contents - leal group · furthermore, during the course of the year distripc obtained the...

CONTENTsContents

Board of Directors

Senior Management

Chairman’s Review

Annual Report

Corporate Governance Report

Secretary’s Certificate

Auditors’ Report

Financial Statements

Notes to the Financial Statements

1-2

3-4

5-8

9-12

13-15

16

17

18-21

22-42

BOARD OFDirectors

1 092009 Annual Report

Mr Clency Leal C.B.E - Chairman

Mr Virrsingh Ramdeny

Mr Bernard Rochecouste Collet

Mr Gérald Lincoln

Mr Eric Leal

BOARD OFDirectors


Mr Vivian Collet Serret

Mr Christian Ferrière

Mr France Ducasse

Mr Jean-Marie Grégoire

Mr Arnaud Leal

SENIORManagement


Mr Neemalen GopalIT Cluster Director

Mr Vivian SerretDeputy CEO

Mr Eric LealCEO

Mr Didier JauffretExecutive Director

Leal Equipements Cie Ltée

Mr Yousouf RehmallyCFO

SENIORManagement


Mr Noel MarionCOO - Car Rental

Mr Christian FerrièreCOO - After Sales Service

Mr François GelléCOO - Parts & Distribution

Mr Louis-Philippe GuéhoCOO - Renault Sales

Mr Michael CareyCOO - BMW Sales

Mr Yousuf Elahee DoomunCIO

CHAIRMAN’SStatement


CHAIRMAN’S STATEMENT

Dear Shareholders,

The financial year under review has been a most challenging year for our Group and numerous outside factors have negatively influenced our growth.

Indeed, since September 2008, the world financial crisis has negatively affected confidence in markets around the world, and our customers in Mauritius and in the region had to curb their spending both on Capital Expenditure and in repairs and maintenance.

In spite of this turmoil and of rising forex rates being highly detrimental to our business, the Board is pleased to report positive results as follows:

Overview of our IT Cluster

During this financial year, we have conducted with success the amalgamation of our DistriPC hardware distribution company with Elytis our Software distribution company. This was finalized and in full operation as from the 1st December 2008.

However, due to operational problems at Microsoft Inc, we have been able to fully exploit our export markets solely as from the 1st of April 2009.

As at today, the amalgamated company is doing very well and we are proud to report that our suppliers have reckoned our professionalism and more and more suppliers have granted us their exclusive distribution rights for the region. We have now started the export of our hardware products in these countries and prospects for the future are extremely encouraging.

We are glad to report that the turnover of our IT cluster rose by 8% as compared to last year, and this in spite of increasing competition from both local and foreign players on the market.

At our retail arm, LCI, in spite of the difficult trading conditions due to the financial crisis, we managed to achieve very good growth and profitability.

Again, during the course of the year we opened two new iShop and eShop outlets and both are performing very satisfactorily. Furthermore, during the course of the year DistriPC obtained the distribution rights of a fantastic new product: Ncomputing. This unique product is proving a great success.

During the coming year a lot of efforts will be put on the export of our brands. We are building strong partnerships with reliable and professional IT distributors in the region where we have marketing rights.

In Reunion Island, our subsidiary Solinfo has been completely re-engineered. Although negative results were experienced last year, we expect a drastic change in the coming months, and we aim at reaching equilibrium at the end of this financial year.

Mr Clency Leal C.B.E



Overview of Engineering Cluster

The financial crisis coupled with the civil crisis in Madagascar has had strong effects on our sales and achievements on our export markets. In the same way, the crisis affected significantly the Seychelles but yet, thanks to the very hard work of our teams and their quick adaptation to changing environments, this cluster has experienced robust growth and profitability.

Again, our core values of excellent service and total customer dedication have proved successful. Our understanding of our customers’ problems in those difficult times has greatly contributed to our results.

We strongly believed that there were very good opportunities even during those hard times. Our forecast for next year looks promising.

Overview of Automobile Sector Activities

In 2008, the Automobile market continued its growth to reach the highest level ever at over 7200 units. Unfortunately, as soon as 2009 started there was a clear fall in new vehicle sales, first at almost 40% and later stabilising at over 25%. Apart from the financial crisis, the main cause of this drop was soaring CIF prices of new vehicles, driven by sharp increases of exchange rates.

Growth in calendar year 2008 was mainly in the lower and medium price range and as a result Japanese brands, which dominate these segments, gained the most.

Sales of passenger cars by Dealer – Calendar year 2008

1 IFRAMAC 7272 TOYOTA MAURITIUS 6893 ABC MOTORS LTD 6874 EAL MAN HIN & SONS LTD 5895 AXESS 5216 LEAL & CO. LTD 4267 IMC 2548 ALLIED MOTORS 177

Sales of passenger cars by Brand – Calendar year 2008

1 TOYOTA 6892 NISSAN 6873 HONDA 5894 MITSUBISHI 5305 HYUNDAI 2546 BMW 2517 SUZUKI / MARUTI 1998 RENAULT 1509 VOLKSWAGEN 14310 MAZDA 122



Sales of passenger cars by Brand – Calendar year 2008 (Cont’d)11 MERCEDES 10812 PROTON 91 13 PEUGEOT 8014 FORD 7715 CHEVROLET 7616 CITROEN 6717 KIA 6118 AUDI 3419 LAND ROVER 3120 MINI 25

BMW - Leadership in a stable market segment

In 2008, BMW was for the fourth consecutive year, the worldwide leader in the Premium segment ahead of its traditional competitor, Mercedes Benz.

The new players locally in this segment, Jaguar and Porsche, were not able to command an important market share. Despite the opening of a new showroom, sales of Audi did not grow significantly.

Renault – Falling market share

With a limited product range, Renault was not able to maintain its market share in 2008, while sales of Japanese vehicles and of Hyundai increased strongly. Although Renault retained its position as second best selling European brand after BMW, VW made the most of its new set up at Réduit to boost its sales and become a close runner up.

Most new products and the new 4-year warranty of Renault were unfortunately introduced only after the end of the financial year. Although there are a number of exciting new products planned for 2010, these introductions may be delayed and the products may thus only reach us in the 2010-2011 financial year.

Great Success with GWM

GWM had the strongest market growth in 2008 and this is being maintained in 2009. It is expected that GWM will be the best selling pickup brand in Mauritius in 2009 with over 300 units.

Our Chinese partner who has been the first Chinese brand (in 2009) to homologate four vehicles to European Standards, will very soon export passenger vehicles to us.

In 2009, GWM maintained its position as the largest vehicle exporter in China, and was for the eleventh year the best selling pickup brand in the Chinese domestic market.



Group Strategy

More than ever our Group Strategy as further developed in our last Strategic Seminar is proving judicious and financially sound.

All our subsidiaries are subject to strict control procedures, but at the same time each Executive has great autonomy within these parameters. This autonomy is essential to permit the creativity, business continuity and development that have made possible our success.

The Group will continue to develop new projects in our core fields of activities to bring sustainable profit growth and maximize return to our shareholders.

I would like to thank our shareholders, directors, employees and partners for their continued support.

Clency LEAL, C.B.E.Chairman

Date: 11 December 2009

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Annual Report

The directors of the company have much pleasure in submitting herewith their annual report of the group and of the company for the financial year ended 30th June 2009.

Review of Business

The parent company is engaged in the distribution and sale of Motor vehicles and associated products, including a car rental activity. The subsidiaries are engaged in the IT sector, the Heavy machinery sector and the Tourism sector.

Results

The Board of Directors is pleased to announce a profit before tax of Rs 29.2M for the year under review. The Group profit before tax stands at Rs 29.5M.

Dividend

The company’s objective is to provide value to its shareholders. Dividends are proposed and paid after taking into account the level of profit after taxation and appropriate reserve needed for operational activities.Directors always recommend dividend distribution only after satisfying the Solvency test.A total dividend of Rs 20,498,080. was declared for the year ended 30 June 2009.

Shareholders Structure

Major shareholders of the company at 30 June 2009 No. of shares owned % HoldingsSociété Clency Leal 997,868 48.68Mr Eric Leal 511,690 24.96Valourous Holdings 222,115 10.84Anglo Mauritius Assurance Society Ltd 103,489 5.05 Others 214,646 10.47

Corporate Information

Directors Holding : Clency Leal, C.B.E (Chairman)Office as at 11 December 2009 Eric Leal (C.E.O.) (Full time) Vivian Serret (Deputy C.E.O.) (Full time) Bernard Rochecouste-Collet Gérald Lincoln Virrsingh Ramdeny France Ducasse Christian Ferrière (COO – After-sales Dept) (Full time) Jean-Marie Grégoire Arnaud Leal

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All Directors who are employed on a full time basis, are employees of the company and earn a basic salary plus a commission on profit.

Secretary : Navitas Corporate ServicesRegistered Office : Motorway M1 Pailles Mauritius Telephone: 207 2400, Fax: 286 4717 Email: [email protected] : Lamusse Sek Sum & CoBankers : The Mauritius Commercial Bank Ltd State Bank of Mauritius Barclays Bank PLC Bank One Ltd Mauritius Post & Cooperative Bank Ltd Bank of Baroda AfrAsia Bank LtdInsurers : The Anglo-Mauritius Assurance Sty Ltd Swan Insurance Co Ltd

Statement of Director’s Responsibility

Company law requires the directors to prepare financial statements for each financial period which present fairly the financial position, financial performance and the cash flows of the Company. In preparing those financial statements, the directors are required to:

- Select suitable accounting policies and then apply them consistently;- Make judgments and estimates that are reasonable and prudent;- State whether International Financial Reporting Standards have been followed, subject to any material departures disclosed and explain in the financial statements; and- Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors confirm that they have complied with the above requirements in preparing the financial statements.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Mauritian Companies Act 2001. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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Organisation Structure

LEAL & CO LTDSUBSIDIARIES HOLDING ASSOCIATES HOLDINGLeal Communications & Informatics Ltd 90 % Pharmacie Nouvelle Ltée 33.4%United Motors Ltd 100 % Exclusive Island Ltd 25%Leal Equipement Cie Ltée 75 % Luxury Automobiles Co Ltd 50 %Société Clency & Patrick Leal 90.9 % CiSolve International Ltd 40 %SARL Solinfo 100 % Distripc Ltd 75 % Leal Logistics & Shipping Ltd 91.79 %

Directors Remuneration

Remuneration and benefits including bonuses and commissions received / receivable: 30.06.09 30.06.08 Rs ’M Rs ‘MThe CompanyLeal & Co Ltd Full time Directors 14.6 18.8Others 8.2 7.0 Remunerations and benefits paidto full time Director of subsidiaries:Leal Communications & Informatics Ltd Full time Director 4.9 4.7 Leal Equipements Cie Ltee Full time Director 4.9 4.2

Related Party Transactions

For related party transaction, please refer to note 26 of the financial statements.

Attendance of Directors

Board Meetings 09-Jul-08 29-Aug-08 5-Dec-08 30-Apr-09 29-Jun-08 TOTALClency Leal Excused X X X Excused 3Bernard Rochecouste Collet X X X X X 5Eric Leal X X X X X 5Vivian Serret X X Excused X X 4Gerald Lincoln X X X X 5Virrsing Ramdeny Excused X X X X 4Jean Marie Gregoire Excused Excused X X X 3France Ducasse X X X X Excused 4Christian Ferriere X Excused X Excused X 3Arnaud Leal X X X X X 5

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Financial Statements and Auditors’ Report

The financial statements of the company for the year ended 30 June 2009 are set out on pages 18 to 42. The auditors’ report on these financial statements is on page 17.

Donations

The total donations during the financial year amount to Rs 3,002,183. This amount includes Rs350,000. as donation to political parties.

Audit Fees

The Auditors, Lamusse Sek Sum & Co. are being recommended to continue in office for the forthcoming year. The fees paid to auditors and other services are as follows:

FEES PAID TO AUDITORS AUDIT FEES RS OTHER SERVICES RS TOTAL RSLAMUSSE SEK SUM & CO: Leal & Co Ltd 255,000. 60,000. 315,000.Subsidiaries 253,000. 48,000. 301,000.GRANT THORNTON: Leal & Co Ltd - 140,000. 140,000.Subsidiaries 150,000. 50,000. 200,000.ANEX CONSULTING SERVICES LTD: Leal & Co Ltd 700,000. 700,000

ConclusionThe Board of Directors would like to express its gratitude to all staff and Management team for their dedication and Shareholders for their valuable support. The Board is confident that the coming year will further contribute to the consolidation of our group and company.

ERIC LEAL VIVIAN SERRETDirector Director


CORPORATEGouvernance


Statement on Corporate Governance

The Leal Group considers good governance practices to be essential in developing and sustaining any successful business. It also ensures the proper running of a company and at the same time enhances the interaction between Senior Management, its board, its shareholders and all other stakeholders.

The Board of Leal & Co Ltd is fully committed to promoting the highest standards of Corporate Governance and complies fully with our own Corporate Governance Charter.

Major ShareholdersThe major shareholders of the company holding more than 5% shares in the company as at 30 June 2009 are as follows:

No. of shares owned % HoldingsSociété Clency Leal 997,868 48.68Mr Eric Leal 511,690 24.96Valorous Holdings Ltd 222,115 10.84Anglo Mauritius Assurance Society Ltd 103,489 5.05

ResponsibilityThe Board, in the Management of the Affairs of the company lays particular emphasis on sound financial and commercial reporting in order to ensure transparency and integrity of financial results.

Dividend PolicyThough the company does not have a standard dividend policy, the aim of the Board is to provide to our shareholders a fair return on their investment.For the year under review, a dividend of Rs 20,498,080. was paid.

The Board of DirectorsThe Board comprises of 10 directors with 7 non-executive directors.Chairperson : Mr Clency LEAL C.B.E Executive directors : Mr Eric Leal Mr Vivian Serret Mr Christian Ferrière Non Executive directors : Mr Arnaud Leal Mr Virrsing Ramdeny Mr Gervais Blackburn (Resigned on 14.07.08) Mr Bernard Rochecouste-ColletIndependent directors : Mr Jean-Marie Grégoire Mr France Ducasse Mr Gérald Lincoln

There is a clear separation of the roles of the Chairman and the Group Chief Executive. The Chairperson leads the Board whereas the Group Chief Executive has the day-to-day management responsibility of the Group’s operation, implementing the strategies and policies agreed by the Board.



Corporate Governance CommitteeThe Corporate Governance Committee comprises of four non-executive directors, 3 of whom are independent including the chairperson.Chairperson : Mr Jean Marie GrégoireMembers : Mr Clency Leal C.B.E Mr France Ducase Mr Gerald LincolnThe committee’s role and responsibilities is mainly to ensure adherence and implementation of the Code of Good Corporate Governance. It is also responsible for the remuneration policy of the Group.

The Corporate Governance Committee met 4 times this financial year. The main areas covered were:- Verification of company statutes and ensure strict adherence to same- Review of CSR Policy

Owing to the financial crisis, the Executive directors unanimously renounced to salary increase. Thus no Remuneration Committee was held.

For the year ending 30 June 2009, the Corporate Governance Committee has confirmed that the Company has strictly adhered to the Code of Conduct as set out in the Corporate Governance Charter.

Audit Committee The Audit Committee consists of 3 non-executive directors of which 2 are independent directorsChairperson : Mr Virrsing RamdenyMembers : Mr Jean Marie Grégoire Mr France Ducasse

The activities of the Audit Committee include the following:- Effectiveness and Independence of Internal Audit function.- Regular meeting with the Management team- Review and assessment of the external audit work- Appointment of External Auditors

The Audit Committee met twice during this financial year. The main areas covered were:- Review of Internal Audit Report- Establishment of audit plan for 2009-2010- Review with external auditors

The Audit Committee has recommended that Lamusse Sek Sum & Co continues in office for the forthcoming year. The fees paid to auditors for the year under review was Rs 616,000. (Audit work Rs 508,000.; other services Rs 108,000.).

Corporate Social responsibility

1. Our PeopleThe special ICT loan scheme set up last year for the low income employees to acquire a PC has been maintained this year also.

2. Our EnvironmentIn line with our continuous efforts on this subject, we have during the year replaced all our lightings with Energy saving bulbs.



3. Our Support ProgramsThis year again we have actively supported financially the following organizations:- APEIM- Loreto Institute- The E-Inclusion Foundation** Leal & Co Ltd is a founder member of the E-Inclusion foundation which has among its objectives the donations of personal computers to the under privileged.

5. Our GovernanceWe are proud to confirm that the Leal Group is an Equal Opportunity Employer where people of all races, genders, colours and irrespective of their political belief have equal chances of success in their career.

We firmly believe that strong adherence to Corporate Governance will foster further our Group and ensure its continued success.

JEAN MARIE GREGOIRE VIRRSING RAMDENYChairman – Corporate Governance Committee Chairman – Audit Committee


SECRETARY’S REPORT

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

Date: 11 December 2009SECRETARY’S REPORT

SECRETARY’SReport


AUDITORS’Report


INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS

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

Report on the financial statementsWe have audited the financial statements of Leal & Co Ltd and its subsidiaries (“the Group”) set out on pages 18 to 42 which comprise the balance sheets as at 30 June 2009 and the income statements, statements of changes in equity and cash flow statements for the year then ended and a summary of significant accounting policies and other explanatory notes.

Directors’ responsibility for the financial statementsThe directors are responsible for the preparation and fair presentation of these financial statements in compliance with the requirements of the Companies Act 2001 and in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements on pages 18 to 42 give a true and fair view of the financial position of the Group and of the company as at 30 June 2009, and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the Companies Act 2001.

Report on other legal and regulatory requirementsCompanies Act 2001We have no relationship with, or interests in the Company or any of its subsidiary, other than in our capacity as auditors, tax and business advisers and dealings with the company and the Group 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.

LAMUSSE SEK SUM & CO A SEK SUM FCCAPUBLIC ACCOUNTANTS PARTNER Port LouisDate: 11 December 2009

Balance Sheets

At 30 June 2009 THE GROUP THE COMPANY 2009 2008 2009 2008ASSETS NOTES Rs Rs Rs Rs NON-CURRENT ASSETS Property, plant and equipment (4) 520,787,821 472,867,315 411,283,698 371,994,871 Intangible assets (5) 11,542,545 11,287,424 4,292,453 4,128,000 Investments in subsidiaries (6) - - 57,116,968 55,116,968 Investments in associates (7) 91,520,019 103,574,227 41,864,444 43,864,444 Other investments (8) 1,549,088 1,549,088 65,000 65,000 Loan to related company 2,159,696 2,159,696 - - Deferred tax asset 140,095 27,721 - - 627,699,264 591,465,471 514,622,563 475,169,283 CURRENT ASSETS Inventories (9) 289,280,300 195,763,020 164,725,855 118,383,808 Trade and other receivables (10) 308,368,094 283,628,167 174,961,016 172,800,238 Cash at bank and in hand 26,884,947 23,235,189 13,290,115 13,309,402 624,533,341 502,626,376 352,976,986 304,493,448 TOTAL ASSETS Rs 1,252,232,605 1,094,091,847 867,599,549 779,662,731 EQUITY AND LIABILITIES EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY Share Capital (14) 204,980,800 204,980,800 204,980,800 204,980,800 Share Premium 5,782,800 5,782,800 5,782,800 5,782,800 Revaluation reserve 83,179,583 83,371,605 13,333,968 13,333,968 Retained earnings 119,455,646 117,335,822 99,649,559 87,517,559 Equity holders’ interest 413,398,829 411,471,027 323,747,127 311,615,127 Minority interests (15) 16,295,176 11,872,918 - - TOTAL EQUITY 429,694,005 423,343,945 323,747,127 311,615,127 NON-CURRENT LIABILITIES Borrowings (13) 192,658,506 184,816,130 166,593,936 160,312,789 Pensions and other retirement (23) 16,610,483 13,168,869 16,610,483 13,168,869 obligationsDeferred tax liabilities (20) 10,899,030 15,782,202 9,250,025 14,122,082 220,168,019 213,767,201 192,454,444 187,603,740 CURRENT LIABILITIES Borrowings (13) 100,075,633 85,800,697 83,979,462 74,182,599 Current tax liabilities (18) 10,431,477 14,275,401 1,842,619 5,307,947 Trade and other payables (12) 430,799,202 300,658,996 255,277,232 165,700,738 Dividend payable (19) - - - - Bank overdrafts (11) 61,064,269 56,245,607 10,298,665 35,252,580 602,370,581 456,980,701 351,397,978 280,443,864

TOTAL EQUITY AND LIABILITIES Rs 1,252,232,605 1,094,091,847 867,599,549 779,662,731 These finanicial statements have been approved by the Board of Directors on 11 December 2009 ) ) ) DIRECTORS ) ) The notes on pages 22 to 42 form an integral part of these financial statements Auditors’ Report on page 17.


Income Statement

For the year ended 30 June 2009 THE GROUP THE COMPANY 2009 2008 2009 2008 NOTES Rs Rs Rs Rs Turnover (2) 2,060,435,912 1,852,574,396 1,034,759,860 1,083,619,274 Cost of sales (1,588,678,318) (1,424,914,581) (753,212,519) (815,465,612) Gross Profit 471,757,594 427,659,815 281,547,341 268,153,662 Other Operating income 42,724,241 55,986,478 48,389,869 72,480,225 Selling expenses (56,657,383) (55,367,056) (32,172,276) (35,231,286) Administrative expenses (374,740,379) (306,581,790) (229,144,131) (203,085,180) Operating profit (16) 83,084,073 121,697,447 68,620,803 102,317,421 Finance costs (17) (52,061,599) (47,895,880) (39,463,704) (38,556,246) Negative Goodwill - 2,003,761 - - Share of result of associates (1,525,215) 14,310,683 - - Profit before tax 29,497,259 90,116,011 29,157,099 63,761,175 Income tax expense (18) (4,129,800) (14,604,557) 3,472,981 (6,119,198) Profit after tax 25,367,459 75,511,454 32,630,080 57,641,977 Attributable to: Equity holders of the parent 19,383,442 68,746,110 32,630,080 57,641,977 Minority Interests 5,984,017 6,765,344 - - 25,367,459 75,511,454 32,630,080 57,641,977 Earnings per share (21) Rs 9.46 33.86 15.92 28.39

The notes on pages 22 to 42 form an integral part of these financial statements Auditors’ Report on page 17.


Statements of Changes in Equity

For the year ended 30 June 2009

Attributable to equity holders of the company

REVALUATION THE GROUP SHARE SHARE AND OTHER RETAINED MINORITY TOTAL CAPITAL PREMIUM RESERVES EARNINGS TOTAL INTEREST EQUITY

Rs Rs Rs Rs Rs Rs Rs At 1st July 2007 181,849,600 - 44,627,901 69,067,792 295,545,293 8,941,874 304,487,167 Issue of shares 23,131,200 5,782,800 - - 28,914,000 1,606,200 30,520,200 Bonus issue - - 26,804,219 - 26,804,219 - 26,804,219Consolidation adjustments - - 11,939,485 - 11,939,485 (5,440,500) 6,498,985 Profit for the year - - - 68,746,110 68,746,110 6,765,344 75,511,454 Dividends - - - (20,478,080) (20,478,080) - (20,478,080)At 30th June 2008 Rs 204,980,800 5,782,800 83,371,605 117,335,822 411,471,027 11,872,918 423,343,945 At 1st July 2008 204,980,800 5,782,800 83,371,605 117,335,822 411,471,027 11,872,918 423,343,945 Issue of shares - - - - - - - Revaluation surplus on land and building - - - - - - - Consolidation adjustments - - (192,022) 3,234,462 3,042,440 (1,561,759) 1,480,681 Profit for the year - - - 19,383,442 19,383,442 5,984,017 25,367,459 Dividends - - - (20,498,080) (20,498,080) - (20,498,080)At 30th June 2009 Rs 204,980,800 5,782,800 83,179,583 119,455,646 413,398,829 16,295,176 429,694,005 THE COMPANY SHARE SHARE REVALUATION RETAINED CAPITAL PREMIUM RESERVE EARNINGS TOTAL Rs Rs Rs Rs Rs At 1st July 2007 181,849,600 - - 50,353,662 232,203,262 Profit for the year - - - 57,641,977 57,641,977 Issue of shares 23,131,200 5,782,800 - - 28,914,000 Revaluation surplus on land and building - - 13,333,968 - 13,333,968Dividends - - - (20,478,080) (20,478,080)At 30th June 2008 Rs 204,980,800 5,782,800 13,333,968 87,517,559 311,615,127 At 1st July 2008 204,980,800 5,782,800 13,333,968 87,517,559 311,615,127 Issue of shares - - - - - Profit for the year - - - 32,630,080 32,630,080 Dividends - - - (20,498,080) (20,498,080) At 30th June 2009 Rs 204,980,800 5,782,800 13,333,968 99,649,559 323,747,127

The notes on pages 22 to 42 form an integral part of these financial statements Auditors’ Report on page 17.


Cash Flow Statements

For the year ended 30 June 2009 THE GROUP THE COMPANY 2009 2008 2009 2008 NOTES Rs Rs Rs RsCASH FLOWS FROM OPERATING ACTIVITIES

Net Profit before taxation (including profit after tax of 29,497,259 90,116,011 29,157,099 63,761,175 associated companies) Adjustments for: Depreciation on property, plant and equipment 63,834,565 53,117,276 44,856,499 42,826,476 Amortisation of intangible asset 1,054,717 1,098,942 782,717 688,000 Profit on disposal of property, plant and equipment (1,717,716) (711,625) (1,347,963) (700,192)Negative Goodwill - (2,003,761) - - Impairment of assets - 247,009 - - Exchange difference (84,523) (1,279) - - Investment income (2,550) (79,943) (25,688,787) (42,950,960)Interest paid 46,276,276 46,157,701 37,302,011 38,556,246 Interest receivable (460,507) (984,268) (231,238) (705,254)Profit retained in associated companies - (2,248,935) - - Provision s 465,000 - - -Movement in pension liability 3,441,614 956,940 3,441,614 956,940Operating profit before working capital changes 142,304,135 185,664,068 88,271,952 102,432,431

Increase in inventories (93,517,281) (25,495,715) (46,342,047) (1,462,093)Increase in accounts receivable (24,739,927) (48,945,177) (2,160,778) (19,979,661) Increase/(Decrease) in accounts payable 130,140,207 28,894,236 89,576,494 (616,537)Cash generated from operations 154,187,134 140,117,412 129,345,621 80,374,140

Taxation paid (14,093,905) (9,272,271) (4,864,404) (3,184,744)Interest paid (46,276,276) (46,157,701) (37,302,011) (38,556,246)Interest received 460,507 984,268 231,238 705,254 Dividends received 2,550 79,943 25,688,787 42,950,960 Dividends paid (20,498,080) (22,004,645) (20,498,080) (22,004,645)Net cash inflow from operations 73,781,930 63,747,006 92,601,151 60,284,719

Cash flows from investing activities Purchase of property, plant and equipment (124,963,076) (113,369,007) (93,834,513) (104,482,023)Purchase of investments - (21,272,595) - (20,993,758)Purchase of intangible assets (947,170) - (947,170) - Proceeds from sale of property, plant and equipment 14,967,646 10,360,527 11,037,149 10,152,703 Net cash outflow from investing activities (110,942,600) (124,281,075) (83,744,534) (115,323,078)

Cash flows from financing activities Proceeds from borrowings 115,724,597 120,078,093 94,758,751 113,976,320 Repayments of borrowings (93,607,285) (93,160,449) (78,680,740) (85,347,243)Shares issued - 28,914,000 - 28,914,000 Net cash inflow from financing activities 22,117,312 55,831,644 16,078,011 57,543,077 Net (decrease)/increase in cash and cash equivalents (15,043,358) (4,702,425) 24,934,628 2,504,718Net cash acquired on amalgamation 9,874,454 - - -Consolidation adjustment 4,000,000 (1,045,270) - - Cash and cash equivalents at the beginningof the year (33,010,418) (27,262,723) (21,943,178) (24,447,896)Cash and cash equivalents at the end of the year (22) (34,179,322) (33,010,418) 2,991,450 (21,943,178) The notes on pages 22 to 42 form an integral part of these financial statements Auditors’ Report on page 17.


Notes to the Financial Statements

For the year ended 30 June 2009

1. INCORPORATION AND ACTIVITIES Leal & Co Ltd is a public company incorporated in Mauritius. Its registered office is situated at Motorway M1, Pailles.

The company mainly deals in Motor Vehicles and spare parts. The activities of its major subsidiaries are described below: - Leal Communications & Informatics Ltd - Dealer in computer accessories, systems and peripherals. - Leal Equipments Compagnie Ltée - Dealer in all kinds of mechanical engineering and agricultural equipment and spares. - Distripc Ltd - Dealer in computer hardware and software. - SARL SOLINFO - Engaged in IT related businesses.- United Motors Ltd - Dealer in Motor Vehicles and spare parts 2. ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of these consolidated financial statements are as follows:

(a) Basis of preparation The financial statements have been prepared under the Historical Cost Convention, adjusted to fair value where applicable, and in accordance with International Financial Reporting Standards (IFRS). The functional and presentation currency of the financial statements are Mauritian Rupees (Rs), rounded to the nearest rupee except at note 27. (b) Adoption of New and Revised Standards (i) In the current year, the Group has adopted all of the new and revised International Financial Reporting Standards and interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are relevant to its operations and effective for accounting periods beginning on 1st July 2008. The adoption of these new and revised standards and interpretations has not resulted in changes to the Group’s accounting policies or estimates.

(ii) Additionally, no standard or interpretation has been applied in advance, and the Group is currently carrying out an analysis of the practical consequences of these new texts published by the IASB and of the effects of applying them in the financial statements: - Amendment to IAS 1 “Presentation of Financial Statements”, applicable for financial reporting periods beginning on 1 January 2009 or later;

- Amendment to IAS 23 “Borrowing Costs”, for which application is compulsory for reporting periods beginning on 1 January 2009 or later;

- Amendment to IFRS 2 “Vesting Conditions and Cancellations”, applicable for reporting periods beginning on 1 January 2009 or later;

- Amendment to IAS 32 and IAS 1: Financial instruments reimbursable at the discretion of the Noteholder, following liquidation, applicable for reporting periods beginning 1 January 2009 or later; - Improvement to IFRS for financial periods beginning on or after 1 January 2009, apart from the IFRS 5 amendment on the interpretation of the notion of “held for sale” in the event of a partial transfer and applicable for financial periods beginning on or after 1 July 2009;

notesto the Financial Statements



Notes to the Financial StatementsFor the year ended 30 June 2009

- IAS 27 (revised) “Consolidated and separate financial statements”, applicable for financial periods beginning on or after 1 July 2009 redefines minority interests as non-controlling interests. The revised standard allows losses attributed to the minority interests to exceed the minority’s interests in the subsidiary’s equity whereas prior to the revision, the excess and any further losses applicable to the minority are allocated against the majority interest except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses. However, the impact of the revised standard on the financial statements is insignificant.

- IFRS 3 (revised) “Business combinations”, applicable to business combinations whose date of acquisition occurs during the first financial period beginning on or after 1 July 2009;

- IFRIC 16 “Hedges of a net investment in a foreign operation”, applicable for financial periods beginning on or after 1 October 2008.

- With the exception to IAS 27 (revised), it is anticipated that the adoption of these new standards and interpretations in the future periods will have no material impact on the financial position and operating results as disclosed in the financial statements of the Group.

2. ACCOUNTING POLICIES (Cont’d) (c) Basis of consolidation The consolidated financial statements incorporate the results of Leal & Co Ltd and of its subsidiaries to 30th June 2009. During the reporting and the previous period, there were no acquisition or disposal of subsidiaries. Intercompany transactions, balances and unrealised gains or losses on transactions between Group companies are eliminated. Accounting policies adopted by subsidiaries and their reporting periods are identical to those of the parent company. (d) Investments in Subsidiaries In the company’s financial statements, investments in subsidiaries are stated at cost, unless in the opinion of the directors, there has been a permanent diminution in value, in which event they are written down to net recoverable value. The consolidated financial statements incorporate the financial statements of the company and entities controlled by the company (its subsidiaries) made up to June 30, each year. Subsidiaries are deemed as such from the date on which control is transferred to the group and cease to be consolidated from the date on which control is transferred out of the group. (e) Investments in Associates Investments in associates are accounted for at cost in the company’s financial statements, unless in the opinion of the directors, there has been a permanent diminution in value. Investments in associates are accounted for under the equity method of accounting in the group’s financial statements.

(f) Retirement Benefit Obligations - Defined Benefit Plan The company contributes to a pension scheme which is a “Defined Benefit” plan. The net total of the present value of funded obligations, the fair value of plan assets, any unrecognised actuarial gains and losses and any unrecognised past service cost, is recognised in the balance sheet either as a liability (if there is a deficit) or as an asset (if there is a surplus).



2. ACCOUNTING POLICIES (Cont’d) - Defined Contribution Plan The company also contributes to a defined contribution plan. Payments by the company to the defined contribution retirement plan are charged as an expense as they fall due. (g) Revenue Recognition Turnover is based on the invoiced value, net of VAT, of all goods and services less discounts, allowances and returns. Group turnover includes the turnover of subsidiary companies after eliminating sales within the group. Interest income and dividend income are accounted on the accruals basis.

(h) Inventories Inventories are valued at the lower of cost (determined on a weighted average price basis) and net realisable value. Inventories do not consist of items which should be recognised as an expense.

(i) Intangible assets Intangible assets comprise of Goodwill arising on purchase of brand name, goodwill acquired on a business combination, and computer software. Goodwill arising on purchase of brand name is amortised over a period of 10 years, and goodwill acquired on a business combination is not amortised and is assessed for impairment every year. Computer software is amortised over a period of 2 1/2 years.

(j) Depreciation Depreciation is calculated to write off the cost or revalued amount of relevant fixed assets to their estimated residual values on a reducing balance (Subsidiaries: straight line) basis over their expected useful lives. The principal annual rates used for that purpose are: Land not depreciated Buildings 2% Motor Vehicles 15% - 30% Furniture and Equipment 10% - 50% Tools and Equipment 10% Computer Equipment 20%

(k) Foreign currency translation (i) Functional and presentation currency Items included in the financial statements are measured in Mauritian Rupees , the currency of the primary economic environment in which the entity operates (“functional currency”). The financial statements are presented in Mauritian Rupees (Rs), which is the company’s functional and presentation currency.



2. ACCOUNTING POLICIES (Cont’d) (ii) Transactions and balances

Transactions denominated in foreign currencies are translated in Mauritian rupees at the rates ruling at the transactions dates. Assets and liabilities which are expressed in foreign currencies are translated into Mauritian rupees at the rates ruling at the Balance Sheet date. Resulting gains or losses are transferred to the income statement. (l) Investments Investments in equity instruments, excluding those in subsidiaries and associates are either held for trading or available-for-sale and are stated at fair value, based on quoted market prices at the balance sheet date, where available. Where securities are held for trading purposes, unrealised gains and losses are included in net profit or loss for the period. For available-for-sale investments, unrealised gains and losses are recognised directly in equity, until the security is disposed of or it is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the net profit or loss for the period. However, available-for-sale investments which do not have a quoted market price and whose fair value cannot be reliably measured, are carried at cost, less any impairment loss. (m) Deferred Taxation Provision is made for deferred taxation on timing differences between the taxable income and the accounting income using the liability method. However, no provision is made if, in the opinion of the directors, these timing differences are not likely to reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences to the extent that it is possible that taxable profit will be available against which the deductible temporary differences can be utilised. (n) Impairment of assets The carrying amounts of the company’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment.If any indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement in the period in which the impairment is identified. (o) Finance Leases Assets held under finance leases are included in fixed assets and are depreciated in accordance with the group’s depreciation policy. Obligations under such agreements are included in creditors net of finance charges allocated to future periods. Finance charges are debited to the income statement so as to produce a constant periodic rate of charge on the outstanding obligation.

(p) Provisions A provision is recognised when there is a present obligation (legal or constructive) as a result of past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.



2. ACCOUNTING POLICIES (Cont’d) (q) Financial Instruments Financial assets and liabilities are recognised on the balance sheet when the group has become party to the contractual provisions of the financial instruments. Financial instruments are initially measured at cost, which includes transaction costs. Subsequent to initial recognition, these instruments are measured as set out below: Trade and other receivables Trade and other receivables are stated at their nominal value, as reduced by appropriate allowances for estimated irrecoverable amounts. Cash and cash equivalents Cash includes balances with banks. Cash equivalents are short term, highly liquid assets which are readily convertible into known amounts of cash and which are subject to an insignificant risk of change in value. For the purpose of cash flow statements, cash and cash equivalents consist of cash and cash at bank, net of outstanding bank overdrafts.

Borrowings Borrowings are recognised initially at fair value being their issue proceeds net of transaction costs incurred. Trade and other payables Trade and other payables are stated at their nominal value. (r) Related Parties Related parties are individuals and enterprises where the individual or enterprise has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions.

3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY The preparation of financial statements in accordance with IFRSs requires the directors and management to exercise judgement in the process of applying the accounting policies. It also requires the use of accounting estimates and assumptions that may affect the reported amounts and disclosures in the financial statements. Judgements and estimates are continuously evaluated and are based on historical experience and other factors, including expectations and assumptions concerning future events that are believed to be reasonable under the circumstances. The actual results could, by definition therefore, often differ from the related accounting estimates. Where applicable, the notes to the financial statements set out areas where management has applied a higher degree of judgement that have a significant effect on the amounts recognised in the financial statements, or estimations and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.


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r fina

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30t

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No

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to th

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tem

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0.



Notes to the Financial StatementsFor the year ended 30 June 2009 THE GROUP THE COMPANY 2009 2008 2009 20085. INTANGIBLE ASSETS Rs Rs Rs Rs (a) Computer Software Balance at 1st July 199 139,141 - - Additions 947,170 - 947,170 - Amortisation for the year (94,916) (138,942) (94,717) - Balance at 30th June Rs 852,453 199 852,453 - (b) Purchase of Brand name Balance at 1st July 11,295,635 12,255,635 4,128,000 4,816,000 Amortisation for the year (960,000) (960,000) (688,000) (688,000) Balance at 30th June Rs 10,335,635 11,295,635 3,440,000 4,128,000 Consolidation adjustment 354,457 (8,410) - - TOTAL Rs 11,542,545 11,287,424 4,292,453 4,128,000

6. INVESTMENTS IN SUBSIDIARIES (UNQUOTED) The investments in subsidiaries are valued at Rs 57,116,968 (at cost) by the directors. All subsidiaries are incorporated in Mauritius, except SARL Solinfo which is incorporated in Reunion Island.

NAME OF ENTITY DESCRIPTION % HOLDING 2009 2008 2009 2008 Rs Rs % % Leal Communications & Informatics Ltd Ordinary Shares 90.00 90.00 12,720,500 12,720,500 United Motors Ltd Ordinary Shares 100.00 100.00 6,750,000 6,750,000 Leal Equipments Compagnie Ltée Ordinary Shares 75.00 75.00 21,176,400 21,176,000 Société Clency & Patrick Leal Parts 90.90 90.90 376,748 376,748 Distripc Ltd Ordinary Shares 75.00 100.00 4,300,000 2,300,000 Leal Logistics and Shipping Ltd Ordinary Shares 91.79 91.79 3,353,800 3,353,800 SARL Solinfo Ordinary Shares 100.00 100.00 8,439,520 8 439,520 Rs 57,116,968 55,116,968


No

tes

to th

e F

inan

cial

Sta

tem

ents

For t

he y

ear e

nded

30

June

200

9

TH

E G

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UP

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9

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. IN

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t 1st

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Gro

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ve b

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007)

to 3

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e 20

09.


Notes to the Financial StatementsFor the year ended 30 June 2009 THE GROUP THE COMPANY 2009 2008 2009 20088. OTHER INVESTMENTS Rs Rs Rs Rs Available for Sale Investment Balance at 1st July 1,549,088 1,270,250 65,000 65,000 Additions - 278,838 - - Balance at 30th June Rs 1,549,088 1,549,088 65,000 65,000

THE GROUP THE COMPANY 2009 2008 2009 20089. INVENTORIES Rs Rs Rs Rs Motor Vehicles 109,727,153 53,892,001 102,574,806 53,892,001 Spare Parts 88,726,272 86,258,430 61,817,279 64,471,751 Finished Goods 90,493,105 55,592,534 - - Work in progress 333,770 20,055 333,770 20,056 Rs 289,280,300 195,763,020 164,725,855 118,383,808 Spare parts and finished goods are valued on a weighted average price basis. The remaining stocks are at cost.

THE GROUP THE COMPANY 2009 2008 2009 200810. TRADE AND OTHER RECEIVABLES Rs Rs Rs Rs Trade receivables 251,470,824 246,951,313 125,354,630 111,371,233 Other debtors & prepayments 56,897,270 36,676,854 48,641,257 60,459,838 Inter company receivables - - 965,129 969,167 Rs 308,368,094 283,628,167 174,961,016 172,800,238

Before accepting any new customer, the Group assesses the potential customer’s credit worthiness.No interest is charged on the trade receivables. (a) As at 30th June 2009, provision for trade receivables impaired was Rs 7,195,326 (2008: Rs 8,192,781) for the Group and the Company Rs 2,525,700 (2008: Rs 5,421,637). The individually impaired receivables mainly related to debtors with overdue balances. (b) As at 30th June 2009, trade receivables of Rs 16,579,516 (2008: Rs 92,078,412) for the Group and for the Company Rs 35,383,306 (2008: Rs 37,181,611) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these receivables is as follows: THE GROUP THE COMPANY 2009 2008 2009 2008 Rs Rs Rs Rs 60 to 90 days 4,520,321 10,107,388 4,438,499 5,841,059 Over 90 days 12,059,195 81,971,024 30,944,807 31,340,552 Rs 16,579,516 92,078,412 35,383,306 37,181,611



11. BANK OVERDRAFTS The group’s bank overdrafts at 30th June 2009 are secured by means of fixed and floating charges on the group’s assets. THE GROUP THE COMPANY 2009 2008 2009 200812. TRADE AND OTHER PAYABLES Rs Rs Rs Rs Trade payables 344,966,868 248,039,566 202,140,602 141,475,909 Other creditors & accruals 80,380,134 47,178,930 52,648,650 23,736,849 Dividend payable to minority 5,452,200 5,440,500 - - Inter company payables - - 487,980 487,980 Rs 430,799,202 300,658,996 255,277,232 165,700,738

THE GROUP THE COMPANY 2009 2008 2009 200813. BORROWINGS Rs Rs Rs Rs

CURRENT Bank and other loans 54,506,565 44,206,618 44,882,122 37,816,754 Obligations under finance lease 45,569,068 41,594,079 39,097,340 36,365,845 100,075,633 85,800,697 83,979,462 74,182,599 NON CURRENT Bank and other loans 96,657,095 85,378,658 86,277,008 69,957,525 Obligations under finance lease 96,001,411 99,437,472 80,316,928 90,355,264 192,658,506 184,816,130 166,593,936 160,312,789 TOTAL BORROWINGS Rs 292,734,139 270,616,827 250,573,398 234,495,388 (a) Loans bearing interest ranging from 9.125% to 13.5% (2008 : 11.75% to 14.5%) per annum are secured by means of fixed and/or floating charges over the assets of the Group and pledging of shares of Pharmacie Nouvelle Ltd and are repayable monthly, half yearly and yearly. (b) Loan capital (excluding obligations under finance leases) can be analysed as follows: THE GROUP THE COMPANY 2009 2008 2009 2008 Repayable by instalments Rs Rs Rs Rs Up to 1 year 54,506,565 44,206,618 44,882,122 37,816,754 After 1 year and before 5 years 96,657,095 85,378,658 86,277,008 69,957,524 Rs 151,163,660 129,585,276 131,159,130 107,774,278 2009 2008 2009 2008(c) Obligations under Finance Leases Rs Rs Rs Rs Minimum Lease Payments Up to 1 year 59,407,574 56,380,994 50,859,021 49,784,987 After 1 year & before 5 years 110,769,286 115,603,571 91,834,006 105,103,818 170,176,860 171,984,565 142,693,027 154,888,805 Less: Future Finance Charges (28,606,381) (30,953,014) (23,278,759) (28,167,695) Rs 141,570,479 141,031,551 119,414,268 126,721,110 The present value of finance lease liabilities may be analysed as follows: Up to 1 year 45,569,068 41,594,079 39,097,340 36,365,845 After 1 year and before 5 years 96,001,411 99,437,472 80,316,928 90,355,265 Rs 141,570,479 141,031,551 119,414,268 126,721,110



13. BORROWINGS (CONT’D) (d) Leasing arrangements Finance leases relate to Motor Vehicles, Tools & Equipment, and Furniture & Fittings with lease terms of 5 years on average. The group has options to purchase the assets for a nominal amount at the conclusion of the lease agreements.

THE GROUP & THE COMPANY 2009 200814. STATED CAPITAL Rs Rs Issued, Allotted and Fully Paid 2,049,808 Ordinary Shares of Rs 100 each Rs 204,980,800 204,980,800 No of shares Balance at 1st July 2,049,808 1,818,496 Bonus Issue - - Rights Issue (one share for every eight shares) - 227,312 Issue for cash - 4,000 2,049,808 2,049,808 SHARE PREMIUM 231,312 Shares at Rs 25 each Rs 5,782,800 5,782,800

THE GROUP 2009 200815. MINORITY INTEREST Rs Rs Balance at 1st July 11,872,918 8,941,874 Consolidation adjustment (1,561,759) (3,834,300) Share of profits of subsidiaries 5,984,017 6,765,344 Balance at 30th June Rs 16,295,176 11,872,918



THE GROUP THE COMPANY 2009 2008 2009 200816. OPERATING PROFIT Rs Rs Rs Rs

Operating Profit is arrived at: AFTER CREDITING: Management fees Receivable Rs - - 4,040,000 3,540,000 Interest Receivable Rs 460,507 1,045,546 231,238 705,254 Rent Receivable Rs - - 4,003,848 3,813,204 Income from Investments Rs 2,550 79,943 25,688,787 42,950,960 Profit on disposal of property, plant and equipment Rs 1,717,716 711,625 1,347,963 700,192 Gain on exchange Rs 15,709,020 29,083,625 6,494,930 16,309,297 AND AFTER CHARGING: Auditors’ Remuneration Rs 658,000 531,500 255,000 255,000 Other Services Rs 998,000 1,700,250 900,000 1,285,000 Depreciation Rs 63,834,565 53,117,276 44,856,499 42,826,476 Amortisation of intangible assets Rs 1,054,916 1,098,942 782,717 688,000 Directors’ Emoluments: - Full-time directors Rs 24,676,530 26,045,611 14,690,448 18,889,210 - Part-time directors Rs 8,260,245 7,079,170 8,260,245 7,079,170 Staff Costs Rs 160,439,124 121,397,249 88,195,358 72,748,180 Number of employees at year end 452 395 252 254

THE GROUP THE COMPANY 2009 2008 2009 200817. FINANCE COST Rs Rs Rs Rs

Interest payable: - On bank overdrafts 4,423,598 4,515,826 1,291,136 3,097,519 - On bank loans 14,894,723 17,067,193 12,108,003 13,617,991 - On other loans 32,743,278 26,312,861 26,064,565 21,840,736 Rs 52,061,599 47,895,880 39,463,704 38,556,246


Notes to the Financial StatementsFor the year ended 30 June 2009 THE GROUP THE COMPANY 2009 2008 2009 200818. TAXATION Rs Rs Rs Rs Current tax @15% 7,666,015 14,585,640 1,399,076 5,498,186 Tax paid under APS (7,248,653) - (2,886,324) - Tax deductible at source (349,936) (310,239) (208,779) (190,239) Balance outstanding 2008/2009 10,364,051 - 3,538,646 - Liability to be recognised in balance sheet 10,431,477 14,275,401 1,842,619 5,307,947 Provision for the year 7,666,015 14,585,640 1,399,076 5,498,186 Movement in deferred tax liability (note 20) (4,883,172) 5,341 (4,872,057) 620,787 Movement in deferred tax asset 163,248 4,367 - - Income tax under/(over)provision - 9,209 - 225 Share of Associate’s tax 1,183,709 - - - CHARGE FOR THE YEAR Rs 4,129,800 14,604,557 (3,472,981) 6,119,198 The tax on the company’s profit differs from the theoretical amount that would arise using the basic rate as follows:

Profit before taxation 29,497,259 90,116,011 29,157,099 63,761,175

Tax on profit at a tax rate of 15% 4,424,589 13,517,402 4,373,565 9,564,176

Net Tax effect of Non-taxable and

other Items (294,789) 1,087,155 (7,846,546) (3,444,978)

Tax charge for the year Rs 4,129,800 14,604,557 (3,472,981) 6,119,198

THE GROUP & THE COMPANY 2009 200819. DIVIDENDS Rs Rs

Interim and Final Dividend - Rs 10/share (2008: Rs 10/share) 20,498,080 20,478,080 Dividend paid (20,498,080) (20,478,080) Dividend payable Rs - - THE GROUP THE COMPANY 2009 2008 2009 200820. DEFERRED TAX LIABILITIES Rs Rs Rs Rs At 1st July 15,782,202 15,787,543 14,122,082 13,501,295 Movement for the year (Note 18) (4,883,172) (5,341) (4,872,057) 620,787 At 30th June Rs 10,899,030 15,782,202 9,250,025 14,122,082 Deferred income tax at 30th June relates to the following: Accelerated capital allowances Rs 10,899,030 15,782,202 9,250,025 14,122,082 THE GROUP THE COMPANY 2009 2008 2009 200821. EARNING PER SHARE Rs Rs Rs Rs Net Profit attributable to shareholders Rs 19,383,442 68,746,110 32,630,080 57,641,977 Number of ordinary shares used in calculation 2,049,808 2,030,532 2,049,808 2,030,532 Earnings per share Rs 9.46 33.86 15.92 28.39


Notes to the Financial StatementsFor the year ended 30 June 2009 THE GROUP THE COMPANY 2009 2008 2009 200822. CASH AND CASH EQUIVALENT Rs Rs Rs Rs Bank and Cash Balances 26,884,947 23,235,189 13,290,115 13,309,402 Bank Overdrafts (61,064,269) (56,245,607) (10,298,665) (35,252,580) Rs (34,179,322) (33,010,418) 2,991,450 (21,943,178) THE GROUP 2009 200823 (a) PENSIONS AND OTHER RETIREMENT BENEFITS Rs Rs Present Value of funded obligations 87,391,754 75,254,439 Fair Value of plan assets (57,257,904) (48,203,442) Funded obligations in excess of plan assets 30,133,850 27,050,997 Unrecognised actuarial loss (13,523,367) (13,882,128) Liability to be recognised in balance sheet Rs 16,610,483 13,168,869

(b) PENSION EXPENSE COMPONENTS Current service cost 4,919,071 3,697,636 Interest cost 8,004,547 6,298,214 Expected return on assets (5,321,019) (4,359,120) Scheme expenses 223,353 214,783 Cost of insuring risk benefits 944,494 772,792 Acturial loss/(gain) 406,304 - Past service cost 370,779 - Net periodic pension cost 9,547,529 6,624,305 (c) MOVEMENT IN LIABILITY RECOGNISED IN BALANCE SHEET At start of year 13,168,869 12,211,929 Total expense as above 9,547,529 6,624,305 Employer contributions (6,105,915) (5,667,365) At end of year. Rs 16,610,483 13,168,869 (d) CHANGES IN THE PRESENT VALUE OF FUNDED OBLIGATIONS 2009 2008 Rs Rs At start of year 75,254,439 56,352,010 Current service cost 4,419,071 3,697,636 Interest cost 8,004,547 6,298,214 Actuarial gain /(losses) (2,238,731) 9,313,762 Benefits paid - (407,183) Past service cost 370,779 - Net transfer in 1,081,649 - At end of year Rs 87,391,754 75,254,439 (e) The principal actuarial assumptions used for accounting purposes were as follows: 2009 2008 Discount rate 10.0% 10.5% Expected return on plan assets 10.5% 10.5% Future salary increases 8% 8% Future guaranteed pension increase 0% 0% Employee benefit obligations figures have been calculated using the projected Unit credit method and are based on the report from The Anglo-Mauritius Assurance Society Limited dated 17 September 2009. The actual return on plan assets was Rs 3,034,745. The group also operates a defined contribution scheme for employees who have joined as from 1 July 2006 and no pension liability arises from this scheme. The group has made a contribution of Rs 8,138,126 to the defined contribution scheme during the year ended 30 June 2009.


Notes to the Financial StatementsFor the year ended 30 June 2009 24. CONTINGENT LIABILITY (a) Guarantee for banking facilities of foreign subsidiary, SARL SOLINFO amounts to EUR 79,100 (2008 : EUR 100,000) and local subsidiaries as follows: 2009 2008 Rs Rs Leal Equipments Compagnie Ltée 7,500,000 7,500,000 Leal Communications & Informatics Ltd 22,000,000 22,000,000 Distripc Ltd 51,000,000 30,000,000 80,500,000 59,500,000 (b) No provision has been made in these financial statements in respect of payments that may have to be made to employees on termination of their contract of service under the Labour Act 1975 as amended. (c) There is a contingent liability not provided for in the Financial Statements in respect of the following Court case against the company. An amount of Rs 2,930,858 is being claimed by the former sales supervisor of the company for unfair dismissal. 25. FINANCIAL RISK MANAGEMENT Concentration risk The company is the local representative of BMW and RENAULT in Mauritius and relies heavily on these suppliers to continue its business. In the event that the company loses its “exclusivity rights”, its ability to continue as a going concern may be adversely affected. Liquidity risk Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and borrowing facilities, by continuously monitoring forecast and actual cash flows. Capital risk management The group manages its capital to ensure that entities in the group will be able to continue as a going concern in order to provide returns to its shareholders. The capital structure of the group consists of debt, which includes borrowings disclosed in note 13, cash and cash equivalents as disclosed in note 22 and equity attributable to equity holders of the parent, comprising issued share capital, reserves and retained earnings. Gearing ratio The gearing ratio at the year end was as follows: THE GROUP THE COMPANY 2009 2008 2009 2008 Rs Rs Rs Rs Debt 292,734,139 270,616,827 250,573,398 234,495,388 Cash and cash equivalents 34,179,322 33,010,418 (2,991,450) 21,943,178 Net debt 326,913,461 303,627,245 247,581,948 256,438,566 Equity 429,694,005 423,343,945 323,747,127 311,615,127 Net debt to equity ratio 0.76 0.72 0.76 0.82


Notes to the Financial StatementsFor the year ended 30 June 2009 25. FINANCIAL RISK MANAGEMENT (CONT’D) Values of financial instruments The group’s assets and liabilities include cash and cash equivalents, receivables and payables which are realised or settled within a short period of time. The carrying amounts of these assets and liabilities approximate their fair values. Currency risk The group has financial assets and liabilities which are denominated in currencies other than its functional currency and hence it is exposed to the exchange rates risks. Currency profile The currency profile of the group’s financial assets and liabilities are summarised as follows: Financial Assets Financial Liabilities 2009 2008 2009 2008 Rs Rs Rs Rs Euro 22,541,528 10,794,891 171,496,159 157,065,746 Pounds Sterling 15,910 12,694 - 3,215 South African Rand - 3,182 6,483,258 13,358 Japanese Yen - - - - Swedish Krona 3,241 1,200 - - United States Dollars 15,196,660 1,823,214 57,485,257 14,635,308 Singapore Dollars - - - 271,321 Rs 37,757,660 12,635,181 235,464,674 171,988,948

Credit risk The group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables, estimated by the group’s management based on prior experience.

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Notes to the Financial StatementsFor the year ended 30 June 2009 27. FINANCIAL SUMMARY (a) THE GROUP 2009 2008 2007 2006 2005 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Turnover 2,060,436 1,852,574 1,551,529 1,363,870 1,366,729 Profit before taxation and dividends, and after minority interest 23,513 83,351 46,790 47,477 77,409 Taxation (4,130) (14,605) (10,733) (12,844) (21,839) Profit after taxation 19,383 68,746 36,057 34,633 55,570 Dividends (20,498) (20,478) (9,093) (9,093) (13,639) Revenue (deficit)/surplus for the year (1,115) 48,268 26,964 25,540 41,931 CAPITAL AND RESERVES Issued and Paid Up Share Capital 204,981 204,981 181,850 90,925 90,925 Revenue Reserves 119,456 117,336 69,067 99,861 74,321 Revaluation and other Reserves 88,962 89,155 44,628 76,727 75,591 NOTE: Profit before taxation is arrived at after adjustments for: (i) Attributable profits of associated companies. (ii) Minority share of profits and losses. (b) THE COMPANY 2009 2008 2007 2006 2005 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Turnover 1,034,760 1,083,619 954,864 825,610 939,366 Profit/(Loss) before taxation and dividends 29,157 63,761 33,515 31,399 64,566 Taxation 3,473 (6,119) (4,208) (1,544) (12,705) Profit/(Loss) after taxation 32,630 57,642 29,307 29,855 51,861 Dividends (20,498) (20,478) (9,093) (9,093) (13,639) Revenue surplus/(deficit) for the year 12,132 37,164 20,214 20,762 38,222 CAPITAL AND RESERVES Issued and Paid Up Share Capital 204,981 204,981 181,850 90,925 90,925 Revenue Reserves 99,650 87,518 50,354 88,391 67,628 Revaluation and other Reserves 19 117 19 117 - 32,673 32,673


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