Stock Exchange of Mauritius · also holds a D.E A. in Development Economics and a Maîtrise in...

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STOCK EXCHANGE OF MAURITIUS

On 18 July 2014, the Stock Exchange of Mauritius (SEM) celebrated the 25th year of its eventful history. Since 1989, the Exchange has come a long way. 25 years is a short time in history, but a long enough time in the life of an institution like SEM to lay its mark on the socio-economic fabric of Mauritius.

During this 25-year period, the SEM has witnessed ground-breaking moments, while facing the tough challenges of a newly-born Exchange. It has created value for investors and for issuers, and has brought its contribution to the growth of our country.

Today, the SEM is only at the door-steps of a new beginning and the Exchange is intent on pushing its boundaries further everyday to fulfill the expectations of each and every stakeholder.

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Corporate Review

Board of Directors Profile ................................................................ 8 - 9SEM Management Profile ............................................................... 10 - 11Directors’ Report ............................................................................. 12 - 13Chief Executive’s Report ................................................................ 14 - 15Reminiscences of SEM’s key milestones over 25 years ............... 16 - 23SEM Corporate Governance Report 2014 ................................... 24 - 42

Operating and Financial Review:• Listing activities ............................................................................. 43 - 47• Trading activities .......................................................................... 48 - 58• Marketing activities ...................................................................... 59 - 61• Legal activities .............................................................................. 62 - 63• Financial review ........................................................................... 64 - 71

TABLE OF CONTENTS

Group Financial Highlights ............................................................. 4Performance Highlights .................................................................. 5

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Financial Reports

Additional Information

Member Companies ...................................................................... 116

Listed Companies:• Official Market (OM) .................................................................... 117• Development & Enterprise Market (DEM) ................................ 118

Auditors’ Report to the Shareholders of theStock Exchange of Mauritius Ltd. .................................................. 74Statements of Financial Position. ................................................... 75Statement of Comprehensive Income. ........................................ 76Statement of Changes in Equity – The Group ............................. 77Statement of Changes in Equity – The Company. ...................... 77Statements of Cash Flows. ............................................................. 78Notes to the Financial Statements. ................................................. 79 - 101Certificate from Company Secretary. .......................................... 102

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GROUP FINANCIAL HIGHLIGHTS

GROUP FINANCIAL HIGHLIGHTS

Financial Year (FY)

2014 2013

For the year (Rs’ m)Revenue 164.6 128.5

Other Income 33.5 29.5

Administrative expenses (74.7) (64.7)

Operating profit 123.4 93.3

Net profit attributable to equity holders 82.0 62.7

At year-end (Rs’ m)Net Current assets 58.8 96.2

Total assets 512.7 445.0

Total liabilities 74.9 55.8

Shareholders’ funds - Stated Capital 3.4 3.4

- Reserves 338.5 301.3

Number of shares issued 330,000 330,000

For the year (%)Revenue growth 28.1 4.4

Operating profit margin 75.0 72.6

Net Profit Margin 41.4 39.7

Cost-to-income ratio 37.7 40.9

Return on Equity 24.0 20.6

Per share DataBasic earnings (Rs) 248.54 189.90

Net Tangible Assets (Rs) 1,326.67 1,179.39

Net Dividend (Rs) 133.46 100.68

Definitions

Operating profit margin

Operating Profit Margin is the operating profit of the group expressed as a percentage of revenue.

Net profit margin

Net profit Margin is the net profit attributable to equity holders, expressed as a percentage of total revenue of the group.

Cost-to-income ratio

It is the ratio of total expenses to total revenue of the group.

Return on equity

It is the net profit attributable to equity holders, expressed as a percentage of shareholders’ funds.

Net tangible assetsIt is the total assets less total liabilities of the group, divided by the number of shares issued.

Net dividend

It is calculated as the dividends proposed divided by the number of shares issued.

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PERFORMANCE HIGHLIGHTS

Key Market Statistics

2014 2013 % Change

Total Turnover (Value) Rs’ m

- OM 13,892 11,000 26

- DEM 3,693 1,461 153

Number of Sessions 248 247 -

Average Daily Turnover (Value) Rs’ m

- OM 56.0 44.5 26

- DEM 14.9 5.9 153

Total Number of Shares Traded (million)

- OM 2,287.3 869.8 163

- DEM 241.2 246.9 (2.3)

Accounts held with the Central Depository & Settlement Co Ltd (CDS)

Number of Securities accounts opened 373,019 327,718 13.8

Number of shares deposited (bn) 35.8 34.5 3.8

Aggregate value of shares held (Rs’ bn) 235.5 196.1 20.1

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CORPORATE REVIEW

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BOARD OF DIRECTORS’ PROFILE

GAETAN LAN HUN KUEN,non-executive director, is a member of the Institute of Chartered Accountants in England and Wales (ICAEW) since 1977 and was made Fellow of the same Institute in 1982. He is presently the Chief Finance Officer and Executive Director of the IBL Group, the leading conglomerate in Mauritius which is listed on the SEM. Since 2009 to date he is the Chairman of the SEM and a director on the board of CDS. He is also presently a member of the Financial Services Consultative Council. During his professional career he completed an Advanced Management Program at INSEAD, Fontainebleau, France and a Management Information System Program at Arthur D Little in Boston, Massachusetts, USA.

Professor DONALD AH-CHUEN,non-executive director, is a Fellow of the ICAEW. He holds an M.B.A. degree (Strathclyde) and is also a fellow member of the Institute of Chartered Accountants in Australia, being also a M.C.I.P.D. (Member of Chartered Institute of Personnel & Development, U.K.). He is the Vice Chairman of SEM and a Director of CDS. He is currently the Chief Executive of the ABC Group and the Managing Director of ABC Banking Corporation Ltd. He is also a Council member of the Mauritius Chamber of Commerce and Industry (being its President in 2000 and 2007) and an Executive Committee Member of the Chinese Chamber of Commerce.

SUNIL BENIMADHU,joined the SEM as Chief Executive in May 1998. He was appointed executive director of the SEM in October 2008. He holds a M.B.A. in Finance and Investment from the University of Illinois, United States. He also holds a D.E A. in Development Economics and a Maîtrise in Macro-Economics from the University of Aix-Marseille, France. In 2010, he was elected as President of the African Securities Exchanges Association (ASEA) for a period of two years, and was re-conducted for a further period of two years in 2012. From 2002 to 2004, he was a member of the Executive Committee of the South Asian Federation of Exchanges (SAFE), which comprises twelve Stock Exchanges of the South Asian region. From 2001 to 2003, he chaired the SADC Committee of Stock Exchanges (COSSE), an association of stock exchanges which includes ten exchanges of the Southern African region.

ANDRE CHUNG SHUI,non-executive director, holds a degree from the London School of Economics and is a Fellow of the ICAEW. He trained to qualify as a Chartered Accountant with KPMG in London. He was previously a Senior Executive of the Happy World Group. André held the position of Managing Director of Mauritian Eagle Insurance Co Ltd from 2011-14. During that period, he was a Vice President and subsequently President of the Insurers’ Association of Mauritius. He is currently an Executive Director at LCF Securities Ltd, a licensed investment dealer. He is also a Fellow of the Mauritius Institute of Directors.

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NITISH BENIMADHU,non-executive director, holds a Honours Degree and a Masters Degree in Economics from the University of Ottawa, Canada. He is currently the Head of Investment at the Swan Group and heads the Anglo-Mauritius Investment Managers Ltd. Nitish has more than 10 years’ experience in the finance industry and has expertise in the life & pension business, general insurance, reinsurance and asset management. He also holds directorship positions on a number of companies in various sectors of the economy. He is a member of the investment Committee of the Swan Group.

SHIVRAJ (KEVIN) RANGASAMI,non-executive director, is a Fellow of the Association of Chartered Certified Accountants. He reckons more than 15 years of experience in the financial services industry and spent the last 10 years in the Capital Markets and Securities business in a senior management role. He is currently the Managing Director at MCB Stockbrokers Ltd and is also a Director of CDS.

MRS REEDHEE BHUTTOO,non-executive director, holds an Advanced Professional Diploma in Marketing from The Chartered Institute of Marketing (UK) and a Degree (Hons) in Economics from the M.S University of Baroda, Gujrat, India. She is currently the Head of SBM Securities Ltd, within the SBM Group of companies.

PEROOMAL GOPALLEN MOOROOGEN,non-executive director, is a Fellow of the Association of Chartered Certified Accountants and holds a MBA. He currently occupies the position of Senior Executive Mass Market at Mauritius Telecom. He is also a director of Swan Insurance Company Ltd and Anglo Mauritius Assurance Society Ltd.

DEV GOPY,non-executive director, holds a DEA in Finance and a Maîtrise in Financial Management from L’Institut D’Administration Des Entreprises of University of Montpellier II, France. He currently occupies the position of Chief Investment Officer at the State Insurance Company of Mauritius Ltd. He is also a director of CDS, the SICOM Financial Services Ltd , Cyber Properties Investments Ltd and Haute Rive Azuri Hotel Ltd.

VIKASH TULSIDAS,non-executive director, holds a B.A (Hons) Law and Business Studies from the University of Warwick,UK. He currently occupies the position of Managing Director of AXYS Stockbroking Ltd. He has held several executive positions including the President of the Port Louis Stockbroking Association. He is the Chairperson of CDS.

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SUNIL BENIMADHUChief Executive

Sunil Benimadhu joined the SEM as Chief Executive in May 1998. He was appointed executive director of the SEM in October 2008. He holds a M.B.A. in Finance and Investment from the University of Illinois, United States. He also holds a D.E A. in Development Economics and a Maîtrise in Macro-Economics from the University of Aix-Marseille, France. In 2010, he was elected as President of the African Securities Exchanges Association (ASEA) for a period of two years, and was re-conducted for a further period of two years in 2012. From 2002 to 2004, he was a member of the Executive Committee of the South Asian Federation of Exchanges (SAFE), which comprises twelve Stock Exchanges of the South Asian region. From 2001 to 2003, he chaired the SADC Committee of Stock Exchanges (COSSE), an association of stock exchanges which includes ten exchanges of the Southern African region.

SHAMIN AHMAD SOOKIAHead of Listing

Shamin Ahmad Sookia is a Fellow of both ACCA and CIMA and is a Chartered Global Management Accountant (CGMA). He also holds a MSc (I.T) and a MBA (Marketing). He joined the SEM in 2005 as Head of the Listing Division. He is a past board member of MIPA and is also a past member of the Audit Committee of CIMA Central, Eastern, Western and Southern Africa Regional Board from 2006 to 2012.

Darmanand VirahsawmySenior Manager/Head of Business Development

Darmanand Virahsawmy holds a D.E.S.S in Economics of Information and a Maîtrise in Econometrics from the University of Montpellier, France. He joined the SEM in 1989 as Manager and currently holds the position of Senior Manager/Head of Business Development.

PAMELA LI CHUN FONGManager Finance and Administration

Pamela Li Chun Fong is a Fellow of the Association of Chartered Certified Accountants and also holds a Diploma in Accountancy. She joined the SEM in 1995 as Accountant and currently holds the position of Manager Finance and Administration. She is a member of MIPA and the ACCA Mauritius Branch.

SEM MANAGEMENT PROFILE

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NISHAN AUBEELUCKManager, Marketing and Market Development

Nishan Aubeeluck holds a MSc in International Business from the University of Melbourne, Australia. He joined the SEM in 2004 as Manager Marketing and Market Development. He is a member of the Australian Centre for International Business (ACIB), the Financial Services Institute of Australia and the Finance and Treasury Association of Australia (FTA).

CHAITANAND JHEENGUNManager, Trading and Market Information/Company Secretary

Chaitanand Jheengun is a Fellow of the Institute of Chartered Secretaries and Administrators and he also holds a M.B.A. He joined the SEM in 1990 as Administrative Officer and currently holds the position of Manager Trading and Market Information. He is also the company Secretary of both SEM and CDS and is a member of the ICSA Mauritius Branch.

VICKRAM RAMFULCorporate Finance Manager

Vickram Ramful is a Fellow of the Association of Chartered Certified Accountants. He holds a BA (Hons) in Business Accounting from the University of Lincolnshire and Humberside (UK) and a MBA in Finance. He joined the Listing Division of the SEM in 2005 as Financial Analyst and currently holds the position of Corporate Finance Manager. He is a member of MIPA and the ACCA Mauritius Branch.

SHALINI GOKHOOLManager, Legal Affairs

Shalini Gokhool holds an LLB (Hons) and has also completed the Vocational Course for Barristers at the Mauritius Council of Legal Education in 1997. Having acquired experience in legal firms and in the banking sector, she joined the SEM in 2001 as Manager Legal Affairs.

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DIRECTORS’ REPORT

On behalf of the Board of the SEM, we are pleased to present the twenty fifth (25th) Annual Report which includes the audited financial statements of the Group and Company for the Financial Year (FY) ended 30 June 2014.

Principal activities of the Group

The principal activities of the SEM, as defined by the Company’s Constitution are:

• To have operating rules for the markets it operates pursuant to law.

• To provide facilities for the buying and selling and otherwise dealing in securities on a securities exchange.

• To provide and maintain, to the satisfaction of the Financial Services Commission, adequate and properly equipped premises for the conduct of its business.

• To operate and maintain a securities exchange in accordance with law.

The principle activities of the CDS, as defined by the Securities (Central Depository Clearing and Settlement) Act 1996, is to provide depository, clearing and settlement services in order to facilitate dealings in securities on the Exchange.

Financial Performance of the Group for FY 2014

Total revenues of the Group increased by 25.3 per cent to attain Rs 198 million in FY 2014 (FY 2013: Rs 158 million). Group expenses showed a total value of Rs 75.5 million, increasing by 12.3 per cent (FY 2013: Rs 67.2 million). As a result, Group Profit for FY 2014 amounted to Rs 101.3 million, showing an increase of 33.6 per cent (FY 2013: Rs 75.8 million).

Shareholders’ funds increased by 12.2 per cent to attain a total value of Rs 341.8 million at 30 June 2014 (FY 2013: Rs 304.7 million).

Financial Performance of the Company for FY 2014

At Company level, total revenues reached Rs 138.4 million, showing a growth rate of 27.8 per cent (FY 2013: Rs 108.3 million). Total expenses were contained at Rs 51.8 million, indicating an increase of 17 per cent (FY 2013: Rs 44.3 million). Net Profit After Tax for FY 2014 was Rs 73.4 million, demonstrating an increase of 32.5 per cent (FY 2013: Rs 55.4 million).

Shareholders’ funds increased by 12.6 per cent to attain a total value of Rs 262.8 million at 30 June 2014 (FY 2013: Rs 233.4 million).

Dividends

At a Board Meeting of the SEM which was held on 12th June 2014, in line with the Group dividend policy, the SEM Board of Directors approved a dividend payment of 60 per cent of Net Profit After Tax for FY 2014. Total dividends payable to the Shareholders of the SEM for FY 2014 amount to Rs 44,040,983 (Rs133.45 per share). For FY 2013, total dividends paid to the Shareholders of the SEM were Rs 33,223,035 (Rs 100.67 per share).

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Auditors

The Auditors, Messrs Deloitte have expressed their willingness to continue in office and a resolution proposing their re-appointment will be submitted at the next Annual Meeting of the SEM.

In accordance with Section 221(1)(h) of the Companies Act 2001, the Remunerations of the Auditors of the SEM and of its subsidiary are disclosed in Note 17 of the audited financial statements.

Acknowledgements

This year, the SEM celebrated its 25th Anniversary. On behalf of the Board, we would like to express our gratitude to all the stakeholders; namely, the Ministry of Finance and Economic Development, the Financial Services Commission, the Listed Companies, the Investment Dealers, the Asset Management Companies, the Investors, both local and foreign and other stakeholders for their continued support during the last twenty five years.

We would also like to convey our thanks to all our fellow Members of the Board for their active contribution during the past year.

Finally, we reiterate our sincere appreciation to the Chief Executive and SEM staff for their dedicated efforts and hard work and wish them success in the future.

By order of the Board of Directors.

Gaëtan Lan Hun Kuen Professor Donald Ah ChuenChairman Vice Chairman

Date: 18 September 2014

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CHIEF EXECUTIVE’S REPORT

The SEM celebrated its 25th Anniversary on the 18th of July amongst a gathering of past and present directors, employees and players who have been associated with the Exchange’s quarter century of history. It was an occasion to rejoice and celebrate 25 years of progressive change, ground-breaking achievements and reflect on the SEM’s contribution to the transformative phase of the Mauritian economy since 1989.

Breaking New grounds, Reaching New heights

Setting up a Stock Exchange in a country with a GDP of only Rs 33 billion and an initial market capitalisation of only Rs 1.4 billion, required more than just a visionary drive. It required an act of faith in the country’s future. In fact, the history of Mauritius is rife with such initiatives where our policy-makers and the private sector have challenged conventional wisdom, time and again, to embrace risky initiatives, when clearly the objective conditions of success were not necessarily met in the beginning.

Since 1989, the SEM has come a long way. From the teetering steps of the early days when trading took place once a week for a mere 5 minutes through the open-outcry system, when the settlement cycle of a transaction exceeded two weeks, and when the total value traded during the first six months of operations barely exceeded Rs 15 million, the SEM has today emerged as one of the leading exchanges in Africa and has been at the forefront of the change process in the exchange space on the continent. In fact, the SEM’s quarter century of history is one where the exchange has constantly strived to break new grounds to overcome the structural constraints of an island economy where the universe of products, investors and market participants is relatively restricted.

We have today a state-of-the-art operating system, trading is effected on a daily basis for nearly five hours, the settlement cycle has been cut to T+3, the total market capitalisation is nearing the Rs 300 billion mark, the internationalisation process is in full swing and the move from a domestic-equity centric Exchange to a multi-asset class internationalised Exchange is fast gaining momentum. We have also joined the selective World Federation of Exchanges, demutualised the SEM’s ownership structure, set up a multi-currency trading platform and modernised our listing framework to list a wide variety of products. But more importantly, we have contributed to the democratisation of the economy by allowing some 100,000 Mauritians acquire shares in the flagship companies, helped companies raise Rs 71 billion to fund their growth, and created a lot of value for the vast majority of issuers that have chosen to list on our platform.

The transformative momentum of the SEM took a new turn in 2009 when the Exchange undertook a fundamental shift of its strategic orientation and proceeded with the internationalisation of its operational and regulatory framework. The outcome of this strategic shift has been quite compelling. Since 2009, the SEM has listed 60 new securities on the Official Market and on the DEM, out of which 39 are foreign securities. The SEM has also enabled listed issuers to raise USD 1.9 billion since 2009, confirming the status of the Exchange as an attractive capital-raising, listing and trading platform for both local and international issuers. We will continue to leverage our attractive multi-currency platform to reach new heights in terms of market development and in terms of listing new products.

Key initiatives in 2013-2014

The SEM made its entry into the ETF space in August 2013 through the listing of its first ETF, NewGold, which was followed by the listing of second ETF, ETF Platinum, in February 2014. The listing of both ETF’s was preceded by educational courses on ETF’s and on the specificities of the products introduced on the Exchange’s platform. ETF’s constitute one of the most heavily traded products on Exchanges worldwide and we hope that the introduction of these first two ETF’s will open up the space for the listing of other ETF’s on the SEM in the future.

As part of its overall strategy to improve the competitiveness of its platform from a trading perspective, the SEM reduced the trading fees on turnaround trades by 88% from 1.29% to 0.15%. From the 12th of December 2013 to the 30th June 2014, turnaround trades amounting to a total value of Rs 189 million were effected on both markets operated by the SEM. The scope and potential of turnaround trades need to be actively promoted by investment dealers in order to increase the number of turnaround trades and improve the overall market’s liquidity. In order to promote active trading on listed corporate bonds and improve the SEM’s appeal as a listing platform for corporate bonds, the transaction costs on these instruments were slashed by 83% from 0.6% to 0.1%.

During financial year 2013-2014, the SEM also engaged with international institutions to consider the listing of

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structured products on the Exchange’s platform. Discussions revolved around the implementation of an appropriate operational environment within the SEM that would be conducive to the listing of these products in the near-term.

The SEM pursued its aggressive marketing campaign at the international level to promote its compelling multi-currency capital-raising, listing, trading and settlement platform and its modern listing and regulatory framework that puts it in a competitive position to list a variety of products.

Near-term initiatives

The SEM has already earmarked five initiatives that it plans to roll out in the near term:

1. As part of SEM’s internationalisation strategy, we intend to launch in association with ABSA, a third Exchange-traded Fund, Erafi-40, by beginning of October which would give Mauritian investors exposure to the growth potential of 40 among the 100 largest stocks traded on the JSE. In effect, this initiative is tantamount to bringing the South African market to Mauritius through a simple and cost-effective product.

2. As from October 2nd this year, SEM will be replacing the SEM-7 index by a SEM-10 index on the Official Market. The underlying changes in the market environment since 1998 have underscored the need to re-actualize the SEM-7 Index, to better reflect current market conditions and introduce an Index that tracks the performance of the ten largest eligible stocks of the Official Market, measured in terms of market capitalization, liquidity and investibility criteria. The reserve-list will include 5 stocks instead of three, meaning that investors will, henceforth, be able to constitute a benchmark portfolio of 15 actively traded stocks.

3. By December 2014/January 2015, the SEM will launch a Sustainability Index which will track the performance of sustainable listed companies by virtue of their compliance with environmental, social, governance and economic issues. This initiative fits with the “Maurice, Ile Durable” concept and will put Mauritius and the SEM at the forefront of the sustainability agenda in Africa.

4. The SEM will soon engage with the Mauritius Post to leverage off their presence across the island to educate investors across the country about the SEM and boost up financial literacy. The objective is to enhance the process of democratisation and increase the number of shareholders from 100,000 to 150,000 by year 2017.

5. The SEM will step up its regulatory framework by adding a “watch list” to its Listing Rules which will target listed companies that do not fully comply with the Listing Rules or which fail to implement projects promised in their Listing Particulars at the time of their listing application, amongst other considerations.

Acknowledgement

We would like to convey our strong appreciation to the movers and shakers of our country who had the vision of laying down the foundations of a Stock Exchange in Mauritius in 1989. We would like to express our thanks to all the stakeholders who actively supported the Exchange’s evolution in the early stages of its development. Our appreciation goes to all the current stakeholders who have been instrumental in accompanying the SEM’s transformation into a multi-asset class international Securities Exchange, namely the Ministry of Finance and Economic Empowerment, the Financial Services Commission, the Listed Companies, the Investment Dealers, the members of the SEM Committees, the CDS and the Investment Community. I would like to thank the SEM’s Chairman and Board of Directors for their strategic advice and their active support in SEM’s transformative journey. Last but not least, I would like to convey my thanks to SEM’s hard working and dedicated staff.

Sunil BenimadhuChief Executive Date: 08 September 2014

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The assistance of the French authorities was a determining factor in the setting up of the Exchange in July 1989. Expertise from the Bourse de Paris was initially sought to set up the appropriate market infrastructure and draft the legislation governing stock market operations. SEM’s first chairman, George Ramet, used the Bourse of Lyon as an inspiration in modeling the Stock Exchange of Mauritius.

1st Chairman at 1st Board meeting of the SEM

SEM started its operations in July 1989 with the Official Market with five listed companies (Mauritius Commercial Bank, Mauritius Development Investment Trust Ltd, UBP Ltd, Mauritius Stationery Manufacturers Ltd and, Mon Trésor Mon Désert Ltd) and a market capitalisation of nearly USD 92 million.

Ten stockbroking companies were registered to operate on the Exchange at inception in July 1989. An eleventh company joined in December 1989. At the start, trading took place once a week under the Box Method.

In April 1990, the ‘Over the Counter Market’ or OTC market was implemented and trading begins on April 19th with the admission of 19 companies.

1989

1990

Reminiscences of SEM’s key milestones over 25 years

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The 1st edition of the SEM Young Investor Award Competition (SEMYIA), a national share market game, was launched with 250 students coming from 50 schools, to promote investment culture amongst the young generation.

Foreign exchange controls were lifted in 1994 and the market is opened up to foreign investors. In its first year, net inflows by foreigners’ amounts to Rs 38.9 million, this represents 2.5% of the year’s turnover.

In 1995, SEM hosted the African Stock Exchanges Association (ASEA) conference, centred on the liberalisation of African capital markets, attracting Stock Exchange delegates from fifteen African countries, representatives of developed exchanges and well-known personalities in the Securities Industry.

The status of the SEM was also raised to that of Corresponding Exchange to Affiliate Member of FIBV (Fédération Internationale des Bourses de Valeurs) in 1995.

In a quest to increase transparency and make the market more dynamic, the Box Method was replaced in September 1991 by the order-driven single price auction Open Outcry System.

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1994

1995

1991

Trading Floor showing SEM’s old open outcry system

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The Exchange proceeded in 1996 with a review of its organisational structure to step up the level and quality of its services to local and international stakeholders. A Chief Executive was appointed. Managers were recruited to head four newly created departments: Marketing & Development, Trading & Market Information, Finance & Administration and Legal Affairs. More powers were entrusted to the Management Team, to lead the Exchange in the next stage of its development.

The first SEM website was launched in 1997, enabling online tracking of stocks, trading prices and volumes as well as listing roles.

This same year, the Central Depository & Settlement Co. Ltd (CDS) was established as a subsidiary of the SEM, with the aim of providing centralised depository, clearing and settlement services for the Mauritian equity and debt markets.

In 1998, SEM launched SEM-7, comprising of the seven largest eligible shares of the Official Market, measured in terms of market capitalization, liquidity and ‘investibility’ criteria.

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1997

1998

SEM’s first website: www.semdex.com

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SEM’s capital structure was demutualized in 2000: 53.5% of the capital, owned by stockbroking companies, is sold to fourteen local shareholders.

The new Listing Rules which were approved by the SEC in February 2000 provided for the setting up of a Listing Committee under the aegis of the SEM and the establishment of a Listing Division within the SEM whose responsibilities ranged from assessing listing applications, monitoring disclosure by listed issuers, enforcing the Rules and marketing the listing facilities of the Exchange. SEM’s listing rules came into force in February 2001.

The SEM Automated Trading System in 2001 replaced the Open Outcry System, established since 1991.

The Total Return Index, SEMTRI was launched in 2002 as a good real-time performance measurement of total return for investors.

A framework was set up in 2003 to trade on the SEM treasury-bills and medium-to-long term government papers.

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2001

2002

2003

Launching of Treasury Bills in December 2003

Launching of SEMATS in June 2001

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SEM became in 2005, a member of the World Federation of Exchanges, a standards setter and global reference of repute for exchanges and the securities industry in the world.

In 2006, the OTC Market was replaced by the Development & Enterprise Market, a regulated market environment conducive to SME’s.

Turnaround trading was introduced in 2008 which enables an investor to buy and sell shares during the same trading session and take advantage of intra-day price movements.

2010 set the stage for a strategic reorientation of the SEM’s activities by gradually moving away from an equity-based domestic Exchange to a multi-product internationally oriented Exchange. New Listing Rules were announced for an array of international products namely: Global and Specialised funds, Global Business companies and specialist companies as well as specialist debt instruments, Depositary Receipts, Mineral and Exploration Companies and Exchange-Traded Funds.

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2010

Launching of DEM brochure

SEM initiated in 2004 the process to become a member of the World Federation of Exchanges. SEM submitted a detailed document to demonstrate its full compliance with the 19 principles of the WFE.

2004

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Launching of Listing brochure: “Listing on the SEM: the road to value-creation, growth and democratisation”

In March 2010, the SEM was designated by the Cayman Islands Monetary Authority (CIMA), an Approved Stock Exchange

SEM was designated by the United Kingdom’s Her Majesty’s Revenue and Customs (HMRC), as a “recognised Stock Exchange” in 2011.

SEM became in 2011 the only Exchange in Africa to provide the issuer with a multi-currency capital-raising listing and trading platform in USD, Euro, GBP, ZAR and MUR.

SEM launched its new-look website in 2011, enabling investors worldwide to follow the market and seize opportunities in real-time by placing orders with investment dealers.

2011

SEM’s new website in 2011: www.stockexchangeofmauritius.com

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For two years in a row, SEM was awarded in 2012 the “Most Innovative African Stock Exchange of the Year Award” at the Africa investor annual Index Series Awards held at the New York Stock Exchange.

SEM introduced Exchange Traded Funds (ETFs) on its platform in July 2013, in association with Absa Capital from South Africa. ETF NewGold and ETF Platinum were listed on the SEM in 2013 and 2014 respectively.

In December 2013, SEM significantly reduced transaction fees on turn-around tradesby 88% as well as transaction fees on corporate bond trading by 83%.

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2013

Launching of the first ETF, ETF NewGold,on the SEM in July 2013

Ai index series Awards at the New York Stock Exchange in September 2012

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Bringing the South African market in one single product to Mauritius:The NewFunds eRAFITM Overall SA Index ETF

With a view to bringing the South African market in one single product to Mauritius,SEM launched in October 2014 a third ETF, namely the NewFunds eRAFITM Overall SAIndex ETF.

The 25th Anniversary of the SEM was recently celebrated in July 2014. This event constituted an excellent occasion to thank the trailblazers who had the foresight of setting up the SEM in 1989, to assess the path followed since then, and to delineate the policies and strategic orientation that need to be pursued to address the key challenges that are likely to characterise the Exchange landscape in the coming decade.

2014

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SEM CORPORATE GOVERNANCE REPORT 2014

Introduction

The Board of the SEM is accountable to its shareholders for the overall direction and control of the Company. It is committed to high standards of governance designed to protect the interests of its shareholders and all other stakeholders while promoting the highest standards of integrity, transparency and accountability.

Compliance with Governance Standards

The SEM Board is committed to ensuring that its policies and practices in the critical areas of financial reporting, remuneration reporting and corporate governance meet high levels of disclosure and comply with the Code of Corporate Governance for Mauritius, the Securities Act 2005, the Financial Services Act 2007 and with the relevant regulations and rules made under these Acts.

SEM’s Governance Framework

The statement which follows, sets out the Corporate Governance framework adopted by the SEM and highlights the activities of the Board and its Committees for the financial year 2014.

SEM Board

As per the provisions of the SEM’s Constitution, the Board of directors currently consists of ten (10) directors, including nine (9) directors who are independent of the management of the Exchange and one (1) executive director. The Chief Executive of the SEM is the executive director.

The Board is of the view that the current size of the Board is appropriate and that it has the right mix of skills and experience which can enable the Board to carry out its duties and responsibilities in a competent and effective manner.

Terms of office

Referring to Clause 21.3(c) and Clause 23.1(b) of the SEM’s Constitution, the term of office of the Directors is for two years and the term of office of the Chairman and the Vice Chairman is for a maximum of two continuous terms of two years or such shorter period as the Board may decide.

SEM’s Board Charter

In order to assist the directors in the discharge of their duties, the SEM has adopted a Board Charter, which sets the framework for the composition, responsibilities, duties, procedures, powers, authority and accountability of its Board. The SEM’s Board Charter also embodies the rules of conduct of Board Members of the SEM and the commitment of the Board of Directors to ensure that the company’s governance processes and structures comply with the Mauritius Code of Corporate Governance and international standards of best practice.

Directors’ Profile

The profile of the directors sitting on the Board of the SEM for the financial year ended 30 June 2014, is disclosed on pages 8 to 9 of the Annual Report.

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SEM’s Governance Framework

The governance framework, as established by the SEM, is illustrated in the chart below:

OTHER STAKEHOLDERS:

• Investment Dealers• Listed Companies• Investors• Data Vendors• Suppliers

OTHER COMMITTEES OF THE SEM:

• Listing Executive Committee• Index Management Committee• Consultative & Informative

Committee

EXTERNAL AUDITORS

FINANCIAL SERVICES

COMMISSIONSHAREHOLDERS OF THE SEM

SEM’S GOVERNANCE FRAMEWORK

(Appointment)

(Appointment)(Appointment)

BOARD OF DIRECTORS OF THE SEM

Election of 10 Directors: - 2 Members of Industry - 1 Executive Director

Approval of appointment (Pursuant to section 24 of the Financial Services Act 2007)

SEM’s BOARD COMMITTEES

• Corporate Governance Committee:

- Nomination Committee

- Remuneration Committee• Audit & Risk Management

Committee• SEM Investment Committee

OPERATIONS OF THE SEM

SEM’s MANAGEMENTCOMMITTEE

(Overview)

(Reporting)

(Reporting)(Reporting)

(Reporting)

(Reporting)(Supervise)

(Conduct Audit)

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Board Procedures

The agenda of each Board meeting is finalized by the CEO/Chairman. Meeting papers are prepared by management under the supervision of the CEO to provide relevant facts, analysis and recommendation to enable informed decision-making by the Board. The agenda and papers for meetings are submitted to Directors and Board Committee members well in advance, to enable them to prepare for these meetings. During meetings, the Chairman encourages constructive and effective debates and Directors are given the chance to freely express their views or share information with their peers in the course of deliberation as a participative Board. Any Director /Board Committee member who has a direct or deemed interest in the subject matter to be deliberated abstains from deliberation and voting on same during the meeting.

The Company Secretary ensures that there is a quorum for all meetings and that such meetings are convened in accordance with the relevant Terms of Reference (TOR). The minutes prepared by the Company Secretary memorises the proceedings of all meetings, including the tabling of pertinent issues and the decisions made. In doing so, the Company Secretary internalises the governance principles in the Company and keeps the Board updated on the follow-up action arising from the Board’s decisions and/or requests at subsequent meetings. This allows the Board to perform its fiduciary duties and fulfil its oversight role via the respective Board Committees towards implementing a culture of transparency and accountability in the Company.

Supply of and access to information

The Directors have individual and independent access to the advice and dedicated support services of the Company Secretary in ensuring the effective functioning of the Board. The Directors may seek advice from the management on issues under their respective purview. In addition, the Board may seek independent professional advice at the Company’s expense on specific issues to enable the Board to discharge its duties in relation to the matters being deliberated.

Conflicts of Interests

The SEM Board Charter contains provisions relating to the management of conflicts of interest and the rules of conduct for directors. Clause 10 of the SEM Board Charter provides that ‘a director should make a best effort to avoid conflicts of interest or situations where others might reasonably perceive there to be a conflict of interest’.

Where a conflict of interest arises or may arise, a director must disclose the conflict to the Chairperson. On declaring their interest and ensuring that it is entered on the Register of Interests of the company, a director can participate in the debate and/or indicate his/her vote on the matter, although such vote would not be counted. The director must give careful consideration in such circumstances to the potential consequences it may have for the board, company and him/her.

SEM CORPORATE GOVERNANCE REPORT 2014 (Cont'd)

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Board Meetings

The directors’ attendance at the Board meetings of the SEM during the past financial year 2014 are detailed in the table below:

SEM BOARD Remuneration Committee

Audit & Risk Mgt Committee

Name of Director MH MA MH MA MH MAMr Gaëtan Lan Hun 5 4 1 1

Mr André Chung Shui 5 4 3 3

Mr Vikash Tulsidas ❶ 5 5 1 1 3 1

Mr Peroomal Gopallen Mooroogen 5 5 3 3

Mr Dev Gopy ➀ 5 4 3 2

Mr Vincent Lamusse ❷ 5 1

Mr Sunil Benimadhu 5 5 1 1

Professor Donald Ah-Chuen 5 2

Mr Vishal Joyram ❸ 5 1 3 1

Mr Shivraj Rangasami 5 5

Mr Nitish Benimadhu ➁ 5 3

Mrs Nimala Jaunky-Gopaul ➂ ❹ 5 1

Mr Reedhee Bhuttoo ➃ 5 1

MH - Number of meetings heldMA - Number of meetings attended

Directors who resigned during the year:

❶ Mr Vikash Tulsidas resigned from Audit Committee on 26th November 2013.

❷ Mr Vincent Lamusse resigned on 1st October 2013.

❸ Mr Vishal Joyram resigned on 1st November 2013.

❹ Mrs Nimala Jaunky-Gopaul resigned on 28th March 2014.

Directors who were appointed during the year:

➀ Mr Dev Gopy appointed member of Audit Committee on 26th November 2013.

➁ Mr Nitish Benimadhu appointed director on 28th October 2013.

➂ Mrs Nimala Jaunky-Gopaul appointed on 27th November 2013.

➃ Mrs Reedhee Bhuttoo appointed director on 21st April 2014.

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Directors’ Shareholdings and Interests Under Clause 11 of the SEM Board Charter:

The Secretary of the Board shall maintain a register of interests, pursuant to S190 (2) (c) of the Companies Act 2001. Upon appointment to the Board, a director shall be required to provide the Secretary to the Board with a complete list of their directorships and/or material interests in any security listed or traded on SEM and in any Member Company of SEM or any interests as defined by S147 of the Companies Act 2001 for entry in the interests register. ‘Material interest’ is defined as any interest of 5% or more in the share capital of the company.

Notwithstanding the provisions of S148 of the Companies Act, 2001, a director shall forthwith inform the Secretary to the Board of any changes in their directorships and/or shareholdings which would affect the effect of increasing or reducing their shareholding above or below the level of material interest disclosure.

Directorships in listed companies The number of other directorships which the directors of the SEM Board hold in listed companies and the number of shares held by them, both directly and indirectly in the SEM, are disclosed in the table below:

Name of Director Number of directorships in

listed companies

Number of shares held directly

in SEM

Number of shares held indirectly

in SEMProfessor Donald Ah-Chuen 1 Nil 0.46%

Mr. Sunil Dutt Benimadhu Nil Nil Nil

Mr. André Chung Shui Nil Nil Nil

Mr. Dev Kumar Gopy Nil Nil Nil

Mr .Vishal Joyram Nil Nil Nil

Mr. Vincent Lamusse Nil Nil Nil

Mr Gaëtan Lan Hun Kuen 2 Nil Nil

Mr. Peroomal Gopallen Mooroogen

2 Nil 0.000033%

Mr. Shivraj Rengasami Nil Nil Nil

Mr. Vikash Tulsidas Nil Nil Nil

Mr. Nitish Benimadhu Nil Nil Nil

Mrs Nirmala Jaunky-Gopaul Nil Nil Nil

Mrs Reedhee Bhuttoo Nil Nil Nil

Dealings in shares by the directors The Directors of SEM have followed the principle of the Model Code on securities transactions as detailed in Appendix 6 of the Listing Rules of the SEM.


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There were no dealings in the shares of the SEM by the directors of the Company during the year ended 30 June 2014. The Company has no share option plans.

Shareholders’ Agreement

There is no shareholders’ agreement which affects the governance of the Company by the board and the SEM does not have any management agreement with third parties.

Management Agreement

There is a management agreement between SEM and the CDS for the provision of Information Technology (IT) Services to the Company.

Directors’ Remuneration

The total remuneration paid to the directors of the SEM and the CDS for the financial years ended 30 June 2014 and 30 June 2013, are disclosed in the table below:

SEM LTD CDS LTDFY 2014 FY 2013 FY 2014 FY 2013

Name of Director Rs’ k Rs’ k Rs’ k Rs’ kProfessor Donald Ah-Chuen 97 81 112 118Mr. Nitish Benimadhu 57 - - -Mr Sunil Dutt Benimadhu **8,416 7,153 - -Mrs Aruna Collendavelloo - - 150 135Mr Jayvind Kumar Choolhun - - - 19Mr André Chung Shui 114 114 - -Mr. Dev Kumar Gopy 102 87 104 70Mrs Tilotma Gobin Jhurry - - 102 64Mr Vishal Joyram (pd to SBM Securitiies) 58 124 - -Mr Vincent Lamusse 21 84 42 159Mr Gaëtan Lan Hun Kuen 178 184 82 78Mr Steve Leung - - 112 96Mr Vipin Mahabirsingh - - 3,635 3,083Mr Peroomal Gopallen Mooroogen 105 81 - -Mr Shivraj Rengasami 87 60 53 -Mr Ramanaidoo Sokappadu - - 103 120Mr Raj Tapesar - 54 - 32Mr Vikash Tulsidas 99 108 260 156

** Includes a one-off 1 month 25th Anniversary special bonus and a one-off 11/2 months extra bonus linked to SEM’s record year, paid to all SEM staff.

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SEM Board Committees and Sub-Committees

The Board of the SEM is accountable to shareholders for the strategic direction of the Company and the pursuit of value creation for shareholders. The Board delegates the implementation of its strategy to its management within a formal delegation framework. However, the Board remains ultimately responsible for corporate governance and the affairs of the Company.

While at all times the Board retains full responsibility for guiding and monitoring the Company, in discharging its responsibilities, it makes use of Board Committees to perform certain of its functions and to provide it with recommendations and advice.

The Board has established the following Committees and has entrusted them with specific responsibilities to oversee the affairs of the Company, with authority to act on behalf of the Board in accordance with their respective Terms Of Reference (TOR):

➢ Corporate Governance Committee, which encompasses the Nomination and the Remuneration Committees;➢ Audit and Risk Management Committee; ➢ SEM Investment Committee.

SEM BOARDCorporate Governance Committee

Approved Terms of Reference

- Ensure reporting requirements on Corporate Governance are in accordance with the principles of the Code of Cor-porate Governance for Mauritius (the Code);

- Determine, agree and develop policies on corporate governance in accordance with the principles of the Code;

- Ensure disclosures are made in the Annual Report in com-pliance with the disclosure provisions in the Code.

Nomination Committee Approved Terms of Reference- Recommend the appointment of executive and non-

executive directors;- Make recommendations on the Board structure, size and

composition;- Identify and nominate candidates to fill Board vacancies

and put in place plans for succession;- Recommend continuation of service for directors reach-

ing the age of 70;- Recommend directors retiring by rotation for re-election.

Remuneration Committee Approved Terms of Reference- Determine, agree and develop the Company’s policy on

executive and senior management remuneration;- Determine specific remuneration packages for executive

directors of the company;- Determine the level of non-executive and independent

non-executive directors fees.


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Audit & Risk Management Committee


- Recommend the appointment of external auditors to the Board;

- Review the audit strategy and agree on the timing and nature of reports from the external auditors;

- Examine and review the financial statements and ensure they comply with the accounting standards and with legal requirements;

- Monitor and review the effective functioning of the inter-nal control systems and reporting;

- Monitor and review the risk management framework. Investment Committee Approved Terms of Reference

- To determine and review the Investment Policy and Guidelines to be adopted by SEM Management for tak-ing investment decisions.

- To ensure that investments made by the SEM, is in line with the approved Investment Policy and Guidelines.

- To consider and approve proposals from SEM Manage-ment that may exceed the maximum percentage stipu-lated in the Investment Policy and Guidelines.

- To assess, analyze and review the performance of the investments undertaken by the SEM.

- To report to the Board on the investments undertaken by the SEM on an annual basis.

- To review and amend the Investment Policy and Guide-lines from time to time, in line with the changing market environment and the evolution of the financial market.

Membership and Meetings Corporate Governance Committee, Nomination and Remuneration Committee (RC)

The Corporate Governance Committee, which encompasses the Nomination and the RC, consists of three Directors, namely; Mr Gaëtan Lan Huen Kuen who acts as Non-Executive Director and chairs the meeting, Mr Vikash Tulsidas who acts as Non-Executive Director and Mr Sunil Benimadhu, who acts as Executive Director. Mrs Pamela Li, who is the Manager Finance and Administration, acts as secretary.

During the year 2013-2014, the RC met on 3rd June 2014 to approve the performance bonuses for the financial year ended 30 June 2014. The Committee also reviewed the salaries of the SEM staff for the year 2014-2015.

Remuneration Philosophy

At the end of each financial year, the increase in the employees remuneration package and the performance bonus paid to all SEM employees are reviewed and approved by the Members of the RC. The salaries are reviewed as per the recommendations of the Chief Executive and takes into consideration, the rate of inflation for the year. The RC also determines whether the SEM’s remuneration package is market competitive and is designed to attract, motivate and retain employees.

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Membership and Meetings

Audit and Risk Management Committee

The Audit and Risk Management Committee comprises three non-executive directors. Members for the year were: Mr. Andre Chung Shui (Chairperson), Messrs Gopallen Mooroogen, and Dev Gopy. The Chief Executive and the Manager Finance and Administration also attend the Committee meetings by invitation. The Company Secretary acts as secretary to the Committee.

Reporting and Accountability

The Audit and Risk Management Committee through its Chairperson is accountable to the Board for its activities and makes recommendations to the Board concerning matters arising from the Committee’s responsibilities;

The Chairperson of the Committee, or, in his/her absence, an alternate member attends the annual meeting to answer questions concerning matters falling within the ambit of the Committee.

Meetings

The Audit and Risk Management Committee meets as and when necessary and met three times during the financial year 2013-2014.

In line with its terms of reference, the scope of work of the Committee included follow up on the internal control functions and risk management, review of audited accounts, annual report, review of internal control audit report, budget, declaration of dividend and appointment of auditors and fixing their remuneration.

INTERNAL CONTROL REPORT

The Board of Directors assumes its overall responsibility for the Company’s system of internal control and risk management and for reviewing the adequacy and integrity of the system. The system of internal control covers inter alia, governance, risk management, financial, organisational, operational and compliance control.

This section of the Report highlights the various Risk Control Mechanisms implemented at the SEM and gives an overview of the system of internal controls existing within the organisation. The risks control mechanisms already in place at the SEM include:

Capital Adequacy Requirements

In accordance with the Financial Reporting of Investment Dealers Rules, all investment dealers have to submit, in addition to audited accounts, Capital Adequacy Requirements returns (CAR) by the tenth business day of each quarterly period in respect of the close of business for the previous three months, reflecting the investment dealer’s risk positions and its financial resources.

As per the Financial Reporting of Investment Dealers Rules, no investment dealer is allowed a shortfall in its capital, other than pursuant to a specific temporary exception granted by the SEM.

The SEM has full discretion as to the necessity and sufficiency of special adjustments in any particular case, taking into consideration all factors pertaining to the market with regard to the financial resources or future contracts and the affairs as a whole of the investment dealer involved.


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Compensation Fund

Section 148 of the Securities Act 2005 provides for the creation and maintenance of a Compensation fund to provide for the compensation of investors who suffer pecuniary loss as a result of:

- The inability of a licensee under this Act or any collective investment scheme to satisfy claims arising from civil liability by it in connection with services provided;

- Fraud or defalcation by a licensee, a collective investment scheme or any of its officers or employees; or

- The insolvency or bankruptcy of any licensee or collective investment scheme.

Section 148 of the Securities Act 2005 further provides as follows in relation to the Compensation Fund:

- A Compensation fund shall be administered in accordance with such regulations as may be prescribed.

- Without prejudice to subsection (3), regulations made under this Act may provide for: • The management of the fund by such committees as may be set up by the Commission; • The levying of contributions from licensees and collective investment schemes and other means of financing the fund; • The power to subscribe to insurance policies; • The mode of determining the right to compensation payable under the fund and the circumstances in which such right may be excluded or modified; • The power to settle claims; • Specifications as to the quantum of the compensation; • The right of subrogation to the fund in order to recover from any person whose liability is extinguished or reduced by the payment of the compensation; • The terms and conditions on which compensation is to be payable; and • Accounts to be kept in respect of the fund.

The SEM Compensation Fund was established, maintained and administered by the SEM under the repealed Stock Exchange Act 1988 (now Section 148 of the Securities Act 2005). In 1999, the Board of Directors of the SEM approved that an initial amount of Rs 2.75 million be transferred out of the SEM’s retained earnings for the purpose of the fund. The value of the Fund as at 30 June 2014 amounted to Rs 4.5 million. In case of any shortfall arising in the fund, the investment dealers, as per the requirements of the SEM Business Rules, would be called upon to contribute to the shortfall in the Compensation Fund. In addition to that, depending upon the size of its business and its relative risk exposure, each investment dealer is required to take a Professional Indemnity insurance cover as per the requirements of the SEM Business Rules.

Risk Review at the SEM

The SEM Audit Committee took the decision to undertake an audit of the internal controls of the SEM once every two years. In April 2014, an audit was performed by the audit firm KPMG. The key objectives of this review were: - To consider the effectiveness of key controls; - To consider compliance with current policies and procedures; and - To assess controls in place over key areas.

Based on their review, the auditors noted the following sound aspects of the control environment which are already in place:

- Business continuity: key systems are tested at least three times a year to ensure that the

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continuity of operations in the event of a disaster. In addition, an alternative location is available to accommodate the majority of SEM employees.

- Integrity of data on the ATS system: physical and user access rights controls are in place to safeguard against unauthorized tampering of data. In addition, there is data integrity check performed each morning to detect unauthorized changes to the ATS’s database.

- Procedures are well established to ensure that staff are clear about their roles and responsibilities.

External Audit

At each year-end, an audit of the financial statements is performed by External Auditors who are duly registered with the Mauritius Institute of Professional Accountants and licensed by the Financial Reporting Council. The audited financial statements together with the recommendations of the Auditors are then discussed at the level of the Audit and Risk Management Committee before approval by the Board of Directors of the SEM.

Stock Exchange Professional Indemnity/Crime Insurance/Directors & Officers Liability Insurance Cover Since SEM and CDS have common interests and common Directors who sit on both Boards, the management of SEM and CDS decided to take a comprehensive joint-insurance policy which includes the Stock Exchange Professional Indemnity, Crime Insurance and Directors & Officers Liability insurance, for a total amount of Rs 15 million. This decision has enabled both companies to achieve synergies and reduce their insurance costs.

IT System

The SEM has outsourced its IT function to its subsidiary CDS Ltd, which possesses the necessary IT infrastructure and expertise. The outsourcing agreement, which started since January 2001, also includes the technical management of the Automated Trading System (ATS). Any software enhancements, modifications and additions are thoroughly tested before implementation in the live environment. A formal Change Management Procedure has been implemented so as to ensure that the IT Systems are being regularly updated.

IT Security Audit

In order to assist the SEM and the CDS in identifying any IT risks and to undertake appropriate measures to address those IT risks, the whole IT system is being subject to a specialized external IT audit once every two years. The last IT security audit was carried out by PricewaterhouseCoopers Ltd during the months April-May 2013.

The IT Auditors’ overall findings and observations were discussed at the level of SEM and CDS Audit Committees and all the recommendations included in the IT Audit Report have been fully implemented during the financial year 2013-2014.

Disaster Recovery Plan

The SEM has a Disaster Recovery Plan (DRP) to cater for various possible scenarios. The DRP covers both preventive and corrective measures, which will enable it to deal with various types of disasters, which can disrupt normal ATS system operation. Prevention of loss of data in the event of media failures is achieved through the implementation of redundant and cyclical backup tapes that are stored both on-site and off-site.


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The ATS system is designed with High-Availability configuration with main and backup servers. The back-up database server maintains a mirror image of the database on the main server. In the event of a problem with the main database server, the backup server takes over without physical intervention required at client sites. Similarly, if one of the two trading engines goes down, the second trading engine takes over within 10 minutes. In the event of a major disaster site that causes the ATS site to be unavailable, systems and business operations will be restored at a back up site within 6 to 24 hours.

During the financial year 2013-2014, three simulations of the DRP were performed on the following respective dates: 13th September 2013, 11th December 2013 and 9th May 2014. The simulation performed on 13th September 2013, involved the participation of the investment dealers, custodian banks as well as employees of SEM and CDS. The results of the three simulations were all successful as no systems downtime was observed.

Report on Members’ Compliance Visit

(Rule 5.2.1 of SEM Membership Rules)

Section 24(1)(a) of the Securities Act 2005 provides that in addition to its other functions, the SEM shall have regulatory functions and shall, inter alia, ensure that it adequately supervises the market operations and conduct of market participants.

The SEM’s Business Rules have been implemented to enable the SEM to discharge its regulatory functions vis à vis market participants. These rules provide for the criteria and conditions for Investment Dealers to be admitted as Trading Members of the SEM, disciplinary action against Trading Members in the event of non-compliance with the rules, requirements on the business practices of Trading Members and a Code of Conduct which the Trading Members must observe when trading on SEM.

The SEM’s Business Rules were approved by the FSC in October 2008 and came into force in January 2009, following a 3-month transition period given to the Investment Dealers to ensure compliance with the new rules. The SEM has set up a compliance unit under the leadership of the Senior Manager which monitors on an on-going basis compliance of Trading Members with the requirements of the SEM’s Business Rules.

With the adoption of the SEM’s Business Rules, the SEM monitors the following:

- Eligibility criteria for membership; - Continued compliance with Exchange requirements, including training and certification of

participants and capital adequacy; - Trading operations of participants, including issue of contract notes to clients, brokerage

charges, turnover limits, margin requirements; - Code of conduct for members and members’ responsibilities; - Maintenance of records, annual accounts and audit; - Inspection of participants; - Sanctions in cases of non-compliance with regulations, rules and procedures of the Exchange.

A thorough investigation and compliance visit was undertaken with the Investment Dealers, in virtue of Rule 5.2.1 of SEM Business Rules to assess how the standards described in the Business Rules had been complied with. The audit started on 15 January 2014 and was completed on 28 March 2014 and was held in the presence of a Senior Officer and the Compliance officer of the Investment Dealer.

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Surprise visits were made at the offices of Trading Members during trading hours so as to verify whether transactions carried out on the stock exchange through the ATS are in conformity with the Trading Rules & Procedures and the Rules made under the Securities Act 2005. A questionnaire type form derived from the Business Rules was used during the audit exercise, which covered specific and general aspects of the trading operations of the Trading Member, such as the Admission of Applicants as Trading Members; Continuing Obligations of Trading Members; Business Practices of Trading Members and Code of Conduct of the SEM Business Rules.

The main components of the audit exercise comprised a "walk through" of a complete trade cycle process, i.e. opening of Clients’ Accounts in CDS, deposit of securities, receipt buy or sell orders from a client, input of order details in ATS, collection and despatch of Contract Notes, executions of trades and post trade functions.

All Trading Members have been informed in writing of the shortcomings observed during the Compliance Visit. A follow-up visit was carried out in early April/May 2014 to verify if the shortcomings identified have been addressed. It was noted that all Trading Members are compliant with the Business Rules. A copy of the full report has been submitted to the Chief Executive of the SEM.

Other Sub-Committees of the SEM

Along with the SEM Board Committees, the SEM has also set-up three other Sub-Committees, namely;

➢ The Consultative and Informative Committee➢ The Index Management Committee➢ The Listing Executive Committee

CONSULTATIVE AND INFORMATIVE COMMITTEE

INDEX MANAGEMENT COMMITTEE (IMC)

LISTING EXECUTIVE COMMITTEE




Discuss issues related to trading activities, operational aspect of the ATS & CDS Systems, new products and development of the market.

Establish the criteria and pro-cedures for selection of the constituents of the SEM-7;------------------------------------------Determine the base period and value and to formulate a scientific and transparent methodology of index calcu-lation;------------------------------------------Review, monitor and main-tain periodically the SEM-7 and consider the develop-ment of sectoral indices.------------------------------------------The inclusion or exclusion of a constituent in the SEM -7 is at the discretion of an indepen-dently constituted IMC. This discretion shall only be used in the spirit of furthering the objectives of the SEM-7.

Determine the suitability of applications for a listing;-----------------------------------------------Recommend changes to Listing Rules and Rules of the Develop-ment & Enterprise Market (DEM) to the Board;-----------------------------------------------Assess cases of apparent breaches of the Listing Rules/ DEM Rules and make recom-mendations to the Board for their adjudication;-----------------------------------------------Assess cases on the suspension or cancellation of a listing on the Exchange and refer to the Board for consideration.


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Membership and meetings

Consultative and Informative Committee (CIC)

The CIC comprises representatives of SEM, CDS, Investment Dealers and Custodian Banks. It does not have executive powers, but can make recommendations to the Board. The Chief Executive of SEM acts as Chairperson of the Committee.

Meetings

The Committee meets as and when the need arises and met two times during the year. The main issues discussed by the Committee included operational aspects of ATS and CDS Systems, the introduction of new products on the exchange and the review and amendments to the Trading Procedures.


Index Management Committee (IMC)

The IMC, which is composed, of stockbrokers, fund managers, academics, and officials from the SEM, ensures that the process of building and maintaining the SEM-7 is as interactive as possible. Members who sat on the IMC for the year ended 30 June 2014 are Mr Prem Beejan (acted as Chairman as from January 2014 in replacement of Mr. Vincent Lamusse), Mr Sunil Benimadhu, Mr Raj Tapesar, Mr Mathew Lamport, Mr. Vikash Tulsidas, Mr Nitish Benimadhu (as from January 2014) and Mr Darmanand Virahsawmy as Secretary. Meetings

The IMC meets quarterly to review the constituents of the SEM-7. These meetings are held on the first Tuesday (or nearest Mauritian business day after that day) of January, April, July and October.

During the year, the IMC worked on the creation of a new index, namely, the SEM-10 Index, which will replace the SEM-7 Index. The SEM-10 Index which is intended to better reflect market conditions will be operational as from Thursday 2nd October 2014 and will comprise a Reserve List made up of 5 constituents.


Listings Executive Committee (LEC)

The LEC comprises SEM representatives, who are Mr Sunil Benimadhu (CEO), Mr Shamin Ahmad Sookia (Head of Listing), Ms Shalini Gokhool (Manager Legal Affairs), Mr Chaitanand Jheengun (Manager Trading and Market Information) and external Members, who are Mr Nassir Ramtoola (Chairman), Mrs Prabha Chinien, Mrs Sharda Dindoyal, Mrs Margaret Wong Pin Lun, Mr Deva Marianen and Mr Bilal Sassa.

The power to act on certain listing matters resides in the Board of the SEM which has delegated those powers to the LEC. Under the relevant legal and regulatory provisions, the LEC deals with listing applications on the Official Market and other specific issues as provided in the SEM Listing Rules. Applications for admission of companies on the Development & Enterprise Market (DEM) and certain types of corporate actions under the DEM Rules are also entertained by the LEC.

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Meetings

During the financial year 2013-2014, fourteen (14) meetings of the LEC were held whereby the following issues, inter alia, were considered: Applications for listings on the Official Market; withdrawals from the Official Market, Corporate actions for both the Official Market and the DEM; and cancellation of admission from the DEM.

Fees paid to external Members of the Listing Executive Committee (LEC)

The remuneration of the LEC Members for the year ended 30 June 2014 and for the previous year 2013, are disclosed in the table below:

Name of LEC Member Fy 2014 Fy 2013( Rs’ k) (Rs’ k)

Mr Nassir Ramtoola (Chairman) 115 99Mrs Prabha Chinien 90 69Mrs Sharda Dindoyal 25 -Mrs Margaret Wong Pin Lun 82 74Mr Deva Marianen 70 62Mr Bilal Sassa 73 65


SEM Management Committee (MC)

The SEM MC is composed of the Chief Executive, the Senior Manager, the Head of Listing, the Manager Finance and Administration, the Manager Trading and Market Information, the Manager Legal Affairs, the Manager Marketing and Market Information, the Manager Corporate Finance and the Executive Secretary.

Meetings

The Members of the MC meet every week to discuss on the day-to-day management and business operations of the SEM. Any relevant issues raised at board level which need to be channelled to management, are also discussed at the MC before implementation by the management team.

Profile of Management Team

The profile of each Member of the Management Team is disclosed on pages 10 to 11 of this Annual Report.

Social, Ethical, Safety, Health and Environmental Issues

All the employees of the SEM are bound by the internal rules and regulations, as detailed in the SEM Employee Handbook, which has recently been updated to take into account changes in the legislation and to reflect the provisions of the New Employment Rights Act 2008. In the discharge of their duties, the SEM staff are committed to the highest standards of integrity and ethical conduct.


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Staff Welfare

The SEM has established a staff welfare programme where the sporting activities of the employees of the SEM are sponsored, in line with the approved budget. The SEM also provides for medical insurance and 24-hour accident covers for all its employees.

Dividend Policy of the SEM

The dividend policy adopted by the Company is disclosed in the Directors’ Report on page 8 to 9 of the Annual Report.

Group Structure of the SEM

The SEM holds 51 per cent of the ordinary share capital of the CDS. The main activities of the CDS are to provide depository, clearing and settlement services in order to facilitate dealings in securities. The total value of the ordinary share capital issued by CDS is Rs 15 million and its total reserves as at 30 June 2014, stood at Rs 156 million.

CDS Ltd

SHAREHOLDERS (See list on page 40)

SEM Ltd

(51% Shareholding)

Common directors and the percentage shareholdings

The table below shows the names of common Directors of both SEM and CDS during the financial year ended 30 June 2014 together with their respective percentage shareholdings in SEM and CDS:

Name of Director Name of Shareholder % shareholding in SEM Ltd

% shareholdingin CDS Ltd

Pr. Donald Ah-Chuen ABC Co. Ltd 3.75 -

Chue Wing & Co. Ltd 3.75 -

Mr. Dev Kumar GopyState Insurance Company of Mauritius Ltd

7.5 -

Mr. Kevin Rangasami MCB Stockbrokers Ltd 5.44 -

Mr. Gaëtan Lan Hun Kuen Ireland Blyth Group 7.5 -

Mr. Vikash Tulsidas GML Investment Ltée 1.38 -

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Related Party Transactions (RPT)

A list of the significant related-party transactions between the Company and its subsidiaries, and between the Group and other related parties including relevant key management personnel for FY 2014, is set out in Note 22 of the Financial Statements.

SEM Shareholders and their respective percentage shareholdings

The table below shows the list of shareholders of the SEM and the relative number of Ordinary shares held by them as at 30 June 2014:

List of shareholders Number of Shares Held

% Holding

1 The Anglo Mauritius Assurance Society Ltd 49,500 15.00%

2 Bramer Capital Brokers Ltd 24,750 7.50%

3 Mauritius Telecom Ltd 24,750 7.50%

4 State Insurance Company of Mauritius Ltd 24,750 7.50%

5 Mirabel Investments Ltd 22,750 6.89%

6 Mauritian Eagle Insurance Co Ltd 20,000 6.06%

7 Newton Securities Ltd 19,000 5.76%

8 MCB Stockbrokers Ltd 17,936 5.44%

9 Plasmo Ltd 16,248 4.92%

10 Ramet Investment Ltee 16,000 4.85%

11 Azelbourn Financial Services Ltd 15,943 4.83%

12 SBM Securities Ltd 15,943 4.83%

13 Island Life Assurance Co Ltd 14,850 4.50%

14 ABC Motor Co Ltd 12,375 3.75%

15 Chue Wing & Co Ltd 12,375 3.75%

16 Ireland Blyth Ltd 4,750 1.44%

17 GML Investment Ltd 4,543 1.38%

18 Alteo Limited 2,500 0.76%

19 Forward Investment And Development Enterprises Limited 2,500 0.76%

20 Excelsior United Development Companies Limited 2,500 0.76%

21 Medine Limited 2,500 0.76%

22 Galvanising Co Ltd 2,000 0.61%

23 Associated Brokers Ltd 999 0.30%

24 Ramet & Associes Ltee 538 0.16%

Total 330,000 100%


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Restrictions on the ownership of SEM shares

SEM being a public company, the transfer of its shares are not subject to pre-emption rights. However, restrictions on ownership of shares as required by law are reflected in the following clauses 10.1 and 10.4 of the SEM Constitution:

Clause 10.1: Transfer of Shares to be subject to Board and FSC approval:-

“Notwithstanding the rights conferred upon the Board by clause 10.4. hereof, all transfers and transmissions of Shares shall have to be approved by the Board. Any document relating to or affecting the title to any Shares shall be registered with the Company, after having been approved by the Board, without payment of any fee. No Shares shall be transferred except with the approval of the FSC pursuant to Section 23 of the Financial Services Act 2007”.

Clause 10.4: Board’s right to refuse or delay registration of transfer:-

(a) “The Board may, subject to compliance with sections 87 to 89 of the Act, refuse or delay the registration of any transfer of any Share to any person, whether that person be an existing Shareholder or not, where:

(i) so required by law; (ii) a holder of any such Share has failed to pay on the due date any amount payable

thereon either in terms of the issue thereof or in accordance with the Constitution (including any Call made thereon);

(iii) the transfer is not accompanied by such proof as the Board reasonably requires of the right of the transferor to make the transfer;

(iii) the Company is required or authorised to do so under the provisions of the Securities (Central Depositary, Clearing and Settlement) Act or any other enactment.

(iv) Notice of the decision of the Board refusing or delaying a transfer of any Share, stating the reasons for the refusal, shall be sent to the transferor and the transferee within twenty-eight (28) days of the date on which such transfer was delivered to the Board”.

The new Constitution that has been adopted by SEM no longer restricts any one shareholder or group of shareholders to hold more than 7.5% of the share capital of the SEM.

Important Dates

Dividend declaration 12th June 2014

Submission of Audited Accounts & Annual report to the Financial Services Commission

29th September 2014

Dividend Payment 6th October 2014

Annual Meeting of Shareholders of the SEM November 2014

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SEM Corporate Social Responsibility

The CSR policy of the SEM is to contribute towards CSR programmes or activities that will assist our country to “Eradicate Absolute Poverty”. For the financial year 2014, the SEM Corporate Governance Committee approved the following CSR projects:

Rs

Youth Creative Craft Potentials - St. Pierre 477,389

Openmind Project 286,000

Les Amis de Zippy 113,310

T1 Diam 100,000

APSA 50,000

A.P.E.I.M 50,000

Gandhi Breedh Ashram 50,000

Total CSR Project Cost (Rs) 1,126,699

Political donation

No political donation was made by the SEM during the financial year 2014.

………………………………………..

Gaëtan Lan Hun Kuen Chairman Date: 12 September 2014


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LISTING ACTIVITIES

The chart below depicts the evolution of listings on the Official Market since the creation of the SEM in 1989 and on the DEM since its launch in 2006.

0

5

10

15

20

25

30

35

40

45

First listings& trading

session

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

OM

DEM

Timeline : New listings on the SEM

Introductionof the newListing Rulesand Listingframework

Setting upof the DEM

Revamping of Chapter

16 of the Listing Rules

Introduction of Chapter18 of the

Listing Rules

Introduction of Chapters19 & 20 in the Listing Rulesand ScheduleTen in DEM Rules

Introduction of Chapter21 in the Listing Rules

1. New Listings

Listings in the year 2013-2014 were a direct reflection of the various initiatives undertaken by the SEM during the past few years to diversify its product offering and widen its reach. Indeed, for Global Funds and Global Business Companies, and especially those entities having an investment focus on Africa, the SEM has successfully established itself as a platform of choice for listing and capital raising. This year also saw the listing of two of the first Exchange Traded Funds and the first Mineral/Exploration company, after the introduction of Chapter 21 (Exchange Traded Funds) and Chapter 20 (Mineral Companies) in the Listing Rules and Schedule Ten (Mineral and Exploration Companies) in the DEM Rules.

New listings on the Official Market

0

1

2

3

4

5

6

7

8

Domestic Companies

Global Business Companies

Global & Specialized

Funds

Debt Securities Specialist Debt Instruments

Exchange Traded Funds

New listings in 2013-2014 New listings in 2012-2013

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On the OM, the SEM welcomed the listing of 4 domestic companies, as follows:

(1) BlueLife Limited migrated from the DEM to the OM, following a restructuring exercise involving the amalgamation of Indian Ocean Real Estate Company Limited with and into the company;

(2) CIEL Investment Limited amalgamated with and into Deep River Investment Limited, following which the resulting entity was rebranded as CIEL Limited and proceeded to migrate from the DEM to the OM;

(3) MCB Group Limited was admitted to listing on the OM, following a restructuring exercise by The Mauritius Commercial Bank Limited; and

(4) Lottotech Ltd, the operator of La Loterie Nationale in Mauritius and Rodrigues with the sale of lottery games, was admitted to listing on the OM on 11 June 2014.

Atlantic Leaf Properties Ltd, a GBL1 company investing primarily in high quality, investment grade real estate assets and companies, was also admitted to listing on the OM of the SEM during the year. Atlantic Leaf Properties Ltd has its primary listing on the SEM and a secondary listing on the Johannesburg Stock Exchange.

Global and Specialised Funds which were admitted to listing on the OM during the year include AIGO Holdings PCC (2 cells were listed, namely AIGO Commercial Property Fund and AIGO Natural Resources Fund), The IPRO African Market Leaders Fund (Class I2) and Universal Golden Fund.

There was a significant increase in the demand for the listing of Debt Securities during the year, and 3 listed companies, namely The United Basalt Products Ltd, The Mauritius Commercial Bank Ltd and State Bank of Mauritius Ltd, issued and listed debt securities on the OM in 2013-2014.

Following the introduction of the new Chapter 21 (Exchange Traded Funds) in the Listing Rules in 2013, NewGold Issuer Limited (RF) listed Gold bullion securities and Platinum securities on the OM.

0

1

2

3

New listings in 2013-2014 New listings in 2012-2013

Domestic Companies

On the DEM, the SEM welcomed the listing of 3 domestic companies, as follows:

(1) BlueLife Limited was admitted to listing on the DEM under the Property Development Sector in July 2013, and subsequently migrated to the OM in January 2014.

(2) Cargohub Limited was admitted to listing on the DEM in January 2014, and became the first SEM-listed company whose securities are traded and settled in Euro.

(3) Shumba Coal Limited, an Exploration company currently building a portfolio of coal Mining and Exploration projects and primarily listed on the Botswana Stock Exchange, was admitted to listing on the DEM (secondary listing) in April 2014.

OPERATING AND FINANCIAL REVIEW (Cont’d)

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The charts below provide an overview of issuers listed on the OM and DEM (by sector of activity), as at the end of June 2014:

Listed issuers on the Official Market (by sector)

Banks & Insurance and Other Finance [7]Commerce [6]Industry [7]Investments [13]Leisure & Hotels [5]Property Development [2]Sugar [1]Transport [1]Debt [4]Foreign [1]Global & Specialised Funds [23]Specialised debt securities [2]Global Business Companies [5]Exchange Traded Funds [2]

Listed issuers on the DEM (by sector)

Banks & Insurance and Other Finance [1] Commerce [4]Debetures [1]Industry [13]Information Technology [1]Investements [11]Leisure & Hotels [4]Mineral & Exploration [1]Others [6]Sugar [3]Transport [1]

2. Withdrawals

Most of the withdrawals which took place during the year were effected in the context of restructuring exercises.

Following the restructuration undertaken by the Mauritius Commercial Bank Limited and the subsequent listing of MCB Group Limited on the OM, the SEM proceeded with the cancellation of the listing of the ordinary shares of the Mauritius Commercial Bank Limited from the OM.

As a condition precedent to the amalgamation of Indian Ocean Real Estate Company Ltd with and into BlueLife Limited, Union Flacq Ltd was wound up and consequently, the admission of Union Flacq Ltd on the DEM was cancelled. The subsequent migration of BlueLife Limited from the DEM to the OM was followed by the cancellation of the admission of BlueLife Limited from the DEM.

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The admissions of CIEL Investment Limited and Deep River Investment Limited were also cancelled as a result of the amalgamation of CIEL Investment Limited with and into Deep River Investment Limited and the subsequent migration of the surviving entity to the OM as CIEL Limited.

Mauritius Stationery Manufacturers Limited was also withdrawn from the OM in May 2014, given that it had disposed of its assets and would not be trading anymore.

3. Corporate Transactions

There was a marked increase in the number of corporate transactions in the year 2013-2014, especially with regard to Disclosable Transactions, Substantial Transactions and Related Party Transactions. The following chart depicts the trend in corporate transactions:

2013-2014 2012-2013

0 1 2 3 4 5 6

Amalgamation

Bonus Issue

Conversion of Shares

Disclosable Transaction

Employee Share Option Scheme Issue

Related Party Transaction

Restructuring

Rights Issue

Share buy back

Share Split

Substantial transaction

Takeover

Future developments

The constantly-changing macroeconomic environment and the evolution of the world’s financial markets continue to present both interesting opportunities and new challenges for the SEM. The Listing Division intends, in the coming year to continue to develop the Listing framework by introducing new products and services as a response to issuers’ and investors’ needs arising from developments in the region. Upcoming product offerings of the SEM include:

1. Structured Products

In view of the increasing demand for a diverse range of specialized products, the SEM is currently working on accommodating the listing of Structured Products on its platform. Structured Products are investment vehicles based on a basket of underlying securities, such as derivatives, equities, debt securities, commodities, indices, currencies or any combination thereof, and link the return on an investor’s principal to the performance of the underlying securities.

2. Special Purpose Acquisition Companies (SPACs)

The SEM is also exploring the possibility of introducing new Rules for the listing of SPACs as it understands the unique needs of companies in accessing capital. A SPAC program would enable


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seasoned directors to form an entity that contains no commercial operations or assets other than cash, but which can still be listed on the SEM in order to raise capital. SPACs are structured so that the proceeds of an initial capital raising exercise are held in escrow until the SPAC uses the funds to consummate an acquisition within a set time period. This specialist product is expected to facilitate accessibility to capital for new ventures, and to empower the SEM as a capital raising platform.

3. The Mauritius Sustainability Index

In the year 2014-2015 the SEM intends to leverage on its unique position within the Mauritian financial sector to drive change for improved sustainability practices and reporting by launching the Mauritius Sustainability Index (SEMSI). The SEMSI will be a benchmark index which will track the performance of the most sustainable companies listed on the OM and the DEM.

Through this new Index the SEM intends to encourage the Mauritian business community to place Sustainability high on its agenda by incorporating Sustainability criteria in everyday business activities. This initiative is in line with the Government of Mauritius’ vision for a sustainable island.

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TRADING ACTIVITIES

Official Market

Market Performance

150.82

190.09

167.86

194.53

229.2252

59

49

53

63

30

35

40

45

50

55

60

65

100

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2010 2011 2012 2013 2014

Ma

rke

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pita

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tion/

GD

P (%

)

Ma

rke

t Ca

pita

lisa

tion

(Rs

bn)

Market Capitalisation & Market Capitalisation/GDP (%)

Market Capitalisation (Rs) Market Capitalisation/GDP (%)

The financial year 2013/2014 was a good year both in terms of index performance and trading activities. Total market capitalization on the Official Market hit an all time high of Rs 229.2 billion at market close of 30th June 2014, representing some 63% of the country’s GDP. The growth in market capitalization can mostly be attributed to the new listings which added some Rs 18 billion to the Official Market capitalization at end of June 2014. Parallel to this, the main index, SEMDEX surged to a record level of 2134.25 points on 10th January 2014, driven by good performance of some listed stocks. Furthermore, total volume of shares traded during the period under review crossed the 2 billion mark to reach a record level of 2.3 billion shares at end of June 2014. Total capital raised amounted to Rs 21 billion during the period under review. The Price Earnings ratio and the dividend yield stood at 12.82 and 2.93% respectively at end of June 2014. The table below shows some salient market indicators at end of June 2014.

Official Market IndicatorsFY 2013-2014

SEMDEX 2,084.70

SEM-7 402.92

SEMTRI (Rs) 6,703.44

SEMTRI (US$) 3,434.75

Market Capitalisation (Rs bn) 229.22

Market Cap / GDP (%) 63

No. of Companies 46

No. of Listed Scrips 82

Total Value Traded (Rs bn) 14

Total Volume Traded (m) 870

Net Foreign Investments (Rs m) 2,287

No. of Trading Sessions (216)

Market PER 248

Market Dividend Yield 2.93


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Index Performance

Market indices completed the financial year on an optimistic note. The main index, SEMDEX closed the session of 30th June 2014 at 2084.70 points registering a growth of 8.9% during the period under review. The total return index, SEMTRI ended the year up, growing by 12.5% over its previous year level. The Blue chip index, SEM-7 closed at 402.92 points compared 374.85 points last year. The table below shows the comparative figures for the market indices and market capitalization.

Index PerformanceYear-To-Date

1-Jul-13 30-Jun-14 Change (%)

SEMDEX 1,914.64 2,084.70 8.88

SEM-7 374.85 402.92 7.49

SEMTRI (Rs) 5,956.66 6,703.44 12.54

SEMTRI (US$) 2,987.83 3,434.75 14.96

Market Capitalisation (Rs bn) 194.53 229.22 17.83

Evolution of Market Indices

On 10th January 2014, the SEMDEX and the SEMTRI (Rs) hit their all time high level of 2134.25 and 6797.85 points respectively. The SEM-7 topped the year under review on the 16th January 2014 closing at 411.20 points. The following charts show the evolution of the market indices during the financial year 2013-2014.

1800

1900

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Jul-1

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SEMDEX: FINANCIAL YEAR 2013-2014

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Month

SEM - 7: FINANCIAL YEAR 2013-2014

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Month

SEMTRI (RS): FINANCIAL YEAR 2013-2014

Jul-1

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Turnover and Volume

The year under review was an excellent year in terms of volume traded. Total volume of shares traded registered a significant growth of 163% during the year and stood at 2.3 billion shares at end of June 2014. Total turnover for the same period amounted to Rs 13.9 billion growing by 26% compared its previous year level. Turnover ratio measured by the ratio of turnover over market capitalization stood at 6.1%. Average daily value traded over the 248 trading sessions held throughout the same time frame stood at Rs 56 million. The following charts depict the monthly turnover and volume traded during the financial year 2013-2014.

0

50

100

150

200

250

300

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400

450

-

500

1,000

1,500

2,000

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Jul-2013

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Vo

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illio

n)

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)

Turnover & Volume Traded: FY 2013-2014

Value Traded (Rs) Volume Traded

Five-Year Trend of Activities on the Official Market (2010–2014)

The following graph illustrates the market activities on the Official Market over a five-year period in terms of volume and value traded.

11,825

10,356

13,561

11,00013,892

322 241 226

870

2,287

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Turnover & Volume Traded: 2010-2014

Turnover Volume

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Trading by Investor Types

The chart below shows the breakdown of total value traded by different category of investors. Foreign investors involvement in the market was on the up side during the year under review and accounted for 40% of the total value traded compared to 33% for last year. Market participation by both foreign investors and local institutions represented 80% of total turnover traded.

0%

20%

40%

60%

80%

100%

2010-2011 2011-2012 2012-2013 2013-2014

% o

f To

tal V

alue

Tra

ded

Foreign Investors Local Institutions Local Individuals

Net Foreign Investments - FY 2013-2014

45.3

15.330.8 20.021.4

39.4

42.145.3 40.0

27.1 33.3 40.0

Investments by Foreign Investors

Net foreign investments for the year under review resulted in a net outflow of Rs 216 million. The following chart depicts the net foreign investments on a monthly basis for the financial year 2013-2014.

(400)

(300)

(200)

(100)

0

100

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Jul-2013Aug-2013

Sep-2013Oct-2013

Nov-2013Dec-2013

Jan-2014Feb-2014

Mar-2014Apr-2014

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Rs

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Market Capitalisation

On 30th June 2014, total market capitalization closed at its all time high of Rs 229.2 billion growing by 17.8 % during the period under review. As shown in the table below, the highest growth in market capitalization was noted in the Property & Development sector due to the listing of BlueLife Limited on the Official Market.

The decline in the market capitalization of the Sugar sector can be explained by the shift of ENL Land Ltd to the Investment Sector. The following table displays comparative figures of market capitalization by sector for the period 2013-2014.

BANKS, INSURANCE & OTHER FINANCE

44.1%

COMMERCE6.7%INDUSTRY

6.0%

INVESTMENTS26.1%

LEISURE & HOTELS12.3%

PROPERTY & DEVELOPMENT1.6%

SUGAR2.4% TRANSPORT

0.7%FOREIGN

0.04%

Market Capitalisation by Sector - June 2014

Market capitalization by sector (Rs bn)

Sectors 1st July 2013 30th June 2014 Change (%)

BANKS, INSURANCE & OTHER FINANCE 94.6 101.2 6.9

COMMERCE 14.1 15.3 8.2

INDUSTRY 11.9 13.7 15.0

INVESTMENTS 37.6 59.9 59.3

LEISURE & HOTELS 17.5 28.3 61.7

PROPERTY & DEVELOPMENT 0.8 3.6 369.6

SUGAR 16.5 5.6 (66.3)

TRANSPORT 1.4 1.7 17.6

FOREIGN 0.10 0.09 (6.9)

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Sectoral Performance 2013-2014

The following table shows the performance of Market Sectors in terms of value traded during the financial year under review.

Sectors Value Traded (Rs' m) % Value Traded

BANKS, INSURANCE & OTHER FINANCE 6,227 45

LEISURE & HOTELS 2,602 19

INVESTMENTS 2,499 18

INDUSTRY 689 5

FUNDS / GBL COMPANIES 663 5

COMMERCE 510 4

DEBENTURES 264 2

SUGAR 203 1

PROPERTY DEVELOPMENT 170 1

TRANSPORT 57 0.41

EXCHANGE TRADED FUND (ETF) 7 0.05

FOREIGN 0.02 0.0002

Top ten Companies in terms of Total Return

The following table shows the top ten companies in terms of total return for the financial year under review which ranges from 23% to 129%.

Total Return IndexCompanies Listing Date 1-Jul-13 30-Jun-14 Change %National Investment Trust Ltd 29-Jul-93 958 2,189 129Lux Island Resorts Ltd 23-Nov-05 57 117 105Compagnie des Magasins Populaires Ltée 6-Mar-91 360 733 104Gamma Civic Ltd 30-Nov-94 2,486 4,443 79CIM Financial Services Ltd 30-Oct-12 118 167 42Sun Resorts Ltd 26-Jan-93 421 593 41Belle Mare Holding Ltd 7-Mar-94 1,744 2,302 32New Mauritius Hotels Ltd 12-Jun-96 516 662 28P.O.L.I.C.Y Ltd 8-Dec-92 3,059 3,921 28Innodis Ltd 28-Feb-96 673 826 23


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Development & Enterprise Market (DEM)

Market Performance

100

125

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May-

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Jun-1

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DEM

TRI (

RS)

DEM

EX

DEMEX & DEMTRI (Rs): FY 2013-2014

DEMEX DEMTRI

The Development and Enterprise market (DEM) ended the financial year of 2013-2014 on a solid note. Both indices, the DEMEX and the DEMTRI ended the month of June 2014 in style closing at their all time high level of 185.02 and 225.12 points respectively. Both indices registered double digit gains during the year essentially on the back of healthy standing of listed stocks on the market. As showed in the graph above, both indices maintained their growth momentum throughout the year. Furthermore, total value traded on the DEM registered a significant increase of 150% during the same time frame. Total net foreign investments for the period under review remained positive. The P/E ratio and the dividend yield for the market stood at 10.59 and 2.86% respectively. The table below demonstrates some market indicators at end of June 2014.

DEM Indicators

FY 2013-2014

DEMEX 185.02

DEMTRI (Rs) 225.12

DEMTRI (US) 232.05

Market Capitalisation (Rs bn) 46.25

Market Cap/GDP (%) 13

No. of Companies 46

No. of Scrips 53

Total Value Traded (Rs bn) 3.69

Total Volume Traded (m) 241.22

Net Foreign Investments (Rs m) 112.91

No. of Trading Sessions 248

Market PER 10.59

Market Dividend Yield 2.86

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Market Indices

The DEMEX ended the year at a record level of 185.02 points realizing an important growth of 20.5% during the year. Parallel to this, the DEMTRI (Rs) grew by 23.7% and peaked at 225.12 points at end of June 2014. The table depicts performance of the indices during the period under review.

Index PerformanceYear-To-Date

1-Jul-13 30-Jun-14 Change (%)

DEMEX 153.58 185.02 20.47

DEMTRI (Rs) 181.96 225.12 23.72

DEMTRI (US$) 183.62 232.05 26.38

Market Capitalisation (Rs bn) 46.71 46.25 (0.99)

Value and Volume Traded

Total value traded during the year rose to Rs 3.7 billion compared to Rs 1.5 billion traded last year. Total volume of shares traded for the twelve months under review stood at 241.2 million shares. As illustrated in the graph below, the highest value and volume traded were registered in the month of June 2013 during which some 49 million shares were exchanged for a total amount of Rs 1.5 billion.

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Foreign Investment

Net foreign investment on the DEM grew by 57.5% over the financial year under review and this was reflected by a net inflow of Rs 112.9 million. The following chart depicts the net foreign investments on a monthly basis for the financial year 2013-2014.

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Market Capitalisation

Despite the good performance of market indices, Market capitalization on the DEM registered a slight fall of 1% and stood at Rs 46.3 billion on 30th June 2014. The fall in market capitalization was mainly due to the delisting of some stocks on the DEM namely Union Flacq Ltd, Deep River Investment Ltd, CIEL Investment Ltd and BlueLife Limited. The latter migrated to the Official Market on 8th January 2014. These delisting also explains the fall in total market capitalization of the Investment sector. The following table shows the comparative figures of sectoral market capitalization as at June 2014.

DEM-Market capitalization by sector (Rs bn)

Sectors 1st July 2013 30th June 2014 Change (%)

BANKS & INSURANCE 1.6 1.8 14.8

COMMERCE 1.3 1.1 (16.3)

INFORMATION COMMUNICATION & TECHNOLOGY

0.9 1.2 27.4

INDUSTRY 3.2 3.2 (2.0)

INVESTMENTS 21.8 17.5 (19.7)

LEISURE & HOTELS 4.9 5.8 16.8

MINERAL & EXPLORATION - 0.6 -

OTHERS 5.4 7.3 33.8

SUGAR 7.3 7.6 4.3

TRANSPORT 0.2 0.2 10.9

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Sectoral Performance 2013-2014

The table below shows the performance of Market Sectors in terms of value traded during the financial year under review. The Mineral & Exploration sector was created on the 4th April 2014 following the listing of the first mining company, Shumba Coal Limited on the DEM.

Sectors Value Traded (Rs' m) % Value Traded

INVESTMENTS 2,741.9 74.3

OTHERS 663.6 18.0

SUGAR 121.9 3.3

INDUSTRY 50.6 1.4

DEBENTURES 47.2 1.3

INFORMATION COMMUNICATION & TECHNOLOGY

39.3 1.1

LEISURE & HOTELS 17.2 0.5

BANKS & INSURANCE 6.5 0.2

COMMERCE 3.6 0.1

TRANSPORT 0.9 0.02

MINERAL & EXPLORATION 0.004 0.0001

DEM Top ten companies in terms of Total Return

The following table shows the top ten companies in terms of total return for the financial year under review.

Total Return IndexCompanies Lisitng Date 1-Jul-13 30-Jun-14 Change (%)Alma Investments Co Ltd 4-Aug-06 198 422 113

Ciel Textile Ltd 4-Aug-06 206 334 62

Mauritius Freeport Development Company Ltd 4-Aug-06 40 62 53

Hotelest Ltd 4-Aug-06 61 92 50

Constance Hotel Services Ltd 4-Aug-06 52 74 42

Constance La Gaiete Company Ltd 4-Aug-06 141 192 36

The Black River Investment Co Ltd 4-Aug-06 197 255 29

Tropical Paradise Co Ltd (Ordinary) 4-Aug-06 174 223 28

Excelsior United Development Co Ltd 4-Aug-06 321 392 22

The Anglo-Mauritius Assurance Society Ltd 4-Aug-06 401 490 22


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MARKETING AND MARKET DEVELOPMENT

Financial year 2013-2014 was another year of progress for the Marketing and Market Development Division of the SEM. Fundamentally, the focus was on developing further the data business segment of the SEM and enhancing the SEM’s educational role towards both issuers and investors.

This year also coincided with the celebration of the 25th Anniversary of the SEM, and SEM’s Marketing Division was entrusted the responsibility of organizing an Event to showcase SEM’s evolution since 1989 and the various facets of its contribution to the local business landscape and the Mauritian economy. A myriad of 400 of SEM’s stakeholders attended the Event marking the celebration.

Key Undertakings during FY 2013-14

Data Business Development

SEM’s Marketing and Market Development Department has a mandate to secure and maintain business relationships with new subscribers locally and internationally as well as global data vendors. We have, in recent years, established a new pricing and dissemination policy for market data services, in line with international best practice, and established an ongoing relationship management programme.

In September 2013, SEM signed a new data agreement with its first Asian-based data vendor, namely, DirectFN, for the distribution of live market data. DirectFN, a wholly owned subsidiary of National Technology Group (NTG) covers a broad range of markets from US to Europe, Middle East, Africa and Asia, providing Exchange information required by both the professional and retail community in the Middle East and global investment community. This data agreement represents a powerful marketing medium for SEM to reach out to the untapped pool of retail and institutional investors from the Middle East.

Financial Analysis Course for listed issuers

SEM organised Investor Relations courses for its capital market stakeholders in June 2013. In June 2014, SEM held an interactive one-day seminar on “Financial analysis for listed companies”, aimed at top management and investor relations executives of listed companies, fund managers, stockbrokers, and pension fund administrators. The seminar was well attended.

The course focused on key aspects of company valuations, probed into the way listed companies should present their financial statements and highlighted the relevant ratios applicable to their specific lines of business. In a nutshell, the course added value to the high level executives present who took home useful lessons learnt to improve the way they operate as listed entities, and the way they communicate their performance to the capital market stakeholders.

Bringing the South African market through one single product to Mauritius: Information awareness campaign for the NewFunds eRAFITM Overall SA Index ETF

In the context of the forthcoming launching of the NewFunds eRAFITM Overall SA Index ETF, an information awareness campaign was held in August 2014 which targeted all capital market stakeholders namely investment dealers, custodians, fund managers, retail and institutional investors at large, and members of the press. The courses covered the operational mechanics of the NewFunds eRAFITM Overall SA Index ETF, advantages and drawbacks as well as risks associated with this new product.

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Zoom on the SEM Young Investor Award 2014 – All time high number of participants

In line with its vision to develop an investment culture in Mauritius, the SEM organizes the annual SEM Young Investor Award competition for lower-6 students from secondary institutions, giving them a close exposure with the exciting and challenging realities of investing in shares and managing money. Today’s teenagers will be tomorrow’s investors on the stock market, it is therefore vital that they be given the opportunity to learn about the mechanics of share market investment.

The Exchange launched the 18th edition of this competition on 01 April 2014, spreading over a period of 3 months till 30 June 2014. This year’s competition attracted 218 teams of five students each from 109 colleges across the country, representing 1090 students, which is an all-time-high since the creation of this event in1993. It is really encouraging that a record number of students this year have seized the opportunity given by the SEM in association with all Investment Dealers, to get an early exposure to investment on the equity market.

Over the years, this competition has allowed participants to become familiar with the mechanics of share trading and to develop an appreciation of the risks and benefits associated with investing in the sharemarket. Players are given a hypothetical amount of money, learn from Investment Dealers, and have access to a maze of educational tools from the SEM, such as newsletters, company announcements and historical publications to assist them in analysing the accounts and activities of listed companies, and making informed decisions about stock selection and managing their portfolios during the 3-month competition.

Future Undertakings for FY 2014-2015

Data Business Development

In our endeavour to broaden the scope of our data business, SEM’s Marketing and Market Development Department has been assigned with the responsibility to develop more business with new and existing global data vendors, while ensuring proper relationship management with existing vendors and index providers, as such partnerships represent a powerful marketing medium to reach out to the pool of institutional investors internationally.

SEM will strive to build on the last five financial years’ positive results, and add more data vendors and subscribers to its list of international institutions.

Sustainability Index

SEM is presently working on a Sustainability Index Project, which fits with the “Maurice, Ile Durable” concept. This will put Mauritius and the SEM at the forefront of the sustainability agenda in Africa. To underpin this development thrust, SEM’s website will be beefed up to showcase the Sustainability Index with a dedicated section from the home page. This Index can be tracked by investors on a 15-min delayed basis, measuring the performance of sustainable listed companies by virtue of their compliance with sustainability criteria cutting across the environmental, social, governance and economic areas.

Investor education

SEM will further expand its educational role by engaging with the Mauritius Post at national level to leverage off their presence across the country, with a view to promoting awareness amongst the public on stock market investment. SEM will use the offices of the Mauritius Post to organise open-


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days for the public. The open-days will be done also in association with investment dealers, asset managers and pension funds as well as with the MBC TV station and a private radio station. The objective is to enhance the process of democratisation and increase the number of shareholders from 100,000 to 150,000 by year 2017.

SEM will kick off the educational campaign on 08 November in Vacoas. The Country has been divided into four areas, namely Vacoas, Triolet, Rose-Belle and Flacq. The open-days will be on a Saturday from 10 am–1pm.

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LEGAL ACTIVITIES

The SEM has, in recent years, been very actively engaged in various initiatives to upgrade its operational and regulatory set-up in the context of its strategy to give an international dimension to the Exchange. Several projects have been undertaken in collaboration with some key stakeholders to diversify product offerings on the SEM platform, increase the number of new listings and make the market more attractive for investors and traders. Many of these initiatives have necessitated the support of the Legal Affairs Department to bring changes to the current regulatory framework with the support of the FSC, and implement those changes. Below is a description of some of the main achievements during the last financial year and the related regulatory developments in the context of initiatives to enhance the attractiveness of the SEM’s markets both locally and internationally.

Amendments to the SEM Business Rules in relation to foreign investment dealers trading on SEM

Since the last financial year, the SEM has initiated joint efforts with the FSC to create the enabling regulatory environment for remote participants to trade on the Exchange. Amendments to the Business Rules of the SEM to introduce new provisions in relation to ‘Trading Members operating from outside Mauritius’ were approved by the FSC.

With effect from December 2013, changes were brought to the Securities (Consolidated Licensing and Fees) Rules 2008 to recognise a new category of investment dealers, namely foreign investment dealers trading on SEM. Subsequently, further amendments were proposed to the SEM Business Rules to distinguish between investment dealers licensed by FSC operating from outside Mauritius and foreign investment dealers licensed and regulated in a foreign jurisdiction and authorised to deal on the SEM by the FSC in accordance with the provisions of the Securities (Authorisation of Foreign Investment Dealers) Rules 2010. These amendments to the SEM Business Rules have been approved by the FSC and are effective since 2 May 2014. This initiative is expected to attract foreign participants to our market and increase the flow of business into Mauritius.

Implementation of reduced brokerage fees on turnaround trades

The SEM has been working closely with the CDS and the investment dealing community to implement measures to develop the market and boost liquidity. In this context, a proposal to substantially reduce transaction fees on turnaround trades was discussed and agreed with the Port Louis Stockbroking Association before submission for regulatory approval. Following approval by the Board of the FSC in November 2013, the SEM worked closely with the FSC for the implementation of the new reduced fee structure for turnaround trades. Transaction fees for turnaround trades executed on the SEM have consequently been slashed down from 1.25% to 0.15%. The Securities (Brokerage Fees for Turnaround Trades) Rules 2013 were implemented with effect as from 12 December 2013.

Implementation of reduced brokerage fees for debentures and corporate bonds traded on SEM

In order to enhance the scope of listings and bond trading on the Exchange, the SEM in collaboration with the CDS and the investment dealers, has adopted a new fee structure for transactions in debentures and corporate bonds traded on the SEM. Brokerage fees on the trading of these instruments as provided under the former Stock Exchange (Brokerage Fee for Debentures) Regulations 1999, have been significantly downsized from 0.60% to 0.10%, representing a substantial reduction of 83%. The proposal for the reduction of fees has been approved by the FSC and new rules namely, the Securities (Brokerage Fees for Debentures) Rules 2013, have come into effect since 1 January 2014. Given the already prevailing interest from listed issuers to raise capital through the issuance of corporate bonds, the implementation of the reduced fee structure is expected to generate more active trading on these instruments and thereby improve liquidity.


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Regulatory changes to dispense issuers of Exchange Traded Funds (ETFs) from publishing quarterly results in the newspaper

The SEM recently revamped its regulatory set-up to cater for the listing and trading of a new category of products namely Exchange Traded Funds (ETFs). Given the specific characteristics of these types of products, discussions have been initiated with the FSC to dispense ETF issuers from the requirement to publish quarterly financial reports in at least one local newspaper having a wide circulation, as provided under the Securities (Disclosure Obligations of Reporting Issuers) Rules 2007.

Approval has been granted by the Regulator for the dispensation to be made by way of amendments to the relevant provisions of the Securities (Disclosure Obligations of Reporting Issuers) Rules 2007.

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FINANCIAL REVIEW 2014

Revenues

The total revenues of the SEM for the FY 2014 amounted to Rs 138.4 million, indicating a significant increase of 27.8%, as compared to the last financial year (FY 2013 - Rs 108.3 million). The graph below illustrates the different components of the revenues of the Company over the past three financial years 2012 to 2014.

Analysis of Revenues over 3 Years

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Revenue breakdown

The table below gives the breakdown of revenues of the SEM for the two consecutive years 2014 and 2013 and shows the percentage increases of each type of revenue for FY 2014.

FY 2014 FY 2013 IncreaseRs’ m Rs’ m %

Transaction fees 81.7 60.3 35.5

Annual Listing & Application fees 22.6 20.1 12.4

Corporate Actions, Service fees and Annual Membership fees

1.3 0.8 71.1

Sale of Information 3.4 3.0 12.3

Investment Income 15.9 14.3 10.8

Dividends 12.3 9.0 36.8

Misc. Income 1.2 0.8 57.2

Total Revenues 138.4 108.3 27.8


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Transaction fees for the FY 2014 showed a marked increase of 35.5%, mainly due to an increase in the volume of shares traded on both the Official and DEM Markets.

Annual Listing and Application fees indicated an increase of 12.4%, owing to new listings of Global and Specialised Funds, Global Business Companies and a few Domestic Companies.

Revenue from Corporate Actions, Service fees and Annual Membership fees rose significantly by 71.1%, mainly due to an increase in the revenue derived from Corporate Actions during the year under review.

Revenue derived from the sale of data information increased by 12.3%, due to new contracts being signed by new data vendors.

Investment Income rose by 10.8%, mainly due to surplus cash derived from increases in revenues during FY 2014.

Dividends received from the CDS Ltd increased by 36.8% to reach a total amount of Rs 12.3 million.

Miscellaneous Income increased by 57.2%, mainly due to more revenue being derived from the sale of publications and revenue perceived by the SEM from seminars and training courses organized during the year under review.

Expenses

Total SEM expenses for FY 2014 amounted to Rs 51.8 million, indicating an increase of 17% over the previous year (FY 2013 - Rs 44.3 million). The graph below depicts the different components of expenses of the Company over the last three financial years 2012 to 2014:

Analysis of Expenses over 3 Years

Staff costsand relatedexpenses

OtherOperatingExpenses

ATSExpenses

Marketing &DevelopmentExpenses

Depreciation Administrationexpenses &Insurances

CorporateSocialResponsibility

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The table below analyses the components of expenses for the two consecutive years 2014 and 2013 and shows the relative percentage increase for each type of component of expense:

FY 2014 FY 2013 IncreaseRs' m Rs' m %

Staff costs and related expenses 30.7 26.9 14

ATS expenses 4.2 4.2 0

Marketing & Development Expenses 4.9 2.2 123

Depreciation 2.6 2.5 4

Administration expenses & insurances 2.0 1.9 5

Corporate Social Responsibility 1.1 1.0 10

Audit fees & Professional Fees 0.9 0.6 50

Other Operating Expenses 5.4 5.0 8

Total Expenses 51.8 44.3 17

The increase in ‘Staff costs and related expenses’ by 14% is mainly due to:

• An overall salary increase of 7.7%, as approved by the SEM’s Remuneration Committee;• A special bonus granted to all SEM staff to mark the 25th Anniversary;• Extra performance bonuses being paid to the employees due to the good financial performance

of the SEM;

Marketing and Development expenses increased by 123%, mainly due to:

• To mark the 25th Anniversary of the SEM, a special budget amounting to Rs 2.7 million, was approved by SEM Board to cater for the costs of organizing the event.

• The costs of Seminars & Conferences and Cocktails for the introduction of new listings on the Official Market increased by 19% over last year.

• ‘Press Advertisement’ cost increased by 16% over the year.

Corporate Social Responsibility cost, which is based on 2% of the chargeable profit for the previous financial year, increased by 10%.

Audit fees and Professional fees indicated an increase of 50% over the last financial year, mainly due to:

• Audit fees amounting to Rs 224 k were incurred for the audit of the Internal Controls of the SEM during the financial year under review.

• Consultancy fees amounting to Rs 61 k were paid for the eligibility exercise being carried out during the year for prospective listed companies.

Other Operating Expenses increased by approximately Rs 400 k, representing 8% increase over FY 2013.


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Costs and Revenues

The table below discloses the total revenues and total costs of the SEM over the last five years 2010 to 2014.

Financial Year Total Revenues Total CostsRs’ m Rs’ m

2010 106.7 38.82011 101.8 38.92012 98.8 41.32013 108.3 44.32014 138.4 51.8

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Total Costs Rs' m

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As depicted by the above chart, total revenues of the SEM increased significantly over the past five years to attain a total value of Rs 138.4 million in FY 2014, showing an annual growth rate of 5.9% over the five-year period from 2010 to 2014 (FY 2010: Rs 106.7 million).

Total costs have been kept under control, showing a yearly increase of 6.7 per cent over the last five years to reach a figure of Rs 51.8 million in FY 2014 (FY 2010: Rs 38.8 million).

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Profit Margin

The table below displays the Total revenues, the Net income and the Net Profit Margin of the SEM over the last five years 2010 to 2014.

Financial Year Total Revenues Net Income Net Profit Margin(Net Income/Total Revenue)

Rs’ m Rs’ m %2010 106.7 67.9 64

2011 101.8 62.9 62

2012 98.8 57.5 58

2013 108.3 64.1 59

2014 138.4 86.6 63

The total revenues of the SEM over the last five years, demonstrated a total increase of 29.7% from Rs 106.7 million in year 2010 to Rs 138.4 million in the year 2014.

Net Income, which is total revenues less total costs, on the other hand, showed an overall total increase of 27.5%, from Rs 67.9 million in FY 2010 to Rs 86.6 million in FY 2014.

The Net Profit Margin showed a slight reduction of 1.6% over the last five years, from 64% in FY 2010 to 63% in FY 2014.

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Return on Equity (ROE)

The table below displays the figures over the last five years of the Net Income, the Shareholders Funds and the ROE (ROE=Net income/Equity).

Year Net Income Equity Return on Equity Rs’ m Rs’ m %

2010 67.9 169.5 40

2011 62.9 191.3 33

2012 57.5 211.3 27

2013 64.1 233.4 27

2014 86.6 262.8 33

As depicted by the chart which follows, the Shareholders funds (Equity) over the past five years increased significantly by 55%, from Rs 169.5 million in FY 2010 to attain a total value of Rs 262.8 million in FY 2014.

Net Income increased by an overall percentage of 27.5% over the five years from financial year 2010 to financial year 2014.

The Return on Equity for the past five years remained on the low side as illustrated in the chart below.

67,9 62,9 57,5 64,186,6

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WEALTH CREATED AND DISTRIBUTED BY THE COMPANY2014 2013 2012

Rs’ m % Rs’ m % Rs’ m %

Turnover 105.6 81.2 71.8 Other Income 32.8 27.1 26.9 Administrative Expenses -18.7 14.9 14.3 TOTAL WEALTH CREATED 119.7 100 93.2 100 84.4 100

DISTRIBUTED AS FOLLOWS:Members of StaffSalaries and other benefits 30.7 26 26.9 29 24.7 29

Providers of CapitalDividends to Ordinary Shareholders 44.0 37 33.2 36 29.9 35Government - taxation 13.1 11 8.5 9 7.4 9

57.1 48 41.7 45 37.3 44Wealth reinvested in the Company to maintain and develop operations:Profit retained 29.3 24 22.1 24 20.0 24Depreciation 2.6 2 2.5 2 2.4 3

31.9 26 24.6 26 22.4 27TOTAL WEALTH DISTRIBUTED AND RETAINED 119.7 100 93.2 100 84.4 100

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Cash and Cash Equivalents

Cash and cash equivalents increased significantly over the last five years showing an overall total percentage increase of 45.9% from Rs 162.7 million in FY 2010 to reach Rs 237.3 million in FY 2014. The value of Cash and Cash Equivalents of the Company over the past five years is illustrated by the chart below.

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FINANCIAL REPORTS

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INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF THE STOCK EXCHANGE OF MAURITIUS LTD

This report is made solely to the company’s shareholders, as a body, in accordance with section 205 of the Mauritius Companies Act 2001. Our audit work has been undertaken so that we might state to the company’s shareholders those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s shareholders 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 The Stock Exchange of Mauritius Ltd and its subsidiary on pages 75 to 101 which comprise the statements of financial position as at 30 June 2014 and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows for the year then ended and a summary of significant accounting policies and other explanatory information.

Directors’ responsibilities 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 Mauritius Companies Act 2001. They are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Opinion

In our opinion, the financial statements on pages 75 to 101 give a true and fair view of the financial position of The Stock Exchange of Mauritius Ltd and its subsidiary as at 30 June 2014, and of their financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the requirements of the Mauritius Companies Act 2001.

Report on other legal requirements

In accordance with the requirements of the Mauritius Companies Act 2001, we report as follows:

• we have no relationship with, or interests in, the company other than in our capacity as auditor and tax advisor;

• we have obtained all information and explanations that we have required; and

• in our opinion, proper accounting records have been kept by the company as far as appears from our examination of those records.

Deloitte

Chartered Accountants

Date 18 September 2014

Jacques de C du Mée, ACA

Licensed by FRC

FINANCIAL REPORTS

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THE STOCK EXCHANGE OF MAURITIUS LTDSTATEMENTS OF FINANCIAL POSITION AT 30 JUNE 2014

THE GROUP THE COMPANY Notes 2014 2013 2014 2013

Rs’ k Rs’ k Rs’ k Rs’ k

ASSETS

Non-current assetsProperty, plant and equipment 5 42,241 45,282 25,160 27,308 Intangible assets 6 149 174 - - Investment in subsidiary 7 - - 7,650 7,650 Deposits 8 323,100 236,334 200,700 149,200 Stock Exchange Compensation Fund 9 4,496 4,369 4,496 4,369 Other Receivables 11 25,570 16,658 16,491 9,261

395,556 302,817 254,497 197,788

Current assets

Inventories 10 222 303 - -

Trade and other receivables 11 30,700 24,534 31,489 22,395 Deposits 8 57,953 112,694 34,953 55,694 Bank balances and cash 28,273 4,703 1,622 1,752

117,148 142,234 68,064 79,841 Total assets 512,704 445,051 322,561 277,629

EqUITY AND LIABILITIES

Capital and reservesStated Capital 12 3,350 3,350 3,350 3,350 Retained profit 338,883 301,332 259,425 230,065 Equity attributable to owners of the company 342,233 304,682 262,775 233,415 Non-controlling interest 95,577 84,543 - - Total equity 437,810 389,225 262,775 233,415

Non-current liabilitiesRetirement benefit obligations 13 4,957 4,347 - - Deferred taxation 14 1,116 1,102 663 669 Stock Exchange Compensation Fund 9 4,496 4,369 4,496 4,369

10,569 9,818 5,159 5,038 Current liabiltiiesTrade and other payables 15 12,389 8,818 4,565 2,985 Taxation 14 7,895 3,967 6,021 2,968 Dividends 16 44,041 33,223 44,041 33,223

64,325 46,008 54,627 39,176 Total liabilities 74,894 55,826 59,786 44,214 Total equity and liabilities 512,704 445,051 322,561 277,629

Approved by the Board of Directors and authorised for issue on 18th September 2014.

Gaëtan Lan Hun Kuen Sunil Benimadhu(Chairman) (Executive Director)

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THE STOCK EXCHANGE OF MAURITIUS LTD STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2014

THE GROUP THE COMPANY Notes 2014 2013 2014 2013

Rs' k Rs' k Rs' k Rs' k

Revenue 18 164,599 128,482 105,604 81,194

Other income 19 33,494 29,563 32,839 27,129

Administrative expenses (74,661) (64,343) (51,792) (44,313)

Operating profit 123,432 93,702 86,651 64,010

Contribution to Guarantee Fund 21 (659) (518) - -

Profit before taxation 17 122,773 93,184 86,651 64010

Income tax expense 14 (20,542) (14,359) (13,123) (8,505)

Profit after taxation 102,231 78,825 73,528 55,505 Transfer to Stock Exchange Compensation Fund 9 (127) (133) (127) (133)

Profit for the year 102,104 78,692 73,401 55,372

Other Comprehensive Income:-

Items that will not be reclassified subsequently to profit or loss

Actuarial loss on defined benefit pension plan 13 (837) (2,922) - -

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 101,267 75,770 73,401 55,372

Profit for the year attributable to:-

Owners of the company 82,019 62,858 Non-controlling interest 20,085 15,834

102,104 78,692

Total comprehensive income attributable to:

Owners of the company 81,593 61,368 Non-controlling interest 19,674 14,402

101,267 75,770

Earnings per share 20 248.54 190.48

FINANCIAL REPORTS (Cont’d)

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THE STOCK EXCHANGE OF MAURITIUS LTD STATEMENTS OF CHANGES IN EqUITY FOR THE YEAR ENDED 30 JUNE 2014

(a) THE GROUP

NoteShare

capital Share

premium Retained

profit Attributable to owners of the

company

Non controlling

interest

Total equity

Rs’ k Rs’ k Rs’ k Rs’ k Rs’ k Rs’ k

Balance at 1 July 2012 3,300 50 273,187 276,537 79,257 355,794


Other Comprehensive Income for the year - - (1,490) (1,490) (1,432) (2,922)

Total Comprehensive Income for the year - - 61,368 61,368 14,402 75,770

Proposed dividends for 2013 16 - - (33,223) (33,223) - (33,223)

Dividends relating to 2012 - - - - (9,116) (9,116)

Balance at 30 June 2013 3,300 50 301,332 304,682 84,543 389,225

Balance at 1 July 2013 3,300 50 301,332 304,682 84,543 389,225


Other Comprehensive Income for the year (427) (427) (410) (837)

Total Comprehensive Income for the year - - 81,592 81,592 19,675 101,267

Proposed dividends for 2014 16 - - (44,041) (44,041) - (44,041)

Dividends relating to 2013 - - - - (8,641) (8,641)

Balance at 30 June 2014 3,300 50 338,883 342,233 95,577 437,810

(b) THE COMPANY

Note Share capital

Share premium

Retained profit

Total


Balance at 1 July 2012 3,300 50 207,916 211,266

Profit for the year - - 55,372 55,372 Other comprehensive income for the year - - - -Total comprehensive income for the year - - 55,372 55,372 Proposed dividends for 2013 16 - - (33,223) (33,223)Balance at 30 June 2013 3,300 50 230,065 233,415 Balance at 1 July 2013 3,300 50 230,065 233,415 Profit for the year - - 73,401 73,401 Other comprehensive income for the year - - - -

Total comprehensive income for the year - - 73,401 73,401

Proposed dividends for 2014 16 - - (44,041) (44,041)Balance at 30 June 2014 3,300 50 259,425 262,775

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THE STOCK EXCHANGE OF MAURITIUS LTDSTATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2014

THE GROUP THE COMPANY 2014 2013 2014 2013Rs’ k Rs’ k Rs’ k Rs’ k

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 122,773 93,184 86,651 64,010 Adjustments for:

Depreciation of property, plant and equipment 3,863 3,871 2,586 2,514 Amortisation on intangible assets 55 57 - - (Loss)/Profit on disposal of property, plant and equipment 7 (11) 7 - Interest receivable (24,745) (22,917) (15,579) (14,344)Retirement benefit obligations (226) 919 - - Loss/(Gain) on exchange (106) 166 (141) (50)

Dividend receivable - - (12,287) (8,994)

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 101,621 75,269 61,237 43,136 (Increase)/decrease in inventories 81 (27) - - (Increase)/decrease in trade and other receivables (8,707) (4,153) (5,973) (3,443)Increase/(decrease) in trade and other payables 3,847 551 1,580 (183)

CASH GENERATED FROM OPERATIONS 96,842 71,640 56,844 39,510

Income tax paid (16,576) (13,470) (10,053) (7,306)

Payment of retirement benefit obligation - (919) - -

NET CASH GENERATED FROM OPERATING ACTIVITIES 80,266 57,251 46,791 32,204

CASH FLOWS FROM INVESTING ACTIVITIESStock Exchange Compensation Fund (150) (156) (150) (156)Purchase of property, plant and equipment (866) (1,647) (482) (1,257)Proceeds from sale of property, plant and equipment 37 28 37 - Purchase of intangible assets (30) - - - Dividend received - - 8,994 9,488 Interest received 18,097 18,660 8,521 10,174 Investment in non-current Fixed deposits (138,300) (120,734) (86,000) (62,600)Proceeds from non-current Fixed deposits 51,534 91,500 34,500 47,500

NET CASH (USED IN)/GENERATED FROM INVESTING ACTIVITIES (69,678) (12,349) (34,580) 3,149

CASH FLOWS FROM FINANCING ACTIVITIESDividend paid to shareholders of holding company (33,223) (29,989) (33,223) (29,989)Dividends paid to non-controlling interest (8,642) (9,116) - -

NET CASH USED IN FINANCING ACTIVITIES (41,865) (39,105) (33,223) (29,989)NET INCREASE/(DECREASE) IN CASH AND CASHEqUIVALENTS (31,277) 5,797 (21,012) 5,364 CASH AND CASH EqUIVALENTS AT THE BEGINNINGOF THE YEAR 117,397 111,766 57,446 52,032

Effects of exchange rates on cash and cash equivalents 106 (166) 141 50

CASH AND CASH EqUIVALENTS AT THE END OF THE YEAR 86,226 117,397 36,575 57,446

REPRESENTED BY:Deposits - Current 57,953 112,694 34,953 55,694 Bank balances and cash 28,273 4,703 1,622 1,752

86,226 117,397 36,575 57,446


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1. GENERAL INFORMATION

Following enactment of the Securities Act 2005,the Stock Exchange of Mauritius Ltd has adopted a new constitution and changed its status from private to public company on 6th October 2008. Its principal place of business and registered office is situated at One Cathedral Square Building, Level 4, 16, Jules Koenig Street, Port Louis.

The main activities of the company and its subsidiary are:

- The Stock Exchange of Mauritius Ltd: To provide facilities for buying, selling and otherwise dealing in securities on the Stock Exchange.

- The Central Depository & Settlement Co Ltd: To provide depository, clearing and settlement service in order to facilitate dealings in securities.

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

In the preceding year, the group and company early adopted IAS 19 Employee Benefits - Amended standard resulting from the post employment benefits and termination benefits projects effective for accounting period begining 1 January 2013 .

In the current year, the group and company have applied all of the new and revised IFRSs issued by the International Accounting Standards Board (“IASB”) and the International Financial Reporting Interpretations Committee (“IFRIC”) of the IASB that are relevant to their operations and effective for accounting periods beginning on 1 July 2013.

(2.1) Relevant Standards applied with no material effect on the financial statements.

The following relevant new and revised Standards have been applied in these financial statements. Their application has not had any material impact on the amounts reported in these financial statements but may impact the accounting for future transactions or arrangements.

IAS 1 Presentation of Financial Statements - Amendments resulting from Annual Improvements 2009-2011 cycle (comparative information)

IAS 16 Property, plant and Equipment - Amendments resulting from Annual Improvements 2009-2011 cycle (servicing equipment)

IAS 27 Seperate Financial Statement - Original issue

IAS 32 Financial Instruments: Presentation - Amendments resulting from Annual Improvements 2009-2011 cycle (tax effect of equity distributions)

IFRS 7 Financial Instruments: Disclosures - Amendments related to the offsetting of assets and liabilities

IFRS 10 Consolidated Financial Statements - Original issue

IFRS 10 Consolidated Financial Statements - Amendments to transitional guidance

IFRS 12 Disclosure of Interests in Other Entities - Original issue

IFRS 12 Disclosure of Interests in Other Entities - Amendments to transitional guidance

IFRS 13 Fair Value Measurement - Original issue

(2.2) New and revised Standards in issue but not yet effective

At the date of authorisation of these financial statements, the following relevant Standards were in issue but effective on annual periods beginning on or after the respective dates as indicated:

IAS 16 Property, Plant and Equipment - Amendments regarding the clarification of acceptable methods of depreciation and amortisation (effective 1 January 2016)

IAS 16 Property, Plant and Equipment - Amendments bringing bearer plants into the scope of IAS 16 (effective 1 January 2016)

IAS 19 Employee Benefits - Amended to clarify the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of service (effective 1 July 2014)

IAS 24 Related Party Disclosures – Amendments resulting from Annual Improvements 2010-2012 Cycle (management entities) (effective 1 July 2014)

IAS 27 Property, Plant and Equipment - Amendments for investment entities (effective 1 January 2014)

IAS 27 Property, Plant and Equipment - Amendments reinstating the equity as an accounting option for investment in subsidiaries, joint ventures and associates in an entity’s seperate financial statements (effective 1 January 2016)

IAS 32 Financial Instruments: Presentation - Amendments relating to the offsetting of assets and liabilities (effective 1 January 2014)

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

(2.2) New and revised Standards in issue but not yet effective (Cont'd)

IAS 36 Impairment of Assets - Amendments arising from Recoverable Amount Disclosures for Non-Financial Assets (Effective 1 January 2014)

IAS 39 Financial Instruments: Recognition and Measurement – Amendments for novations of derivatives (effective 1 January 2014)

IAS 39 Financial instruments: Recognition and Measurement - Amendments to permit an entity to elect to continue to apply the hedge accounting requirements in IAS 39 for a fair value hedge of the interest rate exposure of a portion of a portfolio of financial assets or financial liabilities when IFRS 9 is applied, and to extend the fair value option to certain contracts that meet the ‘own use’ scope exception (effective 1 January 2018)

IFRS 7 Financial Instruments: Disclosures - Deferral of mandatory effective date of IFRS 9 and amendments to transition disclosures (effective 1 January 2018)

IFRS 7 Financial Instruments: Disclosures - Additional hedge accounting disclosures (and consequential amendments) resulting from the introduction of the hedge accounting chapter in IFRS 9 (effective 1 January 2018)

IFRS 9 Financial Instruments - Original Issue (Classification and measurement of financial assets) (effective 1 January 2018)

IFRS 9 Financial Instruments - Reissue to include requirements for the classification and measurement of financial liabilities and incorporate existing derecognition requirements (effective 1 January 2018)

IFRS 9 Financial Instruments - Deferral of mandatory effective date of IFRS 9 and amendments to transition disclosures (effective 1 January 2018)

IFRS 9 Financial Instruments - Reissue to incorporate a hedge accounting chapter and permit the early application of the requirements for presenting in other comprehensive income the ‘own credit’ gains or losses on financial liabilities designated under the fair value option without early applying the other requirements of IFRS 9 (effective 1 January 2018)

IFRS 10 Consolidated Financial Statements - Amendments for investing entities (effective 1 January 2014) IFRS 12 Disclosure of Interests in Other Entities - Amendments for investing entities (effective 1 January 2014) IFRS 13 Fair Value Measurement - Amendments resulting from Annual Improvements 2010-2012 Cycle (short-term

receivables and payables) (Amendments for conclusion basis only)

IFRS 13 Fair Value Measurement - Amendments resulting from Annual Improvements 2011-2013 Cycle (scope of the portfolio exception in paragraph 52) (Effective 1 July 2014)

IFRS 15 Revenue from Contracts with Customers – Original issue (effective 1 January 2017)

The directors anticipate that these amendments will be applied in the financial statements for the annual periods beginning on the respective dates as indicated above. The directors have not yet assessed the potential impact of the adoption of these amendments.

3. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation of financial Statements

The Financial statements are prepared under the historical cost convension and in accordance with International Financial Reporting Standards (IFRS).

(b) Basis of consolidation

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

(including structured entities) controlled by the Company. Control is achieved when the Company:

• has power over the investee

• is exposed, or has rights, to variable returns from its involvement with the investee; and

• has the ability to use its power to affect its returns

The Company reassesses whether or not its controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Where the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sifficient to give it the practical ability to direct the relevant activities of the investee


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3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

unilaterally, The Company considers all relevant facts and circumtances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power including:

• the size of the Company’s holding of voting rights relative to the size and dispersion of holding of the other vote

• potential voting rights held by the Company, other vote holders or other parties;

• rights arising from other contractual arrangements; and

• any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the

Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owner of the Company and to the non-controlling interest. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies

into line with the Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows, relating to transactions between members of the Group are eliminated in full on consolidation.

Non-controlling interests in the net assets (excluding goodwill) of the consolidated subsidiary are identified separately from the Group’s equity therein. Non-controlling interests consist of the amount of those interests at the date of original business combination (see below) and the non-controlling interests’ share of changes in equity since the date of the combination. Losses applicable to the non-controlling interest in excess of the non-controlling interests’ in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the non-controlling interests has a binding obligation and is able to make an additional investment to cover the losses.

(c) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents revenue from transaction fees, listing fees and service fees for the company and the subsidiary.

Revenue from services are recognised when the services have been performed and are billable.

Other income include interest receivable, sale of information, and consultancy fees which are recognised on an accrual basis while dividend income is recognised when the shareholders’ rights to receive the dividend have been established.

(d) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

Profit or loss on disposal of property, plant and equipment is determined by the difference between the carrying

value of the assets and its net disposal proceeds and is accounted for in the statement of profit or loss and other comprehensive income.

Depreciation is calculated so as to write off the cost of property, plant and equipment less their residual values over

their estimated useful lives using the straight line method as follows:

Freehold Office Premises - 50 Years

Office furniture and equipment - 5 - 8 Years

Computer equipment - 5 Years

Motor vehicles - 5 - 8 Years

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3. SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

(e) Intangible assets

Computer Software Computer software that is not considered to form an integral part of any hardware equipment is recorded as

intangible assets. The software is capitalised at cost and amortised over its estimated useful lives of 13 1/2 years.

Development Cost Cost associated with developing or maintaining computer software are recognised as an expense as incurred.

Costs that are directly associated with the production of identifiable and unique software controlled by the group and that will generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs relate to employees involved in software development.

The Computer software development costs recognised as assets are amortised using the straight line method over their estimated useful lives (5 years).

(f) Investment in subsidiary In the company’s financial statements, investment in subsidiary is stated at cost. The carrying amount is reduced if

there is any indication of impairment in value. (g) Inventories Inventories are valued at the lower of cost (determined on the weighted average basis) and net realisable value.

Cost of inventories comprise all costs of purchase and other costs incurred in bringing such stocks to their present condition. Net realisable value is the estimate of the selling price in the ordinary course of business less selling expenses.

(h) Foreign currencies Transactions in foreign currencies are translated to Mauritian Rupees at the rate of exchange ruling at the date of

transaction. Monetary assets and liabilities outstanding at year end are translated to Mauritian rupees (“Rs”) at the rates of

exchange ruling at the reporting date. Exchange differences arising on the settlement and the retranslation of monetary items are recognised in the

statement of profit or loss and other comprehensive income.

(i) Taxation Income tax expense represents the sum of the tax currently payable and deferred tax.

Current Tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of profit or loss and other 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the reporting date.

Deferred Tax

Deferred tax is provided on the comprehensive basis using the liability method.

Deferred tax liabilities are recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes.

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


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3. SIGNIFICANT ACCOUNTING POLICIES (Cont'd) (j) Retirement benefits

The company operates a defined contribution pension plan. Its subsidiary The Central Depository &

Settlement Co Ltd (CDS) operates a defined benefit pension plan.

(i) Defined contribution pension plan and state pension plan

The company’s contributions to the defined contribution pension plan are charged to the statement of profit or loss and other comprehensive income in the year in which they fall due.

(ii) Defined benefit pension plan

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.

For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.

Defined benefit costs are categorised as follows:

- Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements).

- Net interest expense or income.

- Remeasurement.

The Group presents the first two components of defined benefit costs in profit or loss in the line item cost of operations. Curtailment gains and losses are accounted for as past service costs.

(iii) State pension plan

Contributions to the National Pension Scheme are charged to profit or loss in the period in which they are due.

(k) Provisions

Provisions are recognised when the group has a present obligation as a result of a past event, and it is probable

that the group 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 the end of each reporting date and adjusted to reflect the current best estimate.

(l) Financial instruments

Financial assets and liabilities are recognised on the statement of financial position when the group has become party to the contractual provisions of the financial instruments.

The classification of financial instruments depends on the nature and purpose of financial instruments and is

determined at the time of initial recognition.

These instruments are measured as set out below:

(i) Held-to-maturity investments

Held-to-maturity investments are financial assets with fixed or determinable payments and fixed maturity that the company has the positive intent and ability to hold to maturity. They are measured at amortised cost, less any impairment loss. The interest accrued is recorded as interest income in the statement of profit or loss and other comprehensive income.

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3. SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

(l) Financial instruments (Cont'd)

(ii) Trade and other receivables

Trade and other receivables originated by the group are stated at cost less any allowance for doubtful debts. An estimate of doubtful debts is made based on a review of all outstanding amounts at reporting date. Bad debts are written off during the period in which they are identified.

(iii) Cash and cash equivalents

Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at the end of each reporting period.

For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks and investments in deposits with maturity of within one year.

(iv) Trade and other payables

Trade and other payables are stated at their amortised cost.

(v) Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

(vi) Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

(m) Impairment

At the end of each reporting date, the group 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 recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any, and the carrying amount of the asset is reduced to its recoverable amount.

(n) Related parties

Related parties are individuals and companies where the individual or company has the ability, directly or indirectly

to control the other party or exercise significant influence over the other party financial and operating decisions.

(o) Stated capital

Ordinary shares are classified as equity.

4. ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY The preparation of financial statements in accordance with IFRSs 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.


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4. ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Cont'd)

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.

Property, plant and equipment

The cost of the property, plant and equipment is depreciated over the estimated useful life of the asset. The estimated useful life is based on expected usage of the asset and expected physical wear and tear, which depends on operational factors. Management has not considered any residual value as it is deemed immaterial.

5. PROPERTY, PLANT AND EQUIPMENT

(a) THE GROUP

Freehold Office

Premises

Office furniture and equipment

Computer equipment

Motor vehicles Total

Rs’ k Rs’ k Rs’ k Rs’ k Rs’ k

Cost

At 1 July 2012 38,873 8,477 17,435 9,309 74,094

Additions - 142 1,505 - 1,647Disposals - - (39) - (39)Assets written off - (102) (665) - (767)At 30 June 2013 38,873 8,517 18,236 9,309 74,935

At 1 July 2013 38,873 8,517 18,236 9,309 74,935Additions - 59 807 - 866Disposals - (20) (121) - (141)Assets written off - - (5) - (5)

At 30 June 2014 38,873 8,556 18,917 9,309 75,655

Accumulated depreciationAt 1 July 2012 1,501 6,874 14,364 3,832 26,571Charge for the year 757 605 964 1,545 3,871Disposals - - (22) - (22)Assets written off - (102) (655) - (767)At 30 June 2013 2,258 7,377 14,641 5,377 29,653

At 1 July 2013 2,258 7,377 14,641 5,377 29,653Charge for the year 757 556 1,001 1,549 3,863Disposals - (20) (80) - (100)Assets written off - - (2) - (2)At 30 June 2014 3,015 7,913 15,560 6,926 33,414

Net book valueAt 30 June 2014 35,858 643 3,357 2,383 42,241

At 30 June 2013 36,615 1,140 3,595 3,932 45,282

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5. PROPERTY, PLANT AND EQUIPMENT (Cont'd)

(b) THE COMPANY

Freehold Office

Premises

Office furniture and equipment

Computer equipment

Motor vehicles Total

Rs’ k Rs’ k Rs’ k Rs’ K Rs’ k

Cost

At 1 July 2012 22,463 4,403 6,337 6,802 40,005

Additions - 104 1,153 - 1,257 Disposals - (102) (665) - (767)At 30 June 2013 22,463 4,405 6,825 6,802 40,495

At 1 July 2013 22,463 4,405 6,825 6,802 40,495 Additions - 14 468 - 482 Disposals - - (121) - (121)Assets written off - - (5) - (5)At 30 June 2014 22,463 4,419 7,167 6,802 40,851

Accumulated depreciationAt 1 July 2012 858 3,322 4,708 2,552 11,440 Charge for the year 430 356 592 1,136 2,514 Disposals - (102) (665) - (767)At 30 June 2013 1,288 3,576 4,635 3,688 13,187

At 1 July 2013 1,288 3,576 4,635 3,688 13,187 Charge for the year 429 316 704 1,137 2,586 Disposals - - (80) - (80)Assets written off - - (2) - (2)At 30 June 2014 1,717 3,892 5,257 4,825 15,691

Net book valueAt 30 June 2014 20,746 527 1,910 1,977 25,160

At 30 June 2013 21,175 829 2,190 3,114 27,308


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6. INTANGIBLE ASSETS THE GROUP

Computer DevelopmentSoftware Cost Total

Rs’ k Rs’ k Rs’ k

Cost

At 30 June 2013 & 2014 6,643 250 6,893

Additions 30 - 30 6,673 250 6,923

AmortisationAt 1 July 2012 6,608 54 6, 62 Charge for the year 7 50 57 At 30 June 2013 6,615 104 6,719 Charge for the year 5 50 55 At 30 June 2014 6,620 154 6,774

Net book value

At 30 June 2014 53 96 149

At 30 June 2013 28 146 174

7. INVESTMENT IN SUBSIDIARY

THE COMPANY

2014 and 2013

Rs’ k

At 1 July and 30 June 7,650

The investment in subsidiary represents 51% of the ordinary share capital of Central Depository & Settlement Co Ltd, a company incorporated in Mauritius. The above investment is unquoted. At the end of the reporting period, the directors are of opinion, that there has been no objective evidence of impairment.

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7. INVESTMENT IN SUBSIDIARY (Cont'd)

Central Depository and Settlement Co Limited

2014 2013Rs’ k Rs’ k

Current Assets 61,648 71,388

Non-current assets 148,790 112,760

Current Liabilities 34,067 24,469

Non current Liabilities 5,410 4,779

2014 2013

Rs’ k Rs’ k

Revenue 73,479 60,184

Expenses (32,490) (28,241)

Profit(loss) for the year 40,989 31,943

Other comprehensive loss for the year (837) (2,992)

Total comprehensive income for the year 40,152 28,951

Net cash inflow (outflow) from operating activities 33,473 24,832

Net cash inflow (outflow) from investing activities (26,137) (6,010)

Net cash inflow (outflow) from financing activities (17,636) (18,605)

Net cash inflow (outflow) (10,300) 217

8. DEPOSITS

THE GROUP THE COMPANY2014 2013 2014 2013Rs’ k Rs’ k Rs’ k Rs’ k

Maturity falling:

-Within one year 57,953 112,694 34,953 55,694

-Between one to five years 323,100 236,334 200,700 149,200

381,053 349,028 235,653 204,894

The deposits bear interest at rates ranging from 1.7% to 9.6 % p.a. (2013: 1.8% to 9.65% p.a.).


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9. STOCK EXCHANGE COMPENSATION FUND

(a) The Board of Directors of The Stock Exchange of Mauritius Limited decided on 3 August 1998 to create a compensation fund, in accordance with section 40 of The Stock Exchange Act 1988. This fund was set up in accordance with sections 40 to 45 of the Stock Exchange Act 1988, which has now been replaced by Section 148 of the Securities Act 2005. Its objective is to compensate persons suffering from pecuniary losses from any default committed by member companies. An initial amount of Rs 2,750,000 was transferred out of the company’s retained earnings for this purpose in 1999. Movements on the fund are detailed below:

THE GROUP AND THE COMPANY

2014 2013Rs’ k Rs’ k

Balance at 01 July 4,369 4,236

Add: Interest receivable from investments made on behalf of Compensation Fund 150 156

4,519 4,392

Less:

Income tax charge (23) (23)

Balance at 30 June 4,496 4,369

Net movement for the year 127 133

(b) For cash flow purposes


2014 2013Rs’ k Rs’ k

Movement for the year (excluding tax provision) 150 156

10. INVENTORIESTHE GROUP AND THE COMPANY

2014 2013Rs’ k Rs’ k

Stationery, at cost 222 303

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11. TRADE AND OTHER RECEIVABLES


Non-Current

Interest receivable from fixed deposits 22,763 12,737 15,321 7,614

Loan to employees 1,701 2,811 1,094 1,537

Other receivables 1,106 1,110 76 110

25,570 16,658 16,491 9,261

Current Trade receivables 18,427 9,428 13,084 6,316

Interest receivable from fixed deposits 6,767 10,145 3,312 3,961

Other receivables and prepayments 4,751 4,023 2,401 2,723

Loan to employees 755 938 405 401

Dividend receivable from subsidiary - - 12,287 8,994

30,700 24,534 31,489 22,395

The average credit period on sales of services is 7 days for the company and 30 days for the subsidiary. No interest is charged on the trade receivables. Before accepting any new customer, an assessment is made of the potential customer›s credit quality. There are no past due debts which require a provision for doubtful debts as at 30 June 2014 as the directors consider them to be fully recoverable.

Loans to employees are granted in line with the approved policy of the company and interest rates on these loans are charged at the current rates that the company is receiving on its fixed deposits and these rates are reviewed every six months.

Non-current other receivables include deferred expenditure in relation to car grant scheme to staff.

Ageing of past due but not impaired debts


7-30 days 5,464 155 237 155

30-90 days 727 140 612 114

More than 90 days 11 105 11 98

6,202 400 860 367

12. STATED CAPITAL

THE GROUP AND THE COMPANY2014 and 2013

Rs’ k

Issued and fully paid

330,000 ordinary shares of Rs 10 each 3,300

Share Premium 50

3,350

Ordinary shares are not redeemable, carry voting rights, entitlement to dividends or distributions and on winding up to any surplus on assets of the company.


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13. RETIREMENT BENEFIT OBLIGATIONS

(i) Defined benefit pension plan

The Group operates a defined retirement benefit plan for all qualifying employees of its subsidiary. The plan is a defined benefit arrangement, with benefits based on salary at the time the benefit starts. It provides for a pension at retirement and a benefit on death or disablement before death. The assets of the Scheme are invested entirely in a Deposit Administration Policy with the Metropolitan Life (Mauritius) Ltd.

Under the plan, the employees are entitled to post-retirement yearly instalments amounting to 1.67% of the final salary for each year of service until the retirement age of 60. The pensionable salary is limited to 66.7% of the final salary .

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

THE GROUP2014 2013Rs’ k Rs’ k

Present value of funded obligations 17,724 14,493

Fair value of plan assets (12,767) (10,146)

Liability in the statement of financial position 4,957 4,347

The pension plan typically exposes the Group to actuarial risks such as: concentration risk, interest rate risk, longevity risk and salary risk.

Concentration risk: As the plan assets are invested primarily in one class of invesment, that is in the Deposit Administration Fund, the plan may expose the entity to concentration of the Fund Market Risk.

Interest risk: The present value of the defined benefit obligation is calculated using a discount rate based on the pension fund's rate of return. As the fund is fully invested in Deposit Administration Fund managed by Metropolitan Life (Mauritius) Ltd increases or decreases in the discount rate will have significant impact on the liabilities.

Longevity risk: The present value of the defined benefits obligation is calculated by reference to the best estimate of plan participants mortality after retirement.

Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. Sensitivity analysis of salary increase assumption has been performed to assess its significance on the liability.

The amounts recognised in the statement of profit or loss and other comprehensive income are as follows:


Fund Expenses 173 161

Current service cost 1,133 986

Interest cost 1,232 623

Expected return on plan assets (938) (852)

Pension costs included in employee benefit expenses 1,600 918

Remeasurement recognised in OCI 837 2,922

837 2,922

Total 2,437 3,840

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13. RETIREMENT BENEFIT OBLIGATIONS (Cont'd)

Movements in the liability recognised in the statement of financial position:


At 01 July 4,347 1,425

Total expense as shown above 2,437 3,841

Contributions (1,827) (919)

At 30 June 4,957 4,347

Actual return on plan assets 968 792

Movements in the present value of the defined benefit obligations:


Opening defined benefit obligation 14,493 10,021

Current service cost 1,133 986

Interest cost 1,232 994

Liabilities extinguished on settlements 867 2,492

Benefits paid - -

Closing defined benefit obligation 17,725 14,493

Movements in the fair value of the plan assets:


Opening fair value of plan assets 10,146 8,596

Expected return on plan assets 938 852

Actuarial Loss 30 (60)

Contributions from the employer 1,827 919

Benefits paid - -

Fund Expenses (174) (161)

Closing fair value of plan assets 12,767 10,146


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Distribution of plan assets at end of period:-

The assets of the scheme are invested entirely (100%) in a Deposit Administration policy with the Metropolitan Life (Mauritius) Ltd.

The principal actuarial assumptions used were as follows: THE GROUP

2014 2013% %

Discount rate 8.50 8.50

Expected return on plan assets 8.50 8.50

Future salary increases 6.00 6.00

Future pension increases 3.00 3.00

The sensitivity analysis on defined benefit obligation at the end of each reporting period is:


1% increase in discount rate 14,665 11,894

1% decrease in discount rate 21,666 17,860

Increase due to 1% increase in Salaries 16,227 19,748

1% decrease in Salaries 12,081 14,974

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the statement of financial position. Retirement benefit obligations have been based on the report submitted by Feber Associates Limited, Actuaries and Consultants dated 4th June 2014.

(ii) Defined contribution pension plan

THE GROUP AND

THE COMPANY2014 2013Rs’ k Rs’ k

Contributions paid 1,791 1,697

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(iii) State pension plan


National pension scheme contributions charged 315 254 193 179

14. TAXATION

(i) Income tax Income tax is calculated at the rate of 15% (2013: 15%) on the profit of the year as adjusted for income tax

purposes.


Current tax liabilities 20,502 14,237 13,103 8, 27

Stock Exchange Compensation Fund (note 9) 23 23 23 23

20,525 14,260 13,126 8,450

Less APS Paid (12,606) (10,270) (7,082) (5,459)

7,919 3,990 6,044 2,991Prior year tax liabilities 3,990 3,211 2,991 1,858

Less tax already paid during the year (3,993) (3,237) (2,994) (1,884)

Under provision in respect of previous year 3 26 3 26

- - - -

Tax payable by Stock Exchange Compensation Fund (23) (23) (23) (23)

Tax payable as per statement of financial position 7,895 3,967 6,021 2,968

(ii) Current tax liabilities 20,525 14,260 13,126 8,450

Under provision for income tax in respect of previous year 3 26 3 26

Over provision in SEM compensation fund for prior years - (37) - (37)

Deferred tax expense 14 110 (6) 66

Income tax recognised in statement of profit or loss and other comprehensive income

20,542 14,359 13,123 8,505

(iii) Deferred taxation

2014 2013 2014 2013Rs’ k Rs’ k Rs’ k Rs’ k

At 01 July 1,102 992 669 603

Movement for the year 14 110 (6) 66

At 30 June 1,116 1,102 663 669

Deferred tax is made up of:2014 2013 2014 2013


Accelerated capital allowances 1,116 1,102 663 669


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14. TAXATION (Cont'd)

(iv) Tax reconciliation

THE GROUP THE COMPANY2014 2013 2014 2013

% % % %

Tax at the applicable rate 15.00 15.00 15.00 15.00 Tax effect of:- Expenses not deductible for tax 1.93 1.05 2.69 1.00 - Exempt income (0.23) (0.47) (2.57) (2.80)Underprovision of deferred tax for the current year - (0.24) - (0.02)Effective tax rate 16.70 15.34 15.12 13.18

15. TRADE AND OTHER PAYABLES


Trade payables 4,386 3,415 360 353

Other payables and accruals 8,003 5,403 3,928 2,632

Amount due to subsidiary company - - 277 -

12,389 8,818 4,565 2,985

The amount due to subsidiary company was unsecured, interest free with no fixed terms of repayment.

The average credit period of trade payables is 30 days. The group has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

16. DIVIDENDS

Following a board resolution dated 12th June 2014, a final dividend amounting to Rs 44,040,983 (Rs 133.46 per share) [2013: Rs 33,223,035 (Rs 100.68 per share) ] was declared in respect of the year ended 30 June 2014.

17. PROFIT BEFORE TAXATION

Profit before taxation is arrived at after charging the following items:


Staff costs 38,117 32,014 24,486 20,566

Depreciation on property, plant and equipment 3,863 3,871 2,586 2,514

Amortisation of intangible assets 55 57 - -

Auditors' remuneration:

- Audit fees to group auditors - 205 443 205 - Audit fees to auditors of subsidiary 229 202 - -

Corporate Social Responsibility 1,902 1,721 1,127 967

Cost of inventories expensed 694 775 - -

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18. REVENUE


Transaction fees 130,380 98,298 81,700 60,262

Listing fees 32,934 28,950 23,099 20,172

Service fees 605 564 365 330

Annual Membership fees 680 670 440 430

164,599 128,482 105,604 81,194

19. OTHER INCOME


Other income includes the following:

Sale of information 3,382 3,005 3,382 3,005

Advertising income 735 560 735 560

Interest receivable 24,895 22,761 15,729 14,188

Loss on disposal of property, plant and equipment (7) 11 (7) - Miscellaneous income 1,735 1,382 422 176

Profit on exchange 141 50 141 50

Dividend receivable - - 12,287 8,994

Interest for compensation fund 150 156 150 156

Consultancy fees 2,463 1,638 - -

33,494 29,563 32,839 27,129

20. EARNINGS PER SHARE

The calculation of earnings per share is based on group earnings of Rs 82,019,562 (2013: Rs 62,668,705) and 330,000 ordinary shares in issue throughout the two years ended 30 June 2014.

21. GUARANTEE FUND

(a) Section 3(8) of the Securities (Central Depository, Clearing and Settlement) Act 1996 requires the Central Depository & Settlement Co Ltd (CDS) to establish and maintain a Guarantee Fund for the purpose of providing an indemnity against any default in respect of payments for or delivery of securities by any participant and of obligations of participants towards CDS.

The Fund is independently managed by the Business Conduct Committee (BCC) and not by the Board of Directors of CDS. The BCC consists of a majority of independent members who are not directors of the CDS.


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21. GUARANTEE FUND (Cont'd)

The assets of the Guarantee Fund consist of all money accruing lawfully to that fund and of such contributions as may be specified in the CDS rules. The Guarantee Fund is made up as follows:-


MCB deposit account 26,500 26,900

Savings account 8,361 3,510

Current account 5 5

Temporary cash deposit (3,054) (3,054)

Contributions due on value of transactions 75 47

Cash deposit from Investment dealers (2,103) (303)

Income tax payable (48) (49)

Interest receivable 708 1,654

30,444 28,710

Movements on the fund are detailed below:-


Balance at 01 July 28,711 26,532

Contribution made by CDS 659 518

Contribution made by new investment dealer - 621

Interest 1,264 1,222

Income tax (190) (183)

1,733 2,178

Balance at 30 June 30,444 28,710

22. RELATED PARTY TRANSACTIONS


(i) Outstanding balances


(ii) Purchases of goods and services

Purchases of services

Subsidiary - - 1,542 1,469

(iii) Compensation of key management

personnel

Short term benefits 15,798 12,963 12,163 9,880

Post employment benefits 1,493 1,868 736 686

17,291 14,831 12,899 10,566

(iv) Remuneration of directors

- Non executive 1,952 2,012 919 1,017

- Executive 12,036 9,900 8,416 7,153

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22. RELATED PARTY TRANSACTIONS (Cont'd)THE GROUP THE COMPANY

2014 2013 2014 2013


(v) Pension contributions to pension plans 3,392 5,538 1,791 1,697

(vi) Dividend receivable from subsidiary 12,287 - 12,287 8,994

(vii) Dividend payable 44,041 33,223 44,041 33,223

23. FINANCIAL RISK MANAGEMENT

Capital risk management

The group manages its capital to ensure that it will be able to continue as a going concern while maximising the returns of the stakeholders. The capital structure of the group and the company consists of equity comprising issued capital and retained profit.

The Board of Directors of the SEM has a policy of maintaining a non-distributable reserve included under retained earnings, representing 24 months budgeted expenditure to ensure its own business continuity and to provide a shock absorber to cover the ultimate risk when all other risk mechanisms have been exhausted.

Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 3 to the financial statements.

Categories of financial instruments


Financial assets

Loans and receivables:

Deposits:

- Current 57,953 112,694 34,953 55,694 - Non current 323,100 236,334 200,700 149,200

Bank balances and cash 28,273 4,703 1,622 1,752

Trade and other receivables

- Current 27,522 21,328 29,311 20,075

- Non current 25,570 16,572 16,491 9,175

462,418 391,631 283,077 235,896

Financial liabilities

Amortised cost:

Trade payables 4,385 3,415 360 353

Other payables and accruals 8,004 5,403 3,928 2,632


Proposed dividends 44,041 33,223 44,041 33,223

56, 30 42,041 48,606 36,208

Foreign Currency risk

Except for bank accounts in US Dollars with a balance of Rs 5,786,597 (2013: Rs 6,370,826) for the group and Rs 5,435,325 (2013: Rs 6,370,826) for the company at 30 June 2013, and a Gold notes denominated in AUD with a balance of Rs 3,599,583 for the group ,there are no other financial assets and liabilities denominated in foreign currencies.


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23. FINANCIAL RISK MANAGEMENT (Cont'd)

Foreign Currency risk (Cont'd)

The group and company are exposed to currency risk of USD relative to MUR.

The following table details the group’s and company’s sensitivity to a 5% increase in United States Dollars and Australia Dollars against the Mauritian Rupee. A positive number below indicates an increase in profit and other equity where United States Dollars and Australian Dollars strengthen 5% against Mauritian Rupee. For a 5% weakening of United States dollars and Australian Dollars against the relevant currency, there would be an equal and opposite impact on the profit and their equity.


Increase in Profit

USD 289 318 272 318

AUD 180 - - -

Increase in equity

USD 289 318 272 318

AUD 180 - - -

Credit risk

The group’s credit risk is primarily attributable to its trade receivables. At year end, the group considers that all the trade receivables are recoverable.

Interest rate risk

The group is exposed to risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows.

The interest rate profile of the group’s and the company’s financial assets as at 30 June 2014 is as follows:


2014 2013% %

Deposits 1.5 - 9.60 1.7 - 9.65

The following table details the group’s and company’s sensitivity for fixed deposits if interest rates had been 50 basis points higher. For a lower interest rate by 50 basis points, there would be an equal and opposite impact on the profit and their equity.


Increase in Profit 1,905 1,745 1,178 1,024

Increase in Equity 1,905 1,745 1,178 1,024

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Liquidity risk management

Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the management of the group’s short, medium and long-term funding and liquidity management requirements. The group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

The maturity profile of the financial instrument is summarised as follows:

THE GROUP Less than Less than 1 month 1 Year 1-5 Years > 5 Years Total

Rs' k Rs' k Rs' k Rs' k Rs' k

2014

Financial assets

Deposits 6,453 51,500 323,100 - 381,053

Bank balances and cash 28,273 - - - 28,273 Trade and other receivables 18,615 8,907 25,570 - 53,092

53,341 60,407 348,670 - 462,418

Financial Liabilities

Trade and other payables - 12,389 - - 12,389

Dividends - 44,041 - - 44,041

- 56,430 - - 56,430

THE GROUP Less than Less than 1 month 1 Year 1-5 Years > 5 Years Total


2013

Financial assets

Deposits 5,779 106,915 236,334 - 349,028

Bank balances and cash 4,703 - - - 4,703 Trade and other receivables 6,841 14,487 16,305 267 37,900

17,323 121,402 252,639 267 391,631



Dividends - 33,223 - - 33,223

- 42,041 - - 42,041


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Liquidity risk management (Cont'd)

THE COMPANY Less than Less than 1 month 1 Year 1-5 Years > 5 Years Total


2014

Financial assets

Deposits 6,453 28,500 200,700 - 235,653

Cash at bank 1,622 - - - 1,622 Trade and other receivables 13,118 16,193 16,460 31 45,802

21,193 44,693 217,160 31 283,077



Dividends - 44,041 - - 44,041

- 48,606 - - 48,606

THE COMPANY

Less than Less than

1 month 1 Year 1-5 Years > 5 Years Total


2013

Financial assets

Deposits 5,779 49,915 149,200 - 204,894

Cash at bank 1,752 - - - 1,752 Trade and other receivables 6,841 13,234 8,994 181 29,250

14,372 63,149 158,194 181 235,896



Dividends - 33,223 - - 33,223

- 36,208 - - 36,208

Fair value of financial instruments

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

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

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

Level 2

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

Level 3

The directors consider that the carrying amounts of financial assets and financial liabilities recognised in the financial statements approximate their fair values.

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Certificate from the Company Secretary

I certify that, to the best of my knowledge and belief, the Company has filed with the Registrar of Companies all such returns as are required of the Company under the Companies Act 2001 in terms of Section 166 (d).

Chaitanand Jheengun, FCIS

Secretary


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REMINISCENCES OF 25 YEARS OF HISTORY

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ADDITIONAL INFORMATION

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Associated Brokers Ltd

3rd Floor , Travel House,Cnr Sir William Newton Street & Royal Street, Port-LouisTel: 212 3038 - Fax: 212 6690E-Mail:[email protected] of Investment dealers:Mr Pierre de Chasteigner du Mée - Mr François Cayeux - Mrs Roselyn Phanjoo - Mrs Patricia KolfirMrs Sharon Leung - Mrs Kaminee Syea - Mrs Irene Landinaff

Bramer Capital Brokers Ltd

Level 11, Bramer House, 66C2,Cybercity, EbeneTel: 403 4100 - Fax: 467 9730E-Mail:[email protected] of Investment dealer:Mrs Jaya Allock

Capital Markets Brokers Ltd

Alexander House, 35 Cybercity, EbeneTel: 4679655 - Fax: 4540430E-Mail:[email protected] of Investment dealers:Mr. Tommy Lo Seen Chong - Mr. Kamlesh RamjeeMr. Reshad Tagally - Mrs. Sunita Bissessur-Alleck -Ms Neetusha Aubeeluck

AXYS Stockbroking Ltd

Bowen Square, Dr Ferriere Street, Port-Louis Tel: 2133475 - Fax: 2133478E-Mail:[email protected] of Investment dealers:Mr Vikash Tulsidas - Mrs Adlette Rioux -Mr Melvyne Chung Kai To

Anglo Mauritius Stockbrokers Ltd

3rd Floor, Swan Group Centre, 10 Intendance Street Port-LouisTel: 208 7010 - Fax: 212 9867E-Mail:[email protected] of Investment dealers:Mr. Neeraj Umanee - Ms. Aisha Bibi Yoosoof Parak. - Mrs. Dona Narayanam - Mrs Krishma Bhavika Mungur - Mr Poorbarlen Comarrasawmy

MCB Stockbrokers Ltd

9th Floor MCB Centre, Sir William Newton St, Port LouisTel: 202 5245 / 202 5427 Fax: 208 9210 E-Mail:[email protected] of Investment dealers:Mr. Sunil Seeam - Mr. Ashveen Chummun - Mrs. Michaela Garnier - Mr Kevin Rangasami - Mrs Marie Ange Tse Rai Wah - Mrs Micheline Ng Yuen Yan - Mrs Karen Lodoiska - Mrs Reena Ramsurrun

LCF Securities Ltd

Suite 108, 1st Floor, Moka Business Centre, Mont Ory Road, MokaTel: 406-9626 - Fax: 433-5953E-Mail:[email protected] Representatives of Investment dealers:Mr. Rajiv Lutchmiah - Mrs Nemratta Lobin -Mr André Chung Shui

Ramet & Associés Ltee

1st Floor,St Louis House, 17 Mgr Gonin Street, Port Louis Tel: 212 3535 / 212 2661 - Fax: 208 6294E-Mail:[email protected] of Investment dealer:Mrs. Mathilde Leclézio

Prime Securities Ltd

Ground Floor, Unit 17, Air Mauritius Centre, 6, President John Kennedy Street, Port-LouisTel: 212 3500 / 212 4040 - Fax: 211 2424E-Mail:[email protected] Representatives of Investment dealers:Mrs. Banoomatee Veerasamy - Mr. Swaraj KowlessurMr. Soodesh Seechurn - Mrs. Sweta Ramtohul

SBM Securities Ltd

Level 11, State Bank Tower,1 Queen Elizabeth II Avenue, Port LouisTel: 202 1437 / 202 1438 / 202 1473 - Fax: 212 1710 E-Mail:[email protected] of Investment dealers:Mr Reedhee Bhuttoo - Mrs Patricia Dholah

IPRO Stockbroking Ltd

3rd Floor Ebene Skies, Rue de L’Institute, EbèneTel: 403-6470 / 465-1200E-Mail:Stockbroking @ipro.muRepresentatives of Investment dealers:Mrs Fabiola Yit Niuc - Mr Aranud Leclézio

Citygate Securities Ltd

7A, 7th Floor,Ebene Mews, 57 Ebene Cybercity, EbeneTel: 467-0768 / 467-0769 - Fax:468-1288E-Mail: [email protected] Representative of Investment dealer:Mr Laval Law How Hung

MEMBER COMPANIES

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OFFICIAL MARKET

BANKS, INSURANCE & OTHER FINANCE

MCB Group LimitedMauritian Eagle Insurance Co. LtdBramer Banking Corporation LtdMauritius Union Assurance Co. Ltd State Bank of Mauritius LtdSwan Insurance Co. LtdCim Financial Services Ltd

COMMERCE

Compagnie des Magasins Populaires LtéeENL Commercial LtdHarel Mallac LtdInnodis LtdIreland Blyth LtdVivo Energy Mauritius Ltd

INDUSTRY

Gamma Civic LtdGo Life International PCCPhoenix Beverages LtdThe Mauritius Chemical & Fertilizer Industry LtdMauritius Oil Refineries LtdPlastic Industry (Mtius) LtdUnited Basalt Products Ltd

INVESTMENTS

Alteo LimitedBelle Mare Holding LtdCaudan Development LtdCIEL LimitedENL Land Ltd(Ordinary)ENL Land Ltd(Preference)Fincorp Investment LtdThe Mauritius Development Investment Trust Co. LtdNational Investment Trust LtdPromotion and Development LtdP.O.L.I.C.Y LtdUnited Docks LtdRogers & Co. LtdTerra Mauricia Ltd

LEISURE & HOTELS

Automatic Systems LtdNew Mauritius Hotels LtdLux Island Resort LtdLottotech LtdSun Resorts Ltd

PROPERTY DEVELOPMENT

BlueLife LimitedLe Meritt Holdings Ltd

DEBT

Lux Island Resorts Ltd F/P Convertible BondsThe Mauritius Commericial Bank Ltd NotesState Bank of Mauritius Ltd Class A 1 Series BondsState Bank of Mauritius Ltd Class B 1 Series BondsUnited Basalt Products Ltd Bonds

SUGAR

Omnicane Limited TRANSPORT

Air Mauritius Ltd

FOREIGN

Dale Capital Group Limited

EXCHANGE TRADED FUNDS

NewGold Issuer Limited (RF) Gold Bullion DebenturesNewGold Issuer Limited (RF) Platinum Debentures

GLOBAL AND SPECIALISED FUNDS

Ipro Growth Fund LtdFidelis Opportunity Fund PCCGlobal Investment Opportunities FundKotak Investment Opportunities FundACM India Focus Fund LtdGlobal Diversified Fund PCCAfrica Sustainability FundNovare Africa Fund PCCBlack River Agricultural Fund PCC- JPT Capital AgrifundTheseus Property Fund Ltd Lancelot Global PCCACM Aussie LtdACM European LtdTriangle Real Estate India Fund LLCImara African Opportunities Fund LimitedImara Global Fund LimitedTimaeus Capital Fund PCCRSJ Prop, PCCSanlam Africa Core Real Estate Fund LimitedAIGO Holdings PCCGlobal Windsor Capital Fund LimitedIPRO African Market Leaders FundUniversal Golden Fund

SPECIALISED DEBT SECURITIESTC Mauritius HoldingsOmnicane Limited Multicurrency Medium Term Note Programme

GLOBAL BUSINESS COMPANIES

Atlantic Leaf Properties LimitedEvisa Investments LimitedRockcastle Global Real Estate Company LimitedColina Holdings LimitedBayport Management Limited

LISTED COMPANIES

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DEM MARKET

BANKS & INSURANCE & OTHER FINANCE

The Anglo-Mauritius Assurance Society Limited

COMMERCE

ABC Motors Company LimitedAssociated Commercial Co LtdCHEMCO LtdCompagnie Immobiliere Limitee

INFORMATION TECHNOLOGY

Bharat Telecom Ltd

INDUSTRY

Bychemex Ltd Forges Tardieu LimitedLes Gaz Industriels LteeLivestock Feed Limited (Ordinary)Livestock Feed Limited (Preference)Les Moulins de la Concorde Ltee (Ordinary)Les Moulins de la Concorde Ltee (Preference)Mauritius Cosmetics LimitedMargarine Industries LimitedMauritius Secondary Industries LtdPaper Converting Company LimitedQuality Beverages LimitedSoap & Allied Industries LimitedSociété de Développement Industriel et Agricole LimitéeVital Water Bottling Co Ltd

INVESTMENT

Alma Investments Company LimitedAscencia Ltd (Class A)Ascencia Ltd (Class B)The Black River Investments Company LimitedENL Investment LimitedENL Limited(Preference)Excelsior United Development Companies LimitedForward Investment And Development Enterprises LimitedThe Medine Shares Holding Company Limited (Ordinary)The Medine Shares Holding Company Limited (Preference)Phoenix Investment Company LimitedRHT Holding LtdUnited Investments Ltd

LEISURE & HOTELS

Constance Hotels Services LimitedMorning Light Co LtdSouthern Cross Tourist Company LimitedTropical Paradise Co Ltd (Ordinary)Tropical Paradise Co Ltd (Preference)

MINERAL AND EXPLORATION

Shumba Coal Limited

SUGAR

Constance La Gaiete Company LimitedMedine Limited (Ordinary)Medine Limited (Preference)The Union Sugar Estates Co Ltd

TRANSPORT

United Bus Service Ltd

OTHERS

Cargohub Capital LtdCompagnie Des Villages de Vacances L’Isle de France Limitee (COVIFRA) CIEL Textile LtdHotelest LimitedMedical And Surgical Centre LimitedMauritius Freeport Development Company LtdSIT Land Holdings Ltd (Options)

DEBT

United Investments Ltd Bonds

LISTED COMPANIES

NOTES

NOTES

Stock Exchange of Mauritius(Member of the World Federation of Exchanges)

4th Floor, One Cathedral Square Building16, Jules Koenig StreetPort Louis, Republic of MauritiusTel : (230) 212 9541 - Fax : (230) 208 8409Email : [email protected] : www.stockexchangeofmauritius.com

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