Audited-FS-MIL-2011.pdf

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1

MM A ARRGG A ARRIINNEE IINNDDUUSSTTRRIIEESS LLIIMMIITTEEDD

Annual Report

for the year ended

31 December 2011



2

CORPORATE INFORMATION

Directors of the Company

Chairman

Mr. Bashirally A Currimjee, G.O.S.K - Also alternate to Mr. Anil C Currimjee

ExecutiveMr. Azim F Currimjee - Chief Executive Officer /Managing Director/

Also alternate to Mr. Currimjee J CurrimjeeMr. Raffi Currimjee - Chief Operating Officer

Non-ExecutiveMr. Fakhruddin J Currimjee, G.O.S.KMr. Mustanshir A Currimjee - Also alternate to Mr. Ashraf M CurrimjeeMr. Currimjee J Currimjee, G.O.S.K - Also alternate to Messrs. Azim F Currimjee &

Fakhruddin J CurrimjeeMr. Anil C Currimjee - Also alternate to Mr. Bashirally A Currimjee

Mr. Ashraf M Currimjee - Also alternate to Mr. Mustanshir A CurrimjeeMr. Mazahir F E Adamjee - Also alternate to Mr. Raffi CurrimjeeMr. Saliah Mohamed Sait - Also alternate to Mr. Mazahir F E Adamjee

Independent Non-ExecutiveMr. Hassam Vayid, G.O.S.KMr. Uday K Gujadhur

Directors of the Company’s Subsidiary

Central Distribu tors Company Limited(‘CDCO’)

Mr. Currimjee J Currimjee √

Mr Mustanshir A Currimjee √

Mr Azim F Currimjee √

Mr Raffi Currimjee √

Mr Ashraf M Currimjee Al ternate to Mr. Mustanshir A Currimjee

The Company Secretary

Currimjee Limited6, Sir William Newton Street,Port-LouisMauritius

Registered Office

6, Sir William Newton Street,

Port-LouisMauritius

RegistryCurrimjee Limited6, Sir William Newton StreetPort LouisMauritius

Principal Place of Business



3

New Trunk Road,TrianonMauritius

Audi tors

Deloitte7th Floor, Raffles Tower 19, CybercityEbeneMauritius

Bankers

The Mauritius Commercial Bank Ltd.

State Bank of Mauritius Ltd

Barclays Bank Plc

Standard Bank (Mauritius) Limited

Afrasia Bank Limited



4

REPORT FROM THE BOARD OF DIRECTORS

Dear Shareholder

The Board of Directors is pleased to present the Annual Report of MARGARINE INDUSTRIES

LIMITED for the year ended 31 December 2011.

LEGAL FORM AND PRINCIPAL ACTIVITY

The Company was incorporated on 20th

April 1966 as a private company and was converted into a

public company on 29th

June 1982. The Company was admitted to the Development & Enterprise

Market of the Stock Exchange of Mauritius in August 2006.

Its principal activity consists of manufacturing and sale of margarine and has remained unchanged

during the year.

The wholly-owned subsidiary of the Company, Central Distributors Company Limited [“CDCO”], is

engaged in the trading of consumer goods and its activity has also remained unchanged during the

year.

RESULTS

Group turnover increased by 12.3% compared to last year and profit after tax in the year has increased

from Rs 20.2M to Rs 30.3M. A gain on revaluation of plant and machinery of Rs 30.4M is included in

the other comprehensive income. The assets were valued by Independent professional valuer in

accordance with the group accounting policy.

In the prevailing competitive environment and with the rising commodity prices, 2012 will be a

challenging year. However, the Company expects the results to be sustained given various measures

undertaken.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE FINANCIAL

STATEMENTS

Company law requires the Directors to prepare financial statements for each financial year, which

present fairly the financial positions, financial performances and cash flows of the Company. In

preparing those financial statements, the Directors are required to:



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select suitable accounting policies and then apply them consistently;

make judgements and estimates that are reasonable and prudent;

state whether applicable Accounting Standards have been followed and complied with, subject to

any material departures disclosed and explained in the financial statements; and

prepare the financial statements on the going concern basis unless it is inappropriate to presume

that the Company will continue in business.

The Directors confirm that they have complied with the above requirements in preparing the financial

statements.

The Directors are responsible for keeping proper accounting records, which disclose with reasonable

accuracy at any time, the financial position of the Company and to enable them to ensure that the

financial statements comply with the Companies Act 2001. They are also responsible for safeguarding

the assets of the Company and hence for taking reasonable steps for the prevention and detection of

fraud and other irregularities.

DONATIONS

From the Company From Subsidiaries2011(Rs)

2010(Rs)

2011(Rs)

2010(Rs)

Political donations Nil Nil Nil NilNon-political / charitable donations 32,500 47,500 Nil NilTOTAL 32,500 47,500 Nil Nil

AUDITORS

The Auditors, Messrs. Deloitte have expressed their willingness to continue in the office and a

resolution proposing their re-appointment will be submitted to the Annual Meeting.

The fees paid to the Auditors were:

The Company The Group

2011

Rs.

2010

Rs.

2011

Rs.

2010

Rs.

Audit fees 300,000 300,000 375,000 375,000

Other Services 10,000 10,000 20,000 20,000





7

Corporate Governance Report

The Company is committed to high standards of Corporate Governance and the Board uses its best

endeavours to ensure compliance with the provisions of the Mauritius Code of Corporate Governance.

The Holding Structure

The holding structure of the Company as at 31 December 2011is as follows:

Substantial Shareholding

With the exception of CIND, no other Shareholder holds more than 5% of the share capital of the

Company.

Board of Directors

For the year under review, the Board consisted of twelve Directors with a mix of two Executives, eight

Non-Executives and two Independent Directors.

The Independent and Non-Executive Directors bring a wide range of experience and skills to the Board.

Independent Directors are free from any business or other relationships which would materially affect

their ability to exercise independence of mind and judgement.

Fakhary Limited

(“FL”)

Currimjee Industries

Limited (“CIND”)

Others

Margarine Industries

Limited (“the Company”)

Central Distributors

Company Limited (“CDCO”)

100%

25.0%

75.0%

100%



8

Where necessary in the discharge of their duties, Directors may seek independent professional advice

at the Company’s expense.

Directors’ Profiles

The profile of each member of the Board of Directors is set out hereafter:

Mr. Bashirall y A Curr imjee G.O.S.K - Chairman

Mr. Bashirally A Currimjee is the Chairman of the Company since 1 January 2011. He is also the

Chairman and Managing Director of Currimjee Jeewanjee and Company Limited and the Chariman of

the following Development Enterprise Market (DEM) listed companies:

- Compagnie Immobiliere Limitee, Soap & Allied Industries Limited Margarine Industries Limited,

Quality Beverages Limited and Vital Water Bottling Co Ltd.

He is presently Director of Fincorp Limited, a company listed on the Official Market of the Stock

Exchange of Mauritius (“SEM”).

Mr. Azim F Currimjee

Mr. Azim F Currimjee was appointed Director of the Company in September 2001. In August 2008 and

July 2009, he was respectively appointed as Chief Executive Officer and Managing Director of the

Company. He is also Director of the following DEM listed companies:

- Compagnie Immobiliere Limitee, Quality Beverages Limited, Soap & Allied Industries Limited,

and Vital Water Bottling Co Ltd.

Mr. Raffi Currimjee

Mr. Raffi Currimjee was appointed as Executive Director and Chief Operating Officer of the Company in

August 2008. He is also Director of the following DEM listed companies:

- Compagnie Immobiliere Limitee, Quality Beverages Limited and Vital Water Bottling Co Ltd.

Mr. Fakhruddin J Curr imjee G.O.S.K

Mr. Fakhruddin J Currimjee was appointed Director of the Company in April 1966. He is also a Director

of the following DEM listed companies:

- Quality Beverages Limited and Vital Water Bottling Co Ltd.

Mr. Mustanshir A Currimjee

Mr. Mustanshir A Currimjee was appointed Director of the Company in August 1976. He is also a

Director of the following DEM listed companies:

- Quality Beverages Limited, Soap & Allied Industries Limited and Vital Water Bottling Co Ltd.



9

Mr. Currimjee J Curr imjee G.O.S.K

Mr. Currimjee J Currimjee has acted as Chairman of the Company from 15 November 1978 to 31

December 2010. He is also Director of the following DEM listed companies:

- Quality Beverages Limited, Soap & Allied Industries Limited and Vital Water Bottling Co Ltd

Mr. Anil C Currimjee

Mr. Anil C Currimjee was appointed Director of the Company in July 2005. He is presently a Director of

the following DEM listed companies:

- Compagnie Immobiliere Limitee, Quality Beverages Limited, Soap & Allied Industries Limited


He also a Director of the Mauritius Commercial Bank Limited, a company listed on the Official Market of

the SEM.

Mr. Ashraf M Currimjee

Mr. Ashraf M Currimjee was appointed Director of the Company in June 2007 and is Director of the

following DEM listed companies:



He is also a Director of Mauritius Oil Refineries Limited, a company listed on the Official Market of the

SEM.

Mr. Mazahir F E Adamjee

Mr. Mazahir F E Adamjee was appointed Director of the Company in July 2005. He is a Director of the

following listed companies:



He also a Director of National Investment Trust Ltd, a company listed on the Official Market of the SEM.

Mr. Saliah Mohamed Sait

Mr. Saliah Mohamed Sait was appointed as Director of the Company in June 2006. He is the Managing

Director of some companies of the Currimjee Group. He is also a Director of the following DEM listed

companies:




10

Mr. Hassam Vayid

Mr. Hassam Vayid was appointed as an Independent Director of the Company in July 2005. He is the

Chairman of Bramer Banking Corporation Ltd and Director of the following DEM listed companies:


Mr. Uday K Gujadhur

Mr Uday K Gujadhur was appointed as an Independent Director and Chairman of the Company’s Audit

Committee in July 2010. He is Director of the following DEM listed companies:


Board Meeting

The Board of Directors meets every quarter to review the overall management and performance of the

Company. Additional Board Meetings are held as and when required and decisions are also taken by

way of resolutions in writing, assented and signed by all Directors.

The Board of Directors met five times during the year under review.

Board Committees

In line with Corporate Governance best practices, the Board has established the following sub-

committees to assist it in the decision-making process and in the performance of its duties and

responsibilities:

Corporate Governance Committee

Audit Committee

Ad-hoc committees are also set up to assess and review major investments and new projects.

Corporate Governance Committee

The Corporate Governance Committee is chaired by Mr Hassam Vayid, an Independent Director, and

the other members as at 31 December 2011 were Messrs Bashirally A Currimjee, Ashraf M Currimjee,

Azim F Currimjee and Mazahir Adamjee. Mr Anil C Currimjee stepped down as Committee Member

and Mr Mazahir Adamjee was appointed as a Member of the Committee in July 2011.

The Committee operates under a Committee Charter approved by the Board and its main attribution is

to make recommendations to the Board of Directors on all corporate governance provisions to be

adopted so that the Board remains effective and complies with prevailing corporate governance

principles.



11

The Committee met twice during the year under review.

Audit Committee

The Audit Committee is chaired by Mr Uday Kumar Gujadhur, an independent Director. Mr Uday K

Gujadhur is a Fellow Member of the Association of Chartered Certified Accountants, United Kingdom.

The other members of the Audit Committee as at 31 December 2011 were Messrs Saliah Mohamed

Sait, Ashraf M Currimjee and Hassam Vayid.

The Audit Committee operates under the Terms of Reference set by the Board of Directors and a

formally approved Audit Committee Charter.

The role of the Audit Committee has continually been pre-dominant in assisting the Board in carrying

out its responsibilities relating to accounting policies, internal control procedures, financial reporting

practices and audit process.

The Audit Committee oversees the financial reporting process and in particular, it reviews the annual

and quarterly financial statements before being submitted to the Board of Directors for approval. It also

reviews and monitors the following:

the effectiveness of the internal audit function;

the qualifications, assessment of external auditors independence, performance and remuneration;

the compliance of the Company with laws and regulations.

The Audit Committee met four times for the year under review.

Currimjee Limited acts as Secretary to all the above Committees.

Board and Committee Attendance

The following table gives the records of attendance at meetings of the Company’s Board and its

Committees for the year under review:

Directors BoardMeeting

Audi tCommittee

CorporateGovernanceCommittee

Mr Bashirally A Currimjee 5/5 n/a 2/2Mr Azim F Currimjee 5/5 n/a 2/2Mr Raffi Currimjee 4/5 n/a n/a

Mr Fakhruddin J Currimjee 2/5 n/a n/aMr Mustanshir A Currimjee 3/5 n/a n/aMr Currimjee J Currimjee 5/5 n/a n/aMr Anil C Currimjee 4/5 n/a n/a



12

Directors BoardMeeting

Audi tCommittee

CorporateGovernanceCommittee

Mr Ashraf M Currimjee 4/5 3/4 2/2Mr Mazahir F E Adamjee 4/5 n/a n/a

Mr Saliah Mohamed Sait 5/5 4/4 n/aMr Hassam Vayid 4/5 4/4 2/2Mr Uday K Gujadhur 3/5 4/4 n/a

Common Directors within the Holding Structure

Company Fakhary

Limited

Currimjee

Industries

Limited

Central

Distributors

Company

Limited

Mr Bashirally A Currimjee √ √ √

Mr Azim F Currimjee √ √ √

Mr Raffi Currimjee √ √ √

Mr Fakhruddin J Currimjee √ √ √

Mr Mustanshir A Currimjee √ √ A* √

Mr Currimjee J Currimjee √ √ √ √

Mr Anil C Currimjee √ √

Mr Ashraf M Currimjee √ A* √ A*

Mr Mazahir F E Adamjee √ √ √

Mr Hassam Vayid √ √

A* stands for Alternate Director

Internal control

The Board is responsible for the maintenance of an internal control system. The Board of Directors is

conscious of its role of withholding the highest standard of corporate governance and has established a

sensible framework of valuable controls which enables risks to be assessed and managed. The Board

regularly reviews processes and procedures to ensure effectiveness of the Company’s internal control

systems. The internal control activities are carried out in line with an approved internal audit plan.

The Internal Audit Service for the Company is outsourced to Currimjee Jeewanjee and Company

Limited who delivers the service through its Internal Audit Department with clear reporting structure

between the Internal Auditor and the Company. The internal Auditor reports to the Audit Committee.

The internal Auditor has unrestricted access to the Company’s accounting records, to management and

employees.



13

Risks Management

Senior Management assumes responsibility for identifying and monitoring the risks as appropriate to

their position in the organisation. Therefore, the objective of risk management is to reduce risk to an

acceptable level.

The Board is, nevertheless responsible for the total process of risk management, including the

identification and evaluation of risks and putting in place appropriate systems and controls to mitigate

the impact of risks.

Statement of the Company’s remuneration philosophy

The Nomination and Remuneration Committee is set up at the level of Currimjee Limited and is chaired

by Mr Carrim A Currimjee. The other members as at 31 December 2011 were Messrs Bashirally A

Currimjee, Fakhruddin J Currimjee. Sir Hamid Moollan Q.C. and Mr Jean Paul de Chazal have been

nominated as co-opted Members on the Committee for their independent expert advice.

The Committee’s main responsibility is for making recommendations to the Board for determining,

developing and agreeing the Company’s general policy on remuneration for Directors and pension for

Retired Directors and on the appointment of new Directors.

All decision taken at the Nomination and Remuneration committee level are submitted for approval by

the Board of the Company.

The Committee met once during the year under review.

The Company’s remuneration philosophy concerning Directors follow the guidelines proposed by the

Nomination and Remuneration Committee, which solicits the expert advice of a Consultant to assist in

determining the remuneration of Executive Directors.

Independent Directors who are Members of the Board’s sub-committees are paid committee fees, in

addition to their Directors’ fees. Independent Directors are also remunerated for attendance at Board

Meetings.

The Company’s policy for determining remuneration for Management and Staff follow the guidelines

below:

Ensure that remuneration is commensurate with qualifications, skills and experience;

Ensure that pay levels are internally consistent and align with market rates;



14

Provide a remuneration package that attracts, retains and motivates staff;

Reward managers according to their performance and their responsibilities.

Remuneration and benefits received by Directors during the financial year were as follows

From the

Company

Rs

Total - Executive Directors 542,410

Total - Non-Executive Directors 135,603

Total - Independent Directors 147,500

TOTAL 825,513

Directors did not receive any remuneration and benefits from the Company’s subsidiaries for the year

under review.

Remuneration of Directors has not been disclosed on an individual basis due to commercial sensitivity.

Directors’ service contracts

No Director holds any service contract with the Company.

Directors’ Interest and Dealings in Shares

The Directors are aware of the principles of the model code on securities transactions by Directors as

detailed in Appendix 6 of the Mauritius Stock Exchange Listing rules.

The Company Secretary maintains a Register of Interests, which is updated with every transaction

entered into by the Directors and their closely related parties. All new Directors are required to notify in

writing to the Company Secretary their holdings in the Company’s shares as well as those in related

companies.

None of the Directors traded in the Company’s shares throughout the year under review.

The following table details the interests of the Directors in the share capital of the Company as at

31 December 2011:



15

Interests in the Company’s

shares as at 31 December 2010

Number of shares

Direct Indirect

Mr Bashirally A Currimjee 4,482 -

Mr Azim F Currimjee 500 2,000

Mr Raffi Currimjee 1,556 -

Mr Fakhruddin J Currimjee 5,558 2,281

Mr Mustanshir A Currimjee 4,482 -

Mr Currimjee J Currimjee 5, 608 -

Mr Anil C Currimjee - -

Mr Ashraf M Currimjee - -

Mr Mazahir F E Adamjee 1,000 -

Mr Saliah Mohamed Sait - -

Mr Hassam Vayid - -

Mr Uday K Gujadhur - -

Constitution

The main highlights of the Constitution are as follows:

The main objects inter alia of the Company are to carry on the business of manufacturers of

Margarine, Vegetable Ghee, cooking fats and other similar products;

The Shareholders can freely transfer fully paid up shares of the Company; and

The quorum for a Shareholders’ meeting is two Shareholders present or represented by proxy.

Shareholders’ Agreement

To the knowledge of the Company, there was no such agreement with any of its Shareholders for the

year under review.

Share Registry and Transfer Office

The share registry is managed by Currimjee Limited and as at 31 December 2011, the Company had

131 registered Shareholders.

Shareholding Profile

The share ownership and the category of Shareholders as at 31 December 2011 are set out below:



16

Number of

Shareholders

Size of Shareholding Number of

Shares Owned

% of Total Issued

Shares

112 1-500 shares 5,921 1.972

4 501-1,000 shares 4,000 1.332

9 1,001-5,000 shares 26,702 8.894

4 5,001-10,000 shares 25,888 8.622

1 10,001-50,000 shares 12,550 4.180

- 50,001-100,000 shares - -

1 100,001-250,000 shares 225, 178 75.000

- 250,001-500,000 shares - -

- Over 500,000 shares - -

131 Total 300,239 100%

Number of

Shareholders

Category of Shareholders Number of

Shares Owned

% of Total

Shares

Issued

4 Other Corporate Bodies 229,664 76.49

126 Individuals 58,025 19.33

1 Pension & Provident Funds 12,550 4.18

131 Total 300,239 100%

Share Price Information

The share of the Company has a nominal value of Rs 100 and the Company’s share price evolution for

the year 2011 was as follows:

0

50

100

150

200

250

M

a r k e t P r i c e ( R s . )

Year 2011

Price (Rs.)



17

Shareholders’ Communication and Calendar of Events

The Board of Directors of the Company understands that communication to Shareholders about

matters pertaining to the Company is of great importance and ensures that information is delivered in

an open, transparent and meaningful manner. Press communiqués, disclosures in the Annual Report

and the Annual Meeting of Shareholders are means available to the Board in keeping the

communication line with Shareholders open.

The calendar of key events is as follows:

Publication of Abridged Audited Accounts for the year ended 31 December 2011March

Publication of 1st Quarter Results May

Annual Report to Shareholders June

Annual Meeting of Shareholders June

Publication of 2nd

Quarter Results August

Publication of 3rd Quarter Results November

Projection for Declaration/Payment of Final Dividend November/December

Financial Year End December

Employee Share Scheme

There is no Employee Share Option Plan in place at Company or Group level.

Dividend Policy

Payment of dividends is subject to the profitability of the Company, its cash flow and its capital-

expenditure requirements. For the year under review, the Company declared a dividend of Rs 60.00

per share [2010: Rs 50.00 per share].

The trend in dividend declaration or the previous 10 years is illustrated below:

0

10

2030

40

50

60

70

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

Year

%

Final Dividend % on

Nominal Value of

Ordinary Shares



18

Senior Management’s Profiles

Rafic Sulliman is the General Manager. He joined the Company in 1990.

Abed Atchia is the Human Resources IT & Admin Manager and he is responsible for

Human Resources, Health & Safety and Security, business information systems, hardwareand internal infrastructure of the Company. He joined the Company in January 1970.

Sivapragassen Rengasamy is the Factory Manager and he is responsible for the

production, maintenance and technical operations of the Company. He joined the

Company in May 1972.

Zabeer Abbas is the Accounts Manager and he is responsible for the financial

management of the business, including production of financial reports, periodic review

packs and forecasts. He joined the Company in August 2010.

Zeenat Mungloo Peyrye is the Production Manager & R & D Manager and she is

responsible for day to day management of Production department and for product

improvement and development. She joined the Company on 1st August 2008.

Choaib Moreea is the Operations Manager in the Commercial Division. He joined the

Company on 1st November 2009.

Senior Management’s Interests in Shares

The following table details the interests of Senior Management in the share capital of the Company as

at 31 December 2011

Number of shares

Number of shares in the

Company as at 31st

December 2010

Direct Indirect

Rafic Sulliman 1,100 2,000

Abed Atchia 100 -

Sivapragassen Rengasamy 100 -

Related Party Transactions

All the transactions of the Company are carried out at arm’s length.

Please refer to note 27 of the accounts.



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Company Secretary

All the Directors have access to the services of the Company Secretary, Currimjee Limited. It ensures

that the Company complies with its constitution and all relevant statutory and regulatory requirements. It

plays a key role in the application of corporate governance and is a central source of guidance and

advice to the Board on matters of ethics and good governance.

It ensures proper notification and conduct of the Board of Directors, Board Committees and

Shareholders’ meetings and recording of proceedings.

Management Agreement

Currimjee Limited offers secretarial and management services to the Company and the main scope of

its services comprise, among others, Consultancy and Advisory and Management Services. A

Secretariat Service Agreement & a Management Agreement between Currimjee Limited and the

Company have been signed in that respect.

Health, Safety & Environment Practices

The Company ensures that its operations are compliant with the Occupational Safety and Health Act

2005. A Health & Safety consultant assesses, reviews and ensures that the Company adheres to the

best practices in this respect.

The Company is committed to sustainable development and ensures that its operations are conducted

in a way that minimises their impact on the environment and on the society at large.

Corporate Social Responsibility

The Company channels a percentage of its CSR contribution to the “Currimjee Foundation”. The funds

are utilised primarily towards poverty alleviation together with support to education, sports, health and

environment. The Company has contributed an amount of MUR 509,970 to the Currimjee Foundation

for the year 2011.

Major projects undertaken by the Currimjee Foundation in the year 2011 were as follows:

Poverty Al leviation: Six EAP (Eradication of Absolute Poverty program) families of Vallee Pitot

have been taken in charge and empowered. The major activities undertaken by the Currimjee

Foundation in Vallee Pitot were, among others, the financing of pre-primary schools, the

rehabilitation and empowerment of drug abusers through the Idriss Goomany Centre, the

provision of equipment for starting a small business and the contribution to a Credit Union for

117 families.











24MARGARINE INDUSTRIES LIMITED

STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2011

2011 2010 2011 2010

Note Rs Rs Rs Rs

Revenue 19 362,754,756 322,883,200 296,298,091 256,875,825

Cost of sales (255,177,918) (231,173,867) (202,636,095) (173,535,333)

Gross profit 107,576,838 91,709,333 93,661,996 83,340,492

Other income 20 1,266,709 2,323,402 3,270,300 4,114,342

Selling and distribution expenses (17,179,032) (15,045,034) (10,708,231) (9,321,483)

Marketing expenses (12,589,876) (8,007,644) (12,589,876) (8,007,644)

Administrative expenses (35,554,445) (36,208,808) (33,954,419) (33,743,824)

Finance costs 21 (7,522,884) (9,718,770) (6,163,410) (7,850,490)

Profit before taxation 35,997,310 25,052,479 33,516,358 28,531,393

Taxation 15 (5,693,681) (4,772,136) (5,693,681) (4,772,136)

Profit for the year 22 30,303,629 20,280,343 27,822,677 23,759,257

Other comprehensive income

Net value gain(loss) on cash flow hedges 1,461,903 (580,722) 1,461,903 (580,722) Gain on revaluation of land and buildings

and Plant and Machinery 5 30,407,712 4,700,000 30,407,712 4,700,000 Deferred tax on revaluation of land and buildings

and Plant and Machinery 826,177 (5,867,333) 826,177 (5,867,333)

Other comprehensive income/(loss) for the year 32,695,792 (1,748,055) 32,695,792 (1,748,055)

Total comprehensive income for the year 62,999,421 18,532,288 60,518,469 22,011,202

Profit attributable to:

wners o e company 30,303,629 20,280,343 27,822,677 23,759,257

o a compre ens ve ncome a r u a e o

owners of the company 62,999,421 18,532,288 60,518,469 22,011,202

Earnings per share 23 100.93 67.55

THE COMPANYTHE GROUP




STATEMENTS OF CHANGES IN EQUITY


THE GROUP

Stated Revaluation Other Retained

Note capital reserves reserves earnings TotalRs Rs Rs Rs Rs

At 1 January 2010 30,023,900 45,715,266 3,810,342 24,038,998 103,588,50

Profit for the year - - - 20,280,343 20,280,34

Other comprehensive income - (1,167,333) (580,722) - (1,748,05

Total comprehensive income for the year - (1,167,333) (580,722) 20,280,343 18,532,28

Dividend payable 26 - - - (15,011,950) (15,011,95

At 31 December 2010 30,023,900 44,547,933 3,229,620 29,307,391 107,108,84


Other comprehensive income - 31,233,889 1,461,903 - 32,695,79

Total comprehensive income for the year - 31,233,889 1,461,903 30,303,629 62,999,42

Dividend 26 - - - (18,014,340) (18,014,34

At 31 December 2011 30,023,900 75,781,822 4,691,523 41,596,680 152,093,92

THE COMPANY

Stated Revaluation Other Retained

Note capital reserves reserves earnings Total

Rs Rs Rs Rs Rs

At 1 January 2010 30,023,900 45,715,266 3,810,342 24,184,255 103,733,76


Other comprehensive income - (1,167,333) (580,722) - (1,748,05

Total comprehensive income for the year - (1,167,333) (580,722) 23,759,257 22,011,20

Revaluation surplus realised on depreciation - - -

Dividend payable 26 - - - (15,011,950) (15,011,95

At 31 December 2010 30,023,900 44,547,933 3,229,620 32,931,562 110,733,01


Other comprehensive income - 31,233,889 1,461,903 - 32,695,79

Total comprehensive income for the year - 31,233,889 1,461,903 27,822,677 60,518,46 Dividend 26 - - - (18,014,340) (18,014,34

At 31 December 2011 30,023,900 75,781,822 4,691,523 42,739,899 153,237,14

Attributable to owners



MARGARINE INDUSTRIES LIMITED 26STATEMENTS OF CASH FLOWS


2011 2010 2011 2010

Note Rs Rs Rs Rs

CASH FLOWS FROM OPERATING ACTIVITIES

Profit for the year 30,303,629 20,280,343 27,822,677 23,759,257

Adjustments for:-

Taxation recognised in profit or loss 15 5,693,681 4,772,136 5,693,681 4,772,136

Depreciation and amortisation 5 8,382,254 7,121,734 8,382,254 7,055,889

Profit on disposal of property, plant and equipment 20 - (552,220) - (552,220)

Retirement benefit obligations 1,170,500 2,255,187 779,000 1,706,250

Interest income 20 (472,017) (148,486) (675,607) (139,425)

Interest expense 21 7,522,884 9,718,770 6,163,410 7,850,490

OPERATING PROFIT BEFORE WORKING CAPITAL

CHANGES 52,600,931 43,447,464 48,165,415 44,452,377

(Increase)/Decrease in inventories (30,960,113) 9,371,672 (26,004,904) 1,819,321

(Increase)/Decrease in trade and other receivables (13,225,564) (5,070,422) (9,591,886) (2,484,990)

Increase/(decrease) in trade and other payables 7,823,873 (384,877) 3,077,726 935,787

(36,361,804) 3,916,373 (32,519,064) 270,117

CASH GENERATED FROM OPERATIONS 16,239,127 47,363,837 15,646,351 44,722,494

Tax paid (6,293,977) (2,319,845) (6,293,977) (2,319,845)

Interest paid (7,522,884) (9,718,770) (6,163,410) (7,850,490)

Dividend paid - (15,011,950) - (15,011,950)

NET CASH GENERATED FROM OPERATING ACTIVITIES 2,422,266 20,313,271 3,188,964 19,540,209

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received 472,017 148,486 675,607 139,425

Purchase of property, plant and equipment 25 (3,421,018) (2,830,726) (3,421,018) (2,830,726)

Purchase of intangible assets 6 (2,656,533) (2,802,143) (2,656,533) (2,802,143)

Proceeds from sale of property, plant and equipment - 568,570 - 568,570

NET CASH USED IN INVESTING ACTIVITIES (5,605,534) (4,915,813) (5,401,944) (4,924,874)

CASH FLOWS FROM FINANCING ACTIVITIES

Leases received - 32,138,620 - 32,138,620

Loans received 44,460,119 15,900,000 35,000,000 14,000,000

Repayment of loans (19,000,000) (30,899,818) (14,000,000) (23,965,800)

Repayment of finance leases (8,199,842) (14,492,123) (8,199,842) (14,492,123)

NET CASH GENERATED FROM FINANCING ACTIVITIES 17,260,277 2,646,679 12,800,158 7,680,697

NET INCREASE IN CASH AND CASH EQUIVALENTS 14,077,009 18,044,138 10,587,178 22,296,032

CASH AND CASH EQUIVALENTS AT 1 JANUARY 24 (8,108,224) (26,152,362) 350,030 (21,946,002)

CASH AND CASH EQUIVALENTS AT 31 DECEMBER 24 5,968,785 (8,108,224) 10,937,208 350,030




27MARGARINE INDUSTRIES LIMITEDNOTES TO THE FINANCIAL STATEMENTS


1. GENERAL INFORMATION

2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS

New and revised IFRS applied with no material effect on the financial statement

IAS 1 Presentation of Financial Statements - Amendments resulting from May 2010 Annual Improvements to

IFRSs.IAS 24 Related Party Disclosures - Revised definition of related parties.

IAS 27

IAS 32 Financial Instruments: Presentation - amendments relating to classification of rights issuesIAS 34 Interim Financial Reporting - Amendments resulting from May 2010 Annual Improvements to

IFRSs.IFRS 7 Financial Instruments: Disclosures - Amendments resulting from May 2010 Annual

Improvements to IFRSs.IFRIC 14 IAS 19 - The limit of a defined benefit asset, minimum funding requirements and their interaction

November 2009 amendments with respect to voluntary prepaid contributions

New and revised IFRS in issue but not yet applied

IAS 1 Presentation of Financial Statements - Amendments to revise the way other comprehensive

income is resented effective 1 Jul 2012IAS 12 Income Taxes - Limited scope amendment (recovery of underlying assets) (effective 1 January 2012)

IAS 19 Employee Benefits-Amended standard resulting from the Post Employment Benefits and

Termination Benefits Projects (effective 1 January 2013).

IAS 27 Consolidated and Separate Financial Statements - Reissued as IAS 27 Separate Financial Statements

(effective 1 January 2013)

IAS 32 Financial Instruments-presentation and amendments to application guidance on the offsetting of

financial assets and financial liabilities effective 1 Januar 2014IFRS 7 Financial Instruments: Disclosures - Amendments enhancing disclosures about transfers of

financial assets (effective 1 July 2011)IFRS 7 Financial Instruments: Disclosures - Amendments about offsetting financial assets and financial

liabilities (effective 1 January 2013)IFRS 7 Financial Instruments: Disclosures - Amendments requiring the disclosures about the initial

application of IFRS 9 (effective 1 January 2015)IFRS 9 Financial Instruments - Classification and Measurement (effective 1 January 2015)

IFRS 9 Financial Instruments - accounting for financial liabilities and de-recognition (effective 1 January

2015)IFRS 10 Consolidated Financial Statements (effective 1 January 2013)IFRS 12 Disclosure of interest in other entities (effective 1 January 2013)IFRS 13 Fair Value Measurement (effective 1 January 2013)

At the date of authorisation of these financial statements, the following relevant standards and Interpretations were inissue but effective on annual periods beginning on or after the respective dates as indicated.

The directors anticipate that these amendments will be adopted in the financial statements of the Group and the

Company at the above effective dates in future periods. The directors have not yet had an opportunity to consider the

potential impact of the adoption of these amendments.

The Company is a public company incorporated in Mauritius with its registered office at 6, Sir William Newton Street,

Port Louis and principal place of business at Trianon. It is listed on the Development and Enterprise Market (DEM) of

the Stock Exchange of Maurit ius. Its main activities are the manufacture and sale of margarine and its related

products while the subsidiary is a private company which trades on consumer goods.

The following relevant new and revised Standards and Interpretat ions have been adopted in these financial

statements. Their application has not had any material impact on the amounts reported for the current and prior years

but may impact the accounting for future transactions or arrangements.

Consolidated and Separate Financial Statements - Amendments resulting from May 2010 Annual

Improvements to IFRSs

In the current year, the group and the Company have applied all of the new and revised standard and interpretations

issued by the International Accounting Standards Board (the "IASB") and the International Financial Reporting

Interpretations Committee ("IFRIC") of the IASB that are relevant to its operations and effective for accounting periods

beginning on 1 January 2011.




NOTES TO THE FINANCIAL STATEMENTS (CONT'D)


3. ACCOUNTING POLICIES

The principal accounting policies adopted by the group and the Company are as follows:-

(a) Basis of preparation

(b) Basis of consolidation

(c) Investment in subsidiary

(d) Revenue recognition

Turnover

Other income

-

Interest income is accrued on a time basis by reference to the principal outstanding and at the effective

interest rate applicable.

- Management fee is recognised on an accrual basis.

(e) Property, plant and equipment - depreciation

The financial statements are prepared under the historical cost convention as modified by the revaluation of

certain property, plant and equipment and financial instruments and in accordance with International

Financial Reporting Standards (IFRS).

Revenue is measured at the fair value of the consideration received or receivable and represents amounts

receivable for goods and services provided in the normal course of business net of Value Added Tax,

discounts, allowances and returns. Sale of goods are recognised when goods are delivered and title has

passed.

Freehold land and buildings are stated at their revalued amounts being the fair value at the date of

revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment

losses. Revaluations are performed such that the carrying amount does not differ materially from that which

would be determined using fair values at the reporting date. Revaluation of land and buildings is being done

every three years by an independent valuer.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated

statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of

subsidiaries to bring their accounting policies into line with those used by other members of the group.

In the Company's financial statements, investments in subsidiaries are stated at cost, unless in the opinion

of the directors, there has been a permanent diminution in value, in which event they are written down to the

net asset value.

The consolidated financial statements incorporate the financial statements of the Company and entities

controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to

govern the financial and operating policies of an entity so as to obtain benefits from its activities.






3. ACCOUNTING POLICIES (CONT'D)

(e) Property, plant and equipment - depreciation (Cont'd)

The annual depreciation rates used are as follows:

Plant and machinery - 6.5% - 12% p.a. straight line

Factory building - 2% p.a. straight line

Motor vehicles - 10% - 14.28% p.a. straight line

Computer equipment - 20% - 33⅓% p.a. straight line

Office furniture and equipment - 12.5% - 50% p.a. straight line

(f) Government grants

Any revaluation increase arising on the revaluation of such land and buildings is credited in equity to the properties

revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously

recognised in statement of comprehensive income, in which case the increase is credited to profit or loss to the

extent of the decrease previously charged. A decrease in the carrying amount arising on the revaluation of such

land and buildings is charged to statement of comprehensive income to the extent that it exceeds the balance, if

any, held in the properties revaluation reserve relating to a previous revaluation of that asset.

Depreciation is not provided for on freehold land. On other items of fixed assets, it is calculated to write off the cost

or revalued amount of assets over the expected useful lives of such assets.

Depreciation on revalued buildings is charged to profit or loss. On the subsequent sale or retirement of a revalued

property, the attributable revaluation surplus remaining in the properties revaluation reserve is transferred directly

to retained earnings.

Government grants are not recognised until there is reasonable assurance that the Company will comply with the

conditions attaching to them and that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Companyrecognises as expenses the related costs for which the grants are intended to compensate. Specifically,

government grants whose primary condition is that the Company should purchase, construct or otherwise acquire

non-current assets are recognised as deferred revenue in the consolidated statement of financial position and

transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the

purpose of giving immediate financial support to the Company with no future related costs are recognised in profit

or loss in the period in which they become receivable.

The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as

the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned

assets.

The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as

the difference between the sales proceeds and the carrying amount of the asset and is recognised in statement of

comprehensive income.

Plant and machinery are stated at their revalued amounts being the fair value at the date of revaluation, less any

subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluation adjustments

are recognised on the same basis as for land and buildings.

Plant and equipment are stated at cost or valuation less accumulated depreciation and any accumulated

impairment losses.



30

MARGARINE INDUSTRIES LIMITED




(g) Intangible assets

Software costs

(h) Foreign currency balances

(i) Inventories

(j) Taxation

Current tax

Expenditure incurred on the development of new computer software programmes is recognised as asset and is

amortised at 25% p.a on a straight line basis over their estimated useful lives.

Cost associated with maintaining computer software programmes are recognised as an expense as incurred.

Transactions is foreign currencies are converted at the exchange rate at the date of the transactions. Monetary assets

and liabilities in foreign currencies outstanding at year end are translated to Mauritian Rupees at the rates of exchange

ruling at end of the reporting period, or at the amounts settled, where known. Exchange differences arising on

transaction of monetary assets and liabilities are dealt with in the statement of comprehensive income.

Inventories are valued at the lower of cost and net realisable value. Cost is determined on Average Cost (AVCO)

method. Cost is based on the invoiced value of materials plus in the case of finished goods, a proportion of labour and

factory overheads, based on a normal level of production. Net realisable value represents the estimated selling price

for inventories less all estimated costs of completion and costs necessary to make the sale.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilit ies in the financial

statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the

liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax

assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable

profits will be available against which those deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no

longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the

liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively

enacted by the reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences

that would follow from the manner in which the company expects, at the reporting date, to recover or settle the carrying

amount of its assets and liabilities.

Deferred tax assets and liabilit ies are offset when there is a legally enforceable right to set off current tax assets

against current tax liabilit ies and when they relate to income taxes levied by the same taxation authority and the

company intends to settle its current tax assets and liabilities on a net basis.

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the

statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in

other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is

calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax






3.

(k)

(l)

(m)

(i) Defined benefit obligation

The present value of funded obligation is recognised in the statement of financial position as a non-current

liability after adjusting for the fair value of plan assets, any unrecognised actuarial gains and losses and any

unrecognised past service cost. A firm of actuaries carries out the valuation of the funded obligation triennially.

The current service cost and any recognised past service cost are included as an expense together with the

associated interest cost, net of expected return on plan assets.

A portion of the actuarial gains and losses is recognised as income or expense if the net cumulative

unrecognised actuarial gains and losses at the end of the previous accounting period exceeded at that date:

- 10% of the present value of defined benefit obligation at that date; and

- 10% of the fair values of plan assets at that date.

(ii)

The present value of other retirement benefits as provided under the Employment Rights Act 2008 is recognised

in the statement of financial position as a non-current liability.

The Company is a party to a contractual arrangement with related companies with respect to an unfunded

pension plan. When there is a contractual arrangement or stated policy for charging the net benefit costs for

the plan as a whole measured in accordance with IAS 19 to related companies, each related company

recognised in its individual financial statements, the net defined benefit so charged.

The present value of the unfunded obligation is recognised in the statement of financial position as a non-

current liability based on the the valuation carried out by a firm of actuaries annually. If there is a contractual

agreement or stated policy for charging the net defined benefit cost for the plan as a whole measured in

accordance with IAS 19 to related companies, each related company recognises in its individual financial

statements, the net defined benefit cost so charged.

(iii) State plan

Contributions to the National Pension Scheme are expensed to the statement of comprehensive income in the

period in which they fall due.

ACCOUNTING POLICIES (CONT'D)

Cash and cash equivalents

Cash comprises cash at bank and in hand and demand deposits net of bank overdrafts. Cash equivalents are short-

term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an

insignificant risk of change in value.

Leased assets

Other retirement benefits

Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of

the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor

is included in the statement of financial position as a finance lease obligation.

Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve

a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in

profit or loss, unless they are directly attr ibutable to qualifying assets, in which case they are capitalised in

accordance with the group’s general policy on borrowing costs.

Retirement benefits



32





(n) Financial instruments

(i) Accounts receivable

(ii) Loans receivable from related companies

Loans receivable from related companies are stated at their principal value.

(iii) Cash and cash equivalents

(iv)

(v)

(o) Related parties

(p) Impairment

At each reporting date, the Company reviews the carrying amounts of its assets to determine whether there is

any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverableamount of the asset is estimated in order to determine the extent of the impairment loss, if any. An impairment

loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount

which is higher of an asset's net selling price and value in use, that is the present value of estimated future cash

flows expected to arise from continuing to use the asset and from its disposal at the end of its useful life. For the

purpose of assessing impairment, assets are grouped at the lowest level for which there are separately

identifiable cash flows.

An impairment loss is recognised as an expense in the statement of comprehensive income immediately, unless

the asset is carried at revalued amount in which case the impairment loss is recognised against the fair value

reserve for the asset to the extent that the impairment loss does not exceed the amount held in the fair value

reserve for that same asset. Any excess is recognised immediately in the statement of comprehensive income.

Borrowings

For the purposes of these financial statements, parties are considered to be related to the group if they have the

ability, directly or indirectly, to control the group or exercise significant influence over the group in making

financial and operating decisions, or vice versa, or if they and the group are subject to common control. Related

parties may be individuals or other entities.

Accounts payable are stated at amortised cost.

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at the

reporting date.

Financial assets and liabilities are recognised on the statement of financial position when the Company has

become party to the contractual provisions of the financial instruments.

Financial instruments are initially measured at cost, which includes transaction costs. Subsequent to initial

recognition these instruments are measured as set out below:-

Accounts receivable originated by the Company are stated at cost less provision for doubtful debts. An

estimate of doubtful debts is made based on a review of all outstanding amounts at the reporting date.

Debts are written off during the period in which they are identified.

Interest bearing loans and bank overdrafts are initially recorded at the proceeds received, net of direct

issue costs. Finance charges, including premiums payable on settlement or redemption, are accounted for on an accrual basis and are added to the carrying amount of the instalment to the extent that they are not

settled in the period in which they arise. Borrowings are subsequently measured at amortised cost.

Accounts payable







(p) Provision

(q) Goodwill

4. ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Key sources of estimation uncertainty

(i) Impairment of assets

The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date,

that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities withinthe next financial year, are discussed below.

Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances

indicate that the carrying amount of the asset exceeds its recoverable amount. The recoverable amount of

an asset or a cash generating unit is determined based on the higher of its fair value less cost to sell and

value in use, calculated on the basis of management' s assumptions and estimates. Changing the key

assumptions, including the discount rates or the growth rate assumptions in the cash flow projections, could

materially affect the value-in-use calculations.

The preparation of financial statements in accordance with IFRS requires the directors and management to

exercise judgement in the process of applying the accounting policies. It also requires the use of accounting

estimates and assumptions that may affect the reported amounts and disclosures in the financial statements.

Judgements and estimates are continuously evaluated and are based on historical experience and other factors,including expectations and assumptions concerning future events that are believed to be reasonable under the

circumstances. The actual results could, by definition therefore, often differ from the related accounting estimates.

Provisions are recognised when the group and the company have a present obligation as a result of a pastevent, and it is probable that the group and the company will be required to settle the obligation and a

reliable estimate can be made of the amount of the obligation. Provisions are measured at the directors' best

estimate of the expenditure required to settle the obligation at the reporting date. Provisions are reviewed at

each reporting date and adjusted to reflect the current best estimate.

Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the

fair value of the group's share of the Net identifiable assets of the acquired subsidiary/Associate at the date

of acquisition. Goodwill on acquisition of subsidies is shown in a separate line in the statement of financial

position. Goodwill on acquisition of associates is included in investments in associates. Goodwill is tested

annually for impairment and carried at cost less accumulated impairement loss. Gain and losses on the

disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allotted to CGU for the purpose of impairment testing. If the recoverable amount of the CGU is

less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount

of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the

carrying amount of each asset in the limit. An impairment less recognised for goodwill is not reversed in a

subsequent period.

Where applicable, the notes to the financial statements set out areas where management has applied a higher

degree of judgement that have a significant effect on the amounts recognised in the financial statements, or

estimations and assumptions that have a significant risk of causing a material adjustment to the carrying amounts

of assets and liabilities within the next financial year.






4. ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONT'D)

(ii) Property valuation

(iii) Property, plant and equipment and depreciation

(iv) Deferred tax assets

(v) Pension obligations

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

(vi) Allowances for bad debts

In arriving at the fair value of the properties, which is determined by on an open market value basis, theindependent valuers have to make assumptions that are mainly based on market conditions existing at the

reporting date. Should these assumptions and estimates change, or not be met, the valuation as adopted in

the financial statements will be affected.

Freehold land and buildings, and the building component of owner-occupied leasehold properties are

valued every three years by independent valuers. In the intervening years the group reviews the carrying

values and adjustment is made where there has been a material change. In arriving at the valuation of land

and buildings, assumptions and economic estimates have to be made.

Management determines the estimated useful lives and related depreciation charges for the group's

property, plant and equipment. Management will revise the depreciation charge where useful lives are

different to previously estimated, or it will write-off or write-down technically obsolete or non-strategic assets

that have been abandoned or sold.

Recognition of deferred tax assets, which principally relate to tax losses, depends on the management's

expectation of future taxable profit that will be available against which the tax losses can be util ized. The

outcome of their actual utilization may be different.

Allowances for bad debts for the group and the company is determined using a combination of factors toensure that the trade receivables are not overstated due to non-recoverability. The allowance for bad debts

for all customers is based on a variety of factors, including the overall quality and ageing of the receivables,

continuing credit evaluation of the customer`s financial conditions. Also, specific provisions for individual

accounts are recorded when the group and the company become aware of the customer̀ s inability to meet

its financial obligations such as in the case of deterioration in the customer̀ s operating results or financial

position.

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 expected long-term rate of return on the relevant plan assets and the discount rate.

Any changes in these assumptions will impact the carrying amount of pension obligations.

The expected return on plan assets assumption is determined on a uniform basis, taking into consideration

long-term historical returns, asset allocation and future estimates of long-term investment returns.

The group determines the appropriate discount rate at the end of each year. This is the interest rate that

should be used to determine the present value of estimated future cash outflows expected to be required to

settle the pension obligations. In determining the appropriate discount rate, the group considers the interest

rates of high-quality corporate bonds that have terms to maturity approximating the terms of the related

pension liability.



35MARGARINE INDUSTRIES LIMITEDNOTES TO THE FINANCIAL STATEMENTS (CONT'D)FOR THE YEAR ENDED 31 DECEMBER 2011

5. PROPERTY, PLANT AND EQUIPMENTOffice

THE GROUP Freehold Factory Plant and Motor Computer furniture and

land building machinery vehicles equipment equipment Total

Rs Rs Rs Rs Rs Rs Rs

COST OR VALUATION

At 1 January 2010 35,000,000 46,800,000 132,218,377 20,608,801 10,653,306 11,641,539 256,922,023

Additions - - 2,052,799 825,000 413,951 262,308 3,554,058

Disposals - - - (2,224,000) (32,700) - (2,256,700)

Revaluation adjustments 1,500,000 3,200,000 - - - - 4,700,000

At 31 December 2010 36,500,000 50,000,000 134,271,176 19,209,801 11,034,557 11,903,847 262,919,381

Additions - - 1,995,816 11,574,755 520,759 8,500 14,099,830

Write off - - (12,953,668) - - - (12,953,668)

Revaluation adjustments - - (41,000,470) - - - (41,000,470)

At 31 December 2011 36,500,000 50,000,000 82,312,854 30,784,556 11,555,316 11,912,347 223,065,073

DEPRECIATION

At 1 January 2010 - - 75,067,635 11,141,007 9,156,286 10,440,361 105,805,289

Charge for the year - - 4,517,367 1,576,073 699,733 328,561 7,121,734

Disposals - - - (2,224,000) (16,350) - (2,240,350)

At 31 December 2010 - - 79,585,002 10,493,080 9,839,669 10,768,922 110,686,673

Charge for the year - 1,014,078 4,776,848 1,398,418 473,517 280,218 7,943,079

Write off - - (12,953,668) - - - (12,953,668)Revaluation adjustments - - (71,408,182) - - - (71,408,182)

At 31 December 2011 - 1,014,078 - 11,891,498 10,313,186 11,049,140 34,267,902

NET BOOK VALUE

At 31 December 2011 36,500,000 48,985,922 82,312,854 18,893,058 1,242,130 863,207 188,797,171

At 31 December 2010 36,500,000 50,000,000 54,686,174 8,716,720 1,194,889 1,134,925 152,232,708




NOTES TO THE FINANCIAL STATEMENTS (CONT'D)FOR THE YEAR ENDED 31 DECEMBER 2011

5. PROPERTY, PLANT AND EQUIPMENT (CONT'D)Office

THE COMPANY Freehold Factory Plant and Motor Computer furniture and

land building machinery vehicles equipment equipment Total


COST OR VALUATION

At 1 January 2010 35,000,000 46,800,000 132,218,377 20,608,801 10,653,306 9,881,101 255,161,58

Additions - - 2,052,799 825,000 413,951 262,308 3,554,05

Disposals - - - (2,224,000) (32,700) - (2,256,70

Revaluation adjustments 1,500,000 3,200,000 - - - - 4,700,00

At 31 December 2010 36,500,000 50,000,000 134,271,176 19,209,801 11,034,557 10,143,409 261,158,94

Additions - - 1,995,816 11,574,755 520,759 8,500 14,099,83

Write off (12,953,668) (12,953,66

Revaluation adjustments - - (41,000,470) - - - (41,000,47

At 31 December 2011 36,500,000 50,000,000 82,312,854 30,784,556 11,555,316 10,151,909 221,304,63

DEPRECIATION

At 1 January 2010 - - 75,067,635 11,141,007 9,156,286 8,745,768 104,110,69

Charge for the year - - 4,517,367 1,576,073 699,733 262,716 7,055,88

Disposals - - - (2,224,000) (16,350) - (2,240,35

At 31 December 2010 - - 79,585,002 10,493,080 9,839,669 9,008,484 108,926,23

Charge for the year - 1,014,078 4,776,848 1,398,418 473,517 280,218 7,943,07

Write off (12,953,668) (12,953,66Revaluation adjustments (71,408,182) (71,408,18

At 31 December 2011 - 1,014,078 - 11,891,498 10,313,186 9,288,702 32,507,46

NET BOOK VALUE

At 31 December 2011 36,500,000 48,985,922 82,312,854 18,893,058 1,242,130 863,207 188,797,17

At 31 December 2010 36,500,000 50,000,000 54,686,174 8,716,720 1,194,889 1,134,925 152,232,70








6. INTANGIBLE ASSETS

THE GROUP AND THE COMPANY

Software costs 2011 2010

s sCOST

At 1 January 2,802,143 -

Additions 2,656,533 2,802,143

At 31 December Rs 5,458,676 2,802,143

AMORTISATION

At 1 January - -

Charge for the year 439,175 -

At 31 December Rs 439,175 -

CARRYING AMOUNT

At 31 December Rs 5,019,501 2,802,143

7. GOODWILL2011

and

2010

Rs

COST

Amount recognised on acquisition 651,218

IMPAIRMENT

Impairment loss recognised in the year -

CARRYING AMOUNT

At 31 December 651,218

The goodwill arose from the full acquisit ion of the minority shares in Central Distributors Co. Ltd which is a wholly

owned subsidiary. Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating

units (CGUs) that are expected to benefit from that busines combinations. Before recognition of impairment losses, the

carrying amount of goodwill has been allocated wholly to the trading of consumer goods.

The group assesses the recoverable amount of goodwill annually or more frequently if there are indications of any

impairment. The directors are of the opinion that no impairment has occured during the year.

The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the

value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices

and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current

market assessments of the time value of money and the risks specific to the CGU. The growth rates are based on

industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of

future changes in the market.

The directors consider that the carrying amount of the intangible assets approximate its fair value.






8. INVESTMENT IN SUBSIDIARY

THE COMPANY

2011

and2010

At cost Rs

At 1 January and 31 December 4,043,600

9. RETIREMENT BENEFIT ASSET

(a)

Pension plan

2011 2010 2011 2010

Amounts recognised in the statement of financial positions:

Present value of funded obligations 46,388,000 42,565,000 44,780,000 41,392,000

Fair value of plan assets (80,871,000) (82,002,000) (74,181,000) (75,584,000)

Surplus on funded obligations (34,483,000) (39,437,000) (29,401,000) (34,192,000)

Present value of unfunded obligations - -

Unrecognised actuarial gains/(losses) 18,741,000 26,331,248 15,877,000 22,935,000

Net asset in statement of financial position (15,742,000) (13,105,752) (13,524,000) (11,257,000)

Current service cost 2,419,000 1,599,000 2,103,000 1,454,000

Contributions by employees - - - - Interest on obligation 4,155,000 3,790,000 3,925,000 3,711,000

Expected return on plan assets (8,101,000) (7,713,000) (7,347,000) (7,093,000)

Net actuarial losses/(gains) recognised in period (1,067,000) (1,151,000) (905,000) (947,000)

Total, included in "employee benefits expense" (2,594,000) (3,475,000) (2,224,000) (2,875,000)

Amounts recognised in statement of comprehensive income:

The company holds 100% (2010: 100%) of the issued share capital of Central Distributors Co Ltd, a company

incorporated in Mauritius, which trades in consumer goods.

The directors have valued the unquoted investment at book value which in their opinion reflects fairly the value of the

investments.

Retirement benefit asset

The pension plan is a final salary defined contribution plan for employees and is wholly funded. The assets of the

plan are held and administered independently by The Mauritius Business and Management Limited.

The plan provides for a pension at retirement and a benefit in death or disablement in service before retirement.

THE GROUP THE COMPANY








9. RETIREMENT BENEFIT ASSET (CONT'D)

(a)

2011 2010 2011 2010

Expected rate of return on plan assets at end

of year

Equities - Overseas 11.0% 11.0% 11.0% 11.0%

Equities - Local 11.0% 11.0% 11.0% 11.0%

Fixed interest securities - Overseas 10.0% 10.0% 10.0% 10.0%

Fixed interest securities - Local 10.0% 10.0% 10.0% 10.0%

Property 10.5% 10.5% 10.5% 10.5%

Loan & Fixed deposits 10.0% 10.0% 10.0% 10.0%

Cash & other 5.5% 5.5% 5.5% 5.5%

Additional disclosure on assets issued or used

by reporting entity

Percentage of assets at end of year

Assets held in the entity's own financial 0.0% 0.0% 0.0% 0.0%

Property occupied by the entity 0.0% 0.0% 0.0% 0.0%

Other assets used by the entity 0.0% 0.0% 0.0% 0.0%

History of obligations, assets and experience

adjustments:

2011 2010 2009 2008 2007

THE GROUP

Present value of defined benefit obligations 80,871,000 82,002,000 71,272,216 62,015,044 65,615,868 Fair value of plan assets (46,388,000) (42,565,000) (37,249,151) (40,758,621) (27,434,586)

Surplus 34,483,000 39,437,000 34,023,065 21,256,423 38,181,282

Experience adjustments on:

Plan liabilities (defined benefit obligations) (1,720,000) 1,883,000 1,908,422 (7,542,947) (3,246,816)

Plan assets (4,804,000) 5,380,000 3,897,161 (9,064,583) 24,594,962

THE COMPANY

Present value of defined benefit obligations 74,181,000 75,584,000 65,574,728 57,108,167 60,553,679

Fair value of plan assets (44,780,000) (41,392,000) (36,434,557) (39,175,029) (26,602,974)

Surplus 29,401,000 34,192,000 29,140,171 17,933,138 33,950,705

Experience adjustments on:

Plan liabilities (defined benefit obligations) (1,739,000) 1,863,000 1,304,000 (7,167,382) (4,327,643)

Plan assets (4,414,000) 5,162,000 3,587,000 (8,307,028) 22,638,106

Expected employer contributions 46,000

Retirement benefit asset (cont'd)

Year




MARGARINE INDUSTRIES LIMITED 42NOTES TO THE FINANCIAL STATEMENTS (CONT'D)


9. RETIREMENT BENEFIT ASSET (CONT'D)

(b) State pension plan

2011 2010 2011 2010Rs Rs Rs Rs

National Pension Scheme contribution expenses. 891,747 544,588 671,495 478,622

10. INVENTORIES, AT COST

2011 2010 2011 2010

Rs Rs Rs Rs

39,237,699 18,054,308 39,237,699 18,054,308

Finished goods 29,814,817 23,584,219 9,363,583 6,314,749

Goods in transit 16,274,274 13,088,406 12,968,907 11,556,483 Others 3,213,479 2,853,223 3,213,479 2,853,224

88,540,269 57,580,156 64,783,668 38,778,764

The inventories have been pledged for banking facilities.

11. TRADE AND OTHER RECEIVABLES

2011 2010 2011 2010

Rs Rs Rs Rs

53,445,896 46,376,296 39,583,477 33,004,794 Allowance for doubtful debts (1,065,430) (1,303,682) (700,145) (515,791)

52,380,466 45,072,614 38,883,332 32,489,003

17,921,964 10,759,667 12,386,636 8,605,954

- - 7,082,042 6,421,949

5,218,685 5,001,368 5,218,685 5,000,000

75,521,115 60,833,649 63,570,695 52,516,906



Amount due by related companies

Raw materials

Trade receivables

Other receivables and prepayments

Amount due by subsidiary







11. TRADE AND OTHER RECEIVABLES (CONT'D)

The directors consider that the carrying amount of trade and other receivables approximates their fair value.

Ageing of past due but not impaired

2011 2010 2011 2010

Rs Rs Rs Rs

60-90 days 4,548,309 2,943,879 3,163,988 1,110,950

90 days - 180 days 2,442,720 2,694,400 1,882,126 1,666,710

6,991,029 5,638,279 5,046,114 2,777,660

Allowance for doubtful debts

2011 2010 2011 2010

Rs Rs Rs Rs

At 1 January 1,303,682 1,264,528 515,791 457,878

Impairment losses recognised on receivables 741,519 39,154 535,891 57,913

Impairment losses written off as uncollectible (979,771) - (351,537) -

At 31 December 1,065,430 1,303,682 700,145 515,791

12. STATED CAPITAL

2011 2010

Rs RsIssued and fully paid

300,239 Ordinary shares of Rs100 each 30,023,900 30,023,900

(a) The right to vote on poll for every share held at a meeting of the Company on any resolution;

(b) The right to an equal share in dividend authorised by the Board;

(c) The right to an equal share in the distribution of the surplus assets of the Company, on winding up.

The average credit period on sales of goods and services is 69 days (2010: 65 days) for the group and 72 days (2010:73 days) for the Company. The group and the Company have recognised allowance for doubtful debts against trade

receivables above 180 days by reference to past default experience.

In determining the recoverability of a trade receivable, the group and the Company consider any change in the credit

quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of

credit risk is limited due to the customer base being large and unrelated. Accordingly, the directors believe that there is

no further credit provision required in excess of the allowance for doubtful debts.



Each of the above share confer to its holder the following rights:


Included in the group's and the Company's trade receivable balance are debtors with a carrying amount of Rs

6,991,029 (2010: Rs 5,638,279 ) for the group and Rs 5,046,114 (2010: Rs 2,777,660) for the Company, which are

past due at the reporting date for which the group and the Company have not provided as there has not been a

significant change in credit quality and the amounts are still considered recoverable. The average age of these

receivables is 75 days.

Before accepting any new customer, the group and the Company assess the potential customer’s credit quality and

defines credit limits by customer and these are reviewed on a regular basis.





45

MARGARINE INDUSTRIES LIMITEDNOTES TO THE FINANCIAL STATEMENTS (CONT'D)FOR THE YEAR ENDED 31 DECEMBER 2011

15. TAXATION (CONT'D)

(b) Tax reconciliation

2011 2010 2011 2010

Rs Rs Rs Rs

Profit before tax 35,997,310 25,052,479 33,516,358 28,531,393

Tax at 15% 5,399,596 3,757,872 5,027,454 4,279,709

Effect of:

Expenses not deductible for tax purposes 896,293 872,593 896,293 872,593

4,409 4,409 4,409 4,409

132,776 - 132,776 -

Deferred tax not recognised (557,344) 521,837 - -

Net tax effect of non-taxable and other items 185,201 - - -

Corporate Social Responsibility 509,970 - 509,970 -

Consolidation adjustment (877,221) (384,574) (877,221) (384,574)

Tax charge 5,693,681 4,772,136 5,693,681 4,772,136

(c) Deferred tax

Deferred tax is calculated on all temporary differences under the liability method at the rate of 15% (2010: 15%).


2011 2010

Rs Rs

At 1 January 17,263,800 9,365,944

Charge to Tax expense 1,067,262 2,030,523

Charge to Other Comprehensive Income (826,177) 5,867,333

At 31 December 17,504,885 17,263,800


Depreciation on assets not eligible for

capital allowances

Under provision in tax liability in previous

years




NOTES TO THE FINANCIAL STATEMENTS (CONT'D)FOR THE YEAR ENDED 31 DECEMBER 2011

15. TAXATION (CONT'D)

(c) Deferred tax (Cont'd)

Deferred tax liabilities/(assets) arise from the following:

At 1 Charge Charge to other At 31 Charge Charge to other At 31

January to profit or comprehensive December to profit or comprehensive December

2010 loss income 2010 loss income 2011


Deferred tax liabilities

Accelerated capital allowances 6,909,674 2,286,460 - 9,196,134 1,184,112 - 10,380,24

Retirement benefit assets (621,360) (687,188) - (1,308,548) (456,900) - (1,765,44

Revaluation reserves 1,820,218 - 5,867,333 7,687,551 - (826,177) 6,861,37

Deferred tax assets

Retirement benefit obligations 1,257,412 431,251 - 1,688,663 340,050 - 2,028,71

Net deferred tax liabilities 9,365,944 2,030,523 5,867,333 17,263,800 1,067,262 (826,177) 17,504,88




MARGARINE INDUSTRIES LIMITED 47



16. RETIREMENT BENEFIT PLANS

Unfunded pensions

2011 2010 2011 2010

Rs Rs Rs Rs

Proportion of the unfunded post retirement obligations 14,716,750 10,909,250 11,769,650 8,723,650

Charge to the statement of comprehensive income 3,807,500 5,731,250 3,046,000 4,581,250

Amount recognised in the statement of financial position:

2011 2010

Present value of unfunded obligation 104,868,200 112,197,200

Unrecognised actuarial (loss)/gain 3,214,000 (4,040,000)

108,082,200 108,157,200

Amount recognised in the statement of comprehensive income:

2011 2010

Current service cost 2,714,000 12,581,000

Interest cost 12,516,000 10,344,000

15,230,000 22,925,000

Movement in liability recognised in the statement of financial position:

2011 2010

At 1 January 108,157,200 96,967,200Total expense as above 9,138,000 13,755,000

Contributions paid (9,213,000) (2,565,000)

At 31 December 108,082,200 108,157,200

Movement in the present value of the defined benefit obligations were as follows:

2011 2010

At 1 January 129,652,000 104,693,000

Current service cost 2,714,000 12,581,000

Interest cost 12,516,000 10,344,000

Benefits paid (9,213,000) (2,565,000)

Liability (gain)/loss (7,254,000) 4,599,000

128,415,000 129,652,000

Movement in the present value of the plan assets were as follows:-

2011 2010

At 1 January - -

Employer contributions 9,213,000 2,565,000

Benefits paid (9,213,000) (2,565,000)

At 31 December - -


Quality Beverages Limited ('QBL') a related company operates an unfunded defined benefit plan for some of the directors which provides for a

pension at retirement. The company is a party to a contractual arrangement with ('QBL') whereby it bears a proportion of the retirement benefit

obligations in respect of common directors/officers.

The retirement benefit obligations information for the QBL plan as a whole as required by IAS 19 are as follows:



MARGARINE INDUSTRIES LIMITED 48NOTES TO THE FINANCIAL STATEMENTS (CONT'D)


16. RETIREMENT BENEFIT PLANS (CONT'D)

The history of experience adjustments is as follows:-

2011 2010 2009 2008 2007

Rs Rs Rs Rs Rs

Present value of defined benefit obligation (128,415,000) (129,652,000) (104,693,000) (89,901,000) (71,154,000

Fair value of plan assets - - - - -

Deficit (128,415,000) (129,652,000) (104,693,000) (89,901,000) (71,154,000

Liability experience (loss)/gain 7,254,000 (2,660,000) 3,289,000 (79,000) 283,000

The principal actuarial assumptions used for accounting purposes are:-

2011 2010

% %

Discount rate 10 10

Future salary increases 6 6Future pension increases 3 3

Medical benefit inflation 10 10

Passage benefit inflation 6 6

Car benefit inflation 6 6

Driver's allowance inflation 6 6

17. OBLIGATIONS UNDER FINANCE LEASES

Leasing arrangements

Fair value

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

Finance lease liabilities

2011 2010 2011 2010

Rs Rs Rs Rs

Amounts payable under finance leases:

Within one year 14,186,380 11,669,266 10,747,012 8,170,520

Between two to five years 38,030,781 39,341,777 33,437,331 33,534,853

52,217,161 51,011,043 44,184,343 41,705,373

Less: Future finance charges 8,032,817 9,305,670 - -

Present value of minimumlease payments 44,184,343 41,705,373 44,184,343 41,705,373

Expected employer contributions for the year 2012 - Rs9,766,000.

Retirement benefit obligations (unfunded pensions) have been based on the report dated 12 December 2011 submitted by

AON Hewitt, actuaries and consultants.

lease paymentMinimum lease payment

Finance leases relate to plant and machinery and motor vehicles with lease terms ranging from 5 to 7 years. The group andthe company have options to purchase the assets for a nominal amount at the conclusion of the lease agreements. The

group's and the company's obligation under finance leases are secured by the lessors' title to the leased assets.


Present value of minimum



MARGARINE INDUSTRIES LIMITED 49



17. OBLIGATION UNDER FINANCE LEASES (CONT'D)

2011 2010

Rs Rs

Included in the financial statements as:

Current liability 10,747,012 8,170,520

Non-current liability 33,437,331 33,534,853

44,184,343 41,705,373

18. TRADE AND OTHER PAYABLES

2011 2010 2011 2010

Rs Rs Rs Rs

Trade payables 33,099,710 25,399,228 29,956,228 22,908,139

Other payables and accruals 10,159,065 11,116,278 8,163,701 11,116,272

Amount due to subsidiary - - 183,128 22,998 Amount due to related company 25,820,114 24,739,510 21,959,681 23,137,603

69,078,889 61,255,016 60,262,738 57,185,012

19. REVENUE2011 2010 2011 2010

Rs Rs Rs Rs

Sales of margarine products 296,298,091 256,875,825 296,298,091 256,875,825

Sales of consumer goods 66,456,665 66,007,375 - -

362,754,756 322,883,200 296,298,091 256,875,825

20. OTHER INCOME

2011 2010 2011 2010

Rs Rs Rs Rs

Sundry receipts 712,758 1,622,696 2,512,759 3,422,697

Interest 472,017 148,486 675,607 139,425

Grant Income 81,934 - 81,934 -

- 552,220 - 552,220

1,266,709 2,323,402 3,270,300 4,114,342

21. FINANCE COSTS

2011 2010 2011 2010

Rs Rs Rs Rs

Interest payable on:

- Bank loans 2,867,232 1,982,478 1,848,597 1,128,253

- Bank overdrafts 1,331,948 3,107,199 991,109 2,093,144

- Finance leases 3,323,704 4,629,093 3,323,704 4,629,093

7,522,884 9,718,770 6,163,410 7,850,490



Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing

costs. The average credit period on purchases is 3 months. The group and the company have financial risk

management policies to ensure that all payables are paid within the credit timeframe.

THE GROUP AND THE COMPAN


Profit on disposal of property, plant and

equipment







22. PROFIT FOR THE YEAR

Profit for the year has been arrived at after (crediting)/charging:

2011 2010 2011 2010

Rs Rs Rs Rs

239,363,350 215,502,197 183,772,693 157,863,663

Staff costs 36,608,151 35,754,900 32,657,606 31,258,224

Depreciation and amortisation 8,382,254 7,121,734 8,382,254 7,055,889

Gain on foreign exchange (455,330) (399,990) (455,330) (399,990)

741,519 39,154 535,891 57,913

23. EARNINGS PER SHARE

2011 2010

Rs Rs

Profit for the year attributable to owners of the company used

in calculation of earnings per share 30,303,629 20,280,343

Number of ordinary shares in issue 300,239 300,239

24. CASH AND CASH EQUIVALENTS

2011 2010 2011 2010Rs Rs Rs Rs

Cash in hand and at bank 14,568,934 11,911,302 13,550,013 11,083,365

Bank overdrafts (8,600,149) (20,019,526) (2,612,805) (10,733,335)

5,968,785 (8,108,224) 10,937,208 350,030

25. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

2011 2010 2011 2010

Rs Rs Rs Rs

Property, plant and equipment purchased 14,099,830 3,554,058 14,099,830 3,554,058

Financed as follows:

Cash disbursed 3,421,018 2,830,726 3,421,018 2,830,726

Finance leases 10,678,812 723,332 10,678,812 723,332

14,099,830 3,554,058 14,099,830 3,554,058

Impairment losses recognised on trade

receivables


Cost of inventories recognised as an expense

The bank overdrafts are secured by floating charges over the property, plant and equipment of the group and the compan


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







26. DIVIDEND

27. RELATED PARTY TRANSACTIONS

THE COMPANY

2011 2010 2011 2010

Rs Rs Rs Rs

(i) Sales of goods and services

Sales of goods:

- Subsidiary - - - 57,577

- Fellow subsidiaries 137,560 - 137,560 -

- Companies having same management 2,161 493,204 2,161 172,068

139,721 493,204 139,721 229,645

Sales of services:

- Subsidiary - - 2,573,998 2,950,000

- - 2,573,998 2,950,000

(ii) Interest received

- Subsidiary - - 218,205 -

- Fellow subsidiaries 425,000 - 425,000 -

425,000 - 643,205 -

(iii) Purchase of goods and services

Purchase of goods:

- Subsidiary - - 353,241 319,768

- Fellow subsidiaries 23,028,712 220,952 10,548,972 220,952 - Companies having same management 1,356,896 24,744,890 1,316,896 14,604,104

24,385,608 24,965,842 12,219,108 15,144,823

THE GROUP

The group and the Company are making the following disclosures in respect of related party transactions and

balances.

By a Board resolution dated 20 December 2011, the directors proposed that a dividend of Rs60 (2010: Rs50) will be

paid to the shareholders in respect of the current year. The proposed dividend amounting to Rs18,014,340 was paidon 16 January 2012 (2010: Rs15,011,950).






27. RELATED PARTY TRANSACTIONS (CONT'D)

THE COMPANY

2011 2010 2011 2010Rs Rs Rs Rs

(iii) Outstanding balances

Receivable from:

- Subsidiary - - 4,082,042 6,421,949

- Fellow subsidiaries 218,083 1,368 218,083 -

- Companies having same management 602 - 602 -

218,685 1,368 4,300,727 6,421,949

Loans from:

- Subsidiary - - 3,000,000 -

- Fellow subsidiaries 5,000,000 5,000,000 5,000,000 5,000,000

5,000,000 5,000,000 8,000,000 5,000,000

Payables to:

- Subsidiary - - 183,128 22,998

- Fellow subsidiaries 25,515,093 - 21,656,651 23,120,339

- Companies having same management 305,021 24,739,510 303,030 17,264

25,820,114 24,739,510 22,142,809 23,160,601

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

(iv) Retirement benefit - group plan

Retirement benefit cost

Group companies having same

management ,7 ,75 , , 5 ,7 , 5 ,7 , 5

(v) Compensation paid to key management personnel

28. CONTINGENT LIABILITIES

2011 2010

Rs Rs

Bank guarantees and performance bonds to third parties Rs 20,777,467 20,638,291

29. FINANCIAL INSTRUMENTS

THE GROUP

There were no compensation paid to key management personnel for the year under review (2010: Nil).

The directors consider that no liabilities will arise as the probability for default in respect of the guarantees is remote.

In its ordinary operations, the group and the company are exposed to various risks such as capital risk, foreign

currency risks, interest rate risks, credit risks and liquidity risks. The group and the company have devised on a central

basis a set of specific policies for managing these exposures.





54




29. FINANCIAL INSTRUMENTS (CONT'D)

Currency profile

2011 2010 2011 2010

Financial assets Rs Rs Rs Rs

Mauritian Rupees 71,874,359 55,628,235 63,962,542 49,297,933

United States Dollars 4,585,103 5,545,078 4,495,747 5,524,885

Euro 1,293,377 5,517,783 1,293,377 5,517,702

South African Rand and others 2,154,381 806,570 1,540,887 5,777

79,907,220 67,497,666 71,292,553 60,346,297

Financial liabilities

Mauritian Rupees 171,415,041 135,773,597 144,164,342 110,715,635 United States dollars 13,580,690 12,257,694 8,628,463 9,930,544

Euro 17,433,088 13,048,455 16,130,674 12,593,306

South African Rand and others 577,210 384,235 577,210 384,235

203,006,030 161,463,981 169,500,689 133,623,720

Foreign currency sensitivity analysis

The group and the Company are mainly exposed to the USD and the EURO.

Impact of a 10% appreciation of the Mauritian Rupee:-

THE GROUP

2011 2010 2011 2010

Profit or loss 899,559 671,262 1,613,971 753,067

THE COMPANY

2011 2010 2011 2010

Rs Rs Rs Rs

Profit or loss 413,272 440,566 1,483,730 707,560

EURO impact

The currency profile of the group's and the Company’s financial assets and financial liabilit ies are summarised as

follows:


It is the policy of the group and the Company to enter into forward foreign exchange contracts to cover specific foreign

currency payments and receipts. Forward foreign currency contracts outstanding at 31 December 2011 are as follows:

Forward foreign exchange contract

USD impact EURO impact

The following table details the group's and the Company's sensitivity to a 10% increase and decrease in the Mauritian

Rupee against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk

internally to key management personnel and represents management's assessment of the reasonably possible change

in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetaryitems and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number below

indicates an increase in profit or a decrease in loss where the Mauritian Rupee strengthens 10% against the relevant

currency. For a 10% weakening of the Mauritian against the relevant currency, there would be an equal and opposite

impact on the profit or loss, and the balances below would be negative.

The profit or loss is mainly attributable to the exposure outstanding on USD and EURO receivables and payables at year

end in the Company.

USD impact








Outstanding contracts Average Foreign Notional

exchange currency Value Fair Value

Rs Rs Rs

38.56 670,000 25,831,950 (401,350)

Less than 3 months

Credit risk management

Interest rate risk

Interest rate sensitivity analysis

Fair values

Forward foreign exchange contract (Cont'd)

Buy EURO

The Company has entered into contracts to purchase raw materials from suppliers in Germany. The Company has

enterred into forward exchange contracts (for terms of exceeding 3 months) to hedge against the exchange rate risk

arising from these purchases.

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the

company. The group and the company have adopted a policy of only dealing with creditworthy counterparties, as a

means of mitigating the risk of financial loss from defaults. Credit exposure is controlled by counterparty limits that are

approved and reviewed by key management on a regular basis.

The sensitivity analysis below have been determined based on the exposure to interest rates for the non-derivative

instruments at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of liability

outstanding at the reporting date was outstanding for the whole year. A 50 basis point increase or decrease is used

when reporting interest rate risk internally to key management personnel and represents management’s assessment of

the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the group's and the

company’s profit for the year ended 31 December 2011 would decrease/increase by Rs583,643 and Rs458,986 (2010:

the loss would increase/decrease by Rs501,045 and Rs382,194) respectively. This is mainly attributable to the group's

and the company’s exposure to interest rates on its variable rate borrowings.

The group and the Company do not have significant concentration of risk on the trade receivables due to their large

number of customers, spread across diverse industries and geographical areas.

The group and the Company are exposed to interest rate risk as entities in the group borrow funds at both fixed and

floating interest rates. The group and the Company managed the risk by maintaining an appropriate mix between fixed

and floating rate borrowings.

Except where stated elsewhere, the carrying amounts of the company’s financial assets and financial liabilities

approximate their fair values due to the short-term nature of the balances involved.

The group's and the Company’s credit risk are primarily attributable to trade receivables which are unsecured. The

amounts presented in the statement of financial position are net of allowances for doubtful receivables, estimated by

management based on prior experience and represents the group's and the company’s maximum exposure to credit

risk.





57MARGARINE INDUSTRIES LIMITEDNOTES TO THE FINANCIAL STATEMENTS (CONT'D)FOR THE YEAR ENDED 31 DECEMBER 2011



Outstanding contracts Contract Fair value Contract Fair value2011 2011 2010 2010Rs Rs Rs Rs

Cash flow hedges

Less than 1 year 69,220,103 4,691,523 18,166,870 3,229,620

30. SEGMENT INFORMATION

Products and services from which reportable segments derive their revenues.

Segment revenue and segment results

2011 2010 2011 2010

Rs Rs Rs Rs

Manufacturing 296,298,091 256,875,825 39,679,769 36,381,883

Trading 66,809,905 66,384,720 4,058,631 (1,610,634)

Total of all segments 363,107,997 323,260,545 43,738,399 34,771,249

Eliminations (353,241) (377,345) (218,206) -

362,754,756 322,883,200 43,520,194 34,771,249

Finance costs (7,522,884) (9,718,770)

Profit before tax 35,997,310 25,052,479

Taxation (5,693,681) (4,772,136)

Profit for the year 30,303,629 20,280,343

Intersegment sales amounted to Rs 353,241 (2010: Rs377,345) for the year ended 31 December 2011

Trading - trading of consumer goods

Manufacturing - the manufacturing and sale of margarine and related products

Segment resultSegment revenue

The accounting policies of the reportable segments are the same as the group's accounting policies described in note 3.

Segment profit represents the profit earned by each segment without allocation of investment revenue, finance costs

and income taxes. This is the measure reported to the chief operating decision maker for the purpose of resource

allocation and assessment of segment performance.

The following table details the forward foreign currency (FC) contracts outstanding as at reporting date:

The company has entered into forward contracts (for terms not exceeding 12 months) to purchase raw materials from

suppliers in Germany and Malaysia.

As at 31 December 2011 there has been no ineffectiveness recognised in profit or loss arising from the hedges.

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the group that

are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to

assess their performance.

The information reported to the group's chief operating decision maker for the purposes of resource allocation and

assessment of segment performance is focussed on the operating divisions which are manufacturing and trading. The

principal products and services of each of these divisions are as follows:



58MARGARINE INDUSTRIES LIMITEDNOTES TO THE FINANCIAL STATEMENTS (CONT'DFOR THE YEAR ENDED 31 DECEMBER 2010

30. SEGMENT INFORMATION (CONT'D)

Segment assets and liabilities

2011 2010 2011 2010

Rs Rs Rs Rs

Manufacturing 353,289,400 272,715,238 181,843,876 142,347,370

Trading 46,209,112 36,239,020 41,012,843 34,285,203

Total segment assets and liabilities 399,498,512 308,954,258 222,856,719 176,632,573

Eliminations (10,657,552) (9,837,330) (4,318,064) (4,259,342)

Unallocated - - 18,208,381 19,634,853

Consolidated assetsand liabilities 388,840,960 299,116,928 236,747,036 192,008,084

Other segment information

2011 2010 2011 2010

Rs Rs Rs Rs

Manufacturing 8,382,253 7,055,889 16,756,363 6,356,201

Trading - 65,845 - -

8,382,253 7,121,734 16,756,363 6,356,201

Revenue from major products and services

2011 2010

Rs Rs

Margarine 296,298,091 256,818,248

Foodstuffs 66,456,665 66,064,952

362,754,756 322,883,200

Information about major customers

The group has no major customers.

Geographical segments

The group's operations are located in Mauritius only.

31. CAPITAL COMMITMENTS

Authorised but not contracted2011 2010

Rs Rs

Commitments for the acquisition of property, plant and equipment 26,400,000 13,300,000

32. ULTIMATE HOLDING AND HOLDING COMPAN

The Company regards Currimjee Industries Limited, a company incorporated in Mauritius, as the holding company and

Fakhary Ltd, a company incorporated in Mauritius, as the ultimate holding company.

Depreciation and amortisation Additions to non-current assets

Assets Liabilities



APPENDIX IMARGARINE INDUSTRIES LIMITED

TRADING AND PROFIT AND LOSS ACCOUNT


2011 2010

Rs Rs

SALES 296,298,091 256,875,825

LESS: COST OF SALES

Stock at 1 January 6,314,749 7,804,990

ADD: COST OF PRODUCTION

Raw materials used 186,821,527 156,373,421

Wages and commissions 6,532,807 4,729,925

Pension fund contribution (551,781) (669,165)

Fuel, electricity and water 4,821,500 5,155,162

Repairs and maintenance 1,456,381 1,187,592

Laboratory expenses 636,184 286,057

Depreciation on building, plant and machinery 5,790,926 4,517,367 Insurance and Other 177,386 464,733

Stock at 31 December 9,363,583 6,314,749

202,636,096 173,535,333

GROSS PROFIT 93,661,996 83,340,492

Other income 3,270,300 4,114,342

LESS: EXPENSES

Administrative expenses (Appendix II) 33,954,419 33,743,824 Selling and distribution expenses (Appendix III) 10,708,231 9,321,483

Marketing expenses (Appendix III) 12,589,876 8,007,644

(57,252,527) (51,072,951)

OPERATING PROFIT 39,679,769 36,381,883

FINANCE COSTS (6,163,410) (7,850,490)

PROFIT FOR THE YEAR BEFORE TAXATION 33,516,358 28,531,393

TAXATION (5,693,681) (4,772,136)

PROFIT FOR THE YEAR 27,822,677 23,759,257



APPENDIX II


2011 2010

Rs Rs

1. ADMINISTRATIVE EXPENSES

Administrative expenses

Salaries and allowances 19,265,014 19,933,075

Retirement benefit costs 3,046,000 4,581,250

Pension fund contribution (1,059,219) (1,607,557)

Travelling expenses 1,631,656 1,789,240

Telecommunications 999,001 512,412

Legal charges and professional charges 1,930,250 1,850,674

Postage and stationery 899,844 452,886

Depreciation - computer equipment 473,517 699,734

Amortisation - Software 439,175 -

Provision for bad debts 535,891 57,913

Bad debts written off - 8,025

General expenses 1,855,490 1,960,616

30,016,619 30,238,267

Staff welfare expenses 2,799,680 1,358,855

Establishment expenses

Rent and rates 185,175 711,153

Depreciation - furniture and fittings 280,218 262,716

465,393 973,869

Motor vehicle expenses

Depreciation - motor vehicles 672,727 1,172,832

672,727 1,172,832

33,954,419 33,743,824

2. SELLING AND DISTRIBUTION EXPENSES

Salaries and allowances

Salaries, wages and allowances 6,080,786 4,888,974

Pension fund contribution (656,000) (598,278)

5,424,786 4,290,696

Selling and distribution costs

Depreciation - Motor vehicle 725,691 403,241

Motor vehicle running expenses 4,557,754 4,627,546

5 283 445 5 030 787

MARGARINE INDUSTRIES LIMITEDTRADING AND PROFIT AND LOSS ACCOUNT

Documents

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