Contents › sites › default › files › chemco_ar2012.pdf · Galanz (9,000 - 24,000 btu) Midea (9,000 – 60,000 btu) Ammonia Gas and Freon gases R22, R407C and R410 ... forcing

Dear Shareholder

The Board of Directors is pleased to present the Annual Report of Chemco Limited for the year ended 31 December 2012, the contents of which are listed below.

This report was approved by the Board of Directors at its meeting held on 28 March 2013.

Antoine L Harel Sébastien LavoipierreChairman Managing Director

2 At a Glance3 Corporate Information

4 Our Business Segments6 Board of Directors8 Report of the Board of Directors 10 Senior Management11 Corporate Governance Report 19 Statement of Directors’ Responsibilities 20 Statutory Disclosures22 Certificate by Secretary24 Independent Auditors’ Report to the Members 26 Statement of Financial Position

27 Income Statement28 Statement of Comprehensive Income

29 Statement of Changes in Equity30 Statement of Cash Flows

31 Notes to the Financial Statements

Contents

Chemco Limited • Annual Report 20122

At a Glance

Financial Highlights

RevenueRs324.1m

Earnings per ShareRs1.80

Profit after TaxationRs11.2m

Net Asset Value per shareRs16.05

Chemco Limited was incorporated in 1984. It is a trading company that focuses on the marketing of industrial chemicals and specific general goods. Chemco Limited is located in the port area and services both local and export markets. Chemco Limited is a public company listed on the Development and Enterprise Market (DEM) since 2007. Chemco Limited is a subsidiary of Harel Mallac & Co. Ltd.

• To foster a quality culture and sustainable development.• To satisfy the requirements of all our stakeholders.• To create an environment conducive to maximising the wealth of our Company.• To promote the development and welfare of our staff while applying best practices and high

ethical standards.

Profile

Our Mission

Our Vision

To be the leader in the chemical business in the region and to diversify through new ventures

Chemco Limited • Annual Report 2012 3

Corporate Information

COMPANY SECRETARYHM Secretaries Ltd.18 Edith Cavell StreetPort Louis

AUDITORSBDO & Co

BANKERSThe Mauritius Commercial Bank Ltd.Bramer Banking Corporation Ltd.

LEGAL ADVISERSIvan Collendavelloo ChambersEtude Georges Robert

NOTARYMr Hugues Maigrot, Notary Public

REGISTERED OFFICEChaussée TromelinFort GeorgePort Louis

REGISTRYMauritius Computing Services Ltd.18 Edith Cavell StreetPort Louis

BUSINESS REGISTRATION NUMBERC07004261


Our Business Segments

SUGARCHEMICALS

REFRIGERATION

Coagulants Flocculants

LimeBiocides

Phosphoric AcidSulphur

Caustic SodaHydrochloric AcidHydrogen PeroxideCalcium CarbonateSodium SulphateSodium ChlorideSulphuric AcidFood Chemicals

GT RadialCEATBKT

BRILLAND

Air ConditionersGalanz (9,000 - 24,000 btu)Midea (9,000 – 60,000 btu)

Ammonia Gasand Freon gases

R22, R407C and R410

End Users

Complete range ofprocess chemicals

for the sugar industry

End Users

Range of chemicalsfor textile, food and

beverages and detergents industry

End Users

Variety of radial tyres for passenger cars to fit 12 to 15 inch rims and tyres

for light trucks, lorries and buses

End Users

Air conditionerssuitable for

domestic andindustrial purposes

INDUSTRIALCHEMICALS

TYRES


Our Business Segments

LABORATORYSERVICES

Cyanuric AcidCalcium Hypochlorite

Chempool Acid & AlkaliPools AccessoriesPumps & Filters

Coagulant FlocculantsPolymers

LimeCalcium Hypochlorite

Chlorine Dioxide

Water & Wastewater AnalysisMicrobiological Testing

Soil and Sand Analytical Services

End Users

Wide range of chemicals and

equipment to keepswimming pool

water crystal clear

End Users

Boiler water treatmentCooling tower / chiller

Process water treatmentWater Treatment Equipment:

Demineralised SystemSofteners Plant

Reverse Osmosis System

End Users

Environmentalmonitoring services

provided with high techlaboratory equipmentTechnical support to

Customers

The Laboratory is

SWIMMING POOL CHEMICALS AND EQUIPMENTS

WATER TREATMENTCHEMICALS

Chemco Lab Services

Board of Directors

ANTOINE L HAREL (55)Chairman (Non-Executive)

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

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

JEAN-YVES CORSON (53)Independent Director

Jean-Yves Corson is holder of a Maîtrise d’Economie d’Entreprise from Université de Paris I, Panthéon, Sorbonne. He held various senior management positions in France from 1986 to 1990 before returning to Mauritius where he joined Noblesse Cie Ltée. He joined the Groupe Union in 1992 as Financial Manager and was appointed Corporate Planning and Development Manager in 1999. Since 2010, he has held the function of Land Development Manager of Compagnie de Beau Vallon Ltée. He was appointed to the Board of Directors of Chemco Limited on 14 December 2010.

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

VINCENT LABAT (50)Independent Director

Vincent Labat graduated as a Chemical Engineer. From 1996 to 2009 he was the Managing Director of Les Gaz Industriels Ltd, a listed Company. In 2010, he joined Medine Limited as Project Development Executive. In July 2011, he was appointed Managing Director of the Agriculture Cluster. He was appointed to the Board of Directors of Chemco Limited on 12 August 2010.



Board of Directors

HAROLD NG KWING KING (63)Non-Executive Director

Harold Ng Kwing King holds a BSc Hons degree in Chemical Engineering, University of Leeds and is a Senior Member of the American Institute of Chemical Engineers. He joined The Mauritius Chemical and Fertilizer Industry Limited in 1974 as Shift Engineer. He subsequently assumed various positions as Assistant Production Manager (1976), Production Manager (1978), Plant Manager (1980), Deputy General Manager (1988) and Managing Director (2006 – 2010). He was also, up to April 2010, the Managing Director of Chemco Limited, Bychemex Limited and Coolkote Enterprises Limited. He was the Managing Director of Harel Mallac International Limited from May 2010 to December 2011. He was appointed to the Board of Directors of Chemco Limited on 24 November 2003.


MICHEL RIVALLAND G.O.S.K. (59)Non-Executive Director

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

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

SÉBASTIEN LAVOIPIERRE (40)Executive Director

Sébastien Lavoipierre holds a BSc degree in Chemical Engineering from the University of Natal and an MBA from Herriot Watt University, Edinburgh Business School. He was Production Manager of Les Gaz Industriels Ltd from 1998 to 2003 and held a senior management position at Ireland Blyth Limited from April 2003 to December 2006. He was Project Manager of the MCFI Group from 2007 to 2008 and Business Development Manager of the Harel Mallac Group in 2009. Sébastien Lavoipierre was appointed General Manager of MCFI Group in May 2010 and to the Board of Directors of The Mauritius Chemical and Fertilizer Industry Limited in August 2010. He is also the Managing Director of Bychemex Limited and Coolkote Enterprises Ltd. He was appointed to the Board of Directors of Chemco Limited on 12 August 2010.



Report of the Board of Directors

Dear Shareholder

The core business of Chemco Limited is trading of chemicals and general goods. Our business segments are industrial chemicals, sugar chemicals, water treatment chemicals, laboratory services and specific general goods (tyres and air conditioners).

In 2012, the economic downturn negatively impacted the local manufacturing industry resulting in a sluggish year with lower exports. Despite difficult market conditions the Company’s turnover remained at Rs324.1 million, similar to the previous year. However results fell significantly short of targets due to increased competition, thereby increasing pressure on margins.

The year has also been marked by the volatile price of raw materials. This eroded margins in some of our business segments. We have managed to mitigate the situation by the timely purchase of raw materials and by maintaining prices at 2011 levels.

Sales of industrial chemicals have decreased by 6 per cent mainly due to a drop of exports, especially in conflict-torn Madagascar. Our main focus in this division was to develop detergent chemicals, which have registered an appreciable growth of 12 per cent. Significant resources will be invested this year to further increasing our market share in this segment.

The turnover of sugar chemicals has increased by 28 per cent compared to 2011 with an increase of our product range for the milling and refining of sugar. The sugar industry has faced major financial difficulties with a substantial fall in the EU sugar prices over the last years, forcing it to centralise its operations. The reduction in total production capacity of the mills will certainly affect future sales.

The water treatment division is a new department comprising of the swimming pools treatment services, water and wastewater treatment services. This department is offering new services, ranging from total water management services, water desalination systems, potable water treatments, boiler and cooling tower water treatments. The turnover in 2012 reached Rs19.0 million and we are confident that this division will grow with the continued dedication of the team.


Report of the Board of Directors (cont’d)

Sales of the tyre division increased by 6 per cent, despite increased competition in this industry due mainly to the removal of duties on all tyres. We lost our competitive advantage in this division as most of our tyres had previously secured green certification and were therefore already exempt of duty. The Company has therefore been compelled to review its whole sales strategy in this sector as the market opened up to various kinds of tyres coming from all over the world at very competitive prices. Chemco has successfully opened its Tyre Centre at the end of 2012 and has introduced a new brand of tyre, Brilland, which is expected to contribute to increase tyre sales in 2013.

The refrigeration division had another successful year with a growth of 17 per cent in the sales of refrigerants and 9 per cent in the sales of air conditioners. This result has been achieved by a more aggressive sales strategy and the launching of a new brand, Midea Supreme, for small capacities 9,000 BTU and 12,000 BTU.

The laboratory has been accreditated to ISO 17025 in December 2012. It is now geared to provide clients with a testing service of exceptional quality. It will continue to strengthen its scope and portfolio of services in 2013. A manager has been recruited to accelerate activities. An aggressive marketing campaign will be launched shortly to brand the laboratory.

Although 2012 has been a tough financial year, considerable investment has been made in training of our workforce in fire safety, first aid, forklift training and chemical safety. With respect to Business Excellence, the Company passed its ISO 9001 recertification audit and a customer satisfaction audit. A customer excellence service was conducted. We have also undertaken an environmental survey in order to identify projects which will reduce the impact of our activities on the environment.

FUTURE PROSPECTS

With little sign of recovery of the Mauritian economy in 2012, the economic downturn will continue to affect performance and earnings of the Company in the coming year. Despite this, the Company will seek opportunities for growth in different business segments, continue efforts to increase its portfolio of products in core businesses, and improve returns and working capital management.

ACKNOWLEDGMENT

The Board would like to thank all the staff of Chemco for their dedication to team work, customer service and commitment to the Company, and to express its sincere gratitude to our clients and shareholders for their confidence and support.




Senior Management

ROMESH RAJA RAIFinance Manager

Romesh Raja Rai is an Associate Member of the Institute of Chartered Accountants in England and Wales (ACA). He was articled with Coopers and Lybrand (London). After qualifying, he joined DCDM in 1983 and left in 1988 to join the MCFI Group as Finance Manager. He was also involved in the setting up of the Association of the Mauritian Manufacturers (AMM) and was a council member representing MCFI.

RAVI VENKATASAMIOperations Manager

Ravi Venkatasami holds a B Eng (Hons) degree in Chemical and Environmental Engineering and a Masters degree in Project Management. He joined the Company in October 2001 where he has assumed various positions as Sales Executive (2003) and Export Manager (2007). He is the Operations Manager of Chemco Limited and Bychemex Limited since February 2010.


Corporate Governance

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

THE BOARD OF DIRECTORS

The Board endeavours to exercise leadership, entrepreneurship, integrity and judgment in directing the Company, so as to achieve continuing prosperity for the organisation whilst ensuring both performance and compliance.

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

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

At 31 December 2012 the Board of Directors consisted of six members, of whom two were independent Directors. The roles of the Managing Director and the Chairman are separated. The Board concluded that in view of its size, having the Executive Director on the Board and the Finance Manager attending Board meetings whenever required, these measures are in accordance with the spirit of the Code of Corporate Governance for Mauritius with regard to executive presence on the Board. Non-executive Directors have free access to members of the senior management team. All Directors have access to the Company Secretary. The Directors are elected as per the provisions of the Company’s constitution that do not provide for a definite term of office.

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

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


BOARD MEETINGS

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

RESPONSIBILITIES ENTRUSTED TO MCFI’S CORPORATE GOVERNANCE COMMITTEE

The Board has entrusted to MCFI’s Corporate Governance Committee the key areas that are the remit of a nomination and remuneration committee. The Committee’s main responsibilities include establishing a formal and transparent procedure for developing policy on senior management remuneration. The Committee also fixes the fees of the Company’s non-executive and independent non-executive Directors. It oversees the process regarding recommendation of potential candidates as Directors, ensures that proposed Directors are not disqualified from holding that position, and monitors the balance and effectiveness of the Board. The Committee met four times in 2012.

RESPONSIBILITIES ENTRUSTED TO MCFI’S AUDIT COMMITTEE

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

ATTENDANCE AT BOARD MEETINGS HELD IN 2012

AttendanceAntoine L Harel 6/6Jean Yves Corson 6/6Vincent Labat 5/6Sébastien Lavoipierre 6/6Harold Ng Kwing King 6/6Michel Rivalland 6/6

Corporate Governance (cont’d)


RISK MANAGEMENT

The Board regularly addresses and evaluates physical, human resources, IT, business, financial, reputational as well as regulatory and compliance risks. In the course of 2012, the internal audit function examined and evaluated the adequacy and effectiveness of control systems in place within the Company. Reports were subsequently produced and submitted to the Audit Committee. The Audit Committee reviewed the reports and, when applicable, made relevant recommendations to the Board. Since 2010 a risk management framework for the Company was adopted followed by implementation of a continuous and dynamic system of risk assessment through compliance checks and discussions with the management for enhanced risk mitigation strategies. Some of the risk areas and relevant control procedures have been identified as follows:

Physical Risks

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

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

The Company’s control procedures ensure mitigation of risks relating to fraud and theft.

Human Resources Risks

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

Technology Risks

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



Internal Control

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

• Effectiveness and efficiency of operations• Safeguarding of assets and data of the organisation• Reliability of financial and other reporting• Prevention of fraud and irregularities• Acceptance and management of risk• Conformity with the codes of practice and ethics adopted by the organisation• Compliance with applicable laws and regulations• Supporting business sustainability under normal as well as adverse operating conditions.

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

Internal Audit

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

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

The Internal Auditor has examined the current control systems to check their suitability and to ensure that they are being adhered to. The Internal Auditor conducts its assignments based on a yearly plan which is validated by the Audit Committee. Systems reviewed in 2012 at Company levels include the procurement and creditors’ cycles and the stock and fixed assets management control system.

In 2012, the Internal Auditor has regularly submitted to the Audit Committee reports for discussion and follow-up of the implementation of recommended actions.

GROUP STRUCTURE

The Directors recognise that the parent entity is Harel Mallac & Co. Ltd. and that the ultimate parent entity is Société Pronema. The Directors common to the aforesaid entities are Mr Antoine L Harel who is ‘co-gérant’ of Société Pronema and Director of Harel Mallac & Co. Ltd. and Mr Michel Rivalland who sits on the Board of Directors of Harel Mallac & Co. Ltd.



SHAREHOLDERS HOLDING MORE THAN 5 PER CENT OF THE COMPANY

Shareholders directly or indirectly interested in 5 per cent or more of the ordinary share capital of the Company are detailed on page 21.

DIVIDEND POLICY

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

SHARE PRICE INDEX FROM JANUARY 2010 TO JANUARY 2013

DIRECTORS’ INTEREST IN SHARES

The direct and indirect interests of Directors in the ordinary shares of the Company are to be found on page 20.

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

2008 1.3 2.3 10.82009 1.1 3.1 6.52010 1.1 3.2 4.72011 1.0 4.1 3.12012 1.0 1.8 4.0



DIRECTORS’ DEALING IN SHARES OF THE COMPANY

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

RELATED PARTY TRANSACTIONS

Related party transactions are detailed on page 55.

SENIOR MANAGEMENT PROFILE

The profile of the senior management members is given on page 10.

COMPANY’S CONSTITUTION

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

SHAREHOLDERS AGREEMENT AFFECTING THE GOVERNANCE OF THE COMPANY BY THE BOARD

The Company is not aware of any such agreement during the period under review.

DIRECTORS’ FEES

Directors are paid directors’ fees with the exception of the Executive Director and one of the non-executive Directors.

DIRECTORS’ REMUNERATION

Directors’ remuneration is given on page 20. It has been disclosed globally due to sensitivity of the information.

REMUNERATION POLICY

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

EMPLOYEE SHARE OPTION PLAN

No employee share option plan is available within the Company.



CODE OF ETHICS

The Board has adopted a Code of Ethics reflecting the Company’s values and corporate culture.

PROFILE OF COMPANY’S SHAREHOLDERS AS AT 28 MARCH 2013

SUMMARY BY SHAREHOLDING CATEGORY AS AT 28 MARCH 2013

SHAREHOLDER INFORMATION

Forthcoming Annual Meeting

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

Schedule of Events


Publication of condensed audited results for previous year March 2013Annual Meeting May / June 2013Publication of condensed results for 1st quarter May 2013Publication of condensed results for 2nd quarter August 2013Publication of condensed results for 3rd quarter November 2013Dividend declaration & payment December 2013 / January 2014

Size of Shareholding Number of Shareholders Number of Shares Owned % Holding1 - 500 886 78,115 1.26501 - 1,000 166 112,145 1.811,001 - 5,000 104 212,644 3.425,001 - 10,000 19 137,133 2.2110,001 - 50,000 21 408,374 6.5850,001 - 100,000 4 273,204 4.40100,001 - 250,000 3 418,260 6.74250,001 - 500,000 3 1,174,140 18.91Over 500,000 1 3,394,707 54.67Total 1,207 6,208,722 100.00

Category of Shareholders

Number of Shareholders

Number of Shares Owned

% Holding

Individual 1,141 713,207 11.49Insurance and Assurance Companies 3 94,698 1.53Investment and Trust Companies 3 107 0.00Other Corporate Bodies 60 5,400,710 86.98Total 1,207 6,208,722 100.00



Shareholders’ Practical Guide

SAFETY AND HEALTH

The Company complies with the Occupational Safety and Health Act 2005 and other legislative and regulatory frameworks.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company highly values its social role as a responsible corporate citizen, especially on the educational needs of underprivileged and handicapped children. Through Fondation Harel Mallac, a non profit entity of the Harel Mallac Group, Rs554,880 was donated to fund different projects.

In 2012, Fondation Harel Mallac helped many NGOs and schools. They are Xavier Barbe GS, Les Amis de Zippy, Junior Achievement Mascareignes, Centre Technique St. Monfort, l’Association des Parents de Déficients Auditifs (A.P.D.A), l’Association de Parents d’Enfants Inadaptés de l’Ile Maurice (A.P.E.I.M), l’Atelier Mo’Zar, l’Adolescent Non Formal Education Network (A.N.F.E.N) and Terrain for Interactive Pedagogy through Arts (T.I.P.A).

Mauritian Wildlife Foundation, Curepipe Starlight Sporting Club (CSSC), Mouvement d’Aide à la Maternité (M.A.M), Rainbow Kids Day Care Centre and the Trust Fund for Excellence in Sports (TFES), which are NGOs working in the environment, socio-economic and sports fields, were also helped.

In 2013, the focus will still be on helping the underprivileged and handicapped children.

Donations for the year under review are detailed on page 21.

PROMOTING A BETTER ENVIRONMENT

The Company strives to improve the environmental impact of our activities by encouraging responsible use of resources in order to ensure quality of life for future generations. The Company has embarked on significant programmes in the use of more environment-friendly products and services, as well as the reduction of electricity and other resources in the conduct of its business.

Issues ActionChange of address Contact the Company’s secretariatIf shares are deposited with CDS Contact personal brokerChange of name Contact the Company’s secretariatAcquisition or disposal of shares Contact personal brokerShare transfers Contact the Company’s secretariatLost share certificate Contact the Company’s secretariatDirect dividend credit Forward the relevant form to the Company’s secretariat


Statement of Directors’ Responsibility

The Directors acknowledge their responsibilities for:

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

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

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

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

The Directors report that:

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

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

3. Applicable accounting standards have been adhered to. Any departure in the fair presentation has been disclosed, explained and quantified.

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

Signed on behalf of the Board of Directors on 28 March 2013.



Statutory Disclosures

PRINCIPAL ACTIVITIES

The principal activities of the Company consist of the trading of chemicals and general goods.

DIRECTORS

The Directors of the Company as at 31 December 2012 are listed on pages 6 and 7.

DIRECTORS’ SERVICE CONTRACTS

There are no service contracts between the Company and its Directors.

DIRECTORS’ REMUNERATION AND BENEFITS

Remuneration and benefits received, or due from the Company were:

DIRECTORS’ INTERESTS IN SHARES

The interests of the Directors in the shares of the Company as at 31 December 2012 were:

CONTRACTS OF SIGNIFICANCE

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

2012 2011Rs’000 Rs’000

Executive Directors - -Non-executive Directors 464 443

Direct Indirect Interest Interest

Antoine L Harel - 161,529Jean Yves Corson - -Vincent Labat - -Sébastien Lavoipierre - -Harold Ng Kwing King 41,100 -Michel Rivalland - -


THIRD PARTY MANAGEMENT AGREEMENT

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

SHAREHOLDERS

At 28 March 2013, the following shareholders were directly or indirectly interested in more than 5 per cent of the Company’s share capital.

CORPORATE SOCIAL RESPONSIBILITY

AUDITORS’ FEES

The fees payable to the auditors, for audit and other services were:

Other services provided by the auditors of the Company during the year 2011 related to taxation fees.

Statutory Disclosures (cont’d)

2012 2011Rs’000 Rs’000

DonationsPolitical - -Others 5 -Corporate Social Responsibility 555 440

2012 2011Rs’000 Rs’000

Audit fees payable to:- BDO & Co 120 120Fees payable for other services provided by :- BDO & Co - 33

Shareholder Interest % Harel Mallac & Co. Ltd. 54.67Flacq United Estates Ltd 7.42The Mauritius Chemical and Fertilizer Industry Ltd 6.52


Certificate by Secretary

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

HM SECRETARIES LTD.Secretary

28 March 2013

Independent Auditors’ Report to the Members

Statement of Financial Position

Income Statement

Statement of Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

Financial Statements

Page 24

Page 26

Page 27

Page 28

Page 29

Page 30

Page 31



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

Report on the Financial Statements

We have audited the financial statements of Chemco Limited on pages 26 to 55 which comprise the statement of financial position at 31 December 2012, the income statement, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. Directors’ Responsibility for the Financial Statements

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

Auditors’ Responsibility

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

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

Report on the Financial Statements

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

Opinion

In our opinion, the financial statements on pages 26 to 55 give a true and fair view of the financial position of the Company at 31 December 2012 and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the Companies Act 2001.

Report on Other Legal and Regulatory Requirements

Companies Act 2001

We have no relationship with, or interests in, the Company, other than in our capacity as auditors and dealings in the ordinary course of business.

We have obtained all information and explanations we have required.


Independent Auditors’ Report to the Members (cont’d)

Report on Other Legal and Regulatory Requirements (cont’d)

In our opinion, proper accounting records have been kept by the Company as far as it appears from our examination of those records.

Financial Reporting Act 2004

The directors are responsible for preparing the Corporate Governance Report and making the disclosures required by Section 8.4 of the Code of Corporate Governance of Mauritius (“Code”). Our responsibility is to report on these disclosures.

In our opinion, the disclosures in the Corporate Governance Report are consistent with the requirements of the Code.

BDO & Co Rookaya Ghanty, F.C.C.A.Chartered Accountants Licensed by FRC

Port Louis, Mauritius.

28 March 2013

Statement of Financial PositionAt 31 December 2012


Notes 2012 2011

Rs Rs

ASSETS

Non-current assetsPlant and equipment 5 11,090,646 13,206,705 Investments in financial assets 7 56,896 87,986 Retirement benefit obligations 8 - 377,725

11,147,542 13,672,416

Current assetsInventories 9 71,031,568 56,220,839 Trade and other receivables 10 99,656,751 83,447,650 Cash and cash equivalents 26(b) 1,454,618 3,214,197

172,142,937 142,882,686

Total assets 183,290,479 156,555,102

EQUITY AND LIABILITIES

Capital and reservesShare capital 11 6,208,722 6,208,722 Share premium 5,518,864 5,518,864 Fair value reserve 12 36,576 67,666 Retained earnings 87,854,845 82,884,407 Shareholders’ interest 99,619,007 94,679,659

LIABILITIESNon-current liabilitiesDeferred tax liabilities 13 430,536 457,529 Retirement benefit obligations 8 3,598 -

434,134 457,529

Current liabilitiesTrade and other payables 14 53,238,698 35,146,758 Current tax liabilities 15(a) 972,155 1,932,331 Borrowings 16 22,817,763 18,130,103 Dividends 17 6,208,722 6,208,722

83,237,338 61,417,914

Total liabilities 83,671,472 61,875,443

Total equity and liabilities 183,290,479 156,555,102

These financial statements have been approved for issue by the Board of Directors on 28 March 2013.


The notes on pages 31 to 55 form an integral part of these financial statements.Auditors’ report on pages 24 and 25.

Income StatementYear ended 31 December 2012


Notes 2012 2011

Rs Rs

Sales 2(i) 324,134,974 325,030,479

Cost of sales (255,667,584) (242,473,564)

Gross profit 68,467,390 82,556,915

Other income 18 2,920,039 3,322,527

Other gains/(losses) - net 19 563,850 (558,618)

Operating expenses 23 (57,120,930) (55,728,595)

14,830,349 29,592,229

Finance (costs)/income 20 (1,394,432) 40,640

Profit before taxation 22 13,435,917 29,632,869

Income tax expense 15(b) (2,256,757) (4,139,988)

Profit for the year 11,179,160 25,492,881

Earnings per share (Rs/share) 25 1.80 4.11

The notes on pages 31 to 55 form an integral part of these financial statements.

Auditors’ report on pages 24 and 25.

Statement of Comprehensive IncomeYear ended 31 December 2012


Note 2012 2011

Rs Rs

Profit for the year 11,179,160 25,492,881

Other comprehensive income

(Decrease)/increase in fair value of available for sale financial assets 12 (31,090) 10,770

Total comprehensive income for the year 11,148,070 25,503,651



Statement of Changes in EquityYear ended 31 December 2012


Share Share Fair value Retained

Note capital premium reserve earnings Total

Rs Rs Rs Rs Rs

Balance at 1 January 2012 6,208,722 5,518,864 67,666 82,884,407 94,679,659

Total comprehensive income for the year - - (31,090) 11,179,160 11,148,070

Dividends 17 - - - (6,208,722) (6,208,722)

Balance at 31 December 2012 6,208,722 5,518,864 36,576 87,854,845 99,619,007

Balance at 1 January 2011 6,208,722 5,518,864 56,896 63,600,248 75,384,730

Total comprehensive income for the year - - 10,770 25,492,881 25,503,651

Dividends 17 - - - (6,208,722) (6,208,722)

Balance at 31 December 2011 6,208,722 5,518,864 67,666 82,884,407 94,679,659



Statement of Cash FlowsYear ended 31 December 2012


Notes 2012 2011

Rs Rs

Cash flow from operating activities

Cash generated from operations 26(a) 7,477,279 10,691,256

Interest paid (3,405,726) (2,034,185)

Tax paid (3,243,926) (3,721,272)

Net cash generated from operating activities 827,627 4,935,799

Cash flows from investing activities

Purchase of plant and equipment 5 (1,491,636) (8,288,031)

Proceeds from sale of plant and equipment 301,858 179,131

Dividend received 2,032 4,064

Net cash used in investing activities (1,187,746) (8,104,836)

Cash flows from financing activities

Dividends paid 17 (6,208,722) -

Loan received from related party - 8,000,000

Loan repaid to related party - (8,000,000)

Net cash used in financing activities (6,208,722) -

Net decrease in cash and cash equivalents (6,568,841) (3,169,037)

Movement in cash and cash equivalents

At 1 January (14,915,906) (11,960,819)

Decrease (6,568,841) (3,169,037)

Effect of foreign exchange rate changes 121,602 213,950

At 31 December 26(b) (21,363,145) (14,915,906)



Notes to the Financial StatementsYear ended 31 December 2012


1. GENERAL INFORMATION

Chemco Limited is a public company incorporated and domiciled in Mauritius. The address of its registered office is Chaussée Tromelin, Fort George, Port Louis. Its main activity is the trading of chemicals and general goods. The financial statements for the year ended 31 December 2012 relates only to the separate financial statement of the Company. The Company is listed on the Development & Enterprise Market (DEM) of the Stock Exchange of Mauritius.

The directors consider Harel Mallac & Co. Ltd., incorporated in the Republic of Mauritius as the holding company and Société Pronema, an entity registered in the Republic of Mauritius as the ultimate parent entity.

2. SIGNIFICANT ACCOUNTING POLICIES

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

(a) Basis of preparation

The financial statements of Chemco Limited comply with the Companies Act 2001 and have been prepared in accordance with International Financial Reporting Standards (IFRS). Where necessary, comparative figures have been amended to conform with changes in presentation in the current year. The financial statements are prepared under the historical cost convention, except that available-for-sale investments are stated at their fair value.

Standards, Amendments to published Standards and Interpretations effective in the reporting period

Disclosures - Transfers of Financial Assets (Amendments to IFRS 7). These amendments improve the disclosure requirements in relation to transferred financial assets. The amendments are not expected to have any impact on the Company’s financial statements.

Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (Amendments to IFRS1). These amendments replace references to a fixed transition date with ‘the date of transition to IFRSs’ and set out the requirements for how an entity resumes presenting financial statements in accordance with IFRSs after a period when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation. The amendments are not expected to have any impact on the Company’s financial statements.

Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12), introduces a presumption that investment properties that are measured using the fair value model in accordance with IAS 40 Investment Property are recovered entirely through sale for the purposes of measuring deferred taxes. This presumption is rebutted if the investment property is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. This amendment is unlikely to have an impact on the Company’s financial statements.

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

Certain standards, amendments to published standards and interpretations have been issued that are mandatory for accounting periods beginning on or after 1 January 2013 or later periods, but which the Company has not early adopted.

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

Amendments to IAS 1 Presentation of Items of Other Comprehensive Income (Effective 1 July 2012)IFRS 9 Financial InstrumentsIAS 27 Separate Financial StatementsIAS 28 Investments in Associates and Joint VenturesIFRS 10 Consolidated Financial StatementsIFRS 11 Joint Arrangements IFRS 12 Disclosure of Interests in Other Entities



Assets Years

Plant and machinery 10

Furniture, fittings and office equipment 3 - 10

Motor vehicles 5

Forklift 5

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(a) Basis of preparation (cont’d)

Standards, Amendments to published Standards and Interpretations issued but not yet effective (cont’d)

IFRS 13 Fair Value MeasurementIAS 19 Employee Benefits (Revised 2011)IFRIC 20 Stripping Costs in the Production Phase of a Surface MineDisclosures - Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7)IAS 32 Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32)Amendment to IFRS 1 (Government Loans)Annual Improvements to IFRSs 2009-2011 CycleConsolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition GuidanceInvestment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)

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

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 4.

(b) Plant and equipment

All plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the assets carrying amount or recognised as a separate asset as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.

Depreciation is calculated on a straight line method to write off the cost or revalued amounts of the assets to their residual values over their estimated useful lives as follows:

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

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

Gains and losses on disposals of plant and equipment are determined by comparing proceeds with carrying amount and are included in the income statement.

(c) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis. The cost of finished goods comprises purchase cost and other direct costs. Net realisable value is the estimated selling price in the ordinary course of business less the costs of completion and applicable selling expenses.




(d) Foreign currencies

(i) Functional and presentation currency

Items included in the financial statements are measured using Mauritian Rupees, the currency of the primary economic environment in which the entity operates (“functional currency”).

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

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

(e) Deferred income tax

Deferred income tax is provided in full, using the liability method, on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for.

Deferred income tax is determined using tax rates that have been enacted by the end of the reporting period and are expected to apply in the period when the related deferred income tax asset is realised or the deferred income tax liability is settled.

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

(f) Alternative Minimum Tax (AMT)

Alternative Minimum Tax (AMT) is provided for, where the Company, which has a tax liability of less than 7.5% of its book profit, pays a dividend. AMT is calculated as the lower of 10% of the dividend paid and 7.5% of book profit.

(g) Retirement benefit obligations

(i) Defined contribution plans

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

The Company operates a defined contribution retirement benefit plan for all qualifying employees. Payments to deferred contribution retirement plans are charged as an expense as they fall due.




(g) Retirement benefit obligations (cont’d)

(ii) Defined benefit plans

A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The Company contributes to a defined benefit plan for certain employees which is a final salary pension plan. The cost of providing benefits is determined using the Projected Unit Credit Method, so as to spread the regular cost over the service lives of employees in accordance with the advice of qualified actuaries who carry out a full valuation of plans regularly. Cumulative actuarial gains and losses arising from experience adjustments, changes in actuarial assumptions and amendments to pension plans in excess of the greater of 10% of the value of the plan assets or 10% of the defined benefit obligation are spread to income over the average remaining working lives of the related employees.

Past-service costs are recognised immediately in income unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period.

(iii) Gratuity on retirement

For employees who are not covered, the net present value of gratuity on retirement payable under the Employment Rights Act 2008 is calculated by a qualified actuary and provided for. The obligations arising under this item are not funded. Cumulative actuarial gains and losses aring from experience adjustments, changes in actuarial assumption and adjustments in excess of the greater of 10% of the retirement obligation are spread to income over the average remaining lives of the related employees.

(h) Financial instruments

(i) Financial assets

Categories of financial assets The Company classifies its financial assets in the following categories: available-for-sale financial assets and loans

and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date.

The Company’s accounting policies in respect of the main financial instruments are set out below.

(a) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets when maturity is within twelve months after the end of the reporting period or non-current assets for maturities greater than twelve months.

(b) Available-for-sale financial assets

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




(h) Financial instruments (cont’d)

(i) Financial assets

Initial measurement Purchases and sales of financial assets are recognised on trade-date (or settlement date), the date on which the company

commits to purchase or sell the asset. Investments are initially measured at fair value plus transaction costs.

Derecognition Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have

been transferred and the company has transferred substantially all risks and rewards of ownership.

Subsequent measurement Available-for-sale financial assets are subsequently carried at their fair values. Loans and receivables are carried at

amortised cost using the effective interest method.

Unrealised gains and losses arising from changes in the fair value of financial assets classified as available-for-sale are recognised in other comprehensive income. When financial assets classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the statement of comprehensive income as gains and losses on financial assets.

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

Impairment of financial assets The Company assesses at the end of each reporting period whether there is objective evidence that a financial

asset or a group of financial assets is impaired. In the case of security investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss, measured as the difference between acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement for a financial asset classified as available-for-sale are not reversed through the profit or loss.

(ii) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables.

The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows. The amount of provision is recognised in the income statement.

(iii) Borrowings

Borrowings are recorded initially at fair value being the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effetive interest rate.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting period.




(h) Financial instruments (cont’d) (iv) Trade and other payables

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

(v) Cash and cash equivalents

Cash and cash equivalents include cash in hand and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.

(vi) Share capital

Ordinary shares are classified as equity. Incremental costs, directly attributable to the issue of the new shares or options, are shown in equity as deduction, net of tax, from proceeds.

(i) Revenue recognition

Revenue comprises the fair value for the sale of goods net of value-added tax, rebates and discounts.

Sales of goods are recognised when the goods are delivered and titles have passed, at which time all of the following conditions are satisfied:

• the Company has transferred to the buyer the significant risks and rewards of ownership of the goods; • the Company retains neither continuing managerial involvement to the degree usually associated with ownership

nor effective control over the goods sold; • the amount of revenue can be measured reliably; • it is probable that the economic benefits associated with the transaction will flow to the Company; and • the costs incurred or to be incurred in respect of the transaction can be measured reliably.

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

(j) Dividend distribution

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

(k) Provisions

Provisions are recognised when the Company has a present or constructive obligation as a result of past events and it is probable that an outflow of resources that can be reasonably estimated will be required to settle the obligation.

(l) Impairment of assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows (cash-generating units).



3. FINANCIAL RISK MANAGEMENT

3.1 Financial Risk Factors

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

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

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

(a) Market risk

(i) Currency risk

The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarily with respect to US Dollar, Euro and South African Rand. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities.

Currency profile

EuroSouth African

Rand US Dollar

Rs Rs Rs

2012

Financial assets

Trade and other receivables 28,420 - 15,362,516

Cash and bank balances - - 1,439,618

Financial liabilities

Trade payables - 1,610,556 23,664,656

2011

Financial assets

Trade and other receivables - - 8,838,648

Cash and bank balances - - 2,395,017

Financial liabilities

Trade payables - - 5,591,521

At 31 December 2012, if the Rupee had weakened/strengthened by 5% against the US Dollar, Euro and South African Rand with all other variables held constant, post tax profit would have changed as follows:

2012 2011

Rs Rs

Impact of +5% movement:

Post tax profit 422,233 282,107



3. FINANCIAL RISK MANAGEMENT (CONT’D)

3.1 Financial Risk Factors (cont’d)

(ii) Price risk

The market prices of the Company’s available-for-sale quoted investment securities are susceptible to future fluctuations.

Sensitivity analysis

The table below summarises the impact of increases/decreases in the fair value of the investments on the Company’s equity. The analysis is based on the assumption that the fair value has increased/ decreased by 5%.

(b) Credit risk

The Company’s credit risk is primarily attributable to its trade receivables. The amounts presented in the statement of financial position are net of allowances for doubtful receivables, estimated by the management based on prior experience and the current economic environment.

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

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

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities. The Company aims at maintaining flexibility in funding by keeping committed credit lines available.

Management monitors rolling forecasts of the Company’s liquidity reserve on the basis of expected cash flows and does not foresee any major liquidity risk over the next two years.

Impact on equity

2012 2011

Rs Rs

Available-for-sale financial assets 2,845 4,399

Forecasted liquidity reserve is as follows: 2013

Rs’000

Net cash flows from operating activities 19,428

Net cash flows from investing activities (10,450)

Net cash flows from financing activities (6,209)

Increase 2,769

Opening balance (21,363)

Closing balance (18,594)



3. FINANCIAL RISK MANAGEMENT (CONT’D)

3.1 Financial Risk Factors (cont’d)

(c) Liquidity risk (cont’d)

The table below analyses the Company’s non-derivative financial liabilities based on the remaining period at the end of the reporting period:

Less than 1 year

Rs

At 31 December 2012

Bank borrowings 22,817,763

Trade and other payables 53,238,698

At 31 December 2011

Bank borrowings 18,130,103

Trade and other payables 35,146,758

(d) Cash flow and fair value interest rate risk

The Company’s interest rate risk arises from short-term borrowings. Borrowings issued at variable rates expose the company to cash flow interest-rate risk.

At 31 December 2012, if interest rates on rupee-denominated borrowings had been 50 basis points higher/lower with all other variables held constant, post tax profit for the year would have been Rs160,699 (2011: Rs90,651) lower/higher, mainly as a result of higher/lower interest expense on floating rate borrowings.

3.2 Capital risk management

The Company’s objectives when managing capital are:

- to safeguard the Company’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders,

- to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The debt-to-capital ratio at 31 December 2012 and 2011 were as follows:

2012 2011

Rs Rs

Debt (note 16) 22,817,763 18,130,103

Less: cash in hand and at bank (note 26(b)) (1,454,618) (3,214,197)

Net debt 21,363,145 14,915,906

Total equity 99,619,007 94,679,659

Debt-to-capital-ratio 0.21 : 1 0.16 : 1

There were no changes in the Company’s approach to capital risks management during the year.



4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

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

4.1 Critical accounting estimates and assumptions

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

(a) Fair value estimation

The fair value of financial instruments traded in active markets is based on quoted market prices at the end of the reporting period. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the company is the current bid price. These instruments are included in level 1. Instruments included in level 1 comprise primarily quoted equity investments classified as trading securities or available-for-sale.

(b) Depreciation policies

Plant and equipments are depreciated to their residual values over their estimated useful lives. The residual value of an asset is the estimated net amount that the Company would currently obtain from disposal of the asset, if the asset were already of the age and in condition expected at the end of its useful life.

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

(c) Limitation of sensitivity analysis

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

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

(d) Asset lives and residual values

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

(e) Pension benefits

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



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

4.1 Critical accounting estimates and assumptions (cont’d)

(e) Pension benefits (cont’d) The Company determines the appropriate discount rate at the end of each year. This is the interest that should be used to determine the present value of estimated future cash flows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Company considers the interest rate of long-term government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension obligation.

Other key assumptions for pension obligations are based in part on current market conditions. Additional information is disclosed in note 8.

(f) Impairment of available-for-sale financial assets

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



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ber

2012

8

,629

,322

7

,611

,239

1

5,76

1,53

9 1

,300

,000

-

3

3,30

2,10

0

DEPR

ECIA

TIO

N

At 1

Jan

uary

201

2 5

,670

,939

4

,165

,677

1

0,06

3,49

4 1

,003

,667

-

2

0,90

3,77

7

Char

ge f

or t

he y

ear

268

,524

6

02,0

56

2,5

02,1

83

127

,000

8

9,81

8 3

,589

,581

Dis

posa

l adj

ustm

ents

-

(7

5,69

5) (2

,206

,209

) -

-

(2

,281

,904

)

Tran

sfer

8

9,81

8 -

-

-

(8

9,81

8) -

At 3

1 De

cem

ber

2012

6

,029

,281

4

,692

,038

1

0,35

9,46

8 1

,130

,667

-

2

2,21

1,45

4

NET

BO

OK

VALU

ES

At 3

1 De

cem

ber

2012

2

,600

,041

2

,919

,201

5

,402

,071

1

69,3

33

-

11,

090,

646



5.

PLAN

T AN

D EQ

UIP

MEN

T (C

ON

T’D)

Plan

t an

d M

achi

nery

Furn

itur

e,

Fitt

ings

and

O

ffice

eq

uipm

ent

Mot

or

vehi

cles

Fork

lift

Asse

ts in

Pr

ogre

ss T

otal

RsRs

RsRs

RsRs

(b)

COST

At 1

Jan

uary

201

1 6

,560

,372

4

,947

,945

1

4,33

3,14

8 1

,300

,000

-

2

7,14

1,46

5

Addi

tion

s 1

80,6

99

2,1

45,2

05

4,8

62,8

25

-

1,0

99,3

02

8,2

88,0

31

Dis

posa

ls

-

-

(1,3

19,0

14)

-

-

(1,3

19,0

14)

At 3

1 De

cem

ber

2011

6

,741

,071

7

,093

,150

1

7,87

6,95

9 1

,300

,000

1

,099

,302

3

4,11

0,48

2

DEPR

ECIA

TIO

N

At 1

Jan

uary

201

1 5

,420

,453

3

,640

,120

8

,654

,417

8

76,6

67

-

18,

591,

657

Char

ge f

or t

he y

ear

250

,486

5

25,5

57

2,7

28,0

91

127

,000

-

3

,631

,134

Dis

posa

l adj

ustm

ents

-

-

(1

,319

,014

) -

-

(1

,319

,014

)

At 3

1 De

cem

ber

2011

5

,670

,939

4

,165

,677

1

0,06

3,49

4 1

,003

,667

-

2

0,90

3,77

7

NET

BO

OK

VALU

ES

At 3

1 De

cem

ber

2011

1

,070

,132

2

,927

,473

7

,813

,465

2

96,3

33

1,0

99,3

02

13,

206,

705

(c)

Dep

reci

atio

n ch

arge

of

Rs3,

589,

581

(201

1: R

s3,6

31,1

34) h

as b

een

char

ged

in o

pera

ting

exp

ense

s.



6. INVESTMENTS IN SUBSIDIARY COMPANIES

The subsidiary companies were as follows:

Name of companies Class of

shares held Year ended Direct %

Country of operation &

incorporation Main

business

31 December 2012

Asian Buying House Ltd Ordinary 31 December 2012 100 Mauritius Trading

Chemco SARL Ordinary 31 December 2012 100 Madagascar Trading

31 December 2011

Asian Buying House Ltd Ordinary 31 December 2011 100 Mauritius Trading

Chemco SARL Ordinary 31 December 2011 100 Madagascar Trading

The board has decided to wind up Asian Buying House Ltd and Chemco SARL, hence they have not been consolidated in the financial statements.

7. INVESTMENTS IN FINANCIAL ASSETS

2012 2011

Rs Rs

Available-for-sale financial assets

At 1 January 87,986 77,216

(Decrease)/increase in fair value (31,090) 10,770

At 31 December 56,896 87,986

Available-for-sale securities comprise of quoted investments. The fair value of listed securities is based on The Stock Exchange of Mauritius Ltd’s share prices at the close of business at the end of the reporting date.

Available-for-sale financial assets are denominated in Mauritian rupees.

The table below analyses the Company’s financial assets that are measured at fair value in the statements of financial position at 31 December 2012.

Level 1

Rs

At 31 December 2012

Available-for-sale financial assets 56,896

At 31 December 2011

Available-for-sale financial assets 87,986



8. RETIREMENT BENEFIT OBLIGATIONS

2012 2011

Rs Rs

Amounts recognised in the statement of financial position:

- Pension benefits (note 8(a)(ii)) (1,571,774) (1,708,052)

- Other post-retirement benefits (note 8(b)(ii)) 1,575,372 1,330,327

3,598 (377,725)

Income statement charge:

- Pension benefits (note 8(a)(v)) 561,278 540,360

- Other post-retirement benefits (note 8(b)(v)) 245,045 233,752

806,323 774,112

(a) Pension benefits

The assets of the fund are held independently and administered by an insurance company.

The assets of the plan in respect of staff members are invested in Anglo Mauritius’ deposit administration fund. The latter is expected to produce a smooth progression of return from one year to the next. The breakdown of the assets above corresponds to a notional allocation of the underlying investments based on the long term strategy of the fund.

As the fund is expected to produce a smooth return, a fairly reasonable indication of future returns can be obtained by looking at historical ones. Therefore, the long term expected return on asset assumption has been based on historical performance of the fund.

In terms of the individual expected returns, the expected return on equities has been based on an equity risk premium above a risk free rate. The risk free rate has been measured in accordance to the yields on government bonds at the measurement date.

The fixed interest portfolio includes government bonds, debentures. mortgages and cash. The expected return for this asset class has been based on yields of government bonds at the measurement date.

The assets of the plan is based on the reserves held for the Deferred Annuity policies for statutory purposes. This asset value is a notional value and assumes that the scheme is on a going concern.

(i) The amounts recognised in the statement of financial position are as follows:

2012 2011

Rs Rs

Present value of funded obligations 9,461,244 8,072,377

Fair value of plan assets (8,519,260) (7,899,056)

941,984 173,321

Unrecognised actuarial losses (2,513,758) (1,881,373)

Asset in the statement of financial position (1,571,774) (1,708,052)

(ii) Movement in the asset recognised in the statement of financial position:

At 1 January (1,708,052) (1,878,596)

Total expense (note 8(a)(v)) 561,278 540,360

Contributions paid (425,000) (369,816)

At 31 December (1,571,774) (1,708,052)



8. RETIREMENT BENEFIT OBLIGATIONS (CONT’D)

(a) Pension benefits (cont’d)

(iii) The movement in the defined benefit obligation over the year is as follows:

2012 2011

Rs Rs

At 1 January 8,072,377 8,088,390

Current service cost 446,689 437,200

Interest cost 778,573 813,250

Actuarial losses 365,385 472,104

Benefits paid (201,780) (1,738,567)

At 31 December 9,461,244 8,072,377

(iv) The movement in the fair value of plan assets of the year is as follows:

2012 2011

Rs Rs

At 1 January 7,899,056 8,798,190

Expected return on plan assets 743,408 836,033

Actuarial losses (267,000) (240,473)

Employer contributions 425,000 369,816

Scheme expenses (15,036) (13,536)

Cost of insuring risk benefits (64,388) (112,407)

Benefits paid (201,780) (1,738,567)

At 31 December 8,519,260 7,899,056

(v) The amounts recognised in the income statement are as follows:

2012 2011

Rs Rs



Expected return on plan assets (743,408) (836,033)

Scheme expenses 15,036 13,536

Cost of insuring risks benefits 64,388 112,407

Total included in employee benefit expense (note 24) 561,278 540,360

Actual return on plan assets 476,408 595,561




(a) Pension benefits (cont’d)

(vi) The assets in the plan and the expected rate of return were:

2012 2011

Rs % Rs %

Local equities 3,046,939 12.25 2,813,082 12.25

Overseas equities 1,828,163 12.25 1,687,849 12.25

Fixed interest 2,843,809 9.25 2,625,542 9.25

Properties 406,258 6.00 375,078 6.00

Insured contracts 394,091 9.25 397,505 9.25

Total market value of assets 8,519,260 7,899,056

(vii) 2012 2011 2010 2009

Rs Rs Rs Rs

Present value of defined benefit obligation 9,461,244 8,072,377 8,088,390 9,871,020

Fair value of plan assets (8,519,260) (7,899,056) (8,798,190) (9,617,667)

Deficit/(surplus) 941,984 173,321 (709,800) 253,353

Liability experience

(Losses)/gains during the year (365,385) (472,104) 1,126,077 (1,545,022)

Asset experience losses during the year (267,000) (240,473) (266,250) (483,601)

(viii) The principal actuarial assumptions used for accounting purposes were:

2012 2011

% %

Discount rate 8.50 9.25

Expected return on plan assets 8.50 9.25

Future salary increases 6.50 7.25

(ix) Expected contribution to post employment benefit plans for the year ending 31 December 2013 are Rs763,940.




(b) Other post-retirement benefits

(i) Other post-retirement benefits comprise of retirement gratuity payable under the Employment Rights Act.

(ii) The amounts recognised in the statement of financial position are as follows:

2012 2011

Rs Rs

Present value of unfunded obligations 1,225,807 1,503,391

Unrecognised actuarial losses 349,565 (173,064)

Liability in the statement of financial position 1,575,372 1,330,327

(iii) The movement in the defined benefit obligation over the year is as follows:

2012 2011

Rs Rs

At 1 January 1,503,391 1,329,948



Actuarial gains (522,629) (60,309)

At 31 December, 1,225,807 1,503,391

(iv) Movements in liability recognised in the statement of financial position:

2012 2011

Rs Rs

At 1 January 1,330,327 1,096,575

Total expense (note 8(b)(v)) 245,045 233,752

At 31 December 1,575,372 1,330,327

(v) The amounts recognised in the income statement are as follows:

2012 2011

Rs Rs



Total included in employee benefit expense (note 24) 245,045 233,752



9. INVENTORIES

2012 2011

Rs Rs

Finished goods 67,966,267 55,479,502

Containers and tools 396,112 741,337

Goods in transit 2,669,189 -

71,031,568 56,220,839

(a) The cost of inventories recognised as expense and included in cost of sales amounted to Rs255,667,584 (2011: Rs242,473,564).

(b) The bank borrowings are secured by floating charges on the assets of the company including inventories (note 16).

10. TRADE AND OTHER RECEIVABLES

2012 2011

Rs Rs

(a) Trade receivables 85,691,832 70,435,058

Receivables from related companies 12,514,473 7,971,325

98,206,305 78,406,383

Prepayments 371,932 3,714,532

Other receivables 1,078,514 1,326,735

99,656,751 83,447,650

The carrying amount of trade and other receivables approximate their fair value.

At 31 December 2012, no trade receivables were impaired (2011: Rsnil). The amount of provision was Rs.nil as at 31 December 2012 (2011: Rsnil).

At 31 December 2012, trade receivables of Rs5.5 million (2011: Rs2.1 million) were past due but not impaired. These relate to independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:

2012 2011

Rs Rs

3 to 6 months 5,193,991 1,870,216

Over 6 months 305,599 237,707

5,499,590 2,107,923

The carrying amount of the trade and other receivables are denominated in the following currencies:

2012 2011

Rs Rs

Rupee 84,265,815 74,609,002

US Dollar 15,362,516 8,838,648

Euro 28,420 -

99,656,751 83,447,650



10. TRADE AND OTHER RECEIVABLES (CONT’D)

Movements on the provision for impairment of trade receivables are as follows:

2012 2011

Rs Rs

(b) At 1 January - 2,858,077

Unused amounts reversed - (1,877,643)

Provision for receivable impairment 23,180 -

Receivables written off during the year as uncollectible (23,180) (980,434)

At 31 December - -

The other classes within trade and other receivables do not contain impaired assets.

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The Company does not hold any collateral as security.

11. SHARE CAPITAL

2012 2011

Rs Rs

Authorised

12,417,444 ordinary shares of Rs1 each 12,417,444 12,417,444

Issued and fully paid

6,208,722 ordinary shares of Rs1 each 6,208,722 6,208,722

12. FAIR VALUE RESERVE

NoteFair value

reserve

Rs

2012

Decrease in fair value of available-for-sale financial assets 7 (31,090)

2011

Increase in fair value of available-for-sale financial assets 7 10,770

The fair value reserve comprises of the cumulative net change in the fair value of available-for-sale financial assets that has been recognised in other comprehensive income until the investments are derecognised or impaired.

13. DEFERRED TAX LIABILITIES

Deferred taxes are calculated on all temporary differences under the liability method at 15% (2011: 15%).

The following amounts are shown in the statement of financial position.

2012 2011

Rs Rs

Deferred tax liabilities 430,536 457,529



13. DEFERRED TAX LIABILITIES (CONT’D)

The movement on the deferred tax account is as follows:

2012 2011

Rs Rs

At 1 January 457,529 479,145

Income statement credit (note 15) (26,993) (21,616)

At 31 December 430,536 457,529

Deferred tax liabilities credit in the income statement are attributable to the following items:

2012 1 January

(Credited)/ charged

to income statement 31 December

Rs Rs Rs

Deferred tax liabilities

Accelerated tax depreciation 400,870 30,205 431,075

Retirement benefit assets 56,659 (57,198) (539)

457,529 (26,993) 430,536

2011

Deferred tax liabilities

Accelerated tax depreciation 361,841 39,029 400,870

Retirement benefit assets 117,304 (60,645) 56,659

479,145 (21,616) 457,529

14. TRADE AND OTHER PAYABLES

2012 2011

Rs Rs

Trade payables 29,127,614 11,007,578

Payable to related companies 18,443,864 20,466,559

Other payables and accruals 5,667,220 3,672,621

53,238,698 35,146,758

15. CURRENT TAX LIABILITIES

2012 2011

Rs Rs

(a) Current tax liabilities

At 1 January 1,932,331 1,491,999

Current tax on adjusted profit for the year at 15% (2011: 15%) 2,283,750 4,161,604

Tax paid during the year (1,932,352) (1,492,021)

Payment under Advance Payment System (1,311,574) (2,229,251)

At 31 December 972,155 1,932,331



15. CURRENT TAX LIABILITIES (CONT’D)2012 2011

Rs Rs

(b) Income tax expenseCurrent tax on the adjusted profit for the year at 15% (2011: 15%) 2,283,750 4,161,604

Deferred tax (note 13) (26,993) (21,616)

Tax charge 2,256,757 4,139,988

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

2012 2011

Rs Rs

Profit before taxation 13,435,917 29,632,869

Tax calculated at 15% 2,015,388 4,444,930

Expenses not deductible for tax purposes 259,914 156,472

Income not subject to tax (18,545) (461,414)

Tax charge 2,256,757 4,139,988

16. BORROWINGS 2012 2011

Rs Rs

CurrentBank overdraft (note 16 (a)) 22,817,763 18,130,103

(a) The bank overdraft is secured by floating charges on the assets of the Company. The rate of interest on bank overdraft in 2011 and 2012 is PLR + 0.75% per annum.

17. DIVIDENDS2012 2011

Rs Rs

At 1 January 6,208,722 -

Proposed dividend per share Rs1 (2011: Rs1 per share) 6,208,722 6,208,722

Dividend paid (6,208,722) -

At 31 December 6,208,722 6,208,722

18. OTHER INCOME2012 2011

Rs Rs

Investment income 2,032 4,064

Profit on disposal of plant and equipment 283,741 179,131

Management fees receivable 1,080,000 1,080,000

Professional fees received 1,209,017 -

Sundry income 345,249 2,059,332

2,920,039 3,322,527



19. OTHER GAINS/(LOSSES) - NET2012 2011

Rs Rs

Net foreign exchange gains/(losses) (note 21) 563,850 (558,618)

20. FINANCE (COSTS)/INCOME2012 2011

Rs RsInterest expense- Bank overdraft (2,949,296) (1,122,867)- Loans - (250,739)- Current accounts (456,430) (660,579)Total interest expense (3,405,726) (2,034,185)Net foreign exchange gains (note 21) 2,011,294 2,074,825

(1,394,432) 40,640

21. NET FOREIGN EXCHANGE GAINS/(LOSSES)2012 2011

Rs RsThe exchange differences credited to the income statement are included as follows:Cost of sales 654,307 1,821,007 Other gains/(losses) - net (note 19) 563,850 (558,618)Finance income (note 20) 2,011,294 2,074,825

22. PROFIT BEFORE TAXATION2012 2011

Rs RsProfit before taxation is arrived at after:

Crediting:Profit on disposal of plant and equipment 283,741 179,131

and charging:Depreciation on plant and equipment (note 5) 3,589,581 3,631,134 Employee benefit expense (note 24) 27,061,656 25,186,992

23. OPERATING EXPENSES2012 2011

Rs Rs

Depreciation on plant and equipment 3,589,581 3,631,134 Employee benefit expense (note 24) 27,061,656 25,186,992 Repairs and maintenance 4,966,729 5,285,741 Rent and rates 5,431,316 5,306,248 Management fees 6,497,708 7,735,366 Other expenses 9,573,940 8,583,114

57,120,930 55,728,595



24. EMPLOYEE BENEFIT EXPENSE

2012 2011

Rs Rs

Wages and salaries 25,280,497 23,386,613

Social security costs 947,900 835,719

Pension costs - defined contribution plans 26,936 190,548

Pension costs - defined benefit plans (note 8(a)(v)) 561,278 540,360

Other post-retirement benefits (note 8(b)(v)) 245,045 233,752

27,061,656 25,186,992

25. EARNINGS PER SHARE

2012 2011

Profit for the year Rs 11,179,160 25,492,881

Number of ordinary shares in issue 6,208,722 6,208,722

Earnings per share Rs 1.80 4.11

26. NOTES TO THE STATEMENT OF CASH FLOWS

2012 2011

Rs Rs

(a) Cash generated from operations

Profit before taxation 13,435,917 29,632,869

Adjustments for:

Depreciation of plant and equipment 3,589,581 3,631,134

Movement in retirement benefit asset 381,323 404,296

Interest expense 3,405,726 2,034,185

Profit on sale of plant and equipment (283,741) (179,131)

Investment income (2,032) (4,064)

Net foreign exchange gains (289,928) (360,701)

Reversal of impairment of trade receivables - (2,858,077)

Changes in working capital:

- inventories (14,810,730) (24,414,878)

- trade and other receivables (16,063,239) (6,274,097)

- trade and other payables 18,114,402 9,079,720

Cash generated from operations 7,477,279 10,691,256

(b) Cash and cash equivalents

Bank and cash balances 1,454,618 3,214,197

Bank overdraft (note 16) (22,817,763) (18,130,103)

(21,363,145) (14,915,906)



27.

CON

TIN

GEN

T LI

ABIL

ITIE

S

At 3

1 D

ecem

ber

2012

, the

Com

pany

had

con

ting

ent

liabi

litie

s in

res

pect

of

bank

and

oth

er g

uara

ntee

s an

d ot

her

mat

ters

aris

ing

in t

he o

rdin

ary

cour

se o

f bu

sine

ss f

rom

whi

ch it

is a

ntic

ipat

ed t

hat

no m

ater

ial l

iabi

litie

s w

ould

aris

e.

28.

RELA

TED

PART

Y TR

ANSA

CTIO

NS

(i)20

12Re

mun

erat

ion

and

bene

fits

Inte

rest

pa

id

Purc

hase

of

good

s an

d se

rvic

es

Sale

s of

go

ods

and

serv

ices

Man

agem

ent

serv

ices

and

fe

es p

ayab

le

Man

agem

ent

fees

re

ceiv

able

Lo

an f

rom

re

late

d pa

rty

Amou

nt o

wed

by

rela

ted

part

yAm

ount

ow

ed t

o re

late

d pa

rty

RsRs

RsRs

RsRs

RsRs

Rs

Fello

w s

ubsi

diar

ies

-

456

,430

1

0,75

9,84

6 4

4,38

0,35

9 6

,497

,708

1

,080

,000

8

,000

,000

1

2,51

4,47

3 1

0,44

3,86

4

Dire

ctor

s an

d ke

y

man

agem

ent

pers

onne

l 4

64,0

00

-

-

-

-

-

-

-

-

(ii)

2011

Fello

w s

ubsi

diar

ies

-

660

,579

1

6,50

6,74

7 4

4,75

1,54

6 7

,735

,366

1

,080

,000

8

,000

,000

7

,971

,325

1

2,46

6,55

9

Dire

ctor

s an

d ke

y

man

agem

ent

pers

onne

l 4

43,0

00

-

-

-

-

-

-

-

-

The

sale

s to

and

pur

chas

es f

rom

rel

ated

par

ties

are

mad

e in

the

nor

mal

cou

rse

of b

usin

ess.

Out

stan

ding

tra

de b

alan

ces

at t

he y

ear-

end

are

unse

cure

d, (i

nter

est

free

wit

h th

e ex

cept

ion

of lo

ans)

and

set

tlem

ent

occu

rs in

cas

h.

Ther

e ha

s be

en n

o gu

aran

tees

pro

vide

d or

rec

eive

d fo

r an

y re

late

d pa

rty

rece

ivab

les

or p

ayab

les.

For

the

year

end

ed 3

1 D

ecem

ber

2012

, the

Com

pany

has

not

re

cord

ed a

ny im

pairm

ent

of r

ecei

vabl

es r

elat

ing

to a

mou

nts

owed

by

rela

ted

part

ies

(201

1: R

snil)

. Thi

s as

sess

men

t is

und

erta

ken

each

fina

ncia

l yea

r th

roug

h ex

amin

ing

the

finan

cial

pos

itio

n of

the

rela

ted

part

y an

d th

e m

arke

t in

whi

ch t

he re

late

d pa

rty

oper

ates

.

Rem

uner

atio

n an

d be

nefit

s fo

r di

rect

ors

and

key

man

agem

ent

pers

onne

l rel

ates

to

dire

ctor

fee

s.

29.

SEG

MEN

TAL

INFO

RMAT

ION

Due

to th

e ty

pe o

f pro

duct

s, th

e ris

ks a

nd re

war

ds fo

r the

rang

e of

pro

duct

s can

not b

e se

para

tely

iden

tified

. No

sepa

rate

repo

rtin

g se

gmen

t is t

here

fore

iden

tifiab

le.

30.

EVEN

TS A

FTER

TH

E RE

PORT

ING

DAT

E

Ther

e ar

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Documents

Contents › sites › default › files › chemco_ar2012.pdf · Galanz (9,000 - 24,000 btu) Midea (9,000 – 60,000 btu) Ammonia Gas and Freon gases R22, R407C and R410 ... forcing