prospectus - mcb group prospectus | 3 prospectus in respect of the issue and listing by way of an...

PROSPECTUS

Prospectus | 3

PROSPECTUS IN RESPECT OF THE ISSUE AND LISTING BY WAY OF AN OFFER FOR SUBSCRIPTION ON THE OFFICIAL MARKET OF THE STOCK EXCHANGE OF MAURITIUS LTD OF MUR 2 BILLION OF FLOATING RATE SENIOR UNSECURED NOTES DUE 2023 (THE “NOTES”) AT A PRICE OF MUR 1,000 PER NOTE

Sponsoring BrokerMCB Stockbrokers Ltd

ArrangerMCB Capital Markets

Floating Rate Senior Unsecured Notes Due 2023

by MCB Group Limited

A public company limited by shares incorporated on 5 August 2013 in the Republic of Mauritius, bearing business registration number C13117853 and having its registered office at Sir William Newton Street, Port Louis, Mauritius

This prospectus (“Prospectus”) is issued pursuant to the Securities Act 2005 and rules and regulations made thereunder and is deemed to be the listing particulars for the purposes of the rules (“SEM Listing Rules”) of the Stock Exchange of Mauritius Ltd (“SEM”) in relation to a listing by way of an offer for subscription on the Official Market of the SEM. This Prospectus relates to the issue of 2 million Notes representing an aggregate principal amount of MUR 2 billion (the “Issue”), which will be listed on the Official Market of the SEM

The date of this Prospectus is 15 December 2017

LEC/OS/01/2017

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

This Prospectus provides information to the general public pertaining to the subscription of the Notes to be issued by MCB Group Limited (“MCB Group” or the “Issuer”) and includes information given in compliance with Chapter 9 part B of the SEM Listing Rules with regard to the issue and listing of 2 million Notes at a principal amount and Issue Price of MUR 1,000 each by MCB Group and to be admitted on the Official Market of the SEM by way of an offer for subscription.

An application was made to the SEM for the listing and permission to deal in the Notes and this Prospectus has been approved by the Listing Executive Committee of the SEM (“LEC”) on 15 December 2017. A listing has not been sought for these Notes on any other stock exchange. On the first day of listing and trading of the Notes on the Official Market of the SEM, the Issuer undertakes to make available 10 Notes at an indicative price of MUR 1,000 per Note (as may be adjusted in accordance with the Tick Size).

A copy of this Prospectus has been registered with the Financial Services Commission (“FSC”) pursuant to the Securities Act 2005 and the rules and regulations made thereunder.

For a full appreciation of this Prospectus, it should be read in its entirety. If you have any doubt as to the action you should take, please consult your banker, stockbroker, legal advisor, accountant or other professional advisor immediately.

The attention of readers is drawn to Paragraph A, which contains a summary definition of all key terms used in this Prospectus.

This document is not to be redistributed, reproduced, or used, in whole or in part, for any other purpose.

SELLING RESTRICTIONS

The circulation and distribution of this Prospectus in certain jurisdictions may be restricted by law. Persons who may come into possession of this Prospectus are required to inform themselves of, and to observe, any such restrictions. This Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, a security in any jurisdiction in which it is unlawful to make such an offer or to any person to whom it is unlawful to make such an offer or solicitation in such jurisdiction.

The Notes and this Prospectus have not been registered under the United States Securities Act of 1933, as amended, or the United States Investment Company Act of 1940, as amended and may not be offered, sold or delivered in the United States of America, or to or for the account of a U.S. Person. Any investor should consult his own legal, tax and other advisers to determine whether an investment in the Notes could result in adverse consequences to the investor or his related persons and affiliates. All U.S. Persons may have United States tax consequences arising from investing in the Notes.

DISCLAIMER

Neither the LEC, the SEM nor the FSC assumes any responsibility for the contents of this document. The LEC, the SEM and the FSC make no representation as to the accuracy or completeness of any of the statements made or opinions expressed in this document and expressly disclaim any liability whatsoever for any loss arising from or in reliance upon the whole or any part thereof.

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TABLE OF CONTENTS

A SUMMARY AND OVERVIEW OF THE ISSUE ........................................................................................................................... 6

B. GLOSSARY OF DEFINITIONS AND ABBREVIATIONS ..........................................................................................................7

C. DOCUMENTS INCORPORATED BY REFERENCE .............................................................................................................. 10

D. DESCRIPTION OF THE ISSUER.................................................................................................................................................. 10

E. TERMS AND CONDITIONS OF THE NOTES ....................................................................................................................... 22

1. Issue ............................................................................................................................................................................................... 22

2. Form of the Notes ..................................................................................................................................................................... 22

3. Status of the Notes .................................................................................................................................................................... 23

4. Security interest ......................................................................................................................................................................... 23

5. Use of Proceeds ......................................................................................................................................................................... 23

6. Interests ........................................................................................................................................................................................ 23

7. Redemption and Purchases ...................................................................................................................................................... 24

8. Payments ...................................................................................................................................................................................... 24

9. Exclusion of Rights ..................................................................................................................................................................... 24

10. Taxation ...................................................................................................................................................................................... 25

11. Events of Default ...................................................................................................................................................................... 25

12. Treatment of unclaimed money............................................................................................................................................. 25

13. Transfer and Transmission of Notes ..................................................................................................................................... 25

14. Register ......................................................................................................................................................................................25

15. Agent ........................................................................................................................................................................................... 26

16. Noteholders’ Representative ................................................................................................................................................ 26

17. Notices ....................................................................................................................................................................................... 26

18. Meetings of Noteholders and Rights of Noteholders ..................................................................................................... 26

19. Modification............................................................................................................................................................................... 27

20. Further Issues ........................................................................................................................................................................... 27

21. Data collection and protection ............................................................................................................................................. 27

22. Governing law and jurisdiction ............................................................................................................................................. 27

F. ISSUER’S FINANCIAL POSITION .............................................................................................................................................. 28

G. SUBSCRIPTION AND SALE ......................................................................................................................................................... 45

H. RISK FACTORS ................................................................................................................................................................................ 47

I. MAURITIUS TAXATION ............................................................................................................................................................... 50

J. DOCUMENTS AVAILABLE FOR INSPECTION ...................................................................................................................... 50

K. CORPORATE INFORMATION ................................................................................................................................................... 51

This Prospectus and such other information provided in connection with this Prospectus are not intended to provide a basis for any credit or other evaluation. Prospective Investors should ensure that they understand the nature of the relevant Notes and the extent of their exposure to risks and that they consider the suitability of the Notes as an investment in light of their own circumstances and financial condition.

The Arranger and the other professional advisers have not separately verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility is accepted by them as to the accuracy or completeness of the information contained in this Prospectus or any other information provided by the Issuer. The Arranger and the other professional advisers do not accept any liability in relation to the information contained in this Prospectus or any other information provided by the Issuer in connection with the Issue.

Any information on taxation contained in this Prospectus is a summary of certain tax considerations but is not intended to be a complete discussion of all tax considerations. The contents of this Prospectus are not to be construed as investment, legal or tax advice. Prospective Investors should consult their own lawyer, accountant, or investment advisor as to legal, tax and related matters concerning their investment.

Furthermore, nothing in this Prospectus shall be construed as a recommendation by the Issuer and/or the Arranger that any recipient thereof should purchase the Notes.

Unless otherwise specified herein, the statements and information contained in this Prospectus have been compiled as of December 2017. Neither the delivery of this Prospectus nor any allotment or issue of any Notes shall under any circumstances create an implication or constitute a representation that the information given in this Prospectus is correct as at any time subsequent to the date thereof.

RESPONSIBILITY STATEMENT

The directors, whose names appear on pages 12 to 16, collectively and individually:- a) confirm that the accounts of the Issuer for the financial years ended 30th June 2015, 30th June 2016 and 30th June 2017 have been prepared in accordance with the Securities Act 2005 and with relevant accounting standards, and accept full responsibility for them; and

b) accept full responsibility for the accuracy and completeness of the information contained in this Prospectus and confirm, to the best of their knowledge and belief after having made all reasonable enquiries, that this Prospectus complies with the Securities Act 2005 (including applicable rules and regulations issued thereunder) and the SEM Listing Rules, and that this Prospectus contains or incorporates all information which is material in the context of the Issue and the offering of the Notes, that the information contained or incorporated in this Prospectus is true and accurate in all material respects and is not misleading, that the opinions and the intentions expressed in this Prospectus are honestly held and that there are no other facts, the omission of which would make this Prospectus or any of such information or expression of any such opinions or intentions misleading.

Unanimously approved by the Board (as defined below) of the Issuer on 12 December 2017 and signed on its behalf by:

Pierre Guy NOEL Director

Gilbert GNANYDirector


Important Dates

a) Offer Start Date 20 December 2017, 0900

b) Offer End Date 11 January 2018 , 1400

c) Announcement of allotment basis 19 January 2018 , 1500

d) Payment Date 22 January 2018

e) Issue Date & issue of allotment letters 22 January 2018

f) Interest Commencement Date 22 January 2018

g) Date of listing and first trading 23 January 2018

h) Register The Register maintained by the Agent as per of the Terms and Conditions

i) Taxation Interest paid by the Issuer to a Noteholder which is a resident company will be subject to income tax at the current rate of fifteen percent (15%) p.a. Interest paid by the Issuer to a Noteholder who is an individual, société, succession or non-resident company will be exempted from income taxWhere interest is paid on listed Notes to a Noteholder other than an individual, société, succession or a company, the Issuer (acting through the Agent) will be required by the Income Tax Act 1995 to deduct income tax at source at the current rate of fifteen percent (15%) p.a. (subject to any double taxation agreement in force between Mauritius and the foreign country where the Noteholder is resident)

Listing This Prospectus has been approved by the Listing Executive Committee of the SEM on 15 December 2017 and the Notes will be listed on the Official Market of the SEM with first day of listing and trading being 23 January 2018

Governing Law The Notes and this Prospectus are governed by, and shall be construed in accordance with, the laws of the Republic of Mauritius

Jurisdiction Arbitration under the rules of the LCIA-MIAC

A.3 Background of the Issue

The Issuer is an integrated banking and financial services player offering its clients tailored and innovative solutions through its local and foreign subsidiaries and associates. Through The Mauritius Commercial Bank Limited (“MCB”) which was established in 1838, MCB Group has consolidated its position as a leading provider of banking services in Mauritius. It continues to play a key role in promoting the socio-economic development of Mauritius. MCB Group is diversifying its activities by broadening its offering of non-banking financial services and is playing an increasingly prominent role in the region and beyond. As part of its diversification initiative, on the 26th October 2017:• The Issuer announced its intention to implement its real estate investment strategy. Under this strategy, the Issuer, through MCBRA or other wholly owned subsidiaries (each an “Investment Vehicle”), will act as the seed investor for the acquisition of prime real estate yielding assets in Mauritius. In due course, investors will be given the opportunity to participate in the Investment Vehicles; and• MCBRA completed the acquisition of 47,798,387 shares in Compagnie de Villages de Vacances de L’Isle de France (“COVIFRA”) at an ex- dividend price per share equal to MUR 22.50 and for a consideration of c. MUR 1.1 billion (the “COVIFRA Transaction”).

COVIFRA is a company listed on the Development & Enterprise Market of the Stock Exchange of Mauritius Ltd (“DEM”) and is the owner of the ‘Club Med’ resort located at La Pointe aux Canonniers, Mauritius (the “Resort”). The Resort will continue to be leased by a wholly owned subsidiary of Club Med under a long term agreement and will be operated under the ‘Club Med’ brand.

Following the completion of the COVIFRA Transaction, MCBRA is required to make a mandatory offer to acquire the shares of the minority shareholders of COVIFRA in accordance with the Securities (Takeover) Rules 2010.

The proceeds from the issuance of the Notes will be used to provide funding for1 :• The COVIFRA Transaction and the subsequent mandatory offer; and• Other strategic initiatives of the Issuer’s non-banking financial services cluster.

B. GLOSSARY OF DEFINITIONS AND ABBREVIATIONS

All references in this document to ‘MUR’, ‘Rupee’, ‘Mauritius Rupee’ and ‘Rs’ refer to the currency of the Republic of Mauritius.

Where any term is defined within the context of any particular paragraph or section in this Prospectus, the term so defined, shall bear the meaning ascribed to it for all purposes in this Prospectus, unless the context otherwise requires. Expressions defined in this Prospectus shall bear the same meanings in supplements to this Prospectus which do not themselves contain their own definitions.

Any reference in this Prospectus to any statute, regulation or other legislation shall be a reference to that statute, regulation or other legislation at the date of this Prospectus, as amended or substituted from time to time.

In this Prospectus, unless inconsistent with the context, the following expressions shall have the following meanings:

1 Please refer to Condition 5 for additional details on the use of proceeds.

A. SUMMARY AND OVERVIEW OF THE ISSUE

This overview must be read as an introduction to this Prospectus. Any decision to invest in the Notes should be based on consideration of this Prospectus as a whole, including the Documents Incorporated by Reference.

A.1 Parties:

Issuer MCB Group Limited, a public company incorporated under the laws of the Republic of Mauritius with business registration number C13117853 and having its registered office at Sir William Newton Street, Port Louis, Mauritius

Arranger MCB Financial Advisers, trading under the name of MCB Capital Markets, a private company incorporated under the laws of the Republic of Mauritius with business registration number C17145952 and having its registered office at 9th Floor, MCB Centre, Sir William Newton Street, Port Louis, Mauritius

Registrar, Calculation, Transfer and Paying Agent

MCB Registry & Securities Ltd, a public company limited by shares incorporated under the laws of the Republic of Mauritius with business registration number C07009196 and having its registered office at 9th Floor, MCB Centre, Sir William Newton Street, Port Louis, Mauritius

Noteholders’ Representative La Prudence Mauricienne Assurances Limitée, a public company incorporated under the laws of the Republic of Mauritius, having its registered office at 2nd Floor, Barkly Wharf, Le Caudan Waterfront, Port Louis, Mauritius

Noteholders The holders of Notes as recorded in the register maintained by the CDS

A.2 General

Instrument Floating Rate Senior Unsecured Notes due 2023

Offer Mode Public offer in accordance with the Securities Act 2005 and the Securities (Public Offers) Rules 2007

Currency MUR

Purpose The proceeds from the issuance of the Notes will be used to provide funding for:1. The COVIFRA Transaction and the subsequent mandatory offer; and2. Other strategic initiatives of the Issuer’s non-banking financial services cluster

Please refer to paragraph A.3 below (Background of the Issue) for a description of the Issuer’s real estate investment strategies

Aggregate Principal Amount MUR 2 billion

Principal Amount per Note MUR 1,000

Issue Price per Note 100% of the Principal Amount per Note

Minimum Subscription Amount MUR 50,000, subject to discretionary allotment by the Issuer in the event of oversubscription

Redemption Amount 100% of the Principal Amount per Note

Interest Rate The Repo Rate, which at the date of this Prospectus is 3.50%

Maturity Date 22 January 2023

Interest Payment Frequency Quarterly in arrears

Day Count Basis Actual / 365

Business Day Convention Following Business Day Convention

Form of the Notes The Notes will be issued in inscribed form. No certificates will be issuedLegal ownership of the Notes will, upon listing on the Official Market of the SEM, be reflected in book entries recorded by the CDS and such records shall constitute the definitive evidence of the title of the Noteholder to the number of Notes shown in his CDS Account

Status of the Notes The Notes will constitute senior unsecured obligations of the Issuer and will rank as follows:1. Senior to any subordinated creditors of the Issuer including the holders of Subordinated Notes;2. Pari-passu with other unsecured creditors of the Issuer;3. Pari-passu amongst themselves; and 4. Senior to all classes of the share capital of the Issuer

Early redemption Neither the Issuer nor the Noteholders can redeem the Notes prior to the Maturity Date


Issue Price In relation to a Note, one hundred percent (100%) of the Principal Amount

LEC The Listing Executive Committee of the SEM

LCIA-MIAC The London Court of International Arbitration – Mauritius International Arbitration Centre

Maturity Date 22 January 2023

MCB The Mauritius Commercial Bank Limited

MCBRA MCB REAL ASSETS LTD

Minimum Subscription Amount MUR 50,000, subject to discretional allotment by the Issuer in the event of oversubscription

Noteholders The holders of Notes as recorded in the register maintained by the CDS

Noteholders’ Representative La Prudence Mauricienne Assurances Limitée, duly authorised to act on behalf of a Noteholder and appointed pursuant to the Noteholders’ Representative Agency Agreement

Noteholders’ Representative Agency Agreement

The agency agreement entered into between the Issuer and the Noteholders’ Representative appointing the Noteholders’ Representative with the aim of providing for the protection and enforcement of the rights and entitlements of Noteholders

Notes The notes to be issued by the Issuer under this Prospectus

Payment Date The date on which the Issuer receives the full amount of the subscription proceeds in cleared funds, being 22 January 2018

Principal Amount The nominal amount of each Note specified on an allotment letter

Prospective Investor An investor provided with this Prospectus or the Simplified Prospectus and considering an investment in the Notes to be issued hereunder

Register The register maintained in accordance with Condition 14

Repo Rate The Key Repo Rate or any relevant successor benchmark as set from time to time by the Bank of Mauritius

Restricted Countries All countries other than the Republic of Mauritius

SEM The Stock Exchange of Mauritius Ltd

Simplified Prospectus In relation to this Prospectus, the simplified prospectus prepared in accordance with Rule 5 of the Securities (Public Offers) Rules 2007

Special Resolution In relation to Noteholders, a resolution passed at a properly constituted meeting of such Noteholders duly convened and held in accordance with the provisions of the Noteholders’ Representative Agency Agreement (i) upon a show of hands, by a majority of not less than seventy five percent (75%) of the voting rights attached to the Notes voted by Noteholders present in person or by proxy or (ii) if a poll is duly demanded, by a majority of not less than seventy five percent (75%) of the votes cast at such poll by the Noteholders present in person or by proxy

Subordinated Notes The Floating Rate Subordinated Notes Due 2023 issued by the Issuer under a listing particulars dated 12th June 2015 (LEC/I/02/2015)

Terms and Conditions The Terms and Conditions incorporated in the Paragraph headed “Terms and Conditions of the Notes” under which the Notes will be issued

Tick Size Refers to the minimum yield variation set by the SEM, as set out in the SEM’s trading procedures

U.S. Person a) any natural person resident in the United States, including any U.S. resident who is temporarily outside the United States; b) any corporation, partnership, limited liability company or other entity organised or incorporated under the laws of the United States; c) any estate of which any executor or administrator is a U.S. Person; d) any trust of which any trustee is a U.S. Person; e) any agency or branch of a foreign entity located in the United States; f) any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. Person; g) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organised, incorporated, or (if an individual) resident, in the United States; and h) any corporation, partnership, limited liability company or other entity if (1) organised or incorporated under the laws of any non-U.S. jurisdiction and (2) formed by a U.S. Person principally for the purpose of investing in securities not registered under the U.S. Securities Act, unless it is organised or incorporated, and owned, by accredited investors (as defined in Rule 501(a) promulgated under the U.S. Securities Act) which are not natural persons, estates or trusts.

Additional Interest Amount Has the meaning ascribed to it in Condition 6.6(a)

Agency Agreement An agreement between the Issuer and the Agent signed on or about the date hereof setting out the rights and obligations of the parties thereunder as may be further supplemented and/or amended and/or restated from time to time

Agent The entity acting as registrar, calculation, paying and transfer agent under the Agency Agreement

Aggregate Principal Amount The total Principal Amount raised pursuant to the Issue contemplated hereunder

Allotment Date The date on which all successful Prospective Investors will be notified of their allotment by way of an allotment letter sent by email and/or by post. The allotment date has been scheduled for 22 January 2018

Applicable Procedures The rules, guidelines and operating procedures of the SEM and/or CDS, as the case may be

Application Form The application form approved by the Issuer for subscription of Notes to be issued hereunder

Arrears of Interest Has the meaning ascribed to it in Condition 6.6(b)

Board The board of directors of the Issuer

Business Day A day (other than a Saturday or Sunday or public holiday) on which commercial banks settle MUR payments in Mauritius

CDS Central Depository & Settlement Co. Ltd

Companies Act The Companies Act 2001 of the Republic of Mauritius, as amended from time to time

Compulsory Arrears of Interest Payment Event

Any of the following events:(a) the declaration of payment of dividends on, or the redemption or repurchase of, any ordinary shares of the Issuer at any time when Arrears of Interest are outstanding; and(b) any redemption or repurchase for cash of the Subordinated Notes at any time when Arrears of Interest are outstanding, unless such redemption or repurchase was required under the terms of the Subordinated Notes

Condition A term and condition specified in the Paragraph ‘Terms and Conditions of the Notes’

Constitution The constitution of MCB Group, as amended from time to time

Day Count Fraction The actual number of days in the relevant Interest Period divided by 365 days

Default Interest Rate One percent (1%) per annum over and above the Interest Rate

Encumbrance(s) Any mortgage, charge, lien, pledge, assignment, hypothecation, preferential right, or any other security interest or arrangement

Event of Default An event of default set out in Condition 11.1

Final Redemption Amount The amount of principal payable in respect of each Note upon final redemption thereof

Following Business Day Convention Has the meaning ascribed to it in Condition 6.7

FSC The Financial Services Commission

Group The Issuer, its subsidiaries and associates

Insolvency Proceedings Any of the following proceedings as defined under the Insolvency Act 2009 (as amended):a) liquidation (voluntary, creditors’ or compulsory), b) winding-up, c) conservatorship, d) receivership, ore) administration

Interest Amount The amount of interest payable, in respect of each Principal Amount of Notes outstanding, calculated in accordance with Condition 6.3

Interest Commencement Date The first date from which interest on the Notes will accrue, being 22 January 2018

Interest Payment Date Each date which occurs after a certain period following the preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the Interest Commencement Date

Interest Period The period beginning on (and including) the Interest Commencement Date and ending on (but excluding) the first Interest Payment Date, and each successive period beginning on (and including) an Interest Payment Date and ending on (but excluding) the next Interest Payment Date

Interest Rate The rate or rates of interest applicable to the Notes as indicated in Condition 6.1

Investment Vehicle Has the meaning ascribed to that term in paragraph A.3 (Background of the Issue)

Issuer MCB Group Limited, a public company incorporated under the laws of the Republic of Mauritius and having its registered office at Sir William Newton Street, Port Louis, Mauritius

Issue The issue of 2 million Notes for MUR 2 billion in accordance with this Prospectus

Issue Date 22 January 2018


The Group has built a reputation as an ‘employer of choice’ based on its performance culture and emphasis on professional development. The Group was also the first listed company in Mauritius to introduce a fully comprehensive employee share option scheme. The Issuer is one of the largest employers in Mauritius with a headcount of 3,386 employees as at 30 June 2017.

D.3 Key Facts and Figures

Banking* • Over 950,000 individual and institutional customers• Market shares of over 40% for both domestic credit to the economy and local currency deposits and c.55% for cards issued• Network of 39 branches/kiosks redesigned around the ‘department store’ concept• 176 strategically-located ATMs (of which 8 forex ATMs), representing 39% of the national park• Above 6,800 Point of Sale (POS) terminals, many of which are multi-currency and wireless• More than 155,000 registered Internet Banking customers (market share of above 40%)• Wide range of mobile services: SMS Banking, Airtime refill through mobile phones, Mobile Banking and Mobile Payments (more than 124,000 registrations for ‘Juice’ mobile service)• Workforce of some 2,600 employees

Non-Banking • MCB Capital Markets Ltd is the investment banking and asset management arm of the Group. MCB Capital Markets is the leading arranger, and structurer of debt capital market instruments in Mauritius. In addition, through its subsidiaries, MCB Capital Markets has assets under management of c. MUR 22 billion (USD 600 million) • Major player in leasing and factoring• MCB Microfinance Ltd, launched in July 2016, to assist micro and small entrepreneurs• Engagement in consulting services, cards outsourcing operations as well as investment and ancillary undertakings• Promotion of actions in the corporate social responsibility and philanthropic fields

Foreign involvement • Presence in 9 countries outside Mauritius through subsidiaries, associates, and representative offices• Network of approximately 1,470 correspondent banks worldwide• Broadening activities in the context of ‘Bank of Banks’ proposal• Participation in loan syndication as well as structured commodities and project financing

The Group • As at June 2017, a market capitalization of USD 1.9bn, representing a share of 25.6% based on SEMDEX • A broad & diversified shareholder base, with more than 18,500 shareholders • Most tradable security on the local stock exchange (market share of over 40%)

Source: MCB Group and MCB Annual Report 2017

D.4 Group structure

The chart below sets out the current Group structure. MCB Group’s strategy execution is enabled by key operating pillars, which comprise entities, business lines and support functions. Common frameworks and policies, where appropriate, contribute to the accomplishment of the Group’s objectives.

MCB Investment Holding Ltd, as a wholly-owned subsidiary of the Issuer, is the intermediate holding company of the ‘Banking’ cluster, which includes MCB as well as the foreign banking subsidiaries and associates.

The ‘Non-Banking’ financial cluster consists of the following activities: 1. MCB Capital Markets, the Group’s investment banking arm. It is envisaged that key activities under the REI strategy (e.g. deal sourcing and transaction advisory) will be carried out through MCB Capital Markets;2. MCB Equity Fund, with assets under management of MUR 2.2bn (June 2017), provides expansion and buy-out capital to small and medium sized businesses;3. MCB Microfinance, which aims to provide entrepreneurs and self-employed individuals with relatively small unsecured loans; and 4. MCB Factors and Finlease, which offer factoring and leasing services respectively.

Notwithstanding the foregoing, the following persons do not constitute “U.S. Person” for purposes of this Prospectus: a) any discretionary account or similar account (other than an estate or trust) held for the benefit or account of a non-U.S. Person by a dealer or other professional fiduciary organised, incorporated, or (if an individual) resident, in the United States; b) any estate of which any professional fiduciary acting as executor or administrator is a U.S. Person if (i) an executor or administrator of the estate which is not a U.S. Person has sole or shared investment discretion with respect to the assets of the estate and (ii) the estate is governed by non-U.S. law; c) any trust of which any professional fiduciary acting as trustee is a U.S. Person shall not be deemed a U.S. Person if a trustee who is not a U.S. Person has sole or shared investment discretion with respect to the trust assets, and no beneficiary of the trust (and no settlor if the trust is revocable) is a U.S. Person; d) an employee benefit plan established and administered in accordance with the laws of a country other than the United States and customary practices and documentation of such country;e) any agency or branch of a U.S. Person located outside the United States if (i) the agency or branch operates for valid business reasons and (ii) the agency or branch is engaged in the business of insurance or banking and is subject to substantive insurance or banking regulation, respectively, in the jurisdiction where located; andf) the International Monetary Fund, the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the United Nations, and their agencies, affiliates and pension plans, and any other similar international organisations, their agencies, affiliates and pension plans.

C. DOCUMENTS INCORPORATED BY REFERENCE

The following documents shall be deemed to be incorporated in, and to form part of, this Prospectus (hereinafter the “Documents Incorporated by Reference”):

a) all supplements to this Prospectus as may be issued by the Issuer from time to time;b) the Agency Agreement; andc) the Noteholders’ Representative Agency Agreement.

Following publication of this Prospectus, a supplement may be prepared by the Issuer. Statements contained in any such supplement (or contained in any document incorporated by reference therein) shall, to the extent applicable (whether expressly, by implication or otherwise), be deemed to modify or supersede statements contained in this Prospectus or in a document which is incorporated by reference in this Prospectus. Any statement so modified or superseded shall not, except as so modified or superseded, constitute a part of this Prospectus.

Prospective Investors shall be deemed to have notice of all information contained in the Documents Incorporated by Reference into this Prospectus, as if all such information were included in this Prospectus. Prospective Investors who have not previously reviewed such information should do so in connection with their application for purchase of the Notes.

D. DESCRIPTION OF THE ISSUER

D.1 About MCB Group

MCB Group was incorporated on 5 August 2013 and, as part of the reorganisation of the activities of the MCB group of companies (“Group”), three main clusters were created, namely those of banking, non-bank financial and other investments. The Issuer holds, directly or indirectly, all the investments in the subsidiaries and associates of the Group.

The Issuer is an integrated banking and financial services provider, offering a comprehensive range of tailored and innovative solutions to its retail, corporate and institutional clients. The Group’s rich history, commitment to its clients, innovative culture and high quality employees underpin its solid franchise and long track record of sustained profitability.

D.2 A Catalyst for Socio-Economic Development

Throughout its history, the Group has been true to its guiding principle of assisting in the advancement of local citizens and institutions of the countries in which it operates. Over time, the Group has met its clients’ increasingly complex and varied financial needs and has been a major driving force behind the development of various industry sectors which, at inception, were regarded as either unfashionable or risky. These include tourism, textile, local manufacturing, freeport activities, information and communication technology and seafood, which have since developed into key pillars of the Mauritian economy.

MCB Group is a socially responsible institution. It is committed to the promotion of social welfare and meeting its responsibilities vis-à-vis the community. In 2010, MCB established the MCB Forward Foundation. The latter spearheads the Group’s corporate social responsibilities. In 2016/17, MUR 86.3 million was entrusted to MCB Forward Foundation, which undertook 77 corporate socially responsible projects.

*Figures relate to MCB in Mauritius


Name Biography Nationality Address

Sunil BANYMANDHUB Qualifications: BSc (Honours) in Civil Engineering, Master’s degree in Business Studies and Chartered Accountant (UK) Skills and experience: Sunil has occupied senior positions in the private sector in Mauritius prior to launching his own transport company in 1990. In 2001, he joined the CIM Group, a company engaged in financial and international services, from which he retired as Chief Executive Officer in 2008. During his career, he has been involved in various private sector organisations. Amongst others, he was President of the Mauritius Employers’ Federation. He was a Member of the Presidential Commission on Judicial Reform, headed by Lord Mackay of Clashfern, a former UK Lord Chancellor. He is currently a director of a number of domestic and global business entities, acting either as Chairperson or Board member, and is also Adjunct Professor at the University of Mauritius. Directorship(s) in other public companies: Omnicane Ltd, Fincorp Investment Ltd, New Mauritius Hotels, Blue Life Ltd

Mauritian Impasse des Tourterelles, Pereybere, Mauritius

Karuna BHOOJEDHUR-OBEEGADOO

Qualifications: BSc (Hons) in Actuarial Science and Fellow of the Institute and Faculty of Actuaries (UK) Skills and experience: Karuna started her career at the M&G Reinsurance Company in London (now Swiss Re) in 1985 prior to joining the State Insurance Company of Mauritius Ltd (SICOM) as Actuary and Manager of the Life, Pensions and Actuarial departments in 1990 when she was also appointed actuarial advisor to the National Pensions Fund and member of its Investment Committee. She was previously the Chief Executive of the SICOM Group. In the past, she has served as director on the Board of several companies, including State Bank of Mauritius Ltd, National Mutual Fund Ltd, First Republic Fund Ltd, Cyber Properties Investment Ltd, Mauritius Housing Company Ltd, National Housing Development Company Ltd, China Index Fund Ltd and China Actis Ltd. She was also a Founding Member of the National Committee on Corporate Governance and of the Board of Investment.Directorship(s) in other public companies: Sicom Ltd, Sicom General Insurance Ltd, Sicom Financial Services Ltd, Sicom Management Company Ltd, Sicom Global Fund Ltd

Mauritian La Hausse de la Louvière Street,Floréal, Mauritius

Jean-Jacques DUPONT DE RIVALZ DE ST ANTOINE

Qualifications: ‘Diplôme de l’Institut d’Etudes Politiques de Paris’ (France) and MBA (USA) Skills and experience: Jean-Jacques started his career in 1977 as Financial Advisor at Deep River Beau Champ prior to joining the World Bank Group in 1980 under the Young Professionals Program. He integrated the International Finance Corporation (IFC) where he worked on agro-industrial projects in several countries in West Africa. Since 1987, he acted as Principal Operations Officer within the World Bank successively for Europe, Central Asia, Latin America and the African region, whilst being responsible for the Health, Nutrition and Population (HNP) projects undertaken in various countries therein. Moreover, he was appointed as Cluster Leader of the World Bank’s HNP Division for West Africa in 2008 before acting as the Sector Manager for the African region in 2011-2012 when he was also a member of the HNP Sector Board worldwide.

Mauritian 1084 Pipesten PL, Potomac MD 20854, USA

Source: MCB Group, as at 30 October 2017

D.5 Board Composition

MCB Group is led by a committed and unitary board, which is collectively accountable and responsible for the long-term success of the organisation. The Group operates within a clearly defined governance framework which provides for delegation of authority and clear lines of responsibility while enabling the Board to retain effective control. As such, the Board is ultimately accountable and responsible for the performance and affairs of the Group. The Board is comprised of highly experienced individuals with a wealth of expertise across various sectors (including banking and financial services). A summary profile of the directors of MCB Group is included in the table below.

* Relate to clusters

MCB Capital Markets Ltd (100%)

MCB Equity Fund Ltd (100%)

MCB Factors Ltd (100%)

MCB Micro�nance Ltd (100%)

MCB Real Assets Ltd (100%)

Credit Guarantee Insurance Co. Ltd (Associate) (40%)

Fincorp Investment Ltd (57.73%)

MCB Properties Ltd (100%)

International Card Processing Services Ltd (80%)

MCB Forward Foundation (100%)

Blue Penny Museum (95%)

MCB Consulting Services Ltd (100%)

MCB Seychelles Ltd (100%)

MCB (Maldives) Private Ltd (100%)

MCB Madagascar SA (80%)(10%)

(5%)Société Générale Moçambique

(Associate) (35%)

Banque Française CommercialeOcéan Indien (Associate)

(49.99%)

MCB Ltd (100%)

MCB GROUP LIMITED

NON-BANKING FINANCIAL* BANKING* OTHER INVESTMENTS*

MCB INVESTMENT HOLDING LTD (100%)

Finlease Co. Ltd (100%)


Didier HAREL(Chairperson)

Qualifications: BSc in Chemical Engineering and Chemical Technology (UK) and MBA (France) Skills and experience: Didier has a track record of over forty years in the downstream sector of the oil industry, having worked for the EXXON and TOTAL Groups. He started his career with Esso in Mauritius in 1974 and was appointed as Managing Director of Esso Reunion in 1982. After an assignment as Supply & International Sales Manager at Esso Europe-Africa Services Inc Headquearters in London , he joined the TOTAL Group in 1988 where he was entrusted several international assignments, as Managing Director and Chief Executive Officer of major subsidiaries in Europe and southern Africa. He also shouldered an array of senior executive positions at TOTAL’s Africa and Middle East Head Office in Paris and within TOTAL France, the home-based marketing and distribution company of the Group. He was seconded in 2012 by TOTAL S.A as Chairman and CEO of Société Anonyme de Gestion des Stocks Stratégiques, the national oil compulsory stock obligation entity for France. Directorship(s) in other public companies: Sun Ltd, Terra Mauricia Ltd, MCB Forward Foundation, Terragri Ltd

Mauritian Les Vieux Banians, Balaclava, Mauritius



Jean-Pierre MONTOCCHIO

Qualifications: Notary Public Skills and experience: Jean-Pierre sits on several boards of companies spanning various sectors of the economy. He has served on the Board of MCB Ltd for several years since 2001 and was a Director thereof until March 2014, after which he was appointed Director of MCB Group Limited following the Group’s restructuring exercise. Directorship(s) in other public companies: Fincorp Investment Ltd; Caudan Development Ltd; Promotion and Development Ltd; New Mauritius Hotels Ltd; Rogers & Co. Ltd ; ENL Land Ltd ; Les Moulins de la Concorde Ltée

Mauritian Royal Road, Helvetia, St Pierre, Mauritius

Pierre Guy NOEL (Chief Executive)

Qualifications: BSc (Honours) in Economics and Chartered Accountant (UK) Skills and experience: From 1981 to 1991, Pierre Guy worked at De Chazal Du Mée & Co. where he became a partner in financial consultancy. He joined MCB in 1992 as Planning and Development Consultant before being appointed General Manager of the Bank in 1996. Following the organisation’s restructuring, he became the Chief Executive of MCB Group Limited in April 2014. He is a Board member of several companies within the Group namely, amongst others Banque Française Commerciale Océan Indien, MCB Madagascar, MCB Seychelles, MCB Maldives, MCB Investment Holding Ltd, MCB Capital Markets Ltd, MCB Equity Fund, MCB Consulting Services Ltd, MCB Factors Ltd, International Card Processing Services Ltd, Credit Guarantee Insurance Co. Ltd and MCB Microfinance Ltd amongst others, acting either as Chairperson or Director. He was appointed to the Board of MCB Ltd in 2005 and was a Director thereof until March 2014 when he joined the Board of MCB Group Limited following the Group’s restructuring exercise. Board Committee membership(s): Risk Monitoring Committee; Remuneration, Corporate Governance and Ethics Committee; Strategy Committee; Supervisory and Monitoring CommitteeDirectorship(s) in other public companies (in addition to the list above): COVIFRA, MCBRA, Blue Penny Museum, Le Refuge du Pêcheur Ltd, Port Launay Resort Ltd, Mascareignes Properties Ltd, MCB Group Corporate Services Ltd, MCB Properties Ltd, MCB Forward Foundation

Mauritian Route Eureka, Moka, Mauritius

Jean Michel NG TSEUNG Qualifications: BSc (Honours) in Mathematics and Chartered Accountant (UK) Skills and experience: Jean Michel joined MCB Ltd in January 2004 and was Head of Corporate of the Bank until July 2015, when he was appointed Chief Executive Officer of MCB Investment Holding Ltd. He trained as a Chartered Accountant with Arthur Andersen in London before becoming Partner and Head of the Audit and Business Advisory Department of De Chazal Du Mée and subsequently of Ernst & Young. Whilst currently being a Board member of several companies within the Group namely MCB Investment Holding Ltd, MCB Ltd, MCB Seychelles, MCB Maldives, MCB Madagascar and Finlease Co. Ltd, he sits on the Risk Monitoring Committee of MCB Ltd. Directorship(s) in other companies (in addition to the list above): MCB, Les Jamalacs, BFCOI, MCB Properties Ltd

Mauritian Queen Mary Avenue, Floreal, Mauritius


Gilbert GNANY(Chief Strategy Officer)

Qualifications: ‘Licence ès Sciences Economiques (Economie Mathématique)’, ‘Maîtrise en Econométrie’ and ‘DESS en Méthodes Scientifiques de Gestion et Calcul Economique Approfondi’ (France) Skills and experience: Gilbert previously worked as Senior Advisor on the World Bank Group’s Executive Board where he was responsible for issues relating mainly to the International Finance Corporation (IFC) and to the private and financial sectors. Prior to joining the World Bank, he was the MCB Group Chief Economist and Group Head of Strategy, Research & Development after having been the Economic Advisor to the Minister of Finance in Mauritius. During his career, he has been involved in various high-profile boards/committees. Amongst others, he chaired the Stock Exchange of Mauritius Ltd, the Statistics Advisory Council and the Statistics Board as well as having been a director of the Board of Governors of the Mauritius Offshore Business Activities Authority and of the Board of Investment. He was also a member of the IMF Advisory Group for sub-Saharan Africa (AGSA) and a member of the Senate of the University of Mauritius. Furthermore, he is the Chairperson of the Economic Commission of Business Mauritius which serves, inter alia, as a platform for public-private sector dialogue.Directorship(s) in other public companies: Promotion and Development Ltd, Caudan Development Ltd, COVIFRA, MCBRA, MCB Capital Markets Ltd (and all its subsidiaries), MCB Microfinance Ltd, MCB Consulting Services Ltd, MCB Properties Limited, MCB Group Corporate Services Ltd, MCB Forward Foundation, MCB Seychelles Limited, MCB (Maldives) Private Limited

Mauritian Port Chambly, Terre Rouge, Mauritius

Navin HOOLOOMANN, C.S.K

Qualifications: Chartered Surveyor FRICS (UK) Skills and experience: Navin has over 30 years of experience in the construction industry internationally. He is the founder and Managing Director of Hooloomann & Associates Ltd, a construction, project management and cost management consultancy firm operating in Mauritius, Seychelles, Maldives, Sri Lanka, India and West Africa. He has served on the Board of MCB Ltd for several years since 2002 and was a director thereof until March 2014, after which he was appointed Director of MCB Group Limited following the Group’s restructuring exercise.

Mauritian 31 Dodo Avenue, Quatre Bornes, Mauritius

Jean-Louis MATTEI Qualifications: ‘Diplôme d’Etudes Supérieures en Droit Privé’, ‘Diplôme du Centre d’Etudes Supérieures de Banque’ and ‘Diplôme de l’Institut d’Etudes Politiques de Paris’ (France) Skills and experience: Jean-Louis has accumulated wide-ranging experience in the banking sector, having worked for Société Générale Group for 40 years. Over this period, he has shouldered an array of high-level responsibilities within the group, acting as Chairperson, Director or Chief Executive Officer, in its various offices based worldwide. In 1998, he took charge of Société Générale international retail banking operations and built the group’s international network, particularly in northern Africa and in the sub-Saharan region as well as in Eastern Europe. Prior to his retirement in 2013, he was a member of the Executive Committee of Société Générale Group. He is a member of the Board and also acts as Chairperson of the Audit Committee of Agence Française de DéveloppementDirectorship(s) in other companies: Agence Francaise De Développement, Societé Générale de Banque au Liban

French 24 Rue Pierre et Marie Curie, 75005, Paris, France


Key Trends

MCB Group’s key financial metrics are included in the chart below.

Source: MCB Group

During FY 2016/17, the Group consolidated its leading local banking position, bolstered its non-bank activities and pursued its international market diversification strategy. Initiatives were adopted to strengthen foundations for market expansion, promote superior customer relationships and experiences, reinforce growth enablers and improve operational excellence, with effective channel management and technological innovation being at the forefront of various undertakings. Subsequently and in spite of the challenging operating context, the Group posted a resilient financial performance. This was manifested by an increase in attributable profits to equity holders of the Group rising by 1.2% (on a year-on-year basis) to reach MUR 6,702 million.

This rise in profits was achieved in spite of the challenging macroeconomic environment. The demand for credit remains subdued and competitive pressures remain strong. Furthermore, the Mauritian banking system remains awash with liquidity; a situation which shows no signs of abating. Yet, the Group’s operating income grew by 7.6% to MUR 15,506 million. This was underpinned by a further rise in net interest income and a recovery in net fee and commission income whilst ‘other income’ was boosted by a strong growth in profit on exchange and increased revenues from non-banking business entities. With operating expenses growing by 10.6% amidst capacity-building initiatives aiming at further consolidating the basis of MCB Group's future organic growth, and net impairment charges increasing by 4.1%, operating profit went up by 5.9% to reach MUR 8,054 million.

The majority of the Group profits was sourced from the banking cluster (section table below), with the share of foreign-sourced income standing at around 43% in spite of the dampened performances of foreign banking entities, which were further exacerbated by the strength of the rupee. The non-banking activities accounted for some 8% of the results, representing a drop from the preceding year mainly due to the decline in contribution from Promotion and Development Ltd. The Group has sustained generally sound financial indicators in FY 2016/17, as evidenced by further improvement of its capital adequacy ratios as well as the maintenance of strong funding and liquidity positions.

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2017 Pro�t up by 1.2% p.a. over 2016

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FY 2015 FY 2016 FY 2017

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Income Growth Outstripping Expenses

Operating Expenses Operating Income


Alain REY Qualifications: BSc (Honours) in Economics and Chartered Accountant (UK) Skills and experience: Alain has acquired wide financial experience, having been Manager at Citibank NA (Paris) and Regional Corporate Manager at Barclays Plc in Mauritius. He also has a long experience in the textile industry and was namely Financial Director at Corotex, General Manager at Shape Fabrics Ltd and has served as Senior Vice President and Chief Financial Officer at Novel Denim Holdings Ltd, a NASDAQ listed company. He has also been the Chief Executive Officer at Compagnie de Mont Choisy Ltée, a company involved in agricultural and property development activities. He was previously a director of AfrAsia Bank Ltd, State Bank of Mauritius Ltd and SBM Holdings Ltd. Directorship(s) in other public companies: Terra Mauricia Ltd; CIEL Textile Ltd; New Mauritius Hotels Ltd, Terragri Ltd, Terra Finance Ltd, MCB Microfinance Ltd

Mauritian 41C Queen Mary Avenue, Floréal, Mauritius

Margaret WONG PING LUN

Qualifications: BA (Honours) in Business Studies and Chartered Accountant (UK) Skills and experience: Prior to joining the University of Mauritius in 1991 where she was a lecturer in Accounting and Finance, Margaret was a Senior Manager at De Chazal Du Mée’s Consultancy Department. She was formerly a member of the Listing Executive Committee of the Stock Exchange of Mauritius Ltd. She was appointed to the Board of MCB Ltd in 2004 and was a Director thereof until March 2014, after which she joined the Board of MCB Group Limited following the restructuring of the Group. She currently sits on the Board of MCB Factors Ltd, a subsidiary of the Group. Directorship(s) in other public companies: Terra Mauricia Ltd, COVIFRA, MCB Factors Ltd, MCBRA

Mauritian Dr. Lallah Lane, Floreal, Mauritius

D.6 Board Committees

While the Board has reserved certain matters for its approval, it has created five committees tasked to provide specialist guidance to the Board to help it carry out its duties and responsibilities. A reporting mechanism is in place to ensure that matters affecting the affairs and reputation of the Group are escalated to the Board by the chairpersons of these committees and the boards of subsidiaries. In this way, the Board maintains an effective oversight process within a flexible and autonomous structure that allows for adequate ring-fencing of activities, as gauged by the segregation of banking and non-banking operations.

The Board’s committees consist of the “Risk Monitoring Committee”, the “Audit Committee”, the “Remuneration, Corporate Governance & Ethics Committee”, the “Strategy Committee” and the “Supervisory & Monitoring Committee”. The Board’s committees have the role of facilitating the discharge of Board’s responsibilities and provide in-depth focus on specific areas. In fulfilling their role of providing oversight and guidance, chairpersons of Board’s committees escalate all significant matters impacting the Group to the Board.

D.7 Gearing up for the Future

MCB Group is well positioned to carry on its objective of becoming a one-stop shop for financial services locally and in the region, whilst continuing to generate sustainable value for all its stakeholders. The Group intends to take advantage of the growth opportunity present within Sub Saharan Africa and increase its service offering to customers. To this end, the Issuer announced on 26th October 2017 that it had approved the implementation of a real estate investment (“REI”) strategy, whereby the Issuer will act, through the Investment Vehicles, as seed investor for the acquisition of prime real estate assets.

The REI activity will initially be focused on originating and acquiring income producing real estate assets in Mauritius. Depending on market opportunities, the REI activity may be expanded to other geographies and/or other real estate investment strategies, including development and value-add. In due course, investors will be given the opportunity to participate in the Investment Vehicles.

D.8 Financial Performance

MCB Group’s financial performance over the last 3 financial years is included in Paragraph F of this Prospectus.


Outlook for FY 2017/18

While the anticipated improvement in the economic environment globally is encouraging, we anticipate market conditions to remain challenging. In Mauritius, economic growth is likely to pick up only gradually, with delays being observed in the implementation of large scale infrastructure projects. There is little sign of the excess liquidity situation abating, the more so that certain large public sector projects are being financed from abroad. Against this backdrop, we expect continued pressures on demand for bank credit and interest margins while the relative strength of the rupee amidst excess supply of foreign currencies is exerting pressures on our profit on exchange and adversely affecting foreign-sourced income. The Group’s pipeline is, however, encouraging with our international operations and non-banking activities expected to grow further.

D.9 Shareholder Information

The Issuer’s issued share capital is shown in the table below. As at 30 June 2017, the Issuer’s stated share capital amounted to MUR 2,477.8 million comprising of 238.4 million ordinary shares. The shares have no par value and rank ‘pari passu’ among themselves. The shares have a right to dividend. The Issue will have no impact on the share capital of the Issuer.

Number of shares

30th June 2015 238,047,079

30th June 2016 238,187,172

30th June 2017 238,422,890

Source: MCB Group Annual Report 2017

Largest Shareholders

The table below sets out the Issuer’s ten largest shareholders as at 30 June 2017.

Largest shareholders No. of shares owned % Holding

National Pension Fund 16,483,120 6.9

Swan Life Ltd 7,793,227 3.3

Promotion and Development Limited 6,952,200 2.9

State Insurance Company of Mauritius Ltd 3,839,108 1.6

La Prudence (Mauricienne) Assurances Limitée 3,540,923 1.5

SSL C/O SSB Lloyd George Investment Company Plc 3,323,811 1.4

The Bank of New York Mellon 3,294,016 1.4

SSB A/C SQM Frontier Africa Master Fund Ltd 2,625,750 1.1

Policy Ltd 2,532,535 1.1

New Mauritius Hotels Group Superannuation Fund 2,264,765 0.9

Total 52,640,455 22.1


Employee Share Option Scheme

The Issuer has put in place an employee share option scheme. This scheme provides eligible employees with the opportunity to participate in the financial performance of the Issuer through the acquisition of shares in MCB Group.

Under the employee share option scheme, employees are granted non-transferable options to buy the Issuer’s shares with up to a maximum of 25% of their annual performance bonus. The options, which can be exercised over a period of one year through four specific windows, carry a retention period of three years. The option price is based on the average of the share price over the quarter prior to the date on which the options are granted, to which a discount of 10% is applied. Members of the Group’s management team are, however, not entitled to such a discount. Once issued, the shares rank pari passu as to dividend, capital, voting right and in all other respects with the existing shares of the Issuer.

Earnings per Share

The earnings per share is calculated by dividing the profit attributable to the ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year after adjustment for the effects of all dilutive potential ordinary shares. The Issuer has only share options as a category of dilutive potential ordinary shares. The calculation of the earnings per share for the last 3 years, including the share options, is shown in the table below.

Contribution to Group profits

The table below sets out the Group operating entities and their relative contribution to the Issuer’s FY 2017 profits.

Group entities and associatesCountry of incorporation

Principal activities

Stated capital MUR million

Effective holding %

% of Group Profit

Banking

The Mauritius Commercial Bank Limited

Mauritius Banking & Financial services

6,880 100.00 83.0

MCB Seychelles Ltd Seychelles Banking & Financial services

50 100.00 2.6

MCB Madagascar SA Madagascar Banking & Financial services

130 90.00 0.6

MCB (Maldives) Private Ltd Republic of Maldives Banking & Financial services

333 100.00 1.6

Banque Française Commerciale Océan Indien

France Banking & Financial services

49.99 5.2

Société Générale Moçambique Mozambique Banking & Financial services

35.00 -1.2

91.8

Non-banking financial and other investments

MCB Equity Fund Ltd Mauritius Private Equity Fund

2,085 100.00 3.8

MCB Capital Markets Ltd Mauritius Investment Holding Company

73 100.00 1.8

MCB Factors Ltd Mauritius Factoring 50 100.00 0.7

Credit Guarantee Insurance Co Ltd Mauritius Insurance Services 40.00 0.0

MCB Microfinance Ltd Mauritius Credit Finance 75 100.00 -0.3

Fincorp Investment Ltd Mauritius Investment Company

103 57.73 1.8

o/w Finlease Mauritius Leasing Company 200 57.73 0.4

International Card Processing Services Ltd

Mauritius Providing card system facilities, card embossing & encoding services

100 80.00 0.2

MCB Properties Ltd Mauritius Property ownership & development

15 100.00 0.0

Blue Penny Museum Mauritius Philatelic museum 1 97.88 0.0

MCB Consulting Services Ltd Mauritius Consulting; advisory; support and maintenance services

52 100.00 0.1

Total 100.0


Analysis of results for first quarter to 30 September 2017

The Issuer’s financial performance during the first quarter of FY 2017/18 can be summarised as follows: • Profit attributable to shareholders rising to MUR 1,683m (an increase of 5.4% compared to the 3 months to September 2016);• Operating income rising to MUR 3,918m (an increase of 7.3% compared to the 3 months to September 2016); and• Total Assets rising to MUR 357.8bn (an increase of 9.6% compared to the 3 months to September 2016).

Prospective Investors can find additional details pertaining to the Issuer’s latest financial performance at https://www.mcbgroup.com/en/investor-centre/financial-reports and the unaudited quarterly interim report of the Issuer for the first quarter to 30 September 2017 is available for inspection pursuant to Paragraph J (Documents Available for Inspection).


3) Directors’ Remuneration

The table below sets out the remuneration received by each director on the Board in the financial year ended 30 June 2017.

Remuneration and benefits received MUR000

From MCBGMUR000

From subsidiaries MUR000

TotalMUR000

Didier HAREL 2,170 - 2,170

Gérard HARDY (up to September 2016) 405 - 405

Sunil BANYMANDHUB 822 38 860

Karuna BHOOJEDHUR-OBEEGADOO 438 - 438

Jean-Jacques DUPONT DE RIVALZ DE ST ANTOINE 696 - 696

Navin HOOLOOMANN, C.S.K. 438 - 438

Jean-Louis MATTEI 822 - 822

Jean-Pierre MONTOCCHIO 438 110 548

Jean Michel NG TSEUNG (as from November 2016) - 7,474 7,474

Alain REY 564 40 604

Margaret WONG PING LUN 564 43 607

Total Non-Executive 7,357 7,705 15,062

Pierre GUY NOEL 29,302 - 29,302

Gilbert GNANY 16,388 - 16,388

Total Executive 45,690 - 45,690

Total (Non-Executive and Executive) 53,047 7,705 60,752

For FY 2017/18, the remuneration of the non-executive directors for a full year of service is expected to rise by 4% p.a. The remuneration of the executive directors will be determined by the Remuneration, Corporate Governance & Ethics Committee and will be based on the performance of the Group.

4) Outstanding Debt Securities

As at the date of this Prospectus, the Issuer’s total listed securities (not representing share capital) comprised of the Subordinated Notes worth MUR 4,535m.

5) Mortgages

The Issuer has not granted any Encumbrances on its assets.

6) Working capital

The directors of the Issuer, after due and careful enquiry, certify that the working capital available to the Issuer is sufficient for its present requirements, that is 12 months from the date of admission of the Notes.

7) Material adverse change

There has been no material adverse change in the financial or trading position of the Issuer since 30 June 2017.

8) Material interest

There are no contracts or arrangements subsisting at the date of this Prospectus in which a director of the Issuer is materially interested and which is significant in relation to the business of the Group.

9) Material contracts entered outside the ordinary course of business

There is currently no service contract between the Issuer and its directors.

The directors, the Issuer or any member of the Group has not entered into any material contracts, other than contracts entered into in the ordinary course of business, in the two years immediately preceding the publication of the Prospectus.

10) Loans and guarantees to directors of the Issuer

As at date of this Prospectus, the Issuer has not granted any loans and/or guarantees to its directors.

11) Legal and arbitration proceedings

As far as the directors of the Issuer are aware, there are no current, pending or threatened legal or arbitration proceedings against the Issuer, which may have, or have had, in the past twelve months preceding the date of this Prospectus, a material impact on the Issuer’s financial position.

Description FY 2017 FY 2016 FY2015

Profit attributable to equity holders of the Group (MUR’m)

6,702.1 6,625.5 5,722.0

Average number of ordinary shares (thousands)

238,309 238,125 238,014

Effect of share options in issue (thousands)

166 42 49

Diluted number of shares (thousands)

238,475 238,167 238,063

Earnings per share 28.10 27.82 24.04

Source: MCB Group Annual Report 2017 and 2016

Dividend Policy

MCB Group seeks to distribute around 30% of its profits in the form of dividends. An interim dividend is declared in June and paid in July, while a final dividend is declared in September and paid in December. The Issuer aims to supply its shareholders with on-going returns in the form of a stable and relatively predictable dividend path. The dividend per share paid during the last 3 years is shown in the table below.

2017 2016 2015

Dividend Paid in MUR/Share MUR/Share MUR/Share

July 4.25 4.00 3.75

December 5.00 4.75 4.25

Total dividend paid 9.25 8.75 8.00

% Earnings Per Share 32.9 31.4 33.3

Source: MCB Group Annual Report 2017 and 2016

D.10 Additional Consideration

1) Ratio of Operating Profits against Interest Expense The ratio of the Issuer’s operating profits (as per the Issuer’s FY 2017 audited financial statements) against its interest expense is reported in the table below.

As at June 2017

Operating Profit (in million) 2,481

Interest Expense (in million) 246

Coverage 10.1x

Source: MCB Group. Calculations based on a company (and not Group) basis

2) Directors’ Interest

The directors and the chief executive of the Issuer and their associates (as known to each director having made all reasonable enquiries) having an interest in the equity or debt securities of the Issuer as at 30 June 2017, are set out below:

Directors No. of shares held No. of Debentures held

Directly Indirectly

Jean-Jacques DUPONT DE RIVALZ DE ST ANTOINE

88 - -

Gilbert GNANY 198,102 - 200

Navin HOOLOOMANN, C.S.K. 55,910 974,029 2,500

Jean-Pierre MONTOCCHIO 1,000 74,533 2,195

Jean Michel NG TSEUNG 7,885 - -

Pierre Guy NOEL 1,145,459 28,492 -

Alain REY 4,840 - -

Margaret WONG PING LUN 500 46,625 -


2.2 No certificates will be issued. Legal ownership of the Notes will, upon listing on the Official Market of the SEM, be reflected in book entries recorded by the CDS and such records shall constitute the definitive evidence of the title of the Noteholder to the number of Notes shown in his CDS Account. Successful applicants for the Notes will be issued with an allotment letter to confirm allotment of the Notes subscribed for.

2.3 Upon admission to listing on the Official Market of the SEM, the Notes will be credited to CDS accounts of Noteholders.

2.4 The Register of Noteholders is to be kept by the Agent as per Condition 14.

3. Status of the Notes

The Notes will constitute senior unsecured debt obligations of the Issuer and will rank as follows: (a) Senior to any subordinated creditors of the Issuer including the holders of Subordinated Notes; (b) Pari-passu with other unsecured creditors of the Issuer; (c) Pari-passu amongst themselves; and (d) Senior to all classes of the share capital of the Issuer.

4. Security interest

No security or guarantee in rem or in personam is being granted by the Issuer or any third party. Prospective Investors of the Notes should accordingly be aware that by purchasing the Notes, they are subject to the credit risk of the Issuer, as described in Paragraph “Risk Factors Relating to the Issuer”.

5. Use of Proceeds

The proceeds from the issue of the Notes will be used to provide funding for the expansion of the Issuer’s non-banking activities. The proceeds raised will be used to provide funding for: (a) the COVIFRA Transaction (for an amount of MUR 1.1 billion) and finance the subsequent mandatory offer triggered by such investment (for an amount of up to MUR 200 million); and (b) Other strategic initiatives of the Issuer’s non-banking financial services cluster. [SA20]

Accordingly, from the estimated net proceeds, up to MUR 1.3 billion will be applied in the manner specified in Condition 5(a) above and the remaining amount in the manner specified in Condition 5(b) above.

6. Interests

6.1 Interest Rate

The Interest Rate payable from the Issue Date in respect of the Notes shall be the Repo Rate. If during the course of an Interest Period there is a change in the Interest Rate, the interest rate for that Interest Period will be calculated using the weighted average of the Repo Rate for that Interest Period based on the actual number of days elapsed (including the first day and excluding the last day in the Interest Period). The Issuer shall notify the SEM of the revised Interest Rate following a change in the Repo Rate before the opening of the next trading session.

6.2 Interest Payment Dates Interest shall be payable quarterly and will occur on 22 January, 22 April, 22 July and 22 October in each year and starting on the 22nd April 2018. Interest will be payable in arrears based on the Principal Amount.

6.3 Calculation of Interest Amount

The Agent will calculate the Interest Amount as follows: (Interest Rate) X (Principal Amount) X (Day Count Fraction), rounded to the nearest cent. The implied yield on the Notes is equivalent to the weighted average Interest Rate applicable over the Interest Period. [SA11(b)

6.4 Agent’s decision to be final

All communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition by the Agent shall, in the absence of wilful deceit, bad faith, manifest error or any dispute, be binding on the Issuer, the Agent, the Noteholders’ Representative and all Noteholders, and no liability to the Issuer or the Noteholders shall attach to the Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions.6.5 Accrual of Interest Each Note will cease to bear interest (if any) from the date of its redemption unless, upon due presentation thereof, payment of principal is improperly withheld or refused. In such event, interest will accrue at the Interest Rate until the date on which all amounts due in respect of such Note have been paid.

6.6 Interest Deferral (a) Right to defer interest Subject as provided herein, the Issuer may, on any Interest Payment Date, defer payment of interest in respect of the Notes accrued in the Interest Period ending on the day immediately preceding such date. Any Interest not paid on

12) Conflicts of Interest

Prospective Investors are advised that the directors of the Issuer are employed by and/or are directors of entities within the Issuer’s group (its affiliates, parent company and ultimate holding company), which may result in conflicts between the financial interests of the Issuer and the interest of other entities within the Group.

13) Costs relating to the Listing and Estimated Net Proceeds

An application has been made for a listing of the Notes on the Official Market of the SEM. The estimated cost for the admission of the Notes to the Official Market of the SEM is as follows:

Details Amount (MUR)

Total upfront fees to functionaries appointed (incl VAT) 14,000,000

SEM fees 95,000

FSC fees 100,000

Total 14,195,000

Expenses relating to the listing of the Notes shall be borne solely by the Issuer.

The net proceeds after deducting the estimated cost of admission above are estimated at MUR 1.986 billion.

14) Key licences of subsidiaries

(a) Banking licence issued to The Mauritius Commercial Bank Limited under Section 7 of the Banking Act 2004; (b) Foreign institutional investor licence from the Securities and Exchange Board of India; (c) Banking licences for foreign banking subsidiaries of the Group; and (d) Credit Finance, Leasing, Factoring, Registrar and Transfer Agent, CIS Manager, Investment Dealer, Investment Adviser and Investment Adviser (Corporate Finance Advisory) licences issued pursuant to the Financial Services Act 2007.

E. TERMS AND CONDITIONS OF THE NOTES

The following are the Terms and Conditions of the Notes to be issued by the Issuer under this Prospectus and will be incorporated by reference into each Note.

The Board has approved the issue of the Notes, the terms and conditions of which are provided in this Part E of this Prospectus.

1. Issue

1.1 The Issuer will issue Notes for an Aggregate Principal Amount of up to MUR 2 billion (“Targeted Amount”).

1.2 The Minimum Subscription Amount for the Notes shall be MUR 50,000 subject to discretional allotment by the Issuer in the event of oversubscription. The Principal Amount per Note shall be MUR 1,000. The Issue Price of 100% of the Principal Amount shall be paid in one instalment on 22 January 2018.

1.3 The offer will be made available to the general public.

1.4 The Board reserves its right:

(a) to allot Notes for Principal Amounts being less than the Minimum Subscription Amount in the event of oversubscription; or (b) to close the offer at an earlier date and/or not to process subscriptions received (without assigning any particular reasons therefor) on the occurrence of events which are beyond the control of the Issuer.

1.5 In the event that subscriptions received are not processed or in the event of oversubscription, where the Board, in its absolute discretion, decides not to allot additional Notes, all monies already paid by investors will be returned to them without interest and net of bank charges. Refunds will be made within two (2) Business Days after the Allotment Date by bank transfer to the account specified on the Application Forms. The Issuer will make necessary arrangements so that no bank charges are applied for bank accounts maintained with MCB but the Prospective Investors must be aware that they may be subject to such charges by other banks. 1.6 The Issue is not underwritten. The Issuer will proceed with the Issue and the listing of the Notes regardless of any amount subscribed.

2. Form of the Notes

2.1 The Notes will be issued in inscribed form and will be numbered, from 1 to 2,000,000.


10. Taxation

All payments made under the Notes shall be made without set off or counterclaim and without any withholding or deduction for or on account of tax other than as required from time to time by law.

11. Events of Default

11.1 An event of default (“Event of Default”) shall arise if any one or more of the following events shall have occurred and be continuing: (a) except in case of interest deferral pursuant to Condition 6.6, the failure by the Issuer to pay within seven (7) Business Days from the due date any amount due in respect of any of the Notes (the “Payment Default”); or (b) the granting of an order by any competent court or authority for the liquidation, winding-up, conservatorship, receivership, dissolution or administration of the Issuer, whether provisionally (and not dismissed or withdrawn within thirty (30) days thereof) or finally, or the placing of the Issuer under voluntary liquidation, provided that no such proceedings shall constitute an Event of Default if any of such proceedings is for the purpose of effecting an amalgamation, merger, demerger, consolidation, reorganisation or other similar arrangement (the “Insolvency Default”).

11.2 For the purposes of this Condition, an Event of Default is continuing if it has not been remedied within thirty (30) days (or such other extended period as approved by the Noteholders’ Representative in writing) of the occurrence of such Event of Default.

11.3 Where the Issuer becomes aware of the occurrence of any Event of Default, the Issuer shall forthwith notify the Noteholders’ Representative.

11.4 Upon the occurrence of an Event of Default which is continuing, the Noteholders’ Representative may: • In case of a Payment Default; (a) bring proceedings to recover any amount then due and payable but unpaid pursuant to the Notes (subject to the Issuer being able to make the payment and remain solvent); and/or (b) initiate any Insolvency Proceedings. • In case of an Insolvency Default; In addition to taking any of the actions specified in respect of a Payment Default, by written notice to the Issuer, declare all amounts payable under the Notes to be forthwith due and payable and may, subject to the ranking of the Notes, prove the claim in any of the Insolvency Proceedings.

12. Treatment of unclaimed money

In relation to any Final Redemption Amount, where after five (5) years from the date of redemption of the Notes, any payment of such amounts (plus Arrears of Interest if any) has not been claimed, such redemption proceeds will revert to the Issuer and the relevant Noteholders shall have no right whatsoever thereto.

In relation to any Interest Amount (including any Arrears of Interest), where after three (3) years from the relevant Interest Payment Date, any such amounts has not been claimed, those amounts will revert to the Issuer and the relevant Noteholders shall have no right whatsoever thereto.

13. Transfer and Transmission of Notes

The Notes shall be freely transferable.

The transfer of Notes will be effected through the market infrastructure of the SEM in accordance with the Applicable Procedures.

14. Register

14.1 The Register of Noteholders shall:

a) be kept at the registered office of the Agent or such other person as may be appointed for the time being by the Issuer to maintain the Register; b) reflect the number of Notes issued to such Noteholders; c) contain the name and the address of the Noteholders; d) set out the Principal Amount of the Notes issued to such Noteholders and shall show the date of such issue; and e) be open for inspection, subject to a written notice of seventy-two (72) hours during the normal business hours of the Issuer, to any Noteholder or any person authorised in writing by any Noteholder.

14.2 The Agent shall: a) not be obliged to record any transfer while the Register is closed; and b) not to be bound to enter any trust into the Register or to take notice of any, or to accede to any trust executed, whether express or implied, to which any Note may be subject.

14.3 Except as provided for in these Terms and Conditions or as required by law, in respect of Notes, the Issuer will only recognise a Noteholder as the owner of the Notes registered in that Noteholder’s name as per the register maintained by the CDS.

such Interest Payment Date, together with any other Interest not paid on any other such Interest Payment Date, shall, so long as the same remains unpaid, constitute “Arrears of Interest”. Interest will accrue on the amount of Arrears of Interest at the Default Interest Rate, and such amount of Interest (the “Additional Interest Amount”) accrued up to any Interest Payment Date shall be added, for the purpose only of calculating the Additional Interest Amounts accruing thereafter, to the amount of Arrears of Interest remaining unpaid on such Interest Payment Date.

(b) Arrears of Interest Without prejudice to the other provisions herein, any Arrears of Interest (together with all corresponding Additional Interest Amounts) may be paid in whole or in part at any time at the discretion of the Issuer and in any event will become due and payable in whole but not in part upon the earliest of: (i) within 30 days of the date of the occurrence of a Compulsory Arrears of Interest Payment Event; (ii) the date on which an order is made by any competent court or a resolution is passed to have Insolvency Proceedings initiated against the Issuer; (iii) the next Interest Payment Date on which the Issuer elects to make a payment of interest under the Notes (an “Interest Payment Election”), other than a payment of Arrears of Interest or Additional Interest Amounts; or (iv) the Maturity Date.

6.7 Following Business Day Convention

If any date referred to in these Terms and Conditions would otherwise fall on a day that is not a Business Day, such date shall be postponed to the next day that is a Business Day (the “Following Business Day Convention”).

7. Redemption and Purchases

7.1 Redemption

Each Note will be redeemed at its Final Redemption Amount on the Maturity Date.

7.2 Purchases

The Issuer may at any time purchase Notes at any price in the open market or otherwise. In the event of the Issuer purchasing Notes, such Notes may (subject to restrictions of any applicable law) be held, resold or, at the option of the Issuer, cancelled.

7.3 Payment of redemption proceeds

Redemption proceeds will be paid in accordance with Condition 8 below (Payments).

8. Payments

8.1 General

All payments in relation to the Notes will be made in MUR. Payments of principal and/or interest shall be made to the registered holder of such Note, as set forth in the register maintained by the CDS.

8.2 Method of Payment

Interest payments shall be credited as per prevailing instructions on the CDS account of the Noteholder.

In the case of joint Noteholders, payment by electronic funds transfer will be made to the bank account of the Noteholder as specified in the CDS account and the Issuer will, under no circumstances, be required to verify the beneficiary of such bank account. Payment by electronic transfer to the bank account specified in the CDS account shall discharge the Issuer of its relevant payment obligations under the Notes.

8.3 Interpretation of principal and interest

Any reference in these Terms and Conditions to principal in respect of the Notes shall include, as applicable: (a) the Final Redemption Amount of the Notes; and (b) any premium and any other amounts which may be payable under or in respect of the Notes, but excluding for the avoidance of doubt, any Interest Amounts and Additional Interest Amounts (if any).

9. Exclusion of Rights

Noteholders have: (a) no claim against the Issuer except as expressly set out in this Prospectus; (b) no right to participate in the issue of any shares or any other securities of any kind of the Issuer in their capacity as Noteholders; and (c) no right to receive notice of or vote at any meeting of shareholders of the Issuer.


19. Modification

19.1 No modification of these Terms and Conditions may be effected without the written agreement of the Issuer.

19.2 The Issuer may effect, without the consent of Noteholders but subject to a seven (7) days prior written notice to the Noteholders’ Representative, any modification of the Terms and Conditions which does not affect the rights of, or creates obligations on, the existing Noteholders or modification of a formal, minor or technical nature or is made to correct a manifest error or made to comply with the Applicable Procedures, or to comply with provisions of the law of the jurisdiction in which the Issuer is incorporated and the governing law in accordance with which the Notes are issued. Any such modification shall be binding on the Noteholders and any such modification shall be notified to the Noteholders in accordance with Condition 17 as soon as practicable thereafter.

19.3 Save as provided in Condition 19.2 above, no modification of these Terms and Conditions may be effected unless made in writing and signed by or on behalf of the Issuer and by the Noteholders’ Representative after the sanction of an ordinary resolution of the Noteholders approving such modifications.

20. Further Issues

Subject to all relevant regulatory approvals being obtained (if any), the Issuer shall be at liberty from time to time without the consent of the Noteholders to create and issue further Notes that may be subordinated to, or ranking pari passu with, or ranking senior to, Notes issued hereunder. The Issuer will provide due notification to the Noteholders’ Representative only in respect of the creation and issue of notes ranking pari passu or senior to the Notes already in issue.

21. Data collection and protection

21.1 The Issuer and/or the appointed functionaries (the “Relevant Functionaries”) shall, for the performance of their obligations hereunder, collect and, where necessary or required, process, information voluntarily communicated by any Prospective Investor (the “Personal Data”). The Relevant Functionaries will treat the Personal Data confidentially and securely in line with the provisions of the Data Protection Act 2004, as amended from time to time.

21.2 Any Prospective Investor has the right of access to, the possibility of correction and destruction of, the Personal Data which is in the custody or control of the Relevant Functionaries. Save as otherwise herein provided, the Relevant Functionaries will not reveal or otherwise disclose the Personal Data to any external body, unless (i) the Relevant Functionaries have obtained the express consent of any Prospective Investor, or (ii) it is under either a legal obligation or any other duty to do so, or (iii) where the Personal Data is disclosed to any other agent, third party service provider, professional adviser or any other person under a duty of confidentiality to the Relevant Functionaries’ group (its affiliates and parent company), as well as to certain service providers within the Group. It is drawn to the attention of Prospective Investors that the foregoing disclosures may require that the Personal Data be transferred to parties located in countries which do not offer the same level of data protection as the Republic of Mauritius.

21.3 Where personal information relating to the officers, employees and directors of any Prospective Investor is, or is required to be, collected by the Relevant Functionaries, the Prospective Investors expressly shall procure to do all such things that may be required by the Relevant Functionaries to ensure that its officers, employees and directors are made aware of the data protection provisions herein and that such officers, employees and directors give their consent with regard to the collection, processing and transfer of such personal information by the Relevant Functionaries.

22. Governing law and jurisdiction

22.1 This Prospectus and the Notes to be issued hereunder will be governed by and construed in accordance with the laws of the Republic of Mauritius.

22.2 In the event of a dispute arising out of or relating to the Notes or this Prospectus, including any question regarding its existence, validity or termination, the parties shall first seek settlement of that dispute by mediation in accordance with the “LCIA-MIAC Mediation Rules”, which rules are deemed to be incorporated by reference into this Condition. If the dispute is not settled by mediation within thirty (30) days of the appointment of the mediator, or such further period as the parties shall agree in writing, the dispute shall be referred to and finally resolved by arbitration under the “LCIA-MIAC Arbitration Rules”, which rules are deemed to be incorporated by reference into this Condition. In any arbitration commenced pursuant to this Condition: • the number of arbitrators shall be one; • the seat, and legal place, of the arbitration shall be Mauritius; and • the language to be used in the mediation and in the arbitration shall be English.

15. Agent

15.1 The Issuer is entitled to vary or terminate the appointment of the Agent and/or appoint additional or other agents and/or approve any change in the specified office through which any such agent acts on the terms of the Agency Agreement, provided that there will at all times be an Agent with an office in such place as may be required by the Applicable Procedures. The Agent does not assume any obligation towards or relationship of agency or trust for or with any Noteholders.

15.2 To the extent that the Issuer acts as the Agent, all references in these Terms and Conditions to: a) any action, conduct or functions in such role shall be understood to mean that the Issuer shall perform such action, conduct or function itself; and b) requirements for consultation, indemnification by or of, payment by or to, delivery by or to, notice by or to, consent by or to or agreement between the Issuer and such Agent shall be disregarded to the extent that the Issuer performs such role.

16. Noteholders’ Representative

The Noteholders’ Representative has been appointed in furtherance to the Noteholders’ Representative Agency Agreement entered into between the Noteholders’ Representative and the Issuer, with the aim, inter alia, of providing for the protection and enforcement of the rights and entitlements, and the implementation of the obligations, of the Noteholders. Accordingly, all such rights, entitlements and obligations of the Noteholders shall be protected, enforced and implemented, as the case may be, through the office of the Noteholders’ Representative. The Noteholders are deemed to have notice of, are entitled to the benefit of, and are subject to, all the provisions of the Noteholders’ Representative Agency Agreement.

17. Notices

17.1 All notices to be given pursuant to this Prospectus shall be in writing.

17.2 Notices will be sent by email to all Noteholders who (i) have provided an email address and/or (ii) who have an email address associated with his CDS account. Prospective Investors are informed that following allotment and crediting of the Notes to CDS accounts, the email addresses associated with the CDS account of a Noteholder will be used for the purposes of this Condition 17.

17.3 All notices to Noteholders shall be sent by courier, by email or delivered by hand, to the addresses appearing in the relevant CDS accounts.

17.4 A notice to be given by any Noteholder to the Issuer shall be in writing and given by lodging (either by hand delivery or simple courier or posting by registered mail) that notice at the office of the Agent as specified in Paragraph K (Corporate Information).17.5 Notices given by registered mail or delivered shall be deemed to have been given on the seventh day after the day on which it is mailed and on the day of delivery if delivered.

17.6 Notices given by email shall be deemed duly served, if sent during normal business hours, then at the time of transmission and, if sent outside normal business hours, then on the next following Business Day.

18. Meetings of Noteholders and Rights of Noteholders

18.1 The Noteholders’ Representative Agency Agreement contains the rights and powers of the Noteholders, the duties and powers of the Noteholders’ Representative and provisions for convening meetings of the Noteholders to consider any matter affecting their interests. Such meetings may be convened by the Issuer or Noteholders holding not less than ten percent (10%) in Principal Amount of the Notes in issue.

18.2 One or more directors or duly appointed representatives of the Issuer may attend and speak at a meeting of Noteholders but shall not be entitled to vote neither for himself as a Noteholder nor as proxy or representative of a Noteholder.

18.3 The quorum for the meeting shall be any such number of Noteholders representing at least fifty percent (50%) of the total principal value of Notes in issue.

18.4 A Special Resolution passed at any meeting of the Noteholders shall be binding on all the Noteholders, whether or not they are present at the meeting.

18.5 The Noteholders will have, inter alia, the following powers which shall be exercised by Special Resolution: • to bind the Noteholders to any compromise or arrangement to be made between the Issuer and the Noteholders or any of them; • to provide specific instructions to the Noteholders’ Representative and whereupon the Noteholders’ Representative will (if properly indemnified by the Noteholders) be bound to act or refrain from acting as specified by the resolution; • to agree to any variation or modification of any of the rights of the Noteholders, in each case subject to the consent or concurrence of the Issuer; and • to discharge or exonerate the Noteholders’ Representative from liability in respect of any specific breach of its obligations under the Noteholders’ Representative Agency Agreement.


Consent letter for audit report (30 June 2016)

F. ISSUER’S FINANCIAL POSITION

1. Consent Letters (For Figures relating to 30 June 2015, 30 June 2016, 30 June 2017)

Consent letter for audit report (30 June 2015)


2. Independent Assurance Report (30 June 2015, 30 June 2016, 30 June 2017)

Independent Auditor’s Report (30 June 2015)

Consent letter for use of audit report (30 June 2017)


Independent Auditor’s Report (30 June 2017)Independent Auditor’s Report (30 June 2016)


5. Statements of comprehensive income

6. Statements of cash flows

30th June 30th June 30th June 30th June 30th June 30th June2017 2016 2015 2017 2016 2015

MURm MURm MURm MURm MURm MURm

Profit for the year 6,748.4 6,804.9 5,771.2 2,480.9 1,841.0 1,808.1

Other comprehensive income:Items that will not be reclassified to profit or loss:Remeasurement of defined benefit pension plan, net of deferred tax 287.1 (173.7) 95.2 - - - Share of other comprehensive (expense)/income of associates (120.9) 664.0 (0.1) - - -

166.2 490.3 95.1 - - -

Items that may be reclassified subsequently to profit or loss:Exchange differences on translating foreign operations (184.4) (129.0) (31.5) - - - Reclassification adjustments on disposal of available-for-sale investments 16.4 (268.5) 71.0 - - - Net fair value gain on available-for-sale investments 432.1 77.5 762.9 - - - Share of other comprehensive income/(expense) of associates 242.8 382.1 (44.7) - - -

506.9 62.1 757.7 - - p - Other comprehensive income for the year 673.1 552.4 852.8 - - - Total comprehensive income for the year 7,421.5 7,357.3 6,624.0 2,480.9 1,841.0 1,808.1

Total comprehensive income attributable to: Ordinary equity holders of the parent 7,272.2 6,752.1 6,579.9 2,480.9 1,841.0 1,808.1 Non-controlling interests 149.3 605.2 44.1 - - -

7,421.5 7,357.3 6,624.0 2,480.9 1,841.0 1,808.1

GROUP COMPANY

12

30th June 30th June 30th June 30th June 30th June 30th June2017 2016 2015 2017 2016 2015RS'M RS'M RS'M RS'M RS'M RS'M

Operating activitiesNet cash flows from trading activities 959.6 6,717.7 7,568.7 2,179.6 1,904.3 1,604.3 Net cash flows from other operating activities 6,040.0 7,973.3 4,833.0 - - - Dividends received from associates 305.1 256.0 131.9 - - - Dividends paid (2,084.4) (1,904.6) (1,535.0) (2,084.4) (1,904.6) (1,535.0) Dividends paid to non-controlling interests in subsidiaries (40.8) (35.1) (25.4) - - - Income tax paid (1,568.1) (1,259.4) (1,074.2) - - - Net cash flows from operating activities 3,611.4 11,747.9 9,899.0 95.2 (0.3) 69.3

Investing activitiesPurchase of available-for-sale investments (945.4) (946.8) (2,333.8) - - - Proceeds from sale of available-for-sale investments 1,358.1 690.8 465.3 - - - Investment in associates (136.6) (5.9) (5.0) (83.2) (5.9) (5.0) Investment in subsidiaries - - - (83.2) (20.2) (4,525.6) Cash and cash equivalents of subsidiary upon loss of control - (760.6) - - - - Purchase of property, plant and equipment (990.9) (514.0) (532.4) (221.8) (5.6) (4.0) Purchase of intangible assets (345.0) (421.8) (160.8) - - - Proceeds from sale of property, plant and equipment 116.4 47.4 60.9 - - - Net cash flows from investing activities (943.4) (1,910.9) (2,505.8) (388.2) (31.7) (4,534.6) Net cash flows before financing activities 2,668.0 9,837.0 7,393.2 (293.0) (32.0) (4,465.3) Financing activitiesShares issued/employee share options exercised 51.0 29.6 13.9 51.0 29.6 13.9 Shares bought back and cancelled by subsidiary - (21.9) - - - - Refund/(grant) of subordinated loan by associate/to subsidiary - 180.3 - (50.0) - - Acquisition of non-controlling interest in subsidiary - (50.6) (4.1) - - - Subordinated liabilities transferred - - - - - 4,500.0 Net debt securities matured - - (1,793.0) - - - Net cash flows from financing activities 51.0 137.4 (1,783.2) 1.0 29.6 4,513.9 Increase/(decrease) in cash and cash equivalents 2,719.0 9,974.4 5,610.0 (292.0) (2.4) 48.6 Net cash and cash equivalents at 1st July 33,215.1 23,287.5 17,483.5 49.4 51.8 3.2 Effect of foreign exchange rate changes (273.4) (46.8) 194.0 - - - Net cash and cash equivalents at 30th June 35,660.7 33,215.1 23,287.5 (242.6) 49.4 51.8

The notes on pages 20 to 73 form part of these financial statements.Auditors' report on pages 2 to 9.

GROUP COMPANY

13

3. Statements of Financial position

4. Statements of profit or loss

2017 2016 2015 2017 2016 2015MURm MURm MURm MURm MURm MURm

ASSETSCash and cash equivalents 35,711.4 33,305.6 24,528.6 - 49.4 51.8 Derivative financial instruments 479.7 315.4 426.1 - - - Loans to and placements with banks 25,716.3 22,419.1 8,851.5 - - - Loans and advances to customers 171,223.7 163,827.3 164,443.5 - - - Investment securities 74,729.7 62,734.8 50,689.3 - - - Investments in associates 9,552.3 9,151.9 7,254.6 109.7 26.5 20.6 Investments in subsidiaries - - - 9,386.4 9,253.2 9,233.0 Goodwill and other intangible assets 949.4 897.4 840.4 - - - Property, plant and equipment 6,196.8 5,892.8 6,033.5 226.8 6.9 3.2 Deferred tax assets 282.2 311.3 287.0 - - - Other assets 20,835.2 18,849.2 16,658.3 1,374.5 1,071.1 1,089.2 Total assets 345,676.7 317,704.8 280,012.8 11,097.4 10,407.1 10,397.8 LIABILITIES AND SHAREHOLDERS' EQUITYDeposits from banks 2,489.5 1,837.7 2,405.0 - - - Deposits from customers 272,373.8 253,423.9 218,735.0 - - - Derivative financial instruments 401.7 307.2 309.6 - - - Other borrowed funds 5,968.4 5,193.0 7,806.4 242.6 - - Subordinated liabilities 5,587.0 5,619.9 5,595.6 4,535.0 4,537.6 4,504.4 Current tax liabilities 905.9 812.1 539.7 - - - Deferred tax liability 53.4 65.4 50.2 0.4 0.4 0.1 Other liabilities 9,560.4 7,437.0 6,889.1 1,063.7 1,000.4 930.5 Total liabilities 297,340.1 274,696.2 242,330.6 5,841.7 5,538.4 5,435.0 Shareholders' equityStated capital 2,477.8 2,426.8 2,397.2 2,477.8 2,426.8 2,397.2 Retained earnings 34,761.0 30,886.1 27,501.6 2,777.9 2,441.9 2,565.6 Other components of equity 8,710.4 7,417.0 6,034.5 - - - Equity attributable to the ordinary equity holders of the parent 45,949.2 40,729.9 35,933.3 5,255.7 4,868.7 4,962.8 Non-controlling interests 2,387.4 2,278.7 1,748.9 - - - Total equity 48,336.6 43,008.6 37,682.2 5,255.7 4,868.7 4,962.8 Total equity and liabilities 345,676.7 317,704.8 280,012.8 11,097.4 10,407.1 10,397.8 CONTINGENT LIABILITIESAcceptances, guarantees, letters of credit, endorsements and other obligations on account of customers 43,102.9 32,130.8 45,697.1 Commitments 7,201.2 2,913.5 4,633.0 Tax assessments 992.6 836.9 797.2 Other 1,360.2 1,431.7 1,293.9

52,656.9 37,312.9 52,421.2

GROUP COMPANY

10

30th June 30th June 30th June 30th June 30th June 30th June2017 2016 2015 2017 2016 2015

MURm MURm MURm MURm MURm MURmInterest income 13,888.9 13,643.6 12,844.3 - - - Interest expense (4,478.0) (4,753.3) (4,690.1) (246.2) (262.8) (4.4) Net interest income 9,410.9 8,890.3 8,154.2 (246.2) (262.8) (4.4) Fee and commission income 4,279.8 4,028.6 4,148.1 - - - Fee and commission expense (930.0) (845.2) (783.7) - - (0.1) Net fee and commission income 3,349.8 3,183.4 3,364.4 - - (0.1) Other incomeProfit arising from dealing in foreign currencies 1,827.9 1,672.6 1,101.7 - - - Net gain/(loss) from financial instruments carried at fair value 101.3 (82.2) 147.8 - - -

1,929.2 1,590.4 1,249.5 - - - Dividend income 88.8 76.4 86.2 2,841.4 2,204.0 1887.9Net gain on sale of securities 278.8 282.8 97.3 - - - Other operating income 448.5 381.0 262.6 - - -

2,745.3 2,330.6 1,695.6 2,841.4 2,204.0 1,887.9 Operating income 15,506.0 14,404.3 13,214.2 2,595.2 1,941.2 1,883.4 Non-interest expenseSalaries and human resource development (3,611.5) (3,311.0) (3,084.4) (78.6) (68.6) (51.8) Depreciation of property, plant and equipment (551.8) (520.6) (512.7) (1.9) (1.9) (0.8) Amortisation of intangible assets (281.6) (219.1) (247.0) - - - Other (1,943.3) (1,724.8) (1,681.5) (33.8) (29.4) (22.6)

(6,388.2) (5,775.5) (5,525.6) (114.3) (99.9) (75.2) Operating profit before impairment 9,117.8 8,628.8 7,688.6 2,480.9 1,841.3 1,808.2 Net impairment of financial assets (1,063.8) (1,021.9) (1,163.1) - - - Operating profit 8,054.0 7,606.9 6,525.5 2,480.9 1,841.3 1,808.2 Share of profit of associates 338.2 735.0 374.8 - - - Profit before tax 8,392.2 8,341.9 6,900.3 2,480.9 1,841.3 1,808.2 Income tax expense (1,643.8) (1,537.0) (1,129.1) - (0.3) (0.1) Profit for the year 6,748.4 6,804.9 5,771.2 2,480.9 1,841.0 1,808.1 Profit for the year attributable to: Ordinary equity holders of the parent 6,702.1 6,625.5 5,722.0 2,480.9 1,841.0 1,808.1 Non-controlling interests 46.3 179.4 49.2 - - -

6,748.4 6,804.9 5,771.2 2,480.9 1,841.0 1,808.1 Earnings per share: Basic (Rs) 28.12 27.82 24.04 Diluted (Rs) 28.10 27.82 24.04 -

GROUP COMPANY

11


10. Important Notice

The consolidated and separate summary financial statements are derived from the audited consolidated and separate financial statements of MCB Group Limited (the “Company”) and its subsidiaries (together the “Group”) and the separate financial statements of the Company for the years ended 30 June 2017, 30 June 2016 and 30 June 2015. These audited consolidated and separate financial statements, which have been prepared in accordance with International Financial Reporting Standards, are available at 9-15 Sir William Newton Street, Port Louis – Mauritius and can be viewed on our website: www.mcbgroup.com

11. Significant accounting policies for the year ended 30 June 2017

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

a) Basis of preparation

The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) and in compliance with the Mauritian Companies Act 2001.

Where necessary, comparative figures have been amended to conform with changes in presentation, or in accounting policies in the current year.

The financial statements include the consolidated financial statements of the parent company MCB Group Limited and its subsidiary companies (The Group) and the separate financial statements of the parent company (The Company).

The financial statements have been prepared under the historical cost convention except for available-for-sale investment securities, financial assets and liabilities held-for-trading, derivative contracts, defined benefit plan, and land held through associates which are stated at fair value.

Standards, amendments to published Standards and interpretations effective in the reporting period.

The following standards, amendments to published standards and interpretations were effective and applicable to the Group in the reporting period:

Amendments to published standards (effective as from 1 January 2016):

• Amendments to IAS 16, ‘Property, plant and equipment’ and IAS 38,’Intangible assets’ on depreciation and amortisation; • Annual Improvements 2012 – 2014 Cycle; • Amendments to IAS 1, ‘Presentation of financial statements’ disclosure initiative; • Amendments to IFRS 10, ‘Consolidated financial statements’ and IAS 28, ‘Investments in associates and joint ventures’ on applying the consolidation exemption; and • Amendments to IAS 34, ‘Interim financial reporting’ regarding disclosure of information.

The adoption of these amendments did not have any impact on the current period or any prior period and is not likely to affect future periods.

Standards, amendments to published Standards and interpretations issued but not yet effective.

Certain standards, amendments to published standards and interpretations issued are effective for accounting periods beginning after 1 July 2016, but which the Group has not early adopted.

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

• IFRS 2 Share-based payment Amendment on clarifying share-based payment transactions– effective 1 January 2018; • IFRS 9 Financial Instruments – effective 1 January 2018; • IFRS 15 Revenue from Contracts with Customers – effective 1 January 2018; • IFRS 16 Leases – effective 1 January 2019; • IFRIC 22 Foreign Currency Transactions and Advance Consideration – effective 1 January 2018; • IFRIC 23 Uncertainty over Income Tax Treatments – effective 1 January 2019; • Amendment to IAS 12 on recognition of deferred tax assets for unrealised losses – effective 1 January 2017; • Amendment to IAS 7 on Disclosure Initiative – effective 1 January 2017; and • Annual Improvements 2014 – 2016 Cycle - effective 1 January 2018.

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

IFRS 9 Financial Instruments - effective 1 January 2018

IFRS 9 is of particular importance to the Group. In July 2014, the IASB issued IFRS 9 ‘Financial Instruments’, which is the comprehensive standard to replace IAS 39 ‘Financial Instruments: Recognition and Measurement’, and includes requirements for classification and measurement of financial assets and liabilities, impairment of financial assets and hedge accounting.

7. Statements of changes in equity - Group

8. Statements of changes in equity – Company

9. Contingent Liabilities

As at 30 June 2017, contingent liabilities (detailed in the table below) amounted to MUR 52,656.9m.

Description Amount, MURm

Acceptances, guarantees, letters of credit, endorsements, and other obligations on account of customers

43,102.9

Commitments 7,201.2

Tax assessments 992.6

Other 1,360.2

Total 52,659.9


Stated Retained Capital Translation Statutory General Total Non-controlling TotalCapital Earnings Reserve Reserve Reserve Banking Interests Equity

ReserveRS'M RS'M RS'M RS'M RS'M RS'M RS'M RS'M RS'M

GROUPAt 1st July 2014 2,383.3 24,234.9 1,526.8 (205.5) 2,414.1 614.1 30,967.7 1,736.6 32,704.3 Profit for the year - 5,722.0 - - - - 5,722.0 49.2 5,771.2 Other comprehensive (expense)/income for the year - 95.1 780.5 (17.7) - - 857.9 (5.1) 852.8 Total comprehensive income/(expense) for the year - 5,817.1 780.5 (17.7) - - 6,579.9 44.1 6,624.0 Dividends - (1,630.5) - - - - (1,630.5) (25.4) (1,655.9) Effect of increase in shareholding in subsidiaries 2.3 - - - - 2.3 (6.4) (4.1) Issue of shares following the exercise of Group Employee Share Options Scheme 13.9 - - - - - 13.9 - 13.9 Transactions with owners in their capacity as owners 13.9 (1,628.2) - - - - (1,614.3) (31.8) (1,646.1) Share of transfer by associate - 3.7 (3.7) - - - - - - Share of other movements in reserves of associate - (1.5) 1.5 - - - - - - Transfer to general banking reserve - (166.7) - - - 166.7 - - - Transfer to statutory reserve - (757.7) - - 757.7 - - - - At 1st July 2015 2,397.2 27,501.6 2,305.1 (223.2) 3,171.8 780.8 35,933.3 1,748.9 37,682.2 Profit for the year - 6,625.5 - - - - 6,625.5 179.4 6,804.9 Other comprehensive (expense)/income for the year - (175.2) 428.4 (126.6) - - 126.6 425.8 552.4 Total comprehensive income/(expense) for the year - 6,450.3 428.4 (126.6) - - 6,752.1 605.2 7,357.3 Dividends - (1,964.7) - - - - (1,964.7) (35.1) (1,999.8) Effect of increase in shareholding in subsidiaries - (20.4) - - - - (20.4) (40.3) (60.7) Issue of shares following the exercise of Group Employee Share Options Scheme 29.6 - - - - - 29.6 - 29.6 Transactions with owners in their capacity as owners 29.6 (1,985.1) - - - - (1,955.5) (75.4) (2,030.9) Share of transfer by associate - (35.1) 35.1 - - - - - - Share of other movements in reserves of associate - 3.1 (3.1) - - - - - - Transfer to general banking reserve - (200.2) - - - 200.2 - - - Transfer to statutory reserve - (848.5) - - 848.5 - - - - At 30th June 2016 2,426.8 30,886.1 2,765.5 (349.8) 4,020.3 981.0 40,729.9 2,278.7 43,008.6 Profit for the year - 6,702.1 - - - - 6,702.1 46.3 6,748.4 Other comprehensive income/(expense) for the year - 164.7 589.3 (183.9) - - 570.1 103.0 673.1 Total comprehensive income/(expense) for the year - 6,866.8 589.3 (183.9) - - 7,272.2 149.3 7,421.5 Dividends - (2,144.9) - - - - (2,144.9) (40.8) (2,185.7) Effect of increase in shareholding in subsidiary - 2.0 - - - - 2.0 (28.4) (26.4) Issue of shares following the exercise of Group Employee Share Options Scheme 51.0 - - - - - 51.0 - 51.0 Transactions with owners in their capacity as owners 51.0 (2,142.9) - - - - (2,091.9) (69.2) (2,161.1) Share of transfer by associate - (4.6) 4.6 - - - - - - Share of other movements in reserves of associate - 44.5 (5.5) - - - 39.0 28.6 67.6 Transfer from general banking reserve - 51.2 - - - (51.2) - - - Transfer to statutory reserve - (940.1) - - 940.1 - - - - At 30th June 2017 2,477.8 34,761.0 3,353.9 (533.7) 4,960.4 929.8 45,949.2 2,387.4 48,336.6

Attributable to ordinary equity holders of the parent

14

Stated Retained TotalCapital Earnings EquityRS'M RS'M RS'M

COMPANYAt 1st July 2014 2,383.3 2,388.0 4,771.3 Profit for the year - 1,808.1 1,808.1 Total comprehensive income for the year - 1,808.1 1,808.1 Dividends - (1,630.5) (1,630.5) Issue of shares following the exercise of Group Employee Share Options Scheme 13.9 - 13.9 Transactions with owners in their capacity as owners 13.9 (1,630.5) (1,616.6) At 1st July 2015 2,397.2 2,565.6 4,962.8 Profit for the year - 1,841.0 1,841.0 Total comprehensive income for the year - 1,841.0 1,841.0 Dividends - (1,964.7) (1,964.7) Issue of shares following the exercise of Group Employee Share Options Scheme 29.6 - 29.6 Transactions with owners in their capacity as owners 29.6 (1,964.7) (1,935.1) At 30th June 2016 2,426.8 2,441.9 4,868.7 Profit for the year - 2,480.9 2,480.9 Total comprehensive income for the year - 2,480.9 2,480.9 Dividends - (2,144.9) (2,144.9) Issue of shares following the exercise of Group Employee Share Options Scheme 51.0 - 51.0 Transactions with owners in their capacity as owners 51.0 (2,144.9) (2,093.9) At 30th June 2017 2,477.8 2,777.9 5,255.7

The notes on pages 20 to 73 form part of these financial statements.Auditors' report on pages 2 to 9.

15


identifiable assets acquired and the liabilities and contigent liabilities assumed measured in accordance with IFRS 3 is recorded as goodwill. In the case of a bargain purchase (excess of (b) over (a)), the resulting gain is recognised directly in profit or loss. Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(2) Separate financial statements of the Company

In the separate financial statements of the Company, investments in subsidiary companies are carried at cost. The carrying amount is reduced to recognise any impairment in the value of individual investments.

(3) Transactions with non-controlling interests The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests without loss of control are also recorded in equity.

(4) Disposal of subsidiaries When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date control is lost, with the change in carrying amount recognised in profit or loss.The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

(5) Associates

An associate is an entity over which the Group has significant influence but not control, or joint control, generally accompanying a shareholding between 20% and 50% of the voting rights.Investments in associates are accounted for using the equity method except when classified as held-for-sale (see below). Investments in associates are initially recognised at cost as adjusted by post acquisition changes in the group’s share of the net assets of the associate less any impairment in the value of individual investments. Any excess of the cost of acquisition over the Group’s share of the net fair value of the associate’s identifiable assets and liabilities recognised at the date of acquisition is recognised as goodwill, which is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of identifiable assets and liabilities over the cost of acquisition, after assessment, is included as income in the determination of the Group’s share of the associate’s profit or loss.

When the Group’s share of losses exceeds its interest in an associate, the Group discontinues recognising further losses, unless it has incurred legal or constructive obligation or made payments on behalf of the associate.

Unrealised profits and losses are eliminated to the extent of the Group’s interest in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Where necessary, appropriate adjustments are made to the financial statements of associates to bring the accounting policies used in line with those adopted by the Group. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

Dilution gains and losses arising in investments in associates are recognised in profit or loss.

In the separate financial statements of the Company, the investments in associates are carried at cost (which includes transaction costs).The carrying amount is reduced to recognise any impairment in the value of the individual companies.

c) Foreign currency translation

The foreign subsidiaries’ statement of financial position are translated to Mauritian Rupees at the closing rate at the end of the reporting period. Their statements of profit or loss, comprehensive income and cash flows are translated at the average rate for the period unless the average is not a reasonable approximation of the cumulative effects of the rates prevailing at the transaction dates, in which case income and expenses are translated at the rates prevailing on the dates of the transactions.Any resulting exchange differences are recognised in other comprehensive income. On disposal of a foreign entity, such exchange differences are recognised in profit or loss as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

(i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using Mauritian Rupee, the currency of the primary economic environment in which the entity operates (“functional currency”). The consolidated and separate financial statements are presented in Mauritian Rupees, which is the Company’s functional currency. All amounts are in million, rounded

Classification and measurement

The classification and measurement of financial assets will depend on how these are managed (the entity’s business model) and their contractual cash flow characteristics. These factors determine whether the financial assets are measured at amortised cost, fair value through other comprehensive income (‘FVOCI’) or fair value through profit or loss (‘FVPL’). In many instances, the classification and measurement outcomes will be similar to IAS 39, although differences will arise. For example, under IFRS 9, embedded derivatives are not separated from host financial assets and equity securities are measured at FVPL or, in limited circumstances, at FVOCI. The combined effect of the application of the business model and the contractual cash flow characteristics tests may result in some differences in the population of financial assets measured at amortised cost or fair value compared with IAS 39. The classification of financial liabilities is essentially unchanged. For certain liabilities measured at fair value, gains or losses relating to changes in the entity’s own credit risk are to be included in other comprehensive income.

Impairment

The impairment requirements apply to financial assets measured at amortised cost, lease receivables and certain loan commitments and financial guarantee contracts. At initial recognition, allowance (or provision in the case of commitments and guarantees) is required for expected credit losses (‘ECL’) resulting from default events that are possible within the next 12 months (‘12-month ECL’). In the event of asignificant increase in credit risk, allowance (or provision) is required for ECL resulting from all possible default events over the expected life of the financial instrument (‘lifetime ECL’). Financial assets where 12-month ECL is recognised are considered to be ‘stage 1’; financial assets which are considered to have experienced a significant increase in credit risk are in ‘stage 2’; and financial assets for which there is objective evidence of impairment are considered to be in default or otherwise credit impaired are in ‘stage 3’.

The assessment of whether credit risk has increased significantly since initial recognition is performed at the end of each reporting period by considering the change in the risk of default occurring over the remaining life of the financial instrument, rather than by considering an increase in ECL.

The assessment of credit risk, and the estimation of ECL, are required to be unbiased and probability-weighted, and should incorporate all available information which is relevant to the assessment including information about past events, current conditions and reasonable and supportable forecasts of future events and economic conditions at the reporting date. In addition, the estimation of ECL should take into account the time value of money. As a result, the recognition and measurement of impairment is intended to be more forward-looking than under IAS 39 and the resulting impairment charge will tend to be more volatile. It will also tend to result in an increase in the total level of impairment allowances, since all financial assets will be assessed for at least 12-month ECL and the population of financial assets to which lifetime ECL applies is likely to be larger than the population for which there is objective evidence of impairment in accordance with IAS 39.

Hedge accounting

The new hedge accounting rules will align the accounting for hedging instruments more closely with the bank’s risk management practices. As a general rule, more hedge relationship might be eligible for hedge accounting as the Standard introduces a more principles-based approach. Transition

The classification and measurement, and impairment requirements are applied retrospectively by adjusting the opening retained earnings at the date of initial application, with no requirement to restate comparative periods.

The mandatory application date for the standard as a whole is 1 January 2018, but it is possible to apply the revised presentation for certain liabilities measured at fair value from an earlier date.

b) Basis of consolidation and equity accounting

(1) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group.

The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interests in the acquiree either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s net assets.

The excess of (a) the aggregate of the consideration transferred, the amount of any non-controlling interests in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over (b) the net of the acquisition-date amounts of


Investment securities are initially recognised at fair value plus, in the case of those not at fair value through profit or loss, transaction costs. Available-for-sale financial assets are subsequently remeasured at fair value. Changes in the fair value of securities classified as available-for-sale are recognised in other comprehensive income and cumulated in a separate reserve, capital reserve.

Financial assets at fair value through profit or loss are financial assets held-for-trading.

Held-to-maturity investments are carried at amortised cost using the effective interest method, less any provision for impairment.

If the Group was to sell or reclassify more than an insignificant amount of held-to-maturity investments before maturity (other than in certain specific circumstances), the entire category would be tainted and would have to be reclassified as available- for-sale. Furthermore, the Group would be prohibited from classifying any financial asset as held-to-maturity during the following two years.

Interest earned while holding investment securities is reported as interest income. Dividends receivable are included separately in ‘dividend income’ in profit or loss when the Group’s right to receive payment is established.

All regular way purchases and sales of investment securities are recognised at trade date which is the date that the Group commits to purchase or sell the asset.

j) Trading securities

Trading securities are securities which were either acquired for generating a profit from short-term fluctuations in price or dealer’s margin, or are securities included in a portfolio in which a pattern of short-term profit taking exists. Trading securities are initially recognised at fair value (which excludes transaction costs) and measured at subsequent reporting dates at fair value. All related realised and unrealised gains and losses are recognised in profit or loss for the year.

k) Loans and advances

Loans originated by the Group by providing money directly to the borrower (at draw-down) are categorised as loans by the Group and are carried at amortised cost which is defined as the fair value of cash consideration given to originate these loans as is determinable by reference to market prices at origination date. Third party expenses, such as legal fees, incurred in securing a loan are treated as part of the cost of the transaction.

l) Impairment of financial assets

(i) Assets carried at amortised cost

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

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 or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group may measure impairment on the basis of an instrument’s fair value using an observable market price.

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 reversal of the previously recognised impairment loss is recognised in profit or loss.

Statutory and other regulatory loan loss reserve requirements that exceed these amounts are dealt with in the general banking reserve as an appropriation of retained earnings.

(ii) Assets classified as available-for-sale

The Group 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.

For debt securities, if any such evidence exists the cumulative loss – measured as the difference between the acquisition cost

to one decimal place except as otherwise stated. (ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation when the items are remeasured.

Trading transactions denominated in foreign currencies are accounted for at the rate of exchange ruling at the date of the transaction.

Monetary assets and liabilities expressed in foreign currencies are reported at the rate of exchange ruling at the end of the reporting date. Differences arising from reporting monetary items are dealt with through profit or loss.

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

d) Derivative financial instruments

Derivative financial instruments include mainly foreign exchange contracts and currency swaps. These are initially recognised at fair value on the date the derivative contracts are entered into and subsequently remeasured at their fair values. Fair values of derivatives between two external currencies are based on interest rate differential between the two currencies. Fair values of forwards are based on treasury bills rate or LIBOR prevailing at reporting date. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative. Transaction costs are charged immediately through profit or loss.

The Group’s derivative transactions,while providing effective economic hedges under the Group’s risk management policies, do not qualify for hedge accounting under the specific rules of IAS 39 and are therefore treated as derivatives held for trading with fair value gains and losses reported in profit or loss.

The fair values of derivative financial instruments held-for-trading are disclosed in note 5 to the financial statements.

e) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

f) Interest income and expense

Interest income and expense are recognised in profit or loss for all interest bearing instruments using the effective interest method. Interest income includes coupons earned on fixed income investment and trading securities and accrued discount and premium on treasury bills and other discounted instruments. When loans become doubtful of collection, they are written down to their recoverable amounts and interest income is thereafter based on the rate of interest that was used to discount the future cash flows for the purpose of measuring the impairment loss.

g) Fees and commissions

Fees and commissions are generally recognised when the service has been provided. Loan commitment fees for loans that are likely to be drawn down are deferred (together with the related direct costs) and recognised as an adjustment to the effective interest rate on the loan.

h) Sale and repurchase agreements

Securities sold subject to linked repurchase agreements (“repos”) are retained in the statement of financial position as Government securities and Treasury bills and the counterparty liability is included in amount due to other banks or deposits, as appropriate.

Securities purchased under agreements to resell (“reverse repos”) are recorded as amount due from other banks or loans and advances, as appropriate. The difference between sale and repurchase price is treated as interest and accrued over the life of the repos agreements using the effective interest method.

i) Investment securities

The Group classifies its investment securities as financial assets at fair value through profit or loss, held-to-maturity or available- for-sale assets. The directors determine the appropriate classification of the investments at the time of the purchase. Investment securities with fixed maturity where the directors have both the intent and the ability to hold to maturity are classified as held- to-maturity. Investment securities intended to be held for an indefinite period of time in response to needs for liquidity or changes in interest rates, exchange rates or equity prices are classified as available-for-sale, which may be sold.


Leased assets are depreciated over the shorter of the useful life of the asset and the lease terms.

q) Accounting for leases – where the subsidiary company is the lessor

Finance leases

When assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable, the amount being equal to the net investment in the leases after specific provision for impairment loss in respect of all identified impaired leases in the light of periodical reviews. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method, which reflects a constant periodic rate of return.

Operating leases

Assets leased out under operating leases are included in property, plant and equipment in the statement of financial position. They are depreciated over their expected useful lives on a basis consistent with similar assets. Rental income is recognised on a straight-line basis over the lease term.

r) Cash and cash equivalents

For the purposes of the statement of cash flows, cash and cash equivalents comprise cash and balances with Central Banks and amounts due to and from other banks which are short-term, highly-liquid with original maturities of three months or less. A further breakdown of cash and cash equivalents is given in note 4 to the financial statements.

s) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

t) Deposits from banks and customers

Deposits from banks and customers are classified as financial liabilities at amortised cost. They are initially measured at fair value and subsequently carried at amortised cost.

u) Employee benefits

The Group operates a number of defined benefit and defined contribution plans and provides for the requirements under the Employment Rights Act 2008. The defined benefit plan is fully funded. The assets of the funded plan are held independently and administered by The Mauritius Commercial Bank Limited Superannuation Fund.

(i) Defined contribution plans

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group 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 defined contribution plans are recognised as an expense when employees have rendered service that entitle them to the contributions.

(ii) Defined benefit plans

A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The liability recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The main assumptions made in the actuarial valuation of the pension fund are listed in note 17 to the financial statements.

The Group determines the net interest expense/ (income) on the net defined benefit liability/(asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability/(asset), taking into account any changes in the net defined liability/(asset) during the period as a result of contributions and benefit payments. Net interest expense/ (income) is recognised in profit or loss.

Service costs comprising current service cost, past service cost, as well as gains and losses on curtailments and settlements are recognized immediately in profit or loss.

Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any,

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, in a subsequent period, the fair value of a debt instrument classified as available- for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through profit or loss.

For equity investments, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists the cumulative loss – measured as the difference between the 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. Impairment losses recognised in profit or loss on equity instruments are not reversed through profit or loss.

m) Goodwill

The excess of the consideration transferred, amount of any non-controlling interest in the acquired entity over the fair value of the net identifiable assets is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognised directly in profit or loss as a bargain purchase.

Goodwill on acquisition of associates is included in investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. On disposal of a subsidiary or associate, the attributable amount of goodwill is included in the determination of the gains and losses on disposal. Goodwill is allocated to cash-generating units for the purpose of impairment testing.

n) Property, plant and equipment

Property, plant and equipment are carried at cost less accumulated depreciation.

Depreciation is calculated to write down the cost of such assets to their residual values on a straight-line basis over their estimated useful lives as follows:

Buildings 50 years Computer and other equipment 5 – 10 years Furniture, fittings and vehicles 5 – 15 years

Land is not depreciated

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Gains or losses on disposal of property, plant and equipment are determined by reference to their carrying amounts and are recognised as income or expense in profit or loss. Repairs and renewals are charged to profit or loss when the expenditure is incurred.

o) Computer software development costs

Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Costs that are directly attributable with the design of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met:

• it is technically feasible to complete the software product so that it will be available for use; • the directors intend to complete the software product and use or sell it; • there is an ability to use or sell the software product; • it can be demonstrated how the software product will generate probable future economic benefits; • adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and • the expenditure attributable to the software product during its development can be reliably measured. Direct costs include staff costs of the software development team and an appropriate portion of relevant overheads.

Expenditure that enhances or extends the benefits of computer software programmes beyond their original specifications and lives is recognised as a capital improvement and added to the original cost of the software. Computer software development costs recognised as assets are amortised using the straight-line method over their useful lives, but not exceeding a period of eight years.

p) Finance leases

Assets acquired under finance leases are accounted for at inception, at fair value, or if lower at the present value of the minimum lease payments and depreciated over their estimated useful lives. A corresponding liability is recorded as outstanding lease obligations.

Lease payments are apportioned between the liability and the finance charge so as to achieve a constant periodic rate of interest on the outstanding lease obligations.


the proceeds. (ii) Treasury shares

Where the Company purchases its equity share capital, the consideration paid is deducted from total shareholders’ equity as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued, any consideration received is included in shareholders’ equity.

ab) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised until such time as the assets are substantially ready for their intended use or sale. Other borrowing costs are expensed.

ac) Impairment of non-financial assets

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. Any 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 and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

ad) Share-based payments

Share-based compensation benefits are provided to all employees via the Group Employee Share Option Scheme (GESOS). Information relating to this scheme is set out in note 27 (c) to the financial statements.

Employee options

The fair value of options granted under the GESOS is recognised as an employee benefits expense with a corresponding increase in equity.

The total amount to be expensed is determined by reference to the fair value of the options granted:

• including any market performance conditions, • excluding the impact of any service and non-market performance vesting conditions, and • including the impact of any non-vesting conditions.

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

Social security contributions payable in connection with an option grant are considered an integral part of the grant itself and the charges are treated as cash-settled transactions.

G. SUBSCRIPTION AND SALE

G.1 Restrictions

The Issuer represents, warrants and agrees that it:

(I) will not offer Notes for subscription; and (II) will not solicit any offers for subscription for or sale

of the Notes in any Restricted Countries in which it is unlawful to make such an offer or solicitation, unless such offer for subscription for or sale of the Notes is made in full and strict compliance with any applicable laws and regulations of the relevant Restricted Countries.

The Arranger will be required to agree that it will not, directly or indirectly, offer, sell or deliver any Notes or distribute or publish any offering circular, information memorandum, prospectus, form of application, advertisement or other document or information in any of the Restricted Countries except under circumstances that will, to the best of its knowledge and belief, result in full and strict compliance with any applicable laws and regulations and all purchases, offers, sales and deliveries of Notes by it will be made on the same terms.

Without prejudice to the generality of the above paragraph, the Arranger will be required to agree that it has obtained any consent, approval or permission which is, to the best of its knowledge and belief, required for the offer, purchase, sale or delivery by it of Notes under the laws and regulations in force in any of the Restricted Countries to which it is subject or in which it makes such offers, purchases, sales or deliveries and it will, to the best of its knowledge and belief, comply with all such laws and regulations.

Neither the Issuer nor the Arranger represent that the Notes may at any time lawfully be subscribed for or sold in compliance with any applicable registration or other requirements in any of the Restricted Countries or pursuant to any exemption available thereunder or assumes any responsibility for facilitating such subscription or sale.

excluding interest), is recognized immediately in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income shall not be reclassified to profit or loss in subsequent period.

As from 1st July 2015, the Bank has introduced a Defined Contribution Cash Balanced scheme (DCCB) for its employees. With the introduction of DCCB, new employees automatically join the DCCB scheme, whilst existing employees had a one-time opportunity to choose from one of the options listed below:

Option A: To stay in the Defined Benefit (DB) scheme for all service.

Option B:To keep the accrued past pension benefits until 30th June 2015 in the DB scheme and join the DCCB scheme as from 1st July 2015.

Option C: To join the DCCB scheme as from 1st July 2015 and transfer the total accrued benefits as at 30th June 2015 from the DB scheme into the DCCB scheme.

v) Current and deferred income tax

The tax expense for the period comprises current and deferred income 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. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively

Current income 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 and includes the Corporate Social Responsibility charge and Bank levy.

Deferred income tax

Deferred tax is provided in full, using the liability method, on 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 substantially enacted by the end of the reporting period and are expected to apply in the period when the related deferred income tax asset is realised or the deferred income tax liability is settled.

w) Borrowings Borrowings are recognised initially at fair value, being their issue proceeds (fair value of consideration received) net of transaction costs incurred. Borrowings are subsequently stated at amortised cost and any difference between net proceeds and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

x) Dividend declared and unpaid

Dividend declared and unpaid to the Company’s shareholders at reporting date is recognised as a liability in the period in which dividend are declared.

y) Acceptances

Acceptances comprise undertakings by the Group to pay bills of exchange drawn on customers. The Group expects most acceptances to be settled simultaneously with the reimbursement from the customers. Acceptances are disclosed as liabilities with corresponding contra-assets.

z) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the Supervisory and Monitoring Committee to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Detailed analysis of segment reporting are shown in note 35 to the financial statements.

aa) Stated capital

Ordinary shares are classified as equity

(i) Share issue costs

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


Alternatively, the required documents can be certified as true copies by any one of the following persons: a notary, a lawyer, an actuary or an accountant holding a recognized professional qualification, a serving high ranked police or customs officer, a member of the judiciary, a civil servant, an employee of an embassy or consulate of the country of issue of documentary evidence of identity, or a director of a regulated financial services business in Mauritius.

Your application may be rejected if the documents mentioned above are not submitted together with your application form in respect of the Issue and the Issuer reserves the right to request any further document and/or information that it may determine.

• Allotment

In the event the targeted amount of MUR 2 billion is oversubscribed, the Issuer will allot Notes based on a scaling formula that they will result in Notes being allocated to smaller applicants in priority.

Every Prospective Investor shall be issued with an allotment letter or notice of refusal, to confirm allotment of the Notes subscribed for or refusal of the application for the Notes (as the case may be) on the Allotment Date.

Refunds will be made within two (2) Business Days after the Allotment Date by bank transfer to the account specified on the Application Forms. The Issuer will make necessary arrangement so that no bank charges be applied for bank accounts opened with MCB on these refunds but Prospective Investors must be aware that it may be subject to such charges by other banks.

• CDS account

Notes will be issued in inscribed form and will be credited directly to a CDS account in the name of the Prospective Investor(s).

For existing CDS account holders, the Notes will be directly credited to the CDS Account as specified on the application form. A copy of the CDS Statement showing the specified CDS account number should be attached to the application.

Subscribers, who do not hold a CDS account, must open an account with the investment dealer (stockbroker) of their choice.

If a CDS account is not specified or if the corresponding CDS Statement is not attached to the application, a CDS account in the name of the Prospective Investor(s) will be opened on behalf of the Prospective Investor(s) by MCB Stockbrokers Ltd.

H. RISK FACTORS

Prior to making an investment decision, Prospective Investors should carefully consider, along with the information contained in this Prospectus, the following risk factors associated with an investment in the Republic of Mauritius, the Issuer and the Notes. The risks and uncertainties below are not the only ones the Issuer and the Noteholders face. Additional risks and uncertainties not presently known to the Issuer, or that the Issuer currently believes are immaterial, could also impair the Issuer’s business, financial condition or results of operations and, as a result, its ability to service its payment obligations under the Notes. Investors should pay particular attention to the fact that the Issuer is subject to the legal and regulatory environment in the Republic of Mauritius, which, in some respects, may differ from that prevailing in other countries.

The Issuer believes that the factors outlined below may affect its ability to fulfil its obligations under the Notes, but the inability of the Issuer to pay interest, principal or other amounts on or in connection with any Notes may occur for other reasons which may not be considered significant risks by the Issuer based on information currently available to it, or which it may not currently be able to anticipate. Accordingly, the Issuer does not represent that the statements below regarding the risks of holding any Notes are exhaustive.

Prospective Investors should also read the detailed information set out in this Prospectus to reach their own views prior to making any investment decision. The information given below is as at the date of this Prospectus.

H.1 Risk factors relating to general economic conditions

The health of the local banking industry is directly related to conditions in the global economic, political and social environment. Any slowdown in economic growth, be it domestic or foreign, could adversely affect the Issuer’s financial performance.

H.2 Risk factors relating to the Issuer

In the course of its business activities, the Issuer is subject to a variety of risks including credit risks, operational risks, market risks and country risks. Whilst the Issuer believes that it has implemented the appropriate policies, systems and processes to control and mitigate these risks, based on information currently available to it, other risks which the Issuer may not currently be able to anticipate may arise which may adversely affect the Issuer’s financial condition, results of operations, prospects and reputation.

Credit risk

The risk of financial loss should borrowers or counterparties fail to fulfill their financial or contractual obligations to the Group as and when they fall due; credit risk typically includes counterparty risk, settlement risk and concentration risk, with the latter referring to the risk that the institution faces from the lack of diversification of its lending portfolio due to the build-up of exposures to a counterparty, industry, market or product amongst others.

G.2 Procedures of the Issue• Timetable

Offer Start Date 20 December 2017, 0900

Offer End Date 11 January 2018, 1400

Allotment & Announcement Date 19 January 2018, 1500

Payment Date 22 January 2018

Issue Date 22 January 2018

Interest Commencement Date 22 January 2018

Date of first trading 23 January 2018

Pursuant to Section 75(2) of the Securities Act 2005, the Notes shall be issued within 6 months of the effective date of registration of the Prospectus.

• Procedures for the application

Applications for subscription may only be made by Prospective Investors on the Application Form accompanying the Simplified Prospectus.

Applications may only be made by persons over 18 years old. However, a parent or guardian of a minor may apply for the benefit of the minor.

Non-individual Prospective Investors should sign under the hand of a duly authorised official whose representative capacity must be stated. Non-residents, not being a U.S. Person, may apply to this Issue.Amounts invested shall be equal to at least the Minimum Subscription Amount subject to discretional allotment by the Issuer in the event of oversubscription.

Copies of the Prospectus are available for public inspection, and the Simplified Prospectus and Application Forms are available for collection, at: • MCB Stockbrokers Ltd, Sir William Newton Street, Port-Louis, Mauritius; and • All MCB branches

The Simplified Prospectus will be available for download on the Issuer’s website: www.mcbgroup.com.

Payment for the Notes may be made by completing a bank transfer form or by cheque made payable to “MCB Group Limited”, crossed account payee. [LR9.84a]

Completed Application Forms and the required documents, together with the cheque or bank transfer form should reach MCB Stockbrokers Ltd at the following address by latest 14h00 on the Offer End Date

MCB Stockbrokers LtdSir William Newton Street, Port-LouisTel: (+230) 202 5555

• Financial Intelligence and Anti-Money Laundering Act 2002 & Code on the Prevention of Money Laundering and Terrorist Financing

In line with anti-money laundering legislation, Prospective Investors are required to provide the following documents along with their application form.

Individual Prospective Investor/joint Prospective Investor

For each Prospective Investor:- An original of a National Identity Card or of a valid passport or of birth certificate (for minors);- An original of a recent (dated within the last three months) utility bill (CEB, CWA, Mauritius Telecom); and- An original of a recent (dated within the last three months) bank statement showing the Prospective Investor’s name and bank account number

Corporate Prospective Investor- Official documents certifying the legal existence of the Prospective Investor;- Documents certifying the identity of at least two directors (same as for an individual Prospective Investor – see above); and- A resolution of the Board of Directors or managing body, granting the relevant authority to the signatories.

Prospective Investors may call personally at MCB Stockbrokers Ltd or any MCB branch with the stipulated original documents and the officers will certify the copies accordingly.


Exchange Rate Risk

The Issuer will pay principal and interest on the Notes in MUR. This presents certain risks relating to currency conversion if an investor’s financial activities are denominated principally in a currency unit other than MUR. These include the risk that exchange rates may significantly change (including changes due to depreciation of MUR or appreciation/revaluation of the investor’s currency) and the risk that authorities with jurisdiction over the investor’s currency may impose or modify exchange controls. An appreciation/revaluation in the value of the investor’s currency relative to MUR would decrease the investor’s currency equivalent:

• yield on the Notes; • value of the principal payable on the Notes; and • market value of the Notes.

Interest Rate Risk

The rate of interest applicable to the Notes will be based on the Repo Rate and this will allow the Noteholder to benefit from any increase in the Repo Rate. Noteholders may benefit from a lower interest payment due to a decrease in the Repo Rate.

No active trading market for the Notes

Notes to be issued under this Prospectus will be new securities which may not be widely distributed and for which there is currently no active trading market. If the Notes are traded after their initial issuance, they may trade at a discount to their initial offering price, depending upon prevailing interest rates, the market for similar securities, general economic conditions and the financial condition of the Issuer. It will also not be possible to redeem the Notes prior to their Maturity Date. Consequently, an investor in the Notes must be prepared to hold the Notes until their Maturity Date. There is no assurance as to the development or liquidity of any trading market for the Notes.

Meeting of Noteholders and modification

The Terms and Conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority. In addition, the Issuer may, in accordance with this Prospectus, make any modification to the Notes and to its Terms and Conditions.

Amendment or review to prevailing laws

This Prospectus, the Notes and the Terms and Conditions, are governed by, and will be construed in accordance with, the laws of Mauritius. No assurance can be given as to the impact of any possible judicial decision or amendment and, or review of the laws of Mauritius or administrative practice in Mauritius after the issue.

The Notes may not be a suitable investment for all investors

Each Prospective Investor in the Notes must determine the suitability of the investment in light of its own circumstances. In particular, each Prospective Investor should:

(a) have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and risks of investing in the Notes and the information contained or incorporated by reference in this Prospectus;

(b) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Notes and the impact such an investment will have on its overall investment portfolio;

(c) have sufficient financial resources and liquidity to bear all the risks of an investment in the Notes, including where principal or interest payable is different from the currency in which the Prospective Investor’s activities are principally denominated;

(d) understand thoroughly the terms of the Notes and be familiar with the behaviour of any relevant indices and financial markets; and

(e) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

H.4 Risks related to the structure of the particular issue of Notes

Set out below is a description of certain specific features of the Notes which Prospective Investor should note:The Notes will constitute senior unsecured debt obligations of the Issuer. In the event the Issuer faces Insolvency Proceedings, the Issuer will be required to pay other secured and unsubordinated creditors in full before it can make any payments on the Notes. If this occurs, the Issuer may not have enough assets remaining after these payments are made to pay amounts due under the Notes.

Country risk

The risk of loss arising when political or economic conditions or events in a particular country affects the ability of counterparties in that country to meet their financial obligations.

Market risk

The risk arising from a change in the market value of a portfolio of financial instruments caused by adverse movements in market variables such as equity, bond and commodity prices, currency exchange and interest rates, affecting the ability of counterparties in that country to meet their financial obligations.

Risk pertaining to fluctuating Interest Rates

The risk arising from changes in interest rates or the prices of interest rate related securities and derivatives, has an impact on the Group’s earnings or economic value of equity.

Funding and liquidity risk

Funding risk: The Issuer is a holding company and, as a result, depends on the receipt of dividends from its subsidiaries to meet its obligations, including its payment obligations with respect to the Notes. The ability of the Issuer’s subsidiaries to pay dividends and to receive distributions from its investments in other entities are subject to these entities’ financial performance and to applicable local laws and regulations.

Liquidity risk: The risk that the Issuer does not have sufficient financial resources to meet its obligations as they fall due or will have to do so at an excessive cost.

Regulatory and Compliance risk

The risk that is primarily linked to the impact of changes in legislation and regulations on the operation and functioning of the Issuer. It is the risk of statutory or regulatory sanction and material financial loss or reputational damage, which eventually results in the risk of losses, fines or penalties linked to the failure to comply with any applicable laws, regulations or supervisory requirements.Companies within the Group may be subject to banking, financial services laws, regulations, administrative actions and policies (as applicable) in the relevant jurisdictions where they operate. Changes in regulations may materially affect the Issuer’s business, its products and services and net worth.

Operational risk

The risk of loss or costs resulting from human factors, inadequate or failed internal processes and systems or external events. It includes fraud and criminal activity, project risk, business continuity, information and IT risk, etc. Although the Group has implemented risk controls and loss mitigation strategies and substantial resources are devoted to developing efficient procedures, it is not possible to eliminate all operational risks.

Strategic and business risk

The risk to current or prospective earnings arising from inappropriate business decisions or inadequate future business strategies in relation to the operating environment. The risk is, usually, caused by inflexible cost structures, changes in the business environment, Government or international regulatory decisions, client’s behaviour and technological change, and Group-specific factors such as poor choice of strategy. The risk includes strategic risk, business risk, as well as environmental, social and governance risks

Reputation risk

The risk of loss resulting from reputational damage to the Group’s image caused by a negative media coverage, compliance failures, litigation or underperformance. Such damage may result in a breakdown of trust, confidence and business relationships, which may impair the Group’s ability to retain and generate business.

H.3 Risks related to the Notes

Credit Risk

The Notes bear the credit risk of the Issuer. Investors should be aware that they may incur losses should the Issuer fail to satisfy the terms of its obligation to making timely principal and interest payments.

Deferral of interest

Any actual or anticipated deferral of interest payments will likely have an adverse effect on the market price of the Notes. As a result of the interest deferral provision of the Notes set out in Condition 6.6, the market price of the Notes may be more volatile than the market price of other debt securities on which interest accrues that are not subject to such deferral and may be more sensitive generally to adverse changes in the Issuer’s financial condition.

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• The Agency Agreement;• The Noteholders’ Representative Agency Agreement;• The Audited Financial Statements of the Issuer for financial years ended 30th June 2015, 30th June 2016 and 30th June 2017; and• The unaudited quarterly interim report of the Issuer for the first quarter to 30 September 2017.

In addition, this Prospectus will be available for viewing on the website of the Issuer: www.mcbgroup.com. All documents will be published in English.

K. CORPORATE INFORMATION

Issuer MCB Group Limited

Business Registration number C13117853

Registered office Sir William Newton Street, Port-Louis, Mauritius

Company Secretary MCB Registry & Securities Ltd, Sir William Newton Street, Port-Louis

Banker The Mauritius Commercial Bank Limited

Auditors PwCChartered Accountants18 CyberCity, Ebène, Réduit

Noteholders’ Representative La Prudence (Mauricienne) Assurances Limitée2nd Floor, Barkly Wharf, Le Caudan Waterfront, Port Louis, Mauritius

Registrar, Calculation, Transfer and Paying Agent

MCB Registry & Securities LtdSir William Newton Street,Port-Louis

Arranger MCB Capital MarketsSir William Newton Street, Port-Louis

Sponsoring Broker/ Investment Dealer

MCB Stockbrokers Ltd Sir William Newton Street, Port-Louis

H.5 General Considerations

Risk factors relating to Real Estate

The proceeds from the Issue are being raised to finance, amongst others, the COVIFRA Transaction. Although the transaction has been structured to mitigate the risks inherent to the hospitality industry, a slowdown could affect the rental income received by MCBRA. To the extent that MCBRA may invest in other commercial real estate sectors or embark on other investment strategies, it will be exposed to the risks inherent to these sectors. Typically, these risks relate to the general economy and the tenants’ ability to pay the rent.

Force majeure

An event of force majeure is an event which is not within the control of the party affected, which that party is unable to prevent, avoid or remove and shall include war and acts of terrorism, riot and disorders, natural catastrophes and others. Force majeure events do not include economic downturn, non-availability or insufficient or lack of financing on the part of the Issuer. The occurrence of a force majeure event may have a material impact on the Issuer’s business.

Forward-looking statements

Certain statements in this Prospectus are forward-looking in nature. These statements include, amongst other things, discussions of the Issuer’s business strategy and expectation concerning the Issuer’s position in the Mauritian economy, future operations, profitability, liquidity, capital resources and financial position. All forward-looking statements are based on estimates and assumptions made by the Issuer `and third party consultants that, although believed to be reasonable, are subject to risks and uncertainties that may cause actual events and the future results of the Issuer to be materially different from that expected or indicated by such statements and estimates and no assurance can be given that any of such statements or estimates will be realised. In light of these and other uncertainties, the inclusion of forward-looking statements in this Prospectus should not be regarded as a representation or warranty by the Issuer or any other person that the plans and objectives of the Issuer will be achieved.

I. MAURITIUS TAXATION

Information on taxation given below is a summary of certain tax considerations under the laws of the Republic of Mauritius as at the date of this Prospectus. It is not intended to be a complete discussion of all tax considerations and Investors should consult their lawyer, accountant, or investment advisor with regard to legal, tax, and related matters concerning their investment.

• Income Tax

Tax treatment of Interest for Notes listed on the Official Market of the SEM

Interest paid by the Issuer to a Noteholder which is a resident company will be subject to income tax at the current rate of fifteen percent (15%) p.a. Interest paid by the Issuer to a Noteholder who is an individual, société, succession or non-resident company, will be exempted from income tax.

Where interest is paid on listed Notes to a Noteholder other than an individual, société, succession or a company, the Issuer (acting through the Agent) will be required by the Income Tax Act to deduct income tax at source at the current rate of fifteen percent (15%) p.a. (subject to any double taxation agreement in force between Mauritius and the foreign country where the Noteholder is resident).

• Stamp and registration duty

No stamp or registration duty is payable on the issue, redemption or transfer of Notes.

• Capital gains tax - Gains derived by a Noteholder which is an individual or société resident in Mauritius from the sale of Notes are treated as capital gains and are not subject to tax.

- Gains derived by a Noteholder which is company resident in Mauritius from the sale of Notes held for a period of six (6) months or more, are considered as capital gains and are not subject to tax. Gains derived by a Noteholder which is company resident in Mauritius from the sale of Notes held a period of less than six (6) months are subject to income tax if these are held as trading assets. Where the Notes are held as fixed assets, gains/losses derived from the disposal are treated as capital gains/losses. - Gains made by a Noteholder who is not a resident in Mauritius are not subject to income tax in Mauritius.

J. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection by Prospective Investors (and the general public) at MCB Registry & Securities Ltd, Sir William Newton Street, Port-Louis during normal business hours on any weekday (excluding Saturdays, Sundays and public holidays) between the Offer Start Date and the Offer End Date:

• This Prospectus;• The Constitution

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9-15 Sir William Newton StreetPort Louis - Republic of MauritiusT: (230) 202 5000F: (230) 208 0248E: [email protected]