND HAS EXPORTED

“BEAUTIFUL & INNOVATIVE

KNITWEAR” TO ITS CUSTOMERS

WORLDWIDE.

FLOREAL KNITWEAR LTD

HAS NOW ESTABLISHED

ITSELF AS AN INTERNATIONAL

BUSINESS WITH A VERTICALLY

INTEGRATED WOOL SPINNING

MILL AND ITS OWN FACTORIES

IN MAURITIUS, MADAGASCAR

AND BANGLADESH, AS WELL

AS MARKETING AND SUPPORT

OFFICES IN THE UNITED

KINGDOM, SOUTH AFRICA,

HONG KONG AND CHINA.

K N I T W E A R

P R O D U C T I O N O F S W E A T E R S A N D W O O L L E N Y A R N


2.4bn

1,400 TO N S O F WO O L L E N YA R N

RS.TURNOVER

4,4MGARMENTS PRODUCED


MadagascarMauritius Bangladesh


20

K N I T W E A RThe financial results of the knitwear cluster have regressed from previous year with profits after tax of Rs. 115.4M from Rs. 129.4M.

This profit drop was mainly caused by lower sales volume on the French market which impacted on regional profitability. Our Bangladesh operation as well as Ferney Spinning Mills Limited (“FSM”) improved their results marginally.

This market share loss could be attributed to the market going to cheaper yarn from Asia, where we were not competitive and could not meet the yarn import lead times.

We were also short on automatic knitting capacities to produce the fancy stitch styles on demand despite our initial investment in this technology. Measures are being taken by the management to address the above.

Customer satisfaction ratings are very good in respect to FSM’s non captive market which is set to expand with a reasonable profitability. Customer satisfaction from our Bangladesh and regional operations are good. The improvement area being a more fashionable and trendy product offer. This will be achieved in strengthening our product development team, coupled with further investment on automatic machines. The second key area of improvement is on our costs in the region, which are too high against those of our competitors.

Our operations have all been running very smoothly during the year with outstandingly low reject rates and high delivery performance. To address our cost problem, the factory operation in Mauritius will keep reducing its capacity which will be absorbed by our Madagascar and Bangladesh factories.

On the marketing and front-end sides, our presence in Bangladesh is proving to be right and we will keep capturing new customers from that side. The objective being to have them loading also our factories in Madagascar for lambswool and noble yarn, where there is a better product fit with our verticality and know-how.

Our IT system (ERP) is being reviewed and should provide for better effectiveness on the administration side of our order taking and processing.

It is our objective on the human resources’ side to build up stronger and full fledge teams in Madagascar and Bangladesh, while streamlining the service level currently provided from Mauritius. Selection and recruitment of new talents are underway in these countries so as to receive the appropriate coaching.

Our strategic plan can be summarised as follows:

• Further investment and commissioning of automatic knitting machines, which should cover 60% of our capacity as from beginning of next year. This will enable us to meet the trends while reducing our costs;

• Start-up at end of this year of a Hank dyeing facility at FSM. This will enable us to keep cheap écru yarn and dye it on demand. It will provide the solution for speed of delivery on a greater range of yarn for the price sensitive end of the market;

• Finalise the purchase of a plot of land in Bangladesh for future factory expansion in that country; and

• Carry on our business simplification process in order to bring our overheads in line with those of our competitors.


21

JEAN-BAPTISTEDOGER DE SPÉVILLECHIEF EXECUTIVE OFFICER OF THE FINE KNITS AND KNITWEAR CLUSTERS

MUSHTAQ SOOLTANGOSGENERAL MANAGER OF FERNEY SPINNING MILLS LIMITED

Outlook

We have registered a better spring season’s order book in the region and Bangladesh compared to the same period last year. However, due to some restructuring costs to be incurred, our financial results of the first semester should remain in line with those of last year.

Since our knitwear business is dependent of the seasonal aspects, a forecast of our second semester results would be too soon at this stage. We are however confident that the fundamentals of the business are presently being strengthened so as to resume profit growth in the medium terms.

WE ARE CONFIDENT THAT THE FUNDAMENTALS OF THE BUSINESS ARE PRESENTLY BEING STRENGTHENED SO AS TO RESUME PROFIT GROWTH IN THE MEDIUM TERMS.

AQUARELLE CLOTHING LIMITED

IS AN INTERNATIONAL SHIRTS

MANUFACTURER OPERATING IN

A HOMOGENOUS UPPER/MIDDLE

MARKET SEGMENT. SPECIALISED

IN FORMAL, CASUAL AND LADIES

SHIRTS, AQUARELLE AIMS TO

DELIVER “UNBEATABLE VALUE” TO ITS

CUSTOMERS WITH KEY INGREDIENTS

BEING QUALITY, SERVICE, FLEXIBILITY,

PRODUCT DEVELOPMENT

AND COMPETITIVENESS. WITH

CONSOLIDATED FABRICS LIMITED,

ITS INTEGRATED WEAVING MILL,

AQUARELLE OFFERS DYEING,

WEAVING, FINISHING AND WASHING

OPERATIONS IN HOUSE.

W O V E N

P R O D U C T I O N O F W O V E N T O P S : F O R M A L , C A S U A L M E N A N D L A D I E S S H I R T S


5.6bn

8M M T S O F WOV E N FA B R I C

RS.TURNOVER

14MGARMENTS PRODUCED


Madagascar IndiaMauritius


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The Aquarelle group performed very well this year, with an 11.5% sales increase to Rs. 5.6bn and a healthy increase of 37% in profit after tax to Rs. 423.7M. The operations of Aquarelle India have contributed to 70% of the group profit after tax.

The customer satisfaction performance was excellent in our Indian operations. In the region, Mauritius and Madagascar, we faced major issues on new product categories such as viscose blouses and non-iron shirts, which are being fixed now. Our fabric mill, Consolidated Fabrics Limited (“CFL”), has achieved major progress on reliability and quality, resulting into a much improved customer satisfaction performance.

The region’s main challenge remains competitiveness. We are working on the following directions to reduce our costs rapidly:

• Asia procurements, mainly for CFL;

• Improvement of operational effectiveness, both for our garment factories and at the level of CFL;

• Reduction of our overheads in Mauritius and gradually move some of our front-end activities to Madagascar; and

• Our front-end performance remains excellent in India, while we are focusing on enhancing our teams’ capabilities in the region.

Major emphasis is being put on marketing to acquire new customers, sophisticated marketing approach, design and research and development capabilities, mainly towards niche products. Our Grand Bois factory, in Mauritius, won the Chairman’s Manufacturing Award for the 3rd consecutive year and is leading the way on operational effectiveness. The overall trend going forward is positive and we are expecting other factories to achieve substantial improvements on all their KPIs. CFL’s trend on operational effectiveness is excellent and this will result into a reduction of cost per unit in 2015-2016.

From a management infrastructure’s point of view, there is continuous progress across the group. Our focus will be to deliver excellence in terms of customer satisfaction by enhancing our front-end organisation and team approach.

On the sustainability front, we have implemented in 2014, a steering committee and much progress has been achieved, Aquarelle India ISO certification 14000 and Laguna and Aquarelle Antsirabe factory-Marks and Spencer (“M&S”) plan A approved. We will continue the journey in 2016 with more factories expected to achieve M&S plan A certification. We will as well enhance our CSR activities with a specific contribution to communities in need nearby our various sites in Mauritius, Madagascar and India.

W O V E N


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Our strategy, going forward, is to consolidate our regional operation with improved profitability while further expand in Asia. We will soon start the construction of an additional factory 100 kms south of Bangalore for Aquarelle India. We are as well looking for a talented candidate to lead our Bangladesh project with the objective to buy land or build a factory there, as from 2017.

Outlook

Our sales for the first semester are slightly below expectations, both in the region and India. We are now working on action plans to improve our order book for the second semester and reduce our overall costs to consolidate our profitability.

ERIC DORCHIES CHIEF EXECUTIVE OFFICER OF THE WOVEN CLUSTER (ALSO KNOWN AS AQUARELLE GROUP)

NAGESH BADIDADEPUTY EXECUTIVE DIRECTOR OF THE AQUARELLE CASUAL CLUSTER AND GENERAL MANAGER OF AQUARELLE INDIA (PRIVATE) LIMITED

SARBAJIT GHOSEMANAGING DIRECTOR OF LAGUNA CLOTHING LIMITED

MANEESH PATELGENERAL MANAGER OF LAGUNA CLOTHING (MAURITIUS) LIMITED

ERIC EYNAUDGENERAL MANAGER OF PASTEL BLUE

PASCAL WALTEREXECUTIVE DIRECTOR OF CONSOLIDATED FABRICS LIMITED

THE AQUARELLE GROUP PERFORMED VERY WELL THIS YEAR, WITH A 11.5% SALES INCREASE TO RS. 5.6BN AND A HEALTHY INCREASE OF 37% IN PROFIT AFTER TAX TO RS. 423.7M.


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C O R P O R A T E S U S T A I N A B I L I T Y R E P O R T Sustainability development aims at meeting the needs of the present without comprising the ability of future generations to meet their own needs. CIEL Textile (“the Group/”CIEL Textile”) has always strived to make its operations sustainable through a series of measures directed to its stakeholders while ensuring that they are being conducted within legal parameters and other requirements. It proudly affirms its contribution to the economic, social and environmental development of Mauritius, Madagascar, India and Bangladesh.

OUR ENGAGEMENT FOR 2014-2015Since February 2015, CIEL Limited (“CIEL”), the holding company of CIEL Textile has approved an overarching Sustainability Policy, with requirements and guidelines to be followed by its subsidiaries, whereby it considers sustainability as an integral part of business performance and in order to bring maximum value creation for all.

The CIEL’s Sustainability Policy is supported by a Sustainability Management System which has been designed to foster continuous improvement, accountability and transparency through networking, empowerment, knowledge-sharing, capacity building and innovation. It also caters for regular site visits and quarterly reports for monitoring progress.

SEMSILaunched by the Stock Exchange of Mauritius Ltd in September 2015, the Stock Exchange of Mauritius Sustainability Index (“SEMSI”) tracks the price-performance of those companies, which demonstrate strong sustainability practices. It offers a useful tool for domestic and international investors with an appetite for responsible investment.

CIEL Textile, has been among the few pioneer companies to be listed on the SEMSI, following audit by EY Mauritius on environmental, social, economic and governance aspects.

More details on the SEMSI is available at www.stockexchangeofmauritius.com/about-semsi/

CIEL NURTURES A HUMANE, ETHICAL AND TRANSPARENT WAY OF DOING BUSINESS THROUGH THE INTEGRATION OF SUSTAINABLE (ETHICAL, SOCIAL AND ENVIRONMENTAL) CONSIDERATIONS IN ITS BUSINESS DECISION-MAKING PROCESS AND IS COMMITTED TO IMPLEMENT, MAINTAIN AND FOSTER THE BEST SUSTAINABILITY-RELATED PRACTICES ACROSS ITS VALUE CHAIN, THROUGH THE CIEL SUSTAINABILITY STRATEGY AND MANAGEMENT SYSTEM.


27

ENVIRONMENT CIEL textile encourages its companies, subsidiaries and stakeholders to endorse environmentally-conscious practices in their operations and activities. Controls systems are in place at companies level to better manage water and energy consumption as well as waste and affluent.

Some examples of environmental practices at CIEL Textile

• Environmental Policy Statement

• Cross-departmental Environmental Steering Committee, chaired by senior management

• Environmental compliance registers

• Dedicated resource person for environmental aspects

• Employees engagement campaign and awareness in eco-green projects

• Policies and guidelines for reducing water and energy use

• Electricity, water and fossil consumption dashboards implemented across all production units

• Adoption of new technology for better efficiency in terms of energy and water consumption

• Programs and procedures implemented to minimize heat, electricity and water losses

• Solar water heaters and photovoltaic lighting is being implemented

• Transport optimization program

• Identifying, monitoring and management of environmental risks

• Emergency preparedness plan for environmental hazards

• Solid waste Management System, with segregation, reduction, reuse and recycling programs

• Established requirements for eco-friendly sourcing

• Environment awareness and enhancement projects for the community

AWARDS AND CERTIFICATIONS

M&S Plan A approved Eco Ftys: Floreal Knitwear Mauritius, Aquarelle Antsirabe, Laguna India

ISO 14001 Certified: Aquarelle India,

ISO 26000 verified: Laguna India

Most of CIEL Textile factories are WRAP (Worldwide Responsible Accredited Production Award) accredited with some of them having been awarded platinium Certificate.


28

FONDATION CIEL NOUVEAU REGARD (“FCNR”)CIEL Textile is contributing to the welfare of the society and manages its engagement towards communities in which the Group conducts businesses, mainly through the FCNR but also at business units level.

FCNR is accredited by the National CSR Committee as a Special Purpose Vehicle and is empowered to receive the CSR tax contributions of CIEL’s subsidiaries and associates since February 2010.

Since 2005,

Rs. 72.3M has been invested by the FCNR in various projects to alleviate poverty and exclusion in Mauritius.

Total number of beneficiaries for 2014-2015:

2,641 of which 1,141 direct beneficiaries.

Engaged in the fight against poverty and exclusion, the foundation has spent some Rs. 5M during the period under review in various projects, at regional and national level, which are in line with the criteria set by its Board of Directors, while following the legal guidelines of the law governing this tax.

This year, 75% of the amount received from CSR tax contributions, was used to finance projects managed by local NGOs in areas such as the fight against poverty, education, disability and health.

The table below gives an indication of the distribution of funding by area of intervention over the year.

Distribution of FCNR funds from CSR tax contributions, by area of intervention

P o v e r t y

H e a l t h

S p o r t s

C u l t u r e

O t h e r( I n c l u d i n g

A c t o g e t h e r . m u )

E d u c a t i o n

39%

19%2%

22%

3%

1 5%

22%

C O R P O R A T E S U S T A I N A B I L I T Y R E P O R T (CONT’D)


29

FCNR PROVIDED SUPPORT TO THE FOLLOWING NGOS DURING THE PERIOD UNDER REVIEW:

Caritas’ La Caze Lespwar community development projects at Solitude and Olivia.

Open Mind day care centre for those experiencing

psychological distress.

Society for the Welfare of the Deaf.

Teen Hope, which provides non-formal schooling opportunities to adolescents.

ICJM Counselling Department, which provides psychological counselling for children.

Link to Life, a cancer-focused charity.

Kinouété, an NGO working towards the rehabilitation of female ex-prisoners.

Solidarité Maman, which offers remedial courses to primary school students.

Surinam Centre d’Écoute et de Développement, a provider

of remedial courses for primary school students. Adolescent Non-Formal Education

Network (ANFEN).

Fondation Cours Jeanne d’Arc, a specialised primary school for disabled children.

Mille Soleil, a day care centre for the welfare of multi handicapped individuals.


30

ACTOGETHER.MU, A PROJECT CREATED, FINANCED AND MANAGED BY FCNR

www.ACTogether.mu is a web portal that aims to bring together NGOs and social sector organisations in Mauritius and Rodrigues. The portal was created by FCNR in 2007 and is managed and financed by the foundation to this day.

The aim of this communications platform is to give local NGOs a space in which to represent themselves, communicate, share information, and organise collective actions. ACTogether has progressively opened to the private sector, individuals and NGOs. Today, the platform brings together 130 NGOs working against poverty and all types of exclusion.

Among the free services that ACTogether offers its members are an online classified ad space; the creation of infomercials highlighting NGOs’ activities; social media communications; help to promote member events; and press coverage in broadsheets and on the radio thanks to ACTogether’s media partnerships with l’Express and Radio One.

THIS YEAR, ACTOGETHER HAD:

4,789 newsletter subscribers.

465 classified ads placed.

64,000 annual web visitors and 5,300 monthly web visitors.

48 mentions on Radio One.

12 pages of coverage in L’Express’ “solidarité actogether” pull-out.ACTogether also takes part in civil society events in order to continuously raise its own profile and grow its member network. This year, the platform participated in three career fairs, the “Tikoulou” performance and the Disability Business Forum.

According to a participating NGO: “It’s a fantastic and indispensable source of support. It allows us to post about our needs and communicate with the general public.”

C O R P O R A T E S U S T A I N A B I L I T Y R E P O R T (CONT’D)


31

ETHICSThe decision to behave ethically is a moral one; employers and employees must decide what they think is the correct course of action. Ethics applies to all aspects of business conduct and is relevant to the conduct of individuals and the organisation as a whole. This could mean that the organisation rejects the route that would lead to the biggest short-term profit. Together with good corporate governance, ethical behaviour is an integral part of everything that CIEL Textile does.

SOME EXAMPLES OF ETHICAL PRACTICES AT CIEL TEXTILE

• Businesses are conducted within the framework of relevant laws, regulations and internal policies

• Ensuring that all our business partners follow same standard of ethics in terms of employee welfare, society and environment

• Regular awareness campaign on anti-bribery, anti-corruption and privacy and data protection policies

• Grievance reporting procedure

• Responsible procurements procedures

• No discrimination is practiced, Freedom of association and the right to collective bargaining are respected

• Awareness sessions in partnership with ICAC and Transparency Mauritius

PEOPLE COMMITMENTAt CTL, our people are our greatest asset. We provide our employees with a wide-range of training and development programmes, to help them develop their talents and achieve their full potential in a collaborative, safe and healthy workplace.

SOME EXAMPLES OF EMPLOYEE WELFARE

• Free medical tests once a year

• Leisure and sports activities

• Health and social insurances

• Free lunch

• Participation and gifts for festivals

• Talks on themes like tuberculosis, HIV/AIDS, Malaria and EBOLA

SOME EXAMPLES OF TRAINING AND TALENT DEVELOPMENT

• Ongoing training programmes for better performance and self-development

• Regular team building exercises

• Yearly performance appraisals

SOME EXAMPLES OF OCCUPATIONAL HEALTH & SAFETY

• Occupational and Safety Committee in place

• Health and Safety Policy

• Dedicated resource person for Health and Safety Aspects

• Health and Safety Manual

• Incident and accident logbook and reporting

• HR follow-up and convenient placement depending on medical condition.

• Provision and monitoring of Personal Protective Equipment

• Regular checks and maintenance on fire detection, alerting and extinguishing equipment

• Risk assessment, Fire drill and First Aid training

• Awareness sessions on Health Care

WORK ACCIDENTS

• No serious injuries were reported


32

C H A I R M A N ’ S AWA R D F O R M A N U F A C T U R I N G E X C E L L E N C E

STRIVE FOR EXCELLENCE, COACHING, LEARNING & CONTINUOUS IMPROVEMENT

The Chairman’s Award aims to generate a spirit of dynamism, performance and competitiveness among all employees of CIEL Textile, as well as the aim of promoting a culture of excellence.

Launched eight years ago, the Chairman’s Awards reward its best employees and garment making units but also the textile operations with capital-intensive activities such as weaving, spinning and dyeing in the wake of a series of rigorous audits conducted in all plants.

As an opportunity to develop a culture of knowledge sharing between the companies of the same group, to better cope with competition, the Chairman’s Award also encourages the different production units to share experiences, successes and technology through presentations prepared and conducted by staff from various departments.

UNITSin competition

UNITSin competition

EMPLOYEESbest

CDL Knits, Ferney Spinning Mills and Consolidated Fabrics

Floreal Knitwear Mauritius, Madagascar and Bangladesh

Tropic Knits Mauritius and Madagascar

Aquarelle and Laguna Mauritius, Madagascar and India

rewarded for their excellent performance at work

Textile Division:

Garment Division:

Excellence at grassroots:


33

C H A I R M A N ’ S AWA R D F O R M A N U F A C T U R I N G E X C E L L E N C E

OUR VALUES

HARD WORK

TEAM PLAYER

EXCELLENCE

RESULTS DRIVEN

CHAMPION CULTURE

BENCHMARK IN ETHICS

PASSION FOR CUSTOMER SATISFACTION

WINNING FAMILY


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S T A T E M E N T O F C O M P L I A N C E(SECTION 75(3) OF THE FINANCIAL REPORTING ACT)

Name of Public Interest Entity (“PIE”): CIEL Textile Limited

Reporting Period: 1 July 2014 to 30 June 2015

We, the Directors of CIEL Textile Limited, confirm that, to the best of our knowledge:

The PIE has not complied with the following sections of the Code of Corporate Goverance for Mauritius. Reasons for non-compliance are listed below:

Sections not complied with: Reasons for non-compliance:

2.8 - Remuneration of Directors The Board of Directors has resolved not to disclose the remuneration paid to each Director on an individual basis due to the commercial sensitivity of such information.

2.10.3 - Board Appraisal No board appraisal has been conducted as the directors feel that the composition of the Board is stable and efficient in monitoring the affairs of the Group.

2.5.5 – Role and Function of the Chairman

Although the role of the Chairman is assumed by an executive, the CEO reports directly to him and to the Board, giving therefore sufficient segregation of power between the Chairman and the management. The Chairman has the primary responsibility for running the Board and ensuring that the corporate strategy and the related execution are aligned together with operational efficiencies.

7.3.1 - Ethics CIEL Textile Limited is considering developing a Code of Ethics which will apply to its Directors, Officers and employees within the CIEL Textile Group.

P. Arnaud Dalais Jean-Pierre DalaisChairman Director

25 September 2015


35

C O R P O R A T E G O V E R N A N C E R E P O R TCIEL Textile Limited (“CTL” or “the Company”) is pleased to present its Annual Report for the year ended 30 June 2015.

Incorporated on 19 January 1971, CTL is a public company listed on the Development & Enterprise Market (“DEM”) of the Stock Exchange of Mauritius Ltd (“SEM”) and is registered as a Reporting Issuer with the Financial Services Commission (“FSC”) since the promulgation of the Securities Act 2005.

COMPLIANCE The Board of Directors (“the Board”) and Management of CTL are committed to ensuring and maintaining the highest standard of corporate governance and business conduct across all aspects of the Company’s operations and decision-making processes. The Board reiterates its commitment to ensuring and maintaining a high standard of corporate governance within the Company to ensure transparency and protection of the interest of CTL shareholders and stakeholders at large.

It recognises the need to adapt and improve the principles and practices in light of its experience, regulatory requirements and investor expectations.

CTL’s corporate governance philosophy is based on the values of integrity, excellence and responsibility. It emphasises wealth creation for the society and protection and interest enhancement for all stakeholders, without compromising the environment and the health of society at large.

The Company is engaged in upholding standards of corporate governance through awareness of business ethics and supervision of its management team by the Board of Directors. This has brought about the establishment of key committees.

This report describes the main corporate governance framework and compliance of the Company with

the disclosures required by the Code of Corporate Governance for Mauritius (“the Code”).

SALIENT CLAUSES OF THE COMPANY’S CONSTITUTIONThe Constitution of the Company is in conformity with the provisions of the Companies Act 2001 and the DEM Rules of the Stock Exchange of Mauritius Ltd. Its salient features are:

• No restriction on the transfer of fully paid up shares.

• The Board may authorise a distribution by the Company to shareholders if it is satisfied on reasonable grounds that the Company will satisfy the solvency test immediately after the distribution.

• When shareholders exercise a power to approve any of the following, that power may only be exercised by a Special Resolution:

i. an alteration to or revocation of its Constitution or the adoption of a new Constitution;

ii. a major transaction as defined by the Companies Act 2001 (“the Act”);

iii. an amalgamation;

iv. the liquidation of the Company;

v. a reduction of the stated capital under Section 62 of the Act.

• There shall be a quorum for a meeting of the Ordinary Shareholders where two Ordinary Shareholders holding at least thirty four (34) percent of the Ordinary shares in issue are present or represented or have cast postal votes.


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• The Board shall consist of not less than 3 or more than 12 Directors.

• The Directors shall have the power to appoint any person as a Director, either to fill a casual vacancy or as an addition to the existing Directors. The Director appointed to fill up the vacancy shall hold office only until the next following Annual Meeting and shall then be eligible for re-election.

• A Director having an interest shall not be counted in a quorum.

• Every Director shall have one vote and the Chairperson shall not be entitled to a casting vote.

There are no other clauses of the Constitution deemed material enough for special disclosure.

A copy of the Company’s Constitution is available upon request in writing to the Company Secretary at the Registered Office of the Company, 5th Floor, Ebène Skies, rue de l’Institut, Ebène.

SHAREHOLDINGAs at 30 June 2015, the stated capital of the Company was made up as follows:

Rs. 685,865,487 represented by 101,807,589 no par value ordinary shares; and

Rs. 3,500,100 represented by 100 Redeemable B shares.

The holding structure of CTL as at 30 June 2015 was as follows:

C I E L L i m i t e d( C o m p a n y l i s t e d o n

t h e O f f i c i a l M a r k e t o f t h e S E M )

C I E L T e x t i l e L i m i t e d

O t h e r s

4 3 . 6 9 %5 6 . 3 1 %

A detailed Group structure, including the subsidiaries and associates of the Company as at 30 June 2015, has been disclosed on page 4 of the Annual Report.

COMMON DIRECTORSThe names of the common Directors within the holding structure as at reporting date are as follows:

CTL CIEL Limited

P. Arnaud Dalais * *

Jean-Pierre Dalais

L. J. Jérôme De Chasteauneuf **

Antoine Delaporte

Roger Espitalier Noël

J. Harold Mayer

* Chairman**Alternate Director

SUBSTANTIAL SHAREHOLDERThere was only one shareholder holding more than 5% of the share capital of CTL as at 30 June 2015.

Shareholder Number of Shares Held % Held

CIEL Limited 57,332,007 56.31

C O R P O R A T E G O V E R N A N C E R E P O R T (CONT’D)


37

DATA ANALYSIS OF SHAREHOLDINGThe ownership of ordinary share capital by size of shareholding was as follows as at 30 June 2015:

Size of Shareholding (No. of shares)

Number of Shareholders

Number of Shares

Owned

% Holding

1 - 500 823 113,707 0.11

501 - 1,000 166 130,204 0.13

1,001 - 5,000 411 1,014,627 1.00

5,001 - 10,000 140 1,018,890 1.00

10,001 - 50,000 244 5,687,718 5.59

50,001 - 100,000 50 3,553,638 3.49

100,001 - 250,000 44 6,876,561 6.75

250,001 - 500,000 13 4,512,263 4.43

500,001 - 1,000,000 4 2,570,410 2.52

Over 1,000,000 12 76,329,571 74.98

Total 1,907 101,807,589 100.00

SUMMARY BY SHAREHOLDER CATEGORYThe ownership of ordinary share capital by category of shareholding was as follows as at 30 June 2015:

Category Number of Shareholders

Number of Shares Owned

% Holding

Individuals 1,670 24,913,391 24.47Insurance & Assurance Companies 12 2,784,685 2.74

Pensions & Provident Funds 30 6,299,981 6.19

Investment & Trust Companies 45 3,580,778 3.52

Other Corporate Bodies 150 64,228,754 63.08

Total 1,907 101,807,589 100.00

Nb: The above number of shareholders is indicative due to consolidation of multi portfolios for reporting purposes.

SHAREHOLDERS’ AGREEMENTTo the best knowledge of the Company, there has been no such agreement with any of its shareholders.

SHARE OPTION PLANCTL has no Employee Share Option plan.

SHARE REGISTRY & TRANSFER OFFICECTL’s Share Registry & Transfer Office is administered by MCB Registry & Securities Limited. If you have any query regarding your account, wish to change your name or address, or have questions about lost certificates, share transfers or dividends, you may contact the Share Registry & Transfer Office, whose contact details are as follows:

MCB Registry & Securities Limited2nd Floor, MCB Centre9-11 Sir William Newton StreetPort LouisTel: +230 202 5397Fax: +230 208 1167

SHARES IN PUBLIC HANDSIn accordance with the DEM Rules of the Stock Exchange of Mauritius Ltd, at least 10% of the shareholding of CTL is in the hands of the public.

COMMUNICATION WITH THE SHAREHOLDERSCTL’s Board of Directors places great importance on open and transparent communication with all shareholders. It endeavours to keep them regularly informed on matters affecting the Company through official press announcements and disclosures in the Annual Report and at the Annual Meeting of


38

Shareholders, which all Board members are requested to attend.

CTL produces quarterly, half-yearly and annual reports, as required by Law, and publishes them immediately after their approval by CTL’s Board of Directors. These reports are also submitted to the SEM and the FSC. In addition to compliance with periodic reportorial requirements, the Company punctually discloses major and market-sensitive information relating to the Group and its operations.

The Company’s Annual Meeting provides an opportunity for shareholders to meet and discuss matters with the Board relating to the Company and its performance. The external auditors are also present to give their feedback. Shareholders are encouraged to attend the Annual Meeting to remain informed of the Group’s strategy and goals.

All official news release of relevance to the investors are also posted on the CIEL Group’s website: www.cielgroup.com.

The indicative planning for the forthcoming events is as follows:

Event Month

Publication of first quarter results to 30 September 2015 November 2015

Declaration of Interim Dividend November/December 2015

Annual Meeting of shareholders 17 December 2015

Publication of half-yearly results to 31 December 2015 February 2016

Publication of third-quarter results to 31 March 2016 May 2016

Declaration of final dividend June 2016

Publication of end-of-year results September 2016

DIVIDEND POLICYDividends are normally declared and paid twice yearly, subject to the performance of the Company, its cash availability and future capital commitments or as otherwise decided by the Board. Directors ensure that the Company satisfies the solvency test for each declaration of dividend and sign a certificate of compliance with the solvency test.

For the financial year ended 30 June 2015, the Company has declared an interim dividend of Rs. 0.75 per ordinary share on 15 December 2014 (interim dividend declared on 12 December 2013: Rs. 0.75 per ordinary share) and a final dividend of Rs. 1.75 per ordinary share on 2 June 2015 (final dividend declared on 23 June 2014: Rs. 1.25 per ordinary share) representing a 25% increase over the financial year ended 30 June 2014.

Dividends declared in respect of Redeemable B shares during the year under review were as follows:

• Interim dividend of Rs. 15,271.14 per Redeemable B share on 15 December 2014; and

• Final Dividend of Rs. 35,632.66 per Redeemable B share on 2 June 2015.

BOARD OF DIRECTORSThe Board is committed to achieving success for the Company and the Group by building a sustainable business for the long-term, generating shareholder value through consistent profitable growth whilst making sure that its shareholders can always trust the Directors and management to run the business for their benefit.

The Board ensures the appropriate balance of skills, experience, independence and knowledge of the Company thus enabling them to discharge their respective duties and responsibilities effectively.



39

The offices of Chairman and Chief Executive Officer are held separately. The Board currently consists of ten (10) Directors composed of three (3) Executive Directors, five (5) Non-Executive and two (2) Independent Directors.

As part of their role as members of the Board, the Non-Executive Directors and Independent Directors constructively challenge and help in developing proposals on strategy through their range of knowledge, experience and insight from other sectors, whilst complementing the skills and experience of the Executive Directors. They also play a key role in protecting the interests of the shareholders.

The Board of CTL strives in providing entrepreneurial leadership within a framework of prudent and effective controls which enables risk to be assessed and managed. It is also responsible in setting up the Company’s and the Group’s strategic aims, values, standards and in ensuring that the necessary financial and human resources are in place to achieve their objectives.

No Board appraisal has been conducted during the year under review as the Directors feel that the composition of the Board is stable and efficient in monitoring the affairs of the Group.

CHAIRMANThe Chairman ensures that effective governance is realised through leadership and collaboration. The Chairman has also the responsibility of ensuring the efficient operations of the Board and its Committees, of representing the Board externally, and particularly, of communicating with the shareholders at the Annual Meeting.

The Chairman works in close collaboration with the Management team and the Company Secretary in

view of conducting robust interrogation of plans and actions and ensuring high quality decision-making in all areas of strategy, performance, responsibility and accountability.

The role of the Chairman is at the heart of ensuring these actions are sustained and harnessed and can drive a culture of continuous improvement in standards and performance across CTL’s business.

Although the role of the Chairman is assumed by an executive, the CEO reports directly to him and to the Board, giving therefore sufficient segregation of power between the Chairman and the management. The Chairman has the primary responsibility for running the Board and ensuring that the corporate strategy and the related execution are aligned together with operational efficiencies.

DIRECTORS’ PROFILESThe names of the Directors in office as at reporting date, their categories, profiles and directorships in other companies listed on the Official Market of the Stock Exchange of Mauritius Ltd are provided below.

P. ARNAUD DALAIS (60 YEARS)CHAIRMAN - EXECUTIVE DIRECTOR

Mr. P. Arnaud Dalais was appointed Director on 11 May 1989 and Chairman on 9 September 1997. He joined the CIEL Group in August 1977. Under his leadership, the CIEL Group at large has gone through an important growth both locally and internationally. He has played and continues to play an active role at the level of the Mauritian private sector and has assumed the chairmanship of a number of organisations including the Joint Economic Council from 2000 to 2002. He has, in 2010, been appointed Group Chairman of CIEL. Since the amalgamation of CIEL Investment Limited with and into Deep River Investment Limited effective on 24 January 2014,


40

Mr. P. Arnaud Dalais acts as Chairman of CIEL Limited (formerly known as Deep River Investment Limited, the surviving company). He is also the Chairman of Sun Limited and Alteo Limited. He is a member of the Company’s Corporate Governance, Nomination & Remuneration Committee.

Directorship in other listed companies: Alteo Limited, CIEL Limited, Caudan Development Ltd, Sun Limited, Promotion and Development Ltd

JEAN-PIERRE DALAIS (51 YEARS)NON-EXECUTIVE DIRECTOR

Mr. Jean-Pierre Dalais was appointed Director on 13 February 2014. He is the Executive Director of CIEL Limited, formerly known as Deep River Investment Limited, the merged entity with and into which CIEL Investment Limited has been amalgamated. With an MBA from The International University of America, Mr. Dalais acquired working experience from Arthur Andersen (Mauritius and France) before joining the CIEL Group. He played and continues to play an active role in the development of the CIEL Group’s operations both in Mauritius and internationally. He is a member of the Company’s Audit & Risk Committee.

Directorship in other listed companies: Alteo Limited, CIEL Limited, IPRO Growth Fund Ltd, Phoenix Beverages Limited (Alternate Director), Sun Limited

MAURICE P. DALAIS (72 YEARS)NON-EXECUTIVE DIRECTOR

Mr. Maurice P. Dalais was appointed Director of the Company on 18 June 2012. He is the Managing Director of Circonstance Estates Ltd, a family-owned enterprise. He has been a director of Deep River Holding Limited (now CIEL limited) for several years.

Directorship in other listed companies: None

ANTOINE DELAPORTE (55 YEARS)NON-EXECUTIVE DIRECTOR

Mr. Antoine Delaporte was appointed Director of the Company on 25 September 2013 following the recommendation of the Corporate Governance, Nomination and Remuneration Committee of CTL. He is also a member of that committee. Mr. Delaporte is the founder and Managing Director of Adenia Partners Ltd, a private company managing private equity funds in the Indian Ocean and West African regions. He is a Director of Karina International Limited and C.E.A.L. in Mauritius as well as Antenne Réunion in Reunion Island. Mr. Delaporte is also the Chairman of Mauvilac Industries Limited and Mauvilac Chemicals Limited in Mauritius and Newpack, Grand Hotel du Louvre and Socolait in Madagascar. He is a member of the Corporate Governance, Nomination & Remuneration Committee.

Directorship in other listed companies: CIEL Limited

HENRI DE SIMARD DE PITRAY (67 YEARS)INDEPENDENT DIRECTOR

Mr. Henri de Simard de Pitray was appointed Director of the Company on 27 October 2003. He has been during eight years a member of the Board of Spencer Stuart Inc., one of the leading global executive search firms, of which he also chaired the Governance Committee. He currently advises several listed European companies on the functioning of their Boards. He is the Chairman of the Corporate Governance, Nomination & Remuneration Committee of the Company.


ERIC DORCHIES (52 YEARS)EXECUTIVE DIRECTOR

Mr. Dorchies was appointed Director on 29 September 2014. Holder of a diploma from the “Ecole



41

Supérieure de Commerce” in Paris, he joined the Group in1998 as General Manager of Consolidated Fabrics Ltd and was appointed Managing Director of Aquarelle Clothing Ltd in 2003. He was appointed Chief Executive Officer of the woven cluster of the CIEL Textile Group on 1 July 2008.


ROGER ESPITALIER NOËL (60 YEARS)NON-EXECUTIVE DIRECTOR

Mr. Roger Espitalier Noël holds a Certificate in Textile and Knitwear Technology from the City of Leicester Polytechnic. He has headed the operational division of Floreal Knitwear Limited until his nomination as General Manager in 1998. He retired in 2010 after 36 years of service. He was involved in the restructuring and restart of the Madagascar Production Units after the political unrest of 2001 and as from 2008, acted as consultant for CIEL Textile Limited where his activities were focused on the environmental, logistics, utilities as well as the retail aspects of the Knits division. He is now working for CIEL as its Corporate Sustainable Advisor.

Directorship in other listed companies: CIEL Limited, ENL Land Ltd.

J. HAROLD MAYER (50 YEARS)EXECUTIVE DIRECTORCHIEF EXECUTIVE OFFICER

Mr. J. Harold Mayer was appointed Director of the Company on 7 July 2003. He holds a Bachelor in Commerce and qualified as Chartered Accountant - South Africa. He has been very active in the management team of various companies of CIEL Textile Group since 1990 and was appointed Chief Executive Officer in 2006.

Directorship in other listed companies: CIEL Limited, Sun Limited

ALAIN REY (55 YEARS)INDEPENDENT DIRECTOR

Mr. Alain Rey was appointed Director of the Company on 12 November 2007. He is a member of the Institute of Chartered Accountants of England and Wales and holds a BSc in Economics. He was the Chief Executive Officer of Compagnie de Mont Choisy and has a long experience in the textile industry. He is the Chairman of the Company’s Audit & Risk Committee.

Directorship in other listed companies: Rogers Co. Ltd

EDDY YEUNG KAN CHING (66 YEARS)NON-EXECUTIVE DIRECTOR

Mr. Eddy Yeung Kan Ching was appointed Director of the Board of CIEL Textile Limited on 24 June 2003. He has been an active member of the management team of the Group, creating and launching Ferney Spinning Mills Limited in 1978 and Consolidated Dyeing Company Limited (now amalgamated with and into CDL Knits Limited) in 1980. He was accountable for the spinning, weaving and dyeing operations as the Chief Operating Officer of the Group until 30 June 2008 when he retired. He now works as a consultant/mentor for the CIEL Textile Group. He is presently the Chairman of the Board of Fondation CIEL Nouveau Regard.

Directorship in other listed companies: none

L. J. JÉRÔME DE CHASTEAUNEUF (49 YEARS)ALTERNATE DIRECTOR

Mr. Jérôme De Chasteauneuf was appointed Alternate Director of Mr. P. Arnaud Dalais on 1 November 2006. He is a Chartered Accountant of England and Wales and holds a BSc honours in Economics from the London School of Economics and Political Science. He joined CIEL group in 1993 as Corporate Finance Advisor and became Head of Finance of the CIEL


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Group in 2000 where he effectively acts as Group Treasurer. Mr. De Chasteauneuf is the Executive Director of CIEL Limited, the controlling shareholder of CTL. He is a member of the Company’s Audit & Risk Committee.

Directorship in other listed companies: Alteo Limited, CIEL Limited, Sun Limited and Harel Mallac & Co. Ltd.

NEWLY-APPOINTED DIRECTORS

In accordance with the Company’s Constitution, the Board may fill vacancies or newly-created directorships on the Board that may occur between Annual Meetings of shareholders, but so that the total number of Directors shall not at any time exceed the number fixed in accordance with the Constitution.

Upon appointment, Directors are given an introduction to the Group’s operations and are made aware of the statutory provisions concerning insider dealing in the Companies Act 2001, the Securities Act 2005 and relevant FSC Rules and DEM Rules. They are also informed that if they are interested in a transaction, or that their holdings or that of their associates has changed, the interest should be reported to the Company in writing.

PROFILES OF THE SENIOR MANAGEMENT TEAM

J. HAROLD MAYERCHIEF EXECUTIVE OFFICER

Please refer to the section Board of Directors.

ERIC DORCHIES CHIEF EXECUTIVE OFFICER OF THE WOVEN CLUSTER

Please refer to the section Board of Directors.

JEAN-BAPTISTE DOGER DE SPÉVILLE CHIEF EXECUTIVE OFFICER OF THE KNITS AND KNITWEAR CLUSTERS

Holder of a B.Sc in Mechanical Engineering from the University of Natal, RSA and an MBA from the Edinburgh Business School, Mr. de Spéville joined Ferney Spinning Mills Limited in May 2006 as General Manager after 13 years spent in the beverages industry. He was nominated Chief Executive Officer of the knits and knitwear clusters on 1 July 2011.

BOARD ATTENDANCE

Regular Board meetings are held during which the Board considers all statutory matters, including the approval of unaudited quarterly results for publication, of audited financial statements, the declaration of dividends, the review of the Company and Group performance through budgets and forecasts. In addition, the Board meets between scheduled meetings to address any such matters which require its attention.

Board meetings are convened by giving appropriate notice after obtaining approval of the Chairman and of the Chief Executive Officer. As a general rule, detailed agenda, management reports and other explanatory statements are circulated in advance



43

amongst the Directors to facilitate meaningful, informed and focused decisions at the meetings.

The Directors may ask for any explanations or the production of additional information and, more generally, submit to the Chairman any request for information or access to information which might appear to be appropriate to him. In addition to Directors, the CEO of each CTL cluster, key management personnel and outside consultants may be invited to attend Board meetings when deemed necessary.

During the year under review the Board met five times. Decisions were also taken by way of resolutions in writing, agreed and signed by all the Directors then entitled to receive the notice of the meeting.

The attendance of the Directors at Board Meetings during the financial year ended 30 June 2015 was as follows:

Directors Number of Meetings Attended

P. Arnaud Dalais, Chairman 5 out of 5

Jean-Pierre Dalais 5 out of 5

Maurice P. Dalais 5 out of 5

Antoine Delaporte 5 out of 5

Eric Dorchies* 1 out of 5

Roger Espitalier Noël 4 out of 5

Henri de Simard de Pitray 4 out of 5

J. Harold Mayer 5 out of 5

Alain Rey 4 out of 5

Eddy Yeung Kan Ching 4 out of 5

*Appointed on 29 September 2014

The minutes of the proceedings of each Board meeting are recorded by the Company Secretary and are entered in the Company’s minutes’ book. The minutes of each Board meeting are submitted for confirmation at its next meeting and these are then signed by the Chairman and Company Secretary.

BOARD COMMITTEES

To facilitate effective management, the Board delegates clearly defined responsibilities to its specialised committees for the preparation of specific topics submitted for its approval.

In line with the Code, the Board has constituted an Audit & Risk Committee and a Corporate Governance, Nomination & Remuneration Committee which operate within defined terms of reference and independently to the Board.

The Company Secretary acts as secretary to the Board Committees. The minutes of each Board Committee meeting are submitted for confirmation at the following meeting and then signed by the chairman of the Board Committee and the Company Secretary.

The Chairmen of the Board Committees report on the proceedings of the Committees at each Board meeting of the Company.

The Board Committees are authorised to obtain, at the Company’s expense, professional advice both within and outside the Company in order for them to perform their duties.

Audit & Risk Committee

In line with the Code, the Board has nominated an Independent Director to chair the Audit & Risk Committee.

The Committee currently consists of 3 members, namely:

• Mr. Alain Rey (Chairman)

• Mr. Jean-Pierre Dalais

• Mr. L. J. Jérôme De Chasteauneuf


44

During the year under review, the Committee met six times. The composition of the Committee as well as the particulars of attendance at meetings during the year is given in the table below:

Members Number of Meetings Attended

Alain Rey, Chairman 6 out of 6

Jean-Pierre Dalais 2 out of 6

L. J. Jérôme De Chasteauneuf 6 out of 6

The broad terms of reference of the Committee are to:

• Review the integrity of quarterly financial statements and recommend their adoption to the Board of Directors prior to filing and publication;

• Review the effectiveness of the Company’s internal control and risk management systems;

• Monitor and supervise the effective function of the internal audit; and

• Oversee the process for selecting the external auditor, assess the continuing independence of the external auditor and approve the audit fees.

The Committee examined and made recommendations to the Board on the Company’s interim results, audited accounts, budget and dividend. The findings of the internal auditor were also lengthily discussed and adequate recommendations made.

The fees of the external and internal auditors were reviewed by the Committee who proposed same for approval to the Board.

The Financial Controller of CTL Group also attended the meetings. In addition, internal and external auditors were invited to explain the internal audit reports and audited accounts.

Sub-Committees of the Audit & Risk Committee were established at the level of the knits, knitwear and woven clusters. These meetings serve as forum to discuss reports from internal/external auditors and monitor progress on corrective actions prescribed by the auditors in view of eliminating/controlling high risk issues identified. The management of each cluster is also invited to report at these meetings.

The sub-committees currently consist of two members, namely, Mr. L. J. Jérôme De Chasteauneuf (Head of Finance of the CIEL Group /Executive Director of CIEL Limited) and Mr. Bertrand Rivalland (Financial Controller of CTL Group). No candidate has yet been nominated as third member.

Corporate Governance, Nomination & Remuneration Committee

This Committee is composed of three members who are responsible for providing guidance to the Board on aspects of Corporate Governance and for recommending the adoption of policies and best practices. They also look into the remuneration and nomination matters.

The Committee members are:

• Mr. Henri de Simard de Pitray (Chairman)

• Mr. P. Arnaud Dalais

• Mr. Antoine Delaporte

The Directors believe that the success of the Company depends to a large extent on its ability to attract and retain the best performing people and to provide a stimulating and motivating environment. The Corporate Governance, Nomination & Remuneration Committee makes recommendations based on this conviction.



45

The Committee met twice during the year. The attendance of the members was as follows:

MembersNumber of Meetings Attended

Henri de Simard de Pitray, Chairman 2 out of 2

P. Arnaud Dalais 2 out of 2

Antoine Delaporte 2 out of 2

DIRECTORS’ & OFFICERS’ LIABILITY INSURANCE

As permitted by its Constitution, the Company has contracted a Directors’ and Officers’ Liability Insurance, renewed on a yearly basis.

DIRECTORS’ INTERESTS IN SHARES

The Directors’ interests in the capital of the Company as at 30 June 2015 were as follows:

Name of Director

Direct Shareholding

Indirect Shareholding

Number of Shares

Number of Shares

P. Arnaud Dalais 1,813,840 1,550,097

Maurice P. Dalais 107,329 52,223

Jean-Pierre Dalais 2,512,511 1,244,171

Antoine Delaporte - -

Eric Dorchies 1,312,000 -

Roger Espitalier Noël - 97,578

Henri de Simard de Pitray - -

J. Harold Mayer 1,004,300 1,300

Alain Rey 3,052 -

Eddy Yeung Kan Ching 13,140 2,389L. J. Jérôme De Chasteauneuf (Alternate to P. Arnaud Dalais)

157,691 -

The Directors and officers of the Company have been made aware of their responsibilities in disclosing to the Company any acquisition or disposal in the Company’s securities, as per the Securities Act 2005 and DEM rules.

Share dealings by Directors during the year under review were as follows:

Name of Director

Number of Ordinary Shares

Purchased/(Sold) Directly

Number of Ordinary Shares

Purchased/(Sold) Indirectly

P. Arnaud Dalais - -

Maurice P. Dalais 600 (4,500)

Jean-Pierre Dalais - -

Antoine Delaporte - -

Eric Dorchies (500,000) -

Roger Espitalier Noël - -Henri de Simard de Pitray - -

J. Harold Mayer (973,991) -

Alain Rey - -

Eddy Yeung Kan Ching - -L. J. Jérôme De Chasteauneuf (Alternate to P. Arnaud Dalais)

(70,000) -

RISK MANAGEMENT

The Board maintains full control and direction over appropriate strategic, financial, operational and compliance issues and has put in place an organisational structure which formally defined lines of responsibility, delegated authorities and clear operating processes. The systems that the Board has established are designed to safeguard both the shareholders’ investment and the assets of the Group.

CTL Board has empowered the Audit & Risk Committee to ensure that the risk management and internal control framework and systems are adequate to promote transparency and good governance practice across the various lines of activity. In discharging its responsibility towards the Board members, the Audit & Risk Committee relies upon the reports of the internal auditors and of Management to provide assurance on the effectiveness of the internal control framework.


46

A description of the risk factors is disclosed in the notes to the financial statements as well the risk management policies which have been applied.

Some of the prominent risks to which the Company is exposed are:

Financial Risks

These risks comprise of currency risks, price risks, credit risks, liquidity risks as reported in the notes to the financial statements. Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. The Company aims at maintaining flexibility in funding by keeping reliable credit lines available.

Operational Risks

These risks are defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. The Company’s processes are periodically re-evaluated to ensure their effectiveness.

Compliance Risks

This risk is defined as the risk of not complying with laws, regulations and policies. The Company endeavours to comply with the requirements of the relevant legislations and regulatory authorities. CTL is also committed to the protection of the environment and towards society at large.

Reputational Risk

This risk arises from losses due to unintentional or negligent failure to meet a professional obligation to stakeholders. The Company’s strong reputation revolves around effective communication and building solid relationships. Communication between the Company and its stakeholders has been the foundation for a strong reputation.

ICT Failure

This is a significant or sustained loss of ICT capability which could have a material effect on the ability to do business, especially in certain business units. The Management of business units are encouraged to create a central awareness of ICT risk around and ensure, as far as possible, that appropriate disaster recovery plans are in place.

STATEMENT OF REMUNERATION PHILOSOPHY

The Company’s long-term remuneration strategy remains to attract and retain leaders and ensure they are focused on delivering business priorities within a framework aligned with shareholder interests. CTL believes that the remuneration policy provides appropriate incentives to reward performance that protects the long-term interests of its stakeholders and helps to develop an internationally successful business.

The Board has delegated to the Corporate Governance, Nomination and Remuneration Committee, the responsibility of determining the adequate remuneration to be paid to the Board members and Senior Management.

RETIREMENT BENEFIT OBLIGATIONS

The details of the total amount of provisions booked or otherwise recognised by the Company are provided in note 16 of the financial statements.

EXTERNAL AUDITORS

PricewaterhouseCoopers were re-appointed as external auditors for the financial year ended 30 June 2015.

The shareholders will be asked at the forthcoming Annual Meeting to approve the re-appointment of PricewaterhouseCoopers as external auditors and to



47

authorize the Board to fix the remuneration of the auditors for the ensuing year.

INTERNAL AUDIT

The role of the Internal Audit function is to provide to Management, the Audit & Risk Committee and the Board of Directors independent objective assurance and advice aiming at identifying cost efficiencies, providing strategic insights that focus on the risks that matter. It also plays a key role in the maintenance of a sustainable and fit for purpose risk management framework, which provides the right balance between risk, cost and value, in line with CTL’s overall business strategy.

The Internal Audit function is outsourced to BDO & Co. As internal auditors, they have unrestricted access to the records, Management and employees of all operating units within the Group. They report to the Audit & risk Committee and maintain an open and constructive line of communication with Management at all times. This kind of collaboration reaps multiple benefits for the organisation, including enhanced efficiency, and the ability to make informed decisions on how to manage risk.

The Internal Audit coverage is determined through a systematic and collaborative risk based approach which involves members of the Audit & Risk Committee and senior management of each cluster of the Group in the identification of risk areas and the levels of risk within them. The overall audit plan is approved by the Audit & Risk Committee and regularly reviewed in light of changes to the risk landscape.

In line with its mandate to be a value adding partner to the business, BDO & Co. discusses its findings with Management and provides advisory support in the development or risk mitigation action plans. Regular follow-ups are performed by BDO & Co. to assess the implementation of these action plans. Reports

detailing all the internal audit findings are submitted to the Audit & Risk Committee and all high risk areas are presented by BDO & Co. through face to face meetings with the Audit & Risk Committee members on a periodic basis.

COMPANY SECRETARIAT

The Company Secretary is responsible for guiding the Board in discharging its regulatory responsibilities. Directors have unlimited access to the advice and services of the Company Secretary.

The Company Secretary plays an important role in the Company’s corporate governance and ensures that, in accordance with pertinent laws, the proceedings and affairs of the Board, the Company itself and where appropriate, shareholders are properly administered.

THIRD PARTIES AGREEMENTS

CTL holds a service agreement with CIEL Corporate Services Ltd (a subsidiary of CIEL Limited) for the provision of a range of services required in the course of normal activities and day to day operations of the Company such as Corporate Governance, Company Secretary, Legal Support, Communication and Finance.

CTL holds a treasury agreement with Azur Financial Services Limited (a subsidiary of CIEL Limited) for the provision of cash management services, treasury advisory services and foreign exchange & money market brokerage services to the CTL Group.


48

RELATED PARTY TRANSACTIONS

Please refer to note 32 of the Financial Statements.

SHARE PRICE INFORMATION

The Company’s ordinary shares are listed on the Development & Enterprise Market of the Stock Exchange of Mauritius Ltd.

The evolution of the share price over the year has been as follows:

20

28

36

44

52

60

Sept 15Aug 15Jul 15Jun 15May 15April 15March 15Feb 15Jan 15Dec 14Nov 14Oct 14Sept 14Aug 14Jul 14

33.40

36.50

39.0039.00 39.0038.90

35.5034.50

36.75 36.00

38.75 38.00 38.00 38.40 38.50

Rs.

MonthSHAREHOLDERS’ RELATIONS AND COMMUNICATION

The Board is committed to ensuring an effective communication with the shareholders of CTL. The Annual meeting of the Shareholders of CTL provides the Board with the opportunity to meet and engage directly with the Shareholders. It is also the ideal platform for the Shareholders for debates and queries with the Board of Directors.

Upon the approval of the quarterly unaudited accounts and the yearly audited accounts of the Company by the Board of Directors, the said accounts were duly filed with the relevant authorities – the SEM and the FSC. A copy of their abridged versions was also published in the press.

ANNUAL MEETING OF SHAREHOLDERS

The Annual Meeting of Shareholders provides an ideal opportunity to interact with the Board of Directors and the management team on matters affecting the Company and on the Group’s strategy and goals. The external auditors are also present at the meeting to answer any queries.

The notice included in the annual report clearly explains the procedures regarding proxy and postal voting. The deadlines as to when these should be received by the Company Secretary are also stated.



49

ENVIRONMENT AND SUSTAINABILITY REPORTING

CTL believes that growth should not be at the expense of the environment and remains sensible to the climatic change to which the globe is subject to. In its endeavour to preserve the integrity of natural heritage, CTL continuously aims at improving processes in its various operations.

ETHICAL BUSINESS CONDUCT

CTL together with its employees is committed to the highest standards of ethical and professional integrity. This commitment, which is actively endorsed by the Board and Management, is based on a fundamental belief that business should be conducted honestly, fairly and legally whilst preserving the environment.

CIEL Textile Limited is considering developing a Code of Ethics which will apply to its Directors, Officers and employees within the CIEL Textile Group.

HEALTH AND SAFETY POLICY

The Group aims to act as a good employer in providing and maintaining a safe and healthy work environment for all its employees. The objective being the optimisation of work efficiency and the prevention of accidents at work, through the implementation of safety standards in all its operations across the Group.

CTL has set out a culture whereby health and safety are of equal importance as productivity and quality. The said culture is implemented consistently throughout the business by providing and maintaining safe working practices, ensuring employee safety by reducing risks in the working environment and regular inspections of equipment.

CORPORATE SOCIAL RESPONSIBILITY (“CSR”)

CTL is aware of its responsibilities towards promoting social welfare in the island. The Group annually contribute funds to Fondation CIEL Nouveau Regard (“FCNR”), the social vehicle of the CIEL group, whose objectives are to develop community projects across the island and to help the society at large.

The Board has acknowledged its adherence to CIEL Limited’s Corporate Sustainability Policy (“the Policy”) which deals with:

• Business ethics

• Human rights and labour practices

• Environmental responsibility

• Sustainable Design, Planning and Procurement

• Stakeholders Satisfaction & Engagement

CTL, as subsidiary of CIEL Limited, will abide to the Policy and implement same at the level of its subsidiaries.

STOCK EXCHANGE OF MAURITIUS SUSTAINABILITY INDEX (“SEMSI”)

CTL has been awarded the Sustainability Index Rating score of 68% by the SEM through its sustainability Index. Such index provides a benchmarking system for Mauritian companies in terms of best sustainable practices on governance, economic, social and environmental grounds.

Clothilde de Comarmond, ACIS Per CIEL Corporate Services Ltd Company Secretary

25 September 2015


50

NATURE OF BUSINESS

The principal activity of the Company is that of an investment holding company with interests in a number of companies involved in textile activities.

REMUNERATION OF THE DIRECTORS

The emoluments of the Directors have not been disclosed on an individual basis due to the commercial sensitivity of that information.

Remuneration and benefits of the Directors received from the Company and its subsidiaries were as follows:

The Company Subsidiaries

2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000

Executive Directors Nil Nil 93,605 64,888Non-Executive & Independent Directors

2,010 2,077 1,650 1,593

2015 2014 2015 2014

Rs ’000 Rs’000 Rs’000 Rs’000Executive Directors of Subsidiaries Nil Nil 81,185 81,120

The Non-Executive and Independent Directors were paid a fixed annual fee of Rs. 150,000 as well as an attendance fee of Rs. 22,500 per meeting during the year ended 30 June 2015.

Following the recommendation of the Corporate Governance, Nomination & Remuneration committee, it was decided that the members of the Board committees would be remunerated as follows:

Corporate Governance, Nomination & Remuneration Committee:

• Rs. 150,000 per year for the Chairman of the Committee and

• Rs. 100,000 per year for the other members.

AUDIT & RISK COMMITTEE:

• Rs. 225,000 per year for the Chairman of the Committee and

• Rs. 150,000 per year for the other members

Executives sitting on the Board Committees did not perceive any Directors’ fee, being remunerated by the subsidiaries of the Company.

DIRECTORSHIPS OF SUBSIDIARIES

Please refer to page 132 of this report.

SERVICE CONTRACTS

The Chief Executive Officer of CTL, Chief Executive Officer of the knits and knitwear clusters and Chief Executive Officer of the woven cluster hold service contracts with the Company, with no expiry terms. Executive Directors of the subsidiaries of the Company also hold service contracts with either the Company or the subsidiaries of the Company, with no expiry terms.

DONATIONS

Donations made during the year by the Company and its subsidiaries were as follows:

Company (Rs’000)

Subsidiaries (Rs‘000)

2015 2014 2015 2014Corporate Social Responsibility (“CSR”)*

5 - 5,635 487

Political - - 3,000 -

Charitable - - 667 57

*The CSR contribution is channelled through FCNR, registered as a special purpose vehicle accredited to receive CSR contribution. CTL is one of the promoters of FCNR.

O T H E R S T A T U T O R Y D I S C L O S U R E S(PURSUANT TO SECTION 221 OF THE COMPANIES ACT 2001)


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CONTRACT OF SIGNIFICANCE

There were no contracts of significance subsisting during or at the end of the year in which a Director of the Company is or was materially interested, either directly or indirectly.

EXTERNAL AUDIT FEES

External Audit fees for the year were as follows:

The Company (Rs’000)

Subsidiaries (Rs’000)

2015 2014 2015 2014

Audit fees paid to:

PricewaterhouseCoopers 650 600 5,050 4,900

Overseas auditors - - 2,914 2,826

650 600 7,964 7,726Fees paid for other services provided by:PricewaterhouseCoopers* 40 37 685 1,500

BDO & Co** 950 900 - -

Overseas auditors - - 323 726

990 937 1,008 2,226

Note: Fees are exclusive of VAT

* Includes Tax compliance fees and IFRS training fees. ** Includes Group accounts consolidation fees.

INTERNAL AUDIT FEES

Fees paid in respect of the internal audit for the year under review was Rs. 1,641,000.

ON BEHALF OF THE BOARD

P. Arnaud Dalais Jean-Pierre Dalais Chairman Director

25 September 2015


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Directors acknowledge their responsibilities for:

• Adequate accounting records and maintenance of effective internal control systems;

• The preparation of financial statements which fairly present the state of affairs of the Company as at the end of the financial year and the results of its operations and cash flows comply with International Financial Reporting Standards (IFRS); and

• The selection of appropriate accounting policies supported by reasonable and prudent judgments.

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

The Directors report that:

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

• Appropriate accounting policies supported by reasonable and prudent judgments and estimates have been used consistently;

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

• The code of Corporate Governance has been adhered to in all material aspects and reasons provided for non-compliance.

ON BEHALF OF THE BOARD

P. Arnaud Dalais Jean-Pierre Dalais Chairman Director

25 September 2015

S T A T E M E N T O F D I R E C T O R S ’ R E S P O N S I B I L I T I E S IN RESPECT OF THE PREPARATION OF FINANCIAL STATEMENTS


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C E R T I F I C A T E O F C O M P A N Y S E C R E T A R Y

In our capacity as Company Secretary, we hereby certify, to the best of our knowledge and belief, that CIEL Textile Limited has filed with the Registrar of Companies, for the financial year ended 30 June 2015, all such returns as are required of the company under The Companies Act 2001, and that all such returns are true, correct and up to date.


25 September 2015

C O N T E N T S

INDEPENDENT AUDITORS’ REPORT 56

STATEMENTS OF FINANCIAL POSITION 58

INCOME STATEMENTS 59

STATEMENTS OF COMPREHENSIVE INCOME 60

STATEMENTS OF CHANGES IN EQUITY 61

STATEMENTS OF CASH FLOWS 63

NOTES TO THE FINANCIAL STATEMENTS 64


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REPORT ON THE FINANCIAL STATEMENTSWe have audited the consolidated financial statements of CIEL Textile Limited (the “Company”) and its subsidiaries (together the “Group”) and separate financial statements of the Company on pages 58 to 130 which comprise the Group’s and the Company’s statements of financial position at 30 June 2015 and their respective income statements, statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in compliance with the requirements of the Mauritian Companies Act 2001, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITYOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

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

OPINIONIn our opinion, the financial statements on pages 58 to 130 give a true and fair view of the financial position of the Group and of the Company at 30 June 2015 and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the Mauritian Companies Act 2001.

I N D E P E N D E N T A U D I T O R ’ S R E P O R T


57

I N D E P E N D E N T A U D I T O R ’ S R E P O R T

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

MAURITIAN COMPANIES ACT 2001The Mauritian Companies Act 2001 requires that in carrying out our audit we consider and report to you on the following matters. We confirm that:

(a) we have no relationship with or interests in the Company or any of its subsidiaries other than in our capacity as auditor and tax advisor of the Company and some of its subsidiaries;

(b) we have obtained all the information and explanations we have required; and

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

FINANCIAL REPORTING ACT 2004The directors are responsible for preparing the corporate governance report. Our responsibility is to report on the extent of compliance with the Code of Corporate Governance (the “Code”) as disclosed in the annual report on pages 35 to 52 and on whether the disclosure is consistent with the requirements of the Code.

In our opinion, the disclosure in the annual report on pages 35 to 52 is consistent with the requirements of the Code.

OTHER MATTERThis report, including the opinion, has been prepared for and only for the Company’s shareholders, as a body, in accordance with Section 205 of the Mauritian Companies Act 2001 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

PricewaterhouseCoopersGilles Beesoo, licensed by FRC

25 September 2015


58

STATEMENTS OF FINANCIAL POSITIONA S AT 30 J U N E 20 15

THE GROUP THE COMPANYNotes 2015 2014 2015 2014

ASSETS Rs'000 Rs'000 Rs'000 Rs'000Non-current assetsProperty, plant and equipment - at fair value 3 1,873,304 1,907,413 119,326 122,414Property, plant and equipment - at cost 3 1,054,453 920,695 - -

2,927,757 2,828,108 119,326 122,414Intangible assets 4 16,226 16,164 - -Investments in:- Subsidiary companies 5 - - 1,201,801 1,201,801- Available for sale investments 7 6,712 6,712 6,712 6,712

6,712 6,712 1,208,513 1,208,513Non-current receivables 8 29,561 58,308 - -Deferred income tax assets 9 73,886 49,998 - -

3,054,142 2,959,290 1,327,839 1,330,927Current assetsInventories 10 2,590,497 2,462,406 - -Trade and other receivables 11 2,589,445 2,339,194 207,567 156,893Restricted cash 26(c) 52,185 - - -Cash and cash equivalents (excluding bank overdrafts and restricted cash) 26(b) 574,704 247,892 1,601 3,972

5,806,831 5,049,492 209,168 160,865

Non-current assets classified as held for sale 12 - - - -

TOTAL ASSETS 8,860,973 8,008,782 1,537,007 1,491,792

EQUITY AND LIABILITIESCapital and reservesShare capital 13 685,865 685,865 685,865 685,865Revaluation and other reserves 768,082 759,213 131,874 131,874Retained earnings 2,627,546 2,179,233 99,206 98,086Owners' interest 4,081,493 3,624,311 916,945 915,825Non-controlling interests 261,197 179,390 - -Total equity 4,342,690 3,803,701 916,945 915,825

Non-current liabilitiesBorrowings 14 98,374 153,615 - -Deferred income tax liabilities 9 240,082 236,573 19,698 20,554Retirement benefit obligations 16 189,937 177,804 - -

528,393 567,992 19,698 20,554Current liabilitiesTrade and other payables 17 1,537,001 1,697,321 422,006 428,112Provisions 18 26,368 20,528 - -Borrowings 14 2,227,373 1,751,969 159 6Current income tax liabilities 19 20,985 40,012 36 36Dividends payable 25 178,163 127,259 178,163 127,259

3,989,890 3,637,089 600,364 555,413

TOTAL LIABILITIES 4,518,283 4,205,081 620,062 575,967

TOTAL EQUITY AND LIABILITIES 8,860,973 8,008,782 1,537,007 1,491,792

These financial statements have been approved for issue by the Board of Directors on 25 September 2015.

P. Arnaud DalaisChairman

Jean-Pierre DalaisDirector

The notes on pages 64 to 130 form an integral part of these financial statements.Auditors’ report on pages 56 and 57.


59

INCOME STATEMENTS F O R T H E Y E A R E N D E D 30 J U N E 2015

THE GROUP THE COMPANY Notes 2015 2014 2015 2014

Rs'000 Rs'000 Rs'000 Rs'000

Revenue 31 10,119,098 9,565,100 259,609 207,687

Earnings before interest,

tax, depreciation and amortisation 20 1,114,135 969,945 262,796 210,164

Depreciation and amortisation (201,266) (219,322) (3,088) (2,835)

Earnings before interest and tax 912,869 750,623 259,708 207,329

Finance income 23 11,976 6,494 4,638 4,370

Finance costs 23 (67,642) (83,108) (9,496) (8,065)

Net finance costs 23 (55,666) (76,614) (4,858) (3,695)

Profit from ordinary activities 857,203 674,009 254,850 203,634

Non recurring items 20(b) - (23,449) - -

Profit before taxation 22 857,203 650,560 254,850 203,634

Income tax (expense)/credit 19(b) (94,830) (99,472) 789 (36)

Profit for the year 762,373 551,088 255,639 203,598

2015 2014

Rs'000 Rs'000

Profit attributable to :

Owners of the company 702,832 517,195

Non-controlling interests 59,541 33,893

762,373 551,088

Basic earnings per share 24 Rs. 6.90 5.08



60

STATEMENTS OF COMPREHENSIVE INCOME F O R T H E Y E A R E N D E D 30 J U N E 2015


Rs'000 Rs'000 Rs'000 Rs'000

Profit for the year 762,373 551,088 255,639 203,598

Other comprehensive income

Items that will not be reclassified to profit or lossRevaluation (deficit)/surplus 15 (10,486) 276,473 - 12,624

Deferred tax on revaluation surplus 9 - (44,593) - (2,146)

Remeasurements of post retirement

benefit obligations 15 (1,960) (11,819) - -

Deferred tax on remeasurements of post

retirement benefit obligations 9 (330) 3,359 - -

(12,776) 223,420 - 10,478

Items that may be subsequently reclassified to profit or lossAmount recognised in cash flow hedge reserve 33 49,801 (40,230) - -

Deferred tax on cash flow hedge reserve 9 (3,763) 2,003 - -

Exchange differences 15 (2,127) (39,558) - -

43,911 (77,785) - -

Other comprehensive income for the year 31,135 145,635 - 10,478

Total comprehensive income for the year 793,508 696,723 255,639 214,076

2015 2014

Rs'000 Rs'000

Total comprehensive income attributable to:

Owners of the company 711,701 650,958

Non-controlling interests 81,807 45,765

793,508 696,723



61

STATEMENTS OF CHANGES IN EQUITY F O R T H E Y E A R E N D E D 30 J U N E 2015

THE GROUP (Attributable to the owners of the company)

NotesStated Capital

Capital Redemp-

tion Reserve

Revalua-tion

SurplusGeneral Reserve

Actuarial Losses

Cash Flow

Hedge Reserve

Retained Earnings

Translation of foreign

operations Sub-Total

Non- controlling

interestsTotal

EquityAt 30 June 2015 Rs'000 Rs'000 Rs'000 Rs'000 Rs'000 Rs'000 Rs'000 Rs'000 Rs'000 Rs'000 Rs'000

Balance as at 1 July 2014 685,865 75,000 864,091 1,505 (57,854) (38,227) 2,179,233 (85,302) 3,624,311 179,390 3,803,701Profit for the year - - - - - - 702,832 - 702,832 59,541 762,373Other comprehensive income - - (10,322) - (897) 45,907 - (25,819) 8,869 22,266 31,135Transactions with owners:

Ordinary dividends 25 - - - - - - (254,519) - (254,519) - (254,519)Balance as at 30 June 2015 685,865 75,000 853,769 1,505 (58,751) 7,680 2,627,546 (111,121) 4,081,493 261,197 4,342,690

-At 30 June 2014

Balance as at 1 July 2013 685,865 75,000 602,890 1,505 (49,655) - 1,843,260 (50,083) 3,108,782 217,311 3,326,093Profit for the year - - - - - - 517,195 - 517,195 33,893 551,088Other comprehensive income - - 215,408 - (8,199) (38,227) - (35,219) 133,763 11,872 145,635Transactions with owners:

Changes in ownership interest in subsidiaries that do not result in a loss of control 27(a) - - 45,793 - - - 22,393 - 68,186 (83,686) (15,500)Ordinary dividends 25 - - - - - - (203,615) - (203,615) - (203,615)Balance as at 30 June 2014 685,865 75,000 864,091 1,505 (57,854) (38,227) 2,179,233 (85,302) 3,624,311 179,390 3,803,701



62

STATEMENTS OF CHANGES IN EQUITYF O R T H E Y E A R E N D E D 30 J U N E 2015

THE COMPANY NotesStated Capital

Revaluation Surplus

Retained Earnings Total

Rs’000 Rs’000 Rs’000 Rs’000

At 1 July 2014 685,865 131,874 98,086 915,825Profit for the year - - 255,639 255,639Transactions with owners:

Ordinary dividends 25 - - (254,519) (254,519)At 30 June 2015 685,865 131,874 99,206 916,945

At 1 July 2013 685,865 121,396 98,103 905,364Profit for the year - - 203,598 203,598Other comprehensive income - 10,478 - 10,478Transactions with owners:

Ordinary dividends 25 - - (203,615) (203,615)At 30 June 2014 685,865 131,874 98,086 915,825



63

STATEMENTS OF CASH FLOWS F O R T H E Y E A R E N D E D 30 J U N E 2015


Rs’000 Rs’000 Rs’000 Rs’000

OPERATING ACTIVITIES

Cash generated from operations 26(a) 708,900 690,822 206,016 213,368

Interest received 11,976 6,494 4,638 4,370

Tax paid 19(a) (138,345) (109,389) (67) -

Interest paid (67,642) (83,108) (9,496) (8,065)

Net cash generated from operating activities 514,889 504,819 201,091 209,673

INVESTING ACTIVITIES

Acquisition of subsidiary, net of cash acquired 27(b) - (114,957) - -

Purchase of additional shares in subsidiary 27(a) - (15,500) - -

Proceeds from disposal of non current assets held

for sale 12 - 53,700 - -

Purchase of property, plant and equipment 3 (337,517) (326,688) - -

Purchase of intangible assets 4 (5,892) (4,532) - -

Net movement in non-current receivables 28,747 (33,332) - -

Net movement in restricted cash 26(c) (52,185) - - -

Proceeds from disposal of property,

plant and equipment 20,022 7,730 - -

Net cash used in investing activities (346,825) (433,579) - -

FINANCING ACTIVITIES

Net movement in bank and import loans 131,356 1,837 - -

Net movement in bills discounted 34,296 173,612 - -

Net movement on finance leases (19,243) (18,908) - -

Net movement in debentures - (28,000) - (28,000)

Redemption of Redeemable preference shares - (30,000) - -

Ordinary Dividends paid to owners of the

parent 25(b) (203,615) (178,164) (203,615) (178,164)

B shares dividends paid (4,072) (3,563) - -

Net cash used in financing activities (61,278) (83,186) (203,615) (206,164)

Net increase/(decrease) in cash and cash equivalents 106,786 (11,946) (2,524) 3,509

Exchange differences (49,104) (8,601) - -

At 1 July, (277,330) (256,783) 3,966 457

At 30 June 26(b) (219,648) (277,330) 1,442 3,966



64

1. CORPORATE INFORMATION

CIEL Textile Limited is a public Company incorporated and domiciled in Mauritius. It is quoted on the Development and Enterprise Market (DEM). Its registered office is situated on the 5th Floor Ebène Skies, Rue de L’Institut, Ebène.

The main activity of the Company is that of investment holding while the Group is engaged in the manufacture and sales of knitted and woven garments.

These financial statements will be submitted for consideration and approval at the forthcoming Annual Meeting of Shareholders of the Company.

2. ACCOUNTING POLICIES

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

2.1 Basis of Preparation

The financial statements have been prepared on a historical cost basis as modified by the revaluation of land and buildings and forward contracts. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed on pages 66 and 67. The financial statements are presented in thousand rupees except where otherwise indicated. Where necessary, comparative figures have been regrouped and/or restated to conform to the current year’s presentation.

The financial statements include the consolidated financial statements of the parent company and its subsidiaries (together the “Group”) and the separate financial statements of the parent company (the “Company”).

Statement of Compliance

The financial statements of CIEL Textile Limited have been prepared in accordance with International Financial Reporting Standards (IFRSs) and comply with the Companies Act 2001.

Amendments to published Standards and Interpretations effective in the reporting period

Amendments to IAS 32, ‘Offsetting Financial Assets and Financial Liabilities’, clarify the requirements relating to the offset of financial assets and financial liabilities. The amendment is not expected to have any impact on the Group’s financial statements.

Amendments to IFRS 10, IFRS 12 and IAS 27, ‘Investment Entities’, define an investment entity and require a reporting entity that meets the definition of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss in its consolidated and separate financial statements. Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure requirements for investment entities. As the Group is not an investment entity, the standard has no impact on the Group’s financial statements.

IFRIC 21, ‘Levies’, sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation addresses what obligating event that gives rise to pay a levy and when should a liability be recognised. The Group is not subject to levies so the interpretation has no impact on the Group’s financial statements.

Amendments to IAS 36, ‘Recoverable Amount Disclosures for Non- financial Assets’, remove the requirement to disclose the recoverable amount of a cash-generating unit (CGU) to which goodwill or other intangible assets with indefinite useful lives had been allocated. The amendment has no impact on the Group’s financial statements.

Amendments to IAS 39, ‘Novation of Derivatives and Continuation of Hedge Accounting’, provide relief from the requirement to discontinue hedge accounting when a derivative designated as a hedging instrument is novated under certain circumstances. The amendments also clarify that any change to the fair value of the derivative designated as a hedging instrument arising from the novation should be included in the assessment and measurement of hedge effectiveness. The amendment has no impact on the Group’s financial statements.

NOTES TO THE FINANCIAL STATEMENTS30 J U N E 2015


65


2. ACCOUNTING POLICIES (CONT’D)

Amendments to published Standards and Interpretations effective in the reporting period (cont’d)

Defined Benefit Plans: Employee Contributions (Amendments to IAS 19) applies to contributions from employees or third parties to defined benefit plans and clarifies the treatment of such contributions. The amendment distinguishes between contributions that are linked to service only in the period in which they arise and those linked to service in more than one period. The objective of the amendment is to simplify the accounting for contributions that are independent of the number of years of employee service, for example employee contributions that are calculated according to a fixed percentage of salary.

Entities with plans that require contributions that vary with service will be required to recognise the benefit of those contributions over employee’s working lives. The amendment has no impact on the Group’s financial statements.

Annual Improvements 2010-2012 Cycle

IFRS 2, ‘Share based payments’ amendment is amended to clarify the definition of a ‘vesting condition’ and separately defines ‘performance condition’ and ‘service condition’. The amendment has no impact on the Group’s financial statements.

IFRS 3, ‘Business combinations’ is amended to clarify that an obligation to pay contingent consideration which meets the definition of a financial instrument is classified as a financial liability or equity, on the basis of the definitions in IAS 32, ‘Financial instruments: Presentation’. It also clarifies that all non-equity contingent consideration is measured at fair value at each reporting date, with changes in value recognised in profit and loss. The amendment has no impact on the Group’s financial statements.

IFRS 8, ‘Operating segments’ is amended to require disclosure of the judgements made by management in aggregating operating segments. It is also amended to require a reconciliation of segment assets to the entity’s assets when segment assets are reported. The amendment has no impact on the Group’s financial statements.

IFRS 13 (Amendment), ‘Fair Value Measurement’ clarifies in the Basis for Conclusions that short-term receivables and payables with no stated interest rates can be measured at invoice amounts when the effect of discounting is immaterial. The amendment has no impact on the Group’s financial statements.

IAS 16,’Property, plant and equipment’ and IAS 38,’Intangible assets’ are amended to clarify how the gross carrying amount and the accumulated depreciation are treated where an entity uses the revaluation model. The amendment has no impact on the Group’s financial statements.

IAS 24,’Related party disclosures’ is amended to include, as a related party, an entity that provides key management personnel services to the reporting entity or to the parent of the reporting entity (the ‘management entity’). Disclosure of the amounts charged to the reporting entity is required. The amendment has no impact on the Group’s financial statements.

Annual Improvements 2011-2013 Cycle

IFRS 1, ‘First-time Adoption of International Financial Reporting Standards’ is amended to clarify in the Basis for Conclusions that an entity may choose to apply either a current standard or a new standard that is not yet mandatory, but permits early application, provided either standard is applied consistently throughout the periods presented in the entity’s first IFRS financial statements. The amendment has no impact on the Group’s financial statements, since the Group is an existing IFRS preparer.

IFRS 3,’Business combinations’ is amended to clarify that IFRS 3 does not apply to the accounting for the formation of any joint venture under IFRS 11. The amendment has no impact on the Group’s financial statements.

IFRS 13,’Fair value measurement’ is amended to clarify that the portfolio exception in IFRS 13 applies to all contracts (including non-financial contracts) within the scope of IAS 39 or IFRS 9. The amendment has no impact on the Group’s financial statements.

IAS 40,’Investment property’ is amended to clarify that IAS 40 and IFRS 3 are not mutually exclusive. IAS 40 assists users to distinguish between investment property and owner-occupied property. Preparers also need to consider the guidance in IFRS 3 to determine whether the acquisition of an investment property is a business combination. The amendment has no impact on the Group’s financial statements.



66


2.1 Basis of Preparation (cont’d)

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

Certain standards, amendments to published standards and interpretations have been issued that are mandatory for accounting periods beginning on or after 1 January 2015 or later periods, but which the Group has not early adopted.

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

Defined Benefit Plans: Employee Contributions (Amendments to IAS 19)

IFRS 14 Regulatory Deferral Accounts

Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)

Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38)

IFRS 15 Revenue from Contract with Customers

Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41)

Equity Method in Separate Financial Statements (Amendments to IAS 27)

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)

Annual Improvements to IFRSs 2012-2014 Cycle

Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28)

Disclosure Initiative (Amendments to IAS 1)

The Group has early adopted the following standards and interpretations for the year ended 30 June 2015:

IFRS 9 Financial instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39). Refer to Note 34 where the impact of the application of IFRS 9 is disclosed.

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

Significant Accounting Judgements and Estimates

Judgments

In the process of applying the Group’s accounting policies, the directors have made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

Consolidation of Laguna Clothing (Mauritius) Ltd (formerly known as New Island Clothing Limited) and Laguna Clothing Ltd

Laguna Clothing (Mauritius) Ltd (formerly known as New Island Clothing Limited) and Laguna Clothing Ltd have been consolidated in the Group’s financial statements, albeit holdings of 50% in each respective company, as the power to govern the financial and operating policies of each of those subsidiaries remains with the Group, under an agreement.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

NOTES TO THE FINANCIAL STATEMENTS30 J U N E 201 5


67


Significant Accounting Judgements and Estimates (cont’d)

Estimates and assumptions (cont’d)

Deferred tax assets

Deferred tax assets are recognised for all unused tax losses and unused tax credits to the extent that it is probable that taxable profits will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Pension benefits

The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions will impact the carrying amount of pension obligations.

The subsidiaries in their respective countries of operations determine their appropriate discount rates at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Company considers the interest rates to high-quality government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension obligation.

Other key assumptions for pension obligations are based in part on current market conditions.

Revaluation of Land and Buildings

Land and Buildings are measured at revalued amounts with changes in fair value being recognised in ‘other comprehensive income’. The Group engaged independent valuation specialists to determine fair value as at 30 June 2015.

Provision for slow-moving inventories

Management is required to exercise significant judgement in estimating the provision for slow-moving inventories.

The following are considered to provide for inventories write-off:

• Apply appropriate procedures to identify slow-moving and obsolete stocks;

• Make reasonable and prudent estimates of the prices obtainable in the market in which the goods are expected to be sold at the time at which they will be available for sale; and

• Take into account projected time to completion and sale (for example, repair costs for damaged stocks and sales commission).

Depreciation and amortisation rates

The Group depreciates or amortises its assets to their residual values over their estimated useful lives. The estimation of useful lives is based on historical performance and expectation about future use and requires significant degree of judgement. The residual value of an asset is the estimated net amount that the Group would currently obtain from disposal of the asset, if the asset were already of the age and in condition expected at the end of its useful life.

The directors therefore make estimates based on historical experience and use best judgement to assess the useful lives of assets and to forecast the expected residual values of the assets at the end of their expected useful lives.

Limitation of sensitivity analysis

Sensitivity analysis in respect of market risk demonstrates the effect of a change in a key assumption while other assumptions remain unchanged. In reality, there is a correlation between the assumptions and other factors. It should also be noted that these sensitivities are non-linear and larger or smaller impacts should not be interpolated or extrapolated from these results.

Sensitivity analysis does not take into consideration that the Group’s assets and liabilities are managed. Other limitations include the use of hypothetical market movements to demonstrate potential risk that only represent the Group’s view of possible near-term market changes that cannot be predicted with any certainty.



68


2.1 Basis of Preparation (cont’d)

Summary of Significant Accounting Policies

(a) Segment reporting

Segment information presented relate to operating segments that engage in business activities for which revenues are earned and expenses incurred. The Chief Operating Officer (COO) of the different clusters of the Group (Fine Knits, Knitwear, Woven and Retail) are the Chief Operating Decision Makers (CODM). Management has determined the operating segments based on the information reviewed by the above CEOs for the purposes of allocating resources and assessing performance.

The CEOs consider the business from both a geographic and product perspective. Geographically, management considers the performance in Mauritius, Madagascar, Asia and South Africa. From a product perspective, management separately considers the activities in the Fine Knits, Knitwear, Woven and Retail clusters. The CEOs assess performance of the operating segments based on revenue and profit metrics.

Operating segments are reported in a manner consistent with the internal reporting provided to the CODM.

(b) Foreign currencies

Functional currency and presentation currency

The companies in the Group prepare their financial reports in the currency used in the primary economic environment in which they operate which is known as the functional currency. These reports provide the basis for the consolidated financial statements. The consolidated financial statements are presented in Mauritian Rupees being the Parent Company’s functional currency, and all values are rounded to the nearest thousand (Rs’000), except when otherwise indicated.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when deferred in ‘other comprehensive income’ as qualifying cash flow hedges.

Foreign exchange gains and losses are presented in profit or loss within ‘Earnings before interest, tax, depreciation and amortisation’.

Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss and other changes in carrying amount are recognised in ‘other comprehensive income’. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available for sale are included in the fair value reserve in ‘other comprehensive income’.

The statements of financial position and profit or loss for all foreign operations (none of which has the currency of a hyperinflationary economy) whose functional currency is not the presentation currency are translated into the presentation currency using the following procedures:

• assets and liabilities for each reporting period presented are translated at the closing rate at the date of that statement of financial position;

• income and expenses for each profit or loss presented are translated at the average exchange rate for the respective year, unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions;

• equity items are translated at closing rate; and• all exchange differences that arise are reported in ‘other comprehensive income’.



69


Summary of Significant Accounting Policies (cont’d)

(b) Foreign currencies (cont’d)

Translation of foreign operations

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in ‘other comprehensive income’.

(c) Property, plant and equipment

Land and buildings comprise mainly factories, retail outlets and offices. Land and buildings are shown at fair value, based on valuations by external independent valuers, less subsequent depreciation for buildings. Valuations are performed with sufficient regularity to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

Subsequent costs are included in the assets’ carrying amount or recognised as a separate asset as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred.

Increases in the carrying amount arising on revaluation are credited to ‘other comprehensive income’ and shown as revaluation surplus in shareholders’ equity. Decreases that offset previous increases of the same asset are charged against the revaluation surplus directly in equity; all other decreases are charged to profit or loss. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount restated to the revaluated amount of the asset.

The land and buildings are revalued by an independent Land Surveyor annually.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amount and are included in profit or loss. On disposal of revalued assets, amounts in revaluation and other reserves relating to that asset are transferred to retained earnings.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Land is not depreciated. Depreciation on other assets is calculated on the straight-line method to write off the cost of assets, or the revalued amounts, to their residual values over their estimated useful life as follows:

Buildings - 2 % p.a

Buildings on leasehold land - 2 % p.a

Plant and machinery - 5% - 20% p.a

Motor vehicles - 20% p.a

Furniture and equipment - 5% - 20% p.a

Computer equipment - 20% p.a

Other items - 10% - 20% p.a

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



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(d) Investments in subsidiaries

Separate financial statements of the Company

In the separate financial statements of the Company, investments in subsidiary companies are carried at cost. The carrying amount is reduced to recognise any impairment in the value of individual investments.

Consolidated financial statements

(a) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to ‘other comprehensive income’. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. When necessary amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies.

(b) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

(c) Disposal of subsidiaries

When the Group ceases to have control any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate,



71

joint venture or financial asset. In addition, any amounts previously recognised in ‘other comprehensive income’ in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in ‘other comprehensive income’ are reclassified to profit or loss.

(d) Amalgamation of De Nyon Limited, Floreal Manufacturing Limited and Aquarelle Limitée

The Company obtained clearance from the Registrar of Companies to amalgamate the activities of its wholly owned subsidiary, De Nyon Limited on 12 June 2015, and wholly owned subsidiaries, Floreal Manufacturing Limited and Aquarelle Limitée on 15 June 2015. The company has therefore applied the predecessor accounting method to account for the combination as follows:

• Incorporated the amalgamated entities’ results and statement of financial position as if all entities had always been combined.

• The financial statements consequently reflect all entities’ full year results and comparative results, even though the business combination may have occurred part of the way throughout the year.

(e) Investments in associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights.

Separate financial statements of the Company

Investments in associates are carried at cost. The carrying amounts are reduced to recognise any impairment in the value of individual investments. The impairment loss is taken to profit or loss.

Consolidated financial statements

The Group’s investments in associated companies are accounted for using the equity method of accounting. The investment in associate is thus carried in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associated companies, less any impairment loss. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised.

The profit or loss reflects the share of the results of operations of the associates. Where there has been a change recognised directly in the equity of the associates, the Group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity.

When the Group’s share of losses exceeds the carrying amount of the investment, the investment is reported at nil value and recognition is discontinued except to the extent of the Group’s commitment on behalf of the associated company.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

Dilution gains and losses arising in investments in associates are recognised in profit or loss.

(f) Impairment of non-financial assets

Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). Prior impairments of non financial assets (other than goodwill) are reviewed for possible reversal at each reporting date.


(d) Investments in subsidiaries (cont’d)



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(g) Intangible assets

Goodwill

Goodwill acquired in a business combination is initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated:

• represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and

• is not larger than an operating segment in accordance with IFRS 8 Operating Segments.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units), to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised.

Where goodwill forms part of a cash-generating unit (group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Negative goodwill on a bargain purchase represents the excess of the acquirer’s interest in the fair values of the identifiable net assets and liabilities acquired over the cost of acquisition. It is recognised immediately as gain from bargain purchase in profit or loss.

Negative goodwill arising from the acquisition of an associated company is excluded from the carrying amount of the investment and is included as income in the determination of the Group’s share of associate’s profit or loss in the period the investment was acquired.

Other intangible assets

Computer software

Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met:

• it is technically feasible to complete the software product so that it will be available for use;• management intends to complete the software product and use or sell it;• there is an ability to use or sell the software product;• it can be demonstrated how the software product will generate probable future economic benefits;• adequate technical, financial and other resources to complete the development and to use or sell the

software product are available; and• the expenditure attributable to the software product during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.



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(g) Intangible assets (cont’d)

Computer software (cont’d)

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Computer software development costs recognised as assets are amortised over their estimated useful lives, which do not exceed five years.

(h) Other investments and other financial assets

Classification

The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Group’s loans and receivables comprise ‘trade and other receivables’ and ‘cash and cash equivalents’ in the statement of financial position.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.

Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade-date –the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in profit or loss. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in profit or loss in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss when the Group’s right to receive payments is established.

Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognised in ‘other comprehensive income’.

When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in profit or loss as ‘Gains and losses from investment securities’.

Interest on available-for-sale securities calculated using the effective interest method is recognised in profit or loss. Dividends on available-for-sale equity instruments are recognised in profit or loss when the Group’s right to receive payments is established.



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(h) Other investments and other financial assets (cont’d)

Offsetting financial instruments

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

(i) Trade and other receivables

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 60 - 90 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance for credit losses account, and the amount of the loss is recognised in profit or loss. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited in profit or loss.

(j) Interest-bearing loans, debentures and borrowings

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

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

Preference shares, which are mandatorily redeemable on a specific date, are classified as liabilities. The dividends on these preference shares are recognised in profit or loss as interest expense.

(k) Cash and cash equivalents

Cash and short-term deposits in the statement of financial position comprise cash at banks and in hand and short-term deposits with an original maturity of three months or less. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.



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(l) Derecognition of financial assets and liabilities

Financial assets

A financial asset (or, where applicable a part of a financial asset or part of a Group of similar financial assets) is derecognised where:

• the rights to receive cash flows from the asset have expired;• the Company or the Group retains the right to receive cash flows from the asset, but has assumed an

obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or• the Company or the Group has transferred its rights to receive cash flows from the asset and either (a) has

transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where the Company or the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company or the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company or the Group could be required to repay.

Where continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of the Group’s continuing involvement is the amount of the transferred asset that the Group may repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, the extent of the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

(m) Impairment of financial assets

Assets carried at amortised cost

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

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

For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price.



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

Asset carried at amortized cost (cont’d)

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

Assets classified as available for sale

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. For debt securities, the Group uses the criteria referred to in (a) above. In the case of equity investments classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss– is removed from equity and recognised in profit or loss. Impairment losses recognised in the consolidated profit or loss on equity instruments are not reversed through the consolidated profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the consolidated profit or loss.

(n) Inventories

Inventories are valued at the lower of cost and net realisable value. Cost is determined using the first in, first out (FIFO) method.

Costs incurred in bringing each product to its present location and condition is accounted for as follows:

Raw materials - purchase cost on a weighted average cost basis;

Finished goods and work in progress - cost of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

(o) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in profit or loss net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.

(p) Derivative financial instruments and hedging activities

Derivatives are initially recognised at fair value on the date a derivative is entered into and are subsequently re-measured at their fair value. All derivatives are carried in current assets when amounts are receivable by the Group and in current liabilities when amounts are payable by the Group.

Cash flow hedge

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.



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The Group designates certain derivatives as: hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow hedge).

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The fair values of derivative instruments used for hedging purposes are disclosed in note 33 and 34. Movements on the hedging reserve in ‘other comprehensive income’ are shown in note 15. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in ‘other comprehensive income’. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.

Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of currency forward contracts is recognised in profit or loss. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory or fixed assets), the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset. The deferred amounts are ultimately recognised in cost of goods sold in the case of inventory or in depreciation in the case of fixed assets.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to profit or loss.

(q) Employee benefits

The Group operates various post-employment schemes, including both defined benefit and defined contribution pension plans and post-employment plans.

Pension obligations

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan.

Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The liability recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms of maturity approximately to the terms of the related pension obligation. In countries where there is no deep market in such bonds, the market rates on government bonds are used.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in ‘other comprehensive income’ in the period in which they arise.

Past-service costs are recognised immediately in profit or loss.


(p) Derivative financial instruments and hedging activities (cont’d)



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(q) Employee benefits (cont’d)

For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Other post-employment obligations

Some retired employees are paid benefits directly by the Group’s subsidiaries. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit pension plans.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in ‘other comprehensive income’ in the period in which they arise. These obligations are valued annually by independent qualified actuaries.

Termination benefits

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

Profit sharing and bonus plans

The Group recognises a liability and an expense for bonuses and performance based bonuses, based on a formula that takes into consideration the profit attributable to the Company’s shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(r) Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in ‘other comprehensive income’ or directly in equity. In this case, the tax is also recognised in ‘other comprehensive income’ or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

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



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(r) Current and deferred income tax (cont’d)

Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, associates and joint arrangements, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Generally the Group is unable to control the reversal of the temporary difference for associates. Only where there is an agreement in place that gives the Group the ability to control the reversal of the temporary difference not recognised.

Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries, associates and joint arrangements only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Value Added Tax

Revenues, expenses and assets are recognised net of the amount of value added tax except:

• where the value added tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the value added tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables that are stated with the amount of value added tax included.

The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of accounts receivables or payables in the statement of financial position.

(s) Finance Lease

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

The Group leases certain property, plant and equipment. Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term.

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term.

(t) Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.



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(u) Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

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

(v) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Group’s activities. The Group bases its estimate of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

(i) Sale of goods and services

Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and upon customer acceptance, if any, or performance of services, net of value added taxes and discounts, and after eliminating sales within the Group. The Group turnover reflects the invoiced values of knitted and woven garments and fabrics, inclusive of insurance and freight when sold on a ‘cost, insurance and freight’ basis and in other cases on its ‘free on board’ value for sales on ‘free on board’ basis.

(ii) Other operating income

Other operating income earned by the Group are recognised on the following basis:

• Interest income - as it accrues (taking into account the effective yield on the asset) unless collectability is in doubt.

• Dividend income - when the shareholder’s right to receive payment is established.

(w) Share capital

Ordinary shares are classified as equity. Mandatorily redeemable preference shares are classified as liabilities. Incremental costs directly attributable to the issue of new shares or options are shown in equity as deduction, net of tax, from proceeds. Where any group company purchases its equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. When such shares are subsequently reissued, any net consideration received, is included in equity attributable to the Company’s equity holders.

(x) Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in which the dividends are approved by the Company’s shareholders.

(y) Non-current assets held for sale

Non–current assets (or disposal groups) are classified as assets held for sale when their carrying amount are to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at lower of carrying amount and fair value less costs to sell.

(z) Grant related to income

The Group (foreign subsidiaries) receives grants in relation to income which has been presented as a credit in the statement of comprehensive income under the heading ‘Other operating income – net’.

(aa) Restricted cash

Restricted cash relates to funds held in a bank escrow account in India by TKL Knits (India) Private Ltd for the purpose of acquiring an industrial property in India.


81


3. PROPERTY, PLANT AND EQUIPMENT

(a) THE GROUP Freehold Land and Buildings

Buildings on

Leasehold Land

Plant and Machinery

Motor Vehicles

Furniture and

EquipmentComputer

Equipment

Assets Under

Con-struction

Other Items Total

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

At 30 June 2015

COST OR VALUATIONAt 1 July 2014 1,370,563 770,148 2,979,083 113,846 413,178 70,234 25,192 15,738 5,757,982Additions 40,028 2,730 102,858 25,330 17,950 16,703 125,428 11,114 342,141Disposals (612) (3,634) (21,503) (7,188) (6) (168) (1,778) - (34,889)Assets written off - (6,108) (26,212) (1,281) (2,148) (3,313) - - (39,062)Revaluation adjustments - (29,765) - - - - - - (29,765)Translation adjustments (33,516) - (2,346) (1,083) (1,065) (1,420) (10,425) 1,778 (48,077)At 30 June 2015 1,376,463 733,371 3,031,880 129,624 427,909 82,036 138,417 28,630 5,948,330

DEPRECIATIONAt 1 July 2014 96,236 137,062 2,242,809 65,555 326,586 51,202 7,190 3,234 2,929,874Charge for the year 14,199 17,750 117,991 16,930 17,983 9,182 - 1,175 195,210Disposals (262) (515) (17,026) (6,448) (6) (122) - - (24,379)Revaluation adjustments - (19,279) - - - - - - (19,279)Assets written off - (152) (26,204) (1,281) (2,136) (3,275) - - (33,048)Translation adjustments (8,509) - (15,005) (1,316) (2,180) (1,242) - 447 (27,805)At 30 June 2015 101,664 134,866 2,302,565 73,440 340,247 55,745 7,190 4,856 3,020,573

NET BOOK VALUESAt 30 June 2015 1,274,799 598,505 729,315 56,184 87,662 26,291 131,227 23,774 2,927,757


82

NOTES TO THE FINANCIAL STATEMENTS 30 J U N E 2015

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

(a) THE GROUP Freehold Land and Buildings

Buildings on

Leasehold Land

Plant and Machinery

Motor Vehicles

Furniture and

EquipmentComputer

Equipment

Assets Under

Construc-tion

Other Items Total

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000At 30 June 2014

COST OR VALUATIONAt 1 July 2013 907,707 752,190 2,808,493 102,436 430,569 63,087 15,216 9,572 5,089,270Additions 84,035 3,316 270,877 19,058 25,184 12,833 9,976 6,378 431,657Disposals - - (29,870) (4,869) (133) (454) - - (35,326)Assets written off - - (33,505) - (37,436) (2,842) - - (73,783)Acquisition through business

combination (Note 27(b)) 167,500 - - - - - - - 167,500Revaluation surplus 235,394 14,642 - - - - - - 250,036Translation adjustments (24,073) - (36,912) (2,779) (5,006) (2,390) - (212) (71,372)At 30 June 2014 1,370,563 770,148 2,979,083 113,846 413,178 70,234 25,192 15,738 5,757,982

DEPRECIATIONAt 1 July 2013 99,833 142,937 2,174,548 55,913 362,826 48,539 2,453 2,450 2,889,499Charge for the year 14,280 12,429 142,252 15,922 16,588 7,163 4,737 833 214,204Disposals - - (15,957) (4,372) (11,739) (223) - - (32,291)Revaluation adjustments (8,133) (18,304) - - - - - - (26,437)Assets written off - - (33,366) - (37,349) (2,830) - - (73,545)Translation adjustments (9,744) - (24,668) (1,908) (3,740) (1,447) - (49) (41,556)At 30 June 2014 96,236 137,062 2,242,809 65,555 326,586 51,202 7,190 3,234 2,929,874

NET BOOK VALUESAt 30 June 2014 1,274,327 633,086 736,274 48,291 86,592 19,032 18,002 12,504 2,828,108


83



(b) THE COMPANY Buildings on Leasehold

LandPlant and

Machinery Total

Rs’000 Rs’000 Rs’000At 30 June 2015

COST OR VALUATIONAt 1 July 2014 and at 30 June 2015 156,481 5,748 162,229

DEPRECIATIONAt 1 July 2014 34,067 5,748 39,815Charge for the year 3,088 - 3,088

At 30 June 2015 37,155 5,748 42,903

NET BOOK VALUESAt 30 June 2015 119,326 - 119,326

Buildings on Leasehold

LandPlant and

Machinery Total

Rs’000 Rs’000 Rs’000

At 30 June 2014

COST OR VALUATIONAt 1 July 2013 143,857 5,748 149,605Revaluation surplus 12,624 - 12,624

At 30 June 2014 156,481 5,748 162,229

DEPRECIATIONAt 1 July 2013 31,232 5,748 36,980Charge for the year 2,835 - 2,835

At 30 June 2014 34,067 5,748 39,815

NET BOOK VALUESAt 30 June 2014 122,414 - 122,414


84



(c) Fair value of land and buildings

An independent valuation of the Group’s and the Company’s land and buildings was performed by professional land valuers to determine the fair value of the land and buildings as at 30 June 2015. The revaluation surplus was credited to the other comprehensive income and is shown in ‘revaluation surplus’ in the statements of changes in equity. The following table analyses the non-financial assets carried at fair value, by valuation method. The different levels have been defined as follows:

- Quoted prices (unadjusted) in active market for identical assets or liabilities (Level 1)

- Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from process) (Level 2)

- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3)

Fair value measurements

2015 2014Level 3 Level 3

Rs’000 Rs’000THE GROUPRecurring fair value measurementsFreehold land and buildings 1,274,799 1,274,327Buildings on leasehold land 598,505 633,086

1,873,304 1,907,413THE COMPANYRecurring fair value measurementsBuildings on leasehold land 119,326 122,414

119,326 122,414

(i) Fair value measurements using significant unobservable inputs (Level 3)

THE GROUP Manufacturing sites

Mauritius Madagascar Asia Total

Rs’000 Rs’000 Rs’000 Rs’000At 1 July 2013 920,692 361,831 134,604 1,417,127Acquisition through business combination (Note 27) 167,500 - - 167,500Additions 72,330 13,229 1,792 87,351Depreciation (17,957) (6,472) (2,280) (26,709)Translation adjustments - (10,342) (3,987) (14,329)Gains and losses recognised in other comprehensive income 69,584 157,076 49,813 276,473At 30 June 2014 1,212,149 515,322 179,942 1,907,413Additions 12,123 18,368 12,267 42,758Depreciation (23,838) (5,661) (2,450) (31,949)Disposals (3,118) (351) - (3,469)Assets written off (5,956) - - (5,956)Translation adjustments - (50,656) 25,649 (25,007)Gains and losses recognised in other comprehensive income (10,486) - - (10,486)At 30 June 2015 1,180,874 477,022 215,408 1,873,304

THE COMPANY Manufacturing site Mauritius

2015 2014

Rs’000 Rs’000

Opening balance 122,414 112,625

Depreciation (3,088) (2,835)

Gains and losses recognised in other comprehensive income - 12,624

Closing balance 119,326 122,414


85



(ii) Valuation processes of the Group

On an annual basis, the Group engages external, independent and qualified valuers to determine the fair value of the Group’s and the Company’s land and buildings. At 30 June 2015, the fair value of the land and buildings have been determined by SDDS Sworn Land Surveyors, Ratsimbazafy Ihanta Evelyne and Advisory Valuation & Consultancy for land and buildings held in Mauritius, Madagascar and India respectively.

The external valuations of level 3 land and buildings have been performed using:(i) a sales comparison approach, and(ii) replacement cost less depreciation approach.

Given that there are limited or no similar sites in the vicinity in which the land and buildings of the Group are located, the external valuers have determined the unobservable inputs based on the size, age and condition of the land and buildings, the state of the local economy and comparable prices where relevant.

Information about fair value measurements using significant unobservable inputs (Level 3)

Fair value at 30 June,

Range of unobservable inputs (probability – weighted average)

Relationship of unobservable inputs to fair valueDescription

2015 2014 Valuation techniques

Unobservable inputs

Rs’000 Rs’000

Manufacturing and retail sites – Mauritius 1,180,874 1,212,149

Sales comparison and replacement cost less depreciation approach

Price per square metre

Rs.332 - Rs.3,419/square metre (land) and Rs.1,906 - Rs.248,564/ square metre (buildings)

The higher the price per square metre, the higher the fair value

Manufacturing sites – Madagascar 477,022 515,322


Price per square metre

MGA 135,000 - MGA 800,000/ square metre (land) and MGA 139,462 - MGA 397,863 (buildings)

The higher the price per square metre, the higher the fair value

Manufacturing sites – Asia 215,408 179,942


Price per acres and square feet

INR 6,200,000/acre (land) and INR 1,450/square feet (buildings)

The higher the price per square feet and acre, the higher the fair value

1,873,304 1,907,413


86



(ii) Valuation processes of the Group (cont’d)

(d) If the land and buildings were stated on the historical cost basis, the amounts would be as follows:-

THE GROUP THE COMPANY2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000

Cost 1,493,385 1,494,497 18,364 18,364

Accumulated depreciation (1,065,277) (1,035,409) (9,965) (10,943)

Net book values 428,108 459,088 8,399 7,421

(e) Property, plant and equipment above include leased assets as follows:

Plant and Motor 2015Machinery Vehicles Total

THE GROUP Rs’000 Rs’000 Rs’000

Cost 142,982 47,577 190,559Accumulated depreciation (31,650) (34,240) (65,890)Net book values at 30 June 2015 111,332 13,337 124,669

Plant and Machinery

Motor Vehicles

2014 Total

Rs’000 Rs’000 Rs’000

Cost 150,830 45,115 195,945

Accumulated depreciation (29,961) (27,985) (57,946)

Net book values at 30 June 2014 120,869 17,130 137,999

Leased assets are pledged as security for the related finance lease liabilities.

(f) Borrowings are guaranteed by fixed and floating charges over the assets of the Group.

(g) The acquisition of property, plant and equipment includes purchases under finance leases obligations amounting to Rs. 4,624,161 (2014: Rs. 104,969,220).


87


4. INTANGIBLE ASSETS

Computer Software

Development Cost Total

THE GROUP Rs’000 Rs’000 Rs’000COSTAt 1 July 2014 42,361 4,435 46,796Additions 5,785 107 5,892Write off (660) - (660)Translation adjustment 389 - 389At 30 June 2015 47,875 4,542 52,417

At 1 July 2013 38,007 4,435 42,442Additions 4,532 - 4,532Write off (62) - (62)Translation adjustment (116) - (116)At 30 June 2014 42,361 4,435 46,796

AMORTISATIONAt 1 July 2014 29,551 1,081 30,632Charge for the year 5,122 934 6,056Write off (660) - (660)Translation adjustment 163 - 163At 30 June 2015 34,176 2,015 36,191

At 1 July 2013 25,402 164 25,566Charge for the year 4,201 917 5,118Write off (9) - (9)Translation adjustment (43) - (43)At 30 June 2014 29,551 1,081 30,632

NET BOOK VALUES at 30 June 2015 13,699 2,527 16,226

NET BOOK VALUES at 30 June 2014 12,810 3,354 16,164

5. INVESTMENTS IN SUBSIDIARY COMPANIES

Unquoted2015 2014

THE COMPANY Rs’000 Rs’000

(a) COSTAt 1 July 1,210,431 1,210,431

Reversal of impairment - 8,630

Write off of investment - (8,630)

At 30 June 1,210,431 1,210,431

IMPAIRMENT PROVISIONSAt 1 July and 30 June, (8,630) (8,630)

1,201,801 1,201,801

The Directors have carried out an impairment assessment as at 30 June 2015 and no impairment indicator has been identified.


88


5. INVESTMENTS IN SUBSIDIARY COMPANIES (CONT’D)

(b) The subsidiary companies are as follows:

YEAR 2015

Name of Company

Class of Shares

HeldYear

ended

Denomi-nated

CurrencyStated Capital

Country of Incorpora-

tion

Direct percentage holding and

voting power

Indirect percent-

age holding and voting

power

Proportion of ownership interest held by non-con-

trolling interest

Main Business

000’s % % %

Ajax Sweaters Limited Ordinary 30 June, Taka 56,036 Bangladesh - 100.00 - KnitwearFloreal Knitwear Ltd Ordinary 30 June, Rs. 216,450 Mauritius 100.00 - - KnitwearFloreal Madagascar SA Ordinary 30 June, MGA 300,000 Madagascar - 99.70 0.30 KnitwearFloreal Creation SA Ordinary 30 June, Euro 50 France 100.00 - - KnitwearFerney Spinning Mills Limited Ordinary 30 June, Rs. 15,314 Mauritius 100.00 - - KnitwearFloreal International Ltd Ordinary 30 June, Rs. 14,000 Mauritius 100.00 - - KnitwearFloreal Property Ltd (5) Ordinary 30 June, Rs. 1 Mauritius 100.00 - - KnitwearSociété Civile Immobilières des Mascareignes Ordinary 30 June, MGA 2,000 Madagascar 0.20 99.80 - KnitwearSociété Textile d’Andraharo SA - (Texaro) Ordinary 30 June, MGA 260,000 Madagascar - 83.55 16.45 KnitwearCielTex SA (Proprietary) Limited Ordinary 30 June, ZAR 1 South Africa - 100.00 - RetailCTL Retail Ltd Ordinary 30 June, Rs. 10,001 Mauritius - 100.00 - RetailTropic Knits Limited (3) Ordinary 30 June, Rs. 115,000 Mauritius 100.00 - - KnitsTropic Madagascar SA Ordinary 30 June, MGA 3,000,000 Madagascar - 100.00 - KnitsCDL Knits Limited (7) Ordinary 30 June, Rs. 173,000 Mauritius 17.00 83.00 - KnitsTKL International Ltd Ordinary 30 June, Rs. 3,814 Mauritius 100.00 - - KnitsTKL Knits (India) Private Ltd (6) Ordinary 31 March, INR 100,000 India 99.99 - 0.01 KnitsSociete Bonnetiere Malagasy - (Soboma) Ordinary 30 June, MGA 150,000 Madagascar - 100.00 - KnitsAquarelle Clothing Limited (4) (7) Ordinary 30 June, Rs. 180,000 Mauritius 100.00 - - WovenAquarelle Madagascar SARL Ordinary 30 June, MGA 225,000 Madagascar - 100.00 - WovenAquarelle International Limited Ordinary 30 June, Rs. 7,404 Mauritius 100.00 - - WovenAquarelle India Private Limited (2) Ordinary 31 March, INR 24,000 India - 100.00 - WovenConsolidated Fabrics Ltd Ordinary 30 June, Rs. 25,743 Mauritius - 100.00 - WovenInternational Fabrics Ltd Ordinary 30 June, USD 11,328 Mauritius - 100.00 - WovenLaguna Clothing Private Ltd (1) (2) Ordinary 31 March, INR 74,900 India - 50.00 50.00 WovenTinka International Ltd Ordinary 31 March, HKG 100 Hong Kong - 100.00 - WovenLaguna Clothing (Mauritius) Ltd (1) Ordinary 30 June, Rs. 20,000 Mauritius - 50.00 50.00 WovenNew Island Clothing Madagascar SA Ordinary 30 June, MGA 10,000 Madagascar - 98.80 1.20 Woven

(1) The companies are deemed to be subsidiaries of the Group, as the Group maintains control over those companies.

(2) The companies having as year end 31 March, have been consolidated for the 12 months up to 30 June 2015, to be coterminous with the financial year end of the Group

(3) De Nyon Limited and Floreal Manufacturing Limited have been amalgamated in Tropic Knits Limited during the financial year ended 30 June 2015.

(4) Aquarelle Limitee has been amalgamated in Aquarelle Clothing Limited during the financial year ended 30 June 2015.

(5) Floreal Property Ltd was incorporated on 18 May 2015.

(6) TKL Knits (India) Private Ltd was incorporated on 19 February 2015.

(7) Consolidated Dyeing & Fabrics Limited changed its name to CDL Knits Limited during the year 2015.


89




YEAR 2015

Name of Company

Class of Shares

HeldYear

ended

Denomi-nated


Country of Incorpora-

tion


voting power

Indirect percent-

age holding and voting

power

Proportion of ownership interest held by non-con-

trolling interest

Main Business

000’s % % %

Ajax Sweaters Limited Ordinary 30 June, Taka 56,036 Bangladesh - 100.00 - KnitwearFloreal Knitwear Ltd Ordinary 30 June, Rs. 216,450 Mauritius 100.00 - - KnitwearFloreal Madagascar SA Ordinary 30 June, MGA 300,000 Madagascar - 99.70 0.30 KnitwearFloreal Creation SA Ordinary 30 June, Euro 50 France 100.00 - - KnitwearFerney Spinning Mills Limited Ordinary 30 June, Rs. 15,314 Mauritius 100.00 - - KnitwearFloreal International Ltd Ordinary 30 June, Rs. 14,000 Mauritius 100.00 - - KnitwearFloreal Property Ltd (5) Ordinary 30 June, Rs. 1 Mauritius 100.00 - - KnitwearSociété Civile Immobilières des Mascareignes Ordinary 30 June, MGA 2,000 Madagascar 0.20 99.80 - KnitwearSociété Textile d’Andraharo SA - (Texaro) Ordinary 30 June, MGA 260,000 Madagascar - 83.55 16.45 KnitwearCielTex SA (Proprietary) Limited Ordinary 30 June, ZAR 1 South Africa - 100.00 - RetailCTL Retail Ltd Ordinary 30 June, Rs. 10,001 Mauritius - 100.00 - RetailTropic Knits Limited (3) Ordinary 30 June, Rs. 115,000 Mauritius 100.00 - - KnitsTropic Madagascar SA Ordinary 30 June, MGA 3,000,000 Madagascar - 100.00 - KnitsCDL Knits Limited (7) Ordinary 30 June, Rs. 173,000 Mauritius 17.00 83.00 - KnitsTKL International Ltd Ordinary 30 June, Rs. 3,814 Mauritius 100.00 - - KnitsTKL Knits (India) Private Ltd (6) Ordinary 31 March, INR 100,000 India 99.99 - 0.01 KnitsSociete Bonnetiere Malagasy - (Soboma) Ordinary 30 June, MGA 150,000 Madagascar - 100.00 - KnitsAquarelle Clothing Limited (4) (7) Ordinary 30 June, Rs. 180,000 Mauritius 100.00 - - WovenAquarelle Madagascar SARL Ordinary 30 June, MGA 225,000 Madagascar - 100.00 - WovenAquarelle International Limited Ordinary 30 June, Rs. 7,404 Mauritius 100.00 - - WovenAquarelle India Private Limited (2) Ordinary 31 March, INR 24,000 India - 100.00 - WovenConsolidated Fabrics Ltd Ordinary 30 June, Rs. 25,743 Mauritius - 100.00 - WovenInternational Fabrics Ltd Ordinary 30 June, USD 11,328 Mauritius - 100.00 - WovenLaguna Clothing Private Ltd (1) (2) Ordinary 31 March, INR 74,900 India - 50.00 50.00 WovenTinka International Ltd Ordinary 31 March, HKG 100 Hong Kong - 100.00 - WovenLaguna Clothing (Mauritius) Ltd (1) Ordinary 30 June, Rs. 20,000 Mauritius - 50.00 50.00 WovenNew Island Clothing Madagascar SA Ordinary 30 June, MGA 10,000 Madagascar - 98.80 1.20 Woven


(2) The companies having as year end 31 March, have been consolidated for the 12 months up to 30 June 2015, to be coterminous with the financial year end of the Group

(3) De Nyon Limited and Floreal Manufacturing Limited have been amalgamated in Tropic Knits Limited during the financial year ended 30 June 2015.

(4) Aquarelle Limitee has been amalgamated in Aquarelle Clothing Limited during the financial year ended 30 June 2015.

(5) Floreal Property Ltd was incorporated on 18 May 2015.

(6) TKL Knits (India) Private Ltd was incorporated on 19 February 2015.

(7) Consolidated Dyeing & Fabrics Limited changed its name to CDL Knits Limited during the year 2015.




YEAR 2014

Name of Company

Class of Shares

HeldYear

ended

Denomi-nated


Country of Incorporation


voting power

Indirect percent-

age holding

and voting power

Proportion of owner-

ship interest held by

non-con-trolling

interestMain

Business

000’s % % %Ajax Sweaters Limited Ordinary 30 June, Taka 56,036 Bangladesh - 100.00 - KnitwearFloreal Knitwear Ltd Ordinary 30 June, Rs. 216,450 Mauritius 100.00 - - KnitwearFloreal Madagascar SA Ordinary 30 June, MGA 300,000 Madagascar - 99.70 0.30 KnitwearFloreal Creation SA Ordinary 30 June, Euro 50 France 100.00 - - KnitwearFerney Spinning Mills Limited Ordinary 30 June, Rs. 15,314 Mauritius 100.00 - - KnitwearFloreal International Ltd Ordinary 30 June, Rs. 14,000 Mauritius 100.00 - - KnitwearSociété Civile Immobilières des Mascareignes Ordinary 30 June, MGA 2,000 Madagascar 0.20 99.80 - KnitwearSociété Textile d’Andraharo SA - (Texaro) Ordinary 30 June, MGA 260,000 Madagascar - 83.55 16.45 KnitwearCielTex SA (Proprietary) Limited Ordinary 30 June, ZAR 1 South Africa - 100.00 - RetailCTL Retail Ltd Ordinary 30 June, Rs. 10,001 Mauritius - 100.00 - RetailDe Nyon Limited Ordinary 30 June, Rs. 33,547 Mauritius - 100.00 - KnitsTropic Knits Limited Ordinary 30 June, Rs. 115,000 Mauritius 100.00 - - KnitsTropic Madagascar SA Ordinary 30 June, MGA 3,000,000 Madagascar - 100.00 - KnitsConsolidated Dyeing & Fabrics Limited Ordinary 30 June, Rs. 173,000 Mauritius 17.00 83.00 - KnitsTKL International Ltd Ordinary 30 June, Rs. 3,814 Mauritius 100.00 - - KnitsFloreal Manufacturing Limited Ordinary 30 June, Rs. 5,750 Mauritius - 100.00 - KnitsSociete Bonnetiere Malagasy - (Soboma) Ordinary 30 June, MGA 390,000 Madagascar - 100.00 - KnitsAquarelle Clothing Limited Ordinary 30 June, Rs. 180,000 Mauritius 100.00 - - WovenAquarelle Madagascar SARL Ordinary 30 June, MGA 225,000 Madagascar - 100.00 - WovenAquarelle International Limited Ordinary 30 June, Rs. 7,404 Mauritius 100.00 - - WovenAquarelle India Private Limited (4) Ordinary 31 March, INR 24,000 India - 100.00 - WovenAquarelle Limitee (3) (4) Ordinary 31 March, Rs. 5,000 Mauritius - 100.00 - WovenConsolidated Fabrics Ltd (2) Ordinary 30 June, Rs. 25,743 Mauritius - 100.00 - WovenInternational Fabrics Ltd (2) Ordinary 30 June, USD 11,328 Mauritius - 100.00 - WovenLaguna Clothing Private Ltd (1) (4) Ordinary 31 March, INR 74,900 India - 50.00 50.00 WovenTinka International Ltd Ordinary 31 March, HKG 100 Hong Kong - 100.00 - WovenLaguna Clothing (Mauritius) Ltd (1) Ordinary 30 June, Rs. 20,000 Mauritius - 50.00 50.00 WovenNew Island Clothing Madagascar SA Ordinary 30 June, MGA 10,000 Madagascar - 98.80 1.20 Woven


(2) In March 2014, the Group acquired additional 20 per cent interest in International Fabrics Ltd and its subsidiary, Consolidated Fabrics Ltd.

(3) Effective 1 January 2014, the Group acquired 100 per cent of the issued share capital and obtained control of Aquarelle Limitee.

(4) The companies having as year end 31 March, have been consolidated for the 12 months up to 30 June 2014, to be coterminous with the financial year end of the Group.


90



(c) Subsidiaries with material non-controlling interests

Details for subsidiaries that have non-controlling interests that are material to the entity are disclosed below:

NameProfit/(loss)

allocated to non-

controlling interests

during the year

Accumulated non-controlling

interests at 30 June

2015 Rs’000 Rs’000 Laguna Clothing Private Ltd 60,531 275,676Laguna Clothing (Mauritius) Ltd (961) (15,008)

2014 Rs’000 Rs’000 Laguna Clothing Private Ltd 57,379 157,790Laguna Clothing (Mauritius) Ltd (20,742) (22,440)

(d) Summarised financial information on subsidiaries with material non-controlling interests

(i) Summarised statement of financial position and statement of profit or loss and other comprehensive income.

NameCurrent

assets

Non-current assets

Current liabilities

Non- current

liabilities Revenue

Profit/ (loss) for the year

Other Comprehensive

Income/(Loss)Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

2015Laguna Clothing Private Ltd 817,264 144,450 (436,581) (10,601) 1,421,238 121,061 -Laguna Clothing (Mauritius) Ltd 158,142 21,784 (193,760) (16,183) 634,582 (1,923) -

2014Laguna Clothing Private Ltd 643,309 142,425 (426,138) (7,166) 1,172,293 114,757 32,877Laguna Clothing (Mauritius) Ltd 139,213 29,875 (180,912) (16,292) 290,174 (41,485) (521)

(ii) Summarised cash flow information:

2015 2014

Operating activities

Investing activities

Financing activities

Net increase in

cash and cash

equivalentOperating

activitiesInvesting activities

Financing activities

Net increase/ (decrease) in

cash and cash equivalent

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Laguna Clothing Private Ltd 48,669 (7,554) 2,227 43,342 (5,325) (28,129) 60,877 27,423Laguna Clothing (Mauritius) Ltd 59,165 995 (48,858) 11,302 (85,418) (19,833) 52,253 (52,998)

The summarised financial information disclosed above is before intra-group eliminations.

(e) All subsidiary undertakings are included in the consolidation. The proportion of the voting rights in the subsidiary undertakings held directly by the parent company do not differ from the proportion of ordinary shares held.

(f) The total non-controlling interest for the year ended 30 June 2015 is Rs. 261,196,730 (2014: Rs. 179,390,000), of which, Rs. 260,667,430 (2014: Rs. 178,594,960) is for minority shareholders of Laguna Clothing Private Ltd and Laguna Clothing (Mauritius) Ltd. The non-controlling interests in respect of Floreal Madagascar SA, Société Textile d’Andraharo SA - (Texaro), TKL Knits (India) Private Ltd and New Island Clothing Madagascar SA are not material.

(g) There are no significant restrictions for South Africa, Madagascar, India and Bangladesh.


91


6. INVESTMENTS IN ASSOCIATES

Unquoted 2015 2014

Rs’000 Rs’000

(a) THE GROUP

At 1 July and at 30 June - -

(b) The associates are as follows: 2015 2014

Name of Company Year endedCountry of Incorporation

% Holding Indirect

% Holding Indirect

AMTECS (International) Ltd 30 June 2015 Mauritius - -

The investment in AMTECS (International) Ltd has been fully impaired and is not of a material nature for the Group.

7. AVAILABLE FOR SALE INVESTMENTSTHE GROUP THE COMPANY

2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000

At 1 July and at 30 June, 6,712 6,712 6,712 6,712

The directors believe that the fair value of the available-for-sale investments approximates the cost of these investments as the prices of these investments have remained the same.

All investments are denominated in Mauritian Rupees.

8. NON CURRENT RECEIVABLESTHE GROUP

2015 2014

Rs’000 Rs’000

Long-term deposits 29,561 58,308

All non-current receivables are due within 2 to 5 years from the end of the reporting period. The fair value of the non-current receivables does not differ significantly from its carrying amount.

9. DEFERRED TAX LIABILITIES/(ASSETS)THE GROUP THE COMPANY

2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000

Deferred tax liabilities 240,082 236,573 19,698 20,554

Deferred tax assets (73,886) (49,998) - -

Net deferred tax liabilities 166,196 186,575 19,698 20,554

(a) The movement in deferred tax during the year is as follows:


Rs’000 Rs’000 Rs’000 Rs’000

At 1 July 186,575 140,737 20,554 18,408

Acquisition through business combination (note 27(b)) - 17,584 - -

Translation adjustment (2,221) 248 - -

Other comprehensive income 4,093 39,231 - 2,146

Income statement (Note 19(b)) (22,251) (11,225) (856) -

At 30 June 166,196 186,575 19,698 20,554


92


9. DEFERRED TAX LIABILITIES/(ASSETS) (CONT’D)

(b) Deferred tax assets and liabilities, deferred tax charge/(credit) in the Statement of Comprehensive Income are attributable to the following items:

(i) THE GROUP - 2015At

1 July 2014

Acquisition through

business combination

Translation Adjustment

Income Statement

Other Comprehen-

sive Income

At 30 June

2015Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Deferred tax liabilitiesAccelerated tax depreciation 123,276 - 1,107 2,844 - 127,227Revaluation of properties 116,057 - (3,202) - - 112,855Others (2,760) - (428) 3,188 - -

236,573 - (2,523) 6,032 - 240,082

Deferred tax assetsRetirement benefit obligations 21,035 - - 2,127 (330) 22,832Tax losses 4,673 - - (3,918) - 755Provisions 7,261 - (114) (6,534) - 613Investment tax credit 3,056 - (188) (2,487) - 381Cash flow hedge reserves 5,518 - - (3,353) (3,763) (1,598)

Underprovision of deferred tax in prior years - - - 30,351 - 30,351Others 8,455 - - 12,097 - 20,552

49,998 - (302) 28,283 (4,093) 73,886

Net deferred tax liabilities 186,575 - (2,221) (22,251) 4,093 166,196

(ii) THE GROUP - 2014At

1 July 2013

Acquisition through

business combination

Translation Adjustment

Income Statement

Other Comprehen-

sive Income

At 30 June

2014Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Deferred tax liabilitiesAccelerated tax depreciation 119,494 9,170 (433) (4,955) - 123,276Revaluation of properties 63,050 8,414 - - 44,593 116,057Others (350) - - (2,410) - (2,760)

182,194 17,584 (433) (7,365) 44,593 236,573

Deferred tax assetsRetirement benefit obligations 15,697 - - 1,979 3,359 21,035Tax losses 1,292 - (127) 3,508 - 4,673Provisions 6,635 - (24) 650 - 7,261Investment tax credit 5,308 - (530) (1,722) - 3,056Cash flow hedge reserves - - - 3,515 2,003 5,518Others 12,525 - - (4,070) - 8,455

41,457 - (681) 3,860 5,362 49,998

Net deferred tax liabilities 140,737 17,584 248 (11,225) 39,231 186,575


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9. DEFERRED TAX LIABILITIES/(ASSETS) (CONT’D)

(iii) THE COMPANY - 2015

At 1 July 2014

Income Statement

Other Comprehen-

sive Income

At 30 June

2015Rs’000 Rs’000 Rs’000 Rs’000

Deferred tax liabilities

Accelerated tax depreciation 12,790 (856) - 11,934Revaluation of property 7,764 - - 7,764Net deferred tax liabilities 20,554 (856) - 19,698

(iv) THE COMPANY - 2014

At 1 July 2013

Income Statement

Other Comprehen-

sive Income

At 30 June

2014Rs’000 Rs’000 Rs’000 Rs’000

Deferred tax liabilities

Accelerated tax depreciation 12,790 - - 12,790Revaluation of property 5,618 - 2,146 7,764Net deferred tax liabilities 18,408 - 2,146 20,554

THE GROUP2015 2014

Rs’000 Rs’000

(c) Unused tax losses available for offset against future taxable profits 11,670 82,303

The tax losses are available for set off against future taxable profits of the Group are as follows:Up to year ending: THE GROUP

Rs’00030 June 2016 17330 June 2017 19430 June 2018 35230 June 2019 6,35130 June 2020 225

7,295No expiry 4,375

11,670

(d) At the end of the reporting period, the Group had unused tax losses of Rs. 11,669,826 (2014: Rs. 82,302,902) available to offset against future profits. A deferred tax asset has been recognised in respect of Rs. 4,441,176 (2014: Rs. 27,488,000) of such losses. No deferred tax asset has been recognised in respect of the remaining Rs. 7,228,650 (2014: Rs. 54,814,902) due to unpredictability of future profit streams.

10. INVENTORIESTHE GROUP

2015 2014

Rs’000 Rs’000Raw materials 776,453 800,700Other stocks 108,571 105,369Work in progress 1,402,912 1,351,377Finished goods 256,211 118,268Goods in transit 135,930 166,918Less provision for obsolescence (89,580) (80,226)

2,590,497 2,462,406

The amount of inventories recognised as an expense during the year is Rs. 4,538,081,272 (2014: Rs. 4,347,839,826).


94


11. TRADE AND OTHER RECEIVABLESTHE GROUP THE COMPANY

2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000

Trade receivables 2,106,211 1,961,354 - -

Less: provision for impairment (12,605) (24,762) - -

Trade receivables - net 2,093,606 1,936,592 - -

Amount receivable from related companies 123 6 206,857 153,865

Advances to Executive Directors 500 3,912 - -

Fair value asset on forward contracts 21,588 4,861 - -

Other receivables and prepayments (Note 11 (viii)) 473,628 393,823 710 3,028

2,589,445 2,339,194 207,567 156,893

Included in amount receivable from related companies, for the Company, is an amount of Rs. 181,726,547 (2014: Rs. 129,804,676) representing dividend receivable from subsidiaries at 30 June 2015. The dividends have been received after year end.

The carrying amount of trade and other receivables approximate their fair values.

The maximum exposure to credit risk at the end of the reporting period is equal to the carrying value of each class of trade and other receivables mentioned above.

(i) Trade receivables are not secured, non interest bearing and are generally on 60 days term. At 30 June 2015, trade receivables at nominal value of Rs. 12,604,531 (2014: Rs. 24,762,000) were impaired and fully provided for based on the financial difficulties of the customers.

(ii) At 30 June 2015 and 2014, the ageing analysis of trade receivables is as follows:

Total

Neither Past

Due nor Impaired

Past Due not Impaired

< 30 days 30 - 60 days 60 - 90 days > 90 days

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

2015 2,093,606 1,823,246 197,979 36,275 6,339 29,767

2014 1,936,592 1,634,042 172,407 57,703 21,658 50,782

The credit quality of those receivables have been assessed by management who is satisfied as to their recoverability.


95


11. TRADE AND OTHER RECEIVABLES (CONT’D)

(iii) The carrying amount of the Group’s trade and other receivables are denominated in the following currencies:


Rs’000 Rs’000 Rs’000 Rs’000

Rupee 92,003 195,360 207,567 156,893

US Dollar 872,431 628,531 - -

UK Pound 467,936 671,541 - -

Euro 280,321 341,776 - -

ZAR 375,977 233,622 - -

INR 365,895 153,768 - -

Other currencies 134,882 114,596 - -

2,589,445 2,339,194 207,567 156,893

(iv) Movements on the provision for impairment of trade receivables are as follows:

THE GROUP2015 2014

Rs’000 Rs’000

At 1 July (24,762) (23,900)

Receivables written off during the year as uncollectible 7,520 -

Unused amounts reversed 5,548 137

Increase in provision for the year (911) (999)

At 30 June (12,605) (24,762)

(v) The other classes within trade and other receivables do not contain impaired assets.

(vi) All other classes of trade and other receivables are neither past due nor impaired. No collaterals are held in respect of those receivables.

(vii) The advances to Directors are unsecured.

(viii) Other receivables and prepaymentsTHE GROUP THE COMPANY

2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000

Other receivables and prepayments consist of:

Deposits 18,530 14,469 - -

Taxes and grants 207,059 152,031 - -

Advance payments to suppliers 145,528 129,729 - -

Advances to employees 25,873 16,820 - -

Others 76,638 80,774 710 3,028

473,628 393,823 710 3,028


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12. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALETHE GROUP

2015 2014

Rs’000 Rs’000

At 1 July, - 22,366

Disposals - (22,366)

At 30 June, - -

(a) On 20 February 2014, the Group disposed of its 21.9% stake in Harris Wilson Textile SA, realising a gain on disposal of Rs. 31.3 M.

13. SHARE CAPITAL2015 2014

Rs’000 Rs’000

Authorised, issued and fully paid stated capital101,807,589 no par value ordinary shares 685,865 685,865

14. BORROWINGSTHE GROUP THE COMPANY

2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000

(a) Non-currentBank loans - Note (b) 17,689 61,549 - -

Obligations under finance leases - Note (c) 80,685 91,521 - -

Others - 545 - -

98,374 153,615 - -

CurrentBank overdrafts - Note (d) 794,352 525,222 159 6

Bills discounted - Note (d) 714,603 680,307 - -

Bank loans - Note (b) 5,469 9,839 - -

Import loan - Note (d) 683,236 503,105 - -

Obligations under finance leases - Note (c) 29,713 33,496 - -

2,227,373 1,751,969 159 6

Total borrowings 2,325,747 1,905,584 159 6

THE GROUP THE COMPANY 2015 2014 2015 2014

(b) Bank loans Rs’000 Rs’000 Rs’000 Rs’000

Within one year 5,469 9,839 - -

After one year and before two years 4,865 14,006 - -

After two years and before three years 5,131 15,510 - -

After three years and before five years 4,342 16,866 - -

After five years 3,351 15,167 - -

23,158 71,388 - -

The loans are secured by fixed and floating charges over the assets of the Group and the Company and bear interest as disclosed in note 33.


97


14. BORROWINGS (CONT’D)

(c) Obligations under finance leases THE GROUP THE COMPANY 2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000

Finance lease liabilities - minimum lease payments:

Within one year 32,089 38,108 - -




After five years - 928 - -

115,820 135,937 - -

Finance charges allocated to future periods (5,422) (10,920) - -

Present value of finance lease liabilities 110,398 125,017 - -

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


Rs’000 Rs’000 Rs’000 Rs’000

Within one year 29,713 33,496 - -




After five years - 897 - -

110,398 125,017 - -

Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.

The Group leases plant and machinery, motor vehicles and equipment under finance leases. The leases have varying terms and purchase options. There are no restrictions imposed on the Group by lease arrangements other than in respect of the specific assets being leased.

(d) The bank overdrafts, bills discounted and import loans are secured by fixed and floating charges over the assets of the Group and the Company and bear interest as disclosed in note 33.

(e) The carrying amounts of the Group’s and Company’s borrowings are denominated in the following currencies:


Rs’000 Rs’000 Rs’000 Rs’000

Rupee 105,326 231,285 159 6

US Dollar 1,671,889 979,503 - -

Euro 168,048 220,030 - -

UK Pound 336,062 447,167 - -

INR 42,242 24,600 - -


2,325,747 1,905,584 159 6

(f) The fair values of the non-current borrowings are approximately equal to their carrying value as the impact of discounting is not significant.


98


15. OTHER COMPREHENSIVE INCOME

(a) THE GROUP

Revaluation Surplus

Actuarial (losses)/

gains

Translation of foreign

operations

Cash Flow Hedge

Reserve Total2015 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000Items that will not be reclassified to profit or lossRevaluation surplus (10,486) - - - (10,486)Remeasurements of post retirement benefit liabilities - (1,960) - - (1,960)Deferred tax on remeasurements of post retirement benefit obligations (Note 9(b)) - (330) - (330)

Items that may be subsequently reclassified to profit or lossAmount recognised in cash flow hedge reserve - - - 49,801 49,801Deferred tax on cash flow hedge reserve (Note 9(b)) - - - (3,763) (3,763)Translation differences on foreign subsidiaries - - (2,127) - (2,127)Other comprehensive (loss)/income for year 2015 (10,486) (2,290) (2,127) 46,038 31,135

2014Items that will not be reclassified to profit or lossRevaluation surplus 276,473 - - - 276,473Deferred tax on revaluation reserve (Note 9(b)) (44,593) - - - (44,593)Remeasurements of post retirement benefit liabilities - (11,819) - - (11,819)Deferred tax on remeasurements of post retirement benefit obligations (Note 9(b)) - 3,359 - - 3,359

Items that may be subsequently reclassified to profit or lossAmount recognised in cash flow hedge reserve - - - (40,230) (40,230)Deferred tax on cash flow hedge reserve (Note 9(b)) - - - 2,003 2,003Translation differences on foreign subsidiaries - - (39,558) - (39,558)Other comprehensive income/(loss) for year 2014 231,880 (8,460) (39,558) (38,227) 145,635

(b) THE COMPANY Revaluation surplus

2015 2014

Rs’000 Rs’000

Revaluation surplus - 12,624

Deferred tax on revaluation reserve - (2,146)

Other comprehensive income for year - 10,478

16.RETIREMENT BENEFIT OBLIGATIONS

THE GROUP

2015 2014

Amounts recognised in the statement of financial position: Rs ‘000 Rs ‘000

Pension benefits (Note (a)) 55,660 47,889

Other post retirement benefits (Note (b)) 134,277 129,915

189,937 177,804

Amounts charged to profit or lossPension benefits (Note (a)) 10,649 9,488

Other post retirement benefits (Note (b)) 20,971 21,303

31,620 30,791

Amounts charged to other comprehensive incomePension benefits (Note (a)) (8,141) (269)

Other post retirement benefits (Note (b)) 6,181 (11,550)

(1,960) (11,819)


99


16.RETIREMENT BENEFIT OBLIGATIONS (CONT’D)

(a) Pension benefits

The Group has two defined benefit plans, one funded and one unfunded, covering substantially all of its employees, both being administered separately.

The Group has also provided for an unfunded retirement benefit plan to former employees. The following tables summarise the funded status and amounts recognised in the statements of financial position and the component of net benefit expense recognised in the statements of comprehensive income for the respective plans.

(i) The amounts recognised in the statements of financial position are as follows:

Funded retirement benefit plan for

existing employees

Unfunded retirement benefit

plan for existing employees


plan for former employees Total

Benefit liability 2015 2014 2015 2014 2015 2014 2015 2014

Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000

Defined benefit obligation (130,282) (108,020) (3,999) (2,442) (13,007) (12,195) (147,288) (122,657)

Fair value of plan assets 91,628 74,768 - - - - 91,628 74,768

Benefit liability (38,654) (33,252) (3,999) (2,442) (13,007) (12,195) (55,660) (47,889)

(ii) Amounts recognised in income statement are as follows:

Funded retirement benefit plan for

existing employees


plan for existing employees


plan for former employees Total

Net benefit expense 2015 2014 2015 2014 2015 2014 2015 2014

Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000

Current service cost 5,334 4,829 64 70 - - 5,398 4,899

Scheme expenses 739 774 - - - - 739 774

Cost of insuring risk benefits 1,019 527 - - - - 1,019 527

Interest cost on benefit obligation 6,368 5,876 188 179 866 868 7,422 6,923

Expected return on plan assets (3,929) (3,635) - - - - (3,929) (3,635)

Net benefit expense (Note 21) 9,531 8,371 252 249 866 868 10,649 9,488

(iii) Actual return on plan assets 10,761 7,904


100


16. RETIREMENT BENEFIT OBLIGATIONS (CONT’D)

(a) Pension benefits (cont’d)

(iv) The reconciliation of the opening balances to the closing balances for the defined benefit liability is as follows:

Funded retirement

benefit plan for existing employees

Unfunded retirement


Unfunded retirement

benefit plan for former employees Total

Rs’000 Rs’000 Rs’000 Rs’000 At 1 July 2014 (33,252) (2,442) (12,195) (47,889)Total expense (9,531) (252) (866) (10,649)Actuarial losses recognised in other comprehensive income (5,726) (1,305) (1,110) (8,141)Employer contributions 9,855 - 1,164 11,019At 30 June 2015 (38,654) (3,999) (13,007) (55,660)

At 1 July 2013 (24,599) (2,312) (12,385) (39,296)Total expense (8,371) (249) (868) (9,488)Actuarial (losses)/gains recognised in other comprehensive income (288) 119 (100) (269)Employer contributions 6 - 1,158 1,164At 30 June 2014 (33,252) (2,442) (12,195) (47,889)

(v) Changes in the present value of the defined benefit obligation are as follows:

Funded retirement


Unfunded retirement


Unfunded retirement

benefit plan for former employees Total

Rs’000 Rs’000 Rs’000 Rs’000 At 1 July 2013 (93,432) (2,312) (12,385) (108,129)Interest cost (7,344) (179) (870) (8,393)Current service cost (4,829) (70) - (4,899)Experience (gains)/losses (3,089) 119 (100) (3,070)Benefits paid 674 - 1,160 1,834At 30 June 2014 (108,020) (2,442) (12,195) (122,657)Interest cost (8,428) (188) (866) (9,482)Current service cost (5,334) (64) - (5,398)Experience gains (10,497) (1,305) (1,110) (12,912)Benefits paid 1,997 - 1,164 3,161At 30 June 2015 (130,282) (3,999) (13,007) (147,288)


101




(vi) Changes in the fair value of plan assets of the funded retirement benefit plan are as follows:

THE GROUP2015 2014

Rs’000 Rs’000

At 1 July 74,768 68,833

Implied return on plan assets 2,060 1,470

Remeasurements:

– Return on plan assets, excluding amounts included in interest expense 3,929 3,635

– Experience losses 4,771 2,801

Expected return

Contributions by employer 9,855 5

Scheme expenses (739) (774)

Benefits paid (1,997) (675)

Cost of insuring risk benefits (1,019) (527)

At 30 June, 91,628 74,768

(vii) The fair value of the plan assets at the end of the reporting period is as follows:

THE GROUP2015 2015 2014 2014

Rs’000 % Rs’000 %

Local equities 22,907 25% 19,440 26%

Overseas equities 52,228 57% 39,627 53%

Fixed interest 16,493 18% 15,701 21%

Total market value of assets 91,628 100% 74,768 100%

The fair values of the above equity and debt instruments are determined based on quoted market prices in active markets whereas the fair values of properties and derivatives are not based on quoted market prices in active markets.

The assets of the plan are invested in the CIEL Group Segregated Fund. The breakdown of the assets above correspond to a notional allocation of the underlying investments based on the long term strategy of the Fund.

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

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

The fixed interest portfolio includes local and foreign deposits. The expected return for this asset class has been based on these fixed deposits at the measurement date.

(viii) The amounts recognised in other comprehensive income are as follows:

THE GROUP2015 2014

Rs’000 Rs’000

Losses on pension scheme assets 4,771 2,800

Experience gain on liabilities (611) (3,069)

Changes in assumptions underlying the present value of the scheme (12,301) -

(8,141) (269)

(ix) The Group expects to contribute Rs. 8.3M to the pension scheme for the year ending 30 June 2016.


102




(x) The principal assumptions used in determining pension for the Group are shown below:

2015 2014 2013 2012

Discount rates 6.5% 7.5% 7.5% 9.5%

Expected rate of return on assets 6.5% 7.5% 7.5% 10.0%

Future salary increases 4.5% 5.5% 5.5% 7.5% - 8.0%

Future pension increases 0.0% 0.0% 0.0% 0.0%

(xi) Sensitivity analysis on defined benefit obligations at end of the reporting date:

At 30 June 2015 Increase DecreaseRs’000 Rs’000

Discount rate (1% increase) - 21,271Future long term salary assumption (1% increase) 8,862 -

An increase/decrease of 1% in other principal actuarial assumptions would not have a material impact on defined benefit obligations at the end of the reporting period.

The sensitivity above has been determined based on a method that extrapolates the impact on net defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The present value of the defined benefit obligation has been calculated using the projected unit credit method.

The sensitivity analysis may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

(xii) The weighted average duration of the defined benefit obligations ranges between 7 to 23 years at the end of the reporting period.

(xiii) The defined benefit pension plan exposes the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market (investment) risk.

(xiv)The funding requirements are based on the pension fund’s actuarial measurement framework set out in the funding policies of the plan.

(xv) Amounts for the current and previous years are as follows:

2015 2014 2013 2012 2011

Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000 Rs ‘000

Defined benefit obligation (147,288) (122,657) (108,129) (77,800) (71,153)

Plan assets 91,628 74,768 68,833 62,640 64,044

Deficit (55,660) (47,889) (39,296) (15,160) (7,109)

Experience losses on plan liabilities (8,141) (269) (20,191) (7,662) (2,538)


103



(b) Other post retirement benefitsOther post retirement benefits comprise retirement gratuities payable under the Employment Rights Act 2008.

(i) The amounts recognised in the statement of financial position are as follows: THE GROUP

2015 2014

Rs’000 Rs’000

Present value of plan liability (134,277) (129,915)

Liability in the statement of financial position (134,277) (129,915)

(ii) The amounts recognised in the income statement are as follows: THE GROUP

2015 2014

Rs’000 Rs’000

Current service cost 10,403 12,903

Interest cost 10,568 8,400

Total, included in employee benefit expense (Note 21) 20,971 21,303

(iii) Movement in the liability recognised in the statements of financial position: THE GROUP

2015 2014

Rs’000 Rs’000

At 1 July, (129,915) (104,919)

Total expense as above (20,971) (21,303)

Actuarial gains/(losses) recognised in other comprehensive income 6,181 (11,550)

Benefits paid 10,428 7,857

At 30 June (134,277) (129,915)

(iv) The amounts recognised in other comprehensive income are as follows: THE GROUP

2015 2014

Rs’000 Rs’000

Experience gain/(loss) on liabilities 6,181 (11,550)

6,181 (11,550)

THE GROUPMovement in other comprehensive income 2015 2014

Rs’000 Rs’000

At 1 July (52,962) (41,412)

Actuarial gains/(losses) recognised in other comprehensive income 6,181 (11,550)

At 30 June (46,781) (52,962)


104



(b) Other post retirement benefits (continued)(v) The movement in the defined benefit obligation over the year is as follows:

THE GROUP2015 2014

Rs’000 Rs’000

At 1 July (129,915) (104,919)

Current Service Cost (10,403) (12,903)

Interest Cost (10,568) (8,400)

Actuarial gains/(losses) recognised during the year 6,181 (11,550)

Benefits paid 10,428 7,857

At 30 June (134,277) (129,915)

(vi) Amounts for the current and previous years are as follows:

2015 2014 2013

Rs ‘000 Rs ‘000 Rs ‘000

Defined benefit obligation (134,277) (129,915) (104,919)

(vii) The principal actuarial assumptions used for accounting purposes were: THE GROUP

2015 2014

Discount rates 6.5% 7.5%

Future long term salary increases 4.5% 5.5%

(viii) Sensitivity analysis on defined benefit obligations at end of the reporting date:

At 30 June 2015 Increase Decrease

Rs’000 Rs’000Discount rate (1% increase) - 10,463Future long term salary assumption (1% increase) 12,124 -

An increase/decrease of 1% in other principal actuarial assumptions would not have a material impact on defined benefit obligations at the end of the reporting period.

The sensitivity above has been determined based on a method that extrapolates the impact on net defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The present value of the defined benefit obligation has been calculated using the projected unit credit method.

The sensitivity analysis may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

(ix) The weighted average duration of the defined benefit obligations ranges between 7 to 16 years at the end of the reporting period.


105


17. TRADE AND OTHER PAYABLESTHE GROUP THE COMPANY

2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000

Trade payables 563,831 764,185 - -

Amount payable to related parties 80,570 129,524 415,543 422,357

Fair value liability on forward contracts 25,030 42,534 - -

Other payables and accruals (Note 17(a)) 867,570 761,078 6,463 5,755

1,537,001 1,697,321 422,006 428,112

(a) Other payables and accruals


Other payables and accruals consist of: Rs’000 Rs’000 Rs’000 Rs’000

Accrued expenses 133,718 147,660 - -

Deposits from customers 14,543 7,324 - -

Goods in transit 39,319 24,603 - -

Employees related expenses 515,027 395,177 - -

Directors’ fees 2,010 2,203 2,010 2,203

Other payables 162,953 184,111 4,453 3,552

867,570 761,078 6,463 5,755

(b) The carrying amount of the Group’s and the Company’s trade and other payables are denominated in the following currencies:


Rs’000 Rs’000 Rs’000 Rs’000

Rupee 704,657 647,467 422,006 428,112

US Dollar 317,721 495,144 - -

UK Pound 41,481 82,090 - -

Euro 54,346 60,750 - -

INR 317,942 313,771 - -


1,537,001 1,697,321 422,006 428,112

(c) The carrying amounts of trade and other payables approximate their fair values.

18. PROVISIONSTHE GROUP

2015 2014

Movement in provisions during the year is as follows: Rs’000 Rs’000

At 1 July, 20,528 37,990

Additional provisions 6,270 528

Amounts incurred and charged against provisions (539) (17,990)

Exchange differences 109 -

At 30 June, 26,368 20,528

Provisions consist mainly of legal claims.


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19. INCOME TAXTHE GROUP THE COMPANY

2015 2014 2015 2014

(a) Income Tax - Statements of financial position Rs’000 Rs’000 Rs’000 Rs’000

At 1 July, 40,012 39,574 36 -

Current tax on adjusted profits for the year 117,844 114,141 62 36

Exchange differences 2,237 (870) - -

Over provision of prior years (2,217) (5,434) 5 -

Corporate Social Responsibility 1,454 1,990 - -

Paid during the year (138,345) (109,389) (67) -

At 30 June, 20,985 40,012 36 36


(b) Income Tax - Income statements Rs’000 Rs’000 Rs’000 Rs’000

Current tax on adjusted profits for the year 117,844 114,141 62 36

Corporate Social Responsibility 1,454 1,990 - -

Over provision of prior years (2,217) (5,434) 5 -

117,081 110,697 67 36

Deferred tax (Note 9) (22,251) (11,225) (856) -

94,830 99,472 (789) 36

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


Rs’000 Rs’000 Rs’000 Rs’000

Profit before tax 857,203 650,560 254,850 203,634

Tax calculated at a rate of 17% (2014: 17%) 145,725 110,595 43,325 34,618

Adjustments for:

Non-deductible expenses 7,544 2,907 - 36

Exempt income (28,198) (8,231) (43,325) (34,618)

Tax on turnover of overseas subsidiaries (1,237) (225) - -

Effect of different tax rate 30,803 35,814 - -

Deferred tax assets previously unrecognised (30,559) - - -

(Under)/over provision of deferred

tax in prior years (1,349) 4,670 (794) -

Over provision of prior years income tax (2,217) (5,434) 5 -

Foreign tax credit (30,564) (35,038) - -

Investment tax relief (1,890) (9,192) - -

Others 6,772 3,606 - -

94,830 99,472 (789) 36


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20. EARNINGS BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION

(a) THE GROUP THE COMPANY

2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000

Revenue 10,119,098 9,565,100 259,609 207,687

Cost of goods produced (5,124,035) (4,897,850) - -

Logistics (315,228) (308,946) - -

Utilities (313,035) (350,777) - -

Repairs and maintenance (140,675) (144,386) - -

Employee benefit expense (note 21) (2,486,968) (2,274,488) - -

Transport expenses (113,878) (132,754) - -

International business (211,440) (182,568) 29 -

Rental and leases (102,451) (102,436) - -

Office expenses (143,931) (116,996) - -

Services (128,484) (134,393) 30 (177)

Social and events (55,141) (57,590) - -

Fees and commission (60,412) (142,348) (55) (108)

Other operating income 190,715 250,377 3,183 2,762Earnings before interest, tax, depreciation and amortisation (EBITDA) 1,114,135 969,945 262,796 210,164

(b) Non recurring items THE GROUP THE COMPANY

2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000

Fair value loss on forward contracts - (55,178) - -

Profit on disposal of investments held for sale - 31,729 - -

- (23,449) - -

The fair value (loss)/gain on forward contracts consists of both realised loss (Rs. 57,722,000) and unrealised gain (Rs. 2,544,000).

Non recurring items are exceptional items that relate to the sale of an investment in foreign associate and fair value gain/loss on forward contracts which are considered to be one-off items.

(c) Profit before ordinary activities

Profit from ordinary activities is derived from operational profits adjusted for net finance costs and before non-recurring items and interest tax (expense)/credit.

21. EMPLOYEE BENEFIT EXPENSETHE GROUP

2015 2014

Rs’000 Rs’000

Wages and salaries 2,290,140 2,109,927

Social security costs 124,798 102,569

Other post retirement benefits (Note 16(b)) 20,971 21,303

Pension costs-defined benefit plans (Note 16(a)) 10,650 9,488

Pension costs- defined contribution plans 14,270 15,754

Others 26,139 15,447

2,486,968 2,274,488


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22. PROFIT BEFORE TAXATIONTHE GROUP THE COMPANY

2015 2014 2015 2014

Profit before taxation is arrived at after Rs’000 Rs’000 Rs’000 Rs’000

crediting:Profit on disposal of non-current assets

classified as held for sale - 31,729 - -

Profit on disposal of property, plant and equipment 10,078 4,695 - -

and charging:Loss on disposal of property, plant and equipment (566) - - -

Depreciation on property, plant and equipment

- owned assets 165,342 188,816 3,088 2,835

- leased assets 29,868 25,388 - -

Amortisation of intangible assets 6,056 5,118 - -

Cost of raw materials 4,538,081 4,347,840 - -

Employee benefit expense (Note 21) 2,486,968 2,274,488 - -

No. of employees at year end 18,443 19,140 - -

23. NET FINANCE COSTSTHE GROUP THE COMPANY

2015 2014 2015 2014

Interest expense on: Rs’000 Rs’000 Rs’000 Rs’000

- Bank overdrafts (16,479) (25,035) (55) (29)

- Bills discounted (11,952) (17,220) - -

- Bank and other loans (11,811) (8,519) - -

- Import loans (13,828) (15,143) - -

- Finance leases (4,606) (3,845) - -

- Debentures - (1,741) - (1,741)

- B shares dividends (5,090) (4,072) (5,090) (4,072)

- Preference share dividend - (2,700) - -

- Loans from related parties (2,023) - (3,598) (1,236)

- Others (1,853) (4,833) (753) (987)

Finance costs (67,642) (83,108) (9,496) (8,065)

Interest income on:

- Loans and advances 23 74 - -

- Bank balances 11,339 5,821 1 -

- Loans to related parties - - 4,370 3,964

- Others 614 599 267 406

Finance income 11,976 6,494 4,638 4,370

Net finance costs (55,666) (76,614) (4,858) (3,695)


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24. EARNINGS PER SHARETHE GROUP

2015 2014

Rs’000 Rs’000

Profit attributable to owners of the parent 702,832 517,195

Number of shares in issue 101,807,589 101,807,589

Basic earnings per share Rs. 6.90 5.08

25. DIVIDENDS THE GROUP THE COMPANY

2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000

(a)Amounts recognised as distribution to owners of the parent in the year:

Interim dividend of Rs. 0.75 (2014: Rs. 0.75) per share 76,356 76,356 76,356 76,356

Final dividend of Rs. 1.75 (2014: Rs. 1.25) per share 178,163 127,259 178,163 127,259

254,519 203,615 254,519 203,615

(b) Dividends payable at year end 30 June:

(i) THE GROUP - 2015

At 1 July 2014

Declared during

the year

Paid during

the year

At 30 June

2015Rs’000 Rs’000 Rs’000 Rs’000

Dividend to ordinary shareholders (payable

by the holding company) 127,259 254,519 (203,615) 178,163

THE GROUP - 2014

At 1 July 2013

Declared during

the year

Paid during

the year

At 30 June

2014

Rs’000 Rs’000 Rs’000 Rs’000Dividend to ordinary shareholders (payable


(ii) THE COMPANY - 2015

At 1 July 2014

Declared during

the year

Paid during

the year

At 30 June

2015Rs’000 Rs’000 Rs’000 Rs’000

Dividend to ordinary shareholders (payable


THE COMPANY - 2014

At 1 July 2013

Declared during

the year

Paid during

the year

At 30 June

2014

Rs’000 Rs’000 Rs’000 Rs’000Dividend to ordinary shareholders (payable



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26.NOTES TO THE STATEMENTS OF CASH FLOWS THE GROUP THE COMPANY

2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000

(a) Cash generated from operations

Profit before taxation 857,203 650,560 254,850 203,634

Adjustments for: -- Depreciation of property, plant and equipment 195,210 214,204 3,088 2,835

- Profit on disposal of property, plant and equipment (9,512) (4,695) - -

- Property, plant and equipment written off 6,014 238 - -

- Amortisation of intangible assets 6,056 5,118 - -

- Intangible assets written off - 53 - -

- Profit on disposal of non-current assets classified

as held for sale - (31,729) - -

- Bargain on purchase - (67) - -

- Retirement benefit obligations 10,173 21,770 - -

- Provisions 5,840 (17,462) - -

- Unrealised foreign exchange differences 67,039 (1,691) - -

- Interest income (11,976) (6,494) (4,638) (4,370)

- Interest expense 67,642 83,108 9,496 8,065

Cash generated from operations before changes

in working capital 1,193,689 912,913 262,796 210,164

Changes in working capital:

- Inventories (128,091) (181,114) - -

- Trade and other receivables (200,450) (180,883) (50,674) (39,119)

- Trade and other payables (156,248) 139,906 (6,106) 42,323

Cash generated from operations 708,900 690,822 206,016 213,368

(b) Cash and cash equivalents

2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000

Cash in hand and at bank 574,704 247,892 1,601 3,972

Bank overdrafts (Note 14 - Borrowings) (794,352) (525,222) (159) (6)

(219,648) (277,330) 1,442 3,966

(c) Restricted cash

On 19 March 2015 there has been a transfer of $1,521,031 representing a loan from TKL International Ltd to TKL Knits India Pvt Ltd. This amount has been disclosed under cash & cash equivalent as ‘restricted cash’ in TKL Knits India Pvt Ltd since amount has been secured in an escrow account. The purpose of this loan is for the purchasing of building, plant and machinery, furniture and fixtures of an existing unit.

27. BUSINESS COMBINATIONS

(a) Acquisition of additional interest of International Fabrics Ltd and its subsidiary

On 26 March 2014, the Group acquired additional interest in International Fabrics Ltd and its subsidiary for a cash consideration of Rs. 15.5 million, increasing its ownership from 80% to 100%. The carrying amount of International Fabrics Ltd and its subsidiary’s net assets in the consolidated financial statements on the date of the acquisition was Rs. 418,428,967. The Group recognised a decrease in non-controlling interest of Rs. 83,685,793 and an increase in retained earnings and revaluation reserves attributable to the parent of Rs. 22,392,541 and Rs. 45,793,252 respectively.


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27. BUSINESS COMBINATIONS (CONT’D)

The following summarises the effect of changes in the parent’s ownership interest:

2014

Rs’000Parent’s ownership interest at 1 July 2013 344,302

Effect of increase in parent’s ownership interest 68,186

Share of profit for the year after deducting for share of profit attributable to non-controlling interest prior to acquisition (21,318)

Parent’s ownership interest at 30 June 2014 391,170

(b) Acquisition of Aquarelle Limitee

Effective 1 January 2014, the Group acquired 100 per cent of the issued share capital and obtained control of Aquarelle Limitée for a cash consideration of Rs. 115,000,000, which resulted in a gain on bargain purchase of Rs. 66,688.

The following table summarises the consideration paid for Aquarelle Limitee and the amounts of the assets acquired and liabilities assumed recognised at the acquisition date.

2014

Consideration Rs’000

At 1 January 2014

Cash consideration 115,000

Recognised amounts of identifiable assets acquired and liabilities assumedProperty, plant and equipment (note 3(a)) 167,500

Trade and other receivables, net of provision 10,778

Cash and cash equivalents 43

Trade and other payables (184)

Deferred tax liabilities (note 9(a)) (17,584)

Borrowings - current (2,941)

Borrowings - non-current (42,545)

Total identifiable net assets 115,067

Bargain on purchase (67)

115,000

Net cash outflow on acquisition of subsidiary 2014

Rs’000Cash consideration 115,000

Less: cash and cash equivalent balances acquired-net (43)

Net outflow 114,957

The revenue included in the consolidated statement of comprehensive income since 1 January 2014, contributed by Aquarelle Limited was Rs. 5,002,098. The subsidiary’s profit for the year was Rs. 2,290,456 over the same period.


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28.CONTINGENT LIABILITIES

At 30 June 2015, the Group had bank guarantees amounting to Rs. 53M (2014: Rs. 67M) to third parties in respect of expatriates.

During the year, Tropic Madagascar SA was subject to an assessment from the local tax authorities in Madagascar. The matter has been referred for Appeal as the company believes that claims made by local authorities are unsupported.

29. COMMITMENTS

(a) Capital commitments

Capital commitments amounting to Rs. 1,085M (2014: Rs. 592 M) have been approved by the Board of Directors but not yet contracted for.

(b) Operating lease commitments

The Group leases land and motor vehicles under non-cancellable operating lease agreements. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

THE GROUP2015 2014

Rs’000 Rs’000

Not later than one year 18,330 14,824

Later than one year and not later than five years 12,872 13,034

After five years 10,000 4,166

41,202 32,024

The average lease terms range from three to ten years.


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30. SEGMENTAL INFORMATION - GROUP

THE GROUPSegment information

The following is an analysis of the Group’s revenue and results from continuing operations by reportable segment:

Knitwear Fine Knits Woven Retail Total30 June 2015 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000Total segment revenues 2,349,703 2,126,709 5,588,596 54,090 10,119,098

Revenues from external customers 2,349,703 2,126,709 5,588,596 54,090 10,119,098

Earnings before interest and tax 148,932 206,849 555,915 1,173 912,869Net finance costs (23,403) (5,812) (25,664) (787) (55,666)

Profit before taxation 125,529 201,037 530,251 386 857,203Income tax expense (10,167) 22,045 (106,539) (169) (94,830)Profit after taxation 115,362 223,082 423,712 217 762,373Non-controlling interests - - (59,541) - (59,541)

Profit attributable to owners of the parent 115,362 223,082 364,171 217 702,832

Knitwear Fine Knits Woven Retail Total30 June 2014 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000Total segment revenues 2,400,117 2,097,374 5,012,927 54,682 9,565,100

Revenues from external customers 2,400,117 2,097,374 5,012,927 54,682 9,565,100

Earnings before interest and tax 185,369 135,057 426,376 3,821 750,623Net finance costs (29,027) (9,872) (36,888) (827) (76,614)

Profit from ordinary activities 156,342 125,185 389,488 2,994 674,009Non recurring items (Note (a)) (20,465) (35,757) 1,044 31,729 (23,449)

Profit before taxation 135,877 89,428 390,532 34,723 650,560Income tax expense (6,414) (12,052) (81,010) 4 (99,472)Profit after taxation 129,463 77,376 309,522 34,727 551,088Non-controlling interests - - (33,893) - (33,893)

Profit attributable to owners of the parent 129,463 77,376 275,629 34,727 517,195

(a) Included in the retail segment of 2014 is an amount of Rs. 31,729,961 representing profit on disposal of shares in Harris Wilson Textile SA. and a reversal of impairment of Rs. 1,801,577 on consolidation.


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30. SEGMENTAL INFORMATION - GROUP (CONT’D)

30 June 2015

Knitwear Fine Knits Woven RetailConsolidation Adjustments Total

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000ASSETSOther segment assets 2,830,418 1,617,031 3,856,248 84,711 (228,210) 8,160,198Deferred income tax assets 19,222 35,541 17,912 1,211 - 73,886Restricted cash - 52,185 - - - 52,185Cash in hand and at bank 77,400 211,204 285,402 698 - 574,704

Consolidated total assets 2,927,040 1,915,961 4,159,562 86,620 (228,210) 8,860,973

LIABILITIESOther segment liabilities 584,533 502,568 1,040,412 42,902 (217,961) 1,952,454Deferred income tax liabilities 104,366 21,212 114,504 - - 240,082Borrowings 1,041,641 495,702 783,237 7,984 (2,817) 2,325,747

Consolidated total liabilities 1,730,540 1,019,482 1,938,153 50,886 (220,778) 4,518,283

Equity attributable to shareholders of parent 4,081,493Non-controlling interests 261,197

8,860,973

OTHER INFORMATIONCapital additions 184,759 43,063 114,192 127 - 342,141Depreciation and amortisation 54,979 37,505 107,091 1,691 - 201,266


115



30 June 2014Knitwear Fine Knits Woven Retail

Consolidation Adjustments Total

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

ASSETSOther segment assets 2,825,123 1,391,793 3,655,817 88,247 (250,088) 7,710,892Deferred income tax assets 19,238 6,079 23,312 1,369 - 49,998Cash in hand and at bank 64,690 23,767 158,941 494 - 247,892

Consolidated total assets 2,909,051 1,421,639 3,838,070 90,110 (250,088) 8,008,782

LIABILITIESOther segment liabilities 728,528 462,488 1,046,425 38,583 (213,100) 2,062,924Deferred income tax liabilities 99,457 28,036 109,080 - - 236,573Borrowings 897,222 185,879 812,596 9,887 - 1,905,584

Consolidated total liabilities 1,725,207 676,403 1,968,101 48,470 (213,100) 4,205,081

Equity attributable to shareholders of parent 3,624,311Non-controlling interests 179,390

8,008,782

OTHER INFORMATIONCapital additions 123,433 118,656 188,943 625 - 431,657Depreciation and amortisation 58,733 54,091 104,744 1,754 - 219,322


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Geographical information

Revenues from External Customers Non-current assets Capital Additions

2015 2014 2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Mauritius 7,752,796 7,316,235 1,946,261 2,012,751 125,153 295,679

Madagascar 3,025 4,538 568,303 452,557 173,905 44,975

Asia 1,909,582 1,832,068 465,482 443,734 42,925 90,904

South Africa 453,695 412,259 210 250 158 99

Total 10,119,098 9,565,100 2,980,256 2,909,292 342,141 431,657

Revenues from external customers are presented based on the respective subsidiaries’ country of domicile.

The cluster CEO’s and executive directors form the Group’s Chief Operating Decision Makers(CODM). They have determined operating segments based on the information reviewed by the business units meetings (BUM) for the purpose of allocating resources and assessing performance.

The BUM considers business from a cluster and geographic perspective. Geographically, the CODM considers the revenue from Mauritius, Madagascar, Asia and South Africa. From a product perspective, the CODM separately considers Knitwear, Knits, Woven and Retail clusters.

The CODM assesses the performance of the operating segments based on a measure of ‘Earnings before interest and tax’ and ‘Profit after tax’.

31. REVENUE

All revenue of the Group relate to sale of goods.

The revenue for the Company comprises dividend income from subsidiary companies.


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32. RELATED PARTY TRANSACTIONS

The Group is controlled by CIEL Limited which owns 56.31% of the Company’s shares. The remaining shares are widely held. The following transactions were carried out with related parties.

THE GROUP

Holding company

Related Companies

Key Management

Personnel30 June 2015 Rs’000 Rs’000 Rs’000

Treasury and corporate management fees (fellow subsidiaries) - 33,917 -Purchase of goods (shareholder of a subsidiary) - 425,810 -Amount due to (shareholder of a subsidiary) (Note 17) - 72,025 -Amount due to (Note 17) - 8,545 -Amount due from (Note 11) - 123 -Short term benefits - - 171,780Post employment benefits - - 2,678Dividend - - 5,090

Holding company

Related Companies

Key Management

Personnel30 June 2014 Rs’000 Rs’000 Rs’000

Treasury and corporate management fees (fellow subsidiaries)- 28,731 -

Purchase of goods (shareholder of a subsidiary) - 356,427 -Amount due to (shareholder of a subsidiary) (Note 17) - 129,524 -Amount due from (Note 11) - 6 3,912Acquisition of subsidiary (Note 27) 115,000 - -Acquisition of property 65,000 - -Short term benefits - - 151,721Post employment benefits - - 3,376Dividend - - 4,052

THE COMPANY2015 2014

Rs’000 Rs’000

Amount due from subsidiaries (Note 11) 206,857 153,865

Amount due to subsidiaries (Note 17) 415,543 422,357

Dividend received from subsidiaries 259,609 207,687

Terms and conditions:

Outstanding balances at the year-end are unsecured, interest free and settlement occurs in cash. There has been no guarantees provided except for the advances made to the Executive Directors or received for any related party receivables or payables.

For the years ended 30 June 2015 and 2014, the Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial period through examining the financial position of the related party and the market in which the related party operates.


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33. FINANCIAL RISK MANAGEMENT AND POLICIES

The Group’s and Company’s principal financial liabilities comprise bank loans and overdrafts, bills discounted, finance leases and trade and other payables. The main purpose of these financial liabilities is to raise finance for the Group’s and the Company’s operations. The Group and Company have various financial assets, such as trade and other receivables and cash and cash equivalent which arise directly from its operations.

The Group’s and the Company’s activities, therefore, expose it to a variety of financial risks: market risk (including currency risk, cash flow interest rate risk), credit risk and liquidity risk. The Group’s and Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s and Company’s financial performance. The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below.

33.1.Financial risk factorsA description of the significant risk factors is given below together with the risk management policies applicable.

(a) Currency risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarily with respect to British pound, Euro, US Dollar, SA Rand and Indian Rupee. Foreign exchange risk arises from future commercial transactions. The Group hedges its foreign currency risk of sales by entering into forward contracts.

(b) Cash flow and fair value interest rate risk

The Group borrows at fixed and variable rates. In respect of the latter, it is exposed to risk associated with effect of fluctuations in the prevailing label of market interest rates on its financial position and cash flows. The interest rate risk profile is on the following main liabilities:

Bank Overdrafts Floating 2015 2014

Mauritian Rupee 6.90% 6.90%

Euro Euribor + 1.5%/+ 3.0% Euribor + 1.5%/+ 3.5%

US Dollar Libor + 1.5%/+ 3.0% Libor + 1.5%/+ 3.5%

Indian Rupee 12% 12%

Loans - FixedMauritian Rupee Prime lending rate + 1% Prime lending rate + 1%

Euro Euribor + 3% Euribor + 3%

Finance LeaseMauritian Rupee 7.5% - 10.5% 7.5% - 10.5%

US Dollar 2.9% 2.9%

Euro 2.75% 2.75%

Bills DiscountedMauritian Rupee Prime lending rate Prime lending rate

Euro Euribor + 1.5%/+ 2.75% Euribor + 1.5%/+ 3.5%

US Dollar Libor + 1.5%/+ 2.75% Libor + 1.5%/+ 3.5%

Indian Rupee 10.45 % - 13.00 % 10.45 % - 13.00 %

Preference SharesMauritian Rupee n/a 9%

DebenturesMauritian Rupee n/a Prime lending rate + 1%


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33. FINANCIAL RISK MANAGEMENT AND POLICIES (CONT’D)

33.1. Financial risk factors (cont’d)

(b) Cash flow and fair value interest rate risk (cont’d)

At 30 June 2015, if interest rates on borrowings had been 50 basis points higher/lower with all other variables held constant, pre-tax profit for the year would have been lower/higher as shown in the table below, mainly as a result of higher/lower interest expense on floating rate borrowings as shown below. Management believes that a 50 basis point movement is a reasonable basis to determine the sensitivity for the Group’s cashflow and fair value interest rate risk.

THE GROUP THE COMPANY Effect higher/lower on pre-tax profit 2015 2014 2015 2014

Rs’000 Rs’000 Rs’000 Rs’000

Rupee 326 531 1 -

USD 8,054 4,898 - -

Euro 794 1,100 - -

UK Pound 1,680 2,236 - -

INR 211 123 - -

Other currencies 11 15 - -

11,076 8,903 1 -

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. The Group and the Company aims at maintaining flexibility in funding by keeping reliable credit lines available. Management monitors rolling forecasts of the Group’s liquidity reserve on the basis of expected cash flow.

The table below analyses the non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the end of the reporting period to the contractual maturity date.

THE GROUP

At call

Less than 3 months

Between 3 months and 1 year

Over 1 year

Rs’000 Rs’000 Rs’000 Rs’000At 30 June 2015Borrowings 967,451 880,178 379,744 98,374Trade and other payables 105,430 964,531 442,010 -Dividend payable - 178,163 - -

At 30 June 2014Borrowings 827,166 562,155 362,648 153,615Trade and other payables 156,845 1,235,660 262,282 -Dividend payable - 127,259 - -

The amounts in relation to forward exchange contracts for a contract value of Rs. 2.383bn will be settled in the short term for an expected net cash outflow of Rs. 3.442M.


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33.1. Financial risk factors (cont’d)

THE COMPANY

At call

Less than 3 months

Between 3 months and 1 year

Over 1 year

Rs’000 Rs’000 Rs’000 Rs’000At 30 June 2015Borrowings 159 - - -Trade and other payables 6,463 - 415,543 -Dividend payable - 178,163 - -

At 30 June 2014

Borrowings 6 - - -Trade and other payables 5,754 487 421,871 -Dividend payable - 127,259 - -

(d) Credit risk

The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the statement of financial position are net of allowances for doubtful receivables, estimated by the Group’s management based on prior experience and the current economic environment.

The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers. The Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history.

The maximum exposure to credit risk at the end of the reporting period is equal to the carrying value of each financial asset.

(e) Fair value risk

Financial assets and liabilities, which are accounted for at historical cost, are not significantly different from their fair values.


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2015 2014 2015 2014 Contract value Fair value

Outstanding contractsAverage exchange

rate Sell Buy Sell Buy 2015 2014 2015 2014

FC'000 FC'000 FC'000 FC'000 Rs '000 Rs '000 Rs '000 Rs '000

Sell currency EUR and buy currency USD 1.18 1.37 5,395 6,340 3,000 4,113 220,181 122,610 10,650 1,061Sell currency EUR and buy currency MUR 39.43 41.95 1,700 67,026 6,355 266,622 67,026 266,622 312 6,801Sell currency GBP and buy currency EUR - 0.80 - - 680 851 - 34,498 - 75Sell currency GBP and buy currency USD 1.56 1.63 11,428 17,781 22,655 36,920 617,537 1,100,586 (5,498) (45,088)Sell currency GBP and buy currency MUR 52.65 51.00 7,390 389,089 10,370 528,827 389,089 528,827 (16,246) 1,579Sell currency ZAR and buy currency EUR 13.68 14.47 23,215 1,697 318 22 65,945 892 976 12Sell currency ZAR and buy currency USD 11.84 11.00 153,010 12,928 159,002 14,451 448,984 430,769 15,540 (4,134)Sell currency ZAR and buy currency MUR 2.81 2.79 128,929 23,243 58,960 164,618 23,243 164,618 6,487 2,638Sell currency USD and buy currency MUR 34.10 31.24 6,355 216,731 404 12,622 216,731 12,622 (5,846) 898Sell currency USD and buy currency INR 65.56 61.89 1,100 72,113 1,550 95,936 38,111 46,798 (367) (136)Sell currency GBP and buy currency INR 101.72 105.03 3,050 310,234 540 56,716 158,211 27,666 (7,330) (462)Sell currency EUR and buy currency INR 72.87 84.63 3,600 262,347 1,300 110,013 137,868 53,664 (2,120) (917)Total 2,382,926 2,790,172 (3,442) (37,673)

Recognised as follows: 2015 2014

On statement of financial position Rs '000 Rs '000

Fair value asset on forward contracts 21,588 4,861

Fair value liability on forward contracts (25,030) (42,534)

(3,442) (37,673)

In income statement

Fair value movement on outstanding financial derivatives (53,243) 2,557

In statement of other comprehensive income

Amount recognised in cash flow hedge reserve 49,801 (40,230)

(3,442) (37,673)

At 30 June 2015, if rupee had weakened/strengthened by 5% against Euro/UK Pound/US Dollar with all other variables held constant, pre-tax profit for the year would have been Rs. 46,758,000 (2014: Rs. 32,142,000) higher/lower as a result of foreign exchange gains/losses on translation of Euro/UK Pound/US Dollar denominated trade receivables, trade payables and borrowings and is as follows:

2015 2014Rs '000 Rs '000

Euro 2,896 3,050UK Pound 4,520 7,114US Dollar (55,859) (42,306)

(48,443) (32,142)



33.1 Financial risk factors (cont’d)

The following table details the forward foreign currency (FC) contracts outstanding at the end of the reporting period:


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33.2 Fair value estimation of financial instruments

The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Group uses a variety of methods namely the capitalised earnings, net asset basis and dividend yield and makes assumptions that are based on market conditions existing at the end of each reporting date.

The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values.

The fair value of those financial assets and liabilities not presented on the Group's statements of financial position at the fair values are not materially different from their carrying amounts.

The Valuation method used is the Replacement Cover Method.

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

•Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets and liabilities;

•Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

•Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

THE GROUP AND THE COMPANYLevel 1 Level 2 Level 3

Rs'000 Rs'000 Rs'000 As at 30 June 2015 Available-for-sale financial assets - - 6,712 Forward exchange contracts (Hedged items) - 21,588 - Total - 21,588 6,712

As at 30 June 2014

Available-for-sale financial assets - - 6,712 Forward exchange contracts (Hedged items) - 4,861 -

Total - 4,861 6,712


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33.3 Capital risk management

The primary objectives of the Group and Company, when managing capital, are to safeguard the entity’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The Group and the Company manage its capital structure and makes adjustment to it, in light of changes in economic conditions. In order to maintain or adjust the capital structure, the Group and the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. No changes were made in the objectives, policies or processes during the years ended 30 June 2015 and 30 June 2014.

The Group and the Company monitors capital on the basis of the debt-to-capital ratio. This ratio is calculated as net debt adjusted capital. Total debt comprise of borrowings and bills discounted. Net debt is calculated as total debt (as shown in the statement of financial position) less cash and bank balances.

Adjusted capital comprises all components of equity (i.e. share capital, non-controlling interests, retained earnings, revaluation surplus and the redeemable preference shares).

The gearing ratios at 30 June 2015 and 30 June 2014 were as follows:


Rs'000 Rs'000 Rs'000 Rs'000

Total debt 2,325,747 1,905,584 159 6

Less: cash and cash equivalents (Note 26(b)) (574,704) (247,892) (1,601) (3,972)

Less: restricted cash (Note 26(c)) (52,185) - - -

Net Debt 1,698,858 1,657,692 (1,442) (3,966)

Total equity 4,342,690 3,803,701 916,945 915,825

Gearing Ratio 39.12% 43.58% N/A N/A


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34. CASH FLOW HEDGE

The Group is involved in the production and selling of textile apparel, most of which is done through exports to foreign countries. The Group is made up of Knitwear Cluster; Fine knits Cluster and Woven Cluster and is exposed to foreign exchange risk on the sale of textile products denominated in foreign currency. The Group exports almost all of its production in foreign currencies (South African Rand ‘ZAR’, United States Dollars ‘USD’, Great Britain Pound ‘GBP’ and Euro ‘EUR’).

The Group is mainly faced to the following foreign exchange exposures:

Pre-transaction foreign currency risk

This arises before the transaction (‘sales’) becomes contractual while a quote is given to the client in foreign currency. Even though the transaction is not confirmed, movement in exchange rate to the disfavour of the Group signifies a potential risk. If a customer later accepts the quote received, there is a risk that the foreign currency price then converted to MUR will not bring the desired margin.

Transaction foreign currency risk

Transactional foreign currency risk arises as soon as a there is a contractual obligation between the Group and the foreign customers. If nothing is done, there is a certain risk that the foreign exchange rate may weaken and if it so happens, the Group may only lose the intended margin on the transaction and may even incur losses if the exchange rate variations are drastically in disfavour of the Group.

The Group adopted the following strategy:

The treasury Committee/Chief Executive of the Group are responsible for the decision making, with the intention to take cover, through forward exchange contracts with a view to cover for sale transactions that are judged as being highly probable. The intention is to cover for transactional exposures as they are unveiled. Prerogative is given to the treasury Committee/Chief Executive of the Group to decide if they would keep part of this position uncovered with the view of benefiting from potential currency appreciation against the MUR.

The Group enters into forward covers to manage its foreign exchange risk on foreign denominated sales. Forward exchange covers are taken for orders received and which are highly probable and this is designated as a cash flow hedge. Forward covers are used as a mechanism to fix the amount of foreign currency denominated sales which are used to modify cashflow between financial instrument and sales receipts upon realisation.

Financial instruments taken to hedge the Group’s sales are fair valued and recognised in the statement of financial position as financial assets /liabilities. For those sales on which a forward has been taken and which has materialised, the resulting fair value gain/loss on re-measurement is accounted for in profit or loss while for those transactions for which the underlying sale has not yet materialised, the fair value gain/loss is recorded in other comprehensive income. The latter is then recycled to profit or loss as soon as the sale materialise and the goods are shipped.

The Group enters into forward contracts (hedge instrument) to buy or to sell foreign currencies at a specified future time at a price agreed upon the contract date. The price is locked until delivery of sales order which normally will not exceed 9 months.

Hedge instruments, in this case forward exchange contracts, are expected to be highly effective to mitigate the foreign currency risk exposure on sales (hedge item). By selling forward, the Group expects to mitigate long term currency exchange risk and will revalue in the opposite direction to the underlying transaction.


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34. CASH FLOW HEDGE (CONT’D)

The objective of the Group is to cover identified exposures (i.e. confirmed orders or highly probable sales orders) to the minimum of 75% and a maximum of 125%. However, this bench mark is determined on a case to case basis by the CEO and treasury committees of the respective business clusters while taking into consideration the specific transaction requirements.

For all sales not yet shipped and for which a forward exchange contract cover has been taken, the Group performs a revaluation of outstanding forward contracts relating to cash flow hedges which is then recorded in the statement of other comprehensive income.

Revaluation of outstanding forex contracts relating to transaction for which an asset has already crystallised in the statement of financial position (sales already shipped and debtors raised) will be recorded in profit or loss.

Subsequently, the cash flow hedge recognised in other comprehensive income will be reversed in profit or loss in the following year, as an underlying asset would already have crystallised upon the orders being shipped ( Sales not shipped last year would have been shipped this year).

Hedge instruments in the form of forward foreign exchange contracts are expected to be highly effective as the unshipped sales, which represents the hedged item, have a direct economic relationship to the forward foreign exchange contract entered into to mitigate the foreign exchange exposure on the Group’s unshipped and confirmed sales orders at year end.

Although effectiveness is certain to be 100% as long as plain vanilla forward contracts are used, a 10% error margin in the hedge effectiveness is considered as acceptable. To determine effectiveness of the hedge, the list of hedge instruments (Forward contracts) are matched with list of sales not yet shipped/highly probable sales (hedge items).


126

Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16Notional amount USD - 138,987 1,000,000 2,258,746 500,000 974,851 - - - - - -Average hedged rate to MUR - 35.49 35.49 35.49 35.49 35.49 - - - - - -Notional amount GBP 3,570,000 500,000 2,774,000 1,500,000 740,000 - 500,000 - 500,000 - - -Average hedged rate USD 1.55 1.55 1.55 1.55 1.55 - 1.55 - 1.55 - - -Notional amount GBP 500,000 770,754 3,161,180 300,000 - - - - - - - -Average hedged rate MUR 49.32 50.00 51.21 341.61 51.40 - 51.27 - - - - -Notional amount EUR - 1,560 - - - - 300,000 300,000 300,000 - - -Average hedged rate to MUR - 39.50 - - - - 39.22 39.25 39.26 - - -Notional amount EUR 424,000 30,509 173,503 558,832 104,493 - 300,000 300,000 300,000 - - -Average hedged rate to USD 1.25 1.08 1.12 1.25 1.25 - 1.11 1.11 1.11 - - -Notional amount ZAR 11,716,510 15,613,428 20,859,966 25,068,514 20,900,000 6,500,000 14,000,000 - - - - -Average hedged rate to USD 12.20 12.20 12.20 12.20 12.20 12.20 12.20 - - - - -Notional amount ZAR 17,906,064 20,213,525 11,699,535 240,675 6,553,629 7,500,000 890,000 - - - - -Average hedged rate to MUR 2.84 2.84 2.84 2.84 2.84 2.84 2.84 - - - - -

Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15Notional amount USD - 664,000 - - - - - - - - - - Average hedged rate to MUR - 30.90 - - - - - - - - - - Notional amount GBP 12,120,000 4,700,000 1,200,000 500,000 750,000 - 850,000 - 260,000 - - - Average hedged rate USD 1.62 1.63 1.63 1.66 1.63 - 1.69 - 1.70 - - - Notional amount GBP 500,000 500,000 500,000 2,000,000 500,000 - 750,000 - - - - - Average hedged rate MUR 49.32 50.00 51.21 51.24 51.40 - 51.27 - - - - - Notional amount EUR - 175,000 - - - 3,000,000 - - - - - - Average hedged rate to MUR - 42.00 - - - 41.68 - - - - - - Notional amount EUR 750,000 750,000 1,000,000 - - - - - - - - - Average hedged rate to USD 1.38 1.36 1.37 - - - - - - - - - Notional amount ZAR 2,179,450 20,758,353 19,536,000 8,360,000 13,928,000 6,470,000 - - - - - - Average hedged rate to USD 11.08 11.10 11.04 10.82 11.04 10.93 - - - - - - Notional amount ZAR 600,000 415,000 3,527,502 2,000,000 - - - - - - - - Average hedged rate to MUR 2.80 2.70 2.79 2.86 - - - - - - - -


The Group has a single risk category which is the foreign exchange risk on foreign denominated sales.

Effectiveness is expected to be 100% as long as plain vanilla forward contracts are used.

The Group does not have any forecast transaction for which hedge accounting had been used in the previous period but which is no longer expected to occur.



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The impact of hedging instruments (forward exchange contracts) designated in hedging relationships as of 30 June 2015 on the statement of financial position of CIEL Textile Limited (the Group), is as follows:

Cash flow hedges

Notional amount

Carrying amount

Line item in the statement of financial

position

Change in fair value used for measuring

ineffectiveness for the period

(FCY) 000 Rs’000Forward exchange 4,873 2,570 Trade and other payables/ -contract (USD) Trade and other receivablesForward exchange 14,816 (12,990) Trade and other payables/ -contract (GBP) Trade and other receivablesForward exchange 3,093 4,505 Trade and other payables/ -contract (EUR) Trade and other receivablesForward exchange 179,662 15,487 Trade and other payables/ -contract (ZAR) Trade and other receivables

The impact of hedged items designated in hedging relationships as of 30 June 2015 on the statement of financial position of the Group is, as follows:

Cash flow hedges

Change in value used for

measuring ineffectiveness

Cash flow hedge reserve

Rs’000 Rs’000Foreign exchange riskUnshipped sales - (9,572)

Cash flow hedges

Carrying amount

Thereof accumulated fair

value adjustments

Line item in the statement of financial

position

Change in fair value used for measuring

ineffectiveness for the period

Rs’000 Rs’000Forward exchange 2,570 2,570 Trade and other payables/ -contract (USD) Trade and other receivablesForward exchange (12,990) (12,990) Trade and other payables/ -contract (GBP) Trade and other receivablesForward exchange 4,505 4,505 Trade and other payables/ -contract (EUR) Trade and other receivablesForward exchange 15,487 15,487 Trade and other payables/ -contract (ZAR) Trade and other receivables

The above hedging relationships affect other comprehensive income as follows:

Cash flow hedges

Hedging gain/ (loss) recognized

in OCI

Ineffectiveness recognized in profit or loss

Line item in profit or loss

Amount reclassified from OCI to

profit or loss

Line item in profit

or lossRs’000 Rs’000 Rs’000 Rs’000 Rs’000

Foreign exchange risk

Unshipped sales 9,572 - None - -



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35. THREE YEAR SUMMARY

(a) THE GROUP

2015 2014 2013

Rs’000 Rs’000 Rs’000

Stated capital/Issued and paid up share capital 685,865 685,865 685,865

Retained earnings 2,627,546 2,179,233 1,843,260

Other reserves 768,082 759,213 579,657

Amount attributable to owners 4,081,493 3,624,311 3,108,782

Profit before taxation 857,203 650,560 607,034

Profit for the year 762,373 551,088 515,857

Dividends to Ordinary Shareholders 254,519 203,615 152,711

(b) THE COMPANY

2015 2014 2013

Rs’000 Rs’000 Rs’000

Stated capital/Issued and paid up share capital 685,865 685,865 685,865

Revaluation surplus 131,874 131,874 121,396

Retained earnings 99,206 98,086 98,103

Total equity 916,945 915,825 905,364

Profit before taxation 254,850 203,634 152,515

Profit for the year 255,639 203,598 152,997

Dividends to Ordinary Shareholders 254,519 203,615 152,711

36. FINANCIAL INSTRUMENTS

THE GROUPFinancial instruments by category 30 June 2015


Derivatives used for hedging

Available for sale Total

Assets as per statements of financial position Rs’000 Rs’000 Rs’000 Rs’000Available-for-sale financial assets - - 6,712 6,712Derivative financial instruments - 21,588 - 21,588Trade and other receivables excluding prepayments 2,523,488 - - 2,523,488Cash and cash equivalents (excluding bank overdrafts) 574,704 - - 574,704Restricted cash 52,185 - - 52,185

Total 3,150,377 21,588 6,712 3,178,677


Other financial liabilities at

amortised cost Total

Liabilities as per statements of financial position Rs’000 Rs’000 Rs’000Borrowings (excluding finance lease liabilities) - 2,215,349 2,215,349Finance lease liabilities - 110,398 110,398Derivative financial instruments 25,030 - 25,030Trade and other payables - 1,511,971 1,511,971Dividend payable - 178,163 178,163

Total 25,030 4,015,881 4,040,911


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36. FINANCIAL INSTRUMENTS (CONT’D)

THE GROUP

Financial instruments by category 30 June 2014




Assets as per statements of financial position Rs’000 Rs’000 Rs’000 Rs’000Available-for-sale financial assets - - 6,712 6,712Derivative financial instruments - 4,861 - 4,861Trade and other receivables excluding prepayments 2,313,315 - - 2,313,315

Cash and cash equivalents (excluding bank overdrafts) 247,892 - - 247,892

Total 2,561,207 4,861 6,712 2,572,780


Other financial

liabilities at amortised

cost TotalLiabilities as per statements of financial position Rs’000 Rs’000 Rs’000Borrowings (excluding finance lease liabilities) - 1,780,567 1,780,567Finance lease liabilities - 125,017 125,017Derivative financial instruments 42,534 - 42,534Trade and other payables - 1,697,321 1,697,321Dividend payable - 127,259 127,259

Total 42,534 3,730,164 3,772,698

THE COMPANYFinancial instruments by category 30 June 2015



Assets as per statements of financial position Rs’000 Rs’000 Rs’000Available-for-sale financial assets - 6,712 6,712Trade and other receivables excluding prepayments 207,567 - 207,567Cash and cash equivalents (excluding bank overdrafts) 1,601 - 1,601

Total 209,168 6,712 215,880

Other financial


cost TotalLiabilities as per statements of financial position Rs’000 Rs’000Borrowings 159 159Trade and other payables 422,006 422,006Dividend payable 178,163 178,163

Total 600,328 600,328


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36. FINANCIAL INSTRUMENTS (CONT’D)

THE COMPANY

Financial instruments by category (cont’d) 30 June 2014Loans and

receivablesAvailable

for sale TotalAssets as per statements of financial position Rs’000 Rs’000 Rs’000Available-for-sale financial assets - 6,712 6,712Trade and other receivables excluding prepayments 156,893 - 156,893Cash and cash equivalents (excluding bank overdrafts) 3,972 - 3,972

Total 160,865 6,712 167,577

Other financial


cost TotalLiabilities as per statements of financial position Rs’000 Rs’000Borrowings 6 6Trade and other payables 428,112 428,112Dividend payable 127,259 127,259

Total 555,377 555,377

37. EMPLOYEE BENEFIT LIABILITY

The Company issued redeemable shares for executives pursuant to resolutions of the Board approved on 28 February 2005 and approved by the shareholders on 13 April 2005. Under the scheme, a fixed number of Redeemable B shares were issued at a fixed price per share.

The shares have the following specificities:

Redeemable B Shares

100 redeemable shares were issued to the Chief Executive Officer of the Woven Cluster at a consideration of Rs. 35,001 each. The shares are not transferable, carry no voting rights and are redeemable at subscription price at the option of the Company.

The shares will entitle the holder to a non-cumulative annual dividend equivalent to 0.02% of the dividend paid to ordinary shareholders.

As the overall contract does not evidence any residual interest to the shareholder, the directors are thus of opinion that the contract is a financial liability. Dividends payable are recognised as an expense in profit or loss over the term of the contract.

38. CHANGES IN ACCOUNTING ESTIMATES

(a) Change in depreciation rates

In the current year, the Group has changed its depreciation rates to better reflect the useful lives of its assets. These changes have been applied prospectively.

The effects on future periods have not been disclosed as it is impracticable to estimate the amount.

If the depreciation had been calculated using the same rate as previous years, the depreciation charge for the year would have been higher by Rs. 27.3M.

39. HOLDING COMPANY

The holding company is CIEL Limited, a public company incorporated in the Republic of Mauritius. It is listed on the Stock Exchange of Mauritius. Its registered office is situated on the 5th Floor Ebène Skies, rue de L’Institut, Ebène.


131

C O R P O R A T E I N F O R M A T I O NBOARD OF DIRECTORS

P. Arnaud Dalais (Chairman)Jean-Pierre Dalais Maurice DalaisAntoine Delaporte Henri de Simard de PitrayEric Dorchies Roger Espitalier Noël J. Harold MayerAlain ReyEddy Yeung Kan ChingJérôme De Chasteauneuf (Alternate to P. Arnaud Dalais)

BOARD COMMITTEES

CORPORATE GOVERNANCE, NOMINATION & REMUNERATION COMMITTEE

Henri de Simard de Pitray (Chairman)P. Arnaud DalaisAntoine Delaporte

AUDIT & RISK COMMITTEE

Alain Rey (Chairman)Jean-Pierre DalaisJérôme De Chasteauneuf

FINANCIAL & SECRETARIAL SERVICES

CIEL Corporate Services Ltd5th Floor, Ebène Skies,Rue de l’Institut, EbèneMauritiusTel : +230 404 2200Fax: +230 404 2201

TREASURY SERVICES

Azur Financial Services Limited5th Floor, Ebène Skies,Rue de l’Institut, EbèneMauritius

REGISTRAR & TRANSFER OFFICE

If you are a shareholder and have inquiries regarding your account, wish to change your name and address, or have questions about lost certificates, share transfers or dividends, please contact our Registrar & Transfer Office:

MCB Registry & Securities Limited2nd Floor MCB CentreSir William Newton StreetPort LouisTel: +230 202 5397Fax: +230 208 1167

REGISTERED OFFICE

5th Floor, Ebène SkiesRue de l’InstitutEbèneTel: +230 404 2200Fax: +230 404 2201Email: [email protected]

MAIN BANKERS

The Mauritius Commercial Bank LtdThe Hong Kong and Shanghai Banking Corporation LtdBarclays Bank PlcBank One LtdStandard Bank (Mauritius) LtdThe State Bank of Mauritius Ltd

EXTERNAL AUDITORS

PricewaterhouseCoopers18 CyberCityEbèneTel: +230 404 5000Fax: +230 404 5588/89

INTERNAL AUDITORS

BDO & CoDCDM Building10, Frère Félix de Valois StreetPort LouisTel : +230 202 3000Fax: +230 202 9993

NOTARY

Etude Montocchio – d’Hotman

LEGAL ADVISORS

Thierry Koenig SA, ENSafrica (Mauritius)Maxime Sauzier SC, ENSafrica (Mauritius)Patrice Doger de Spéville SC, De Spéville Desvaux

WEBSITE

www.cielgroup.com


132

DIRECTORS COMPANY

Dora Brocchetto Cieltex Pty SA Ltd

Elvis Cateaux New Island Clothing Madagascar SA

P. Arnaud Dalais Aquarelle Clothing LtdAquarelle Clothing India (Private) LtdAquarelle International LtdAquarelle Madagascar SACDL Knits Ltd Consolidated Fabrics LtdCTL Retail LtdFerney Spinning Mills LtdFloreal International LtdFloreal Knitwear LtdFloreal Madagascar SAFloreal Property LtdInternational Fabrics LtdLaguna Clothing (Mauritius) LtdNew Island Clothing Madagascar SATKL International LtdTropic Knits LtdTropic Mad SASociété Textile d'Andraharo SA - TEXAROSociété Bonneterie Malagasy - SOBOMA

Guillaume Dalais CDL Knits Ltd TKL International LtdTKL Knits (India) Private LtdTropic Mad SATropic Knits Ltd

Jean-Pierre Dalais Aquarelle Clothing LtdCDL Knits Ltd Consolidated Fabrics LtdCTL Retail LtdFerney Spinning Mills Ltd Floreal Knitwear LtdFloreal Property LtdTropic Knits Ltd

L. J. Jérôme De Chasteauneuf Aquarelle Clothing LtdAquarelle International LtdAquarelle Madagascar SAAjax Sweaters LtdCDL Knits Ltd Consolidated Fabrics Ltd (Alternate Director of Eddy Yeung Kan Ching)CTL Retail LtdFerney Spinning Mills LtdFloreal International LtdFloreal Knitwear Ltd

D I R E C T O R S H I P S O F S U B S I D I A R I E S AS AT 30 JUNE 2015


133

DIRECTORS COMPANY

L. J. Jérôme De Chasteauneuf (Continued) Floreal Madagascar SAFloreal Property LtdTKL International LtdTropic Knits LtdTropic Mad SASociété Bonneterie Malagasy - SOBOMA

Jean-Baptiste Doger de Spéville Ajax Sweaters LtdCDL Knits Ltd Ferney Spinning Mills LtdFloreal International LtdFloreal Knitwear LtdFloreal Madagascar SAFloreal Property LtdTKL International LtdTropic Knits Ltd

Eric Dorchies Aquarelle Clothing LtdAquarelle Clothing India (Private) LtdAquarelle International LtdAquarelle Madagascar SAConsolidated Fabrics LtdInternational Fabrics LtdLaguna Clothing Private LtdLaguna Clothing (Mauritius) LtdNew Island Clothing Madagascar SATinka International Ltd

Jacques Edouard-Betsy Floreal Madagascar SASociété Civile Immobiliere des MascareignesSociété Textile d'Andraharo SA - TEXAROSociété Bonneterie Malagasy - SOBOMA

Roger Espitalier-Noël Aquarelle Madagascar SACTL Retail LtdFloreal Madagascar SANew Island Clothing Madagacar SATropic Mad SASociété Textile d'Andraharo SA - TEXARO

Sarbajit Ghose Laguna Clothing Private LtdLaguna Clothing (Mauritius) Ltd

Françoise Ip Ajax Sweaters LtdAquarelle Madagascar SAFloreal Madagascar SATropic Mad SA


134

DIRECTORS COMPANY

Rajesh Kumar Laguna Clothing Private Ltd

Michel André Kim Shin Loo Chin Moy Tropic Mad SA

J. Harold Mayer Aquarelle Clothing LtdAquarelle Clothing India (Private) LtdAquarelle International LtdAquarelle Madagascar SACDL Knits Ltd Consolidated Fabrics LtdCTL Retail LtdFerney Spinning Mills LtdFloreal International LtdFloreal Knitwear LtdFloreal Madagascar SAFloreal Property LtdInternational Fabrics LtdLaguna Clothing Private LtdNew Island Clothing Madagascar SATinka International LtdTKL International LtdTKL Knits (India) Private LtdTropic Knits LtdTropic Mad SASociété Textile d'Andraharo SA - TEXAROSociété Bonneterie Malagasy - SOBOMA

Bruno Monti Laguna Clothing Private LtdLaguna Clothing (Mauritius) Ltd

Paolo Monti Laguna Clothing Private Ltd

Manuel Monti Laguna Clothing (Mauritius) Ltd

Neera Munisamy Ajax Sweaters Ltd

Murali Nagesh Aquarelle India (Private) Ltd

Bertrand Rivalland Aquarelle Madagascar SAAjax Sweaters LtdCieltex SA PtyLtdFloreal Madagascar SATropic Mad SATKL Knits (India) Private LtdSociété Textile d'Andraharo SA - TEXAROSociété Bonneterie Malagasy - SOBOMA

Vaidyanathan Pudugramam Venkata Subramanian TKL Knits (India) Private Ltd

Ayaz Tajoo Aquarelle Madagascar SA

D I R E C T O R S H I P S O F S U B S I D I A R I E S (CONT’D) AS AT 30 JUNE 2015


135

DIRECTORS COMPANY

Bertrand Thevenau Tropic Knits LtdCDL Knits Ltd TKL International LtdTKL Knits (India) Private LimitedTropic Mad SATinka International LtdSociété Bonneterie Malagasy - SOBOMA

Eddy Yeung Kan Ching Aquarelle Clothing LtdAquarelle International LtdCDL Knits Ltd Consolidated Fabrics LtdCTL Retail LtdFerney Spinning Mills LtdFloreal International LtdFloreal Knitwear LtdFloreal Property LtdTKL International LtdTropic Knits Ltd

Pascal Walter Consolidated Fabrics Ltd


136

N O T I C E O F A N N U A L M E E T I N GNotice is hereby given that the Annual Meeting (“the Meeting”) of the shareholders of CIEL Textile Limited (“the Company’’) will be held on 17 December 2015, at 14.00 hours at the Registered Office of the Company, 5th floor, Ebène Skies, rue de l’Institut, Ebène, to transact the following business in the manner required for passing Ordinary Resolutions:

AGENDA

1. To receive, consider and approve the Group’s and the Company’s audited Financial Statements for the year ended 30 June 2015, including the Annual Report and the Auditors’ Report, in accordance with section 115(4) of the Companies Act 2001.

2. To authorise, in accordance with section 138(6) of the Companies Act 2001, Mr. Maurice Dalais to continue to hold office as a Director until the next Annual Meeting of the Shareholders of the Company.

3-11. To re-elect, as Directors of the Company to hold office until the next Annual Meeting of the Shareholders of the Company, the following persons who offer themselves for re-election (as separate resolutions):

3. Mr. P. Arnaud Dalais

4. Mr. Jean-Pierre Dalais

5. Mr. Antoine Delaporte

6. Mr. Henri de Simard de Pitray

7. Mr. Eric Dorchies

8. Mr. Roger Espitalier Noël

9. Mr. J. Harold Mayer

10. Mr. Alain Rey

11. Mr. Eddy Yeung Kan Ching

12. To appoint the auditors for the financial year ending 30 June 2016 and authorise the Directors to fix their remuneration.

13. To ratify the remuneration paid to the auditors for the year ended 30 June 2015.

By Order of the Board


30 October 2015

Notes:

(a) A shareholder of the Company entitled to attend and vote at the Meeting may appoint a proxy, whether a member or not, to attend and vote in his/her stead. A proxy need not be a shareholder of the Company.

(b) Proxy Forms should be deposited at the Company’s Share Registry & Transfer Office, MCB Registry & Securities Limited, 2nd Floor, MCB Centre, Sir William Newton Street, Port Louis, not less than 24 hours before the Meeting, and in default, the instrument of proxy shall not be treated as valid.

(c) Postal votes shall reach the Company’s Share Registry & Transfer Office, MCB Registry & Securities Limited, 2nd Floor, MCB Centre, Sir William Newton Street, Port Louis, not less than 48 hours before the Meeting, and in default, the postal vote shall not be treated as valid.

(d) A proxy form and postal vote are included in this Annual Report and are also available at the Registered Office of the Company.(e) For the purpose of this Meeting, the shareholders who are entitled to receive notice and attend the Meeting shall be those

shareholders whose names are registered in the share register of the Company as at 19 November 2015.(f) The minutes of the Annual Meeting held on 17 December 2014 are available for consultation by the shareholders of the Company

during normal trading office hours, at the Registered Office of the Company.(g) The profiles and categories of Directors proposed for re-election are set out under the corporate governance section of this

report.


137

I/We

of

being a shareholder(s) of CIEL Textile Limited (“the Company”) hereby appoint

of

or failing him/her

of

or, failing him/her the Chairman of the Meeting, as my/our proxy to represent me/us and vote for me/us and on my/our behalf at the Annual Meeting of the shareholders of the Company to be held on 17 December 2015, at 14.00 hours at the Company’s Registered Office, 5th Floor, Ebène Skies, rue de l’Institut, Ebène and at any adjournment thereof.

I/We direct my/our proxy to vote in the following manner (Please vote with a tick):

RESOLUTIONS FOR AGAINST ABSTAIN











10. Mr. Alain Rey




Signed this day of 2015

Signature (s)

Notes:

(a) Any shareholder entitled to attend and vote at the Meeting may appoint a proxy, whether a member or not, to attend and vote in his/her stead.

(b) If the instrument appointing the proxy is returned without any indication as how the proxy shall vote on any particular reason, the proxy will exercise his/her discretion as to whether, and if so, how he/she votes.

(c) Proxy forms should be deposited at the at the Company’s Share Registry & Transfer Office, MCB Registry & Securities Limited, 2nd Floor, MCB Centre, Sir William Newton Street, Port Louis, not less than 24 hours before the Meeting, and in default, the instrument of proxy shall not be treated as valid.

P R O X Y F O R M


138

I/We

of

being a shareholder(s) of CIEL Textile Limited (“the Company”), do hereby cast my/our vote by post, by virtue of section 19.10 of the Constitution of the Company, for the Annual Meeting of the Shareholders of the Company to be held on 17 December 2015, at 14.00 hours at the Company’s Registered Office, 5th Floor, Ebène Skies, rue de l’Institut, Ebène and at any adjournment thereof.

I/We desire my/our vote to be cast on the Resolutions as follows (please vote with a tick):

RESOLUTIONS FOR AGAINST ABSTAIN











10. Mr. Alain Rey




Signed this day of 2015

Signature(s)

Note:

Duly signed postal votes shall reach the Company’s Share Registry & Transfer Office, MCB Registry & Securities Limited, 2nd Floor, MCB Centre, Sir William Newton Street, Port Louis, not less than 48 hours before the Meeting, and in default, the postal vote shall not be treated as valid.

P O S T A L V O T E

N O T E S

CIE

L T

EX

TIL

E/A

NN

UA

L R

EP

OR

T 2

015

CIEL Textile Limited

5th floor, Ebène Skies

Rue de l’Institut, Ebène

Mauritius

www.cielgroup.com

BRN: C06001871

annual report 2015 - ciel group · and madagascar. the management team is taking appropriate...

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