Cover2016.pdf 1 4/11/17 10:37 AM
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Id 2 Fs 4
Introduction Financial statements St Cg
Strategic report Corporate governance
Id 2 INTRODUCTION St 14 STRATEGIC REPORT Fs 24 FINANCIAL STATEMENTS Cg 31 CORPORATE GOVERNANCE
We 3 Who we are Op 15 Review of Operations Di 26 Directors’ Report Cr 31 Corporate Governance Report
Vi 4 Our Vision Hs 21 History of Vivo Energy in Mauritius Sc 29 Secretary’s Report Co 56 Statement of Compliance
Va 7 Our Values Sh 22 Our Shareholders Au 59 Independent Auditor’s Report
Ch 8 Chairman’s Message In 63 Income Statement
Md 10 Managing Director’s Report Ci 64 Statement of Comprehensive Income
Fp 65 Statement of Financial Position
Ce 66 Statement of Changes in Equity
Cf 67 Statement of Cash Flows
Nt 68 Notes to the Financial Statements WHO WE ARE A strong and growing presence in 16 countries across Africa
Vivo Energy is the company behind the Shell brand in Africa and Helios Investment Partners. Vivo Energy operates in and is jointly owned by Vitol and Helios Investment Partners. Retail, Commercial Fuels, Marine, Aviation (in partnership The company has a strong and growing presence in 16 with Vitol Aviation), Liquefied Petroleum Gas and Lubricants countries across Africa. in Mauritius. The Shell brand has been present in Mauritius since 1905, celebrating its 111th anniversary in 2016. It sources, distributes, markets and supplies Shell’s high-quality fuels and lubricants to retail and commercial customers Vivo Energy Mauritius Limited (VEML) is a public interest across the continent. Vivo Energy was established on 1st entity as defined by law. It employs 121 people, operates December 2011 to distribute and market Shell-branded 48 retail stations under the Shell brand and has access to fuels and lubricants. Vitol and Helios each own 40% of Vivo 34,500 metric tonnes of fuel and 2,675 metric tonnes of Id Energy, with Shell holding the remaining 20%. Shell and Vivo LPG storage capacity. Lubricants is 50% owned by Shell and 50% owned by Vitol Introduction
2 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 3 OUR VISION Becoming Africa’s most respected energy business
Our vision is to become Africa’s most respected energy business.
To become Africa’s most respected energy business is not an end in itself. It is the logical consequence of doing things the right way, realising the full potential of our people and our business partners, and creating a new benchmark for quality, excellence, safety and responsibility in Africa’s downstream energy marketplace.
We know that respect is earned and that actions speak louder than words. We strive constantly to behave ethically, responsibly and honourably in everything we do. We take care of our people, our customers and the local communities and the environment in which we operate.
We meet the highest international Health, Safety, Security and Environmental (HSSE) standards. We continue to invest in our operations, building stronger partnerships and implementing world-class safety practices. We set an example for others to follow.
Above all, we grow our business by hiring, training and motivating the best local people, sharing the rewards of success and investing in the communities in which we operate.
4 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 5 OUR VALUES
We are judged by how we act and our reputation is upheld should conduct ourselves, and drive the behaviour expected by how we put into practice our core values of honesty, of every employee, in every Vivo Energy operation, at all integrity and respect for people. times.
These values underpin all the work we do and are the We employ a diverse group of people and value the benefits foundation of our business. We always strive to uphold this brings. We respect the human rights of our employees them, in whatever situation we find ourselves in. Indeed, and strive to provide them with safe working conditions, they are crucial to our success and growth as a company, promote the development of their talents and give them and to achieving our vision. channels to report concerns.
These core values are encapsulated in our General Business We also firmly believe in the fundamental importance of Principles and Code of Conduct, which outline clear, concrete trust, openness, teamwork, professionalism and pride in and detailed principles and ethical actions by which we what we do.
6 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 7 CHAIRMAN’S MESSAGE
Dear Shareholders,
2016 was another year of significant progress for Vivo Energy Mauritius Limited (VEML) with profit after tax registered was Rs 320 million in 2016, compared to Rs 283 million in 2015.
Despite many challenges faced from the external environment in 2016, VEML has grown, investing in making its operations more efficient, adding new retail stations to its portfolio, growing its market share and adding new and refurbished convenience retail outlets.
We had an excellent HSSE performance in 2016, exceeding the stringent targets set. I know that the team has worked hard to ensure the safety of our people and those around us.
We have kept building the reputation of the company, never losing focus on doing business the right way, enhancing our environmental footprint through better quality goods, services and efficiency and playing an active part in our communities.
In summary VEML is in great shape. We have set ambitious targets for 2017 and will continue to build on the positive results and momentum from 2016 to continue the sustainable growth of the company. I have no doubt that 2017 will be another important and successful year helping us progress towards our vision of becoming the most respected energy business in Mauritius.
I offer my thanks to the directors for all of their contributions to and governance of VEML. I would also like to extend my appreciation to the Managing Director and his management team, for their drive in delivering results year on year.
The progress we made in 2016, the value we created for our customers, and the financial results we delivered would not have been possible without the dedication and hard work of our employees, and I would like to express my gratitude to all of them for their efforts.
Our strategy has delivered strong results for VEML and the Shell brand remains the preferred customer brand and market leader. This gives me every confidence that we will again grow the business in 2017 and create further value for you, our shareholders.
Christian Chammas Chairman
8 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 9 MANAGING DIRECTOR’S REPORT
Vivo Energy Mauritius has seen another year of strong growth in 2016 showing that we have the right strategy in place and that we have an excellent team of people who have brilliantly executed it.
Looking back at 2016, the oil industry was filled with many challenges. Throughout the volatility of oil prices on the international market, continued slow-down of some sectors in the local market and increased competition both locally and internationally, we managed the challenges head-on and are building a stronger company year by year.
BUSINESS PERFORMANCE Overall performance was good, we succeeded in maintaining our leadership position and we achieved favourable results in most segments of the business. The aviation business performed better in 2016 compared to previous years, and this was mainly due to several strategic cost efficiency initiatives driven during the course of the year. With regard to marine, we leveraged previous initiatives related to the partial liberalisation of fuel imports, including putting our new bunkering barge into operation, coupled with the supply of marine fuel oil 380 cst. Both our retail and LPG volumes grew in 2015. The margin increase in LPG midway through 2016 helped improve the financial performance. On the other hand the retail margin review by the regulator still remains overdue. Our commercial businesses delivered good overall performances too, despite below expectation growth in the construction and transport sectors.
Investment Investing for growth remains our winning strategy. With the opening of our latest stations in Rivière Noire and Diolle Junction, we now operate the largest network in the country with 48 Shell-branded service stations. We upgraded a number of stations during the year, with a complete knock down and rebuild of our station in Saint Paul. With the opening of the first KFC outlet on a station atS hell Golden in Goodlands and additional Hearty outlets, we increased our footprint of shops in 2016. We are pleased with the investment we made in our new LPG filling line, which is of higher capacity and more efficient than the previous one. In line with the general aspiration to further strengthen Port Louis as a bunkering destination, we increased our storage capacity in our Causeway heavy fuel oil depot.
Our customer focus We maintained our excellent customer service levels and continued to be at the forefront of industry innovation. We launched new marketing campaigns, creating unique experiences for our Smart Club members, whilst further growing our brand. Over and above allowing customers to accumulate and redeem points for rewards all year round, our Smart Club members won star prizes, namely a stay for two in a 5-star hotel which included a helicopter tour of the island, an all-inclusive package for two to watch the finals ofE uro 2016 in Paris and an environmentally-friendly home for our Christmas campaign. In order to capture the requirements and feedback from our customers to provide them with best in class service and product quality, we have put in place the ‘Voice of the Customer’ programme.
Delivering quality products and services remain high on our agenda and the company has continued its effort in working towards operational excellence. Vivo Energy Mauritius achieved a new milestone with the ISO-9001-2015 certification. We have also pursued this quest for quality into our Convenience Retail shops.
10 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 11 All the above are aimed to enhance the Shell customer experience. So far, I am encouraged with the results delivered, especially when I see the continued increase in our loyal customer base.
Our people – at the centre of everything we do To meet the evolving needs of our customers, our efforts go into attracting and engaging the best talent with the right skills. In 2016, we recruited ten new employees and three young graduates joined under the Youth Employment Programme. We also gave the opportunity to four interns by hiring them for short term assignments and helped them develop the skills they need and acquire on-the-job experience. We keep investing in training and development of our people. We held a team building activity for all employees during the course of the year and visioning workshop was organised to engage and align employees on the company’s vision.
A people survey was carried out in 2016 and the results show ‘purpose and values’ as a key strength of the company. An action plan is in place and actions already started to build on the strengths and address the areas for improvement following the feedback received from employees.
Community Investment We are committed to making a meaningful contribution to the communities where we operate. This includes maximising the local employment and economic development opportunities that our projects can provide. We are proud to support community projects in the ten districts of Mauritius, in the areas of road safety, education and environment and we encourage our employees to volunteer in our community activities.
Heath, Safety, Security and Environment (HSSE) Once again, we had a very good HSSE record in 2016. We closed yet another “Goal Zero” year. No recordable incident or spill, no recordable Lost Time Injury for 650,000 exposure hours and 1,300,000 kilometres driven. It is a matter of pride that we extended our Goal Zero record to 1,784 days in 2016. This is thanks to the effort of every employee, every contractor, every retail site staff member and every customer who never become complacent when it comes to HSSE.
Outlook Despite the changing industry environment and the challenges resulting from volatile oil prices, I remain confident in the future of the company.VEM L is already equipped with a solid foundation to deal with external risks and we have demonstrated how resilient we are and determined to fight for maintaining our leadership position.
I am deeply thankful to all those who have contributed to this success. I must express my gratitude to the Board of Directors for their trust, steer and invaluable counsel. Without the commitment and staunch support of my management team, the company would not have made such remarkable progress over the years. And none of it would have been possible without the dedication and hard work of our staff - I want to thank all of them for their efforts in 2016.
Together, we are committed to keep working hard, hand in hand with all our stakeholders, for an even more successful 2017. Vivo Energy Mauritius has a bright future ahead.
Pawan K Juwaheer Managing Director
12 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 13 St Strategic report REVIEW OF OPERATIONS
Retail In our effort to improve our offer on retail stations, VEML The highest quality products and a world-class retail continued to partner with reputable companies to offer experience. new services, with the aim of making our service stations one-stop shops. We opened the first KFC outlet on a 2016 saw the opening of a new service station in Riviere service station at our Shell station in Goodlands. By the end Noire which contributed to further growing our well- of 2016, the company was operating convenience shops on distributed network under the Shell brand across the 18 sites and a series of quick service restaurants (Subway country. on three sites, KFC on one site, Food Lovers on one site and “Hearty”, our in-house brand offering freshly baked Our customers have continued to enjoy driving longer products, on seven sites). distances with better efficiency and more engine protection thanks to our differentiated fuels, Shell FuelSave Unleaded With regard to operational excellence, we continued the and Shell FuelSave Diesel. “Mystery Motorist Programme” to monitor and ensure quality and enhance service to customers on site. We During the year, a number of stations were upgraded. launched the Voice of Customer to capture feedback from We undertook major upgrade at Shell Saint Paul service our customers and provide them with best in class service station and re-opened Shell Paillotte. Our focus on and product quality. For the first time, we organised an continuous improvement ensures that our service stations Emerging Retailers’ Workshop, targeting our new generation are clean, efficient and welcoming with all offering high- of retailers, which took place at our training centre located quality Shell fuels, lubricants and LPG. We also offer Shell at Shell Pineview service station in La Vigie. Autogas, Shell Gas Lite, car wash and tyre service facilities on selected sites. 2017 looks promising for further growth through new offers and the further development of our retail network. In 2016, a number of marketing activities were organised, to reward our loyal customers, members of the Smart Club Loyalty Programme. Over and above allowing customers to Commercial accumulate points to redeem for rewards all year round, our Supplying transport and industrial fuels, lubricants and Shell Smart Club members won star prizes, namely a stay greases to business-to-business customers. for two in a 5-star hotel which included a helicopter tour of the island, an all-inclusive package for two to watch the finals VEML has been successful in maintaining its leadership of Euro 2016 in Paris and an environmentally-friendly home position for the supply of fuels, lubricants and greases to for our Christmas campaign. business-to-business customers by constantly championing
14 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 15 Review of operations
its customers and anticipating their needs. With Shell’s Shell Gas is sold in a variety of cylinder sizes for various Marine and Liquefied Petroleum Gas delivery scheduling and unmatched portfolio of differentiated fuels, the company applications: 5 kg and 12 kg for domestic purposes, 50kg for Providing marine fuel oil, marine gasoil and Shell lubricants. telesales and telemarketing support. delivers products to customers across all sectors such as both domestic and commercial use, 12 kg for commercial transport, construction, textile, agriculture, manufacturing, use and industrial applications and 12/15 kg for forklift 2016 was another good year for the marine business. Calls are handled by our trained agents who act as business power, hotels and restaurants. The company continually applications. Our product range is backed by our expertise, The business leveraged previous initiatives related to the and service focal points for HSSE, strives to add value to the business by reviewing the dedicated account managers and rigorous safety standards. partial liberalisation of fuel imports, including putting a new commercial, lubricants, LPG, aviation and marine. We face processes with a view to simplifying and enhancing the bunkering barge into operation and the introduction of an ever-growing demand for services, both internally and customer experience. VEML has maintained its high HSSE To respond to customers’ expectations and needs, the marine fuel oil 380 cst as well as extending our customer externally. standards through regular training and toolbox talks with its company introduced Shell Gas Lite, the first lightweight base. This resulted in the marine business margins being customers, who highly value these initiatives. LPG cylinders for domestic use in Mauritius. Made from above plan for 2016. However Port Louis is still not as Besides being the only petroleum company operating composite materials, it is lighter, rust-free and more competitive as its direct competing ports (Singapore and such comprehensive customer service in the country, we Compared to the previous year, the market registered manageable than the traditional metal cylinders on the South Africa) due to higher supply costs. Despite this, we are continuously revisiting our processes and striving to a negative growth in 2016 for the supply of fuels. The market. Besides being 7 kg lighter than metal cylinders, our managed to maintain our margins by properly managing maintain high performance through focus and emphasis on construction sector was expected to pick up, however new cylinder is translucent, which allows customers to see stock and capitalising on our own fuel imports at the right people development and staff motivation. major projects from the public sector have been postponed when the LPG is running low. time. to 2017. This has, in turn, impacted the transport sector. Pressure on margins is constantly increasing as we operate 2016 was a good year for the LPG business, with volumes With our new barge, Gulf Star 1, we doubled our logistics Product Supplies and in a mature market where opportunities for growth above plan and additional margin for packed domestic LPG capabilities at anchorage. We also increased our storage Distribution are limited. Yet, we have been able to secure long term obtained in July 2016. capacities for fuel oil, with new storage of 8,000 m3 coming Distribution contracts with customers with whom we entertain strong into operation in 2016. VEML wants to contribute to the relationships and have won medium term tender businesses. development of Port Louis maritime activities and is looking VEML owns and operates two depots, namely Roche Bois Lubricants forward to grasping growth opportunities. and Causeway and operates three other depots on behalf On the other hand, bulk LPG volume has increased Providing a full range of lubricants for automotive, marine of the oil industry, one at Fort William for the storage of fuel compared to 2015 thanks to key customers secured in our and industrial applications. oil on behalf of the Central Electricity Board, the second portfolio. AVIATION one in Rodrigues Island, and the third, a joint venture LPG VEML offers a complete range of lubricants, greases and Supplying products and related services to the aviation storage, ESCOL in which VEML owns 50% equity. services to all market segments be it retail, commercial industry. Liquefied Petroleum Gas and marine customers, available from our comprehensive The company holds 23.5% of the shares of Mer Rouge Oil Providing LPG in various cylinder sizes and bulk for network of Shell service stations, spare parts shops and The aviation business performed better in 2016 compared Storage Terminal Company Limited (MOST), a Joint Venture domestic, commercial and industrial applications. franchises, as well as independent workshops. to previous years, mainly due to several strategic initiatives set up with the oil companies and STC to build and operate implemented during the course of the year with the aim to an additional 25,000 metric tonnes motor gasoline depot in Liquefied Petroleum Gas (LPG), being a clean and convenient In the retail segment, our new automotive lubricants reduce stock exposure and maintain contractual margins. Mer Rouge. source of energy, is used worldwide for numerous business formulation enhancing engine cleanliness and better This resulted in the aviation business performing above applications in industry and transportation, as well as for protection, has been designed for the latest technology plan, both in terms of volumes and margins. The industry Distribution to retail outlets, industrial customers and the domestic use. VEML supplies Shell Gas to commercial vehicle manufacturers giving our customers peace of mind environment remained challenging with low margin levels airport is effected by bulk delivery vehicles for white oils and sectors such as textiles, hotels, livestock breeding, catering, when using Shell Lubricants. We continued to build trust still prevailing during the tender process. black oils. Another fleet of vehicles distributes LPG cylinders restaurants and industry. Easy to transport and to store, in our business-to-business partners by offering them across the island to retailers, while bulk LPG is delivered LPG has long been a competitive source of energy and for Shell’s industry leading lubricants technology and technical Compared to 2015, industry volume grew by 11%, with through specialised vehicles. Deliveries to marine customers domestic applications. It is cheaper than electricity. expertise, which resulted in more customers valuing our the increasing number of flights to Mauritius. Our aviation is conducted either through bunkering barge or through products. We helped them meet their most demanding business is prepared to adapt to challenges and seize pipelines at quays. In recent years, the market has become more competitive, business challenges in terms of reduced cost and lower opportunities as they arise in the market. although despite this, the company has managed to limit downtime, hence improving their business performance. the impact on its LPG business. VEML continually strives Human Resources to deliver better, safer and more reliable ways to meet the 2016 results were slightly below plan given the slowdown in Customer Service Centre Our people, our biggest asset. energy needs of customers, while guaranteeing a continuous activities, specifically in the construction sector. A one-stop shop for our customers. and regular supply of LPG to our customers. We have a At Vivo Energy, we are committed to the continual wide distribution network which consists of some 900 We are seeing a better future in 2017 in most of the Through our call centre, we provide basic services, such as development of our people. We understand that, as a resellers throughout Mauritius and Rodrigues. In addition, major segments and more specifically in the construction, order taking from retail and commercial customers for fuels business, we can only be as good as the individuals we the company provides a home delivery service in selected agricultural and transport sector.s To further meet customer and lubricants, complaints handling, invoicing and responding employ, and for that reason we actively seek out people regions through a network of resellers, and through our expectations in terms of quality and professionalism, VEML to queries on customer accounts. Our services also include with the rare combination of skill, experience, responsibility, distributor, Gas Transport Limited, for 12 kg commercial and will bring some innovations in the lubricants industry in debtor follow up, maintenance calls management, lubricants commitment and ambition that will help make VEML a 50 kg cylinders. 2017.
16 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 17 respected and successful company and an employer of Health, Safety, Security and choice. The company is very culturally diverse, which helps Environment to bring different perspectives. Our commitment to achieving and maintaining the highest In 2016, VEML recruited ten new employees and three international Health, Safety, Security and Environment young graduates joined under the Youth Employment (HSSE) standards is at the heart of our business and is a Programme. The company also hired four interns for short key differentiator for Vivo Energy in Africa. Being the best term assignments and helped them develop the skills they in HSSE is not an objective that sits apart from our overall need and acquire on-the-job experience. ambitions. It is an integral and essential part of our business plan. We keep investing in training and development of our people and the average training days per person in 2016 We know that our retail, commercial and marine customers was three days. We also held a team building event for all recognise and value the standards we set ourselves in employees in October 2016. HSSE and social performance. We also know that the maintenance and advancement of these standards will play a The company is committed to developing and promoting key role in winning new customers, building loyalty, engaging local talent wherever possible. Employees who want to communities, motivating our employees and growing our make a difference and have the energy, professionalism and business. We are diligent in reporting incidents and identifying drive to achieve more and motivate others are given learning potential incidents. It is part of a company-wide culture that and growth opportunities and outstanding performance is extends to employees, contractors and partners alike. For recognised. our employees, adherence to HSSE policy and practice is a performance target linked directly to their pay.
COMMUNITY INVESTMENT In 2016, the company celebrated its annual Safety Day, a significant milestone in the company’s journey to build a At Vivo Energy, we want to make a real and lasting difference stronger safety culture in its pursuit of Goal Zero of no to the communities in which we operate. We have chosen harm to people or the environment, under the theme “See to focus on three key areas of community investment: road it; Prevent it; Report it”. safety, education and the environment. Our community investment programmes matter to us because we employ local people and serve local businesses and individuals. We HSSE performance 2014-2016 want to create sustainable social and economic benefits for these communities and engage with them to earn their respect and trust. 2014 2015 2016 Fatality zero zero zero For the fourth year running, we held our annual Road Total Recordable Cases zero zero zero Safety Day, in collaboration with the Ministry of Education Total Recordable Occupational and Human Resources, in all primary schools in Mauritius Illness Frequency zero zero zero and Rodrigues. We organised a video clip competition to Exposure Hours (‘000) 475 783 645 further sensitise young people on the importance of road Lost Time Injury zero zero zero safety. With regard to our support to education, we have Spills zero zero zero continued to work with the NGO Junior Achievement Kilometres driven (‘000s) 1,902 1,614 1,238 Mascareignes to help disadvantaged youth build a brighter future for themselves through skills development. We held a Vivo Energy Youth Day to help prepare young students for the world of work. We also continued to upgrade of the environment close to our office. Many of our employees have volunteered in the community investment activities of the company.
18 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 19 HISTORY OF VIVO ENERGY IN MAURITIUS
Vivo Energy, the Shell licensee in 16 African markets, was established on 1st December 2011 to distribute and market Shell branded fuels and lubricants.
Vivo Energy is the company behind the Shell brand in Africa marketing operations in Mauritius in 1905 through its and is jointly owned by Vitol, Helios Investment Partners and managing agents, Blyth Brothers and Company Limited. As Shell. The company has a strong and growing presence in 16 such, Shell was the first international oil company to set up countries across Africa. It sources, distributes, markets and business on the island and its close partnership with Blyth supplies Shell’s high-quality fuels and lubricants to retail and has been the cornerstone of a successful development. Most commercial customers across the continent. of the sites of current service stations, depot and customer portfolio were acquired during this time. Vivo Energy was established on 1st December 2011 to distribute and market Shell-branded fuels and lubricants. As part of a regional corporate reorganisation in the late Vitol and Helios each own 40% of Vivo Energy, with Shell 1950s, the Shell Company of East Africa was replaced by the holding the remaining 20%. Shell and Vivo Lubricants is Shell Company of the Islands Limited, a branch of a company 50% owned by Shell and 50% owned by Vitol and Helios incorporated in the United Kingdom. After the irreversible Investment Partners. Vivo Energy operates in Retail, turmoil on the international oil scene in the early 1970s and Commercial Fuels, Marine, Aviation (in partnership with recognising the need for oil companies to have their own Vitol Aviation), Liquefied Petroleum Gas and Lubricants in identity and direct dialogue with Government, Shell and Mauritius. Ireland Blyth Limited, who was then the oldest Shell agent in the world, negotiated the terms of the agency agreement. The Shell brand has been present in Mauritius since 1905, In 1976, Shell took over its own business management in celebrating its 111th anniversary in 2016. VEML employs Mauritius, directly promoting its activities, engaging its own 121 people, operates 48 retail stations under the Shell staff and opening its own offices. As a result of a decision brand and has access to 34,500 metric tonnes of fuel and made by the Shell and BP groups to deconsolidate their 2,675 metric tonnes of LPG storage capacity. joint business interests in Africa in 1982, BP Ocean Islands The Shell Company of East Africa Limited started its Limited’s activities in Mauritius were taken over by Shell
20 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 21 to become Shell Ocean Islands Limited. Both The Shell company was floated on the Mauritian Stock Exchange and Company of the Islands Limited and Shell Ocean Islands the Mauritian public currently owns 22.85% of its shares. Limited were given the status of a Public Limited Company (plc) as a result of a change in British Company Law. On 1 During its 111-year presence in Mauritius, the company has January 1991, the businesses of the local branch of both The built up a comprehensive business network in the energy Shell Company of the Islands plc and Shell Ocean Islands scene, backed up by strong infrastructural investments, good plc were transferred to a local incorporated company, Shell technical knowhow and professionalism. VEML accounts for Mauritius Limited, in exchange for shares in the latter. This nearly half of the imported energy demand of the island and change in corporate structure underlines Shell’s confidence is present in all sectors of this business activity. in the future of Mauritius. In addition, the newly incorporated
OUR SHAREHOLDERS
About Vitol proprietary transactions around them. The firm’s unique Vitol has 40% shareholding in Vivo Energy. combination of a deep knowledge of the Africa operating environment, a singular commitment to the region and a Vitol is an energy and commodities company and sits proven capability to manage complexity, is reflected in the at the heart of the world’s energy flows. Every day firm’s diverse portfolio of growing market leading businesses the company uses its expertise and logistical networks and its position as the partner of choice for multinational to distribute energy around the world, efficiently and corporations. responsibly. For over 50 years Vitol has served the world’s energy markets; trading over seven million barrels of crude Further details on Helios Investment Partners can be found oil and products a day and delivering energy products to at www.heliosinvestment.com countries worldwide. Their customers include national oil companies, multinationals, leading industrial and chemical companies and the world’s largest airlines. They deliver the About Royal Dutch Shell products the customers need on time and to specification, Shell has 20% shareholding in Vivo Energy. by sourcing and managing the movement of energy through the relevant infrastructures. Shell is a global group of energy and petrochemical companies with an average of 92,000 employees in more Further details on Vitol are available on www.vitol.com than 70 countries. The group uses advanced technologies and takes an innovative approach to help build a sustainable energy future. Royal Dutch Shell was formed in 1907, About Helios Investment although the history of Shell dates back to the early 19th Partners century. The parent company of the Shell group is Royal Helios Investment Partners has 40% shareholding in Vivo Dutch Shell plc, which is incorporated in England and Wales. Energy. The strategy of Shell is to seek to reinforce its position as a leader in the oil and gas industry, while helping to meet Helios Investment Partners is one of the largest Africa- global energy demand in a responsible way. Safety and focused investment firms, with a record that spans creating environmental and social responsibility are at the heart of start-ups to providing established companies with growth the activities of the company capital and expertise. Led and predominantly staffed by African professionals For further information, visit: www.shell.com with the language skills and cultural affinity to engage with local entrepreneurs, managers and intermediaries on the continent, Helios leverages its local and global networks, identifying businesses opportunities and structuring
22 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 23 Fs
Financial statements
FINANCIAL STATEMENTS
24 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 25 DIRECTORS’ REPORT STATEMENT OF DIRECTORS’ responsibilities in respect of the financial statements The directors present their annual report and the audited RESULTS AND DIVIDENDS financial statements of Vivo Energy Mauritius Limited (the The Company’s profit for the year isRs 320,872,000 (2015 Company law requires the directors to prepare financial (a) with effect from 01 December 2011, a licence “Company”) for the year ended 31 December 2016. Rs 282,627,000). statements for each financial year which present fairly the agreement for the branding of retail automotive fuel sites financial position, financial performance and cash flows of and other assets with Shell Brands International AG; and The financial statements of the Company for the year ended the Company. In preparing those financial statements, the (b) with effect from 01 January 2014, a contract for the PRINCIPAL ACTIVITIES 31 December 2016 are set out on pages 63 to 107. The directors are required to: provision of services with Vivo Energy Africa Services Ltd. The Company’s principal activity is the marketing and auditor’s report on these financial statements is on pages distribution of petroleum products. Its joint venture, Energy 59 to 62. • select suitable accounting policies and then apply them Storage Company Limited, is involved in the provision of consistently; MAJOR SHAREHOLDER LPG terminal usage facilities. The other joint venture, Mer • make judgements and estimates that are reasonable and At 31 December 2016, Vivo Energy Mauritius Holdings Rouge Oil Storage Terminal Co. Ltd, is not yet operational. prudent; BV holds directly 77.15% of the ordinary share capital of • state whether International Financial Reporting Standards the Company. No other person holds 5% or more of the have been followed, subject to any material departures ordinary share capital of the Company. disclosed and explained in the financial statements; and The Company declared and paid the following dividends in 2015 and 2016: • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the SEGMENTAL ANALYSIS Company will continue in business. A business segment analysis of sales and results is given in Dividend per share Note 5 to the financial statements. 2016 2015 The directors confirm that they have complied with the Rs Rs above requirements in preparing the financial statements. Declared on: SERVICE CONTRACTS 15 May 2015 (2015 interim dividend) - 0.90 The directors are responsible for keeping proper accounting Messrs Patrick Crighton and Pawan K Juwaheer have service 14 August 2015 (2015 interim dividend) - 1.00 records which disclose with reasonable accuracy at any time contracts without an expiry date. 13 November 2015 (2015 interim dividend) - 1.00 the financial position of the Company and to enable them 24 March 2016 (2015 final dividend) 1.90 to ensure that the financial statements comply with the Service contracts of other directors are terminable with a 3 13 May 2016 (2016 interim dividend) 1.00 Mauritian Companies Act 2001. They are also responsible months’ notice period by either party. 12 August 2016 (2016 interim dividend) 1.00 for safeguarding the assets of the Company and hence for 14 November 2016 (2016 interim dividend) 1.00 taking reasonable steps for the prevention and detection of 4.90 2.90 fraud and other irregularities. DIRECTORS’ INTERESTS The directors have no interests in the ordinary share capital of the Company, either directly or indirectly. For the year ended 31 December 2016, the Company made a profit ofRs 10.94 (2015 - Rs 9.64) per share DIRECTORS and declared and paid an interim dividend of Rs 3.00 (2015 - Rs 2.90) per share during the year. The directors of the Company since 01 January 2016 and at the date of this report are: THREE YEAR SUMMARY A three year financial summary is set out in Note 29 to the Mr Pawan K Juwaheer financial statements. Mr Patrick Crighton Mr Roger K F Leung Shin Cheung Mr Christian Chammas DONATIONS Mr Tim Taylor During the year, the Company made donations of Mr Johan Depraetere Rs 12,185 (2015 – Rs 59,669).
CONTRACTS OF SIGNIFICANCE The Company entered into the following contracts with related parties:
26 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 27 AUDITOR The fees charged by the auditor, PricewaterhouseCoopers, for audit and other services were: SECRETARY’S REPORT to the members of Vivo Energy Mauritius Limited
2016 2015 Under Section 166(d) of the Companies Act 2001 Rs’000 Rs’000 Statutory audit 1,800 1,800 Audit related services:- We certify that we have filed with the Registrar of Quarterly reviews 600 581 Companies all such returns as are required of the Company Reporting to Group Auditors 231 241 under the Companies Act 2001. Issuing volume certificates 58 60
The audit related services consist of (i) quarterly review of published financial statements, (ii) reporting to the Executive Services Limited group auditors and (iii) issuing volume certificates. As per Christian Angseesing ACIS PricewaterhouseCoopers has indicated its willingness to CORPORATE SECRETARY 24 March 2017 continue in office and will be automatically reappointed at the Annual Meeting.
Approved by the Board of Directors on 24 March 2017 and signed on its behalf by:
) DIRECTORS )
28 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 29 Cg
Corporate governance CORPORATE GOVERNANCE REPORT
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.
The Board confirms compliance to the Mauritius Code of Corporate Governance.
30 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 31 HOLDING STRUCTURE
80% 20% HV Investments Shell Overseas BV (Netherlands) Investments BV BOARD OF (Netherlands) DIRECTORS
100% Vivo Energy Holding BV (Netherlands) The Board of directors of VEML remains stringent when During the year ended 31 December 2016, four board it comes to upholding the highest standards of integrity meetings were held. and transparency in their governance of the Company. The importance and the value of a balanced interplay The offices of Chairman and Managing Director were between directors, management and shareholders within separated on 17 November 2003 in order to align board the Company has long been a major principle governing the governance with the Mauritius Code of Corporate conduct of VEML. Governance. A Non-executive Director occupies the Office of Chairman and an Executive Director occupies the office 77.15% A Board of directors consisting of six directors manages of Chief Executive. The Chairman and Managing Director VEML. Directors are appointed at the annual meeting of ensure that the members of the board receive accurate, Vivo Energy shareholders. They hold office until they retire or submit timely and clear information. Mauritius Holding their resignation, unless removed earlier from office by the BV (Netherlands) annual meeting of shareholders. The board delegates the day- to-day running of the Company to the Managing Director. The board delegates operational issues to the management 22.85% team and is directly accountable to the shareholders for the Local performance of the Company. shareholders
Vivo Energy Mauritius Limited
32 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 33 PROFILE OF DIRECTORS
Mr Christian Chammas Mr Pawan K Juwaheer Mr Johan Depraetere (Aged 62) (Aged 53) (Aged 49) Chairman and Non-Executive Director Managing Director Non-Executive Director
Christian Chammas, joined Vivo Energy, a Shell licensee in 16 Pawan Juwaheer was appointed Managing Director of Johan Depraetere has been the Chief Financial Officer at African countries, as Chief Executive Officer on 01 January VEML in January 2012. Mr. Juwaheer studied Mechanical Vivo Energy since joining in April 2012. His responsibilities 2012. Mr. Chammas has extensive experience in the energy Engineering at the University of Manchester Institute of include Internal Audit, Financial Control, Treasury & Credit, IT sector. Prior to joining Vivo Energy, he was at Total for 31 Science and Technology, UK. He joined Shell Mauritius in and Procurement. Prior to joining Vivo Energy, Johan worked years where he held several positions in Central America, 1986 and has over the years occupied different positions for the Samsung Group in Korea for 9 years. During that the Caribbean and India. However, it is in Africa where most across the business in Mauritius, Tunisia and Kenya, before time his roles included Global Strategist (2003 – 2004), of his career has developed. being appointed Country Chairman of the company in Director Samsung Electronics Korea (2004 – 2008) before 2006. Mr. Juwaheer is a former Chairman of the Mauritius becoming a member of the Chairman’s Office in July 2008 As an engineer, he worked on his first project in Nigeria. Chamber of Commerce and Industry. He is also a member where he worked as VP Corporate Strategy (2008 – 2011) He later served as Chief Executive Officer for Total Group of the National Corporate Governance Committee. and VP Corporate M&A until April 2012. Responsibility of Companies in Cameroon and Kenya. In his last role, included covering various industries, monitoring & Mr Chammas was the Executive Vice President for the Directorship in other companies supporting the overseas operations of Samsung Electronics Middle East and North Africa division of Total’s refining and • Vivo Energy Indian Ocean Holdings with performance issues, strategy, marketing, organisational marketing division. Mr Chammas is based in London but • Energy Storage Company Limited design and talent management. spends the majority of his time with employees, customers • Mer Rouge Oil Storage Terminal Company Limited and other key stakeholders in the Vivo Energy businesses • Barclays Bank Mauritius Limited In May 1999, Johan co-founded a company in New York across Africa. called Soloella and was the acting CEO and CFO for two years, raising $6.3 million in financing. Johan started his career at McKinsey and Company in January 1991 as a Business Analyst for 4 years before going on to be an Associate until March 1998. During that time he worked on assignments in various sectors across Europe, USA and the Middle East analysing issues of strategy, commerce and operations. He assisted private US investors acquire the largest bank and conglomerate in Israel as well as improve the key account management structure of a leading producer. Belgium born, Johan lives in London and graduated with a Masters in Business Administration from Harvard Business School in June of 1996.
34 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 35 Mr Patrick Crighton Mr Roger Leung Tim Taylor DIRECTORS’ EMOLUMENTS (Aged 57) (Aged 70) (Aged 70) Executive Director and Finance Manager Independent and Non-Executive Director Independent and Non-Executive Director During the year ended 31 December 2016, executive directors received an aggregate amount of MUR 21,658,396 Fellow of the Association of Chartered Certified Member of the Association of the Chartered Institute of Tim Taylor holds a BA (Hons) in Industrial Economics from (2015 - MUR 21,001,454.59) as remuneration and benefits Accountants, Patrick Crighton joined Shell Mauritius in bankers in UK and a fellow member of the Mauritius Institute Nottingham University in the United Kingdom. He worked from the Company. Out of this sum, MUR 7,386,509 is January 1987. He has since occupied the positions of of Directors, Roger Leung has been appointed a Director in United Kingdom until 1972 when he returned to Mauritius variable and the quantum depends on the performance Management Accountant, Legal and Tax Accountant, in June 2006. He retired from Barclays Bank in September and joined Rogers, a leading Mauritian Commercial and of the company compared to a set scorecard. The non- Treasury and Corporate Accountant and Credit Manager 2005 as Regional Corporate Director. He has been trustee Services Group. He became Chief Executive of Rogers in executive directors received an aggregate amount of MUR before being appointed Finance Manager in 2001. Mr. of the Barclays Employees Pension Fund and a Director 1999 and retired in December 2006. He became Chairman 528,000 (2015 - MUR 504,000) as remuneration and Crighton is holder of a Masters in Business Administration of the Barclays Leasing Company (Mauritius) Limited. He (non-executive) of Rogers in 2007, retiring in October benefits from the Company during the same period. The from Napier University. He has been board member since also works as a Consultant in business restructuring and in 2012. He is Chairman (non-executive) of Cim Financial non-executive directors are not entitled to variable pay. January 2005. performance optimisation. Services Ltd and Scott & Co Ltd. Mr Taylor is the Honorary Consul of Norway in Mauritius and a past Chairman of the He is a director the Mauritius Development Investment Mauritius Chamber of Commerce and Industry. He is a Trust. former Chairman of the National Committee on Corporate Governance. He has been a member of the Council of the Mauritian Wildlife Foundation since 2006 and President since 2009.
Messrs Juwaheer, Crighton, Leung and Taylor are ordinarily resident in Mauritius.
36 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 37 PROFILE OF MANAGEMENT TEAM
From left to right : Afsar Soobadar, Distribution Manager; Krishnen Vencadachellum, Retail Manager; Nancy Young, Human Resources Manager; Patrick Crighton, Finance Manager; Pawan Juwaheer, Managing Director; Ashvin Ramdenee, Marine and Aviation Manager; Ravi Ramjus Business-to-Business Manager; Shalini Bunwaree-Nagdan, Marketing Manager.
38 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 39 The VEML management team is responsible for supervising the general course of business of the company and advises the Board of directors. BOARD MEETINGS
The board meets on a regular basis and has a formal a separate resolution for a term of one year. The full list of schedule of matters reserved for it. This includes matters matters reserved to the board for decision is available from Nancy Young Ashvin Ramdenee such as approval of the Annual Report, approval of interim the Company Secretary. Human Resources Manager Marine and Aviation Manager dividends and recommendation of final dividends, approval Nancy Young is the holder of a Master’s degree in Psychology Ashvin Ramdenee is holder of a Master of Engineering degree in of material contracts and nomination of candidates for board Attendance of board meetings with specialisation in Industrial Psychology from the University of Mechatronics from the University of Leeds, UK. He joined Shell membership. The shareholders elect the board members in 2016 Bordeaux in France. She joined Shell Mauritius in 1990 as Assistant Mauritius in 2000 as Plant and Speciality Engineer. Thereafter, he each year at the annual meeting. Each director is elected by In 2016, the attendance of the directors was as follows: Personnel and Services Manager having worked on a major project has worked in diverse sectors within the Group in Engineering, with a consultancy firm, Core Services Limited. She currently holds Customer Service, Terminal Operations, Planning, Supply Chain the position of Human Resources Manager. and Strategy at Local, African and Global levels. Mr. Ramdenee was appointed Marine and Aviation Manager in March 2015. 24 Mar 13 May 12 Aug 14 Nov 2016 2016 2016 2016 Krishnen Vencadachellum Ravi Ramjus Chairman Retail Manager Business-to-Business Manager Mr Christian Chammas X X Holder of a degree in Mechanical Engineering from the NIT Ravi Ramjus, Business-to-Business Manager, holds a B.Tech in Mr Bernard Le Goff (Resigned 29/04/2016) Allahabad, India and a Masters degree in Business Administration Mechanical Engineering from the University of Mauritius and a Mr Johan Depraetere (Appointed 16/05/2016) X from the University of Mauritius, Krishnen Vencadachellum joined Master’s in Business Administration from the Surrey European Shell Mauritius in 2004 as Retail Engineer and Property Manager. Management School in the UK. Mr. Ramjus has occupied several Managing Director In 2009, he was appointed Operations Excellence Coordinator, positions at local, regional and international levels within the Mr Pawan Kumar Juwaheer X X X X Network Planner for East and South East Africa in 2011, before company in Engineering, Retail & Business Development. In these becoming Executive Assistant to the VP Indian Ocean Islands. Mr. roles, he had the opportunity to drive several projects such as retail Directors Vencadachellum was appointed Retail Manager in 2012. network strategic review, payment systems and loyalty programs. Mr Patrick Crighton X X X X Mr. Ramjus has also championed the setting up of various strategic Mr Timothy Taylor X X X X alliances between Vivo Energy and renowned operators in the (Chairperson) (Chairperson) Afsar Soobadar payment, banking and mobile financial industry. Mr Roger Leung X X X X Distribution Manager Afsar Soobadar, Distribution Manager, joined Shell Mauritius in 2004. He has since occupied the posts of Transport and Logistics Manager then Terminal Operations Manager. Mr. Soobadar holds a Masters degree in Engineering Manufacture & Management from the University of Manchester, UK, and a Masters in Business Administration from Manchester Business School, UK. Mr Soobadar Board committees is a Board Director of ESCOL board (Energy Storage Company Limited), an associate Company of VEML. The Board has three standing committees made up of As from 27 March 2007 the Nomination and Remuneration Executive and Non-executive Directors to assist in the committee forms part of the Corporate Governance discharge of its duties. The committees, which are set out committee. Shalini Bunwaree-Nagdan below, meet regularly under the terms of reference set by Marketing Manager the board. Shalini Bunwaree Nagdan is holder of a degree in Industrial Economics from the University of Nottingham, UK and an MBA degree from the University of Mauritius. Mrs. Nagdan joined Shell Mauritius in 2001 as Sector Sales Manager. In 2005, she was appointed Fuels and Bitumen HSSE Manager for the Indian Ocean cluster after which, she became the B2B/B2C Marketing Manager for Mauritius in 2007. Prior to her appointment as Marketing Manager in 2014, Mrs. Nagdan has occupied the position of Fuels Sales Manager since 2009.
40 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 41 TERMS OF REFERENCE TERMSTERMS OF REFERENCEREFERENCE
Board authority (et al) • Ensure that significant adjustments, unadjusted differences, The board authorises the audit and risk committee, within disagreements with management and management letter the scope of its responsibilities to: are discussed with the external auditors; and • Investigate any activity it deems appropriate, • Review the other sections of the annual report before • Appoint independent advisers and professionals its release and consider whether the information is (accountants, lawyers and so on) as it deems necessary to understandable, consistent with members’ knowledge of carry out its duties, the Company and unbiased. • Instruct any officer or employee of the Company to attend any meetings and provide pertinent information as Key responsibility in respect Terms of Reference of Audit and Risk Committee (ARC) necessary and appropriate, of internal control • Have unrestricted access to members of management, The committee shall: Constitution Meetings employees and relevant information, • Discuss the internal controls, adhered to by the Company’s The ARC, established by the Board of the Company, shall Only committee members will attend meetings. A quorum • Establish procedures for dealing with concern of management, financial, accounting and internal audit consist of at least two but not exceeding three Non- of any meeting shall be two (2) members. employees regarding accounting, internal controls and personnel, executive Directors (NED). The Chairperson of the The audit and risk committee may invite such other persons auditing matters, • Discuss with management the Company’s major risk committee shall be an independent NED (as defined by the (e.g. other directors, the General Manager, head of finance, • Make recommendations to the board in relation to the exposures and the steps management has taken to Code of Corporate Governance of Mauritius). head of internal audit and external audit senior partner) to appointment, termination and remuneration of external monitor and control such exposures, Each member shall be financially literate. At least one member its meetings, as it deems necessary. auditors and evaluate the work of the latter, • Evaluate the overall effectiveness of the internal control must have accounting or related financial expertise. Members • Review the performance of the external auditors and and risk management frameworks and consider whether shall be appointed for two (2) years term of notice so long as The external and internal auditors shall be invited to make exercise final approval on the appointment or discharge recommendations made by the internal and external they remain a director of the Company. presentations to the audit and risk committee as appropriate. of the auditors; and auditors have been implemented by management, At least once a year, the committee shall meet with the head • Pre-approve all audit services fees and terms as well as • Ensure that significant findings and recommendations Audit and risk committee members shall not serve of internal audit and senior partner of the external auditors review policies for the provision on non-audit services by noted by the internal auditors and management’s simultaneously on the audit committee of companies in without the presence of executive management to discuss the external auditors. proposed response are discussed and appropriately acted the same field as the present Company and of more than any matters that either the committee or these two parties on; and two other public companies without the approval of the believe should be discussed privately. The committee shall The internal audit manager reports functionally to • Evaluate the internal control matrix of the Company on full board. meet as often as it determines necessary or appropriate but the chairman of the audit and risk committee (and a quarterly basis and obtain management comments on not less frequently than quarterly. The committee chairman administratively to the General Manager). fluctuations in the score. Objectives shall convene a meeting upon request of any committee The audit and risk committee shall assist the board in member who considers it necessary. The secretary of the Main responsibilities Key responsibility in respect monitoring and overseeing its financial responsibilities. Its audit and risk committee shall be the Company secretary, or The basic responsibility of the members of the audit and risk of internal audit main objectives shall be to: such other person as nominated by the board. The secretary committee is to exercise their business judgement to act The committee shall: • Oversee the integrity of the financial reporting process and of the committee shall circulate the minutes, agenda, and in what they reasonably believe to be in the best interests • Ensure that the Company has an appropriate internal ensure the transparency and performance of published background materials of meetings to the members of the of the Company and its shareholders. In discharging that audit function, financial information. committee and to the chairman of the board at least a week obligation members should be entitled to rely on the • Review the effectiveness of the internal audit function • Review the effectiveness and performance of the before the meeting. honesty and integrity of the Company senior executives and ensure that it has appropriate standing within the Company’s internal financial control and risk management and its outside advisors and auditors, to the fullest extent Company; and system. The background material must include all such management permitted by law. • Evaluate the internal audit department and its impact on • Evaluate the work of the internal audit function and of the accounts, financial statements, internal and external audit the accounting practices internal controls and financial external auditors. reports and internal control evaluations that are available. Key responsibility in respect reporting of the Company. • Review the Company’s process compliance with legal and of financial reporting regulatory requirements affecting financial reporting and, The chairman of the committee or another member of The committee shall: Key responsibility in respect if applicable, its code of business conduct. the committee shall attend the board meeting at which the • Review the interim financial statements, annual financial of external audit financial statements are approved. statements and preliminary announcements prior to their The committee shall: The ARC will maintain effective working relationships with release, • Review on an annual basis the performance of the external the board of directors, management, and the external and The committee should meet with in-house legal adviser on • Meet with management internal auditors and the external auditors based on the scope and results of their work and internal auditors. The duties and responsibilities of a member a regular basis (if one is appointed). Meetings with outside auditors to review the financial statements, the critical make recommendations to the board of the appointment, of the audit and risk committee are in addition to those set legal adviser should be held if it is deemed necessary. accounting policies and practices, and the results of their reappointment or termination of the appointment of the out for a member of the board of directors. audit, external auditors,
42 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 43 TERMS OF REFERENCE TERMS OF REFERENCE
• Consider the independence and objectivity of the external It should be composed of a majority of independent recommended to the shareholders at the Meeting of • ensure that potential candidates are free from material auditor. nonexecutive directors. A quorum shall be two members. Shareholders conflicts of interest and are not likely to simply actin • Discuss and review the external auditors’ proposed • ascertain whether potential new directors are fit and the interest of a major shareholder, substantial creditor audit scope, planning and approach in the light of the Attendance at meetings proper and are not disqualified from being directors. or significant supplier of the company. This is of particular Company’s circumstances and changes in regulatory and The Chairman of the Board, the Group Chief Executive, Prior to their appointment, their backgrounds should be importance when a candidate has been nominated other requirements; and the Group Human Resources Director and other members investigated thoroughly; by virtue of a shareholder’s agreement, or other such • Ensure that significant findings, accounting adjustments of management shall attend the meetings, if invited by the • ensure that the potential new director is fully cognisant of agreement. and recommendations noted by the external auditors Committee. Executive Services Ltd shall be secretary of the what is expected from a director, in general, and from him • ensure that those directors who, in the opinion of and management’s proposed response are discussed and Committee. or her in particular the board, have either acted in accordance with the appropriately acted on. • ensure that the right balance of skills, expertise and instructions of a third party or have not discharged their Meetings independence is maintained; duties as directors to the satisfaction of the board, not be Responsibility in respect of Meetings of the Committee will be held as the Committee • ensure that there is a clearly defined and transparent nominated for re-election. compliance with laws and deems appropriate. However the Committee should meet procedure for shareholders to recommend potential regulations at least once a year. The Chairperson of the Committee or candidates; The committee shall: any member of the Committee may call a meeting at any • Review the effectiveness of the system for monitoring other time. The quorum for decisions of the Committee compliance with laws and regulations and the results shall be any two members present throughout the meeting of management’s investigation and follow-up (including who shall vote on the matter for decision. Corporate Governance 05 Feb 21 Mar disciplinary action) of any fraudulent acts or non- committee 2016 2016 compliance, Authority (Remuneration and Nomination committee) • Oversee the Company’s compliance with legal and The Committee is authorised by the Board to: regulatory provisions, its articles of association, code of • Investigate, or cause to be investigated, any activity within Mr Timothy Taylor (Chairman) Chairman conduct, by-laws and any rules established by the board; its terms of reference; Mr Pawan K Juwaheer Mr Timothy Taylor X X and • Obtain external legal or independent professional advice Mr Roger Leung Directors • Conduct and authorise investigations into any matters and such advisors may be invited to attend meetings as Mr Pawan Kumar Juwaheer X X within the audit and risk committee’s scope of necessary. Mr Roger Leung X X responsibilities. Duties Evaluating performance and The responsibilities of the Committee shall be to: Audit and Risk Management committee reporting responsibilities • Determine, agree and develop the Company’s general The committee shall: policy on corporate governance in accordance with the Mr Roger Leung (Chairman) • Assess the achievement of the duties specified in the applicable Code of Corporate Governance. Mr Timothy Taylor charter annually and make regular report of their findings • Prepare the corporate governance report to be published to the board, in the Company’s Annual Report. • Review and reassess the adequacy of its charter every • Ensure that disclosures are made in the Annual Report in 21 Mar 09 May 08 Aug 07 Nov two (2) years and discuss any required changes with the compliance with the disclosure in the Code of Corporate 2016 2016 2016 2016 board; and Governance • Recommend approval of the annual report and accounts • determine, agree and develop the company’s general Chairman to the board. policy on executive and senior management remuneration Mr Roger Leung X X X X • determine specific remuneration packages for executive Director directors of the company, including but not limited to basic Mr Timothy Taylor X X X X Terms of reference - Corporate salary, benefits in kind, any annual bonuses, performance- Governance committee based incentives, share incentives, pensions and other benefits. Membership • determining any criteria necessary to measure the The membership, including the chairmanship, of the performance of executive directors in discharging their Committee shall be appointed by the Board. The Corporate functions and responsibilities Governance Committee shall consist of not less than three • determine the level of non-executive directors’ and members including the Managing Director of the Company. independent non-executive directors’ fees to be
44 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 45 TERMS OF REFERENCE TERMS OF REFERENCE
Directors in joint venture Vivo Energy HR performance, In addition to these shared objectives, the different elements Energy Storage Company Limited rewards and benefits of the total compensation package focus on different, philosophy although complementary, goals. VEML holds 50% of the shares of Energy Storage Company Limited (ESCOL). The Board directors of ESCOL and their attendance People in Vivo Energy are critical to the achievement of to the ESCOL board meeting in 2016 are as follows: our business objectives. Vivo Energy compensation policies, Performance and rewards practices, and systems are intended to recognise and • Differentiate on the basis of performance and value to the 28 Apr 29 Nov support: business; and 2016 2016 • Individual and business performance; both short and long • Encourage growth and development as individuals and term; team players. Chairman • Vivo Energy core values, business principles and people Mr Bashirally A Currimjee - - principles; Benefits • Business and people strategies; • Provide a standardised platform that allows other Directors • Our strong commitment to sustainable development; elements of the reward strategy to differentiate on the Mr David Muraguri Murriithi - X • Market competitiveness and the importance of internal basis of performance; Mr Pawan Kumar Juwaheer X X relationships; and • Are cost effective and tax advantaged, where Vivo Energy Mr Mohammed Afsar Soobadar X X • Different business and country economic, social, legal, and purchasing power provides leverage over individual Mr Mathieu Soulas (alternate to Mr Bashirally A Currimjee) X X regulatory environments. purchasing power to provide for cost reduction and risk (Chairperson) sharing; Mr Jerome Dechamps (alternate to Mr Bashirally A Currimjee) (appointed 04/11/2016) - X Performance and reward policies should help people excel, • Support long-term social objectives for the communities (Chairperson) foster affiliation with Vivo Energy, and encourage behaviour within which we work; Mr Patrick Crighton (alternate to Mr David Muraguri Murriithi) X - that leads to the achievement of business and personal • Recognise the legislative environments and competitive Mr Peyami Oven X X objectives. markets within these environments; and • Support sharing of responsibility between the state, the Benefits that are provided or enabled by Vivo Energy employer and the employee. companies are another important component of the Mer Rouge Oil Storage Terminal Company Limited employee value proposition and support our attraction Standards VEML holds 23.5% of the shares of Mer Rouge Oil Storage Terminal Company Limited (MOST), a joint venture set up with the and retention strategies. Benefits that are common foster All reward and benefit programmes must comply fully with oil companies and the State Trading Corporation to build and operate an additional 25,000 metric tons motor gasoline depot in affiliation and community spirit and offer a foundation for appropriate laws and regulations and our Business Principles: Mer Rouge. the total compensation package. • Our competitive reference: To compare to representative Attendance to the Board meetings in 2016 is as follows: employers in the markets in which we compete for talent. Our pay and benefits philosophy, objectives and standards • Our competitive objective: To have salary and benefits that apply to Vivo Energy companies that employ people on result in a fair and competitive market position among 31 May Vivo Energy terms and conditions and should be broadly the competitive reference group. The pay element within 2016 communicated and understood by all. the total mix is more important than benefits in our competitive positioning - aimed at delivering a competitive Chairman Objectives position on Total Cash and Total Compensation (including Mr Rahul Bhardwaj (Appointed on 26/01/2016) X Vivo Energy companies will operate performance, reward benefits). and benefit systems that: Directors • Align employee and shareholder interests; Policies and practice on Ms Joan Njeri Njoroge X • Support the attraction and retention of the best talent at Ethics Mr Pawan Kumar Juwaheer X all levels who fit our business needs; Our approach to business integrity Mr Afsar Soobadar (alternate to Mr David Muraguri Murriithi) X • Assist mobility and avoid creating barriers to movement Our commitment to business integrity is clear and Mr Peyami Oven X within a business, country or Vivo Energy; unequivocal; VEML insists on honesty, integrity and fairness Ms Zalhatta Ali Ben Ali X • Recognise both common interests and individual in all aspects of our business and expects the same in our Mr Sagar Mudhole X preferences; and relationships with all those with whom we do business. Mr Mohunlall Banydeen X • Are transparent and well explained. We do not bribe, nor do we accept bribes. We do not effect illegal payments of any kind and investigate all
46 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 47 TERMS OF REFERENCE TERMS OF REFERENCE
suspicious circumstances. Serious action is taken against Company’s policies and Company has a risk-based approach to internal control and In addition to these structured self-appraisals, the assurance any employee found to have breached our firm ‘no bribes’ practices with regards to that management is responsible for implementing, operating framework relies upon objective appraisals by internal audit. policy. Corruption can occur in all parts of the world and social issues and monitoring the system of internal control, which is The results of internal audit’s risk-based reviews of operations at all levels. Our policy is that the direct or indirect offer, Vivo Energy companies aim to be good neighbours by designed to provide reasonable but not absolute assurance provide an independent view regarding the effectiveness of payment, soliciting or acceptance of bribes in any form is continuously improving the ways in which we contribute of achieving business objectives. The approach to internal risk and control management systems. These established unacceptable. Facilitation payments are also bribes and directly or indirectly to the general well-being of the control includes a number of general and specific risk reviews; reporting and assurance processes enable Vivo should not be made. communities within which we work. We manage the social management processes and policies. Within the essential Energy to regularly consider the overall effectiveness of impacts of our business activities carefully and work with framework provided by the Statement of General Business the system of internal control and to perform a full annual Declaration of conflict of interest others to enhance the benefits to local communities, and to Principles, the primary control mechanisms are self-appraisal review of the system’s effectiveness. Taken together, these Employees must avoid conflicts of interest between their mitigate any negative impacts from our activities. processes in combination with strict accountability for results. processes and practices provide confirmation to Vivo Energy private activities and their part in the conduct of Company In addition, Vivo Energy companies take a constructive These mechanisms are underpinned by established policies, holding companies that relevant policies are adopted and business. They must also declare in writing to the Company interest in societal matters, directly or indirectly related to standards and guidance material that relate to particular procedures implemented with respect to risk and control potential conflicts of interest. All business transactions our business. types of risk; structured investment decision processes, management. on behalf of a Vivo Energy Company must be reflected timely and effective reporting systems and performance accurately and fairly in the accounts of the Company in Corporate Social appraisal. Risk related to credit accordance with established procedures and are subject to Responsibility Credit risk is one of the Company’s key risks. Vivo Energy has audit and disclosure. We report annually on any breaches of VEML is committed to being a responsible corporate citizen Examples of specific risk management mechanisms include: devised a set of rules that apply across the continent on that our ‘no bribes’ policy. and caring for the communities in which it operates. To this • regular review of significant risks by the management team; subject. Items on which this policy place a lot of emphasis end, the Company is fully engaged in Community Investment • a common health, safety, security and environment (HSSE) include carrying out customer risk assessment before any Our assurance letter process helps us to monitor whether projects which promote road safety awareness among the policy, a common requirement for HSSE management delivery is made to a customer and also at regular intervals, we are living by our Principles, in accordance with both country’s youth and the general public; provide educational systems, and external certification of the environmental setting of a credit limit by customer and using the Enterprise external laws and regulations and with our internal standards. training programmes for underprivileged learners; and component of such systems for major installations; Resource Planning system to avoid trading outside of Each year, the Managing Director reports back to the Chief encourage environmental awareness and sustainable • a financial control handbook that establishes standards for approved conditions. Executive Officer of Vivo Energy, in writing, whether VEML development. the application of internal financial controls; has acted in line with these requirements and to report • arrangements for the management of property, liability Risk related to foreign material exceptions. Action is taken to address areas of Political donations and treasury risks; and exchange noncompliance. VEML has no mandate to participate in party politics, • a business control incident reporting process that enables More than one third of the Company’s business is carried although, as a major generator of economic wealth, the monitoring and appropriate follow-up actions for incidents out in foreign currency. The Company’s risk mitigation policy Code of Conduct energy industry clearly has considerable social and political arising as a result of control breakdowns. Lessons learned with respect to foreign currency is to minimise exposure by The Code of Conduct helps us to live by our business impact. However, when dealing with government, VEML has from these incidents are used to improve the overall matching currencies whenever feasible and entering forward principles. As Shell Licensee, we fully abide by the the right and responsibility to make its position known on control framework. contracts whenever possible and economically viable. Statement of General Business Principles which provides any matter, which affects the Company, its employees, its the foundation for how Vivo Energy companies do business customers, or its shareholders. VEML has also the right to A formalised self-appraisal and assurance letter process is Risk related to supplies around the world. Many of these principles contain legal and make its position known on matters affecting the community, in place. Annually, the management of every business unit Regularity of supplies is of vital importance to enable VEML ethical compliance requirements. The code is a single source where the Company has a contribution to make. We do not provides assurance as to the adequacy of governance to meet the needs of its customers; consequently Vivo of information about what those compliance requirements make donations to political parties and treat this issue in the arrangements, risk and internal control management, Energy has secured the position of Oil Industry coordinator mean, with guidance on when to use them, how to use same way as bribery and corruption. We report annually on HSSE management, financial controls and reporting, with The State Trading Corporation for the monitoring them and how to be sure. We provide employees with the implementation of this policy of no political payments. treasury management, brand management and information of all product imports. Whereas product demand for good and safe working conditions, and competitive terms During the year, the Company made no political donations. management. The Managing Director also provides inland trade is fairly predictable, with transfer prices fixed and conditions of employment. assurance regarding compliance with the Statement of monthly and regulated by the Automatic Pricing Mechanism, Risk management and General Business Principles and other important topics; international sales are not price controlled, very seasonal and Responsibility to customers internal control as part of this process business integrity concerns or unpredictable. In this respect, efficient management of the We remain at the forefront of innovation, in consistently The approach to internal control is based on the underlying instances of bribery or illegal payments are to be reported. product replenishment cycle, product availability and freight offering top quality products to our customers at very principle of line management’s accountability for risk and Assurance letter results including any material qualifications are therefore of essence to ensure continuity of service. The competitive prices. control management. are reviewed by Vivo Energy Audit and Risk Committee and risk to the business is product shortage or stock out causing The risk and internal control policy explicitly states that the support representations made to the external auditors. curtailment of sales, loss of revenue and business.
48 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 49 TERMS OF REFERENCE TERMS OF REFERENCE
Risk related to Health, Safety, perceptions of key stakeholders through a variety of methods. Risk related to effective Security and Environment Included are statements of our commitments, policies and governance Internal controls (HSSE) standards and human resource roles of Communications Successful delivery of the VEML strategy requires effective The Group has an internal audit plan in place. The plan is VEML operates under a common set of business principles, and Managing Director. The role of the Managing Director, in governance. There is a risk of incorrect design and operation set up such that internal controls are reviewed at regular supported by policies and business controls. particular, is specifically designed to protect the reputation of internal control, which may result in damage to the intervals in all operating units. These include a Health, Safety, Security, Environment (HSSE) of Vivo Energy companies operating in a country with Company’s reputation, financial results and employees. Management agreements and Social Performance (SP) Commitment and Policy, which the support from Communications both locally and at The Company does not have any shareholders’ agreement require that our Company shall have a systematic approach Vivo Energy level. Statements of commitments, policies Risk related to partners and that affects the governance of the Company by the Board. As to HSSE & SP management. We have put in place the Vivo and standards adopted by VEML include the Statement of ventures mentioned in page 29 of the directors’ report, the Company Energy mandatory procedure for an HSSE Management General Business Principles, Code of Conduct, Commitment There is a risk that VEML could lose the ability to influence has a licence agreement with Shell Brands International System (HSSE MS), which is a structured set of controls to Sustainable Development, HSSE & SP Commitment and and control the operations, behaviours and performance of AG and a contract for the provision of services with Vivo for managing the business and to ensure and demonstrate Policy, Diversity and Inclusiveness Standard, Environmental business activities of other parties with whom the Company Energy Africa Services. Apart from these two contracts, that business objectives are met. This management system Minimum Standards, Environmental, Social and Health is engaged. This could result in damage to staff, assets and the Company does not have any management agreement takes into account HSSE MS implementation requirements, Impact Assessment, Minimum Health Standards, Security financial results. with third parties where the third party is a director or a incorporated in the business level HSSE MS as well as Standards, HIV/AIDS Policy, Human Rights Standard, Road Company owned by a director. the various classes of business HSSE MSs relevant to our Transport Safety Policy, Code of Ethics and adoption of the Risk related to economic and operations. Classes of business are distribution, marine, Mauritian Code of Corporate Governance. financial market conditions aviation, and business-to-business, LPG, lubricants and retail. VEML is subject to differing economic and financial market Risk related to fluctuating conditions. There are risks from political and economic The elements of this management system are organised oil prices instability. Realisation of one of these risks could have an according to Vivo Energy guidance of how to integrate Oil and oil products prices can vary as a result of various adverse impact on the results of operations and financial HSSE into the business and manage HSSE matters as any factors, including natural disasters, political instability or position of VEML.. other critical activity. In line with our HSSE & SP policy conflicts, economic conditions or action taken by major oil- to achieve continuous performance improvement, the exporting countries. Fluctuations in these prices could test individual classes of business action plans have been well our business assumptions, and could have an adverse impact observed and completed. on VEML investment decisions, operational performance and financial position. Risk related to information security Risk related to operational VEML has in place an Information Security programme hazards, natural disasters that ensures it adheres to the Information security based and pandemics on ISO 27001. Disaster recovery plans are in place and The activities of VEML place it at the risk of operational tested to ensure that there is minimum business disruption hazards, natural disasters and pandemics, which could result in the event of a disaster. All new staff and contractors are in loss of life, adverse impact on the environment and cause continually coached to complete the mandatory e-learning disruption to business activities. Realisation of these risks information security training module, the objective of could have an adverse effect on the results of operations the training being to enhance awareness, education and and financial position of the Company. behaviour against information security threats. Risk related to change in Risk related to reputation legislation and fiscal and VEML and the Vivo Energy companies value the perception regulatory policies of stakeholders as no Company or business operates in a The operations of VEML are subject to risk of change in vacuum. Our licence to operate and our very existence rely legislation, taxation and regulation, changes that could have on the understanding, goodwill and emotion of stakeholders. an adverse effect on the results of operations and financial As such, VEML addresses the interests, concerns and position of the Company.
50 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 51 SHAREHOLDER INFORMATION
Shareholder communications shareholders holding shares carrying together not less than The Board recognises the importance of two-way 5% of the voting rights entitled to vote on an issue. The communications with its shareholders and, in addition to resolutions of the Annual Meeting of Shareholders shall, giving a balanced report of results and progress at each except in those cases where the law or the Constitution annual meeting, VEML responds to questions and issues prescribe a larger majority, be passed by absolute majority raised by institutions and private shareholders. of the votes cast. Information about VEML is available on the website www.vivoenergy.com. At annual meetings, shareholders may cast one vote for each ordinary share held by them. In addition, shareholders’ questions can be asked via: Te: +230 206 1234 Fax: +230 240 1043 Vivo Energy Mauritius VivoEnergyMtius Annual Meeting of Shareholders The Annual Meeting of Shareholders of VEML is held once a year to discuss the report of the Board of directors, to approve the audited financial statements, to elect any new directors, to appoint the auditors and to authorise the directors to fix their remuneration, to ratify the dividends declared by the Board of directors. The Annual Meeting of Shareholders shall be called by the Board of directors. The items to be dealt with at the meeting are determined by the Board of directors and are specified in the agenda included in the notice of convocation. A Special Meeting of Shareholders may be called by the Board on written request of
52 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 53 Shareholder information
Data Analysis on Shareholding
Vivo Energy Mauritius Limited share price
117 compared to SEM-10 - 4 January to 31 December 2016 Number of Shares Number of Shareholders Number of Shares Owned % of Total Issued Shares
1 - 500 2,248 436,414 1.49% 112 501 - 1,000 531 473,822 1.62% 1,001 - 5,000 500 1,225,522 4.18% 355 107 5,001 - 10,000 103 751,252 2.56% 10,001 - 50,000 74 1,490,350 5.08% 350 50,001 - 100,000 6 428,692 1.46% 102 100,001 - 250,000 5 820,732 2.80%
345 250,001 - 500,000 1 273,937 0.93%
97 500,001 - 1,000,000 1 798,215 2.73% 340 Over 1,000,000 1 22,623,316 77.15% Total 3,470 29,322,252 100.00% 92 335
87 330 y y v v Apr Apr Apr Aug Aug List of 10 Major Security Holders as at 31 December 2016 07 Ju l 19 Ju l 29 Ju l 04 Ja n 14 Ja n 26 Ja n 02 Ju n 14 Ju n 24 Ju n 09 Feb 19 Feb 06 19 29 10 23 02 Mar 15 Mar 25 Mar 07 Oct 19 Oct 31 Oct 23 Ma 11 Ma 05 Dec 15 Dec 27 Dec 11 No 23 No 02 Sept 15 Sept 27 Sept
VEML SEM-10 Vivo Energy Mauritius Holdings B.V. (Netherlands) 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 202,559 Sections Rolling Limited 137,100 Vivo Energy Mauritius Limited share price Mr N J P Maurice Raffray 135,000
118 compared to SEMDEX: 4 January to 31 December 2016 Swan Life Ltd (051 Fund) 117,421 1880 National Savings Fund 84,700 113 Mr Gary Lam Po Tang 82,415 The Mcb Ltd (A/C Rogers Money Purchase Retirement Fund) 76,940 108 1835
103 Apart from Vivo Energy Mauritius Holdings B.V, no other shareholder owns more than 5% of the share capital of the Company.
98 1790
93 Shares held by each director at 31 December 2016
88 1745 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. 83 The directors have not held or traded in any shares of the Company during the year.
78 1700 y y v v Apr Apr Apr Aug Aug 07 Ju l 19 Ju l 29 Ju l 04 Ja n 14 Ja n 26 Ja n 02 Ju n 14 Ju n 24 Ju n 27Dec 09 Feb 19 Feb 06 19 29 10 23 02 Mar 15 Mar 25 Mar 07 Oc t 19 Oc t 31 Oc t 11 Ma 23 Ma 05 Dec 15 Dec 11 No 23 No 02 Sept 15 Sept 27 Sept
VEML SEMDEX
54 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 55 Shareholder information
Shareholders’ diary Going concern The directors have a reasonable expectation that the Financial Year End 31 December 2016 Company has adequate resources to continue in an Annual Meeting of Shareholders 12 May 2017 operational existence for the foreseeable future, as set out Reports and profits statement in the Chairman and Managing Director’s reports, and for Income Statement for the year ended 31 December 2016 Published 31 March 2017 this reason has adopted the going concern basis in preparing Condensed Interim Income Statement for the quarter the annual financial statements. ended 31 March 2017 Published 15 May 2017 Condensed Interim Income Statement for the six months Registered office ended 30 June 2017 Published 15 August 2017 Vivo Energy Mauritius Limited Condensed Interim Income Statement for the nine months Cemetery Road ended 30 September 2017 Published 15 November 2017 Roche Bois Income Statement for the year ended 31 December 2017 Published 31 March 2018 (at latest) PO Box 85, Port Louis www.vivoenergy.com Dividend Interim Dividend To be announced 15 May 2017 By order of the Board Interim Dividend Payable 30 June 2017 (at latest) Executive Services Limited Final Dividend To be announced 31 March 2018 (at latest) Per Ah Man Wong Too Yan ACIS Final Dividend Payable 31 July 2018 (at latest) Secretary
Constitution funds and solvency certificate. The solvency certificate The Company’s constitution is in conformity with the should be signed and approved by the Board of directors in provisions of the Companies Act 2001 and those of the accordance with the Companies Act. Listing Rules of the Stock Exchange of Mauritius. Insider dealing Its salient features are: Vivo Energy believes it important in order to protect the • There are restrictions on pre-emptive rights attached to reputation for honesty and integrity enjoyed by both Vivo the shares. Energy and its employees that, where part of the share • The Company may acquire and own its shares. capital of a Vivo Energy Company is traded on a Stock • The Company may not issue fractions shares. Exchange, there should be no possibility of suspicion that • Shareholders may cast their votes by post. an employee or contractor of the Company or a person • The Board consists of not less than two (2) or more than connected with that employee or contractor while dealing eleven directors (11). in the Company’s quoted shares has used confidential • There is rotation of directors every year except for the knowledge for either his own benefit or that of another one who is elected as chairperson who retires every four person. Between the dates a period is closed and the results years. are published, a notice is sent to all staff asking them not to deal with shares during such periods. Dividend Policy The Company will pay dividends on a quarterly basis. Related party transactions The timing of Board meetings should be planned so as to Related party transactions are disclosed in note 28 of the meet this objective. Dividend payments should take into financial statements. account the dividend calendar of trading rules of the Stock Exchange. Ideally, dividends should be declared at the Board Non-audit services meetings which are held in May and November each year. During the year, the external auditors have rendered no The Dividend Policy of VEML is to declare up to a maximum nonaudit services. of 50% of Net Income after Tax (NIAT) subject to sufficient
56 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 57 STATEMENT OF COMPLIANCE Independent Auditor’s Report (Section 75(3) of the Financial Reporting Act) To the Shareholders of Vivo Energy Mauritius Limited
Name: Vivo Energy Mauritius Limited (“the Company”)
Reporting Period: Year ended 31 December 2016
On behalf of the Board of Directors of the Company, we Report on the Audit of the Financial Statements confirm that to the best of our knowledge, the Company has not complied with section 2.8. Our Opinion In our opinion, the financial statements give a true and fair view of the financial position of Vivo Energy Mauritius Limited Reason for non-compliance is as follows: (the “Company”) as at 31 December 2016, and of its financial performance and its cash flows for the year then ended in Disclosing salaries by bands protects the personal privacy accordance with International Financial Reporting Standards and in compliance with the Mauritian Companies Act 2001. of individuals and this is also in line with current market practice. What we have audited The financial statements of Vivo Energy Mauritius Limited set out on pages 63 to 107 comprise: • the statement of financial position as at 31 December 2016; SIGNED BY: • the income statement for the year then ended; • the statement of comprehensive income for the year then ended; • the statement of changes in equity for the year then ended; • the statement of cash flows for the year then ended; and • the notes comprising significant accounting policies and other explanatory information.
Chairman Director Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of the Financial Statements” section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter How our audit addressed the key audit matter
Accounting treatment for defined retirement benefit Accounting treatment for defined retirement benefit obligations obligations We obtained the pension valuation report and an See note 2 of the financial statements for the Directors’ understanding through discussion with the external actuary disclosures of the accounting policies for defined retirement of the methodology used to derive the discount rate. benefit obligations. We agreed the discount and inflation rates, together with As at 31 December 2016, the Company has a net defined the expected rates of return on plan assets used in the retirement benefit liability of Rs 80.3 million, a 50% increase valuation of the pension obligation by the external actuary,
58 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 59 Independent Auditor’s Report Independent Auditor’s Report To the Shareholders of Vivo Energy Mauritius Limited (continued) To the Shareholders of Vivo Energy Mauritius Limited (continued)
of Rs 26.9 million from the previous year. to our internally developed benchmarks. We compared control as the directors determine is necessary to enable the preparation of financial statements that are free The increase arises due to changes in actuarial assumptions, the assumptions around salary increases and mortality to from material misstatement, whether due to fraud or error. particularly a decrease in the discount rate, which follows national and industry averages. the decrease in the local repo rate. In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue We further tested the membership data used in the as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis The valuation of the net liability is carried out by the valuation of the pension obligation, including leavers’ data, of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no external actuary engaged by management. The valuation is to assess whether the basis of the valuation is appropriate. realistic alternative but to do so. dependent on market conditions and key assumptions made, in particular relating to investment markets, discount rates, We also assessed the competence, capabilities and objectivity The directors are responsible for overseeing the financial reporting process. salary increases, inflation expectations and life expectancy of the external actuary and verified his qualifications. assumptions. Auditor’s Responsibilities for the Audit of the From the work completed, we are satisfied that the Financial Statements The setting of these assumptions is complex and requires methodology and assumptions applied in relation to Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free the exercise of significant management judgement with the determining the pension obligation are appropriate. from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our support of the external actuary. 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. Other Information The directors are responsible for the other information. The other information comprises the directors’ report, the secretary’s As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional report, the corporate governance report and the statement of compliance, which we obtained prior to the date of this scepticism throughout the audit. We also: auditor’s report and the introduction and strategic review, which are expected to be made available to us after that date. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, Other information does not include the financial statements and our auditor’s report thereon. design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from Our opinion on the financial statements does not cover the other information and we do not express any form of assurance fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, conclusion thereon. Our reporting responsibilities regarding the corporate governance report is dealt with in the “Report on misrepresentations, or the override of internal control. Other Legal and Regulatory Requirements” section of this report. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, internal control. in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and obtained in the audit, or otherwise appears to be materially misstated. related disclosures made by the directors. • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may we conclude that there is a material misstatement of this other information, we are required to report that fact. We have cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material nothing to report in this regard. uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based When we read the introduction and the strategic review, if we conclude that there is a material misstatement therein, we are on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions required to communicate the matter to those charged with governance. may cause the Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and Responsibilities of the Directors for the Financial Statements whether the financial statements represent the underlying transactions and events in a manner that achieves The directors are responsible for the preparation and fair presentation of the financial statements in accordance with fair presentation. International Financial Reporting Standards and in compliance with the Mauritian Companies Act 2001, and for such internal
60 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 61 INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2016 Independent Auditor’s Report To the Shareholders of Vivo Energy Mauritius Limited (continued) 2016 2015 Note Rs’000 Rs’000
Sales 9,106,874 10,139,537 Cost of sales ( 8,229,861) ( 9,318,404) We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Gross profit 877,013 821,133 Other income 6 76,822 76,754 We also provide the directors with a statement that we have complied with relevant ethical requirements regarding Other (losses)/gains on exchange - net ( 1,146) 5,182 independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on Distribution costs ( 97,265) ( 89,655) ( 482,426) our independence, and where applicable, related safeguards. Administrative expenses ( 477,980)
Operating profit 7 372,998 335,434 From the matters communicated with the directors, we determine those matters that were of most significance in the audit
of the separate financial statements of the current period and are therefore the key audit matters. We describe these matters Finance income 8 5,732 1,867 in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare Finance costs 8 ( 5,045) ( 8,097) 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. Finance income/(costs) - net 8 687 ( 6,230) Share of profit of joint ventures 7,511 10,594 Report on Other Legal and Regulatory Requirements Mauritian Companies Act 2001 Profit before income tax 381,196 339,798 The Mauritian Companies Act 2001 requires that in carrying out our audit we consider and report to you on the following Income tax expense 9 ( 60,324) ( 57,171) matters. We confirm that: 320,872 (a) we have no relationship with or interests in the Company other than in our capacity as auditor; Profit for the year 282,627
(b) we have obtained all the information and explanations we have required; and Basic and diluted earnings per share Rs 10.94 9.64 (c) in our opinion, proper accounting records have been kept by the Company as far as appears from our examination of those records. Number of shares used in the calculation (000’s) 29,322 29,322
Financial Reporting Act 2004 The directors are responsible for preparing the corporate governance report. Our responsibility is to report on the extent of compliance with the Code of Corporate Governance (the “Code”) as disclosed in the annual report on pages 6 to 26 and on whether the disclosure is consistent with the requirements of the Code.
In our opinion, the disclosure in the annual report on pages 31 to 57 is consistent with the requirements of the Code. Other Matter This report, including the opinion, has been prepared for and only for the Company’s shareholders, as a body, in accordance 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 come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers Robert Coutet, licensed by FRC
24 March 2017
The notes on pages 68 to 107 are an integral part of these financial statements.
62 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 63 Statement of Comprehensive Income Statement of Financial Position for the year ended 31 December 2016 31 December 2016
2016 2015 2016 2015 Note Rs’000 Rs’000 Note Rs’000 Rs’000
Profit for the year 320,872 282,627 ASSETS Non-current assets Other comprehensive income Property, plant and equipment 12 1,085,388 1,056,118 Items that will not be reclassified to profit or loss Intangible assets 13 2,237 2,124 Prepaid operating leases 14 9,784 10,362 Remeasurements of post employment benefit obligations 21 ( 31,108) 22,904 Other long-term assets 15 5,990 6,524 Interest in joint ventures 16 39,538 46,402 Deferred tax asset/(liability) on remeasurements of 1,142,937 1,121,530 post employment benefit obligations 20 5,288 ( 3,894) Current assets Other comprehensive income for the year, net of tax ( 25,820) 19,010 Inventories 17 416,363 619,093 Trade and other receivables 18 776,162 690,102 Total comprehensive income for the year 295,052 301,637 Cash and cash equivalents 24 397,785 67,664 1,590,310 1,376,859 Total assets 2,733,247 2,498,389
EQUITY & LIABILITIES Equity Share capital 19 293,223 293,223 Retained earnings 583,290 431,917 Total equity 876,513 725,140
LIABILITIES Non-current liabilities Deferred income tax liabilities 20 71,824 68,701 Retirement benefit obligations 21 80,326 53,426 152,150 122,127
Current liabilities Bank overdrafts 24 - 98,935 Trade and other payables 22 1,339,267 1,195,956 Deposits on LPG cylinders 23 344,043 322,134 Current income tax liabilities 9 21,274 34,097 1,704,584 1,651,122 Total liabilities 1,856,734 1,773,249
Total equity and liabilities 2,733,247 2,498,389
Approved by the Board of Directors on 24 March 2017 and signed on its behalf by: ) ) ) DIRECTORS )
The notes on pages 68 to 107 are an integral part of these financial statements. The notes on pages 68 to 107 are an integral part of these financial statements.
64 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 65 Statement of Changes in Equity Statement Of Cash FlowS for the year ended 31 December 2016 for the year ended 31 December 2016
Share Retained Total 2016 2015 Capital Earnings Equity Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Cash flows from operating activities At 01 January 2015 293,223 215,315 508,538 Profit before income tax 381,196 339,798 Adjustments for: Comprehensive income Depreciation on property, plant and equipment (Note 12) 121,663 104,063 Profit for the year - 282,627 282,627 Provision for impairment of receivables (Note 18) 2,791 11,224 Other comprehensive income - 19,010 19,010 Amortisation of intangible assets (Note 13) 802 106 Total comprehensive income - 301,637 301,637 Amortisation of prepaid operating leases (Note 14) 578 451 Interest expense (Note 8) 5,045 8,097 Transactions with owners Profit on disposal of property, plant and equipment (Note 7) ( 56) ( 65) Dividends declared (Note 25) - ( 85,035) ( 85,035) Interest income (Note 8) ( 5,732) ( 1,867) Total transactions with owners - ( 85,035) ( 85,035) Unrealised loss/(gain) on exchange 1,639 ( 3,123) At 31 December 2015 293,223 431,917 725,140 Share of profit of joint venture (Note 16) ( 7,511) ( 10,594) Decrease in retirement benefit obligations ( 4,208) ( 5,393)
At 01 January 2016 293,223 431,917 725,140 Cash generated before working capital changes 496,207 442,697 Decrease in inventories 202,730 47,858 Comprehensive income (Increase)/decrease in receivables and prepayments ( 79,784) 321,173 Profit for the year - 320,872 320,872 Increase/(decrease) in trade and other payables 142,917 ( 143,477) Other comprehensive income - ( 25,820) ( 25,820) Increase in deposits on LPG cylinders 21,909 27,635 Total comprehensive income - 295,052 295,052 Cash generated from operations 783,979 695,886 Transactions with owners Interest paid ( 5,045) ( 8,097) Dividends declared (Note 25) - ( 143,679) ( 143,679) Income tax paid (Note 9) ( 64,735) ( 15,296) Total transactions with owners - ( 143,679) ( 143,679) Net cash generated from operating activities 714,199 672,493 At 31 December 2016 293,223 583,290 876,513 Cash flows from investing activities Proceeds from disposal of property, plant and equipment 56 68 Interest received 5,732 1,867 Loan to dealers ( 7,000) - Dividends received from joint venture (Note 16) 15,000 - Payments for purchase of property, plant and equipment and intangible assets ( 151,848) ( 263,941) Investment in joint venture (Note 16) ( 625) - Net cash used in investing activities ( 138,685) ( 262,006)
Cash flows from financing activities Dividends paid to company’s shareholders ( 143,679) ( 85,035) Net cash used in financing activities ( 143,679) ( 85,035) Net increase in cash, cash equivalents and bank overdrafts 431,835 325,452 Cash, cash equivalents and bank overdrafts at beginning of year ( 31,271) ( 360,579) Effect of exchange rate changes on cash and bank overdrafts ( 2,779) 3,856 Cash, cash equivalents and bank overdrafts at end of year 397,785 ( 31,271)
The notes on pages 68 to 107 are an integral part of these financial statements. The notes on pages 68 to 107 are an integral part of these financial statements.
66 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 67 NOTES TO THE NOTES TO THE FINANCIAL STATEMENTS FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016
changes in own credit risk in other comprehensive income, Segment reporting for liabilities designated at fair value through profit or loss. Operating segments are reported in a manner consistent IFRS 9 relaxes the requirements for hedge effectiveness by with the internal reporting provided to the chief operating replacing the bright line hedge effectiveness tests. It requires decision-maker. The chief operating decision-maker, who an economic relationship between the hedged item and is responsible for allocating resources and assessing hedging instrument and for the ‘hedged ratio’ to be the same performance of the operating segments, has been identified as the one management actually uses for risk management as the Chief Executive Officer. 1 GENERAL INFORMATION or areas where assumptions and estimates are significant to purposes. Contemporaneous documentation is still required the financial statements are discussed in Note 3. but is different to that currently prepared under IAS 39. The Foreign currency translation Vivo Energy Mauritius Limited (the “Company”), is a limited standard is effective for accounting periods beginning on • Functional and presentation currency liability company listed on the Stock Exchange of Mauritius Changes in accounting policies and disclosures or after 1 January 2018. Early adoption is permitted. The Items included in the financial statements are measured and is incorporated and domiciled in Mauritius. (a) New standards, amendments and interpretations adopted Company is yet to assess IFRS 9’s full impact. using the currency of the primary economic environment in by the Company which the entity operates (the “functional currency”). The The Company’s principal activity is the marketing and IFRS 15, ‘Revenue from contracts with customers’ deals with financial statements are presented in thousands of Mauritian distribution of petroleum products. Its joint venture, Energy There are no standards, interpretations or amendments to revenue recognition and establishes principles for reporting Rupee (Rs’000), which is the Company’s functional and Storage Company Limited, is involved in the provision of existing standards that are effective for the first time for useful information to users of financial statements about presentation currency. LPG terminal usage facilities. The Company has invested in a the financial year beginning 1 January 2016 that have had a the nature, amount, timing and uncertainty of revenue and new joint venture, Mer Rouge Oil Storage Terminal Co.Ltd, material impact on the Company. cash flows arising from an entity’s contracts with customers. • Transactions and balances which is involved in the storage of petroleum products, but Revenue is recognised when a customer obtains control Foreign currency transactions are translated into the is not yet operational. (b) New standards, amendments and interpretations not yet of a good or service and thus has the ability to direct the functional currency using the exchange rates prevailing at adopted use and obtain the benefits from the good or service. The the dates of the transactions or valuation where items are These financial statements were authorised for issue by the standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction re-measured. Foreign exchange gains and losses resulting Board of Directors on 24 March 2017. A number of new standards and amendments to standards contracts’ and related interpretations. The standard is from the settlement of such transactions and from the and interpretations are effective for annual periods beginning effective for annual periods beginning on or after 1 January translation at year-end exchange rates of monetary assets after 1 January 2016, and have not been applied in preparing 2018 and earlier application is permitted. The Company is and liabilities denominated in foreign currencies are 2 SUMMARY OF SIGNIFICANT these financial statements. None of these is expected to assessing the impact of IFRS 15. recognised in the income statement, except when deferred ACCOUNTING POLICIES have a significant effect on the financial statements ofthe in other comprehensive income as qualifying cash flow Company, except the following set out below: In January 2016, the International Accounting Standards hedges and qualifying net investment hedges. The principal accounting policies applied in the preparation Board (IASB) issued IFRS 16, ‘Leases’. IFRS 16 will replace of these financial statements, are set out below. These IFRS 9, ‘Financial instruments’, addresses the classification, the current IAS 17 standard on leases. The effective date Foreign exchange gains and losses are presented in the policies have been consistently applied to all the years measurement and recognition of financial assets and is 1 January 2019. The new standard requires that for income statement within ‘Other gains / losses on exchange presented, unless otherwise stated. financial liabilities. The complete version of IFRS 9 was issued lessees all leases, regardless of whether they are operating – Net’. in July 2014. It replaces the guidance in IAS 39 that relates to or financial in nature, will be on the statement of financial Basis of preparation the classification and measurement of financial instruments. position and accounted for as “financial leases”. There are Property, plant and equipment and depreciation The financial statements of Vivo Energy Mauritius Limited IFRS 9 retains but simplifies the mixed measurement model some exemptions which could be applied and these relate Property, plant and equipment is stated at historical cost have been prepared in accordance with International and establishes three primary measurement categories for to leases of 12 months or less (short-term leases), and less depreciation. Historical cost includes expenditure that Financial Reporting Standards (“IFRS”) and comply with the financial assets: amortised cost, fair value through OCI and leases of low-value assets. For such leases, the lease costs is directly attributable to the acquisition of the items. Cost Mauritian Companies Act 2001. The financial statements fair value through P&L. The basis of classification depends will be accounted for in the same way as operating leases may also include transfers from equity of any gains/losses on have been prepared under the historical cost convention. on the entity’s business model and the contractual cash are accounted for today. IFRS 16 will significantly change the qualifying cash flow hedges of foreign currency purchases of The financial statements are presented in Mauritian Rupees flow characteristics of the financial asset. Investments in way lessees account for leases, however lessor accounting property, plant and equipment. (‘Rs’), rounded to the nearest thousand. equity instruments are required to be measured at fair remains largely the same and the classification as a finance value through profit or loss with the irrevocable option lease or operating lease is still a consideration. This means Subsequent costs are included in the asset’s carrying amount The preparation of financial statements in conformity with at inception to present changes in fair value in OCI not that straight-lining of operating leases will remain for lessors. or recognised as a separate asset, as appropriate, only when IFRS requires the use of certain critical accounting estimates. recycling. There is now a new expected credit losses model Management has yet to assess the impact of this new it is probable that future economic benefits associated It also requires management to exercise its judgement in the that replaces the incurred loss impairment model used in standard. with the item will flow to the Company and the cost of process of applying the Company’s accounting policies. The IAS 39. For financial liabilities there were no changes to the item can be measured reliably. The carrying amount areas involving a higher degree of judgement or complexity, classification and measurement except for the recognition of
68 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 69 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
of the replaced part is derecognised. All other repairs and and use or sell it; Management determines the classification of its financial financial difficulty, default or delinquency in interest or maintenance are charged to the income statement during • There is an ability to use or sell the software product; assets at initial recognition. principal payments, the probability that they will enter the financial period in which they are incurred. • It can be demonstrated how the software product will bankruptcy or other financial reorganisation, and where generate probable future economic benefits; Loans and receivables observable data indicate that there is a measurable decrease No depreciation is provided on freehold land and on assets • Adequate technical, financial and other resources to Loans and receivables are non-derivative financial assets in the estimated future cash flows, such as changes in arrears in the course of construction. Buildings on leasehold land complete the development and to use or sell the software with fixed or determinable payments that are not quoted or economic conditions that correlate with defaults. are depreciated over the period of the lease if less than 20 product are available; and in an active market. They are included in current assets, years. Depreciation on other assets is calculated using the • The expenditure attributable to the software product except for maturities greater than 12 months after the For loans and receivables category, the amount of the loss straight-line method to allocate their cost less their residual during its development can be reliably measured. reporting date. These are classified as non-current assets. is measured as the difference between the asset’s carrying values over their estimated useful lives. The annual rates The Company’s loans and receivables comprise ‘other long amount and the present value of estimated future cash used are: Directly attributable costs that are capitalised as part of term assets’, ‘trade and other receivables’, and ‘cash and cash flows (excluding future credit losses that have not been the software product include the software development equivalents’ in the statement of financial position. incurred) discounted at the financial asset’s original effective Freehold Buildings 2.5% - 20.0% employee costs and an appropriate portion of relevant interest rate. The carrying amount of the asset is reduced Plant and equipment 3.3% - 50.0% overheads. Recognition and measurement and the amount of the loss is recognised in the income Motor vehicles 15.0% - 20.0% Regular purchases and sales of financial assets are recognised statement. If a loan has a variable interest rate, the discount Computer equipment 20.0% - 33.3% Other development expenditures that do not meet on the trade date, which is the date on which the Company rate for measuring any impairment loss is the current Furniture and fittings 5.0% - 20.0% these criteria are recognised as an expense as incurred. commits to purchase or sell the asset. Financial assets are effective interest rate determined under the contract. As a Development costs previously recognised as an expense derecognised when the rights to receive cash flows from practical expedient, the Company may measure impairment are not recognised as an asset in a subsequent period. the investments have expired or have been transferred on the basis of an instrument’s fair value using an observable The assets’ residual values and useful lives are reviewed, and and the Company has transferred substantially all risks market price. adjusted if appropriate, at the end of each reporting period. Computer software development costs recognised as and rewards of ownership. Loans and receivables are assets are amortised over their estimated useful lives, not subsequently carried at amortised cost using the effective If, in a subsequent period, the amount of the impairment An asset’s carrying amount is written down immediately exceeding three years. interest method. loss decreases and the decrease can be related objectively to its recoverable amount if the asset’s carrying amount is to an event occurring after the impairment was recognised greater than its estimated recoverable amount. Impairment of non-financial assets Offsetting financial instruments (such as an improvement in the debtor’s credit rating), the Intangible assets that have an indefinite useful life or Financial assets and liabilities are offset and the net amount reversal of the previously recognised impairment loss is Gains and losses on disposals are determined by comparing intangible assets not ready to use are not subject to reported in the statement of financial position when there is recognised in the income statement. the proceeds with the carrying amount and are recognised amortisation and are tested annually for impairment. a legally enforceable right to offset the recognised amounts within ‘Other income’ in the income statement. Assets that are subject to amortisation are reviewed for and there is an intention to settle on a net basis or realise Inventories impairment whenever events or changes in circumstances the asset and settle the liability simultaneously. Inventories are stated at the lower of cost and net realisable Intangible assets indicate that the carrying amount may not be recoverable. value. As from 01 January 2016, cost of inventories (fuels) is Acquired computer software licences are capitalised on An impairment loss is recognised for the amount by which Impairment of financial assets determined using the weighted average method (previously the basis of the costs incurred to acquire and bring to use the asset’s carrying amount exceeds its recoverable amount. Assets carried at amortised cost first-in, first-out method). the specific software. These costs are amortised over their The recoverable amount is the higher of an asset’s fair value The Company assesses at the end of each reporting period This change in accounting policy was not material for prior estimated useful lives (not exceeding three years). less costs of disposal and value in use. For the purposes of whether there is objective evidence that a financial asset year restatement as the fuels inventory turnover is relatively assessing impairment, assets are grouped at the lowest levels or group of financial assets is impaired. A financial asset high. Cost comprises direct costs only. Net realisable value Costs associated with maintaining computer software for which there are largely independent cash inflows (cash- or a group of financial assets is impaired and impairment is the estimated selling price in the ordinary course of programmes are recognised as an expense as incurred. generating units). Prior impairments of non-financial assets losses are incurred only if there is objective evidence of business, less the costs of completion and applicable variable Development costs that are directly attributable to the (other than goodwill) are reviewed for possible reversal at impairment as a result of one or more events that occurred selling expenses. For lubricants and accessories, the weighted design and testing of identifiable and unique software each reporting date. after the initial recognition of the asset (a ‘loss event’) and average method was already being used to determine the products controlled by the Company, are recognised as Financial assets that loss event (or events) has an impact on the estimated cost of inventories. intangible assets, when the following criteria have been met: future cash flows of the financial asset or group of financial Classification assets that can be reliably estimated. Spares, accessories and supplies included under inventories • It is technically feasible to complete the software product The Company classifies its financial assets in the category consist of items which are regularly used for repairs, so that it will be available for use; ‘Loans and receivables’. The classification depends on the Evidence of impairment may include indications that the maintenance and new installations. They are stated at the • Management intends to complete the software product purpose for which the financial assets were acquired. debtors or a group of debtors is experiencing significant lower of cost and net realisable value.
70 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 71 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
Trade receivables Where such ordinary shares are subsequently reissued, income statement over the lease period so as to produce a their carrying amounts in the financial statements. However, Trade receivables are amounts due from customers for any consideration received, net of any directly attributable constant periodic rate of interest on the remaining balance deferred tax liabilities are not recognised if they arise from goods sold in the ordinary course of business. If collection incremental transaction costs is included in equity. of the liability for each period. The property, plant and the initial recognition of goodwill; deferred income tax is not is expected in one year or less (or in the normal operating equipment acquired under finance leases is depreciated accounted for if it arises from initial recognition of an asset cycle of the business if longer), they are classified as current Trade payables over the shorter of the useful life of the asset and the lease or liability in a transaction other than a business combination assets. If not, they are presented as non-current assets. Trade payables are obligations to pay for goods or services term. that at the time of the transaction affects neither accounting that have been acquired in the ordinary course of business nor taxable profit or loss. Deferred income tax is determined Trade receivables are recognised initially at fair value and from suppliers. Accounts payable are classified as current Investment in joint ventures using tax rates (and laws) that have been enacted or subsequently measured at amortised cost using the effective liabilities if payment is due within one year or less (or in the The Company has applied IFRS 11 to all joint arrangements. substantively enacted by the balance sheet date and are interest method, less provision for impairment. A provision normal operating cycle of the business if longer). If not, they Under IFRS 11, investments in joint arrangements are expected to apply when the related deferred income tax for impairment of trade and other receivables is established are presented as non-current liabilities. classified as either joint operations or joint ventures asset is realised or the deferred income tax liability is settled. when there is objective evidence that the Company will not depending on the contractual rights and obligations of each be able to collect all amounts due according to the original Trade payables are recognised initially at fair value and investor. The Company has assessed the nature of its joint Deferred income tax assets are recognised only to the terms of the receivables. Significant financial difficulties of subsequently measured at amortised cost using the effective arrangements and determined them to be joint ventures. extent that it is probable that future taxable profit will be the debtor, probability that the debtor will enter bankruptcy interest rate method. Joint ventures are accounted for using the equity method. available against which the temporary differences can be or financial reorganisation, and default or delinquency in utilised. payments (more than 90 days overdue) are considered Accounting for leases Under the equity method of accounting, interests in joint indicators that the receivable is impaired. The amount of Leases in which a significant portion of the risks and rewards ventures are initially recognised at cost and adjusted Deferred income tax is provided on temporary differences the provision is the difference between the asset’s carrying of ownership are retained by the lessor are classified as thereafter to recognise the Company’s share of the post- arising from depreciation on plant and equipment, provision amount and its recoverable amount, being the present value operating leases. Payments made under operating leases acquisition profits or losses and movements in profit or for impairment of receivables, provision for slow-moving of estimated future cash flows, discounted at the original are charged to the income statement on a straight-line basis loss. When the Company’s share of losses in a joint venture inventory and retirement benefit obligations, except for effective interest rate. The carrying amount of the asset over the period of the lease. equals or exceeds its interests in the joint ventures (which deferred income tax liability where the timing of the reversal is reduced through the use of an allowance account, and includes any long-term interests that, in substance, form part of the temporary difference is controlled by the Company the amount of the loss is recognised in the statement of The Company leases land under operating leases. Upfront of the Company’s net investment in the joint ventures), the and it is probable that the temporary difference will not comprehensive income. When a receivable is uncollectible, lease payments are carried forward as prepaid operating Company does not recognise further losses, unless it has reverse in the foreseeable future. it is written off against the allowance account for trade leases under non-current assets and are amortised so as to incurred obligations or made payments on behalf of the or other receivables. Subsequent recoveries of amounts record a constant annual charge to the profit or loss over joint ventures. Deferred income tax assets and liabilities are offset when previously written off are credited against ‘administrative the lease period. Other payments made under operating there is a legally enforceable right to offset current tax expenses’ in the statement of comprehensive income. Bad leases are charged to the profit or loss on a straight line Current and deferred income tax assets against current tax liabilities and when the deferred debts are written off in the year in which they are identified. basis over the period of the lease. The tax expense for the period comprises current, income taxes assets and liabilities relate to income taxes deferred income tax and Corporate Social Responsibility levied by the same taxation authority on either the same Cash and cash equivalents When an operating lease is terminated before the lease contribution. Tax is recognised in the income statement, taxable entity or different taxable entities where there is an In the statement of cash flows, cash and cash equivalents period has expired, any payment required to be made to except to the extent that it relates to items recognised in intention to settle the balances on a net basis. includes cash in hand, deposits held at call with banks, other the lessor by way of penalty is recognised as an expense in other comprehensive income or directly in equity. In this short-term highly liquid investments with original maturities the period in which termination takes place. case, the tax is also recognised in other comprehensive Employee benefits of three months or less and bank overdrafts. Bank overdrafts Leases of property, plant and equipment, where the income or directly in equity, respectively. • Pension and retirement plans are shown separately on the statement of financial position. Company has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are The current income tax charge is calculated on the The Company has both a defined benefit pension plan and Share capital capitalised at the lease’s commencement at the lower of the basis of the tax laws enacted or substantively enacted at a defined contribution pension plan. Ordinary shares are classified as “Share Capital” in equity. fair value of the leased property and the present value of the reporting date. Management periodically evaluates the minimum lease payment. positions taken in tax returns with respect to situations in A defined benefit plan is a pension plan that defines an Where any group company purchases the Company’s which applicable tax regulation is subject to interpretation. amount of pension benefit that an employee will receive equity share capital (treasury shares), the consideration Each lease payment is allocated between the liability and It establishes provisions where appropriate on the basis of on retirement, usually dependent on one or more factors paid, including any directly attributable incremental costs finance charges. The corresponding rental obligations, net of amounts expected to be paid to the tax authorities. such as age, years of service and compensation. The plan is is deducted from equity attributable to the Company’s finance charges, are included in trade and other payables. funded by the payments from the Company taking account equity holders until the shares are cancelled or reissued. The interest element of the finance cost is charged to the Deferred income tax is recognised on temporary differences of the recommendations of independent qualified actuaries. arising between the tax bases of assets and liabilities and The liability recognised in the statement of financial position in
72 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 73 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
respect of defined benefit pension plans is the present value • Other benefits Revenue recognition of assets and liabilities within the next financial year are of the defined benefit obligation at the end of the reporting Employee entitlement to annual leave and other benefits Revenue is measured at the fair value of the consideration addressed below. period less the fair value of plan assets. The defined benefit are recognised when they accrue to the employees. received or receivable, and represents amounts receivable obligation is calculated annually by independent actuaries for goods supplied, stated net of discounts, returns and • Pension benefits using the projected unit credit method. The present value of • Termination benefits value added taxes. The Company recognises revenue when the defined benefit obligation is determined by discounting Termination benefits are payable when employment is the amount of revenue can be reliably measured; when it The present value of the pension obligations depends on a the estimated future cash outflows using interest rates of terminated by the Company before the normal retirement is probable that future economic benefits will flow to the number of factors that are determined on an actuarial basis high-quality corporate bonds that are denominated in the date, or whenever an employee accepts voluntary entity; and when specific criteria have been met for each of using a number of assumptions. The assumptions used in currency in which the benefits will be paid, and that have redundancy in exchange for these benefits. The Company the Company’s activities, as described below. determining the net cost (income) for pensions include the terms to maturity approximating to the terms of the related recognises termination benefits at the earlier of the following discount rate. Any changes in these assumptions will impact pension obligation. In countries where there is no deep dates: (a) when the Company can no longer withdraw the Sale of goods the carrying amount of pension obligations. market in such bonds, the market rates on government offer of those benefits; and (b) when the entity recognises Sales are recognised upon delivery of products and bonds are used. The actuaries carry out a full valuation of costs for a restructuring that is within the scope of IAS 37 customer acceptance, if any, net of trade discounts and value The Company’s actuary determines the appropriate the plan every three/four years (the latest full valuation was and involves the payment of termination benefits. In the case added tax. discount rate at the end of each year in consultation with the done in January 2015). of an offer made to encourage voluntary redundancy, the management of the Company. This is the interest rate that termination benefits are measured based on the number of Dividend income should be used to determine the present value of estimated Actuarial gains and losses arising from experience employees expected to accept the offer. Benefits falling due Dividend income is recognised when the right to receive future cash outflows expected to be required to settle adjustments and changes in actuarial assumptions are more than 12 months after the end of the reporting period payment is established. the pension obligations. In determining the appropriate charged or credited to equity in other comprehensive are discounted to their present value. discount rate, the Company considers the interest rates of income in the period in which they arise. Interest income high-quality corporate bonds that are denominated in the Deposits on LPG cylinders Interest income is recognised using the effective interest currency in which the benefits will be paid, and that have Past-service costs are recognised immediately in the income Deposits on LPG cylinders are accounted for as part of method. When a loan and receivable is impaired, the terms to maturity approximating the terms of the related statement. current liabilities and are recognised at historical cost in the Company reduces the carrying amount to its recoverable pension liability. financial statements. amount, being the estimated future cash flow discounted A defined contribution plan is a pension plan under which Provisions at the original effective interest rate of the instrument, and Other key assumptions for pension obligations are based in the Company pays fixed contributions into a separate entity. Provisions for environmental restoration, restructuring costs continues unwinding the discount as interest income. part on current market conditions. Additional information The Company has no legal or constructive obligations to and legal claims are recognised when: the Company has a Dividend distributions is disclosed in Note 21. pay further contributions if the fund does not hold sufficient present legal or constructive obligation as a result of past Dividend distributions to the Company’s shareholders assets to pay all employees the benefits relating to employee events; it is probable that an outflow of resources will be are recognised as a liability in the Company’s financial service in the current and prior periods. required to settle the obligation, and the amount has been statements in the year in which the dividends are approved 4 FINANCIAL RISK MANAGEMENT reliably estimated. Provisions are not recognised for future by the Company’s shareholders. A defined benefit plan is a pension plan that is not a defined operating losses. Financial risk factors contribution plan. The Company’s activities expose it to a variety of financial Where there are a number of similar obligations, the 3 CRITICAL ACCOUNTING risks: market risk (including foreign exchange risk, price risk For defined contribution plans, the Company pays likelihood that an outflow will be required in settlement ESTIMATES AND JUDGEMENTS and cash flow interest rate risk), credit risk and liquidity contributions to publicly or privately administered pension is determined by considering the class of obligations as a risk. The Company’s overall risk management programme insurance plans on a mandatory, contractual or voluntary whole. A provision is recognised even if the likelihood of an Estimates and judgements are continually evaluated and focuses on the unpredictability of financial markets and seeks basis. The Company has no further payment obligations outflow with respect to any one item included in the same are based on historical experience and other factors, to minimise potential adverse effects on the Company’s once the contributions have been paid. The contributions class of obligations may be small. including experience of future events that are believed to financial performance. are recognised as employee benefit expense when they be reasonable under the circumstances. are due. Prepaid contributions are recognised as an asset to Provisions are measured at the present value of the Risk management remains within the responsibility of the the extent that a cash refund or a reduction in the future expenditures expected to be required to settle the Critical accounting estimates and assumptions Board of Directors to whom the Audit and Risk committee payments is available. obligation using a pre-tax rate that reflects current market The Company makes estimates and assumptions reports. The board provides written principles for overall assessments of the time value of money and the risks concerning the future. The resulting accounting estimates risk management, as well as written policies covering specific specific to the obligation. The increase in the provision due will, by definition, seldom equal the related actual results. areas, such as currency risk, interest rate risk, credit risk, and to passage of time is recognised as interest expense. The estimates and assumptions that have a significant risk investment of excess liquidity. of causing a material adjustment to the carrying amounts
74 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 75 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
(a) Market risk (ii) Price risk Management considers that a 50 basis point shift in interest out market positions. Due to the dynamic nature of the (i) Foreign exchange risk rate is reasonable as the repo rate has fluctuated by 40 basis underlying businesses, company treasury maintains flexibility Price risk is the risk that the fair value or future cash flows points in 2016 (25 basis points in 2015). in funding by maintaining availability of liquid resources Currency risk is the risk that the fair value or future cash of a financial instrument will fluctuate because of changes under committed credit lines. flows of a financial instrument will fluctuate because of in market prices of equity (other than those arising from (b) Credit risk changes in foreign exchange rates. interest rate risk or currency risk). All of the Company’s financial liabilities, which includes trade Credit risk refers to the risk that a counter-party will default and other payables, deposit on LPG cylinders and bank The Company transacts with international customers and The Company is not exposed to equity price risk as it does on its contractual obligations resulting in financial loss to the overdrafts are payable within 12 months and the amounts suppliers and is exposed to currency risk arising from various not have any investment in equity securities. Company. recognised in the statement of financial position of Rs currency exposures, primarily with respect to the United 1,683,310,000 (2015: Rs 1,617,025,000) are approximately States dollar (‘USD’). Currency risk arises from future The Company is exposed to commodity price risk on non- Credit risk arising from trade receivables is managed at the equal to the contractual undiscounted cash flows. All commercial transactions and recognised assets and liabilities. regulated products. To manage its risk, the Company keeps Company level. Credit risk arises from credit exposures balances due within 12 months equal their carrying amounts, It is the Company’s policy not to enter into any currency its inventory level for non-regulated products to the strict to wholesale and retail customers, including outstanding as the impact of discounting is not significant. hedging transactions. To manage its foreign exchange risk minimum. Split pricing is also used as a mitigation measure. receivables and committed transactions. The credit control arising from future commercial transactions and recognised At 31 December 2016, if the price of unregulated products department assesses the credit quality of the customer, The Company adopts prudent liquidity risk management by assets and liabilities, the Company maintains sufficient liquid had increased/decreased by 5% (2015 – 5%) with all other taking into account its financial position, past experience maintaining sufficient cash and cash equivalents to meet its resources in from its USD denominated receipts to meet its variables held constant, pre-tax profit for the year would and other factors. Individual risk limits are set based on normal operating commitments. USD denominated obligations as they fall due. have increased/decreased by Rs 17,582,661 (2015 - Rs internal ratings in accordance with limits set by the board. The currency profile of the Company’s USD-denominated 17,769,600). The utilisation of credit limits is regularly monitored. Capital risk management financial assets and liabilities is summarised as follows: The Company is not exposed to commodity price risk on In cases where credit limits were exceeded during the The Company’s objectives when managing capital are to regulated products since their margins are fixed by The year, this was done in accordance with the Company’s safeguard the Company’s ability to continue as a going Financial Financial Financial Financial State Trading Corporation. procedures and management does not expect any major concern in order to provide returns for shareholders and assets liabilities assets liabilities losses from non-performance by these counterparties. benefits for other stakeholders and to maintain an optimal 2016 2016 2015 2015 (iii) Cash flow and fair value interest rate risk In the event of default of customers, who require timely capital structure to reduce the cost of capital. Rs’000 Rs’000 Rs’000 Rs’000 delivery of petroleum products, LPG & Lubricants to run The capital of the Company consists of equity and retained Cash flow interest rate risk arises from the possibility their operations, the Company reserves the right to stop earnings. The Company does not have any debt, other than United States that changes in interest rates will affect future cash flows delivery of these products until the outstanding debt is short-term bank overdrafts. In order to maintain or adjust Dollar 274,580 233,112 192,493 340,314 or the fair values of the assets. The Company’s interest recovered. the capital structure, the Company may adjust the amount rate risk arises from cash and cash equivalents and short- of dividends paid to shareholders. term bank overdrafts which bear interest at variable rates. Credit risk arising on cash and cash equivalents is considered The Company does not have long-term borrowings. to be minimal as these are placed with reputable financial There are no external capital requirements. At 31 December 2016, if the Mauritian rupee had weakened/ The Company mitigates this risk by holding enough cash institutions. strengthened by 5% (2015 – 10%) against the USD with resources that in turn earn variable interest rates and invests Fair value estimation all other variables held constant, pre-tax profit for the year in financial institutions where it can earn the highest rates Credit risk arising on other long-term assets, consisting would have increased/decreased by Rs 2,073,400 (2015 - of interest. mainly of loan to dealers, is considered to be minimal since The carrying value of trade and other receivables, cash and Rs 14,782,100), mainly as a result of currency gains/losses repayment of the loans is done principally through discount cash equivalents, bank overdrafts, trade and other payables on translation of US dollar-denominated trade receivables Based on the simulations performed, the impact on pre-tax provided by the Company to the dealers. and deposits on LPG cylinders are assumed to approximate and trade payables. profit of a 50 basis point (2015 – 25 basis point) increase/ their fair values due to their short term maturities. decrease in interest rate on borrowings would be a (c) Liquidity risk Management considers a 5% (2015 – 10%) shift in foreign maximum decrease/increase of Rs Nil (2015 - Rs 247,338), Offsetting financial assets and liabilities currency exchange rate is appropriate to determine the respectively based on the interest bearing bank overdrafts Prudent liquidity risk management implies maintaining sensitivity of USD denominated financial assets and liabilities the Company had at 31 December. sufficient cash, the availability of funding through an adequate There were no financial asset and financial liability that were vis a vis the Mauritian rupee. amount of committed credit facilities and the ability to close subject to offsetting at 31 December 2016.
76 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 77 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
5 Segment Information (Continued) 5 SEGMENT INFORMATION Year ended 31 December 2016 Regulated Non-Regulated Total The directors are of the opinion that the segment Rs’000 Rs’000 Rs’000 information presented below gives a good reflection of how they decide to allocate resources as they consider that the Revenue from external customers 5,911,241 3,195,633 9,106,874 main consideration in determining their strategy depends Segment results 133,296 302,410 435,706 on whether they can control or not the price and margin of Unallocated costs ( 62,708) their products. Hence, the directors believe it is appropriate Operating profit 372,998 that the disclosure on segment analysis be separated Finance income 5,732 between regulated and non-regulated. Finance cost ( 5,045) Share of profits of joint venture ( 138) 7,649 7,511 381,196 The operations of the joint ventures comprise of LPG Profit before income tax Income tax expense ( 60,324) terminal usage facilities. Mer Rouge Oil Storage Terminal Profit for the year 320,872 Co.Ltd has not yet started its operations.
Segment assets 944,158 822,528 1,766,686 There are no sales between the different segments. Revenue Joint venture 17,120 22,418 39,538 from no single customer amounted to 10% or more of the Unallocated assets 927,023 Company’s total revenue. Unallocated costs represent net Total assets 2,733,247 expenses that do not directly relate to a segment. Segment assets consist primarily of property, plant and equipment, Segment liabilities 893,974 689,993 1,583,967 prepaid operating leases, other long term assets, inventories, Unallocated liabilities 272,767 trade and other receivables and prepayments, investment Total liabilities 1,856,734 in joint ventures, and exclude cash and cash equivalents. Other segment items 93,292 24,528 117,820 Segment liabilities comprise operating liabilities and exclude Capital expenditure Depreciation ( 75,444) ( 33,350) ( 108,794) items such as taxation. Capital expenditure comprises Amortisation ( 1,242) ( 32) ( 1,274) additions to property, plant and equipment.
Unallocated items Capital expenditure 34,028 Depreciation ( 12,869) Amortisation ( 106)
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.
78 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 79 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
5 Segment Information (Continued) 5 Segment Information (Continued)
Year ended 31 December 2016 (continued) Assets Liabilities Year ended 31 December 2015 Regulated Non-Regulated Total Rs’ 000 Rs’ 000 Rs’000 Rs’000 Rs’000
Segment assets and liabilities are reconciled to the Company’s assets and liabilities as follows: Revenue from external customers 6,350,725 3,788,812 10,139,537 Segment results 167,936 278,517 446,453 Segment assets/liabilities and interest in joint ventures 1,806,224 1,583,967 Unallocated costs ( 111,019) Unallocated: Operating profit 335,434 Property, plant and equipment 251,026 Finance income 1,867 Value added tax recoverable 13,714 Finance cost ( 8,097) Other receivables and prepayments 264,498 Share of profits of joint venture (7) 10,601 10,594 Cash and cash equivalents 397,785 Profit before income tax 339,798 Retirement benefit obligations 80,326 Income tax expense ( 57,171) Deferred income tax liabilities 71,824 Profit for the year 282,627 Bank overdrafts - Other payables 99,343 Segment assets 1,132,489 809,045 1,941,534 Current income tax liabilities 21,274 Joint venture 16,633 29,769 46,402 Total 2,733,247 1,856,734 Unallocated assets 510,453 Total assets 2,498,389
Segment liabilities 797,744 614,792 1,412,536 Unallocated liabilities 360,713 Total liabilities 1,773,249
Other segment items Capital expenditure 202,148 28,317 230,465 Depreciation ( 62,801) ( 29,557) ( 92,358) Amortisation ( 451) - ( 451)
Unallocated items Capital expenditure 33,477 Depreciation ( 11,705) Amortisation ( 106)
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 2016 Vivo Energy Mauritius Limited Annual Report 2016 81 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
5 Segment Information (Continued) 7 Operating Profit
The following items have been (credited)/charged in arriving at operating profit: Year ended 31 December 2015 (continued) Assets Liabilities Rs’ 000 Rs’ 000 2016 2015 Rs’000 Rs’000 Segment assets and liabilities are reconciled to the Company’s assets and liabilities as follows:
(Profit)/loss on disposal of property, plant and equipment ( 56) ( 65) Segment assets/liabilities and interest in joint ventures 1,987,936 1,412,536 Depreciation on property, plant and equipment (Note 12) Unallocated: - included in cost of sales 96,892 89,156 Property, plant and equipment 237,095 - included in administrative expenses 24,771 14,907 Value added tax recoverable 19,046 Amortisation of intangible assets (Note 13) 802 106 Other receivables and prepayments 186,648 Amortisation of prepaid operating leases (Note 14) 578 451 Cash and cash equivalents 67,664 Fees paid to auditor - audit services 1,800 1,800 Retirement benefit obligations 53,426 - audit related services 889 882 Deferred income tax liabilities 68,701 Operating lease charges on land and buildings 8,261 7,172 Bank overdrafts 98,935 Operating lease charges on motor vehicles 5,023 4,974 Other payables 105,554 Operating lease charges on vehicles for distribution purposes 37,505 39,204 Current income tax liabilities 34,097 Repairs and maintenance: Total 2,498,389 1,773,249 - included in cost of sales 3,689 3,474 - included in administrative expenses 22,740 20,138 Staff costs (Note 11) - included in cost of sales 15,993 15,313 6 Other Income - included in administrative expenses 173,190 166,945 - included in finance costs 3,527 4,663 2016 2015 Provision for impairment of receivables (Note 18) 2,791 11,224 Rs’000 Rs’000 Cost of inventories recognised as expense - included in cost of sales 8,055,012 9,147,955 Rental income 14,366 15,959 Management fees 4,778 4,624 Profit on disposal of property, plant and equipment 56 65 Fuel storage fee 25,023 29,036 Throughput fee 9,023 10,077 8 Finance Income/(costs) – Net Tanker discharge fee 933 1,075 2016 Non-fuel retailing income 11,743 2,349 2015 Rs’000 Other customer fees 4,768 5,847 Rs’000 Others 6,132 7,722 76,822 76,754 Finance costs: Interest expense ( 1,518) ( 3,434) Accretion on retirement benefit ( 3,527) ( 4,663) ( 5,045) ( 8,097)
Finance income: Interest income 5,732 1,867 5,732 1,867 Net finance income/(costs) 687 ( 6,230)
82 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 83 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
9 Income Tax Expense 10 Earnings Per Share
The calculation of earnings per share is based on the Company’s profit for the year of Rs 320,872,000 (2015 - Rs 282,627,000) and on 2016 2015 29,322,252 ordinary shares in issue during the two years ended 31 December 2016 and 31 December 2015. There were no potentially Rs’000 Rs’000 dilutive shares outstanding at 31 December 2016 or 2015. Diluted earnings per share are therefore the same as basic earnings per share. Charge for the year
Based on the profit for the year, as adjusted for tax purposes, at 11 Staff Costs 17 % (2015 - 17%) 53,710 53,255 Over-provision of income tax in previous year ( 1,797) ( 275) 2016 2015 (Over)/under-provision of deferred tax in previous year ( 498) 11 Rs’000 Rs’000 Deferred income tax (Note 20) 8,909 4,180 Charge to income statement 60,324 57,171 Wages and salaries 143,060 138,031 Social security costs 1,917 1,853 Current income tax (asset)/liabilities Pension costs – defined benefit plan 7,053 6,638 Pension costs – defined contribution plan 14,671 14,062 2016 2015 Other benefits 38,464 43,258 Rs’000 Rs’000 Termination benefits 8,078 - Recharge of costs to related companies (20,533) (16,921) At 01 January 34,097 ( 3,587) 192,710 186,921 Charge for the year 51,913 52,980 Paid during the year, based on 2016 2015 - Previous year’s profit ( 29,449) - Number Number - Current year’s profit ( 35,287) ( 15,296) At 31 December 21,274 34,097 Number of employees at year end 122 126
A reconciliation between the effective rate of income tax of the Company of 15.83% (2015 – 16.82%) and the applicable income tax Directors’ emoluments included in staff costs are as follows: rate of 17% (2015 - 17%) follows: 2016 2015 (As a percentage of profit before taxation) Rs’000 Rs’000
2016 2015 Short-term benefits 18,908 18,914 % % Post-employment benefits 2,750 2,591 21,658 21,505 Applicable income tax rate 17.00 17.00 Impact of: The recharge of costs is in respect of 9 (2015 - 10) central staff based in Mauritius whose costs are incurred by the Company and Depreciation on non-qualifying assets 0.03 0.02 recharged to VEIBV (Vivo Energy Investment BV). Other non-allowable expenses 0.09 0.37 Share of profit of joint venture ( 0.33) ( 0.53) Other non-taxable income ( 0.36) ( 0.42) CSR/TDS - 0.46 Over-provision of income tax in previous year ( 0.47) ( 0.08) (Over)/under-provision of deferred tax in previous year ( 0.13) - Effective income tax rate 15.83 16.82
84 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 85 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
13 Intangible Assets - - 318)
Total Computer 16,695) 14,368) 16,692) 14,368) Rs’000 251,820 150,933 907,051 104,063 994,422 121,663 1,815,733 2,050,540 1,056,118 software ( ( ( 2,187,105 ( 1,085,388 1,101,717 ( Rs’000 - - - - -
318) Cost: 22,762 76,651 16,371) 82,724 21,319 75,980) 82,724 Rs’000 28,063 28,063 Capital At 01 January 2015 2,515 ( ( ( Additions 1,912 Assets capitalised 318 expenditure - - - - - 1,605 1,605 3,025
1,420 At 31 December 2015 4,745 19,950 19,950 15,320 16,925 Rs’000 19,950 fittings in progress Additions 915 Disposals ( 2,515) Furniture and Furniture
------At 31 December 2016 3,145 1,971 5,032 1,782 - - 1,385) 1,693 1,017 2,850 - - 1,385) 7,740 8,365 26,452 33,455 24,698 25,715 Rs’000 35,545 27,180 18,530
Computer Accumulated amortisation: ( ( At 01 January 2015 2,515 equipment
Charge for the year 106 ------49 486 192 185 258 979 770 1,969 2,647 1,483 1,668 2,696 1,926
Rs’000 At 31 December 2015 2,621 Charge for the year 802
Motor vehicles Disposals ( 2,515) - - At 31 December 2016 908 9,091 16,695) 99,719 12,983) 63,389 85,253 16,692) 97,460 12,983) Rs’000 105,528 717,957 786,518 643,101 708,749 870,995 1,331,695 1,429,619
( ( 1,579,744 ( ( Net book amount:
Rs 28,063,142 (2015 - 82,723,516) in the course of construction. At 31 December 2016 2,237 - -
land equipment At 31 December 2015 2,124 1,455 2,614 6,384 6,728 24,412 71,287 77,671 49,419 Rs’000 69,717 125,635 127,090 154,116 Buildings -
2,056 3,701 8,235 9,619 65,729 76,306 85,925 12,762 Rs’000 196,286 264,071 178,146 276,007 177,320 Freehold on leasehold Plant and buildings ------98,687 84,399 90,984 90,984 90,984 Rs’000 90,984 90,984
Freehold Freehold land
Cost: At 01 January 2015
Additions
Assets capitalised offs/adjustments Assets Write Disposals At 31 December 2015 Additions Assets capitalised Assets Disposals Write offs/adjustments Write At 31 December 2016 depreciation: Accumulated At 01 January 2015 Charge the year for Disposals At 31 December 2015 Charge the year for At 31 December 2015 Net book amount: At 31 December 2016 Disposals At 31 December 2016 Included in capital expenditure progress are plant and equipment amounting to an d E qu ip men t P l an t y, e rt 12 P rop
86 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 87 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
14 Prepaid Operating Leases 16 Investment in Joint Ventures
ESCOL MOST Total Rs’000 2016 2015 2016 2015 2016 2015 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Cost: At 01 January 2015 1,473 Cost: Additions 10,209 At 01 January 15,000 15,000 17,000 17,000 32,000 32,000 Investment in share capital - - 625 - 625 - At 31 December 2015 11,682 At 31 December 15,000 15,000 17,625 17,000 32,625 32,000 At 31 December 2016 11,682 Share of post-acquisition reserves: Amortisation: At 01 January 14,769 4,167 ( 367) ( 360) 14,402 3,807 At 01 January 2015 869 Share of profit after income tax 7,649 10,602 ( 138) ( 7) 7,511 10,595 Charge for the year 451 Dividends received ( 15,000) - - - ( 15,000) - Other comprehensive income ------At 31 December 2015 1,320 At 31 December 7,418 14,769 ( 505) ( 367) 6,913 14,402 Charge for the year 578 Net book amount: At 31 December 2016 1,898 At 31 December 22,418 29,769 17,120 16,633 39,538 46,402
Net book amount: At 31 December 2016 9,784 Nature of investment in joint venture 2016 and 2015: At 31 December 2015 10,362 Name of entity Place of Activity Description of % % Operating leases represent upfront lease payments on certain lease of land. incorporation / shares held holding holding business 2016 2015
Energy Storage Co.Ltd Mauritius LPG storage Ordinary 50.0 50.0 15 Other Long-Term Assets Mer Rouge Oil Storage Mauritius Storage of Ordinary 23.5 25.0 2016 2015 Terminal Co.Ltd petroleum Rs’000 Rs’000 products
Loans to Dealers 5,990 6,524 5,990 6,524 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. Loans to Dealers relate to loan agreements between the Company and several retailers for the construction of service stations. There are no contingent liabilities and restrictions relating to the Company’s interest in its joint ventures.
88 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 89 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
16 Investment In Joint Ventures (Continued) 16 Investment in Joint Ventures (Continued)
Summarised financial information for joint venture: Reconciliation of summarised financial information
Set out below are the summarised financial information for Energy Storage Co.Ltd and Mer Rouge Oil Storage Terminal Co.Ltd, which are Reconciliation of the summarised financial information presented to the carrying amount of its interest in the joint venture: accounted for using the equity method. Summarised financial information ESCOL MOST Summarised balance sheet 2016 2015 2016 2015 ESCOL MOST Rs’000 Rs’000 Rs’000 Rs’000 As at 31 December As at 31 December Opening net assets 1 January 49,537 37,833 30,532 30,561 2016 2015 2016 2015 Investment during the year - - 25,850 - Rs’000 Rs’000 Rs’000 Rs’000 Deposit on share capital - - - - Profit/(loss) for the period 15,299 21,704 (552) (28) Current Other comprehensive income - - - - Cash and cash equivalents 28,089 46,259 31,311 19,466 Dividend paid ( 20,000) - - - Other current assets (excluding cash) 6,246 6,324 369 311 Dividend payable - ( 10,000) - - Total current assets 34,335 52,583 31,680 19,777 Closing net assets 44,836 49,537 55,830 30,532 Interest in joint venture @ 50%, 25% 22,418 29,769 17,120 16,633 Financial liabilities (excluding trade payables) - - - - Deposit on share capital - - - - Other current liabilities (including trade payables) ( 1,200) ( 13,084) - - Goodwill - - - - Total current liabilities ( 1,200) ( 13,084) - - Carrying value 22,418 29,769 17,120 16,633
Non-current Assets 32,803 32,375 24,150 10,755 Financial liabilities - - - - Other liabilities ( 21,102) ( 22,337) - - Total non-current liabilities ( 21,102) ( 22,337) - - Net assets 44,836 49,537 55,830 30,532
Summarised statement of comprehensive income ESCOL MOST For the year ended For the year ended 31 December 31 December
2016 2015 2016 2015 Rs’000 Rs’000 Rs’000 Rs’000
Revenue 29,689 34,265 - - Depreciation and amortisation ( 2,448) ( 2,385) - - Interest income 584 713 1 2 Interest expense - - - - Pre-tax profit/(loss) from continuing operations 18,451 26,149 - - Income tax expense ( 3,152) ( 4,445) - - Post-tax profit/(loss) from continuing operations 15,299 21,704 ( 552) ( 28) Post-tax profit from discontinued operations - - - - Other comprehensive income - - - - Total comprehensive income 15,299 21,704 ( 552) ( 28) Dividends received from joint venture 15,000 - - -
90 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 91 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
17 Inventories 18 TRADE AND OTHER RECEIVABLES (Continued)
2016 2015 As of 31 December 2016, trade receivables of Rs 26,845,000 (2015 - Rs 25,253,000) were impaired. The amount of the provision was Rs’000 Rs’000 Rs 26,845,000 as of 31 December 2016 (2015 - Rs 25,253,000). The individually impaired receivables relate to customers, which are in unexpected difficult economic situations. The ageing of these receivables is as follows: Goods for resale (NRV) 408,622 608,603 Spares, accessories and supplies (NRV) 7,741 10,490 2016 2015 416,363 619,093 Rs’000 Rs’000
1 to 3 months (gross receivable) - - 1 to 3 months (provision for impairment) - - 18 Trade and Other Receivables 3 to 6 months (gross receivable) - - 3 to 6 months (provision for impairment) - - 2016 2015
Rs’000 Rs’000 Over 6 months (gross receivable) 26,845 25,253 Over 6 months (provision for impairment) 26,845 25,253 Trade receivables 763,347 631,134 Less: provision for impairment of receivables ( 26,845) ( 25,253) Trade receivables – net 736,502 605,881 The carrying amounts of the Company’s trade and other receivables are denominated in the following currencies:
Other receivables 12,423 21,382 2016 2015 Less: provision for impairment of other receivables ( 775) ( 808) Rs’000 Rs’000 Other receivables – net 11,648 20,574 Currency Trade receivables from related companies (Note 28 (vii)) 5,246 34,049 Mauritian rupee 590,242 510,850 Value added tax recoverable 13,714 19,046 United States dollar 185,920 179,252 Prepayments 9,052 10,552 776,162 690,102 28,012 63,647
776,162 690,102
Movements on the Company’s provision for impairment of trade and other receivables are as follows: The carrying amount of receivables and prepayments approximate their fair values.
2016 2015 Trade receivables that are less than three months past due are not considered impaired except where management identifies specific Rs’000 Rs’000 instances where a trade receivable would be subject to impairment. The ageing analysis of trade receivables that are not impaired are as
follows: At 01 January 26,061 17,466 Provision for impairment of trade and other receivables 2,791 11,224 2016 2015 Receivables written off during the year as uncollectible ( 1,232) ( 2,629) Rs’000 Rs’000 At 31 December 27,620 26,061
Not past due and not impaired 737,704 635,154 01 – 30 days 3,192 ( 5,628) The creation and release of provision for impaired receivables have been included in ‘administrative expenses’ in profit or loss. Amounts 31 – 90 days 226 6,928 charged to the allowance account are generally written off, when there is no expectation of recovering additional cash. 91 – 365 days 626 3,476 741,748 639,930 The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable. At 31 December 2016, the Company held bank guarantees as security on receivables amounting to Rs 73,188,000 (2015 - Rs 28,120,000).
92 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 93 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
19 Share Capital 21 Retirement Benefit Obligations
2016 2015 2016 2015 Pension benefits Number Number Rs’000 Rs’000 The amounts recognised in the statement of financial position are determined as follows: Authorised, Issued and fully paid: Ordinary shares of Nil par value 29,322,252 29,322,252 293,223 293,223 2016 2015 Rs’000 Rs’000
20 Deferred Income Tax Liabilities Present value of funded obligations 418,784 374,215 Fair value of plan assets ( 338,458) ( 320,789) Liability in the statement of financial position 80,326 53,426 The gross movement on the deferred income tax account is as follows:
2016 2015 The amounts recognised in profit or loss are as follows: Rs’000 Rs’000
2016 2015 At 01 January 68,701 60,616 Rs’000 Rs’000 (Over)/under-provision of deferred tax in prior year ( 498) 11
Deferred tax (asset)/liability on remeasurements of post employment Current service cost - - benefit obligations charged to other comprehensive income ( 5,288) 3,894 Scheme expenses 2,000 621 Charge for the year (Note 9) 8,909 4,180 Cost of insuring risk benefits - 1,321 At 31 December 71,824 68,701 Effect of curtailments / settlements - -
Net interest cost 3,527 4,663 Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax Other adjustments 1,559 - liabilities and when the deferred income taxes relate to the same fiscal authority. Total included in staff costs 7,086 6,605
The movements in deferred income tax assets and liabilities during the year are shown below: The actual return on plan assets amounted Rs 21,039,000 (2015 - Rs 31,221,272).
Provision for Provision for Retirement The movement in the (asset)/liability recognised in the balance sheet is as follows: Capital tax impairment of slow-moving benefit allowances receivables inventory obligations Total 2016 2015 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000
At 01 January 2015 77,478 ( 2,969) - ( 13,893) 60,616 At 01 January 53,426 81,723 Charge to other comprehensive income - - - 3,894 3,894 Total expense – as shown above 7,086 6,605 Under-provision of deferred tax in prior year 11 - - - 11 Employer’s contributions ( 11,294) ( 11,998) Charge/(credit) for the year to income statement 5,760 ( 1,461) ( 1,036) 917 4,180 Actuarial losses/(gains) recognised in other comprehensive income 31,108 (22,904)
At 31 December 2015 83,249 ( 4,430) ( 1,036) ( 9,082) 68,701 At 31 December 80,326 53,426 Charge to other comprehensive income - - - ( 5,288) ( 5,288) Over-provision of deferred tax in prior year ( 498) - - - ( 498) Charge/(credit) for the year to income statement 8,219 ( 265) 240 715 8,909 At 31 December 2016 90,970 ( 4,695) ( 796) ( 13,655) 71,824
94 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 95 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
21 Retirement Benefit Obligations (Continued) 21 Retirement Benefit Obligations (Continued)
The movement in present value of funded obligations is as follows: Plan assets are comprised as follows:
2016 2015 2016 2016 2015 2015 Rs’000 Rs’000 Rs’000 % Rs’000 %
At 01 January 374,215 373,452 Local equities 89,536 27 67,907 21 Current service cost - - Overseas equities 132,736 39 143,264 45 Interest cost 25,141 26,180 Fixed income 116,186 34 109,618 34 Actuarial losses/(gains) 30,533 ( 13,200) Benefits paid ( 12,703) ( 12,217) 338,458 100 320,789 100 Settlements - - Other adjustments 1,598 - At 31 December 418,784 374,215 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 The movement in fair value of plan assets is as follows: 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. At 01 January 320,789 291,729 Interest income 21,614 21,517 Vivo Energy Mauritius Limited is expected to contribute around Rs 11,217,000 to the pension scheme for the year ending 31 December Employer’s contribution 11,294 11,998 2017. Scheme expenses ( 2,000) ( 621) Cost of insuring risk benefits - ( 1,321) The duration (i.e. mean term) of the liabilities as at 31 December 2016 is 16.057 years. Actuarial (losses)/gains ( 575) 9,704 Benefits paid ( 12,703) ( 12,217) The principal actuarial assumptions used were as follows: Settlements - - Other adjustments 39 - 2016 2015 At 31 December 338,458 320,789 % %
Discount rate 5.75 7.00 Analysis of amount recognised in other comprehensive income Future salary increases 4.00 5.00 Future pension increases 2.30 3.00 (Losses)/gains on pension scheme assets ( 575) 9,704 NPS Ceiling increases 6.00 6.00 Experience (losses)/gains on the liabilities ( 30,533) 13,200 Actuarial (losses)/gains recognised in other comprehensive income ( 31,108) 22,904 In case of the funded plans, the Company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the pension schemes. Cumulative actuarial gains/(losses) at the end of the year 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 actively monitors Cumulative actuarial losses at start of year ( 117,687) ( 140,591) how the duration and the expected yield of the investments are matching the expected cash outflows arising from the pension obligations. Actuarial (losses)/gains recognised during year ( 31,108) 22,904 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 2016 consists of equities and bonds, although the Company also invests in property, bonds and Cumulative actuarial losses at end of year ( 148,795) ( 117,687) 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.
96 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 97 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
21 Retirement Benefit Obligations (Continued) 21 Retirement Benefit Obligations (Continued)
Plan assets Sensitivity analysis
None of the plan assets are invested in shares of the Company or in property used by the Company. The sensitivity of the defined benefit obligation to changes in the weighted principal assumption have been determined based 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 Mortality rate unchanged and are as follows :
Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience. Impact on defined benefit obligation The average life expectancy in years of a pensioner retiring at age 60 on the reporting date is as follows: Change in Decrease in Increase in Assumption Assumption Assumption 2016 2015 Discount rate 0.5% Increase by 8.2% Decrease by 7.3% Male 21 21 Future long term salary assumption 0.5% Decrease by 2.6% Increase by 2.7% Female 24 24 The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely The average life expectancy in years of a pensioner retiring at age 60, 15 years after the reporting date is as follows: 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 unit credit method 2016 2015 at the end of the reporting period) has been applied as when calculating the pension liability recognised within the statement of financial position. Male 21 21 Female 24 24 The methods and types of assumptions used in preparing the sensitivity analyses did not change compared to the previous period.
Through its defined benefit pension plans, the Company is exposed to a number of risks, the most significant of which are detailed below: 2016 2015 Rs’000 Rs’000 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 At 31 December: 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 investment risk by Present value of defined benefit obligations 418,784 374,215 investing more in assets that better match the liabilities. Fair value of plan assets 338,458 320,789 Deficit 80,326 53,426 Changes in bond yields Experience adjustments on plan liabilities 30,533 ( 13,200) A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ Experience adjustments on plan assets ( 575) 9,704 bond holdings.
Inflation risk 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 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.
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.
98 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 99 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
22 Trade And Other Payables 25 Dividends
The Company declared the following dividends during the year. 2016 2015
Rs’000 Rs’000 2016 2015
Rs’000 Rs’000 Trade payables 1,197,502 1,043,199
Payable to related parties (Note 28 (vii)) 30,492 30,693 Rs 1.90 per ordinary share (2015 - Rs Nil) 55,712 - Other payables and accruals 111,273 122,064 Rs 3.00 per ordinary share (2015 - Rs 2.90) 87,967 85,035 1,339,267 1,195,956 143,679 85,035
23 Deposits On Lpg Cylinders The dividend of Rs 1.90 declared in 2016 represents the final dividend in respect of the financialear y ended 31 December 2015. The dividend of Rs 3.00 declared in 2016 represents the interim dividend in relation to the financial year ended 31 December 2016. 2016 2015 Rs’000 Rs’000
At 01 January 322,134 294,499 Deposits – net 21,909 27,635 26 Operating Leases At 31 December 344,043 322,134 The Company leases various plots of land and vehicles under non-cancellable operating lease agreements. The leases have varying terms,
escalation clauses and renewal rights. The lease expenditure charged to profit or loss during the year is disclosed in Note 7.
The future aggregate minimum lease payments under non-cancellable motor vehicle leases are as follows: 24 Cash, Cash Equivalents And Bank Overdrafts 2016 2015 Cash, cash equivalents and bank overdrafts include the following for the purposes of the cash flow statement. Rs’000 Rs’000
2016 2015 Within 1 year 9,609 12,787 Rs’000 Rs’000 Between 1 and 5 years 24,299 28,056
After five years 26,994 24,308 Cash and cash equivalents 397,785 67,664
Bank overdrafts - ( 98,935) The future aggregate minimum lease payments under non-cancellable leasehold land leases are as follows: 397,785 ( 31,271)
2016 2015 Bank overdrafts are repayable on demand and bear average interest rates of 5.26% annually (2015 - 5.36% annually). Rs’000 Rs’000
Within 1 year 7,424 6,977 Between 1 and 5 years 24,818 21,722 After five years 90,151 88,899
100 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 101 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
27 Contingent Liabilities 28 Related Party Transactions (Continued)
At 31 December 2016, the Company had no contingent liabilities (31 December 2015 – Rs 35,292,000) following a positive outcome in 2016 2015 the case of one-off receipt of sale of economic rights in the Shell trademark in 2008. Rs’000 Rs’000
(ii) Sales of goods and services 28 Related Party Transactions (a) Sales of goods to fellow subsidiary: At 31 December 2016, the Company is controlled by Vivo Energy Mauritius Holdings BV which owns 77.15% of the Company’s shares. The Vitol Aviation (fuels) 143,785 323,689 remaining 22.85% of the shares are widely held and are listed on the Stock Exchange of Mauritius. The intermediate and ultimate parents Vivo Energy Uganda (seals) 358 893 of the Company are Vivo Energy Holding BV and HV Investments BV, companies based in Netherlands. Fellow subsidiaries are entities Société Malgache des Pétroles Vivo Energy (lubricants) - 51 which are controlled by the ultimate parent directly or indirectly through one or more intermediaries. Associates are entities in which the Vivo Energy Burkina (lubricants) - 16 Company has significant influence but which it does not control. The following transactions were carried out with related parties: 144,143 324,649
(b) Sales of services: 2016 2015 Energy Storage Company Ltd (joint venture) (management services) 3,000 3,000 Rs’000 Rs’000 Energy Storage Company Ltd (joint venture) (rent) 2,321 288 Vivo Energy Indian Ocean Holdings (management services) (fellow subsidiary) 1,448 1,294 (i) Purchases of goods and services from fellow subsidiaries 6,769 4,582
Purchases of goods: Shell and Vivo Lubricants SA (lubricants freight) 11,375 11,239 The above transactions were carried out on normal commercial terms and conditions. Vitol Asia Pte (fuels) 203,003 103,034 Vitol Bahrain E.C. (fuels) 306,204 152,556 (iii) Key management personnel (including full time directors) Vivo Energy Botswana (additives) - 599 520,582 267,428 2016 2015 Number Number Purchases of services: Vivo Energy Africa Services Sàrl 95,347 89,841 Shares held in the Company - Directly - - - Indirectly - - - - The above transaction 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). 2016 2015 Rs’000 Rs’000
Emoluments 37,347 36,263 Post employment benefits 5,552 5,445 42,899 41,708
102 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 103 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
28 Related Party Transactions (Continued) 29 Three Year Summary
2016 2015 2016 2015 2014 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000
(iv) Expenses Income Statement
Expenses paid on behalf of fellow subsidiaries: Sales 9,106,874 10,139,537 12,784,100 Vivo Energy Investments BV (VEIBV) 21,763 18,328 Vivo Energy South Africa (Pty) Ltd (VESA) - 2,258 Operating profit 372,998 335,434 181,682 Société Malgache des Pétroles Vivo Energy 663 1,212 Finance income 5,732 1,867 677 4,226 Vivo Energy Botswana 1,616 Finance cost ( 5,045) ( 8,097) ( 9,540) Vivo Energy Kenya 5 - Share of profit of joint venture 7,511 10,594 10,679 Vivo Energy Maroc 189 - Profit before income tax 381,196 339,798 183,498 Vivo Energy Uganda 775 734 ( 60,324) 27,621 24,148 Income tax expense ( 57,171) ( 29,167) Profit for the year 320,872 282,627 154,331 Expenses paid on behalf of Vivo Energy Investments BV (VEIBV) included staff costs of Rs 20,533,000 (2015 – Rs 16,921,000) and were recharged to VEIBV with a mark-up of 7% (2015 – 7%). The other expenses related to the above transactions were reclaimed from the Dividends declared per share Rs 4.90 2.90 5.00 above related companies and invoiced at cost. Basic and diluted earnings per share 10.94 9.64 5.26 (v) Dividends received
15,000 Energy Storage Company Ltd (joint venture) - Statement of Comprehensive Income
(vi) Dividends paid 2016 2015 2014
Rs’000 Rs’000 Rs’000 Vivo Energy Mauritius Holdings BV (parent) 110,854 65,608
(vii) Outstanding balances Profit for the year 320,872 282,627 154,331
Receivable from related parties: Other comprehensive income Items that will not be reclassified to profit or loss Vitol Aviation (fellow subsidiary) - 22,595 Remeasurements of post employment benefit Vivo Energy Investments BV (VEIBV) (fellow subsidiary) 4,143 8,621 obligations ( 31,108) 22,904 27,541 368 Energy Storage Company Ltd (joint venture) 427 Deferred tax asset/(liability) on remeasurement of Société Malgache des Pétroles Vivo Energy (fellow subsidiary) 149 262 post employment benefit obligations 5,288 ( 3,894) ( 4,682) Vivo Energy Botswana (fellow subsidiary) 155 762 Other comprehensive income for the year ( 25,820) 19,010 22,859 Vivo Energy South Africa (fellow subsidiary) - 1,209 295,052 Vivo Energy Uganda (fellow subsidiary) 237 173 Total comprehensive income for the year 301,637 177,190 Vivo Energy Kenya (fellow subsidiary) 5 - Vivo Energy Maroc (fellow subsidiary) 189 - 5,246 34,049
Payable to related parties:
Vivo Energy Africa Services (fellow subsidiary) 29,530 30,044 Shell and Vivo Lubricants SA (fellow subsidiary) 962 607 Vitol Aviation (fellow subsidiary) - 42
30,492 30,693
The amounts receivable from, and payable to related parties are unsecured, interest free and have no fixed repayment terms and approximate their fair values.
104 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 105 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2016 (CONTINUED) 31 DECEMBER 2016 (CONTINUED)
29 Three Year Summary (Continued) 30 Financial Instruments By Category
2016 2015 2014 Loans and receivables Rs’000 Rs’000 Rs’000 2016 2015 Rs’000 Rs’000 Statement of financial position Financial assets ASSETS Trade and other receivables 753,396 660,504 Non-current assets Cash and cash equivalents 397,785 67,664 Property, plant and equipment 1,085,388 1,056,118 908,682 1,151,181 728,168 Intangible assets 2,237 2,124 - Prepaid operating leases 9,784 10,362 604 Investment in joint ventures 39,538 46,402 35,807 At amortised cost Other long-term assets 5,990 6,524 11,425 2016 2015 1,142,937 1,121,530 956,518 Rs’000 Rs’000
Current assets Financial liabilities Inventories 416,363 619,093 666,951 Bank overdraft - 98,935 Trade and other receivables 776,162 690,102 1,018,886 Trade and other payables 1,339,267 1,195,956 Cash and cash equivalents 397,785 67,664 55,990 Deposit on LPG cylinders 344,043 322,134 Income tax asset - - 3,587 1,683,310 1,617,025 1,590,310 1,376,859 1,745,414 Total assets 2,733,247 2,498,389 2,701,932
EQUITY & LIABILITIES 31 Parent And Ultimate Parent Companies Equity Share capital 293,223 293,223 293,223 At 31 December 2016, the directors consider Vivo Energy Mauritius Holdings B.V. (incorporated in the Netherlands) as the parent company. Retained earnings 583,290 431,917 215,315 The intermediate and ultimate parents of the Company are Vivo Energy Holding BV and HV Investments BV, companies based in Netherlands. Total equity 876,513 725,140 508,538
LIABILITIES Non-current liabilities 32 Incorporation And Registered Office Deferred income tax liabilities 71,824 68,701 60,616 Retirement benefit obligations 80,326 53,426 81,723 The Company is incorporated and domiciled in Mauritius as a public company with limited liability. The address of its registered office is 152,150 122,127 142,339 Roche Bois, Port Louis.
Current liabilities Bank overdrafts - 98,935 416,569 33 Currency Trade and other payables 1,339,267 1,195,956 1,339,987
Deposits on LPG cylinders 344,043 322,134 294,499 The financial statements are presented in thousands of Mauritian rupees. Current income tax liabilities 21,274 34,097 - 1,704,584 1,651,122 2,051,055 Total liabilities 1,856,734 1,773,249 2,193,394 Total equity and liabilities 2,733,247 2,498,389 2,701,932
106 Vivo Energy Mauritius Limited Annual Report 2016 Vivo Energy Mauritius Limited Annual Report 2016 107 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 Friday 12 May 2017 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 13 May 2016.
Ordinary Resolution I
“Resolved that the minutes be adopted as true proceedings of the meeting.”
2. To consider the Annual Report 2016 of the Company.
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 2016.
Ordinary Resolution II
“Resolved that the Audited Financial Statements of the Company for the year ended 31 December 2016 be hereby BLANK PAGE approved.” 5. To re-elect as Director of the Company Mr Christian Georges CHAMMAS 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 Christian Georges CHAMMAS be hereby re-elected as Director of the Company.”
6. To re-elect as Director of the Company Mr Jean Noel Patrick CRIGHTON who retires by rotation and, being eligible, offers himself for re-election in accordance with the Constitution of the Company.
Ordinary Resolution IV
“Resolved that Mr Jean Noel Patrick CRIGHTON be hereby re-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 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. Shell trademarks used under license NOTICE OF MEETING OF SHAREHOLDERS Proxy form
9. To elect Mr David Muraguri MURIITHI as Director of the Company I/We Ordinary Resolution VII of “Resolved that Mr David Muraguri MURIITHI be hereby elected as Director of the Company.” being a member/members of the abovenamed Company, hereby appoint of 10. 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. or failing him/her of Ordinary Resolution VIII as my/our proxy to vote for me/us and on my/our behalf at the Annual Meeting of Shareholders of the
“Resolved that the Board of Directors of the Company be hereby authorized to fix the remuneration of Messrs Company, to be held on the 12 May 2017 and at any adjournment thereof. PricewaterhouseCoopers, the auditors of the Company for the financial year ending 31 December 2017.” I/We desire my/our vote(s) to be cast on the Resolutions as follows:
By order of the Board RESOLUTIONS For Against Abstain I Resolved that the minutes be adopted as true proceedings of the meeting. Executive Services Limited Per Christian Angseesing II Resolved that the Audited Financial Statements of the Company for the year Secretary ended 31 December 2016 be hereby approved. III Resolved that Mr Christian Georges CHAMMAS be hereby re-elected as Director of the Company IV Resolved that Mr Jean Noel Patrick CRIGHTON be hereby re-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 Mr David Muraguri MURIITHI be hereby elected as Director of the Company VIII 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 2017.
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 Note:: A member not being able to attend and vote at the meeting is entitled to appoint a proxy to attend given, the 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 office of the Company at least FORTY-EIGHT hours before the holding of the meeting. Shell trademarks used under license hours before the holding of the meeting or else the instrument of proxy should not be treated as valid. Shell trademarks used under license BLANK PAGE Cover2016.pdf 1 4/11/17 10:37 AM
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