contents · chartered accountants in england and wales and holds a ba (hons) degree in accounting...

ANNUAL REPORT 2017 1

02 visionmission guiding principles

03company profilekey figures for 2017business linescorporate information

04 chairman’s statement

05 managing director’sreport 22 statement of

financial position

06 board of directors 23 statement of profit or loss and other comprehensive income

08 senior management team 24 statement of

changes in equity

09 corporate governance report

16 statutory disclosures

25 statement of cash flows

19 independent auditor’s report

18 statement of directors’ responsibilitiesstatement of compliance

17 secretary’s certificate

26 notes to the financial statements

Dear Shareholder,

The Board of Directors of Bychemex Limited is pleased to present the Annual Report for the year ended 31 December 2017, the contents of which are listed below.

This report was approved by the Board of Directors at its meeting held on 9 May 2018.

Antoine L. HarelChairman

Shemboosingh CheekhooreeManaging Director

cont

ents

vis o

n

guiding principles

mission

To be a regional leader in textile chemicals and auxiliaries.

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

To provide the Mauritian textile industry with cost effective and innovative textile auxiliaries, while working towards shareholders andemployees’ expectations.

BYCHEMEX LIMITED 2

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

Bychemex represents renowned principals that include CHT (Chemische Fabrik Tubingen) in Germany, Evonik South Africa and sources other chemicals from high quality suppliers such as Formosa Group and Arabian Alkali.

corporate information

BANKERSABC Banking Corporation LtdThe Mauritius Commercial Bank Ltd

LEGAL ADVISERSIvan Collendavelloo ChambersÉtude Georges Robert

NOTARYMr Didier MaigrotNotary Public

REGISTERED OFFICE18, Edith Cavell streetPort Louis

BUSINESS REGISTRATION NUMBERC07006253

SECRETARYHM Secretaries Ltd.18, Edith Cavell streetPort Louis

AUDITORSBDO & Co.

REGISTRYHarel Mallac Corporate Services Ltd18, Edith Cavell streetPort Louis

business lines

key figures for 2017 Revenue (Rs): 67.4 million Profit After Tax (Rs ): 1.07 million Dividend per Share (Re): 0.16


Textile Dyestuff & Auxiliaries

Bleaching Chemicals

ScouringChemicals

Detergents, Wetting agents, Anti-crease agents,

Sequestrants, Dispersants, Softeners

Dyestuffs including Bemacron dispersed dyes and Tubantin as well as the BEZAKTIV GO range which

comprises eco-friendly and efficient dyes.

Hydrogen Peroxide, Brine solution

Caustic Solutions

BYCHEMEX LIMITED 4

chairman’s statementDear Shareholder,

The Company achieved a 14% increase in revenue, from Rs 59.2m in 2016 to Rs 67.4m in 2017, whilst profit after tax increased to Rs 1.07m from Rs 0.12m during the previous period.

Earnings per share increased to Re 0.21 in 2017, up from Re 0.02 in previous period.

A dividend of Re 0.16 per share was declared in respect of its financial year ended 31 December 2017 compared to Re 0.08 for the previous year.

acknowledgements

We were deeply saddened by the demise of late Michel Rivalland, non-executive Director of the Company, who passed away on 12 August 2017. Michel was appointed to the Board of Directors of the Company in December 2006. He was a man of great vision and deep intellect. During his mandate he served the Company with unflinching dedication. Michel is greatly missed.

We thank the Management and the staff for their dedication and hard work. The Board is confident that Management will improve the Company’s profitability for the next year.



managing director’s reportDear Shareholder,

The Company registered an increase in turnover, despite a contracting textile and apparel sector, as a result of its effort to supply custom made solutions backed by sound technical expertise.

All product lines performed better than previous year, with growth in the Textile Dyes and Auxiliaries segment +35%, Scouring +29%, Bleaching + 19%. This has been achieved as a result of a closer collaboration with CHT, our main principal, and a supply of advanced auxiliaries destined to improve process performance at customers’ manufacturing facilities.

Bychemex continues to increase its range of eco-friendly products for the textile and apparel industry, in line with customer demands and the Group’s own sustainability initiatives.


Rs1∙07mprofit after tax

BYCHEMEX LIMITED 6

Antoine L. Harel (60)Chairman (Non-Executive)

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

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

Suie Sen Hock Meen Ah Kine (56)Executive Director

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

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

Shemboosingh Cheekhooree (56)Executive Director

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


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Charles Harel (50)Non-Executive Director

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

Other Directorships (listed Companies):Harel Mallac & Co. Ltd, The Mauritius Chemical and Fertilizer Industry Limited and Chemco Limited.

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Guy Harel (69)Independent Director

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

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

Michel Rivalland G.O.S.K. (64)Non-Executive DirectorDeceased on 12 August 2017

Late Michel Rivalland G.O.S.K. was a Fellow Member of the Chartered Association of Certified Accountants. He joined the Board of Directors of The Mauritius Chemical and Fertilizer Industry Limited on 1 June 2006 and served as Managing Director from October 2006 to 30 June 2009. He was an Executive Director of Harel Mallac & Co. Ltd. up to 12 August 2017. He was appointed to the Board of Directors of Bychemex Limited on 21 December 2006.

Other Directorships (listed Companies) on 12 August 2017:Compagnie des Magasins Populaires Limitée, Harel Mallac & Co. Ltd, Chemco Limited and The Mauritius Chemical and Fertilizer Industry Limited.

Vincent Labat (55)Independent Director

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


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BYCHEMEX LIMITED 8

team

senior management

Ajay LuximunOperations Manager

Ajay Luximun holds a degree in Business Studies and a master’s in International Business Management from the University of Mauritius. He joined Chemco Limited in May 1993 and has held various positions within the Company. He was appointed General Manager – Export for Harel Mallac Export Ltd in January 2012. Since January 2015, he is the Operations Manager of Chemco Limited and Bychemex Limited.

Suie Sen Hock Meen Ah KineFinance Director

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


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


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

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

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

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

At 31 December 2017, the Board of Directors consisted of six members, of whom two are Independent Directors and two are Executive Directors.

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

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

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

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

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

responsibilities entrusted to MCFI’s corporate governance committeeThe Board has entrusted to MCFI’s Corporate Governance Committee the key areas that are the remit of a nomination and remuneration committee. The Committee’s main responsibilities include establishing a formal and transparent procedure for developing policy on senior management remuneration. The Committee also fixes the fees of the Company’s non-executive and independent non-executive Directors. It oversees the process regarding recommendation of potential candidates as Directors, ensures that proposed Directors are not disqualified from holding that position, and monitors the balance and effectiveness of the Board. The Committee met four times in 2017.

corporate governance report

BYCHEMEX LIMITED 10


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

risk managementThe Board regularly addresses and evaluates physical, HR, IT, business, financial, reputational as well as regulatory and compliance risks. In the course of 2017, the internal audit function examined and evaluated the adequacy and effectiveness of control systems in place. Reports were subsequently produced and submitted to the Audit Committee, which, when applicable, made relevant recommendations to the Board.

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

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

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

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

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

attendance at board meetings held in 2017

Directors Attendance Antoine L. Harel 6/6

Suie Sen Hock Meen Ah Kine 6/6

Shemboosingh Cheekhooree 6/6

Charles Harel 5/6

Guy Harel 6/6

Vincent Labat 5/6

Michel Rivalland G.O.S.K. * (deceased on 12 August 2017) 3/4



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

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

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

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

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

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

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

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

The Internal Auditor has examined the current control systems to check their suitability and to ensure that they are being adhered to. The Internal Auditor conducts its assignments based on a yearly plan that is validated by the Audit Committee and has unrestricted access to the Company’s records, Management and employees. Systems reviewed in 2017 at Company level include sales, debtors and cash cycles, fixed assets cycles, IT procedures, as well as the stock cycle and cover all significant areas of the Company’s internal control.

In 2017, the Internal Auditor has regularly submitted to the Audit Committee reports for discussion and follow-up of the implementation of recommended actions.

group structureThe Directors recognise that the parent entity is Harel Mallac & Co. Ltd and that the ultimate parent entity is Société Pronema. The Directors common to the aforesaid entities are Mr Antoine L. Harel who is gérant of Société Pronema and Director of Harel Mallac & Co. Ltd and Mr Charles Harel who sits on the Board of Directors of Harel Mallac & Co. Ltd.

shareholders holding more than 5 percent of the companyShareholders directly or indirectly interested in 5 percent or more of the ordinary share capital of the Company are detailed on pages16 and 17.

BYCHEMEX LIMITED 12

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

share price index from January 2016 to December 2017

directors’ interest in sharesThe direct and indirect interests of Directors in the ordinary shares of the Company are to be found on page 16.

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

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

related party transactionsRelated party transactions are detailed on page 49.


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

2012 0.5 0.6 3.6

2013 0.6 0.4 5.6

2014 0.7 0.2 5.8

2015 0.1 0.1 1.5

2016 0.08 0.3 2.0

2017 0.16 1.3 3.6

Byc

hem

ex S

hare

Pri

ce (R

s)

DE

ME

X

0.00

5.00

10.00

15.00

20.00

25.00

Jan-1

6

Feb-1

6

Mar-16

Apr-1

6

May-16

Jun-1

6Ju

l-16

Aug-1

6

Sep-1

6

Oct-16

Nov-16

Dec-1

6

Jan-1

7

Feb-1

7

Mar-17

Apr-1

7

May-17

Jun-1

7Ju

l-17

Aug-1

7

Sep-1

7

Oct-17

Nov-17

Dec-1

7

Bychemex DemexMonth

170175180185190195200205210215220225230235240245250



senior management profileThe profile of the senior management members is given on page 8.

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

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

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

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

directors’ remunerationDirectors’ remuneration is given on page 16. It has been disclosed globally due to the sensitivity of the information.

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

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

code of ethicsAs a subsidiary of Harel Mallac, Bychemex abides to the new Group Code of Ethics adopted by the Board in March 2018 and made available to all employees in paper and electronic copies, as well as via an e-learning module. The Code can be consulted on Harel Mallac’s website.

BYCHEMEX LIMITED 14

profile of company’s shareholders as at 31 december 2017

Size of Shareholding Number of Shareholders Number of Shares Owned % Holding1-500 278 37,835 0.76501-1,000 114 97,972 1.971,001-5,000 174 362,837 7.255,001-10,000 13 89,798 1.7910,001-50,000 26 545,773 10.9150,001-100,000 2 117,393 2.35100,001-250,000 6 944,560 18.89250,001-500,000 2 558,349 11.17Over 500,000 1 2,245,483 44.91Total 616 5,000,000 100.00


summary of shareholding category as at 31 december 2017

Category of Shareholders Number of Shareholders Number of Shares Owned % HoldingIndividual 561 1,212,485 24.25

Insurance and assurance companies 2 267,140 5.34Pension and provident funds 4 379,939 7.60Investment and trust companies 4 118,406 2.37Other corporate bodies 45 3,022,030 60.44Total 616 5,000,000 100.00

shareholder information Forthcoming Annual Meeting

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

Schedule of events

Issues ActionPublication of condensed audited results for previous year March 2018Annual Meeting May/June 2018Publication of condensed results for the 1st quarter May 2018Publication of condensed results for the 2nd quarter August 2018Publication of condensed results for the 3rd quarter November 2018Dividend declaration and payment December 2018/January 2019

Shareholders’ practical guide

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



social, health and safetyManagement commitment with regards to health and safety is one of the top priorities in Bychemex business operations. Our goal is to continuously improve the work environment driven injuries, occupational illnesses and operational incidents as close to zero as possible and to strive for a work environment free from hazards and risks. The Company is aware of health and safety risks that are inherent to our operations and has taken appropriate actions to mitigate those risks through the risk assessment and risk control processes.

Our Health and Safety performance for 2017 showed no major work-related incident. This has been principally attributed to focus on training and raising employee awareness on health and safety issues. Overall these programmes have contributed in fostering the right attitude for positive culture change with respect to health and safety, resulting in lower accident rates in the organisation.

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

corporate, social and environmental responsibility As a subsidiary of the Harel Mallac Group, Bychemex’s support to the community is entrusted to the Fondation Harel Mallac (FHM), which focuses on education and support to vulnerable children.

In 2017, the FHM has supported four non-governmental organisations: Action for Economic & Social Development, ANFEN, SOS Children’s Villages and Association d’Alphabétisation de Fatima.

On the environmental side, Bychemex contributed to J’aime Ma Terre, a group-wide sensitisation project on waste management and the 4Rs (Reduce, Reuse, Recycle, Rots), which was rolled out in five schools. The Chemical and Fertilisers sub-division companies also set up a greenhouse on their premises where employees grow vegetables and fruits for their own consumption.

BYCHEMEX LIMITED 16

statutory disclosures

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

directorsThe Directors of the Company as at 31 December 2017 are listed on pages 6 and 7.

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

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

2017 2016Rs’000 Rs’000

Executive Directors - -Non-executive Directors 528 613

Total 528 613

directors’ interests in shares

The interests of the Directors in the shares of the Company as at 31 December 2017 were:

Directors Direct IndirectInterest Interest

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

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

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

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

shareholders At 31 December 2017, the following shareholders were directly or indirectly interested in more than 5 percent of the Company’s share capital.


statutory disclosures

Shareholders Interest %

Harel Mallac & Co. Ltd 44.91

National Pension Fund 5.94

The MCB Ltd. (A/c UIL Multi-Purpose Pension Fund) 5.21

corporate social responsibility

Donations 2017 2016

Rs’000 Rs’000

Political - -

Other - -

Corporate Social Responsibility 12 15

auditors’ fees

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

2017 2016

Rs’000 Rs’000

Auditors’ fees payable:

-BDO & Co. 143 138

Fees paid for other services provided by:

-BDO & Co. - -

secretary’scertificate

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

HM Secretaries LtdSecretary

21 March 2018

BYCHEMEX LIMITED 18

NAME OF PIE: BYCHEMEX LIMITEDREPORTING PERIOD: Year ended 31 December 2017

We, the Directors of Bychemex Limited, confirm that to the best of our knowledge, the PIE has not complied with Section 2.8.2 of the Code of Corporate Governance. The reasons for non-compliance are detailed on page 13 of the Corporate Governance Report.


21 March 2018


statement of directors’ responsibilitiesDirectors acknowledge their responsibilities for:

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

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

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

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

The Directors report that:

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

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

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

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

Signed on behalf of the Board of Directors on 21 March 2018.



statement of compliance


independent auditor's report for the year ended 31 December 2017

To the Shareholders of Bychemex Limited This report is made solely to the members of Bychemex Limited (the "Company"), as a body, in accordance with Section 205 of the Companies Act 2001. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Report on the audit of the Financial Statements Opinion We have audited the financial statements of Bychemex Limited (the "Company"), on pages 22 to 51 which comprise the statement of financial position as at 31 December 2017, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the financial statements on pages 22 to 51 give a true and fair view of the financial position of the Company as at 31 December 2017, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the Companies Act 2001. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Mauritius, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1. Revenue recognition

Key Audit Matter

Revenue is an important measure used to evaluate the performance of the Company. There is a risk that the revenue is presented for amounts higher than what has been actually generated by the Company. Consequently, we considered revenue recognition to be a significant key audit matter. The Company’s revenue is recognised when the significant risks and rewards of ownership of the goods have been passed to the buyer.

Related Disclosures

Refer to note 2.16 (accounting policy note).

Audit Response

Our audit procedures to address the risk of material misstatement relating to revenue recognition include:

• Testing of design, existence and operating effectiveness of internal control procedures implemented as well as test of details to ensure accurate processing of revenue transactions.

• The accuracy and completeness of revenue was verified through Computer Assisted Audit Techniques, cut-off test and analytical reviews.

2. Valuation of Inventory

Key Audit Matter

Inventory is carried in the financial statements at the lower of cost and net realisable value. The net carrying value of inventory at 31 December 2017 was Rs 12,302,235. Sales in the industry can be extremely volatile with consumer demand changing significantly based on current trends. As a result there is a risk that the carrying value of inventory exceeds its net realisable value. Related Disclosures

Refer to note 2.3 (accounting policy note) and note 8 (financial statement disclosures).

Audit Response

Our audit procedures were designed to challenge the adequacy of the Company’s provisions against inventory and included: • Examining the Company’s historical trading patterns of

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

BYCHEMEX LIMITED 20


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

We have also considered the adequacy of the Company’s disclosures in respect of the levels of provision against inventory. 3. Trade debtors recoverability Key Audit Matter The recoverability of trade receivables and the level of provisions for doubtful debts are considered to be a significant risk due to the pervasive nature of these balances to the financial statements, and the importance of cash collection with reference to the working capital management of the business. At 31 December 2017, the trade receivables balances, net of provisions, included in note 9 was Rs 24,199,610.

Related Disclosures Refer to note 2.12 (accounting policy note) and note 9 (financial statement disclosures). Audit Response We have:- assessed the design and implementation of key controls

around the monitoring of recoverability;- challenged management regarding the level and ageing

of trade receivables, along with the consistency and appropriateness of receivables provisioning by assessing recoverability with reference to cash received in respect of debtors. In addition we have considered the Company’s previous experience of bad debt exposure and the individual counter-party credit risk;

- critically assessed the recoverability of overdue unprovided debt with reference to the historical levels of bad debt expense and credit profile of the counter-parties;

- tested these balances on a sample basis through agreement to post period end invoicing and cash receipt; and

- considered the consistency of judgments regarding the recoverability of trade receivables made year on year to consider whether there is evidence of management bias through discussion with management on their rationale and obtaining evidence to support judgment areas.

Other information Directors are responsible for the other information. The other information comprises the Corporate Governance Report, Board of Directors, Profile of Senior Management Team, Statutory Disclosures, Statement of Directors’ Responsibilities and Statement of Compliance (but does not include the

financial statements and our auditor’s report thereon), which we obtained prior to the date of this auditor’s report, and the Vision, Mission and Guiding Principles Statement, Company Profile, Corporate Information, Business Lines, Chairman’s Statement and Managing Director’s Report (together referred as the ‘other statements’), which is expected to be made available to us after that date. Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the Corporate Governance Report, Board of Directors, Profile of Senior Management Team, Statutory Disclosures, Statement of Directors’ Responsibilities and Statement of Compliance, that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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

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

In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to

To the Shareholders of Bychemex Limited



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

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

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

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

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on Other Legal and Regulatory Requirements Companies Act 2001 We have no relationship with, or interests in, the Company, other than in our capacity as auditors and dealings in the ordinary course of business. We have obtained all information and explanations we have required. In our opinion, proper accounting records have been kept by the Company as far as it appears from our examination of those records.

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

To the Shareholders of Bychemex Limited

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

BDO & CoChartered Accountants

Port Louis,Mauritius.

21 March 2018

Rookaya Ghanty, FCCALicensed by FRC

BYCHEMEX LIMITED 22

statement of financial positionat 31 December 2017



Notes 2017 2016Rs Rs

ASSETS Non-current assetsProperty, plant and equipment 5 5,463,635 6,153,316 Intangible assets 6 91,701 213,480 Investment in financial assets 7 - 100,000

5,555,336 6,466,796 Current assetsInventories 8 12,302,235 10,107,561 Trade and other receivables 9 24,995,549 19,799,207 Cash and cash equivalents 26(c) 4,296,913 8,179,641

41,594,697 38,086,409

Total assets 47,150,033 44,553,205

EQUITY AND LIABILITIESCapital and reservesShare capital 10 5,000,000 5,000,000 Revaluation reserves 1,974,237 1,974,237 Actuarial reserves (339,417) (220,542)Retained earnings 24,688,509 24,413,553 Owners' interest 31,323,329 31,167,248

LIABILITIESNon-current liabilitiesObligations under finance lease 12 278,420 433,640 Deferred tax liabilities 13 527,055 589,534 Retirement benefit obligations 14 1,012,508 1,303,394

1,817,983 2,326,568

Current liabilitiesTrade and other payables 15 12,903,390 10,495,041 Current tax liabilities 16 150,111 20,310 Obligations under finance lease 12 155,220 144,038 Dividends 17 800,000 400,000

14,008,721 11,059,389

Total liabilities 15,826,704 13,385,957

Total equity and liabilities 47,150,033 44,553,205

These financial statements have been approved for issue by the Board of Directors on 21 March 2018.

The notes on pages 26 to 51 form an integral part of these financial statements.Auditor’s report on pages 19 to 21.


statement of profit or loss and other comprehensive income

year ended 31 December 2017Notes 2017 2016

Rs RsRevenue 2.16 67,442,901 59,229,117 Cost of sales 24 (53,894,920) (46,454,117)Gross profit 13,547,981 12,775,000 Other income 18 36,262 618,666 Other gains/(losses) - net 19 27,524 (16,650)Operating expenses 24 (12,710,502) (13,467,162)

901,265 (90,146)Net finance income 20 363,439 242,216 Profit before taxation 22 1,264,704 152,070 Income tax expense 16 (189,748) (35,704)Profit for the year 1,074,956 116,366

Other comprehensive income:Items that will not be reclassified to profit and loss:Remeasurements of post employment benefit obligations, net of deferred tax 11 (118,875) 153,701 Gain on revaluation of building, net of deferred tax 11 - 1,974,237 Other comprehensive income for the year, net of tax (118,875) 2,127,938

Total comprehensive income for the year 956,081 2,244,304

Earnings per share (Re/share) 25 0.21 0.02


BYCHEMEX LIMITED 24

year ended 31 December 2017statement of changes in equity

Share Revaluation Actuarial RetainedNotes capital reserves (losses)/gains earnings Total

Rs Rs Rs Rs Rs

Balance at 01 January 2017 5,000,000 1,974,237 (220,542) 24,413,553 31,167,248

Profit for the year - - - 1,074,956 1,074,956 Other comprehensive income for the year 11 - - (118,875) - (118,875)Total comprehensive income for the year - - (118,875) 1,074,956 956,081

Dividends - 2017 17 - - - (800,000) (800,000)

Balance at 31 December 2017 5,000,000 1,974,237 (339,417) 24,688,509 31,323,329

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

Profit for the year - - - 116,366 116,366 Other comprehensive income for the year 11 - 1,974,237 153,701 - 2,127,938 Total comprehensive income for the year - 1,974,237 153,701 116,366 2,244,304

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

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



year ended 31 December 2017statement of cash flows

Notes 2017 2016Rs Rs

Cash flows from operating activitiesCash used in operations 26(a) (3,248,114) (1,629,221)Interest received 33,962 414,082 Interest paid (41,620) (50,301)Tax paid (101,448) (196,700)Net cash used in operating activities (3,357,220) (1,462,140)

Cash flows from investing activitiesPurchase of property, plant and equipment 5 (386,529) (200,963)Net cash used in investing activities (386,529) (200,963)

Cash flows from financing activitiesFinance lease principal payments (144,038) (133,663)Dividends paid 17 (400,000) (500,000)Net cash used in financing activities (544,038) (633,663)

Net decrease in cash and cash equivalents (4,287,787) (2,296,766)

Movement in cash and cash equivalentsAt 1 January 8,179,641 10,183,890 Decrease (4,287,787) (2,296,766)Effect of foreign exchange rate changes 405,059 292,517

At 31 December 26(c) 4,296,913 8,179,641


BYCHEMEX LIMITED 26

year ended 31 December 2017notes to the financial statements

1. GENERAL INFORMATION Bychemex Limited is a public limited liability company incorporated and domiciled in Mauritius. The address of its registered office is 18, Edith Cavell Street, Port Louis. Its main activities consist of the trading of specialised chemical products for the textile industry. The Company is listed on the Development & Enterprise Market (DEM) of the Stock Exchange of Mauritius.

The Directors consider Harel Mallac & Co. Ltd, incorporated in the Republic of Mauritius as the holding company and Société Pronema, an entity registered in the Republic of Mauritius as the ultimate parent entity. These financial statements will be submitted for consideration and approval at the forthcoming Annual Meeting of Shareholders of the Company. 2. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. 2.1. Basis of preparation The financial statements of Bychemex Limited comply with the Companies Act 2001 and have been prepared in accordance with International Financial Reporting Standards (IFRS). These financial statements are that of an individual entity and are presented in Mauritian Rupees. Where necessary, comparative figures have been amended to conform with change in presentation in the current year. The financial statements are prepared under the historical cost convention, except that: (i) Buildings are carried at revalued amounts; and (ii) Relevant financial assets and financial liabilities are stated at their amortised cost. Amendments to published Standards effective in the reporting period Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12). The amendments clarify the accounting for deferred tax where an asset is measured at fair value and that fair value is below the asset’s tax base. The amendment has no impact on the Company’s financial statements. Disclosure Initiative (Amendments to IAS 7). The amendments require the entity to explain changes in its liabilities arising from financing activities. This includes changes arising from cash flows (e.g. drawdowns and repayments of borrowings) and non-cash changes such as acquisitions, disposals, accretion of interest and unrealised exchange differences. A reconciliation of the opening and closing carrying amounts for each item for which cash flows have been or would be classified as financial activities is presented in note 26(b).

Annual Improvements to IFRSs 2014-2016 Cycle IFRS 12 Disclosure of Interests in Other Entities. The amendments clarify that entities are not exempt from all of the disclosure requirements in IFRS 12 when entities have been classified as held for sale or as discontinued operations. The amendment has no impact on the Company’s financial statements. Standards, Amendments to published Standards and Interpretations issued but not yet effective Certain standards, amendments to published standards and interpretations have been issued that are mandatory for accounting periods beginning on or after January 1, 2018 or later periods, but which the Company has not early adopted. At the reporting date of these financial statements, the following were in issue but not yet effective: IFRS 9 Financial Instruments IFRS 15 Revenue from Contracts with Customers Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)



2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 2.1. Basis of preparation (cont’d) Standards, Amendments to published Standards and Interpretations issued but not yet effective (cont’d) IFRS 16 Leases Clarifications to IFRS 15 Revenue from Contracts with Customers Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2) Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4) Annual Improvements to IFRSs 2014-2016 Cycle IFRIC 22 Foreign Currency Transactions and Advance Consideration Transfers of Investment Property (Amendments to IAS 40) IFRS 17 Insurance Contracts IFRIC 23 Uncertainty over Income Tax Treatments Prepayment Features with negative compensation (Amendments to IFRS 9) Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28) Annual Improvements to IFRSs 2015-2017 Cycle Where relevant, the Company is still evaluating the effect of these Standards, Amendments to published Standards and Interpretations issued but not yet effective, on the presentation of its financial statements. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 4.

2.2. Property, plant and equipment All property, plant and equipment are initially recorded at historical cost. Buildings are subsequently stated at fair value, based on periodic, but at least triennial valuations, by external independent valuers, less subsequent depreciation. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. All other property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the assets’ carrying amount or recognised as a separate asset as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.

Increases in the carrying amount arising on revaluation are credited to other comprehensive income and shown as revaluation surplus in shareholders’ equity. Decreases that offset previous increases of the same asset are charged against the revaluation surplus, directly in equity; all other decreases are charged to profit or loss.

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

The assets’ residual values, useful lives and depreciation method are reviewed, and adjusted prospectively, if appropriate, at the end of each reporting period. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

YearsImprovement to Leasehold land 40Buildings on leasehold land 40Plant and Machinery 3-10Forklift 5Furniture and Office equipment 3-10Motor vehicles 5

BYCHEMEX LIMITED 28


Gains and losses on disposal of property, plant and equipment are determined by comparing proceeds with the carrying amount and included in the profit or loss. On disposal of revalued assets, the amounts included in revaluation surplus are transferred to retained earnings.

2.3. Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis. The cost of finished goods and work in progress comprises of raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business less the costs of completion and applicable variable selling expenses.

2.4. Foreign currencies (i) Functional and presentation currency Items included in the financial statements are measured using Mauritian Rupees, the currency of the primary economic environment in which the entity operates (“functional currency”). The financial statements are presented in Mauritian rupees, which is the Company’s functional and presentation currency.

(ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

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

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

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

2.5. Current and deferred income tax

The tax expense for the period comprises of current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current tax

The current income tax charge is based on taxable income for the year calculated on the basis of tax laws enacted or substantively enacted by the end of the reporting period.

Deferred tax

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

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

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

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 2.2. Property, plant and equipment (cont’d)



2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 2.6. Alternative Minimum Tax (AMT) Alternative Minimum Tax (AMT) is provided for, where the Company, which has a tax liability of less than 7.5% of its book profit, pays a dividend. AMT is calculated as the lower of 10% of the dividend paid or 7.5% of book profit. 2.7. Intangible assets Computer software Costs incurred to acquire and bring to use computer software are capitalised and are amortised using the straight-line method over its estimated useful life (3 years).

Costs 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 Company and that will generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include the software development employee costs and an appropriate portion of relevant overheads.

2.8. Retirement benefit obligations

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

Payments to deferred contribution retirement plans are recognised as an expense when employees have rendered service that entitle them to the contributions.

(ii) Gratuity on retirement For employees who are not covered by the pension plan (or who are insufficiently covered by the above pension plans), the net present value of gratuity on retirement payable under the Employment Rights Act 2008 is calculated by a qualified actuary and provided for. The obligations arising under this item are not funded.

(iii) Termination benefitsTermination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Company recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

2.9. Impairment of non-financial assets

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

2.10. Leases

(a) Leases are classified as finance leases where the terms of the lease transfer substantially all risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease. (b) Accounting for leases - where Company is the lesseeFinance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss.

BYCHEMEX LIMITED 30


2.11. Financial assets

(a) Categories of financial assetsThe Company classifies its financial assets in the following categories : available-for-sale financial assets and loans and receivables. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its financial assets at initial recognition.

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

(ii) Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment.

The Company’s loans and receivables comprise of cash and cash equivalents, and trade and other receivables.

(b) Recognition and measurement Purchases and sales of financial assets are recognised on trade-date (or settlement date), the date on which the Company commits to purchase or sell the asset. Investments are initially measured at fair value plus transaction costs.

Available-for-sale financial assets are subsequently carried at their fair values.

Unrealised gains and losses arising from changes in the fair value of financial assets classified as available-for-sale are recognised in other comprehensive income.

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

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

(c) Impairment of financial assets

(i) Financial assets classified as available-for-sale The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss, measured as the difference between acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equity and recognised in profit or loss.

If the fair value of a previously impaired security classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised, the impairment loss is reversed and the reversal recognised in profit or loss.

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

(ii) Financial assets carried at amortised cost For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and, the amount of the loss is recognised in profit or loss. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)



2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 2.11. Financial assets (Cont’d)

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

(ii) Financial assets carried at amortised cost (Cont’d) If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

2.12. Trade receivables

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

The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of provision is recognised in profit or loss.

2.13. Trade and other payables

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

2.14. Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of 3 months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.

2.15. Share capital

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

2.16. Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, returns, value added taxes, rebates and other similar allowances.

(a) Sale of goodsSales of goods are recognised when the goods are delivered and titles have passed, at which time all of the following conditions are satisfied:

(i) The Company has transferred to the buyer the significant risks and rewards of ownership of the goods; (ii) The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor

effective control over the goods sold; (iii) The amount of revenue can be measured reliably;

(iv) It is probable that the economic benefits associated with the transaction will flow to the Company; and (v) The costs incurred or to be incurred in respect of the transaction can be measured reliably.

BYCHEMEX LIMITED 32


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

2.17. Provisions

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

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

2.18. Dividend distribution

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

2.19. Related parties

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

3. FINANCIAL RISK MANAGEMENT

3.1. Financial Risk Factors

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

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

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

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



3. FINANCIAL RISK MANAGEMENT (CONT’D)

3.1. Financial Risk Factors (Cont’d)

(a) Market risk

(i) Currency risk The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarily with respect to US Dollar and Euro. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities. Management has set up a policy to require the Company to manage its foreign exchange risk exposure. The Company uses forward contracts to hedge its exposure to foreign currency risk. Currency profile The currency profile of the Company’s financial assets and liabilities is summarised below:

The table above excludes prepayments, advance payments and accruals. Sensitivity Analysis At 31 December 2017, if the rupee had weakened/strengthened by 5% against the following currencies with all other variables held constant, post tax profit for the year would have been as shown in the following table, mainly as a result of foreign exchange gains/losses on translation of foreign currency denominated financial assets and liabilities.

(ii) Cash flow and fair value interest rate risk

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

Sensitivity AnalysisAt 31 December 2017 and 2016, if interest rates on both fixed borrowings had been 50 basis point higher/lower with all other variables held constant, the impact on post-tax profit would not have been material.

2017 2016Financial Financial Financial Financial

assets liabilities assets liabilitiesRs Rs Rs Rs

Mauritian Rupee 26,583,655 4,292,270 22,884,237 5,186,195 US Dollar 1,623,883 2,998,285 1,888,768 2,618,671 Euro 612,468 5,414,718 2,975,850 2,575,899 CHF - 134,420 - 167,292

28,820,006 12,839,693 27,748,855 10,548,057

2017 2016Financial Financial Financial Financial

assets liabilities assets liabilitiesImpact on post-tax results: Rs Rs Rs RsUS Dollar 69,015 127,427 80,272 111,294 Euro 26,030 230,126 126,474 109,476 CHF - 5,713 - 7,110

95,045 363,266 206,746 227,880

BYCHEMEX LIMITED 34


(b) Credit risk

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

The table below shows the balance of major counterparties at the end of the reporting period:

The Company has significant concentration of credit risk, with exposure spread over one counterparty (2016: 1). The Company has policies in place to ensure that sales of goods are made to customers with an appropriate credit history. Management does not expect any losses from non-performance by these counterparties.

(c) Liquidity risk

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

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

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

3.2. Capital risk management

The Company’s objective when managing capital is to safeguard the entity’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders and to provide an adequate return to shareholders by pricing products commensurately with the level of risk.

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



2017 2016

No. of counterparties Balance

No. of counterparties Balance

Rs RsMajor counterparty 1 9,231,767 1 7,621,890 Others 15,461,786 12,228,214

24,693,553 19,850,104

Less than Between 1 Between 2 Between 31 year and 2 years and 3 years and 5 years

Rs Rs Rs RsAt 31 December 2017Dividends 800,000 - - - Obligations under finance lease 182,480 182,480 114,199 - Trade and other payables 12,903,390 - - -

At 31 December 2016Dividends 400,000 - - - Obligations under finance lease 182,480 182,480 182,480 114,199 Trade and other payables 10,495,041 - - -





3.3. Fair value estimation

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

If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cashflows at the current market interest rate that is available to the Company for similar financial instruments.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

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

4.1. Critical accounting estimates and assumptions

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

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

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

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

Sensitivity analysis does not take into consideration that the Company`s assets and liabilities are managed. Other limitations include the use of hypothetical market movements to demonstrate potential risk that only represent the company`s view of possible near-term market changes that cannot be predicted with any certainty. (c) Asset lives and residual valuesProperty, plant and equipment are depreciated over its useful life taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In reassessing asset lives, factors such as technological innovation and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. Consideration is also given to the extent of current profits and losses on the disposal of similar assets.

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

BYCHEMEX LIMITED 36


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

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

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

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

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

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

4.1. Critical accounting estimates and assumptions(Cont’d)



Improvement to Leasehold

Land

Buildingson Leasehold

Land

Plantand

Machinery Forklift

Furnitureand OfficeEquipment Total

MotorVehicles

Rs Rs Rs Rs Rs Rs Rs (a) COST

At 1 January 2017 22,691 3,412,500 15,784,583 550,000 2,464,139 1,958,070 24,191,983 Additions - - 375,029 - 11,500 - 386,529 Write off - - - (550,000) - - (550,000)At 31 December 2017 22,691 3,412,500 16,159,612 - 2,475,639 1,958,070 24,028,512

DEPRECIATION

At 1 January 2017 16,735 - 13,972,564 550,000 2,159,677 1,339,691 18,038,667 Charge for the year 567 153,286 594,245 - 151,432 176,680 1,076,210 Write off - - - (550,000) - - (550,000)At 31 December 2017 17,302 153,286 14,566,809 - 2,311,109 1,516,371 18,564,877

NET BOOK VALUES

At 31 December 2017 5,389 3,259,214 1,592,803 - 164,530 441,699 5,463,635

Improvement to Leasehold

Land

Buildingson Leasehold

Land

Plantand

Machinery Forklift

Furnitureand OfficeEquipment Total

MotorVehicles

Rs Rs Rs Rs Rs Rs Rs (b) COST

At 1 January 2016 22,691 2,303,048

15,590,620 550,000 2,464,139 1,958,070

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

DEPRECIATION

At 1 January 2016 16,168 1,162,602

13,394,609 550,000 2,010,373 1,052,011

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

NET BOOK VALUES

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

5. PROPERTY, PLANT AND EQUIPMENT

(c) There is no addition to assets under finance lease during the year ended 31 December 2017 (2016: Rs Nil).

BYCHEMEX LIMITED 38


(e) Depreciation charge of Rs 1,076,210 (2016: Rs 1,073,082) has been charged in operating expenses. (f) The Company’s buildings were last revalued as at 31 December 2016 by an external independent valuer, Professional

Valuers Co Ltd. The revaluation surplus, net of applicable deferred income taxes, was credited to revaluation surplus in shareholders’ equity (note 11).

(g) Details of the Company’s buildings measured at fair value and information about fair value hierarchy are as follows:

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

(i) Land is leased from the Mauritius Ports Authority which has expired on 30 June 2017. The Company is negotiating with the Mauritius Ports Authority for the renewal of the lease. No official renewable agreement has been signed up to now between the Mauritius Ports Authority and the Company.

(b) Amortisation charge of Rs 121,779 (2016: Rs 121,779) has been charged in operating expenses.

(d) Leased assets comprise motor vehicles: 2017 2016Rs Rs

Cost-capitalised under finance lease 883,400 883,400 Accumulated depreciation (441,700) (265,020)Net book value 441,700 618,380

2017 2016Rs Rs

Cost 2,310,048 2,310,048 Accumulated depreciation (1,277,929) (1,220,178)Net book value 1,032,119 1,089,870

Computer software2017 2016

(a) COST Rs Rs

At 1 January and 31 December 365,704 365,704

AMORTISATIONAt 1 January 152,224 30,445 Charge for the year 121,779 121,779 At 31 December 274,003 152,224

NET BOOK VALUEAt 31 December 91,701 213,480

Level 1 Level 2 Level 3Rs Rs Rs

31 December 2017Building - 3,259,214 -

31 December 2016Building - 3,412,500 -

6. INTANGIBLE ASSETS

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



7. INVESTMENT IN FINANCIAL ASSETS

8. INVENTORIES

9. TRADE AND OTHER RECEIVABLES

2017 2016Rs Rs

(a) At 1 January 100,000 100,000 Impairment losses (100,000) - At 31 December - 100,000

2017 2016Rs Rs

(a) Raw materials 788,520 96,480 Finished goods 10,500,061 10,011,081 Goods in transit 1,013,654 -

12,302,235 10,107,561

The ageing of these receivables is as follows: 2017 2016Rs Rs

Over 6 months 493,943 711,422

2017 2016Rs Rs

Trade receivables 24,693,553 19,850,104 Less: provision for impairment (493,943) (711,422)Trade receivables - net 24,199,610 19,138,682 Prepayments 118,495 329,993 Receivables from related companies (Note 29) 323,483 330,532 Advance payments 353,961 -

24,995,549 19,799,207

(b) The investment in financial assets comprise unlisted equity securities, denominated in Mauritian Rupees and are classified under level 3.

(b) The cost of inventories recognised as expense and included in cost of sales amounted to Rs 53,894,920 (2016: Rs 46,454,117).

The carrying amount of trade and other receivables approximate their fair value. As of 31 December 2017, trade receivables of Rs 493,943 (2016: Rs 711,422) were impaired. The amount of the provision was Rs 493,943 as of 31 December 2017 (2016: Rs 711,422). The individually impaired receivables mainly relate to customers who are in unexpectedly difficult economic situations. It was assessed that a portion of these receivables is expected to be recovered.

As of 31 December 2017, trade receivables of Rs 5,152,813 (2016: Rs 3,950,476) were past due but not impaired. These relates to a number of independent customers for whom there is no recent history of default.

BYCHEMEX LIMITED 40


9. TRADE AND OTHER RECEIVABLES (CONT’D)

10. SHARE CAPITAL

11. OTHER COMPREHENSIVE INCOME

The ageing analysis of these trade receivables is as follows: 2017 2016Rs Rs

3 to 6 months 4,969,406 3,387,480 Over 6 months 183,407 562,996

5,152,813 3,950,476

2017 2016Rs Rs

Issued and fully paid ordinary shares5,000,000 ordinary shares of Rs 1.00 each 5,000,000 5,000,000

2017 2016Rs Rs

Rupee 22,418,697 16,384,600 US Dollar 1,623,883 1,888,768 Euro 671,753 1,525,839 South African Rand 281,216 -

24,995,549 19,799,207

2017 2016Rs Rs

At 1 January 711,422 859,468 Provision for receivable impairment 21,397 152,168 Receivables written off during the year as uncollectible (164,597) - Reversal of provision for receivable impairment (74,279) (300,214)At 31 December 493,943 711,422

Actuarial RevaluationNotes (losses)/gains Surplus

2017 Rs RsItems that will not be reclassified to profit or loss:Remeasurement of retirement benefit obligations 14 (139,853) - Deferred tax on remeasurement of retirement benefit obligations 13 20,978 - Other comprehensive income for the year 2017 (118,875) -

The carrying amounts of the Company`s trade and other receivables are denominated in the following currencies:

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

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

Fully paid ordinary shares carry one vote per share and carry a right to dividends.



11. OTHER COMPREHENSIVE INCOME (CONT’D)

12. OBLIGATIONS UNDER FINANCE LEASE

Actuarial RevaluationNotes (losses)/gains Surplus

Rs Rs2016Items that will not be reclassified to profit or loss:Remeasurement of retirement benefit obligations 14 180,825 - Deferred tax on remeasurements of retirement benefit obligations and revaluation of buildings 13 (27,124) (348,395)Revaluation of building - 2,322,632 Other comprehensive income for the year 2016 153,701 1,974,237

Actuarial gains/(losses)The actuarial gains/(losses) reserve represents the cumulative remeasurement of defined benefit obligation recognised.

Revaluation surplusThe revaluation arises on the revaluation of building on leasehold land.

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

2017 2016Rs Rs

Non-current 278,420 433,640

Current 155,220 144,038

433,640 577,678

(b) Finance lease liabilities - minimum lease payments 2017 2016Rs Rs

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

479,159 661,639 Future finance charges on finance lease (45,519) (83,961)Present value of finance lease liabilities 433,640 577,678

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

2017 2016Rs Rs

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

433,640 577,678

BYCHEMEX LIMITED 42


12. OBLIGATIONS UNDER FINANCE LEASE (CONT’D)

(c) The Company leases a motor vehicle under finance lease. The lease has purchase options on termination. There are no restrictions imposed on the Company by lease arrangements.

(d) The carrying amounts of obligations under finance lease are denominated in Mauritian Rupees and are not materially different from their fair value.

13. DEFERRED INCOME TAX

Deferred income tax is calclulated on all temporary differences under the liability method at 15% (2016: 15%).

(a) There is a legally enforceable right to offset current tax assets against current tax liabilities and deferred income tax assets and liabilities when the deferred income taxes relate to the same fiscal authority on the same entity. The following amounts are shown in the statement of financial position:

(c) The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same fiscal authority on the same entity, is as follows:

2017 2016Rs Rs

Deferred tax assets (151,876) (195,509)Deferred tax liabilities 678,931 785,043

527,055 589,534

(b) The movement on the deferred income tax account is as follows: 2017 2016Rs Rs

At 1 January 589,534 288,930 Credited to profit or loss (Note 16(b)) (41,501) (74,915)(Credited)/charged to other comprehensive income (Note 11) (20,978) 375,519 At 31 December 527,055 589,534

Deferredtax liabilities

Deferredtax assets

Accelerated tax

depreciation

Retirement benefit

obligations TotalRs Rs Rs

At 1 January 2016 488,435 (199,505) 288,930 Credited to profit or loss (51,787) (23,128) (74,915)Charged to other comprehensive income 348,395 27,124 375,519 At 31 December 2016 785,043 (195,509) 589,534 (Credited)/charged to profit or loss (106,112) 64,611 (41,501)Credited to other comprehensive income - (20,978) (20,978)At 31 December 2017 678,931 (151,876) 527,055



14. RETIREMENT BENEFIT OBLIGATIONS

2017 2016Rs Rs

Amount recognised in the statement of financial position as non-current liabilities:Other retirement benefits (Note 14(ii)) 1,012,508 1,303,394

Amount charged to profit or loss:Other retirement benefits (Note 14(iv)) 126,810 154,187

Amount charged/(credited) to other comprehensive income:Other retirement benefits (Note 14(v)) 139,853 (180,825)

(i) Other retirement benefits comprise of retirement gratuity payable under the Employment Rights Act 2008 and other benefits.

(ii) The amounts recognised in the statement of financial position are as follows:2017 2016Rs Rs

Present value of unfunded obligations 1,012,508 1,303,394

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

2017 2016Rs Rs

At 1 January 1,303,394 1,330,032 Charged to profit or loss 126,810 154,187 Charged/(credited) to other comprehensive income 139,853 (180,825)Benefits paid (557,549) - At 31 December 1,012,508 1,303,394

(iii) The movement in retirement benefit obligations over the year is as follows:2017 2016Rs Rs

At 1 January 1,303,394 1,330,032 Current service cost 61,634 57,089 Interest cost 65,176 97,098 Actuarial losses/(gains) 139,853 (180,825)Benefits paid (557,549) - At 31 December 1,012,508 1,303,394

(iv) The amounts recognised in profit or loss are as follows:2017 2016Rs Rs

Current service cost 61,634 57,089 Interest cost 65,176 97,098 Total included in employee benefit expense (Note 23) 126,810 154,187

The total above is included in operating expenses in profit or loss.

BYCHEMEX LIMITED 44


14. RETIREMENT BENEFIT OBLIGATIONS (CONT’D)

(v) The amounts recognised in other comprehensive income are as follows:2017 2016Rs Rs

Experience losses/(gains) on the liabilities 139,853 (180,825)

(vi) The principal actuarial assumptions used for the purposes of the actuarial valuations were:

2017 2016% %

Discount rate 5.00 6.00 Future long-term salary increase 3.00 4.00

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

Increase Decrease 31 December 2017 Rs Rs Discount rate (1% increase) - 90,092 Future salary growth (1% increase) 106,235 -

31 December 2016Discount rate (1% increase) - 81,441 Future salary growth (1% increase) 96,505 -

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

It is based on a method that extrapolates the impact on net unfunded obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

The sensitivity analysis may not be representative of the actual change in the unfunded obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

(viii) The weighted average duration of the unfunded obligation is 8 years at the end of the reporting period (2016: 6 years).



15. TRADE AND OTHER PAYABLES

2017 2016Rs Rs

Trade payables 8,743,003 5,835,976 Payables to related companies (Note 29) 2,722,758 3,609,359 Accrued expenses 1,297,337 924,662 Other payables 140,292 125,044

12,903,390 10,495,041

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

16. CURRENT TAX LIABILITIES

2017 2016Rs Rs

(a) Statement of financial positionAt 1 January 20,310 106,391 Current tax on adjusted profit for the year 229,716 104,610 Underprovision of tax in previous years 1,533 6,009 Tax paid during the year (21,843) (112,400)Tax paid under advance payment scheme (79,605) (84,300)At 31 December 150,111 20,310

2017 2016(b) Statement of profit or loss Rs RsCurrent tax on the adjusted profit for the year 229,716 104,610 Underprovision of tax in previous years 1,533 6,009 Deferred tax credit (note 13) (41,501) (74,915) Tax charge 189,748 35,704

(c) The Company is taxed at 15% on all profits earned locally and 3% on all exports.

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

2017 2016Rs Rs

Profit before taxation 1,264,704 152,070

Tax calculated at 15% (2016: 15%) 189,706 22,811 Expenses not deductible for tax purposes 31,132 29,091 Underprovision of tax in previous years 1,533 6,009 Income not subject to tax (32,623) (22,207)Tax charge 189,748 35,704

BYCHEMEX LIMITED 46


17. DIVIDENDS 2017 2016Rs Rs

At 1 January 400,000 500,000 Proposed dividend per share Rs 0.16 (2016: Rs 0.08) 800,000 400,000 Dividend paid (400,000) (500,000)At 31 December 800,000 400,000

18. OTHER INCOME 2017 2016Rs Rs

Interest income 33,962 414,082 Others 2,300 204,584

36,262 618,666

19. OTHER GAINS/(LOSSES) - NET

2017 2016Rs Rs

Net foreign exchange gains/(losses) (Note 21) 27,524 (16,650)

20. NET FINANCE INCOME

2017 2016Rs Rs

Interest expense:- Bank overdraft (3,093) (1,483)- Finance lease (38,441) (48,818)- Other loans not repayable by instalments (86) - Net foreign exchange gains on financing activities (Note 21) 405,059 292,517

363,439 242,216

21. NET FOREIGN EXCHANGE GAINS/(LOSSES)

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

2017 2016Rs Rs

Cost of sales 624,639 608,682 Other gains/(losses) - net (Note 19) 27,524 (16,650)Net finance income (Note 20) 405,059 292,517

22. PROFIT BEFORE TAXATION

2017 2016Rs Rs

Profit before taxation is arrived at after:Charging:Lease rentals - property 580,000 450,000 Depreciation on property, plant and equipment (Note 5)- owned assets 899,530 896,402 - assets under finance lease 176,680 176,680 Amortisation of intangible assets (Note 6) 121,779 121,779 Employee benefit expense (Note 23) 3,508,727 3,546,422



23. EMPLOYEE BENEFIT EXPENSE

2017 2016Rs Rs

Wages and salaries 3,184,333 3,132,423 Social security cost 136,449 184,078 Pension costs - defined contribution plans 61,135 75,734 Pension costs - other retirement benefit obligations (Note 14) 126,810 154,187

3,508,727 3,546,422

24. EXPENSES BY NATURE

2017 2016Rs Rs

Depreciation (Note 5) 1,076,210 1,073,082 Amortisation (Note 6) 121,779 121,779 Employment benefit expense (Note 23) 3,508,727 3,546,422 Management fees 3,109,895 2,233,191 Changes in inventories of finished goods (2,194,674) (580,655)Raw materials used and consumed 56,089,594 47,034,772 Other expenses 4,893,891 6,492,688 Total cost of sales and operating expenses 66,605,422 59,921,279

25. EARNINGS PER SHARE

2017 2016

Net profit attributable to shareholders (Rs) 1,074,956 116,366

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

Earnings per share (Re/share) 0.21 0.02

26. NOTES TO THE STATEMENT OF CASH FLOWS

2017 2016Rs Rs

(a) Cash generated from operations Profit before taxation 1,264,704 152,070 Adjustments for:Depreciation on property, plant and equipment 1,076,210 1,073,082 Amortisation of intangible assets 121,779 121,779 Impairment loss on investment in financial assets 100,000 - Interest income (33,962) (414,082)Interest expense 41,620 50,301 Impairment loss recognised on inventory 605,642 - Provision for impairment on trade receivables, net of reversal (52,882) (148,046)Retirement benefit obligations (430,739) 154,187 Unrealised exchange gains (679,874) (329,866)

2,012,498 659,425 Changes in working capital:- inventories (2,800,316) (580,655)- trade and other receivables (5,069,300) (467,238)- trade and other payables 2,609,004 (1,240,753)Cash used in operations (3,248,114) (1,629,221)

BYCHEMEX LIMITED 48


26. NOTES TO THE STATEMENT OF CASH FLOWS (CONT’D)

(b) Reconciliation of liabilities arising from financing activities

2016 Cash flows 2017Rs Rs Rs

Obligations under finance lease 577,678 (144,038) 433,640

(c) Cash and cash equivalents 2017 2016Rs Rs

Cash in hand and at bank 2,796,913 1,379,641 Loan at call (Note (d)) 1,500,000 6,800,000 Cash and cash equivalents 4,296,913 8,179,641

(d) The loan at call carries interest at 6.25% per annum and is unsecured.

27. COMMITMENTS

Operating lease commitments

As stated in note 5, land is leased from the Mauritius Ports Authority which has expired on 30 June 2017. The Company is negotiating with the Mauritius Ports Authority for the renewal of the lease. No official renewable agreement has been signed up to now between the Mauritius Ports Authority and the Company.

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

2017 2016Rs Rs

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

- 225,000

Capital commitments

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

2017 2016Rs Rs

Intangible assets 595,000 595,000

28. SEGMENTAL INFORMATION

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


year ended 31 December 2017notes to the financial statements29

. RE

LAT

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86

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962

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2,5

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46

-

323

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2

,612

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A

ssoc

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of h

oldi

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com

pany

-

-

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239

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1

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9 D

irect

ors

and

key

man

agem

ent p

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nnel

528

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-

-

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-

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2016

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ding

com

pany

-

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,000

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-

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A

ssoc

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of h

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pany

-

-

-

256

,372

-

-

-

-

4

6,25

2 D

irect

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and

key

man

agem

ent p

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nnel

615

,463

-

-

-

-

-

-

-

-

The

sale

s to

and

pur

chas

es fr

om re

late

d pa

rtie

s ar

e m

ade

in th

e no

rmal

cou

rse

of b

usin

ess.

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stan

ding

trad

e ba

lanc

es a

t the

yea

r-en

d ar

e un

secu

red,

inte

rest

fre

e (w

ith th

e ex

cept

ion

of lo

an a

t cal

l) an

d se

ttle

men

t occ

urs

in c

ash.

The

loan

at c

all c

arrie

s in

tere

st a

t 6.2

5% p

er a

nnum

and

is u

nsec

ured

.

Ther

e ha

s be

en n

o gu

aran

tees

pro

vide

d or

rec

eive

d fo

r an

y re

late

d pa

rty

rece

ivab

les

or p

ayab

les.

For

the

yea

r en

ded

31 D

ecem

ber

2017

, th

e C

ompa

ny h

as

not

reco

rded

any

impa

irmen

t of

rec

eiva

bles

rel

atin

g to

am

ount

s ow

ed b

y re

late

d pa

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s (2

016:

Nil)

. Th

is a

sses

smen

t is

und

erta

ken

each

fina

ncia

l yea

r th

roug

h ex

amin

ing

the

finan

cial

pos

ition

of t

he re

late

d pa

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and

the

mar

ket i

n w

hich

the

rela

ted

part

y op

erat

es.

(a) R

emun

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ion

and

bene

fits

for

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ctor

s an

d ke

y m

anag

emen

t per

sonn

el re

late

to D

irect

ors

fees

.

BYCHEMEX LIMITED 50


30. EVENTS AFTER THE REPORTING DATE

There are no event after the end of the reporting period which the Directors consider may materially affect the financial statements for the year ended 31 December 2017.

31. CONTINGENT LIABILITIES

As at 31 December 2017, the Company had contingent liabilities in respect of bank and other guarantees arising in the ordinary course of business from which it is anticipated that no material liabilities would arise.

32. HOLDING COMPANY

The Company is controlled by Harel Mallac & Co. Ltd, incorporated in Mauritius, which owns 44.91% of the Company’s shares. The remaining 55.09% of the shares is widely held.

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

2017 2016 2015(a) Statement of profit or loss Rs Rs Rs

Revenue 67,442,901 59,229,117 58,882,354

Profit before taxation 1,264,704 152,070 134,957 Income tax expense (189,748) (35,704) (99,473)Profit for the year 1,074,956 116,366 35,484

Profit attributable to:- Owners of the parent 1,074,956 116,366 35,484

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

Profit for the year 1,074,956 116,366 35,484 Other comprehensive income for the year (118,875) 2,127,938 61,801 Total comprehensive income for the year 956,081 2,244,304 97,285

Total comprehensive income attributable to:- Owners of the parent 956,081 2,244,304 97,285

Dividend per share (Re) 0.16 0.08 0.10

Earnings per share (Re/share) 0.21 0.02 0.01



33. THREE-YEAR SUMMARY OF PUBLISHED RESULTS AND ASSETS AND LIABILITIES (CONT’D)

2017 2016 2015(c) Statement of financial position Rs Rs Rs

ASSETSNon-current assets 5,555,336 6,466,796 5,138,064 Current assets 41,594,697 38,086,409 38,926,890 Total assets 47,150,033 44,553,205 44,064,954

EQUITY AND LIABILITIESCapital and reserves 31,323,329 31,167,248 29,322,944

LIABILITIESNon-current liabilities 1,817,983 2,326,568 2,196,641 Current liabilities 14,008,721 11,059,389 12,545,369 Total liabilities 15,826,704 13,385,957 14,742,010

Total equity and liabilities 47,150,033 44,553,205 44,064,954

NOTES

BYCHEMEX LIMITED 52

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