REPORT 2017 ANNUAL VIVO ENERGY MAURITIUS
VIVO ENERGY MAURITIUS ANNUAL REPORT 2017
Vivo Energy Mauritius VivoEnergyMtius Cover2018_Choisi.pdfCover2018_Choisi.pdf 2 24/9/18 4/9/18 5:09 5:09 PM PM
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K K Who we are 3 Our Vision 4 Our Values 5 Chairman’s Message 6 Managing Director’s Report 8 Strategic Review 12 Review of Operations 13 Retail 13 Commercial 14 Aviation 14 Marine 14 Liquefied Petroleum Gas (LPG) 14 Lubricants 15 Customer Service Centre 15 Product Supplies and Distribution 16 Human Resources 16 Community Investment 17 Health, Safety, Security and Environment 17 History of Vivo Energy in Mauritius 18 Our Shareholders 19 Financial Statements 20 Directors’ Report 21 Secretary’s Report 24 Corporate Governance Report 26 Statement of Compliance 53 Independent Auditor’s Report 54 CONTENTS Income Statement 61 Statement of Comprehensive Income 62 Statement of Financial Position 63 Statement of Changes in Equity 64 Statement of Cash Flows 65 Notes to the Financial Statements 66 Notice of Meeting of Shareholders 111 Proxy Form 113
Vivo Energy Mauritius Limited Annual Report 2017 1 WHO WE ARE A strong and growing presence across Africa
Focused on fuelling Africa’s future, we make our customers’ lives easier and their experience with us more convenient, enjoyable and rewarding. We offer high-quality products and services to our customers, setting new standards for safety, innovation and service, wherever we operate.
Vivo Energy is the company behind the Shell brand in Africa and is jointly owned by Vitol and Helios Investment Partners. The company has a strong and growing retail presence in countries across Africa.
It sources, distributes, markets and supplies Shell’s high-quality fuels and lubricants to retail and commercial customers across the continent. Vivo Energy was established on 1st December 2011 to distribute and market Shell-branded fuels and lubricants. Vivo Energy operates in Retail, Commercial Fuels, Marine, Aviation (in partnership with Vitol Aviation), Liquefied Petroleum Gas and Lubricants in Mauritius. The Shell brand has been present in Mauritius since 1905.
Vivo Energy Mauritius Limited (VEML) is a public interest entity as defined by law. It employs 124 people, operates 47 service stations under the Shell brand and has access to 41,191 metric tonnes of fuel and 4,175 metric tonnes of LPG storage capacity.
Ownership and our shareholders’ commitment Vivo Energy is jointly owned by the energy and commodities company Vitol and the Africa focused private investment firm Helios Investment Partners Their commitment is to: • invest to grow, • enhance the Shell brand and • drive performance through local accountability. INTRODUCTION
Vivo Energy Mauritius Limited Annual Report 2017 3 Review of Operations
OUR VISION Becoming Africa’s most respected energy business OUR VALUES
We are judged by how we act and our reputation is upheld by how we put into practice our core values of honesty, Our vision is to become Africa’s most respected energy business. integrity and respect for people.
To become Africa’s most respected energy business is not an end in itself. It is the logical consequence of doing things the These values underpin all the work we do and are the foundation of our business. We always strive to uphold them, in right way, realising the full potential of our people and our business partners, and creating a new benchmark for quality, whatever situation we find ourselves in. Indeed, they are crucial to our success and growth as a company, and to achieving excellence, safety and responsibility in Africa’s downstream energy marketplace. our vision.
We know that respect is earned and that actions speak louder than words. We strive constantly to behave ethically, These core values are encapsulated in our General Business Principles and Code of Conduct, which outline clear, responsibly and honourably in everything we do. We take care of our people, our customers and the local communities concrete and detailed principles and ethical actions by which we should conduct ourselves, and drive the behaviour and the environment in which we operate. expected of every employee, in every Vivo Energy operation, at all times.
We meet the highest international Health, Safety, Security and Environmental (HSSE) standards. We continue to invest We employ a diverse group of people and value the benefits this brings. We respect the human rights of our employees in our operations, building stronger partnerships and implementing world-class safety practices. We set an example for and strive to provide them with safe working conditions, promote the development of their talents and give them others to follow. channels to report concerns.
Above all, we grow our business by hiring, training and motivating the best local people, sharing the rewards of success We also firmly believe in the fundamental importance of trust, openness, teamwork, professionalism and pride in what and investing in the communities in which we operate. we do.
4 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 5 ReviewChairman’s of Operations Message
Dear Shareholders,
Following my recent appointment as My focus as Chairman will be on Chairman of the Board of Directors of taking advantage of VEML’s distinctive Vivo Energy Mauritius Limited (VEML) combination of experience and in May 2017, I am pleased to present innovative capability, where expertise the Company’s annual report and is captured and applied to new financial statements for the year ended technologies that generate more value 31 December 2017. for our customers and shareholders.
VEML continued to perform solidly in I would like to thank my other board 2017, with sales increasing by Rs 1.37 members for their service, and billion (15%) between 2016 and 2017. particularly pay tribute to our previous Chairman, Mr Christian Chammas, With a continued challenging economic for everything he has done for our environment in 2017, VEML managed company during his period as Chairman. to maintain its competitive advantage and stayed ahead of competition, with It is gratifying to see the management almost all parts of the business growing team, led by Managing Director Kiran volumes compared to the previous Juwaheer, relentlessly exploring new year. Only Marine volumes were less opportunities and addressing the than the previous year, attributed to challenges for the business. I would like an exceptional performance in this to thank them and all the staff of VEML sector during Q1 2016 and significant for their hard work, dedication and
MESSAGE competitive intensity. contribution to our success.
Despite these volume increases, 2017 With such a strong team in place, and profit decreased by Rs 41 million the values that employees and the (-13%) compared to the previous year. management continue to demonstrate The difference is largely attributed to at Vivo Energy Mauritius, I am highly Marine volume loss and the negative optimistic that they will take the impact of exchange rate losses, due to company to even greater heights the declining dollar versus the rupee. and one step closer to achieving Vivo Energy’s vision of becoming Africa’s VEML has continued to invest to most respected energy business.
CHAIRMAN’S become more efficient, strengthen and grow the existing business and build Thank you for continuing to put your the reputation of the company with faith in us. customers and other stakeholders. The company has an excellent track record, and has consistently performed well David Mureithi over recent years. Chairman
6 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 7 ManagingReview Director’s of Operations Report
2017 was a good year for VEML overall, In the regulated inland environment, despite the economic growth of the we finally obtained a slight margin country being less than expected. The increase in August 2017, although we company faced many challenges, yet were justifiably expecting a higher we seized new opportunities with margin review. Still, this increase vigour to further grow the business. helped the company in mitigating the effect of costs hikes. Economic environment The inland market continued to We kept investing by opening a quick grow at a healthy but slow rate, service restaurant at Arsenal, a shop although some sectors such as the at Relays in Quatre-Bornes and a new Construction and Transport industries station at Diolle junction in Vacoas. lagged behind. Retail customers With regard to the international Retail customers enjoy convenience, market, the increase in the number of and are now looking to do more than tourists and the signing of new airspace just refuel when they visit our service agreements had a direct impact on the stations. We continued on our journey
REPORT number of flights to Mauritius in 2017. of innovation and convenience to This resulted in the Aviation industry respond to customer demand, and growing by 7%. as a result, more and more of our forecourts are becoming one stop In parallel, the partial liberalisation shops. of marine fuel imports, coupled with measures to make port dues more After the launch of our loyalty card competitive, have boosted marine in 2016, we took a quantum leap traffic. There has been a resulting and introduced an online shopping increase of 40% in bunkering demand, site. With ‘welcome online’, we offer which has been positive for the our customers the opportunity to
MANAGING country. place orders for groceries, fresh fruits and vegetables online and collect Business performance their products from a Shell service The economic environment was station at their convenience, and at a DIRECTOR’S favourable for the Marine business competitive price. which gave VEML more means to compete in the regional Marine We continued incentivising our industry. At the same time, there have loyal customers and making them been more players in the Mauritius come back for more. SmartClub sea territory resulting in fiercer members were rewarded with unique competition. For this reason, we were experiences. Many members won not able to repeat the previous year’s five-star treatments in a luxurious spa performance. and one won an Italian kitchen, over
8 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 9 Managing Director’s Report
and above redeeming their points for young graduate joined under the projects in Mauritius since 2012, when other gifts. Youth Employment Programme. The the company became part of Vivo company also hired three interns for Energy. Health, Safety, Security and short term assignments and helped Environment (HSSE) them develop the skills they need I extend my warm welcome to the VEML scored good ratings in all HSSE and acquire on-the-job experience. new Chairman of the Board, Mr David audits carried out in the company in Career opportunities at international Mureithi, who is far from new to the 2017. We obtained a fair rating in the level were offered to Mauritians and in organisation. As EVP East and South Distribution Operations Review and 2017, ten employees worked for the region, he is a member of the Vivo we successfully completed an external Vivo Energy Group, across the African Energy Management Team, and has review in corporate insurance. continent. worked closely with Mauritius for a After the successful ISO 9001-2015 number of years to drive the company certification obtained in 2016, we Community investment forward. took great pride in obtaining the On the social front, VEML rolled out OHSAS 18001 certification only a few a number of community investment I would like to express my appreciation months later. initiatives. Notable ones include Cite to the directors for their invaluable Zen, an educational programme contribution. As well as we did in the audits, our on road safety designed for school ‘Goal Zero’ objective was negatively children and run in collaboration To the employees of VEML, I would like impacted by one medical treatment with the Ministry of Education; Vivo to say thank you for their tremendous case in August 2017. One contracted Energy Youth Day, an initiative to help efforts and hard work in getting us to employee was slightly injured at one young adults prepare for working life, where we are. It is much appreciated. of our service stations, which kept run with the help of an NGO; the him away from work for a week. The sponsorship of needy students from We will capture new opportunities for company’s number of days without College Technique Saint Gabriel; the long-term growth, while meeting the incident was thus reset to zero. development of a video on road demands of our customers, and will safety to encourage behavioural make 2018 another good year in all We are more than determined to change among motorists; the donation areas of the business. renew our focus on HSSE in all aspects of books to the best students of of our business and our activities, with the University of Mauritius; and the Kiran Juwaheer the objective of reaching the next cleaning of the area in the vicinity of Managing Director 1,000 days goal zero milestone and our office. beyond. All these activities show the continued People commitment of the company to None of our success would be support the community. possible without our people. Learning and development remained a top Outlook priority. Each employee received an To close, I would like to thank our average of three training days during outgoing Chairman, Mr Christian the year. In 2017, VEML recruited Chammas, for his guidance and the eleven new employees and one immense support he has given to
10 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 11 REVIEW Retail In 2017, a number of marketing activities The highest quality products and a were organised to reward members world-class retail experience. of the SmartClub for their loyalty. Customers continued to accumulate 2017 saw the opening of a new service points, which they redeemed for station in Diolle, which contributed to rewards during the year. Besides, thirty further growing our well distributed Shell FuelSave customers enjoyed network under the Shell brand across unique experiences at a 5-star spa, as the country. Shell Relays service station well as extra points on their SmartClub STRATEGIC
Review in Quatre Bornes was also upgraded Loyalty Card. One customer won a fully with the opening of a new shop under equipped kitchen for our Christmas the ‘welcome’ brand. campaign.
Our customers continued driving Convenience Retail and other Non- longer distances with better efficiency Fuel Retail and more engine protection thanks to our differentiated fuel, Shell FuelSave. We have a major programme to create new and upgraded convenience Our focus on continuous improvement retailing outlets, so that our sites are ensures that our service stations are increasingly offering a full range of Of Operations clean, efficient and welcoming with facilities and services, including shops, all offering high-quality Shell fuels and bakeries, cafes, quick service restaurants, lubricants. We also offer LPG under the and other non-fuel retail services such brand names Shell Gas and Shell Gas Lite. as car washes, express servicing and tyre services.
12 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 13 Strategic Review Strategic Review
Review of Operations (continued) Review of Operations (continued)
In our effort to improve our offer on We continued to service customers customers receive world-class service a wide distribution network of around account managers and rigorous safety good conditions. In addition, we have service stations, VEML continued to across all economic sectors such and are assured of the highest standards 900 resellers throughout Mauritius and standards. introduced the new Shell coolant and partner with reputable companies to as transport, construction, textile, in fuel quality. Rodrigues. Shell Brake fluid Dot 3 and 4 on the offer new services, with the aim of agriculture, manufacturing, power, 2017 was a good year for the LPG market, which are available on Shell making our service stations one-stop hotels and restaurants. We invested in Compared to 2016, industry volume LPG is mainly sold to domestic customers, business, with volumes and margin on service stations and at authorised shops. We opened the first KFC outlet the upgrade of our facilities at customer grew by 7%, supported by the increasing where it is used as a safer, cleaner and plan. resellers. on a service station at our Shell station premises. VEML maintained its high air traffic activity. VEML achieved above more efficient fuel for cooking and in Goodlands. By the end of 2017, the HSSE standards through regular training industry growth and remained a key heating. It is also sold to commercial Lubricants The results for 2017 were positive company was operating convenience and toolbox talks with its customers, player in the Aviation industry. customers to provide energy for textiles, Providing a full range of lubricants thanks to new customers who put their shops and quick service restaurants on who highly value these initiatives. hotels, livestock breeding, catering, for automotive, marine and trust in the Shell brand and growth in 18 sites. Marine restaurants and industries. industrial applications. different sectors of activities such as The market remained relatively flat Providing Marine Fuel Oil, Marine Business to Consumer, Retail, Transport The year saw the launch of our new in 2017 as some major projects have Gasoil and Shell Lubricants. Our LPG is stored, distributed and We offer our customers the very best and Construction and Marine. online supermarket, selling groceries, been delayed. The limited growth delivered under two widely recognised of Shell’s high quality lubricant products and healthy fruits and vegetables. opportunities through new projects 2017 was a difficult year compared to and trusted brands: Shell Gas and Shell and services – including supply reliability, We will continue to be innovative in Customers only have to click and resulted in more pressure on margins. 2016 for the Marine business due to a GasLite, the lightweight LPG cylinders technical expertise and unmatched 2018 by introducing other products to collect their products from one of the Yet, we have been active securing and change in the industry landscape and its for domestic use. Easy to transport customer service. Designed to provide meet the demands of our customers. twelve Shell service stations which renewing several long-term contracts new challenges, which resulted in lower and to store, LPG has long been a improved engine performance, extra serve as pick-up points. ‘welcome’ is with customers with whom we volumes and margins. competitive source of energy and for responsiveness, reduced engine Customer Service Centre Vivo Energy’s own bespoke customer- entertain strong relationships. domestic applications, it is cheaper than noise and lower maintenance costs, A one-stop shop for our customers. focused convenience retail brand. Although Port Louis is still not as electricity. Shell lubricants offer our customers Aviation competitive as its direct competing the highest levels of performance, Through our call centre, we provide 2018 looks promising for further Supplying products and related ports (Singapore and South Africa), In recent years, the market has become quality and efficiency in all sectors basic services, such as order taking from growth through new offers and the services to the aviation industry. Vivo Energy Mauritius has however more competitive. Despite this, the of applications such as Automotive, retail and commercial customers for further development of our retail moved towards better supply, following company has managed to limit the Construction, Agriculture, Transport, fuels and lubricants, complaints handling, network. The Aviation business maintained its closely the international market trend. impact on its LPG business. VEML Manufacturing, Power, Marine, Retail invoicing and responding to queries on growth trend in 2017 compared to continually strives to deliver better, and others. customer accounts. Our services also Commercial previous years as we continue to reap Vivo Energy is looking forward to safer and more reliable ways to meet include debtor follow up, maintenance Supplying transport and industrial the benefits of strategic initiatives contribute to developing Mauritius as the energy needs of customers, while According to Kline and Company’s calls management, lubricants and Liquefied fuels, lubricants and greases to implemented during the recent years. a petroleum and bunkering hub, in line guaranteeing a continuous and regular 15th Edition ‘Global Lubricants Industry: Petroleum Gas delivery scheduling and business-to-business customers. We improved on operational efficiency with Government Vision 2030, and we supply of LPG to customers. In addition, Market Analysis and Assessment: 2016- telesales and telemarketing support. and performed above our forecasts are consolidating our position as a key the company provides a home delivery 2026 report, Shell Lubricants has been In 2017, VEML further strengthened its both in terms of volumes and margins. player in the industry. service in selected regions for 12 kg recognised as the global market leader Calls are handled by our trained agents position for the supply of fuels, lubricants The industry environment remained commercial and 50 kg cylinders. for 11 consecutive years, marking the who act as business and service focal and greases to business-to-business, challenging with low margin levels still Liquefied Petroleum Gas start of two decades of undisputed points for HSSE, Commercial, Lubricants, largely because we are recognised as prevailing during the tender process. Providing LPG in various cylinder sizes Shell Gas is sold in a variety of cylinder industry leadership. This is the proven LPG, Aviation and Marine. We face an a business partner who focuses on and bulk for domestic, commercial sizes for various applications: 5 kg and recognition of the high quality products ever-growing demand for services, both innovation and value improvement. Our operators are trained to the and industrial applications. 12 kg for domestic purposes, 50 kg that we market, giving our customers internally and externally. highest international standards and for both domestic and commercial peace of mind and hassle-free solutions We successfully secured new contracts our aviation HSSE, procedures and Our growth in the Liquefied Petroleum use, 12 kg for commercial use and to run their business. Besides being the only petroleum thanks to our willingness and ability operations are on par with best in Gas (LPG) sector is based on a deep industrial applications and 12 kg for In 2017, VEML launched the new range company operating such comprehensive to adapt to the changing needs of class world standards. Our aviation understanding of the route to market forklift applications. Our product range of products, Shell Car Care, specifically customer service in the country, we are our business-to-business customers in auditors are Joint Inspection Group coupled with the selection of a strong is backed by our expertise, dedicated developed to keep vehicles clean and in continuously revisiting our processes and every sector. (JIG) accredited and ensure that all our distributor, Gas Transport Limited, and
14 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 15 Strategic Review
Review of Operations (continued)
Employees, who want to make a Health, Safety, Security and engaging communities, motivating our difference and have the energy, Environment employees and growing our business. We professionalism and drive to achieve Our commitment to achieving and are diligent in reporting incidents and more and motivate others, are given maintaining the highest international identifying potential incidents. It is part learning and growth opportunities and Health, Safety, Security and the of a company-wide culture that extends outstanding performance is recognised. Environment (HSSE) standards is at to employees, contractors and partners the heart of our business and is a key alike. For our employees, adherence to Community Investment differentiator for Vivo Energy in Africa. HSSE policy and practice is a performance At Vivo Energy, we want to make Being strong in HSSE is not an objective target linked directly to their pay. a real and lasting difference to the that sits apart from our overall ambitions. communities where we operate and It is an integral and essential part of our In 2017, the company celebrated its have chosen to focus on three key business plan. Safety Day, a significant milestone in the areas of community investment – road company’s journey to build a stronger safety, education and environment. We know that our retail, commercial and safety culture in its pursuit of Goal Zero marine customers recognise and value of no harm to people or the environment, Our community investment the standards we set ourselves in HSSE under the theme “Potential Incidents that programmes matter to us because we and social performance. We also know matter make all the difference’ so that employ local people and serve local that the maintenance and advancement even more incidents can be prevented businesses and individuals. We want of these standards will play a key role in before they occur. striving to maintain high performance Distribution to retail outlets, industrial recognition for team and individual to create lasting social and economic winning new customers, building loyalty, through focus and emphasis on people customers and the airport is effected by performance, and the implementation of benefits for these communities and development and staff motivation. bulk delivery vehicles for white oils and a professional learning and development engage with them to earn their respect black oils while Bulk LPG is delivered structure have all been instrumental in and trust. Product Supplies and through specialised vehicles. Deliveries the company’s success. HSSE performance 2015-2017 Distribution to marine customers is conducted either In 2017, we held a Road Safety Day 2015 2016 2017 VEML owns and operates two depots, through bunkering barge or through The company is very culturally in all primary schools in the country Fatality zero zero zero namely Roche Bois and Causeway and pipelines at quays. diverse, which helps to bring different and launched a video ‘La Parole aux Total Recordable Cases zero zero one operates three other depots on behalf of perspectives. Enfants’ where school children shared Total Recordable Occupational Illness Frequency zero zero zero the oil industry, one at Fort William for Human Resources their experiences and observations on Exposure Hours (‘000) 783 645 763 the storage of fuel oil on behalf of the At Vivo Energy, we are committed to the In 2017, VEML recruited eleven new road safety to help sensitize their peers. Lost Time Injury zero zero zero Central Electricity Board, the second one continual development of our people. employees and one young graduate Given that road safety remained a major Spills zero zero one in Rodrigues Island, and the third, a joint We understand that, as a business, we joined under the Youth Employment concern for the country in 2017, we Kilometres driven (‘000s) 1,614 1,238 878 venture LPG storage, ESCOL in which can only be as good as the individuals Programme. The company also hired also developed a 3D animation video, VEML owns 50% equity. we employ, and for that reason we three interns for short-term assignments, targeting motorists this time, with focus actively seek out people with the helping them develop the skills they need on the consequences of speeding. The company holds 23.5% of the shares rare combination of skill, experience, and acquiring on-the-job experience. of Mer Rouge Oil Storage Terminal responsibility, commitment and ambition Our ‘Vivo Energy Youth Day’, ran in Company Limited (MOST), a Joint that will help make VEML a respected Capability and skills development will partnership with the NGO Junior Venture set up with the oil companies and successful company and an employer always be a top priority with a substantial Achievement, was once again helpful to and State Trading Corporation to build of choice. amount being invested in learning and secondary school students in preparing and operate an additional 25,000 metric In our first six years, the recruitment development opportunities for our and developing them for the workplace. tonnes motor gasoline depot in Mer of many high-quality people, combined people. The average training days per Rouge. with a strong focus on reward and person in 2017 was three days.
16 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 17 Our Shareholders
agreement. In 1976, Shell took over its Mauritius Limited, in exchange for shares Vitol own business management in Mauritius, in the latter. This change in corporate • Largest crude & oil products trader in directly promoting its activities, engaging structure underlines Shell’s confidence the world, founded in 1966 its own staff and opening its own offices. in the future of Mauritius. In addition, • Holds investments in a number of As a result of a decision made by the the newly incorporated company was midstream and downstream companies Shell and BP groups to deconsolidate floated on the Mauritian Stock Exchange including OVH Energy, Petrol Ofisi, Varo their joint business interests in Africa in and the Mauritian public currently owns Energy, Viva Energy Australia and VTTI 1982, BP Ocean Islands Limited’s activities 22.85% of its shares. in Mauritius were taken over by Shell to Helios Investment Partners become Shell Ocean Islands Limited. During its presence in Mauritius, the • Africa-focused private equity firm, Both The Shell Company of the Islands company has built up a comprehensive established in 2004 in London Limited and Shell Ocean Islands Limited business network in the energy scene, • Manages funds totalling c.$3bn with were given the status of a Public Limited backed up by strong infrastructural investments in a number of companies Company (plc) as a result of a change in investments, good technical knowhow including OVH Energy, Helios Towers British Company Law. On 1 January 1991, and professionalism. VEML accounts for a Africa, Crown Agents, GB Foods Africa the businesses of the local branch of both third of the imported energy demand of and Interswitch The Shell Company of the Islands plc and the island and is present in all sectors of Shell Ocean Islands plc were transferred this business activity. to a local incorporated company, Shell Vivo Energy is the company behind in Mauritius in 1905 through its managing the Shell brand in Africa and is jointly agents, Blyth Brothers and Company owned by Vitol and Helios Investment Limited. As such, Shell was the first Partners. The company was established international oil company to set up on 1st December 2011 and has a strong business on the island and its close and growing presence across Africa. It partnership with Blyth has been the sources, distributes, markets and supplies cornerstone of a successful development. Shell’s high-quality fuels and lubricants to Most of the sites of current service retail and commercial customers across stations, depot and customer portfolio
History the continent. were acquired during this time.
Vivo Energy operates in Retail, As part of a regional corporate Commercial Fuels, Marine, Aviation reorganisation in the late 1950s, the (in partnership with Vitol Aviation), Shell Company of East Africa was Liquefied Petroleum Gas and Lubricants replaced by the Shell Company of the in Mauritius. The Shell brand has been Islands Limited, a branch of a company
in Mauritius present in Mauritius since 1905. VEML incorporated in the United Kingdom. employs 124 people, operates 47 retail After the irreversible turmoil on the stations under the Shell brand and has international oil scene in the early access to 41,191 metric tonnes of fuel 1970s and recognising the need for oil and 4,175 metric tonnes of LPG storage companies to have their own identity capacity. and direct dialogue with Government, Of Vivo Energy Of Vivo Shell and Ireland Blyth Limited, who was The Shell Company of East Africa then the oldest Shell agent in the world, Limited started its marketing operations negotiated the terms of the agency
18 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 19 Review of Operations
The directors present their annual Results and Dividends report and the audited financial The Company’s profit for the statements of Vivo Energy Mauritius year is Rs 270,431,000 (2016 Rs Limited (the “Company”) for the year 311,573,000). ended 31 December 2017. The financial statements of the Principal Activities Company for the year ended 31 The Company’s principal activity is the December 2017 are set out on pages marketing and distribution of petroleum 61 to 110. The auditor’s report on
Report products. Its joint venture, Energy these financial statements is on pages Storage Company Limited, is involved 54 to 59. in the provision of LPG terminal usage
Directors’ facilities. The other joint venture, Mer The Company declared and paid the Rouge Oil Storage Terminal Co. Ltd, is following dividends in 2016 and 2017: not yet operational.
Dividend per share FINANCIAL 2017 2016 Rs Rs Declared on: 24 March 2016 (2015 final dividend) - 1.90 13 May 2016 (2016 interim dividend) - 1.00 12 August 2016 (2016 interim dividend) - 1.00 14 November 2016 (2016 interim dividend) 1.00 24 March 2017 (2016 final dividend) 2.45 12 May 2017 (2017 interim dividend) 1.00 14 August 2017 (2017 interim dividend) 1.00 13 November 2017 (2017 interim dividend) 1.00 STATEMENTS 5.45 4.90
For the year ended 31 December 2017, the Company made a profit of Rs 9.22 (2016 – Restated Rs 10.63) per share and declared and paid an interim dividend of Rs 3.00 (2016 - Rs 3.00) per share during the year.
20 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 21 Company law requires the directors to Mr Christian Chammas (resigned on 13 Service Contracts Donations prepare financial statements for each November 2017) Messr Pawan K Juwaheer have service During the year, the Company made financial year which present fairly the Mr David Mureithi (appointed on 12 contracts without an expiry date. donations of Rs 11,902 (2016 – Rs financial position, financial performance May 2017) Service contracts of other directors 12,185). and cash flows of the Company. In Mr Johan Depraetere (resigned on 30 are terminable with a 3 months’ notice preparing those financial statements, March 2017) period by either party. Auditor the directors are required to: Mr Pawan K Juwaheer The fees charged by the auditor, Mr Patrick Crighton (resigned on 13 Directors’ Interests PricewaterhouseCoopers, for audit and • select suitable accounting policies and November 2017) The directors have no interests in the other services were: then apply them consistently; Mr Jean-Michel Arlandis (appointed as ordinary share capital of the Company, • make judgements and estimates that executive director on 13 November either directly or indirectly. 2017 2016 are reasonable and prudent; 2017). Rs’000 Rs’000 • state whether International Financial Mr Roger K F Leung Shin Cheung Three Year Summary Reporting Standards have been Mr Tim Taylor A three year financial summary is Statutory audit 1,700 1,800 followed, subject to any material set out in Note 29 to the financial Audit related services:- departures disclosed and explained Contracts Of Significance statements. Quarterly reviews 612 600 in the financial statements; and The Company entered into the Reporting to Group Auditors 231 231 • prepare the financial statements on following contracts with related parties: Issuing volume certificates 58 58 the going concern basis unless it is inappropriate to presume that the (a) with effect from 01 December 2011, Company will continue in business. a licensing agreement for the branding The audit related services consist of (i) quarterly review of published financial of retail automotive fuel sites and other statements, (ii) reporting to the group auditors and (iii) issuing volume certificates. The directors confirm that they have assets with Shell Brands International PricewaterhouseCoopers has indicated its willingness to continue in office and will
Responsibilities complied with the above requirements AG; and be automatically reappointed at the Annual Meeting. in preparing the financial statements. (b) with effect from 01 January 2014, a contract for the provision of services Approved by the Board of Directors on 23 March 2018 The directors are responsible for with Vivo Energy Africa Services Ltd. and signed on its behalf by keeping proper accounting records which disclose with reasonable accuracy Major Shareholder Mr Roger Leung ) DIRECTORS at any time the financial position of At 31 December 2017, Vivo Energy Mr Pawan K Juwaheer ) the Company and to enable them to Mauritius Holdings BV holds directly ensure that the financial statements 77.15% of the ordinary share capital of
Statement of Directors’ of Statement comply with the Mauritian Companies the Company. No other person holds Act 2001. They are also responsible for 5% or more of the ordinary share safeguarding the assets of the Company capital of the Company. and hence for taking reasonable steps for the prevention and detection of Segmental Analysis fraud and other irregularities. A business segment analysis of sales and results is given in Note 5 to the financial IN RESPECT OF THE FINANCIAL STATEMENTS Directors statements. The directors of the Company since 01 January 2017 and at the date of this report are:
22 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 23 VIVO ENERGY MAURITIUS LIMITED UNDER SECTION 166(D) OF THE COMPANIES ACT 2001
We certify that we have filed with the Registrar of Companies all such returns as are required of the Company under the Companies Act 2001.
Executive Services Limited As per Christian Angseesing ACIS CORPORATE SECRETARY 23 March 2018 Secretary’s Report to the Members of to
24 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 25 REPORT CORPORATE Mauritius Code of Corporate Governance Compliance
The disclosures contained in this report are intended to provide the reader with a description of VEML’s corporate governance policies and practices. The directors firmly believe in and support high standards of corporate governance, which are critical to our business integrity.
GOVERNANCE The Board confirms compliance to the Mauritius Code of Corporate Governance.
26 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 27 Corporate Governance Report (continued) Corporate Governance Report (continued)
Stichting Administratiekantoor VIP Africa II B.V. Vitol Africa B.V. Vivo Energy Holding HIP Oil 2 B.V. HIP Oil B.V. (Netherlands) (Netherlands) (Netherlands) (Netherlands) (Netherlands) The Board of directors of VEML remains management team and is directly stringent when it comes to upholding accountable to the shareholders for the the highest standards of integrity and performance of the Company. transparency in their governance of 13.34% 41.81% 0.44% 41.81% 2.59% the Company. The importance and During the year ended December 31, the value of a balanced interplay 2017, four board meetings were held. between directors, management and shareholders within the Company has The offices of Chairman and Managing Board long been a major principle governing Director were separated on November the conduct of VEML. 17, 2003 in order to align board governance with the Mauritius Code Directors are appointed at the annual of Corporate Governance. A Non- Vivo Energy meeting of shareholders. They hold executive Director occupies the Office 100% Holding B.V. office until they retire or submit their of Chairman and an Executive Director (Netherlands) resignation, unless removed earlier occupies the office of Chief Executive. from office by the annual meeting of The Chairman and Managing Director shareholders. The board delegates the ensure that the members of the board of Directors of day-to-day running of the Company receive accurate, timely and clear to the Managing Director. The board information. delegates operational issues to the
Vivo Energy Investments B.V. 100% (Netherlands) Holding Structure
77.15% 22.85%
Vivo Energy Minority Mauritius Holding B.V. Shareholders (Netherlands)
Vivo Energy Mauritius Limited (Mauritius)
28 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 29 Corporate Governance Report (continued) Corporate Governance Report (continued)
Christian Chammas David Mureithi Johan Depraetere Pawan K Juwaheer (Aged 63) (Aged 54) (Aged 50) (Aged 54)
Profile Chairman and Non-Executive Director Non-Executive Director Non-Executive Director Managing Director
Christian Chammas joined the Group as David Mureithi is the Executive Vice Johan Depraetere has been the Chief Mr. Depraetere has also held roles at Pawan Juwaheer was appointed Managing Chief Executive Officer in January 2012. President for Retail, Marketing and East Financial Officer at the Group since joining McKinsey and Morgan Stanley. His five Director of VEML in January 2012. Mr. Christian has extensive experience in the & Southern Africa, a position he has held in April 2012. His responsibilities include years at McKinsey included three years as Juwaheer studied Mechanical Engineering energy sector and has a deep knowledge of since January 2017. financial control, treasury & credit, IT and a Corporate Finance Analyst, and also one at the University of Manchester Institute Africa and emerging markets. procurement. year in high yield capital markets at Morgan of Science and Technology, UK. He joined Mr. Mureithi joined the Group in May Stanley. Shell Mauritius in 1986 and has over the Prior to joining the Group, Mr. Chammas 2013 and previously held the position of Prior to joining the Group, Mr. Depraetere years occupied different positions across of Directors of was at Total for 31 years where he held Executive Vice President for Supply and worked for the Samsung Group in Korea Belgium born, Johan is based in London the business in Mauritius, Tunisia and Kenya, several executive positions in Central Marketing. for nine years, of which he spent four and graduated with an MBA from Harvard before being appointed Country Chairman America, the Caribbean, Pacific and India. Mr. years as a member of the Corporate Business School. of the company in 2006. Mr. Juwaheer is Chammas served as Chief Executive Officer Prior to joining the Group, Mr. Mureithi Auditing team of Samsung Electronics a former Chairman of the Mauritius for the Total group of companies in Nigeria, held various positions at Unilever, including Korea and four years as a Vice President He resigned as board member on 30 Chamber of Commerce and Industry. He Cameroon and Kenya, followed by successive Supply Chain Director for East Africa, in the Chairman’s office focusing on global March 2017. is a member of the National Committee positions as Executive Vice President for the Managing Director for Kenya, Regional performance management and M&A. on Corporate Governance. Total group of companies for Central Africa, Head for East and Southern Africa and Executive Vice President for the Total group Regional Head for West Africa. Mr. Mureithi Mr Juwaheer is a director of Vivo Energy of companies for Caribbean and Central is based in Nairobi, Kenya, and qualified Madagascar Holdings Limited, Energy America, and as Total Group Representative with a BSc in electrical engineering from Storage Company Limited, Mer Rouge Oil for India and Executive Country Chairman the University of Nairobi and an MBA in Storage Terminal Company Limited and for downstream companies. In his last Marketing from the University of Leicester. Barclays Bank Mauritius Limited. role, Mr. Chammas was the Executive Vice President for the Middle East and He was appointed board member on 12 North Africa division of Total’s refining and May 2017. marketing division.
Mr. Chammas is based in London but spends the majority of his time with employees, customers and other key stakeholders in the Group’s businesses across Africa. Mr. Chammas joined Total in 1980 having graduated in 1979 with a degree in civil engineering.
He resigned as Chairman of the board on 13 November 2017.
30 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 31 Corporate Governance Report (continued) Corporate Governance Report (continued)
Patrick Crighton Jean-Michel Arlandis Roger Leung Tim Taylor (Aged 58) (Aged 53) (Aged 71) (Aged 71)
Profile Executive Director and Finance Executive Director and Finance Independent and Non-Executive Independent and Non-Executive
(continued) Manager Manager Director Director
Fellow of the Association of Chartered Jean-Michel Arlandis was appointed Member of the Association of the Tim Taylor holds a BA (Hons) in Honorary Consul of Norway in Certified Accountants, Patrick Crighton Finance Manager for Vivo Energy Chartered Institute of bankers in UK Industrial Economics from Nottingham Mauritius and a past Chairman of the joined Shell Mauritius in January 1987. Mauritius on 1 December 2017. and a fellow member of the Mauritius University in the United Kingdom. He Mauritius Chamber of Commerce and He has since occupied the positions of During his career, Mr. Arlandis has been Institute of Directors, Roger Leung worked in United Kingdom until 1972 Industry. He is a former Chairman of Management Accountant, Legal and Tax the head of Internal Audit Department has been appointed a Director in June when he returned to Mauritius and the National Committee on Corporate Accountant, Treasury and Corporate for two global retailers Kering and 2006. He retired from Barclays Bank in joined Rogers, a leading Mauritian Governance. He has been a member of Directors of Accountant and Credit Manager before Decathlon, a Partner at both Ernst and September 2005 as Regional Corporate Commercial and Services Group. He of the Council of the Mauritian Wildlife being appointed Finance Manager in Young, and Deloitte and also the Head Director. He has been trustee of the became Chief Executive of Rogers in Foundation since 2006 and President 2001. Mr. Crighton is holder of a Masters of Corporate at Efferton Group, an Barclays Employees Pension Fund and 1999 and retired in December 2006. since 2009. He is also a director of Cim in Business Administration from Napier International Investment company in a Director of the Barclays Leasing He became Chairman (non-executive) Financial Services Ltd. University. He has been board member Africa, Europe and Asia. Before joining Company (Mauritius) Limited. He also of Rogers in 2007, retiring in October since January 2005. the company, he was an independent works as a Consultant in business 2012. He is currently Director of Cim consultant and Partner at Agastia restructuring and in performance Financial Services Ltd and Chairman He resigned as board member on 13 Consulting and X-PM. He holds a optimisation. He is a director of the of Scott & Co Ltd. Mr. Taylor is the November 2017 Master’s Degree in Accounting and Mauritius Development Investment Finance, a Master’s Degree in Law and Trust. a Master’s Degree in Political Sciences – Economics and Finance from the University of Toulouse in France. Mr. Arlandis also holds a Post-Graduate Directors’ emoluments Diploma in Business Administration from the IAE, Toulouse and is a Certified During the year ended 31 December 2017, executive directors received Fraud Examiner. an aggregate amount of MUR 24,986,241 (2016 - MUR 21,658,396) as remuneration and benefits from the Company. Out of this sum, MUR He was appointed board member on 9,713,085 is variable and the quantum depends on the performance of the 13 November 2017. company compared to a set scorecard. The non-executive directors received an aggregate amount of MUR 868,320 (2016 - MUR 528,000) as remuneration and benefits from the Company during the same period. The non-executive directors are not entitled to variable pay.
Messrs Juwaheer, Arlandis, Leung and Taylor are ordinarily resident in Mauritius.
32 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 33 Corporate Governance Report (continued)
The VEML management team is responsible for supervising the general course of business of the company and advises the Board of directors.
Nancy Young Shalini Bunwaree-Nagdan Ravi Ramjus
Profile of Profile Human Resources Manager Marketing and Convenience Business-to-Business Manager Nancy Young is the holder of a Retailing Manager Ravi Ramjus, Business-to-Business Master’s degree in Psychology with Shalini Bunwaree-Nagdan is holder of Manager, holds a B.Tech in Mechanical specialisation in Industrial Psychology a degree in Industrial Economics from Engineering from the University of from the University of Bordeaux in the University of Nottingham, UK and Mauritius and a Master’s in Business France. She is also an alumni from the an MBA degree from the University Administration from the Surrey International Institute of Management of Mauritius. Mrs. Nagdan joined Shell European Management School in Development, a business school Mauritius in 2001 as Sector Sales the UK. Mr. Ramjus has occupied based in Lausanne in Switzerland. Manager. In 2005, she was appointed several positions at local, regional She joined Shell Mauritius in 1990 Fuels and Bitumen HSSE Manager for and international levels within the as Assistant Personnel and Services the Indian Ocean cluster after which, company in Engineering, Retail & Manager having worked on a major she became the B2B/B2C Marketing Business Development. In these roles, project with a consultancy firm, Core Manager for Mauritius in 2007. Prior he had the opportunity to drive Services Limited. She currently holds to her appointment as Marketing and several projects such as retail network the position of Human Resources Convenience Retailing Manager in strategic review, payment systems Manager. 2014, Mrs. Nagdan has occupied the and loyalty programs. Mr. Ramjus has
Management Team position of Fuels Sales Manager since also championed the setting up of Krishnen Vencadachellum 2009. various strategic alliances between Retail Manager Vivo Energy and renowned operators Holder of a degree in Mechanical Ashvin Ramdenee in the payment, banking and mobile Engineering from the NIT Allahabad, Supply and Distribution Manager financial industry. Since 1 June 2017, India and a Masters degree in Business Ashvin Ramdenee is holder of a Master he is also responsible for the Aviation Administration from the University of of Engineering degree in Mechatronics business, which now falls within the Mauritius, Krishnen Vencadachellum from the University of Leeds, UK. He scope of the Business-to-Business joined Shell Mauritius in 2004 as Retail joined Shell Mauritius in 2000 as Plant Manager. Engineer and Property Manager. In 2009, and Speciality Engineer. Thereafter, he he was appointed Operations Excellence has worked in diverse sectors within the Coordinator, Network Planner for Group in Engineering, Customer Service, East and South East Africa Terminal Operations, Planning, Supply in 2011, before becoming Chain and Strategy at Local, African Executive Assistant to the and Global levels. Mr. Ramdenee was VP Indian Ocean Islands. Mr. appointed Marine and Aviation Manager Vencadachellum was appointed in March 2015. He then became Supply Retail Manager in 2012. and Distribution Manager in June 2017, while continuing to support the Marine business.
34 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 35 Corporate Governance Report (continued)
The board meets on a regular basis membership. The shareholders elect and has a formal schedule of matters the board members each year at the reserved for it. This includes matters annual meeting. Each director is elected such as approval of the Annual Report, by a separate resolution for a term approval of interim dividends and of one year. The full list of matters recommendation of final dividends, reserved to the board for decision is approval of material contracts and available from the Company Secretary. nomination of candidates for board Board Attendance of board meetings in 2017 In 2017, the attendance of the directors was as follows:
Mar 24 May 12 Aug 14 Nov 13
Meetings 2017 2017 2017 2017 Chairman Mr Christian Chammas (resigned 13/11/2017) X X - X Mr David Mureithi (appointed 12/05/2017) - - X X
Managing Director Mr Pawan Kumar Juwaheer X X X X
Directors Mr Patrick Crighton (resigned 13/11/2017) X X X X Mr Jean-Michel Arlandis (appointed 13/11/2017) - - - X Mr Timothy Taylor X X X X (Chairperson) Mr Roger Leung X X X X Mr Johan Depraetere (resigned 30/03/2017) - - - -
With effect from November 2012, each time the Chairman is not in a position to chair Board meetings, the Chairmanship will be held by an independent director.
Board committees The Board has three standing committees made up of Executive and Non-executive Directors to assist in the discharge of its duties. The committees, which are set out below, meet regularly under the terms of reference set by the board.
As from March 27, 2007 the Nomination and Remuneration committee forms part of the Corporate Governance committee.
36 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 37 Corporate Governance Report (continued)
Terms of Reference of Audit and Risk Committee (ARC) (continued)
board of directors, management, and all such management accounts, financial • Pre-approve all audit services fees the external and internal auditors. The statements, internal and external audit and terms as well as review policies duties and responsibilities of a member reports and internal control evaluations for the provision on non-audit of the audit and risk committee are in that are available. services by the external auditors. addition to those set out for a member The chairman of the committee or The internal audit manager reports of the board of directors. another member of the committee functionally to the chairman of the audit shall attend the board meeting at which and risk committee (and administratively Meetings the financial statements are approved. to the General Manager). Only committee members will attend The committee should meet with in- meetings. A quorum of any meeting house legal adviser on a regular basis Main responsibilities shall be two (2) members. (if one is appointed). Meetings with The basic responsibility of the members The audit and risk committee may outside legal adviser should be held if it of the audit and risk committee is to invite such other persons (e.g. other is deemed necessary. exercise their business judgement to directors, the General Manager, head act in what they reasonably believe to of finance, head of internal audit and Board authority (et al) be in the best interests of the Company external audit senior partner) to its The board authorises the audit and and its shareholders. In discharging that meetings, as it deems necessary. risk committee, within the scope of its obligation members should be entitled The external and internal auditors shall responsibilities to: to rely on the honesty and integrity of be invited to make presentations to the • Investigate any activity it deems the Company senior executives and its Terms of Reference of Audit and Risk Committee (ARC) audit and risk committee as appropriate. appropriate, outside advisors and auditors, to the At least once a year, the committee shall • Appoint independent advisers and fullest extent permitted by law. Constitution Objectives meet with the head of internal audit and professionals (accountants, lawyers The ARC, established by the Board The audit and risk committee shall senior partner of the external auditors and so on) as it deems necessary to Key responsibility in respect of the Company, shall consist of at assist the board in monitoring and without the presence of executive carry out its duties, of financial reporting least two but not exceeding three overseeing its financial responsibilities. management to discuss any matters • Instruct any officer or employee of The committee shall: Non-executive Directors (NED). The Its main objectives shall be to: that either the committee or these the Company to attend any meetings • Review the interim financial Chairperson of the committee shall be Oversee the integrity of the financial two parties believe should be discussed and provide pertinent information as statements, annual financial
Terms • an independent NED (as defined by reporting process and ensure the privately. The committee shall meet necessary and appropriate, statements and preliminary the Code of Corporate Governance of transparency and performance of as often as it determines necessary or • Have unrestricted access to members announcements prior to their release, Mauritius). published financial information. appropriate but not less frequently than of management, employees and • Meet with management internal Each member shall be financially • Review the effectiveness and quarterly. The committee chairman relevant information, auditors and the external auditors literate. At least one member must performance of the Company’s shall convene a meeting upon request • Establish procedures for dealing with to review the financial statements, have accounting or related financial internal financial control and risk of any committee member who concern of employees regarding the critical accounting policies and expertise. Members shall be appointed management system. considers it necessary. The secretary accounting, internal controls and practices, and the results of their for two (2) years term of notice so • Evaluate the work of the internal of the audit and risk committee shall auditing matters, audit, long as they remain a director of the audit function and of the external be the Company secretary, or such • Make recommendations to the • Ensure that significant adjustments, Company. auditors. other person as nominated by the board in relation to the appointment, unadjusted differences, disagreements
Of Reference Audit and risk committee members • Review the Company’s process board. The secretary of the committee termination and remuneration of with management and management shall not serve simultaneously on the compliance with legal and regulatory shall circulate the minutes, agenda, and external auditors and evaluate the letter are discussed with the external audit committee of companies in the requirements affecting financial background materials of meetings to work of the latter, auditors; and same field as the present Company reporting and, if applicable, its code the members of the committee and • Review the performance of the • Review the other sections of the and of more than two other public of business conduct. to the chairman of the board at least a external auditors and exercise final annual report before its release and companies without the approval of the The ARC committee will maintain week before the meeting. approval on the appointment or consider whether the information full board. effective working relationships with the The background material must include discharge of the auditors; and is understandable, consistent with
38 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 39 Corporate Governance Report (continued) Corporate Governance Report (continued)
Terms of Reference of Audit and Risk Committee (ARC) (continued) Terms of reference - Corporate Governance committee (continued)
members’ knowledge of the Company Key responsibility in respect and risk committee’s scope of Meetings • determine specific remuneration • ensure that the right balance of and unbiased. of external audit responsibilities. Meetings of the Committee will be held packages for executive directors of skills, expertise and independence is The committee shall: as the Committee deems appropriate. the company, including but not limited maintained; Key responsibility in respect • Review on an annual basis the Evaluating performance and However the Committee should meet to basic salary, benefits in kind, any • ensure that there is a clearly of internal control performance of the external reporting responsibilities at least once a year. The Chairperson of annual bonuses, performance-based defined and transparent procedure The committee shall: auditors based on the scope and The committee shall: the Committee or any member of the incentives, share incentives, pensions for shareholders to recommend • Discuss the internal controls, adhered results of their work and make • Assess the achievement of the duties Committee may call a meeting at any and other benefits. potential candidates; to by the Company’s management, recommendations to the board of specified in the charter annually and other time. The quorum for decisions • determining any criteria necessary • ensure that potential candidates financial, accounting and internal the appointment, reappointment or make regular report of their findings of the Committee shall be any two to measure the performance of are free from material conflicts audit personnel, termination of the appointment of to the board, members present throughout the executive directors in discharging of interest and are not likely to • Discuss with management the the external auditors, • Review and reassess the adequacy of meeting who shall vote on the matter their functions and responsibilities simply act in the interest of a major Company’s major risk exposures and • Consider the independence and its charter every two (2) years and for decision. • determine the level of non-executive shareholder, substantial creditor or the steps management has taken to objectivity of the external auditor. discuss any required changes with directors’ and independent non- significant supplier of the company. monitor and control such exposures, • Discuss and review the external the board; and Authority executive directors’ fees to be This is of particular importance when • Evaluate the overall effectiveness auditors’ proposed audit scope, • Recommend approval of the annual The Committee is authorised by the recommended to the shareholders a candidate has been nominated by of the internal control and risk planning and approach in the light report and accounts to the board. Board to: at the Meeting of Shareholders virtue of a shareholder’s agreement, management frameworks and of the Company’s circumstances • Investigate, or cause to be investigated, • ascertain whether potential new or other such agreement; consider whether recommendations and changes in regulatory and other Terms of reference - any activity within its terms of directors are fit and proper and are • ensure that those directors who, made by the internal and external requirements; and Corporate Governance reference; not disqualified from being directors. in the opinion of the board, have auditors have been implemented by • Ensure that significant findings, committee • Obtain external legal or independent Prior to their appointment, their either acted in accordance with management, accounting adjustments and professional advice and such advisors backgrounds should be investigated the instructions of a third party or • Ensure that significant findings and recommendations noted by the Membership may be invited to attend meetings as thoroughly; have not discharged their duties as recommendations noted by the external auditors and management’s The membership, including the necessary. • ensure that the potential new director directors to the satisfaction of the internal auditors and management’s proposed response are discussed chairmanship, of the Committee is fully cognisant of what is expected board, not be nominated for re- proposed response are discussed and appropriately acted on. shall be appointed by the Board. The Duties from a director, in general, and from election. and appropriately acted on; and Corporate Governance Committee The responsibilities of the Committee him or her in particular; • Evaluate the internal control matrix Responsibility in respect of shall consist of not less than three shall be to: of the Company on a quarterly basis compliance with laws and members including the Managing • Determine, agree and develop and obtain management comments regulations Director of the Company. It should be the Company’s general policy on Corporate Governance committee on fluctuations in the score. The committee shall: composed of a majority of independent corporate governance in accordance (Remuneration and Nomination committee) • Review the effectiveness of the non-executive directors. A quorum with the applicable Code of Mr Timothy Taylor (Chairman) Key responsibility in respect system for monitoring compliance shall be two members. Corporate Governance. Mr Pawan K Juwaheer of internal audit with laws and regulations and the • Prepare the corporate governance Mr Roger Leung The committee shall: results of management’s investigation Attendance at meetings report to be published in the • Ensure that the Company has an and follow-up (including disciplinary The Chairman of the Board, the Company’s Annual Report. Feb 06, 2017 Mar 20, 2017 appropriate internal audit function, action) of any fraudulent acts or non- Group Chief Executive, the Group • Ensure that disclosures are made in Chairman • Review the effectiveness of the compliance, Human Resources Director and the Annual Report in compliance Mr Timothy Taylor X X internal audit function and ensure • Oversee the Company’s compliance other members of management shall with the disclosure in the Code of that it has appropriate standing within with legal and regulatory provisions, attend the meetings, if invited by the Corporate Governance Directors the Company; and its articles of association, code of Committee. Executive Services Ltd • determine, agree and develop Mr Pawan Kumar Juwaheer X X • Evaluate the internal audit department conduct, by-laws and any rules shall be secretary of the Committee. the company’s general policy on Mr Roger Leung X X and its impact on the accounting established by the board; and executive and senior management practices internal controls and • Conduct and authorise investigations remuneration financial reporting of the Company. into any matters within the audit
40 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 41 Corporate Governance Report (continued) Corporate Governance Report (continued)
Audit and Risk Management committee Mer Rouge Oil Storage Terminal Company Limited Mr Roger Leung (Chairman) VEML holds 23.5% of the shares of Mer Rouge Oil Storage Terminal Company Limited (MOST), a joint venture set up with the Mr Timothy Taylor oil companies and the State Trading Corporation to build and operate an additional 25,000 metric tons motor gasoline depot in Mer Rouge. Mar 20, 2017 May 05, 2017 Aug 07, 2017 Nov 03, 2017 Attendance to the Board meetings in 2017 is as follows: Chairman Mr Roger Leung X X X X Feb 10, 2017 Chairman Director Mr Rahul Bhardwaj (resigned 01/05/2017) X Mr Timothy Taylor X X X X Directors Mr Adama Soro X Mr Pawan Kumar Juwaheer X Directors in joint venture Mr Afsar Soobadar (alternate for Mr David Mureithi) X Energy Storage Company Limited Mr Peyami Oven X VEML holds 50% of the shares of Energy Storage Company Limited (ESCOL). The Board directors of ESCOL and their Ms Zalhatta Ali Ben Ali X attendance to the ESCOL board meeting in 2017 are as follows: Mr Sagar Mudhole (resigned 10/02/2017) X Mr Kanen Mathaven (alternate for Mr Mohunlall Banydeen) X Apr 04, 2017 Dec 01, 2017 Mr Asyrigadoo Balram (appointed 10/02/2017) X Chairman Mr Patrick Crighton X Mr Jerome Dechamps X X Mr Ram Rishi Bapamah X Mr Rajanah Dhaliah (appointed 10/02/2017) - Directors Mr Sanjay Nageshwar Parashar (appointed 01/05/2017) - Mr David Mureithi X X Mr Pawan Kumar Juwaheer X X Mr Afsar Soobadar (resigned on 01/06/2017) X - Mr Bashirally A Currimjee - - Vivo Energy HR performance, rewards and benefits philosophy Mr Ashvin Ramdenee (appointed on 23/11/2017 ) - X Mr Jean-Michel Arlandis (appointed on 23/11/2017 ) - X People in Vivo Energy are critical to the • Different business and country and offer a foundation for the total Mr Peyami Oven (alternate to Mr Bashirally A Currimjee) achievement of our business objectives. economic, social, legal, and regulatory compensation package. Vivo Energy compensation policies, environments. Our pay and benefits philosophy, practices, and systems are intended to Performance and reward policies should objectives and standards apply to Vivo recognise and support: help people excel, foster affiliation with Energy companies that employ people • Individual and business performance; Vivo Energy, and encourage behaviour on Vivo Energy terms and conditions both short and long term; that leads to the achievement of and should be broadly communicated • Vivo Energy core values, business business and personal objectives. and understood by all. principles and people principles; Benefits that are provided or enabled • Business and people strategies; by Vivo Energy companies are Objectives • Our strong commitment to sustainable another important component of Vivo Energy companies will operate development; the employee value proposition and performance, reward and benefit • Market competitiveness and the support our attraction and retention systems that: importance of internal relationships; strategies. Benefits that are common • Align employee and shareholder and foster affiliation and community spirit interests;
42 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 43 Corporate Governance Report (continued) Corporate Governance Report (continued)
Policies and practice on Ethics (continued)
• Support the attraction and retention Standards Declaration of conflict of interest working conditions, and competitive Political donations appraisal processes in combination of the best talent at all levels who fit All reward and benefit programmes Employees must avoid conflicts of terms and conditions of employment. VEML has no mandate to participate with strict accountability for results. our business needs; must comply fully with appropriate interest between their private activities in party politics, although, as a major These mechanisms are underpinned • Assist mobility and avoid creating laws and regulations and our Business and their part in the conduct of Responsibility to customers generator of economic wealth, the by established policies, standards barriers to movement within a Principles: Company business. They must also We remain at the forefront of energy industry clearly has considerable and guidance material that relate to business, country or Vivo Energy; • Our competitive reference: To declare in writing to the Company innovation, in consistently offering top social and political impact. However, particular types of risk; structured • Recognise both common interests compare to representative employers potential conflicts of interest. All quality products to our customers at when dealing with government, VEML investment decision processes, timely and individual preferences; and in the markets in which we compete business transactions on behalf of a Vivo very competitive prices. has the right and responsibility to make and effective reporting systems and • Are transparent and well explained. for talent. Energy Company must be reflected its position known on any matter, which performance appraisal. Examples of In addition to these shared objectives, • Our competitive objective: To have accurately and fairly in the accounts Company’s policies and affects the Company, its employees, its specific risk management mechanisms the different elements of the total salary and benefits that result in a of the Company in accordance with practices with regard to customers, or its shareholders. VEML include: compensation package focus on fair and competitive market position established procedures and are subject social issues has also the right to make its position • regular review of significant risks by different, although complementary, among the competitive reference to audit and disclosure. We report Vivo Energy companies aim to be good known on matters affecting the the management team; goals. group. The pay element within annually on any breaches of our ‘no neighbours by continuously improving community, where the Company has a • a common health, safety, security the total mix is more important bribes’ policy. the ways in which we contribute directly contribution to make. We do not make and environment (HSSE) policy, a Performance and rewards than benefits in our competitive Our assurance letter process helps us or indirectly to the general well-being of donations to political parties and treat common requirement for HSSE • Differentiate on the basis of positioning - aimed at delivering a to monitor whether we are living by the communities within which we work. this issue in the same way as bribery management systems, and external performance and value to the competitive position on Total Cash our Principles, in accordance with both We manage the social impacts of our and corruption. We report annually on certification of the environmental business; and and Total Compensation (including external laws and regulations and with business activities carefully and work the implementation of this policy of no component of such systems for • Encourage growth and development benefits). our internal standards. Each year, the with others to enhance the benefits to political payments. During the year, the major installations; as individuals and team players. Managing Director reports back to the local communities, and to mitigate any Company made no political donations. • a financial control handbook Policies and practice on Ethics Chief Executive Officer of Vivo Energy, in negative impacts from our activities. that establishes standards for the Benefits Our approach to business integrity writing, whether VEML has acted in line In addition, Vivo Energy companies Risk management and application of internal financial • Provide a standardised platform that Our commitment to business integrity with these requirements and to report take a constructive interest in societal internal control controls; allows other elements of the reward is clear and unequivocal; VEML insists material exceptions. Action is taken to matters, directly or indirectly related to The approach to internal control is • arrangements for the management strategy to differentiate on the basis on honesty, integrity and fairness in all address areas of non-compliance. our business. based on the underlying principle of of property, liability and treasury risks; of performance; aspects of our business and expects line management’s accountability for and • Are cost effective and tax advantaged, the same in our relationships with all Code of Conduct Corporate Social risk and control management. • a business control incident reporting where Vivo Energy purchasing power those with whom we do business. We The Code of Conduct helps us to live Responsibility The risk and internal control policy process that enables monitoring and provides leverage over individual do not bribe, nor do we accept bribes. by our business principles. As Shell VEML is committed to being a explicitly states that the Company has a appropriate follow-up actions for purchasing power to provide for cost We do not effect illegal payments of Licensee, we fully abide by the Statement responsible corporate citizen and risk-based approach to internal control incidents arising as a result of control reduction and risk sharing; any kind and investigate all suspicious of General Business Principles which caring for the communities in which it and that management is responsible for breakdowns. Lessons learned from • Support long-term social objectives circumstances. Serious action is taken provides the foundation for how Vivo operates. To this end, the Company is implementing, operating and monitoring these incidents are used to improve for the communities within which we against any employee found to have Energy companies do business around fully engaged in Community Investment the system of internal control, which is the overall control framework. work; breached our firm ‘no bribes’ policy. the world. Many of these principles projects which promote road safety designed to provide reasonable but not A formalised self-appraisal and assurance • Recognise the legislative environments Corruption can occur in all parts of contain legal and ethical compliance awareness among the country’s absolute assurance of achieving business letter process is in place. Annually, the and competitive markets within these the world and at all levels. Our policy is requirements. The code is a single youth and the general public; provide objectives. The approach to internal management of every business unit environments; and that the direct or indirect offer, payment, source of information about what those educational training programmes control includes a number of general provides assurance as to the adequacy • Support sharing of responsibility soliciting or acceptance of bribes in compliance requirements mean, with for underprivileged learners; and and specific risk management processes of governance arrangements, risk and between the state, the employer and any form is unacceptable. Facilitation guidance on when to use them, how encourage environmental awareness and policies. Within the essential internal control management, HSSE the employee. payments are also bribes and should to use them and how to be sure. We and sustainable development. framework provided by the Statement management, financial controls and not be made. provide employees with good and safe of General Business Principles, the reporting, treasury management, primary control mechanisms are self- brand management and information
44 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 45 Corporate Governance Report (continued) Corporate Governance Report (continued)
management. The Managing Director Enterprise Resource Planning system Performance (SP) Commitment and and behaviour against information or conflicts, economic conditions or is engaged. This could result in damage also provides assurance regarding to avoid trading outside of approved Policy, which require that our Company security threats. action taken by major oil-exporting to staff, assets and financial results. compliance with the Statement of conditions. shall have a systematic approach to countries. Fluctuations in these prices General Business Principles and other HSSE & SP management. We have put Risk related to reputation could test our business assumptions, Risk related to economic and important topics; as part of this process Risk related to foreign exchange in place the Vivo Energy mandatory VEML and the Vivo Energy companies and could have an adverse impact on financial market conditions business integrity concerns or instances More than one third of the Company’s procedure for an HSSE Management value the perception of stakeholders VEML investment decisions, operational VEML is subject to differing economic of bribery or illegal payments are to business is carried out in foreign System (HSSE MS), which is a as no Company or business operates performance and financial position. and financial market conditions. There be reported. Assurance letter results currency. The Company’s risk mitigation structured set of controls for managing in a vacuum. Our licence to operate are risks from political and economic including any material qualifications policy with respect to foreign currency the business and to ensure and and our very existence rely on the Risk related to operational hazards, instability. Realisation of one of these are reviewed by Vivo Energy Audit is to minimise exposure by matching demonstrate that business objectives understanding, goodwill and emotion of natural disasters and pandemics risks could have an adverse impact on and Risk Committee and support currencies whenever feasible and are met. This management system takes stakeholders. As such, VEML addresses The activities of VEML place it at the risk the results of operations and financial representations made to the external entering forward contracts whenever into account HSSE MS implementation the interests, concerns and perceptions of operational hazards, natural disasters position of VEML. auditors. possible and economically viable. requirements, incorporated in the of key stakeholders through a variety and pandemics, which could result In addition to these structured self- business level HSSE MS as well as the of methods. Included are statements in loss of life, adverse impact on the Internal controls appraisals, the assurance framework Risk related to supplies various classes of business HSSE MSs of our commitments, policies and environment and cause disruption to The Group has an internal audit plan relies upon objective appraisals Regularity of supplies is of vital relevant to our operations. Classes standards and human resource roles business activities. Realisation of these in place. The plan is set up such that by internal audit. The results of importance to enable VEML to of business are distribution, marine, of Communications and Managing risks could have an adverse effect on internal controls are reviewed at regular internal audit’s risk-based reviews of meet the needs of its customers; aviation, and business-to-business, LPG, Director. The role of the Managing the results of operations and financial intervals in all operating units. operations provide an independent consequently Vivo Energy has secured lubricants and retail. Director, in particular, is specifically position of the Company. view regarding the effectiveness of the position of Oil Industry coordinator designed to protect the reputation Management agreements risk and control management systems. with The State Trading Corporation The elements of this management of Vivo Energy companies operating Risk related to change in legislation The Company does not have any These established reviews; reporting for the monitoring of all product system are organised according to Vivo in a country with the support from and fiscal and regulatory policies shareholders’ agreement that affects and assurance processes enable Vivo imports. Whereas product demand Energy guidance of how to integrate Communications both locally and The operations of VEML are subject the governance of the Company by the Energy to regularly consider the overall for inland trade is fairly predictable, HSSE into the business and manage at Vivo Energy level. Statements of to risk of change in legislation, taxation Board. As mentioned in page 3 of the effectiveness of the system of internal with transfer prices fixed monthly and HSSE matters as any other critical commitments, policies and standards and regulation, changes that could have directors’ report, the Company has a control and to perform a full annual regulated by the Automatic Pricing activity. In line with our HSSE & SP policy adopted by VEML include the Statement an adverse effect on the results of licensing agreement with Shell Brands review of the system’s effectiveness. Mechanism, international sales are to achieve continuous performance of General Business Principles, operations and financial position of the International AG and a contract for the Taken together, these processes and not price controlled, very seasonal improvement, the individual classes of Code of Conduct, Commitment to Company. provision of services with Vivo Energy practices provide confirmation to Vivo and unpredictable. In this respect, business action plans have been well Sustainable Development, HSSE & SP Africa Services. Apart from these two Energy holding companies that relevant efficient management of the product observed and completed. Commitment and Policy, Diversity and Risk related to effective governance contracts, the Company does not policies are adopted and procedures replenishment cycle, product availability Inclusiveness Standard, Environmental Successful delivery of the VEML strategy have any management agreement with implemented with respect to risk and and freight are therefore of essence to Risk related to information security Minimum Standards, Environmental, requires effective governance. There is a third parties where the third party is control management. ensure continuity of service. The risk VEML has in place an Information Social and Health Impact Assessment, risk of incorrect design and operation a director or a Company owned by a to the business is product shortage or Security programme that ensures it Minimum Health Standards, Security of internal control, which may result in director. Risk related to credit stock out causing curtailment of sales, adheres to the Information security Standards, HIV/AIDS Policy, Human damage to the Company’s reputation, Credit risk is one of the Company’s key loss of revenue and business. based on ISO 27001. Disaster recovery Rights Standard, Road Transport Safety financial results and employees. risks. Vivo Energy has devised a set of plans are in place and tested to Policy, Code of Ethics and adoption rules that apply across the continent on Risk related to Health, Safety, ensure that there is minimum business of the Mauritian Code of Corporate Risk related to partners and that subject. Items on which this policy Security and Environment (HSSE) disruption in the event of a disaster. All Governance. ventures place a lot of emphasis include carrying VEML operates under a common set new staff and contractors are continually There is a risk that VEML could lose out customer risk assessment before of business principles, supported by coached to complete the mandatory Risk related to fluctuating oil prices the ability to influence and control any delivery is made to a customer policies and business controls. e-learning information security training Oil and oil products prices can vary the operations, behaviours and and also at regular intervals, setting of These include a Health, Safety, Security, module, the objective of the training as a result of various factors, including performance of business activities of a credit limit by customer and using the Environment (HSSE) and Social being to enhance awareness, education natural disasters, political instability other parties with whom the Company
46 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 47 Corporate Governance Report (continued) Corporate Governance Report (continued)
VEML share price compared to SEMTRI Shareholder communications to appoint the auditors and to authorise 3 January to 31 December 2017 The Board recognises the importance the directors to fix their remuneration, 150 9000 of two-way communications with to ratify the dividends declared by its shareholders and, in addition to the Board of directors. The Annual 8000 140 giving a balanced report of results and Meeting of Shareholders shall be called 7000 progress at each annual meeting, VEML by the Board of directors. The items responds to questions and issues raised to be dealt with at the meeting are 130 6000 by institutions and private shareholders. determined by the Board of directors 5000 Information about VEML is available on and are specified in the agenda 120 the website www.vivoenergy.com. included in the notice of convocation. 4000 A Special Meeting of Shareholders 110 3000 In addition, shareholders’ questions can may be called by the Board on written be asked via: request of shareholders holding shares 2000 Telephone: +230 206 1234 carrying together not less than 5% of 100 Fax: +230 240 1043 the voting rights entitled to vote on 1000
Vivo Energy Mauritius an issue. The resolutions of the Annual 90 0 l l t t t r r r c c c y y y v v n n n n n n pr pr ug ug ug
Twitter: VivoEnergyMtius Meeting of Shareholders shall, except 10 Ju 20 Ju 03 Ja 13 Ja 25 Ja 05 Ju 15 Ju 28 Ju 07 Feb 20 Feb 07 A 19 A 01 A 11 A 23 A 06 Oc 18 Oc 31 Oc 03 Ma 15 Ma 27 Ma 02 Ma 12 Ma 24 Ma 06 De 18 De 29 De 14 No 24 No 04 Sept 14 Sept 26 Sept Shareholder
Information in those cases where the law or the VEML SEMTRI Annual Meeting of Shareholders Constitution prescribe a larger majority, The Annual Meeting of Shareholders be passed by absolute majority of the of VEML is held once a year to discuss votes cast. the report of the Board of directors, At annual meetings, shareholders may to approve the audited financial cast one vote for each ordinary share VEML share price compared to SEMDEX statements, to elect any new directors, held by them. 3 January to 31 December 2017 150 2300 VEML share price compared to SEM-10 2200 - 3 January to 31 December 2017 450 150 140
2100
140 425 130 2000
130 120 1900 400
120 1800 110
375 1700 110 100 1600 350 100 90 1500 Apr Apr Aug Aug Aug 10 Jul 20 Jul 03 Jan 13 Jan 25 Jan 05 Jun 15 Jun 28 Jun 07 Feb 20 Feb 07 19 01 11 23 06 Oct 18 Oct 31 Oct 03 Mar 15 Mar 27 Mar 12 M ay 02 M ay 24 M ay 06 Dec 18 Dec 29 Dec 14 N ov 24 N ov 90 325 04 Sept 14 Sept 26 Sept y y y v v VEML SEMDEX Apr Apr Aug Aug Aug 10 Ju l 20 Ju l 2 Ma 03 Ja n 13 Ja n 25 Ja n 05 Ju n 15 Ju n 28 Ju n 07 Feb 20 Feb 07 19 01 11 23 03 Mar 15 Mar 27 Mar 06 Oct 18 Oct 31 Oct 12 Ma 24 Ma 06 Dec 18 Dec 29 Dec 14 No 24 No 04 Sept 14 Sept 26 Sept
VEML SEM-10
48 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 49 Corporate Governance Report (continued)
List of 10 Major Security Holders as at December 31, 2017
Vivo Energy Mauritius Holdings B.V. 22,623,316 National Pensions Fund 798,215 Mr Limberg Lam Po Tang 273,937 Mr Lim Kwat Chow Lam Po Tang 228,652 State Insurance Company Of Mauritius Ltd 209,665 Swan Life Ltd 141,710 Sections Rolling Limited 137,100 Mr N J P Maurice Raffray 135,000 National Savings Fund 84,700 Mr Gary Lam Po Tang 82,415
Apart from Vivo Energy Mauritius Holdings B.V, no other shareholder owns more than 5% of the share capital of the Company.
Shares held by each director as at December 31, 2017
The directors follow the principles of the model code on securities transactions by directors as detailed in Appendix 6 of the Mauritius Stock Exchange rules. The directors have not held or traded in any shares of the Company during the year.
Shareholders’ diary
Financial Year End December 31, 2017 Annual Meeting of Shareholders May 14, 2018 Data Analysis on Shareholding Reports and profits statement Income Statement for the year ended 31 December 2017 Published March 31, 2018 Number of shares Number of shareholders Number of shares owned % of total issued shares Condensed Interim Income Statement for the quarter ended 31 March 2018 Published May 15, 2018 1 - 500 2,229 432,374 1.47 Condensed Interim Income Statement for the six months ended 30 June 2018 Published August 15, 2018 501 - 1,000 534 476,091 1.62 Condensed Interim Income Statement for the nine months ended 1,001 - 5,000 485 1,177,565 4.02 30 September 2018 Published November 15, 2018 5,001 - 10,000 96 700,054 2.39 Income Statement for the year ended 31 December 2018 Published March 31, 2019 (at latest) 10,001 - 50,000 84 1,697,896 5.79 50,001 - 100,000 4 297,783 1.02 Dividend 100,001 - 250,000 5 845,021 2.88 Interim Dividend To be announced May 15, 2018 250,001 - 500,000 1 273,937 0.93 Interim Dividend Payable June 30, 2018 (at latest) 500,001 - 1,000,000 1 798,215 2.72 Final Dividend To be announced March 31, 2019 (at latest) Over 1,000,000 1 22,623,316 77.15 Final Dividend Payable July 31, 2019 (at latest) Total 3,440 29,322,252 100.00
50 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 51 Corporate Governance Report (continued) Corporate Governance Report (continued)
Constitution year. The Dividend Policy of VEML is to Non-audit services (Section 75(3) of the Financial Reporting Act) The Company’s constitution is in declare up to a maximum of 50% of During the year, the external auditors conformity with the provisions of the Net Income after Tax (NIAT) subject to have rendered no non-audit services. Name: Vivo Energy Mauritius Limited (“the Company”) Companies Act 2001 and those of the sufficient funds and solvency certificate. Listing Rules of the Stock Exchange of The solvency certificate should be Going concern Reporting Period: Year ended 31 December 2017 Mauritius. signed and approved by the Board The directors have a reasonable Its salient features are: of directors in accordance with the expectation that the Company has On behalf of the Board of Directors of the Company, we confirm that to the best • There are restrictions on pre-emptive Companies Act. adequate resources to continue in of our knowledge, the Company has not complied with section 2.8. rights attached to the shares. an operational existence for the • The Company may acquire and own Insider dealing foreseeable future, as set out in the Reason for non-compliance is as follows: its shares. Vivo Energy believes it important in Chairman and Managing Director’s Disclosing salaries by bands protects the personal privacy of individuals. • The Company may not issue fractions order to protect the reputation for reports, and for this reason has adopted shares. honesty and integrity enjoyed by both the going concern basis in preparing the • Shareholders may cast their votes by Vivo Energy and its employees that, annual financial statements. SIGNED BY: post. where part of the share capital of a Statement • The Board consists of not less than Vivo Energy Company is traded on a Registered office Mr Roger Leung Mr Pawan K Juwaheer two (2) or more than eleven directors Stock Exchange, there should be no Vivo Energy Mauritius Limited Chairman Director (11). possibility of suspicion that an employee Cemetery Road • There is rotation of directors every or contractor of the Company or a Roche Bois year except for the one who is person connected with that employee PO Box 85, Port Louis elected as chairperson who retires or contractor while dealing in the www.vivoenergy.com every four years. Company’s quoted shares has used Compliance of confidential knowledge for either his By order of the Board Dividend Policy own benefit or that of another person. Executive Services Limited The Company will pay dividends on Between the dates a period is closed Per Christian Angseesing a quarterly basis. The timing of Board and the results are published, a notice is Secretary meetings should be planned so as to sent to all staff asking them not to deal meet this objective. Dividend payments with shares during such periods. should take into account the dividend calendar of trading rules of the Stock Related party transactions Exchange. Ideally, dividends should be Related party transactions are disclosed declared at the Board meetings which in note 27 of the financial statements. are held in May and November each
52 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 53 Independent Auditor’s Report
To the Shareholders of Vivo Energy Mauritius Limited (Continued)
To the Shareholders of Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial Vivo Energy Mauritius Limited statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Report on the Audit of the Financial Statements
Our Opinion Key audit matter How our audit addressed the key audit matters In our opinion, the financial statements give a true and fair view of the financial position of Vivo Energy Mauritius Limited (the “Company”) as at 31 December Accounting treatment for retirement benefit obligations Accounting treatment for retirement benefit obligations 2017, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and in compliance with See note 2 of the financial statements for the Directors’ We obtained the pension valuation report and an the Mauritian Companies Act 2001. disclosures of the accounting policies for retirement benefit understanding of the methodology used to derive the obligations. discount rate. What we have audited The financial statements of Vivo Energy Mauritius Limited set out on pages 61 to At 31 December 2017, the Company has a net retirement We agreed the discount and inflation rates, together with 110 comprise: benefit liability of Rs 68.8 million, a 14% decrease of Rs 11.5 the expected rates of return on plan assets used in the • the statement of financial position as at 31 December 2017; million from the previous year. valuation of the pension obligation by the external actuary, • the income statement for the year then ended; to our internally developed benchmarks. We compared
Independent • the statement of comprehensive income for the year then ended; The decrease is mainly due to the increase in the fair value of the assumptions around salary increases and mortality to • the statement of changes in equity for the year then ended; the assets in which the pension fund has invested. national and industry averages. • the statement of cash flows for the year then ended; and • the notes, comprising significant accounting policies and other explanatory The valuation of the net liability is carried out by the We further tested the membership data used in the information. external actuary engaged by management. The valuation is valuation of the pension obligation, including leavers’ data, dependent on market conditions and key assumptions made, to assess whether the basis of the valuation is appropriate.
Auditor’s Report Auditor’s Basis for Opinion in particular relating to investment markets, discount rates, We conducted our audit in accordance with International Standards on Auditing salary increases, inflation expectations and life expectancy We have also assessed the competence, capabilities (ISAs). Our responsibilities under those standards are further described in the assumptions. and objectivity of the external actuary and verified his “Auditor’s Responsibilities for the Audit of the Financial Statements” section of our qualifications. report. The setting of these assumptions is complex and requires We believe that the audit evidence we have obtained is sufficient and appropriate the exercise of significant management judgement with the to provide a basis for our opinion. support of the external actuary.
Independence We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code). We have fulfilled our other ethical responsibilities in accordance with the IESBA Code.
54 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 55 Independent Auditor’s Report Independent Auditor’s Report
To the Shareholders of To the Shareholders of Vivo Energy Mauritius Limited (Continued) Vivo Energy Mauritius Limited (Continued)
Key Audit Matters (continued) Other Information The directors are responsible for the other information. The other information comprises the directors’ report, the secretary’s Key audit matter How our audit addressed the key audit matters report, the corporate governance report and the statement of compliance, which we obtained prior to the date of this auditor’s report, and the introduction and strategic review, which are expected to be made available to us after that date. Other information does not include the financial statements and our auditor’s report thereon. Early adoption of IFRS 16 Leases We have reviewed a sample of lease agreements to corroborate the terms and conditions applied by Our opinion on the financial statements does not cover the other information and we do not express any form of assurance See note 14 for the impact of the early adoption of IFRS 16. management as part of the calculation of the present value conclusion thereon. Our reporting responsibilities regarding the corporate governance report is dealt with in the “Report on of future lease payments at commencement date. We have Other Legal and Regulatory Requirements” section of this report.” On 01 January 2017, the Company early adopted IFRS 16 also assessed management’s judgement when determining Leases ahead of its mandatory effective date of 01 January the total lease term. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, 2019. As required by IAS 8, Accounting Policies, Changes in in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge Accounting Estimates and Errors, the Company has applied We have assessed the reasonableness of the rate applied obtained in the audit, or otherwise appears to be materially misstated. the new standard retrospectively. by management to discount the future lease payments to their present values by comparing them to the interest rates If, based on the work we have performed on the other information, we conclude that there is a material misstatement of this On the statement of financial position as at 31 December prevailing on the market as at the date of commencement other information, we are required to report that fact. We have nothing to report in this regard. 2017, the Company has recognised right-of-use assets with of the leases. We further supported our assessment through a carrying value of Rs 326.3 million, and lease liabilities of Rs the use of a sensitivity analysis. When we read the introduction and strategic review, if we conclude that there is a material misstatement therein, we are 367.6 million. required to communicate the matter to those charged with governance. We have recalculated the finance charge and amortisation The calculation of the present value of the future lease charge arising on each lease liability and right of use asset Responsibilities of the Directors for the Financial Statements payments requires judgement regarding the lease terms, respectively. The directors are responsible for the preparation and fair presentation of the financial statements in accordance with where extension periods exist, and estimates regarding the International Financial Reporting Standards and in compliance with the Mauritian Companies Act 2001, and for such internal discount rates to be applied. On an asset by asset basis, control as the directors determine is necessary to enable the preparation of financial statements that are free from material management has considered whether the option to extend misstatement, whether due to fraud or error. will be exercised. In the absence of an implicit rate of In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue as a going return, management has taken the incremental borrowing concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the rate prevailing locally as at the commencement date of each directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. lease as the basis for the discount rate used. The directors are responsible for overseeing the financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
56 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 57 Independent Auditor’s Report Independent Auditor’s Report
To the Shareholders of To the Shareholders of Vivo Energy Mauritius Limited (Continued) Vivo Energy Mauritius Limited (Continued)
Auditor’s Responsibilities for the Audit of the Financial Statements (continued) Report on Other Legal and Regulatory Requirements As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Mauritian Companies Act 2001 • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and The Mauritian Companies Act 2001 requires that in carrying out our audit we consider and report to you on the following perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a matters. We confirm that: basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting (a) we have no relationship with or interests in the Company other than in our capacity as auditor; from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal (b) we have obtained all the information and explanations we have required; and control. (c) in our opinion, proper accounting records have been kept by the Company as far as appears from our examination of • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in those records. the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related Financial Reporting Act 2004 disclosures made by the directors. The directors are responsible for preparing the corporate governance report. Our responsibility is to report on the extent of • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit compliance with the Code of Corporate Governance (the “Code”) as disclosed in the annual report on pages 26 to 52 and evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on on whether the disclosure is consistent with the requirements of the Code. the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are In our opinion, the disclosure in the annual report on pages 26 to 52 is consistent with the requirements of the Code. inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. Other Matter • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the This report, including the opinion, has been prepared for and only for the Company’s shareholders, as a body, in accordance financial statements represent the underlying transactions and events in a manner that achieves fair presentation. with Section 205 of the Mauritian Companies Act 2001 and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant come save where expressly agreed by our prior consent in writing. audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on PricewaterhouseCoopers Robert Coutet, licensed by FRC our independence, and where applicable, related safeguards. 23 March 2018 From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
58 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 59 Income Statement for the year ended 31 December 2017 (Restated) 2017 2016 Note Rs’000 Rs’000
Sales 10,467,842 9,106,874 Cost of sales ( 9,667,196) ( 8,228,066)
Gross profit 800,646 878,808 Other income 6 67,152 76,822 Other losses on exchange - net ( 6,811) ( 1,146) Distribution costs ( 44,722) ( 97,265) Administrative expenses ( 465,776) ( 458,418)
Operating profit 7 350,489 398,801
Finance income 8 4,002 5,732 Finance costs 8 ( 38,752) ( 42,052)
Finance costs - net 8 ( 34,750) ( 36,320) Share of profit of joint ventures 6,756 7,511
Profit before income tax 322,495 369,992 Income tax expense 9 ( 52,064) ( 58,419)
Profit for the year 270,431 311,573
Basic and diluted earnings per share Rs 9.22 10.63
Number of shares used in the calculation (000’s) 29,322 29,322
The notes on pages 66 to 110 are an integral part of these financial statements.
60 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 61 Statement of Comprehensive Income Statement of Financial Position for the year ended 31 December 2017 31 December 2017 (Restated) (Restated) (Restated) 2017 2016 31 Dec 2017 31 Dec 2016 01 Jan 2016 Note Rs’000 Rs’000 Note Rs’000 Rs’000 Rs’000 ASSETS Profit for the year 270,431 311,573 Non-current assets Property, plant and equipment 12(a) 1,074,779 1,085,388 1,056,118 Other comprehensive income Right-of-use assets 14 326,255 371,398 405,107 Items that will not be reclassified to profit or loss Prepaid leases 12(b) 9,205 9,784 10,362 Intangible assets 13 2,363 2,237 2,124 Remeasurements of post employment benefit Other long-term assets 15 2,919 5,990 6,524 Obligations 21 2,096 ( 31,108) Investment in joint ventures 16 37,794 39,538 46,402 Deferred tax (liability)/asset on remeasurements Of post employment benefit obligations 20 ( 356) 5,288 1,453,315 1,514,335 1,526,637
Other comprehensive income for the year, net of tax 1,740 ( 25,820) Current assets Inventories 17 792,709 416,363 619,093 Total comprehensive income for the year 272,171 285,753 Trade and other receivables 18 890,930 776,162 690,102 Cash and cash equivalents 24 269,800 397,785 67,664 1,953,439 1,590,310 1,376,859
Total assets 3,406,754 3,104,645 2,903,496
EQUITY & LIABILITIES Equity Share capital 19 293,223 293,223 293,223 Retained earnings 668,182 555,872 413,798 Total equity 961,405 849,095 707,021
LIABILITIES Non-current liabilities Deferred income tax liabilities 20 65,848 66,208 64,990 Retirement benefit obligations 21 68,815 80,326 53,426 Lease liability 14 330,772 367,636 391,969 465,435 514,170 510,385
Current liabilities Bank overdrafts 24 - - 98,935 Trade and other payables 22 1,552,311 1,339,267 1,195,956 Deposits on LPG cylinders 23 374,260 344,043 322,134 Current income tax liabilities 9 16,513 21,274 34,097 Lease liability 14 36,830 36,796 34,968 1,979,914 1,741,380 1,686,090 Total liabilities 2,445,349 2,255,550 2,196,475 Total equity and liabilities 3,406,754 3,104,645 2,903,496
Approved by the Board of Directors on 23 March 2018 and signed on its behalf by:
Mr Roger Leung ) DIRECTORS Mr Pawan K Juwaheer )
The notes on pages 66 to 110 are an integral part of these financial statements. The notes on pages 66 to 110 are an integral part of these financial statements.
62 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 63 Statement of Changes in Equity Statement of Cash Flows for the year ended 31 December 2017 for the year ended 31 December 2017
Share Retained Total (Restated) Capital Earnings Equity 2017 2016 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Cash flows from operating activities At 01 January 2016 293,223 431,917 725,140 Profit before income tax 322,495 369,992 Adjustment on adoption of IFRS16 (net of tax) - ( 18,119) ( 18,119) Adjustments for: Depreciation on property, plant and equipment (Note 12(a)) 123,289 121,663 At 01 January 2016 (as restated) 293,223 413,798 707,021 Depreciation on right-of-use assets (Note 14) 45,143 47,012 Comprehensive income Provision for impairment of receivables (Note 18) 3,815 2,791 Profit for the year - 320,872 320,872 Amortisation of intangible assets (Note 13) 1,118 802 IFRS16 impact on profit for the year - ( 9,299) ( 9,299) Amortisation of prepaid leases (Note 12(b)) 579 578 Interest expense (Note 8) 38,752 42,052 Profit for the year (as restated) - 311,573 311,573 Profit on disposal of property, plant and equipment (Note 7) ( 261) ( 56) Other comprehensive income - ( 25,820) ( 25,820) Interest income (Note 8) ( 4,002) ( 5,732) Unrealised loss on exchange 10,890 1,639 Total comprehensive income (as restated) - 285,753 285,753 Share of profit of joint venture (Note 16) ( 6,756) ( 7,511) Decrease in retirement benefit obligations ( 9,415) ( 4,208) Transactions with owners Dividends declared (Note 25) - ( 143,679) ( 143,679) Cash generated before working capital changes 525,647 569,022 (Increase)/decrease in inventories ( 376,346) 202,730 Total transactions with owners - ( 143,679) ( 143,679) Increase in receivables and prepayments ( 112,461) ( 79,784) Increase in trade and other payables 214,199 142,916 At 31 December 2016 (as restated) 293,223 555,872 849,095 Increase in deposits on LPG cylinders 30,217 21,909
Cash generated from operations 281,256 856,793 At 01 January 2017 293,223 583,290 876,513 Interest paid ( 38,752) ( 42,052) Adjustment on adoption of IFRS16 (net of tax) - ( 27,418) ( 27,418) Income tax paid (Note 9) ( 57,541) ( 64,735) Net cash generated from operating activities 184,963 750,006 At 01 January 2017 (as restated) 293,223 555,872 849,095 Comprehensive income Cash flows from investing activities Profit for the year - 270,431 270,431 Proceeds from disposal of property, plant and equipment 270 56 Other comprehensive income - 1,740 1,740 Interest received 4,002 5,732 Loan to dealers ( 4,000) ( 7,000) Total comprehensive income - 272,171 272,171 Dividends received from joint venture (Note 16) 10,000 15,000 Payments for purchase of property, plant and equipment and intangible assets ( 113,933) ( 151,848) Transactions with owners Investment in joint venture (Note 16) ( 1,500) ( 625) Dividends declared (Note 25) - ( 159,806) ( 159,806) Net cash used in investing activities ( 105,161) ( 138,685) Payment of forfeited dividends - ( 55) ( 55) Cash flows from financing activities Total transactions with owners - ( 159,861) ( 159,861) Dividends paid to company’s shareholders ( 159,861) ( 143,679) Repayment of lease liability ( 36,830) ( 35,807) At 31 December 2017 293,223 668,182 961,405 Net cash used in financing activities ( 196,691) ( 179,486)
Net (decrease)/increase in cash, cash equivalents and bank overdrafts ( 116,889) 431,835 Cash, cash equivalents and bank overdrafts at beginning of year 397,785 ( 31,271) Effect of exchange rate changes on cash and bank overdrafts ( 11,096) ( 2,779)
Cash, cash equivalents and bank overdrafts at end of year 269,800 397,785
The notes on pages 66 to 110 are an integral part of these financial statements. The notes on pages 66 to 110 are an integral part of these financial statements.
64 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 65 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Summary of Significant Accounting Policies (Continued)
three primary measurement categories loss that would arise from the expected brought on to the balance sheet as 1 General Information for financial assets: amortised cost, fair loss assessment would not be significant. financial obligations and ‘right-of-use’ value through OCI and fair value through (“ROU”) assets other than leases of Vivo Energy Mauritius Limited (the products. Its joint venture, Energy These financial statements were P&L. The basis of classification depends IFRS 15, ‘Revenue from contracts ’low-value’ underlying assets and short- “Company”), is a limited liability Storage Company Limited, is involved authorised for issue by the Board of on the entity’s business model and the with customers’ deals with revenue term leases of less than twelve months. company listed on the Stock Exchange in the provision of LPG terminal usage Directors on 23 March 2018. contractual cash flow characteristics recognition and establishes principles of Mauritius and is incorporated and facilities. The Company has invested of the financial asset. Investments in for reporting useful information to Lessor accounting under IFRS 16 is domiciled in Mauritius. in a new joint venture, Mer Rouge equity instruments are required to be users of financial statements about substantially unchanged from current Oil Storage Terminal Co.Ltd, which is measured at fair value through profit the nature, amount, timing and accounting under IAS 17. In addition, The Company’s principal activity is the involved in the storage of petroleum or loss with the irrevocable option at uncertainty of revenue and cash flows IFRS 16 also requires both lessees marketing and distribution of petroleum products, but is not yet operational. inception to present changes in fair arising from an entity’s contracts with and lessors to make more extensive value in OCI not recycling. There is now customers. Revenue is recognised disclosures than under IAS 17. a new expected credit losses model that when a customer obtains control of 2 Summary of Significant Accounting Policies replaces the incurred loss impairment a good or service and thus has the The Company elected to early adopt model used in IAS 39. For financial ability to direct the use and obtain the the standard effective January 1, 2017 The principal accounting policies significant to the financial statements assets that hedge liabilities arising from liabilities there were no changes to benefits from the good or service. The concurrent with the adoption of IFRS applied in the preparation of these are discussed in Note 3. financing liabilities. Entities may include classification and measurement except standard replaces IAS 18 ‘Revenue’ and 15 Revenue from Contracts with financial statements, are set out below. changes in other items as part of this for the recognition of changes in own IAS 11 ‘Construction contracts’ and Customers. The Company elected These policies have been consistently Changes in accounting policies disclosure, for example by providing a credit risk in other comprehensive related interpretations. The Company the available practical expedients and applied to all the years presented, and disclosures ‘net debt’ reconciliation. However, in income, for liabilities designated at has assessed the implications of the implemented internal controls and unless otherwise stated. (a) New standards, amendments and this case the changes in the other items fair value through profit or loss. IFRS new standard and concluded that the key system functionality to enable the interpretations applicable as from 01 must be disclosed separately from the 9 relaxes the requirements for hedge accounting treatment for its sale of preparation of financial information Basis of preparation January 2017 changes in liabilities arising from financing effectiveness by replacing the bright line goods is the same under both IAS 18 on adoption. The impact of the early The financial statements of Vivo Energy activities. hedge effectiveness tests. It requires an and IFRS 15. adoption of IFRS 16 is disclosed in Mauritius Limited have been prepared in The following standards and economic relationship between the Note 14 of the financial statements. accordance with International Financial interpretations apply for the first time to (b) New standards, amendments and hedged item and hedging instrument The adoption of these standards did Reporting Standards (“IFRS”) and financial reporting periods commencing interpretations not yet effective but which and for the ‘hedged ratio’ to be the not have any impact on the amounts (c) New standards, amendments and comply with the Mauritian Companies on or after 1 January 2017: have been early-adopted by the Company same as the one management actually recognised in prior periods and is not interpretations not yet adopted Act 2001. The financial statements have uses for risk management purposes. expected to have a material impact on been prepared under the historical cost Disclosure Initiative – Amendments The Company elected to early adopt Contemporaneous documentation the current or future periods. There are no standards, interpretations convention. The financial statements are to IAS 7, requires an entity to explain the following standards effective January is still required but is different to that or amendments to existing standards presented in Mauritian Rupees (‘Rs’), changes in its liabilities arising from 1, 2017: currently prepared under IAS 39. IFRS 16 Leases was issued on 13 that are effective for the first time for rounded to the nearest thousand. financing activities. This includes January 2016 and replaces IAS 17 the financial year beginning 1 January changes arising from cash flows (for IFRS 9, ‘Financial instruments’, addresses The only area of significance to the Leases, IFRIC 4 Determining whether an 2017 that are expected to have a The preparation of financial statements example, drawdowns and repayments the classification, measurement and Company relates to the new expected Arrangement contains a Lease, SIC-15 material impact on the Company and in conformity with IFRS requires the use of borrowings) and non-cash changes recognition of financial assets and credit loss model, as it does not engage Operating Leases Incentives and SIC-27 that have not been adopted. of certain critical accounting estimates. such as acquisitions, disposals, accretion financial liabilities. The complete in hedge accounting, and its investment Evaluating the Substance of Transactions It also requires management to exercise of interest and unrealised exchange version of IFRS 9 was issued in July in equity instruments are accounted involving the Legal Form of a Lease. Segment reporting its judgement in the process of applying differences. Changes in financial assets 2014. It replaces the guidance in IAS for in accordance with IFRS 11. The IFRS 16 sets out the principles for the Operating segments are reported the Company’s accounting policies. must be included in this disclosure if 39 that relates to the classification and Company has assessed the requirements recognition, measurement, presentation in a manner consistent with the The areas involving a higher degree the cash flows were, or will be, included measurement of financial instruments. of the new expected credit loss model and disclosure of leases and requires internal reporting provided to the of judgement or complexity, or areas in cash flows from financing activities. IFRS 9 retains but simplifies the mixed against its existing provisioning policy lessees to account for all leases under a chief operating decision-maker. The where assumptions and estimates are This could be the case, for example, for measurement model and establishes and concluded that its existing policy is single on-balance sheet model. Virtually chief operating decision-maker, who is more conservative and any additional all leasing arrangements have been responsible for allocating resources and
66 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 67 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Summary of Significant Accounting Policies (Continued) Summary of Significant Accounting Policies (Continued)
assessing performance of the operating Historical cost includes expenditure amount if the asset’s carrying amount is its development can be reliably goodwill) are reviewed for possible of financial assets carried at fair value segments, has been identified as the that is directly attributable to the greater than its estimated recoverable measured. reversal at each reporting date. through profit or loss are expensed in Managing Director. acquisition of the items. Cost may also amount. profit or loss. include transfers from equity of any Directly attributable costs that are Financial assets Foreign currency translation gains/losses on qualifying cash flow Gains and losses on disposals are capitalised as part of the software Debt instruments hedges of foreign currency purchases determined by comparing the proceeds product include the software Classification Subsequent measurement of debt • Functional and presentation currency of property, plant and equipment. with the carrying amount and are development employee costs and From 1 January 2017, the Company instruments depends on the Company’s recognised within ‘Other income’ in the an appropriate portion of relevant classifies its financial assets in the business model for managing the asset Items included in the financial Subsequent costs are included in the income statement. overheads. following measurement categories: and the cash flow characteristics of statements are measured using the asset’s carrying amount or recognised • those to be measured subsequently the asset. The Company classifies its currency of the primary economic as a separate asset, as appropriate, only Intangible assets Other development expenditures at fair value (either through other debt instruments at amortised cost. environment in which the entity when it is probable that future economic Acquired computer software licences that do not meet these criteria comprehensive income, or through This comprises assets that are held for operates (the “functional currency”). benefits associated with the item will are capitalised on the basis of the costs are recognised as an expense as profit or loss), and collection of contractual cash flows The financial statements are presented flow to the Company and the cost of incurred to acquire and bring to use incurred. Development costs • those to be measured at amortised where those cash flows represent solely in thousands of Mauritian Rupee the item can be measured reliably. The the specific software. These costs are previously recognised as an expense cost. payments of principal and interest. A (Rs’000), which is the Company’s carrying amount of the replaced part amortised over their estimated useful are not recognised as an asset in a gain or loss on a debt investment that functional and presentation currency. is derecognised. All other repairs and lives (not exceeding three years). subsequent period. Computer software The classification depends on the is subsequently measured at amortised maintenance are charged to the income development costs recognised as assets entity’s business model for managing cost and is not part of a hedging • Transactions and balances statement during the financial period in Costs associated with maintaining are amortised over their estimated the financial assets and the contractual relationship is recognised in profit or which they are incurred. computer software programmes are useful lives, not exceeding three years. terms of the cash flows. For assets loss when the asset is derecognised or Foreign currency transactions are recognised as an expense as incurred. measured at fair value, gains and losses impaired. Interest income from these translated into the functional currency No depreciation is provided on Development costs that are directly Impairment of non-financial will either be recorded in profit or loss financial assets is included in finance using the exchange rates prevailing freehold land and on assets in the attributable to the design and testing assets or other comprehensive income. For income using the effective interest rate at the dates of the transactions or course of construction. Buildings on of identifiable and unique software Intangible assets that have an indefinite investments in debt instruments, this will method. valuation where items are re-measured. leasehold land are depreciated over products controlled by the Company, useful life or intangible assets not ready depend on the business model in which Foreign exchange gains and losses the period of the lease if less than 20 are recognised as intangible assets, to use are not subject to amortisation the investment is held. For investments Impairment of financial assets resulting from the settlement of such years. Depreciation on other assets is when the following criteria have been and are tested annually for impairment. in equity instruments that are not held Assets carried at amortised cost transactions and from the translation at calculated using the straight-line method met: Assets that are subject to amortisation for trading, this will depend on whether The Company assesses on a forward year-end exchange rates of monetary to allocate their cost less their residual • It is technically feasible to complete are reviewed for impairment whenever the Company has made an irrevocable looking basis the expected credit assets and liabilities denominated in values over their estimated useful lives. the software product so that it will be events or changes in circumstances election at the time of initial recognition losses associated with its debt foreign currencies are recognised in The annual rates used are: available for use; indicate that the carrying amount may to account for the equity investment at instruments carried at amortised cost. the income statement, except when • Management intends to complete the not be recoverable. An impairment loss fair value through other comprehensive The impairment methodology applied deferred in other comprehensive Freehold Buildings 2.5% - 20.0% software product and use or sell it; is recognised for the amount by which income. See note 30 for details about depends on whether there has been income as qualifying cash flow hedges Plant and equipment 3.3% - 50.0% • There is an ability to use or sell the the asset’s carrying amount exceeds its each type of financial asset. a significant increase in credit risk. and qualifying net investment hedges. Motor vehicles 15.0% - 20.0% software product; recoverable amount. The recoverable Note 4(b) details how the Company Computer equipment 20.0% - 33.3% • It can be demonstrated how the amount is the higher of an asset’s fair Measurement determines whether there has been Foreign exchange gains and losses are Furniture and fittings 5.0% - 20.0% software product will generate value less costs of disposal and value At initial recognition, the Company a significant increase in credit risk. For presented in the income statement within probable future economic benefits; in use. For the purposes of assessing measures a financial asset at its fair trade receivables, the Company applies ‘Other gains / losses on exchange - Net’. The assets’ residual values and useful lives • Adequate technical, financial and impairment, assets are grouped at value plus, in the case of a financial the simplified approach permitted by are reviewed, and adjusted if appropriate, other resources to complete the the lowest levels for which there are asset not at fair value through profit IFRS 9, which requires expected lifetime Property, plant and equipment at the end of each reporting period. development and to use or sell the largely independent cash inflows (cash- or loss, transaction costs that are losses to be recognised from initial and depreciation software product are available; and generating units). Prior impairments directly attributable to the acquisition recognition of the receivables. Property, plant and equipment is stated An asset’s carrying amount is written • The expenditure attributable of non-financial assets (other than of the financial asset. Transaction costs at historical cost less depreciation. down immediately to its recoverable to the software product during
68 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 69 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Summary of Significant Accounting Policies (Continued) Summary of Significant Accounting Policies (Continued)
Evidence of impairment may include Inventories objective evidence that the Company Where any group company purchases As most of the leases do not provide • the use of hindsight in determining indications that the debtors or a Inventories are stated at the lower of will not be able to collect all amounts the Company’s equity share capital an implicit rate, the Company uses the lease term where the contract group of debtors is experiencing cost and net realisable value. As from due according to the original terms (treasury shares), the consideration the incremental borrowing rate contains options to extend or significant financial difficulty, default 01 January 2016, cost of inventories of the receivables. Significant financial paid, including any directly attributable based on the information available at terminate the lease. or delinquency in interest or principal (fuels) is determined using the difficulties of the debtor, probability that incremental costs is deducted from commencement date in determining payments, the probability that they will weighted average method (previously the debtor will enter bankruptcy or equity attributable to the Company’s the present value of future payments. Investment in joint ventures enter bankruptcy or other financial first-in, first-out method). This change financial reorganisation, and default or equity holders until the shares are The operating lease ROU asset also The Company has applied IFRS 11 to reorganisation, and where observable in accounting policy was not material delinquency in payments (more than 90 cancelled or reissued. Where such includes any lease payments made and all joint arrangements. Under IFRS 11, data indicate that there is a measurable for prior year restatement as the fuels days overdue) are considered indicators ordinary shares are subsequently excludes lease incentives and initial investments in joint arrangements are decrease in the estimated future cash inventory turnover is relatively high. that the receivable is impaired. The reissued, any consideration received, net direct costs incurred. Lessees will be classified as either joint operations flows, such as changes in arrears or Cost comprises direct costs only. Net amount of the provision is the difference of any directly attributable incremental required to separately recognise the or joint ventures depending on the economic conditions that correlate realisable value is the estimated selling between the asset’s carrying amount transaction costs is included in equity. interest expense on the lease liability contractual rights and obligations of each with defaults. price in the ordinary course of business, and its recoverable amount, being and the depreciation expense on the investor. The Company has assessed the less the costs of completion and the present value of estimated future Trade payables ROU asset. The depreciation rate on nature of its joint arrangements and For financial assets classified at applicable variable selling expenses. For cash flows, discounted at the original Trade payables are obligations to pay ROU assets vary from 3.9% to 36.4%. determined them to be joint ventures. amortised cost, the amount of the loss is lubricants and accessories, the weighted effective interest rate. The carrying for goods or services that have been Joint ventures are accounted for using measured as the difference between the average method was already being used amount of the asset is reduced through acquired in the ordinary course of The lease terms may include options the equity method. asset’s carrying amount and the present to determine the cost of inventories. the use of an allowance account, and the business from suppliers. Accounts to extend or terminate the lease when value of estimated future cash flows amount of the loss is recognised in the payable are classified as current liabilities it is reasonably certain that the option Under the equity method of accounting, (excluding future credit losses that have Spares, accessories and supplies statement of comprehensive income. if payment is due within one year or will be exercised. Lease expense for interests in joint ventures are initially not been incurred) discounted at the included under inventories consist When a receivable is uncollectible, it less (or in the normal operating cycle minimum lease payments is recognised recognised at cost and adjusted financial asset’s original effective interest of items which are regularly used is written off against the allowance of the business if longer). If not, they are on a straight-line basis over the lease thereafter to recognise the Company’s rate. The carrying amount of the asset for repairs, maintenance and new account for trade or other receivables. presented as non-current liabilities. term. share of the post-acquisition profits or is reduced and the amount of the loss installations. They are stated at the Subsequent recoveries of amounts losses and movements in profit or loss. is recognised in the income statement. lower of cost and net realisable value. previously written off are credited Trade payables are recognised initially In instances where lease agreements When the Company’s share of losses If a loan has a variable interest rate, against ‘administrative expenses’ in the at fair value and subsequently measured contain lease and non-lease in a joint venture equals or exceeds its the discount rate for measuring any Trade receivables statement of comprehensive income. at amortised cost using the effective components, they are generally interests in the joint ventures (which impairment loss is the current effective Trade receivables are amounts due Bad debts are written off in the year in interest rate method. accounted for separately. For certain includes any long-term interests that, in interest rate determined under the from customers for goods sold in the which they are identified. instances where it is impractical to substance, form part of the Company’s contract. As a practical expedient, the ordinary course of business. If collection Lease accounting policy separate the lease from the non-lease net investment in the joint ventures), the Company may measure impairment on is expected in one year or less (or in the Cash and cash equivalents As explained in Note 2(b) above, the component, the Company will account Company does not recognise further the basis of an instrument’s fair value normal operating cycle of the business In the statement of cash flows, cash and Company has changed its accounting for them as a single lease component. losses, unless it has incurred obligations using an observable market price. if longer), they are classified as current cash equivalents includes cash in hand, policy for leases. The new policy is as or made payments on behalf of the assets. If not, they are presented as non- deposits held at call with banks, other described below and the impact of the In applying IFRS 16 for the first time, joint ventures. If, in a subsequent period, the amount current assets. short-term highly liquid investments change is disclosed in Note 14. the Company has used the following of the impairment loss decreases with original maturities of three months practical expedients permitted by the Current and deferred income and the decrease can be related Trade receivables are recognised or less and bank overdrafts. Bank At the commencement date of a lease, standard: tax objectively to an event occurring after initially at fair value and subsequently overdrafts are shown separately on the a lessee will recognise a lease liability • the use of a single discount rate to The tax expense for the period the impairment was recognised (such measured at amortised cost using statement of financial position. and ROU asset representing the right a portfolio of leases with reasonably comprises current, deferred income as an improvement in the debtor’s the effective interest method, less to use the underlying asset during the similar characteristics tax and Corporate Social Responsibility credit rating), the reversal of the provision for impairment. A provision Share capital lease term. Lease ROU assets and lease • the exclusion of initial direct costs for contribution. Tax is recognised in the previously recognised impairment loss for impairment of trade and other Ordinary shares are classified as “Share liabilities are initially recognised at the the measurement of the right-of-use income statement, except to the extent is recognised in the income statement. receivables is established when there is Capital” in equity. present value of the future minimum asset at the date of initial application, that it relates to items recognised lease payments over the lease term. and in other comprehensive income or
70 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 71 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Summary of Significant Accounting Policies (Continued) Summary of Significant Accounting Policies (Continued)
directly in equity. In this case, the tax is Deferred income tax is provided on The liability recognised in the statement A defined benefit plan is a pension plan the end of the reporting period are and represents amounts receivable for also recognised in other comprehensive temporary differences arising from of financial position in respect of defined that is not a defined contribution plan. discounted to their present value. goods supplied, stated net of discounts, income or directly in equity, respectively. depreciation on plant and equipment, benefit pension plans is the present For defined contribution plans, the returns and value added taxes. The provision for impairment of receivables, value of the defined benefit obligation Company pays contributions to publicly Deposits on LPG cylinders Company recognises revenue when The current income tax charge is provision for slow-moving inventory at the end of the reporting period or privately administered pension Deposits on LPG cylinders are the amount of revenue can be reliably calculated on the basis of the tax laws and retirement benefit obligations and less the fair value of plan assets. The insurance plans on a mandatory, accounted for as part of current measured; when it is probable that future enacted or substantively enacted at right of use assets, except for deferred defined benefit obligation is calculated contractual or voluntary basis. The liabilities and are recognised at historical economic benefits will flow to the entity; the reporting date. Management income tax liability where the timing of annually by independent actuaries using Company has no further payment cost in the financial statements. and when specific criteria have been periodically evaluates positions taken the reversal of the temporary difference the projected unit credit method. The obligations once the contributions met for each of the Company’s activities, in tax returns with respect to situations is controlled by the Company and it is present value of the defined benefit have been paid. The contributions Provisions as described below. in which applicable tax regulation is probable that the temporary difference obligation is determined by discounting are recognised as employee benefit Provisions for environmental restoration, subject to interpretation. It establishes will not reverse in the foreseeable the estimated future cash outflows using expense when they are due. Prepaid restructuring costs and legal claims are Sale of goods provisions where appropriate on the future. interest rates of high-quality corporate contributions are recognised as an recognised when: the Company has a Sales are recognised upon delivery of basis of amounts expected to be paid bonds that are denominated in the asset to the extent that a cash refund present legal or constructive obligation products and customer acceptance, if to the tax authorities. Deferred income tax assets and currency in which the benefits will be or a reduction in the future payments as a result of past events; it is probable any, net of trade discounts and value liabilities are offset when there is a legally paid, and that have terms to maturity is available. that an outflow of resources will be added tax. Deferred income tax is recognised on enforceable right to offset current tax approximating to the terms of the required to settle the obligation, and temporary differences arising between assets against current tax liabilities and related pension obligation. In countries • Other benefits the amount has been reliably estimated. Dividend income the tax bases of assets and liabilities and when the deferred income taxes assets where there is no deep market in such Provisions are not recognised for future Dividend income is recognised when the their carrying amounts in the financial and liabilities relate to income taxes bonds, the market rates on government Employee entitlement to annual leave operating losses. right to receive payment is established. statements. However, deferred tax levied by the same taxation authority bonds are used. The actuaries carry out and other benefits are recognised when liabilities are not recognised if they arise on either the same taxable entity or a full valuation of the plan every three/ they accrue to the employees. Where there are a number of similar Interest income from the initial recognition of goodwill; different taxable entities where there is four years (the latest full valuation was obligations, the likelihood that an Interest income is recognised using deferred income tax is not accounted an intention to settle the balances on a done in January 2015). • Termination benefits outflow will be required in settlement the effective interest method. When for if it arises from initial recognition net basis. is determined by considering the class a loan and receivable is impaired, the of an asset or liability in a transaction Actuarial gains and losses arising Termination benefits are payable when of obligations as a whole. A provision Company reduces the carrying amount other than a business combination Employee benefits from experience adjustments and employment is terminated by the is recognised even if the likelihood of an to its recoverable amount, being the that at the time of the transaction changes in actuarial assumptions are Company before the normal retirement outflow with respect to any one item estimated future cash flow discounted affects neither accounting nor taxable • Retirement benefit obligations charged or credited to equity in other date, or whenever an employee accepts included in the same class of obligations at the original effective interest rate of profit or loss. Deferred income tax is comprehensive income in the period in voluntary redundancy in exchange for may be small. the instrument, and continues unwinding determined using tax rates (and laws) The Company has both a defined which they arise. these benefits. The Company recognises the discount as interest income. that have been enacted or substantively benefit pension plan and a defined termination benefits at the earlier of the Provisions are measured at the present enacted by the balance sheet date and contribution pension plan. Past-service costs are recognised following dates: (a) when the Company value of the expenditures expected Dividend distributions are expected to apply when the related immediately in the income statement. can no longer withdraw the offer of to be required to settle the obligation Dividend distributions to the Company’s deferred income tax asset is realised A defined benefit plan is a pension those benefits; and (b) when the entity using a pre-tax rate that reflects current shareholders are recognised as a liability or the deferred income tax liability is plan that defines an amount of pension A defined contribution plan is a pension recognises costs for a restructuring market assessments of the time value in the Company’s financial statements settled. benefit that an employee will receive plan under which the Company pays that is within the scope of IAS 37 and of money and the risks specific to the in the year in which the dividends on retirement, usually dependent on fixed contributions into a separate involves the payment of termination obligation. The increase in the provision are approved by the Company’s Deferred income tax assets are one or more factors such as age, years entity. The Company has no legal or benefits. In the case of an offer made due to passage of time is recognised as shareholders. recognised only to the extent that it of service and compensation. The constructive obligations to pay further to encourage voluntary redundancy, interest expense. is probable that future taxable profit plan is funded by the payments from contributions if the fund does not hold the termination benefits are measured will be available against which the the Company taking account of the sufficient assets to pay all employees the based on the number of employees Revenue recognition temporary differences can be utilised. recommendations of independent benefits relating to employee service in expected to accept the offer. Benefits Revenue is measured at the fair value of qualified actuaries. the current and prior periods. falling due more than 12 months after the consideration received or receivable,
72 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 73 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Financial Risk Management (Continued)
3 Critical Accounting Estimates and Judgements The currency profile of the Company’s USD-denominated financial assets and liabilities is summarised as follows: Financial Financial Financial Financial Estimates and judgements are • Pension benefits of estimated future cash outflows Assets liabilities assets liabilities continually evaluated and are based on expected to be required to settle the 2017 2017 2016 2016 Rs’000 Rs’000 Rs’000 Rs’000 historical experience and other factors, The present value of the pension pension obligations. In determining
including experience of future events obligations depends on a number the appropriate discount rate, the United States Dollar 331,157 202,228 274,580 233,112 that are believed to be reasonable of factors that are determined on Company considers the interest rates under the circumstances. an actuarial basis using a number of of high-quality corporate bonds that assumptions. The assumptions used are denominated in the currency in At 31 December 2017, if the Mauritian products to the strict minimum. Split basis point (2016 – 50 basis point) Critical accounting estimates and in determining the net cost (income) which the benefits will be paid, and that rupee had weakened/strengthened by pricing is also used as a mitigation increase/decrease in interest rate on assumptions for pensions include the discount rate. have terms to maturity approximating 10% (2016 – 5%) against the USD with measure. At 31 December 2017, if borrowings would be of Rs Nil (2016 The Company makes estimates and Any changes in these assumptions will the terms of the related pension liability. all other variables held constant, pre-tax the price of unregulated products had - Rs Nil), respectively as the Company assumptions concerning the future. impact the carrying amount of pension profit for the year would have increased/ increased/decreased by 5% (2016 – 5%) had no interest bearing bank overdrafts The resulting accounting estimates obligations. Other key assumptions for pension decreased by Rs 12,892,900 (2016 with all other variables held constant, at 31 December. will, by definition, seldom equal the obligations are based in part on - Rs 2,073,400), mainly as a result of pre-tax profit for the year would have related actual results. The estimates The Company’s actuary determines current market conditions. Additional currency gains/losses on translation increased/decreased by Rs 15,631,247 Management considers that a 50 basis and assumptions that have a significant the appropriate discount rate at the information is disclosed in Note 21. of US dollar-denominated trade (2016 - Rs 17,582,661). point shift in interest rate is reasonable risk of causing a material adjustment end of each year in consultation with receivables and trade payables. as the repo rate has fluctuated by 50 to the carrying amounts of assets and the management of the Company. The Company is not exposed to basis points in 2017 (40 basis points in liabilities within the next financial year This is the interest rate that should be Management considers a 10% (2016 – commodity price risk on regulated 2016). are addressed below. used to determine the present value 5%) shift in foreign currency exchange products since their margins are fixed rate is appropriate to determine by The State Trading Corporation. (b) Credit risk the sensitivity of USD denominated 4 Financial Risk Management financial assets and liabilities vis a vis the (iii) Cash flow and fair value interest Credit risk refers to the risk that Mauritian rupee. rate risk a counter-party will default on its Financial risk factors principles for overall risk management, from various currency exposures, contractual obligations resulting in The Company’s activities expose it as well as written policies covering primarily with respect to the United (ii) Price risk Cash flow interest rate risk arises from financial loss to the Company. to a variety of financial risks: market specific areas, such as currency risk, States dollar (‘USD’). Currency risk arises the possibility that changes in interest risk (including foreign exchange risk, interest rate risk, credit risk, and from future commercial transactions Price risk is the risk that the fair value rates will affect future cash flows or the Credit risk arising from trade receivables price risk and cash flow interest investment of excess liquidity. and recognised assets and liabilities. It is or future cash flows of a financial fair values of the assets. The Company’s is managed at the Company level. Credit rate risk), credit risk and liquidity the Company’s policy not to enter into instrument will fluctuate because of interest rate risk arises from cash risk arises from credit exposures to risk. The Company’s overall risk (a) Market risk any currency hedging transactions. To changes in market prices of equity and cash equivalents and short-term wholesale and retail customers, including management programme focuses on manage its foreign exchange risk arising (other than those arising from interest bank overdrafts which bear interest outstanding receivables and committed the unpredictability of financial markets (i) Foreign exchange risk from future commercial transactions rate risk or currency risk). at variable rates. The Company does transactions. The credit control and seeks to minimise potential adverse and recognised assets and liabilities, not have long-term borrowings. The department assesses the credit quality effects on the Company’s financial Currency risk is the risk that the fair the Company maintains sufficient liquid The Company is not exposed to Company mitigates this risk by holding of the customer, taking into account performance. value or future cash flows of a financial resources in from its USD denominated equity price risk as it does not have any enough cash resources that in turn its financial position, past experience instrument will fluctuate because of receipts to meet its USD denominated investment in equity securities. earn variable interest rates and invests and other factors. Individual risk limits Risk management remains within the changes in foreign exchange rates. obligations as they fall due. in financial institutions where it can earn are set based on internal ratings in responsibility of the Board of Directors The Company transacts with The Company is exposed to commodity the highest rates of interest. accordance with limits set by the board. to whom the Audit and Risk committee international customers and suppliers price risk on non-regulated products. To The utilisation of credit limits is regularly reports. The board provides written and is exposed to currency risk arising manage its risk, the Company keeps Based on the simulations performed, monitored. its inventory level for non-regulated the impact on pre-tax profit of a 50
74 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 75 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Financial Risk Management (Continued) Financial Risk Management (Continued)
2017 2016 2015 Expected credit loss rate as at 31 December 2017 is as follows: Rs’000 Rs’000 Rs’000
Current 1-3 3-6 Above 6 Total Less than 1 year 72,475 67,995 72,213 months months months Between 1 and 2 years 73,534 72,475 66,674 Between 2 and 5 years 216,801 218,088 212,854 Expected loss rate 0.3% 5.6% 14.4% 100% More than 5 years 188,453 248,194 293,814 Gross carrying amount Rs’000 849,641 8,702 2,741 26,889 885,273 Expected allowance for impairment Rs’000 2,206 486 396 26,889 551,263 606,752 645,555
In cases where credit limits were the event of default of customers, who Credit risk arising on cash and cash The Company adopts prudent liquidity The capital of the Company consists bank overdrafts, trade and other exceeded during the year, this was done require timely delivery of petroleum equivalents is considered to be minimal risk management by maintaining of equity and retained earnings. The payables, deposits on LPG cylinders in accordance with the Company’s products, LPG & Lubricants to run their as these are placed with reputable sufficient cash and cash equivalents Company does not have any debt, and lease liabilities are assumed to procedures and management does operations, the Company reserves the financial institutions. Credit ratings are to meet its normal operating other than short-term bank overdrafts. approximate their fair values due to not expect any major losses from non- right to stop delivery of these products as follows: commitments. In order to maintain or adjust the their short term maturities. performance by these counterparties. In until the outstanding debt is recovered. capital structure, the Company may Capital risk management adjust the amount of dividends paid to Offsetting financial assets and liabilities shareholders. 2017 2016 The Company’s objectives when There were no financial asset and Rs 000 Rs 000 Cash at bank and short-term bank deposits managing capital are to safeguard There are no external capital financial liability that were subject to the Company’s ability to continue as requirements. offsetting at 31 December 2017. BB+ 207,560 279,207 a going concern in order to provide BBB- 42,820 95,097 returns for shareholders and benefits Fair value estimation 19,343 AA- 23,389 for other stakeholders and to maintain AA 77 92 an optimal capital structure to reduce The carrying value of trade and other 269,800 397,785 the cost of capital. receivables, cash and cash equivalents,
Credit risk arising on other long-term nature of the underlying businesses, due within 12 months equal their 5 Segment Information assets, consisting mainly of loan to company treasury maintains flexibility carrying amounts, as the impact of dealers, is considered to be minimal in funding by maintaining availability discounting is not significant. The directors are of the opinion that the The operations of the joint ventures consist primarily of property, plant since repayment of the loans is done of liquid resources under committed segment information presented below comprise of LPG terminal usage facilities. and equipment, prepaid leases, right- principally through discount provided credit lines. Financial liabilities also comprise the gives a good reflection of how they Mer Rouge Oil Storage Terminal Co.Ltd of-use assets, other long term assets, by the Company to the dealers. lease liability recognised as a result of decide to allocate resources as they has not yet started its operations. inventories, trade and other receivables The Company’s financial liabilities, that the application of IFRS 16 Leases. The consider that the main consideration and prepayments, investment in joint (c) Liquidity risk are payable within 12 months, includes table below analyses the lease liabilities in determining their strategy depends There are no sales between the ventures, and exclude cash and cash trade and other payables, deposit on into relevant maturity groupings on whether they can control or different segments. Revenue from equivalents. Segment liabilities comprise Prudent liquidity risk management LPG cylinders and bank overdrafts. The based on the remaining period at not the price and margin of their no single customer amounted to operating liabilities and exclude items implies maintaining sufficient cash, amounts recognised in the statement of the statement of financial position to products. Hence, the directors believe 10% or more of the Company’s total such as taxation. Capital expenditure the availability of funding through an financial position of Rs 1,886,547,000 the contractual maturity date. The it is appropriate that the disclosure on revenue. Unallocated costs represent comprises additions to property, plant adequate amount of committed credit (2016: Rs 1,683,310,000) are amounts disclosed in the table are the segment analysis be separated between net expenses that do not directly and equipment. facilities and the ability to close out approximately equal to the contractual contractual undiscounted cash flows. regulated and non-regulated. relate to a segment. Segment assets market positions. Due to the dynamic undiscounted cash flows. All balances
76 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 77 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Segment Information (Continued) Segment Information (Continued)
Year ended 31 December 2017 Year ended 31 December 2017 (continued) Regulated Non-Regulated Total Rs’000 Rs’000 Rs’000 The amounts provided to the chief operating decision-maker with respect to the total assets and total liabilities are measured in a manner consistent with that of the financial statements. Revenue from external customers 6,818,101 3,649,741 10,467,842 Segment results 224,361 258,685 483,046 Unallocated costs ( 132,557) The assets and liabilities are allocated based on the operations of the segments. Operating profit 350,489 Finance income 4,002 Segment assets and liabilities are reconciled to the Company’s assets and liabilities as follows: Finance cost ( 38,752) Share of profits of joint venture ( 1,199) 7,955 6,756 Profit before income tax 322,495 Assets Liabilities Income tax expense ( 52,064) Rs’ 000 Rs’ 000 Profit for the year 270,431
Segment assets/liabilities and interest in joint ventures 2,606,996 1,433,465 Segment assets 1,516,882 1,052,320 2,569,202 Unallocated: Joint venture 17,421 20,373 37,794 Property, plant and equipment 257,270 Unallocated assets 799,758 Value added tax recoverable - Total assets 3,406,754 Other receivables and prepayments 272,688
Cash and cash equivalents 269,800 Segment liabilities 813,219 620,246 1,433,465 Retirement benefit obligations 68,815 Unallocated liabilities 1,011,884 Deferred income tax liabilities 65,848 Total liabilities 2,445,349 Bank overdrafts - Other payables 860,708 Other segment items Current income tax liabilities 16,513 Capital expenditure 78,333 19,676 98,009 Total 3,406,754 2,445,349 Depreciation ( 77,283) ( 32,683) ( 109,966) Amortisation ( 1,447) ( 143) ( 1,590)
Unallocated items Capital expenditure 15,924 Depreciation ( 13,323) Amortisation ( 106)
78 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 79 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Segment Information (Continued) Segment Information (Continued)
Year ended 31 December 2016 Year ended 31 December 2016 (Continued)
(Restated) (Restated) (Restated) Segment assets and liabilities are reconciled to the Company’s assets and liabilities as follows: Regulated Non-Regulated Total Rs’000 Rs’000 Rs’000 (Restated) (Restated) Assets Liabilities Revenue from external customers 5,911,241 3,195,633 9,106,874 Rs’ 000 Rs’ 000 Segment results 140,091 321,418 461,509 Unallocated costs ( 62,708) Segment assets/liabilities and interest in joint ventures 2,177,622 1,988,399 Unallocated: Operating profit 398,801 Property, plant and equipment 251,026 Finance income 5,732 Value added tax recoverable 13,714 Finance cost ( 42,052) Other receivables and prepayments 264,498 Share of profits of joint venture ( 138) 7,649 7,511 Cash and cash equivalents 397,785 Profit before income tax 369,992 Retirement benefit obligations 80,326 Income tax expense ( 58,419) Deferred income tax liabilities 66,208 Profit for the year 311,573 Bank overdrafts - Other payables 99,343 Segment assets 1,038,903 1,099,181 2,138,084 Current income tax liabilities 21,274 Joint venture 17,120 22,418 39,538 Total 3,104,645 2,255,550 Unallocated assets 927,023 Total assets 3,104,645
Segment liabilities 998,876 989,523 1,988,399 6 Other income Unallocated liabilities 267,151 Total liabilities 2,255, 550 2017 2016 Rs’000 Other segment items Rs’000 Capital expenditure 93,292 24,528 117,820 13,802 Depreciation ( 75,444) ( 33,350) ( 108,794) Rental income 14,366 4,755 Amortisation ( 1,242) ( 32) ( 1,274) Management fees 4,778 261 Profit on disposal of property, plant and equipment 56 20,147 Unallocated items Fuel storage fee 25,023 4,024 Capital expenditure 34,028 Throughput fee 9,023 777 Depreciation ( 12,869) Tanker discharge fee 933 14,731 Amortisation ( 106) Non-fuel retailing income 11,743 Other customer fees 3,169 4,768 Others 5,486 6,132 67,152 76,822 The amounts provided to the chief operating decision-maker with respect to the total assets and total liabilities are measured in a manner consistent with that of the financial statements.
The assets and liabilities are allocated based on the operations of the segments.
80 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 81 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
7 Operating profit 9 Income tax expense
The following items have been (credited)/charged in arriving at operating profit: 2017 2016 Rs’000 Rs’000 (Restated) 2017 2016 Charge for the year Rs’000 Rs’000 Based on the profit for the year, as adjusted for tax purposes, at 17 % (2016 - 17%) 52,436 53,710 (Profit)/loss on disposal of property, plant and equipment ( 261) ( 56) Under/(over)-provision of income tax in previous year 344 ( 1,797) Depreciation on property, plant and equipment (Note 12) Over/under-provision of deferred tax in previous year ( 928) ( 498) - included in cost of sales 97,457 96,892 Deferred income tax (Note 20) 212 7,004 - included in administrative expenses 25,832 24,771 Charge to income statement 52,064 58,419 Depreciation on right-of-use assets (Note 14) - included in cost of sales 45,143 47,012 Current income tax liabilities Amortisation of intangible assets (Note 13) 1,118 802 2017 2016 Amortisation of prepaid leases (Note 12) 579 578 Rs’000 Rs’000 Fees paid to auditor - audit services 1,700 1,800 - audit related services 901 889 At 01 January 21,274 34,097 Repairs and maintenance: Charge for the year 52,780 51,913 - included in cost of sales 3,469 3,689 Paid during the year, based on - included in administrative expenses 20,853 22,740 - Previous year’s profit ( 20,025) ( 29,449) Staff costs (Note 11) - Current year’s profit ( 37,516) ( 35,287) - included in cost of sales 15,949 15,993 At 31 December 16,513 21,274 - included in administrative expenses 192,669 173,190 - included in finance costs 4,341 3,527 Provision for impairment of receivables (Note 18) 3,815 2,791 A reconciliation between the effective rate of income tax of the Company of 16.14% (2016 – 15.79%) and the applicable income tax Cost of inventories recognised as expense rate of 17% (2016 - 17%) follows: - included in cost of sales 9,495,984 8,055,012 (As a percentage of profit before taxation)
2017 2016 8 Finance income/(costs) – net % %
(Restated) Applicable income tax rate 17.00 17.00 2017 2016 Impact of: Finance costs: Rs’000 Rs’000 Depreciation on non-qualifying assets 0.03 0.03 Other non-allowable expenses 0.16 0.06 Interest expense ( 665) ( 1,519) Share of profit of joint venture ( 0.36) ( 0.35) Accretion on retirement benefit ( 4,341) ( 3,527) Other non-taxable income ( 0.51) ( 0.35) Interest on lease ( 33,746) ( 37,006) Under/(over)-provision of income tax in previous year 0.10 ( 0.47) ( 38,752) ( 42,052) Over-provision of deferred tax in previous year ( 0.28) ( 0.13) Effective income tax rate 16.14 15.79 Finance income: Interest income 4,002 5,732 4,002 5,732 Net finance costs ( 34,750) ( 36,320)
82 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 83 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued) - - - - Total Rs’000 14,368) 14,368) 11,714) 11,705) 994,422 150,933 121,663 123,289 112,689 2,050,540 1,085,388 1,101,717 2,187,105 1,213,301 1,074,779 2,288,080 ( ( ( (
------Rs’000 82,724 28,063 21,319 75,980) 28,063 29,802 26,218 Capital ( 24,479) (
10 Earnings per share in progress
The calculation of earnings per share is based on the Company’s profit for the year of Rs 270,431,000 (2016 - Rs 311,573,000) ------
and on 29,322,252 ordinary shares in issue during the two years ended 31 December 2017 and 31 December 2016. There were 68 153 408) 408) 1,420 1,605 1,335
no potentially dilutive shares outstanding at 31 December 2017 or 2016. Diluted earnings per share are therefore the same as basic Rs’000 16,925 19,950 18,530 19,950 19,457
earnings per share. Furniture expenditure ( and fittings
------35 8,365 2,850 1,782 1,693 1,385) 1,385) 3,820 9,315 2,905 1,371) ( 25,715 33,455 27,180 35,545 28,714 11 Staff costs 38,029 19,610 29,802 Computer equipment ( 1,371) ( ( ( 2017 2016 Rs’000
Rs’000 ------41) 41) 49 573 770 258 1,668 2,647 1,926 2,696 2,458 159,879 9,174 1,701
Wages and salaries 143,060 Motor Rs’000 Rs’000 11,072 13,530 Social security costs 1,970 1,917 vehicles ( Pension costs – defined benefit plan 7,101 7,053 ( 14,398 Pension costs – defined contribution plan 14,671 (2016 - Rs 28,063,142) in the course of construction.
Other benefits 48,293 38,464 -
Termination benefits 65 8,078 739 1,547 9,218) 97,460 99,719 63,389 12,983) 12,983) 97,946 14,840 Recharge of costs to related companies ( 18,747) ( 20,533) 64,412 786,518 708,749 870,995 960,462 690,859 Plant and 1,429,619 1,579,744 1,651,321 equipment ( 9,222) ( ( 212,959 192,710 ( Rs 29,801,762
- - - 2017 2016 698 644) 739) land 6,728 2,614 Number 7,515 7,728
Number Rs’000 Rs’000 77,671 69,717 24,412 84,399 90,744 69,389 127,090 154,116 160,133
leasehold ( 1,547) ( 649) ( Number of employees at year end 127 122 on Buildings
- - - - - 23) ( 388 3,701 Directors’ emoluments included in staff costs are as follows: 8,235 8,299 85,925 12,762 98,687 12,802 Rs’000 177,320 264,071 276,007 2017 2016 284,671 111,466 173,205 Freehold buildings Rs’000 Rs’000 ( 23) (
22,193 ------Short-term benefits 18,908 - Post-employment benefits 2,793 2,750
24,986 Rs’000 90,984 90,984 21,658 90,984 90,984 90,984 - -
Freehold land Freehold
The recharge of costs is in respect of 12 (2016 - 9) central staff based in Mauritius whose costs are incurred by the Company and recharged to VEIBV (Vivo Energy Investment BV). Assets capitalised Reclassification Disposals At 31 December 2017 Accumulated depreciation: At 01 January 2016 Reclassification Disposals At 31 December 2017 Net book amount: At 31 December 2017 At 31 December 2016
12(a) Property, plant and equipment 12(a) Cost: At 01 January 2016
Charge the year for Additions Included in capital expenditure progress are plant and equipment amounting to Assets capitalised Disposals Write offs/adjustments Disposals At 31 December 2016 At 31 December 2016 Charge the year for Additions
84 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 85 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
12 (b) Prepaid leases 13 Intangible assets
Rs’000 Computer software Cost: Rs’000 At 01 January 2016, 31 December 2016 and 31 December 2017 11,682 Cost: Amortisation: At 01 January 2016 4,745 At 01 January 2016 1,320 Additions 915 Charge for the year 578 Disposals ( 2,515)
At 31 December 2016 1,898 At 31 December 2016 3,145 Charge for the year 579 Additions 1,244
At 31 December 2017 2,477 At 31 December 2017 4,389
Net book amount: Accumulated amortisation: At 31 December 2017 9,205 At 01 January 2016 2,621 Charge for the year 802 At 31 December 2016 9,784 Disposals ( 2,515)
At 31 December 2016 908 Charge for the year 1,118 Operating leases represent upfront lease payments on certain lease of land. At 31 December 2017 2,026
Net book amount: At 31 December 2017 2,363 At 31 December 2016 2,237
86 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 87 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Right of use assets and lease liabilities (Continued)
The statement of profit or loss shows the following amounts relating to leases:
14 Right of use assets and lease liabilities 2017 2016 2015 Rs’000 Rs’000 Rs’000 Leases are recognised as a right-of-use asset and corresponding liability at the date of which the leased asset is available 45,143 for use by the Company. Each lease payment is allocated between the liability and finance cost. The finance cost is Depreciation of right-of-use asset 47,012 43,859 Interest on lease liability 33,746 37,006 37,646 charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining Total lease cost 78,889 84,018 81,505 balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset’s useful life and lease term on a straight-line basis. The total cash outflow for leases was as follows:
The Company has operating and finance leases for motor vehicles, land and buildings, barge and certain equipment. 2017 2016 2015 Leases have remaining lease terms between 1 and 19 years, some of which may include options to extend the leases for Rs’000 Rs’000 Rs’000 up to 5 years, and some of which may include options to terminate the leases within 1 year. Supplemental Cash Flows Information The statement of financial position shows the following amounts relating to leases. Cash paid for amounts included in: Financing cash flows from operating leases 70,576 72,814 68,412
Right-of-use assets Other information: Weighted Average Remaining Lease Term 6.50 7.50 7.84 Land and Motor Buildings Vehicule Barge Others Total Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Right-of-use assets, 01 Impact of IFRS16 January 2015 65,360 37,468 315,235 - 418,063 Additions/(expired) 4,261 2,116 - 24,526 30,903 As As restated As restated Balance of Depreciation ( 4,362) ( 6,599) ( 32,024) ( 874) ( 43,859) previously IFRS 16 31 December 31 December 31 December reported Adjustment 2015 (Under 2016 (Under 2017 (Under Right-of-use assets, IFRS 16) IFRS 16) IFRS 16) 31 December 2015 65,259 32,985 283,211 23,652 405,107 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Additions/(expired) 4,918 8,385 - - 13,303 Depreciation ( 4,476) ( 7,009) ( 32,023) ( 3,504) ( 47,012) Right-of-use assets, 01 January 2015 - 418,063 418,063 - - Depreciation of ROU - ( 43,859) ( 43,859) - - Right-of-use assets, ROU leases effective in 2015 - 30,903 30,903 - - 31 December 2016 65,701 34,361 251,188 20,148 371,398 Depreciation ( 4,532) ( 5,966) ( 32,024) ( 2,621) ( 45,143) Right-of-use assets, 31 December 2015 - 405,107 405,107 - - Depreciation of ROU - ( 47,012) - ( 47,012) - Right-of-use assets, ROU leases effective in 2016 - 13,303 - 13,303 - 31 December 2017 61,169 28,395 219,164 17,527 326,255 Right-of-use assets, 31 December 2016 - 371,398 - 371,398 - Depreciation of ROU - ( 45,143) - - ( 45,143) Lease liability Right-of-use assets, 31 December 2017 - 326,255 - - 326,255 31 December 31 December 01 January 2017 2016 2016 Rs’000 Rs’000 Rs’000 Lease liability: Current 36,830 36,796 34,968 Non-current 330,772 367,636 391,969 367,602 404,432 426,937
88 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 89 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Right of use assets and lease liabilities (Continued)
Impact of IFRS16 (continued)
As As restated As restated Balance of 16 Investment in joint ventures previously IFRS 16 31 December 31 December 31 December ESCOL MOST Total reported Adjustment 2015 (Under 2016 (Under 2017 (Under 2017 2017 2017 IFRS 16) IFRS 16) IFRS 16) 2016 2016 2016 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Cost: At 01 January 15,000 15,000 17,625 17,000 32,625 32,000 Lease Liability, 31 December 2014 - 426,800 426,800 - - Investment in share capital - - 1,500 625 1,500 625 Interest expenses of Lease Liability - 37,646 37,646 - - Annual lease payments 2015 - ( 68,412) ( 68,412) - - At 31 December 15,000 15,000 19,125 17,625 34,125 32,625 Lease Liability effective in 2015 - 30,903 30,903 - - Share of post-acquisition reserves: Lease Liability, 31 December 2015 - 426,937 426,937 - - At 01 January 7,418 14,769 ( 505) ( 367) 6,913 14,402 Interest expenses of Lease Liability - 37,006 - 37,006 - Share of profit after income tax 7,955 7,649 ( 1,199) ( 138) 6,756 7,511 Annual lease payments 2016 - ( 72,814) - ( 72,814) - Dividends received ( 10,000) ( 15,000) - - ( 10,000) ( 15,000) Lease Liability effective in 2016 - 13,303 - 13,303 - Other comprehensive income ------Lease Liability, 31 December 2016 - 404,432 - 404,432 - At 31 December 5,373 7,418 ( 1,704) ( 505) 3,669 6,913 Interest expenses of Lease Liability - 33,746 - - 33,746 Annual lease payments 2017 ( 70,576) ( 70,576) Net book amount: 20,373 17,421 37,794 Lease Liability, 31 December 2017 - 367,602 - - 367,602 At 31 December 22,418 17,120 39,538
Deferred Tax liability, 31 December 2015 68,701 - - - - Deferred Tax assets, ROU assets 2015 - ( 3,711) ( 3,711) - - Nature of investment in joint venture 2017 and 2016: Deferred Tax liability, 31 December 2015 - - 64,990 - - Name of entity Place of Description % % Deferred tax expense in 2016 3,123 - - 3,123 - incorporation/ Activity of shares holding holding Deferred Tax assets, ROU assets 2016 - ( 1,905) - ( 1,905) - business held 2017 2016 Deferred Tax liability, 31 December 2016 - - - 66,208 - Energy Storage Co.Ltd Mauritius LPG storage Ordinary 50.0 50.0 Deferred tax expense in 2017 - - - - 1,053 Deferred Tax assets, ROU assets 2017 - ( 1,413) - - ( 1,413) Mer Rouge Oil Storage Terminal Co.Ltd Mauritius Storage of Ordinary 23.5 23.5 Deferred Tax liability, 31 December 2017 - - - - 65,848 petroleum products
Energy Storage Company Limited (ESCOL) and Mer Rouge Oil Storage Terminal Co.Ltd (MOST) are private companies and there are no quoted market prices available for their shares. 15 Other long-term assets There are no contingent liabilities and restrictions relating to the Company’s interest in its joint ventures. Summarised financial information for joint venture: 2017 2016 Rs’000 Rs’000 Set out below are the summarised financial information for Energy Storage Co.Ltd and Mer Rouge Oil Storage Terminal Co.Ltd, which are accounted for using the equity method. Loans to Dealers 2,919 5,990
2,919 5,990
Loans to Dealers relate to loan agreements between the Company and several retailers for the construction of service stations.
90 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 91 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Investment in joint ventures (Continued) Investment in joint ventures (Continued)
Summarised balance sheet Reconciliation of summarised financial information
ESCOL MOST Reconciliation of the summarised financial information presented to the carrying amount of its interest in the joint venture: As at 31 December As at 31 December 2017 2016 2017 2016 Summarised financial information ESCOL MOST Rs’000 Rs’000 Rs’000 Rs’000 2017 2016 2017 2016 Current Rs’000 Rs’000 Rs’000 Rs’000 Cash and cash equivalents 23,853 28,089 865 31,311 Other current assets (excluding cash) 5,248 6,246 10,871 369 Opening net assets 1 January 44,836 49,537 55,830 30,532 Investment during the year - - 23,650 25,850 Total current assets 29,101 34,335 11,736 31,680 Deposit on share capital - - - - Profit/(loss) for the period 15,909 15,299 ( 5,202) ( 552) Financial liabilities (excluding trade payables) - - - - Other comprehensive income - - - - Other current liabilities (including trade payables) ( 5,858) ( 1,200) ( 136,499) - Dividend paid ( 20,000) ( 20,000) - - Dividend payable - - - - Total current liabilities ( 5,858) ( 1,200) ( 136,499) - Closing net assets 40,745 44,836 74,278 55,830 Interest in joint venture @ 50%, 23.5% 20,373 22,418 17,421 17,120 Non-current Deposit on share capital - - - - Assets 37,297 32,803 199,041 24,150 Goodwill - - - - Carrying value 20,373 22,418 17,421 17,120 Financial liabilities - - - - Other liabilities ( 19,795) ( 21,102) - -
Total non-current liabilities ( 19,795) ( 21,102) - -
Net assets 40,745 44,836 74,278 55,830 17 Inventories Summarised statement of comprehensive income
ESCOL MOST 2017 2016 For the year For the year Rs’000 Rs’000 ended 31 December ended 31 December 2017 2016 2017 2016 Goods for resale (NRV) 785,485 408,622 Rs’000 Rs’000 Rs’000 Rs’000 Spares, accessories and supplies (NRV) 7,224 7,741 792,709 416,363 Revenue 28,539 29,689 - - Depreciation and amortisation ( 2,645) ( 2,448) - - Interest income 285 584 1 1 Interest expense - - - - Pre-tax profit/(loss) from continuing operations 19,167 18,451 - - Income tax expense ( 3,258) ( 3,152) - - Post-tax profit/(loss) from continuing operations 15,909 15,299 ( 5,202) ( 552) Post-tax profit from discontinued operations - - - - Other comprehensive income - - - - Total comprehensive income 15,909 15,299 ( 5,202) ( 552) Dividends received from joint venture 10,000 15,000 - -
92 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 93 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Trade and other receivables (Continued)
As of 31 December 2017, trade receivables of Rs 29,202,000 (2016 - Rs 26,845,000) were impaired. The amount of the provision 18 Trade and other receivables was Rs 29,202,000 as of 31 December 2017 (2016 - Rs 26,845,000). The individually impaired receivables relate to customers, which are in unexpected difficult economic situations. The ageing of these receivables is as follows: 2017 2016 Rs’000 Rs’000 2017 2016 Rs’000 Rs’000 Trade receivables 883,262 763,347 Less: provision for impairment of receivables ( 29,202) ( 26,845) Not past due (gross receivable) 777 - Not past due (provision for impairment) 777 - Trade receivables – net 854,060 736,502 1 to 3 months (gross receivable) 486 - Other receivables 14,715 12,423 1 to 3 months (provision for impairment) 486 - Less: provision for impairment of other receivables ( 775) ( 775) 3 to 6 months (gross receivable) 396 - Other receivables – net 13,940 11,648 3 to 6 months (provision for impairment) 396 -
Trade receivables from related companies (Note 27 (vii)) 14,354 5,246 Over 6 months (gross receivable) 27,543 26,845 Value added tax recoverable - 13,714 Over 6 months (provision for impairment) 27,543 26,845 Prepayments 8,576 9,052
22,930 28,012 The carrying amounts of the Company’s trade and other receivables are denominated in the following currencies: 890,930 776,162 2017 2016 Rs’000 Rs’000 The carrying amount of receivables and prepayments approximate their fair values. Currency Mauritian rupee 633,460 590,242 Trade receivables that are less than three months past due are not considered impaired except where management identifies specific United States dollar 257,470 185,920 instances where a trade receivable would be subject to impairment. The ageing analysis of trade receivables that are not impaired are as follows: 890,930 776,162
Movements on the Company’s provision for impairment of trade and other receivables are as follows: 2017 2016 Rs’000 Rs’000 2017 2016 Rs’000 Rs’000 Not past due and not impaired 858,507 737,704 01 – 30 days - 3,192 At 01 January 27,620 26,061 31 – 90 days 8,216 226 Provision for impairment of trade and other receivables 3,815 2,791 91 – 365 days 1,691 626 Receivables written off during the year as uncollectible ( 1,458) ( 1,232)
868,414 741,748 At 31 December 29,977 27,620
The creation and release of provision for impaired receivables have been included in ‘administrative expenses’ in profit or loss. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash.
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable. At 31 December 2017, the Company held bank guarantees as security on receivables amounting to Rs 34,863,000 (2016 - Rs 73,188,000).
94 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 95 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Deferred income tax liabilities
The movements in deferred income tax assets and liabilities during the year are shown below:
19 Share Capital Capital tax Provision for Provision for Retirement allowances impairment slow-moving benefit Lease of receivables inventory obligations obligations Total 2017 2016 2017 2016 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Number Number Rs’000 Rs’000 At 01 January 2016 83,249 ( 4,430) ( 1,036) ( 9,082) - 68,701 Authorised, Issued and fully paid: Effect of IAS12 on lease obligations - - - - ( 3,711) ( 3,711) Ordinary shares of Nil par value 29,322,252 29,322,252 293,223 293,223 At 01 January 2016 (as restated) 83,249 ( 4,430) ( 1,036) ( 9,082) ( 3,711) 64,990 Credit to other comprehensive income - - - ( 5,288) - ( 5,288) Over-provision of deferred tax 20 Deferred income tax liabilities in prior year ( 498) - - - - ( 498) Effect of IAS12 on lease obligations - - - - ( 1,905) ( 1,905) The gross movement on the deferred income tax account is as follows: Charge/(credit) for the year (Restated) to income statement 8,219 ( 265) 240 715 - 8,909 2017 2016 Rs’000 Rs’000 At 31 December 2016 90,970 ( 4,695) ( 796) ( 13,655) ( 5,616) 66,208 At 01 January 71,824 68,701 Charge to other Deferred tax on leased assets ( 5,616) ( 3,711) comprehensive income - - - 356 - 356 Over-provision of deferred tax At 01 January (as restated) 66,208 64,990 in prior year ( 928) - - - - ( 928) Over-provision of deferred tax in prior year ( 928) ( 498) Charge/(credit) for the year Deferred tax liability/(asset) on remeasurements of post employment to income statement 416 ( 401) 9 1,601 ( 1,413) 212 benefit obligations charged to other comprehensive income 356 ( 5,288) Charge for the year (Note 9) 212 7,004 At 31 December 2017 90,458 ( 5,096) ( 787) ( 11,698) ( 7,029) 65,848
At 31 December 65,848 66,208
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.
96 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 97 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Retirement benefit obligations (Continued)
The movement in present value of funded obligations is as follows:
21 Retirement benefit obligations 2017 2016 Rs’000 Rs’000 Pension benefits At 01 January 418,784 374,215 Scheme expenses 1,538 - The amounts recognised in the statement of financial position are determined as follows: Interest cost 23,154 25,141 Actuarial losses 14,480 30,533 2017 2016 Benefits paid ( 10,746) ( 12,703) Rs’000 Rs’000 Settlements - - Other adjustments - 1,598 Present value of funded obligations 447,210 418,784 ( 378,395) Fair value of plan assets ( 338,458) At 31 December 447,210 418,784 Liability in the statement of financial position 68,815 80,326 The movement in fair value of plan assets is as follows:
At 01 January 338,458 320,789 The amounts recognised in profit or loss are as follows: Interest income 18,813 21,614
Employer’s contribution 15,294 11,294 2017 2016 Scheme expenses - ( 2,000) Rs’000 Rs’000 Cost of insuring risk benefits - - Actuarial gains/(losses) 16,576 ( 575) Scheme expenses 1,538 2,000 Benefits paid ( 10,746) ( 12,703) Net interest cost 4,341 3,527 Settlements - - Other adjustments - 1,559 Other adjustments - 39 Total included in staff costs 5,879 7,086 At 31 December 378,395 338,458
The actual return on plan assets amounted Rs 35,389,000 (2016 - Rs 21,039,000). Analysis of amount recognised in other comprehensive income
Gains/(losses) on pension scheme assets 16,576 ( 575) The movement in the (asset)/liability recognised in the balance sheet is as follows: Experience losses on the liabilities ( 14,480) ( 30,533) 2017 2016 Actuarial gains/(losses) recognised in other comprehensive income 2,096 ( 31,108) Rs’000 Rs’000
At 01 January 80,326 53,426 Cumulative actuarial gains/(losses) at the end of the year Total expense – as shown above 5,879 7,086 Employer’s contributions ( 15,294) ( 11,294) Cumulative actuarial losses at start of year ( 148,795) ( 117,687) Actuarial (gains)/losses recognised in other comprehensive income ( 2,096) 31,108 Actuarial gains/(losses) recognised during year 2,096 ( 31,108) At 31 December 68,815 80,326 Cumulative actuarial losses at end of year ( 146,699) ( 148,795)
98 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 99 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Retirement benefit obligations (Continued) Retirement benefit obligations (Continued)
Plan assets are comprised as follows: Plan assets
None of the plan assets are invested in shares of the Company or in property used by the Company. 2017 2017 2016 2016 Rs’000 % Rs’000 % Mortality rate
Local equities 108,557 29 89,536 27 Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and Overseas equities 146,219 38 132,736 39 experience. The average life expectancy in years of a pensioner retiring at age 60 on the reporting date is as follows: Fixed income 123,619 33 116,186 34 2017 2016 378,395 100 338,458 100 Male 21 21 Female 24 24 The assets of the Fund are mainly invested overseas in the Global Aggregate Bond Index Fund B and Blackrock World Index Subfund. Part of the fund is invested locally through MCBIM. There is also some cash held locally. The expected return on plan assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected returns on overseas equities reflect long-term government bond yields plus an approximate equity risk premium. Expected yields as fixed interest securities are based on government bond yields of approximately 7% per annum. The average life expectancy in years of a pensioner retiring at age 60, 15 years after the reporting date is as follows:
Vivo Energy Mauritius Limited is expected to contribute around Rs 18,935,000 to the pension scheme for the year ending 31 2017 2016 December 2018. Male 21 21 The duration (i.e. mean term) of the liabilities as at 31 December 2017 is 16.114 years. Female 24 24
The principal actuarial assumptions used were as follows:
2017 2016 % % 2017 2016 Rs’000 Rs’000 Discount rate 5.50 5.75 Future salary increases 3.00 4.00 At 31 December: Price inflation 3.80 2.30 NPS Ceiling increases 6.00 6.00 Present value of defined benefit obligations 447,210 418,784 Fair value of plan assets ( 378,395) ( 338,458)
In case of the funded plans, the Company ensures that the investment positions are managed within an asset-liability matching (ALM) Deficit 68,815 80,326 framework that has been developed to achieve long-term investments that are in line with the obligations under the pension schemes. Within this framework, the Company’s ALM objective is to match assets to the pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due and in the appropriate currency. The Company Experience adjustments on plan liabilities 14,480 30,533 actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the pension obligations. The Company has not changed the processes used to manage its risks from previous periods. The Company does not use derivatives to manage its risk. A large portion of assets in 2017 consists of equities and bonds, although the Company also Experience adjustments on plan assets 16,576 ( 575) invests in property, bonds and cash. The Company believes that equities offer the best returns over the long term with an acceptable level of risk. The majority of equities are in a globally diversified portfolio of international blue chip entities.
A triennial valuation was carried out as at 31 December 2014. As a result, contributions have been reviewed to 17.5%. This is also due to the fact that, as employees have stopped accruing service under the Defined Benefit Scheme as from 1 January 2015, there would henceforth not be any service costs.
100 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 101 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Retirement benefit obligations (Continued)
Sensitivity analysis
The sensitivity of the defined benefit obligation to changes in the weighted principal assumption have been determined based 22 Trade and other payables on sensibly possible changes of the discount rate or salary increase rate occurring at the end of the reporting period if all other assumptions remained unchanged and are as follows : 2017 2016 Rs’000 Rs’000 Impact on defined benefit obligation Change in Decrease in Increase in Trade payables 1,365,836 1,197,502 Assumption Assumption Assumption Payable to related parties (Note 27 (vii)) 42,994 30,492 Other payables and accruals 143,481 111,273 Discount rate 0.5% Increase by 8.3% Decrease by 7.3% Future long term salary assumption 0.5% Decrease by 2.1% Increase by 2.2% 1,552,311 1,339,267
The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected 23 Deposits on LPG cylinders unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised within the statement of financial position. 2017 2016 Rs’000 Rs’000 The methods and types of assumptions used in preparing the sensitivity analyses did not change compared to the previous period. At 01 January 344,043 322,134 Through its defined benefit pension plans, the Company is exposed to a number of risks, the most significant of which are detailed Deposits – net 30,217 21,909 below: At 31 December 374,260 344,043 Asset volatility
The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if plan assets underperform this yield, this will create a deficit. The plan holds a significant proportion of equities, which are expected to outperform corporate bonds in the long-term while providing volatility and risk in the short-term. As the plans mature, the Company intends to reduce the level of 24 Cash, cash equivalents and bank overdrafts investment risk by investing more in assets that better match the liabilities. Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement. Changes in bond yields 2017 2016 A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the Rs’000 Rs’000 plans’ bond holdings. Cash and cash equivalents 269,800 397,785 Inflation risk Bank overdrafts - - There are some of the Company’s pension obligations which are linked to inflation, and higher inflation will lead to higher liabilities (although, in most cases, caps on the level of inflationary increases are in place to protect the plan against extreme inflation). The 269,800 397,785 majority of the plan’s assets are either unaffected by (fixed interest bonds) or loosely correlated with (equities) inflation, meaning that an increase in inflation will also increase the deficit. Bank overdrafts are repayable on demand and bear average interest rates of 5.14% annually (2016 - 5.26% annually). Life expectancy The majority of the plans’ obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans’ liabilities. This is particularly significant in the plan, where inflationary increases result in higher sensitivity to changes in life expectancy.
102 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 103 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Related party transactions (Continued)
2017 2016 25 Dividends Rs’000 Rs’000 (ii) Sales of goods and services The Company declared the following dividends during the year. 2017 2016 (a) Sales of goods to fellow subsidiary: Rs’000 Rs’000 Vitol Aviation (fuels) 20,155 143,785 Vivo Energy Uganda (seals) 697 358 Rs 2.45 per ordinary share (2016 - Rs 1.90) 71,839 55,712 Vivo Energy Botswana (additives) 420 - Rs 3.00 per ordinary share (2016 - Rs 3.00) 87,967 87,967 21,272 144,143
159,806 143,679 (b) Sales of services: Energy Storage Company Ltd (joint venture) The dividend of Rs 2.45 declared in 2017 represents the final dividend in respect of the financial year ended 31 December 2016. (management services) 3,000 3,000 The dividend of Rs 3.00 declared in 2017 represents the interim dividend in relation to the financial year ended 31 December 2017. Energy Storage Company Ltd (joint venture) (rent) 950 2,321 Vivo Energy Indian Ocean Holdings (management services) (fellow subsidiary) 1,425 1,448 5,375 6,769 26 Contingent liabilities The above transactions were carried out on normal commercial terms and conditions. At 31 December 2017, the Company had no contingent liabilities (31 December 2016 – Rs Nil).
(iii) Key management personnel (including full time directors)
27 Related party transactions 2017 2016 Number Number At 31 December 2017, the Company is controlled by Vivo Energy Mauritius Holdings BV which owns 77.15% of the Company’s shares. The remaining 22.85% of the shares are widely held and are listed on the Stock Exchange of Mauritius. The intermediate and ultimate Shares held in the Company - Directly - - parents of the Company are Vivo Energy Holding BV and HV Investments BV, companies based in Netherlands. Fellow subsidiaries are - Indirectly - - - - entities which are controlled by the ultimate parent directly or indirectly through one or more intermediaries. Associates are entities in which the Company has significant influence but which it does not control. The following transactions were carried out with related parties: 2017 2016 2017 2016 Rs’000 Rs’000 Rs’000 Rs’000 Emoluments 41,814 37,347 (i)Purchases of goods and services from fellow subsidiaries Post employment benefits 5,670 5,552 47,484 42,899 Purchases of goods: Shell and Vivo Lubricants SA (lubricants freight) 16,057 11,375 Vitol Asia Pte (fuels) 214,689 203,003 Vitol Bahrain E.C. (fuels) 291,505 306,204 522,251 520,582
Purchases of services: Vivo Energy Africa Services Sàrl 97,722 95,347 Vivo Energy South Africa 136 - 97,858 95,347
The above transaction with Vivo Energy Africa Services Sàrl represents the Company’s share of central service cost for business support services and as per the intra group services agreement (contribution agreement) between Vivo Energy Mauritius Limited and Vivo Energy Africa Services Sàrl (VEAS).
104 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 105 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Related party transactions (Continued)
2017 2016 Rs’000 Rs’000 28 Prior year restatement (iv) Expenses Expenses paid on behalf of fellow subsidiaries: The Company has early adopted IFRS16 Leases which required the restatement of previously issued comparative 19,111 Vivo Energy Investments BV (VEIBV) 21,763 numbers, the impact of which has been disclosed in Note 14. Société Malgache des Pétroles Vivo Energy 347 663 Vivo Energy Botswana 771 4,226 Vivo Energy Kenya - 5 Vivo Energy Maroc - 189 29 Three year summary Vivo Energy Uganda 913 775 (Restated) (Restated) 21,142 27,621 2017 2016 2015 Rs’000 Rs’000 Rs’000 Expenses paid on behalf of fellow subsidiaries included staff costs of Rs 18,747,000 (2016 – Rs 20,533,000). Expenses paid on behalf of Vivo Energy Investments BV (VEIBV) were recharged to the latter with a mark-up of 7% (2016 – 7%). The Income Statement other expenses related to the above transactions were reclaimed from the above related companies and invoiced at cost. Sales 10,467,842 9,106,874 10,139,537
350,489 (v) Dividends received Operating profit 398,801 359,987 4,002 Energy Storage Company Ltd (joint venture) 10,000 15,000 Finance income 5,732 1,867 Finance cost ( 38,752) ( 42,052) ( 45,743) 6,756 (vi) Dividends paid Share of profit of joint venture 7,511 10,594 322,495 Vivo Energy Mauritius Holdings BV (parent) 123,297 110,854 Profit before income tax 369,992 326,705 Income tax expense ( 52,064) ( 58,419) ( 54,945) Profit for the year 270,431 311,573 271,760 (vii) Outstanding balances Rs 5.45 Receivable from related parties: Dividends declared per share 4.90 2.90 Rs 9.22 Vitol Aviation (fellow subsidiary) 1,479 - Basic and diluted earnings per share 10.63 9.27 Vivo Energy Investments BV (VEIBV) (fellow subsidiary) 11,741 4,143 Energy Storage Company Ltd (joint venture) 653 368 Société Malgache des Pétroles Vivo Energy (fellow subsidiary) - 149 Vivo Energy Botswana (fellow subsidiary) 220 155 Statement of Comprehensive Income Vivo Energy South Africa (fellow subsidiary) - - Vivo Energy Uganda (fellow subsidiary) 261 237 (Restated) (Restated) Vivo Energy Kenya (fellow subsidiary) - 5 2017 2016 2015 Vivo Energy Maroc (fellow subsidiary) - 189 Rs’000 Rs’000 Rs’000 14,354 5,246 Profit for the year 270,431 311,573 271,760 Payable to related parties: Other comprehensive income Vivo Energy Africa Services (fellow subsidiary) 38,485 29,530 Items that will not be reclassified to profit or loss Shell and Vivo Lubricants SA (fellow subsidiary) 4,499 962 Remeasurements of post employment benefit obligations 2,096 ( 31,108) 22,904 Vitol Aviation (fellow subsidiary) 10 - Deferred tax (liability)/asset on remeasurement of 42,994 30,492 post employment benefit obligations ( 356) 5,288 ( 3,894) Other comprehensive income for the year, net of tax 1,740 ( 25,820) 19,010 The amounts receivable from, and payable to related parties are unsecured, interest free and have no fixed repayment terms and Total comprehensive income for the year 272,171 285,753 290,770 approximate their fair values.
106 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 107 Notes to the Financial Statements Notes to the Financial Statements 31 December 2017 (continued) 31 December 2017 (continued)
Three year summary (Continued)
Statement of financial position 30 Financial instruments by category (Restated) (Restated) 2017 2016 2015 The Company classifies its financial assets and liabilities at amortised cost only if the following criteria are met: Rs’000 Rs’000 Rs’000 • the asset or liability is held within a business model with the objective of collecting the contractual cash flows, and • the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on ASSETS the principal outstanding. Non-current assets Property, plant and equipment 1,074,779 1,085,388 1,056,118 At amortised cost Intangible assets 2,363 2,237 2,124 2017 2016 Right-of-use assets 326,255 371,398 405,107 Rs’000 Rs’000 Prepaid operating leases 9,205 9,784 10,362 Investment in joint ventures 37,794 39,538 46,402 Financial assets Other long-term assets 2,919 5,990 6,524 Trade and other receivables 882,354 753,396 1,453,315 1,514,335 1,526,637 Cash and cash equivalents 269,800 397,785 Other long-term assets 2,919 5,990 Current assets 1,155,073 1,157,171 Inventories 792,709 416,363 619,093 890,930 Trade and other receivables 776,162 690,102 Trade and other receivables exclude prepayments of Rs 8,576,000 (2016 – Rs 9,052,000) and VAT receivable amounting Cash and cash equivalents 269,800 397,785 67,664 Rs Nil 1,953,439 1,590,310 1,376,859 to (2016 – Rs 13,713,000). Total assets 3,406,754 3,104,645 2,903,496 At amortised cost 2017 2016 EQUITY & LIABILITIES Rs’000 Rs’000 Equity Share capital 293,223 293,223 293,223 Financial liabilities Retained earnings 668,182 555,872 413,798 Trade and other payables 1,512,287 1,339,267 Total equity 961,405 849,095 707,021 Deposit on LPG cylinders 374,260 344,043 Lease liability (current) 36,830 36,796 LIABILITIES Lease liability (non-current) 330,772 367,636 Non-current liabilities 2,254,149 2,087,742 Deferred income tax liabilities 65,848 66,208 64,990 Retirement benefit obligations 68,815 80,326 53,426 Lease liability 330,772 367,636 391,969 Trade and other payables amount exclude VAT payable of Rs 40,024,000 (2016 – Rs Nil) which is considered to be a 465,435 514,170 510,385 non-financial instrument.
Current liabilities Bank overdrafts - - 98,935 Trade and other payables 1,552,311 1,339,267 1,195,956 31 Parent and ultimate parent companies Deposits on LPG cylinders 374,260 344,043 322,134 Current income tax liabilities 16,513 21,274 34,097 At 31 December 2017, the directors consider Vivo Energy Mauritius Holdings B.V. (incorporated in the Netherlands) Lease liability 36,830 36,796 34,968 as its parent company. The ultimate parent company of the Vivo Energy structure is Vivo Energy Holding B.V. and its 1,979,914 1,741,380 1,686,090 ownership structure is 41,81% owned by Vitol Africa B.V., 13,34% owned by VIP Africa II B.V., 41,81 owned by HIP Oil 2 Total liabilities 2,445,349 2,255,550 2,196,475 Total equity and liabilities 3,406,754 3,104,645 2,903,496 B.V., 2,59% owned by HIP Oil B.V. and 0,44% owned by Stichting Administratiekantoor Vivo Energy Holding. The Group’s ultimate controlling parties are Vitol Holding B.V. with 55% and funds advised by Helios Investments Partners LLP with 45%.
On 26 April 2017 Shell Overseas Investments B.V. sold their minority interest of 20% in Vivo Energy Holding B.V. to Vitol Africa B.V.
108 Vivo Energy Mauritius Limited Annual Report 2017 Vivo Energy Mauritius Limited Annual Report 2017 109 Notes to the Financial Statements 31 December 2017 (continued) Notice of Meeting of Shareholders
Notice is hereby given that the Annual Meeting of Shareholders of Vivo Energy Mauritius Limited (‘the Company’) will be held at Labourdonnais Waterfront Hotel, Caudan Waterfront, Port Louis on Monday 14 May 2018 at 14.00 hours to transact the following business:
1. To adopt the minutes of proceedings of the last Annual Meeting of Shareholders held on 12 May 2017.
32 Incorporation and registered office Ordinary Resolution I
The Company is incorporated and domiciled in Mauritius as a public company with limited liability. The address of its “Resolved that the minutes be adopted as true proceedings of the meeting.” registered office is Roche Bois, Port Louis. 2. To consider the Annual Report 2017 of the Company. 33 Currency 3. To receive the report of Messrs PricewaterhouseCoopers, the auditors of the Company. 4. To consider and approve the Audited Financial Statements of the Company for the year ended 31 December 2017. The financial statements are presented in thousands of Mauritian rupees. Ordinary Resolution II
“Resolved that the Audited Financial Statements of the Company for the year ended 31 December 2017 be and are hereby approved.”
5. To re-elect as Director of the Company Mr Pawan Kumar JUWAHEER who retires by rotation and, being eligible, offers himself for re-election in accordance with the Constitution of the Company.
Ordinary Resolution III
“Resolved that Mr Pawan Kumar JUWAHEER be and is hereby re-elected as Director of the Company.”
6. To re-elect as Director of the Company Mr Jean-Michel ARLANDIS who has been appointed by the board on the 13 November 2017 to fill a casual vacancy now retires in accordance with the Constitution of the Company and, being eligible, offers himself for election.
Ordinary Resolution IV
“Resolved that Mr Jean-Michel ARLANDIS be and is hereby elected as Director of the Company.”
7. To re-elect Mr Timothy TAYLOR retiring under Section 138(6) of the Companies Act 2001 as Company Director to hold office from the date of this Annual Meeting of Shareholders until the next Annual Meeting of Shareholders of the Company.
Ordinary Resolution V
“Resolved that Mr Timothy TAYLOR be and is hereby re-elected as Director of the Company.”
8. To re-elect Mr Mr Kim Foong LEUNG SHIN CHEUNG who retires by rotation in accordance with the Constitution of the Company and with Section 138 (6) of the Companies Act 2001.
Ordinary Resolution VI
“Resolved that Mr Kim Foong LEUNG SHIN CHEUNG be hereby re-elected as Director of the Company.”
Note:: A member not being able to attend and vote at the meeting is entitled to appoint a proxy to attend and vote on his behalf. The proxy need not be a member. Proxy forms duly signed should reach the registered office of the Company at least FORTY-EIGHT hours before the holding of the meeting. 110 Vivo Energy Mauritius Limited Annual Report 2017 Notice of Meeting of Shareholders Proxy form
9. To take note of the automatic reappointment of Messrs PricewaterhouseCoopers as auditors of the Company and to authorise the Board to fix their remuneration for the financial year ending 31 December 2017. I/We
Ordinary Resolution VII of being a member/members of the abovenamed Company, hereby appoint “Resolved that the Board of Directors of the Company be hereby authorised to fix the remuneration of Messrs of PricewaterhouseCoopers, the auditors of the Company for the financial year ending 31 December 2018.” or failing him/her of By order of the Board as my/our proxy to vote for me/us and on my/our behalf at the Annual Meeting of Shareholders of the Company, to be held on 14 May 2018 and at any adjournment thereof. Executive Services Limited Per Christian Angseesing I/We desire my/our vote(s) to be cast on the Resolutions as follows: Secretary
RESOLUTIONS For Against Abstain I Resolved that the minutes be adopted as true proceedings of the meeting. II Resolved that the Audited Financial Statements of the Company for the year ended 31 December 2017 be hereby approved. III Resolved that Mr Pawan Kumar JUWAHEER be hereby re-elected as Director of the Company IV Resolved that Mr Jean-Michel ARLANDIS be hereby elected as Director of the Company V Resolved that Mr Timothy TAYLOR be hereby re-elected as Director of the Company VI Resolved that Mr Kim Foong LEUNG SHIN CHEUNG be hereby re-elected as Director of the Company VII Resolved that the Board of Directors of the Company be hereby authorized to fix the remuneration of Messrs PricewaterhouseCoopers, the auditors of the Company, for the financial year ending 31 December 2018.
Signed this day of
Signature
Note:: 1. A member of the Company entitled to attend and vote at this meeting may appoint a proxy of his own choice (whether a member or not) to attend and vote on his behalf. 2.Please mark in the appropriate box how you wish to vote. If no specific direction as to voting is given, the Note:: A member not being able to attend and vote at the meeting is entitled to appoint a proxy to attend proxy will exercise his discretion as to how he/she votes. and vote on his behalf. The proxy need not be a member. Proxy forms duly signed should reach the registered 3. Proxy forms duly signed should reach the registered office of the Company at least FORTY-EIGHT hours office of the Company at least FORTY-EIGHT hours before the holding of the meeting. before the holding of the meeting or else the instrument of proxy should not be treated as valid. Shell trademarks used under license Notes
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