port louis fund ltd annual report 2013 · 2013. 12. 5. · 2 annual report 2013 notice is hereby...

Annual Report 2013Port Louis Fund Ltd

What you need to know about us… Port Louis Fund Ltd (PLF) was set up in 1997 under the aegis of the State Investment Corporation Ltd. The Fund was set up with MUR 648 million which has now grown to MUR 1.3 billion after having

paid dividends approximating MUR 610 million over the 16 years. To-date, PLF is the largest local mutual fund in terms of net asset value and has around 4,700

shareholders. Consistently among top 3 performers in the local market. Return for the financial year 2012-13: 12.7% implying that an investment of MUR 1,000 would have grown to MUR

1,126.7 in a year with dividends being re-invested.

Return since inception: 380.6% which is equivalent to an annually compounded return of 10.3%.

Consistent payment of dividends: MUR 0.80 per share in financial year 2012-13. MUR 41.0M was distributed as dividends.

Lowest total expense ratio; No entry fee and No exit fee if investment held for more than 1 month.

Annualised return

Asset allocation

Dividend per share

Top 10 Holdings

Security MUR 'M % of Net

Assets State Insurance Corporation of Mauritius 315.3 25.2%

Mauritius Commercial Bank 115.6 9.3%

State Bank of Mauritius 80.0 6.4%

Bramer Banking Corporation 56.3 4.5%

Grand Casino du Domaine 39.7 3.2%

Innodis 31.9 2.6%

New Mauritius Hotels 30.3 2.4%

Terra Mauritius 29.9 2.4%

Maurinet 23.5 1.9%

ENL Land 21.6 1.7%

Total 744.0 59.6%

-9.90%

11.50%

17.30%

-0.83%

12.67%

Jun-09 Jun-10 Jun-11 Jun-12 Jun-13

Unquoted securities

30.5%

Foreign investments

22.1%

Fixed income

4.1%

Banking and Insurance

21.2%

Commerce 3.6%

Industry 2.3%

Investment 8.4%

Others 0.3%

Leisure & Hotels 4.2%

Sugar 2.8%

Transport 0.5%

Local listed equities

MUR 0.60

MUR 0.80

MUR 1.00

MUR 0.60

MUR 0.80

Jun-09 Jun-10 Jun-11 Jun-12 Jun-13

Annual Report 2013Port Louis Fund Ltd 1

DearShareholders, TheBoardofDirectorsispleasedtopresenttheAnnualReportofPortLouisFundLtdforthefinancialyearwhichendedon30June2013. ThisreportwasapprovedbytheBoardofDirectorson30September2013.

M.I. Mallam-HashamChairman

CONTENTS PAGE Noticeofannualmeeting 2 Corporateinformation 3

Statutorydisclosures 4 Directors&ExecutiveManagementprofile 5-6 Corporategovernancereport 7-12 ReportofDirectors 13-30

Independentauditor’sreporttothemembers 32-33 Statementoffinancialposition 34 Statementofprofitorlossandothercomprehensiveincome 35 Statementsofchangesinnetassetsattributabletoholdersofredeemableshares 36 Statementofcashflows 37 Notestothefinancialstatements 38-52

V.BhuguthDirector

Annual Report 2013 2

Noticeisherebygiventhatthe16thAnnualMeetingofShareholdersofPortLouisFundLtdwillbeheldonTuesday17December2013at14:00hoursatConferenceHallA,1stfloor,BPML,CyberTower,Cybercity,Ebenetodeliberateandtransactonthefollowingbusinesses:

Agenda

Ordinary Resolutions1. ToapproveandadopttheMinutesofProceedingsofthe15thAnnualMeetingofShareholdersofPortLouisFundLtdheldon Monday,4thDecember,2012.

2. ToreceivetheAnnualReportforthefinancialyearended30June2013.

3. ToreceivetheReportofAuditors.

4. Toconsiderand approvetheAuditedFinancialStatementsfortheyearended30June2013.

5. ToratifythedividenddeclaredbytheBoardofDirectorsandpaidtoallshareholdersregisteredatthecloseofbusinesson 7June 2013.6. Tore-appointMr.MuhammadIqbalMallam-HashamasDirectoroftheCompanytoholdofficeuntilthenextAnnualMeeting.

7. Tore-appointMr.YusufHassamAboobaker,whoisovertheageof70years,tocontinuetoholdofficeasDirectorofthe CompanytoholdofficeuntilthenextAnnualMeetingoftheCompanyundersection138(6)oftheCompaniesAct2001.8. Tore-appointMr.GeorgesYvesHervéLassémillanteasDirectoroftheCompanytoholdofficeuntilthenextAnnualMeeting.

9. Tore-appointMr.VijayBhuguthasDirectoroftheCompanytoholdofficeuntilthenextAnnualMeeting.

10. Tore-appointMr.IshwurlalGolamasDirectoroftheCompanytoholdofficeuntilthenextAnnualMeeting.

11. Tore-appointMr.VeenayRambarassahasDirectoroftheCompanytoholdofficeuntilthenextAnnualMeeting.

12. TofixremunerationoftheDirectors.

13. Tore-appointtheAuditorsoftheCompanyforthefinancialyearending30June2014andtoauthorisetheBoard ofDirectors tofixtheirremuneration.

Special ResolutionToconsiderand,ifthoughtfit,passthefollowingresolutionasaSpecialResolution:

14. “ThatthenewconstitutionoftheCompanycontainedintheDraftDeedsignedbyMrM.I.Mallam-Hasham,DirectoroftheCompany,forthepurposeofidentificationanddepositedwithMr.AshvinKrishnaDwarka,NotaryofPortLouis,aswitnessedbya DeedofDepositdulydrawnupandauthenticatedbyhim,currentlyintheprocessofbeingregisteredwiththeRegistrar-General’sDepartment, suchas the saidconstitution standsafter anyamendmentoralterationmade to it at themeeting,beadoptedastheNewConstitutionoftheCompanyinsubstitutionforandtotheexclusionoftheexistingMemorandumandArticlesofAssociationoftheCompany,andtograntfullpowerstoanymemberoftheBoardand/ortheSecretaryoftheCompanytocarryoutallsuchproceduralformalities(includingthedepositbyauthenticdeed)asmaybeusefulornecessaryfollowingtheadoptionoftheunalteredoralteredNewConstitutionoftheCompany”.

AnexplanatorynoteinrespectoftheSpecialResolutionunderItem14isattachedherewith.

15. Totransactanyotherbusiness,ifany,asmaybetransactedatanAnnualMeetingofShareholders.

BYORDEROFTHEBOARD

S.L Nullatemby (Mrs.)CompanySecretary5November2013

NOTE:Membersentitledtoattendandvoteatthemeetingmayappointproxiestoattendandvoteforthem.TheinstrumentappointingaproxyoranygeneralpowerofattorneyshallbedepositedattheRegisteredOfficeoftheCompanynotlessthantwenty-fourhoursbeforethemeetingorelsetheinstrumentofproxyshallnotbetreatedasvalid.Registrationofshareholdersatthemeetingwillstartasfrom13:00hours

Notice of Annual Meeting

PortLouisFundLtd


DirectorsMr.M.I.Mallam-Hasham,Chairman

Mr.Y.H.Aboobaker,S.C,C.S.K

Mr.V.Bhuguth

Mr.I.Golam

Mr.G.Y.H.Lassémillante

Mr.V.Rambarassah

Fund ManagerCapitalAssetManagementLtd

Registrar and Transfer OfficePrimePartnersLtd

Company SecretaryMrs.S.L.Nullatemby

BankersAfrAsiaBankLimited

BankofBarodaLtd

BankOneLtd

BanquedesMascareignesLtée

BarclaysBankMauritiusLtd

BramerBankingCorporationLimited

MauritiusPostandCo-operativeBankLtd

StandardBank(Mauritius)Ltd

StateBankofMauritiusLtd

TheHongKongandShanghaiBankingCorpLtd

TheMauritiusCommercialBankLtd

Registered Office15thFloor,AirMauritiusCentre,

6,PresidentJohnKennedyStreet

PortLouis

Mauritius

AuditorsBDO&CO(External)

McMillanWoods(Internal)

Websitehttp://www.portlouisfund.com

Stockbroking CompaniesAnglo-MauritiusStockbrokersLtd

AssociatedBrokersLtd

AXYSStockbrokingLtd

BramerSecuritiesLtd

CapitalMarketsBrokersLtd

IPROStockbrokingLtd

MCBStockbrokersLtd

LCFSecuritiesLtd

PrimeSecuritiesLtd

Ramet&AssociésLtée

SBMSecuritiesLtd

Foreign Fund ManagersFidelityInvestmentsInternational

FranklinTempletonInvestmentsLtd

London&CapitalAssetManagementLtd

ImaraAssetManagementLtd

Custodian BankStandardBank(Mauritius)Ltd

ICICIBankLtd(India)

Indian StockbrokersIndsecSecurities&FinanceLtd

ReligareCapitalMarketsLtd

SPASecuritiesLtd

Corporate Information

Annual Report 2013 Port Louis Fund Ltd4

TheDirectorshavethepleasuretosubmittheAnnualReport together with the audited accounts of PortLouisFundLtdfortheyearended30June2013.

Principal ActivitiesPort Louis Fund Ltd is a Public Company withlimited liability incorporated on 9 June 1997. Itoperates as a collective investment scheme (CIS) asauthorised by the Financial Services CommissionundertheSecuritiesAct2005.

ThemainobjectsoftheCompanyare:

• To carry on business as an investment

holdingcompany;

• Todealinsecuritiesandpropertiesofall

kinds;and

• Tomanageandadviseoninvestmentfunds.

Members of the Board of DirectorsMr.M.I.Mallam-Hasham,Chairman

Mr.Y.H.Aboobaker

Mr.V.Bhuguth

Mr.I.Golam


Mr.V.Rambarassah

Directors’ Service ContractsTherewasnoservicecontractbetweentheCompanyandanyofitsDirectors.

Directors’ Remuneration and BenefitsRemuneration and benefits received and receivablefromtheCompanywere:

The direct and indirect interests of the Directors in the securities of the Company as at June 30, 2013

DonationsNo donation was made during the financial yearendedJune30,2013.Auditors’ RemunerationsTheauditors’remunerationswere:

M.I. Mallam-HashamChairman

Approvedon30September2013

Secretary’s CertificateFortheyearendedJune30,2013I certify that, to the best of my knowledge andbelief, theCompanyhas filedwith theRegistrar ofCompanies, for the financial year ended 30 June2013,allsuchreturnsasarerequiredoftheCompanyundertheCompaniesAct2001ofsection166(d).

S.L. Nullatemby (Mrs.)CompanySecretary30September2013

Statutory Disclosures

V.BhuguthDirector


Directors’Profile

Mr. M.I. Mallam-HashamisaFellowoftheprestigiousHubertH.HumphreyprogramandreadInternationalEconomyatBostonUniversity.HeisalsoaFellowoftheMauritiusInstituteofDirectors.Heholdspost-graduatedegreesinManagementandBusinessfrom“Institutd’AdministrationdesEnterprises”,UniversitédeStrasbourg.Atpresent,heistheManagingDirectoroftheStateInvestmentCorporationLtdandisboardmemberofanumberof leadingcompanies inMauritius.Hehaswiderangingexperience in thefinancialsectorandhasbeenbanker,consultantincorporatemanagementandAssociateProfessoratuniversities.HewasalsoaMemberofParliament.Mr. Y.H. Aboobaker, S.C, C.S.K,holdsaB.A.(Hons)inEconomics.HeisaSeniorCounselpracticingattheBarofMauritiussinceMarch1972andsitsontheboardofsomeoftheleadingcompaniesinMauritius.Mr. V. Bhuguth isaFellowoftheAssociationofCharteredCertifiedAccountant(FCCA).Hereckons24yearsofexperienceinaccountingfirmsandholdsapost-graduatediplomainInternationalTaxPlanningfromtheUniversityofMiami.BeingaFellowoftheMauritiusInstituteofDirectors,heispresently leadinganaccountingfirminPortLouis.Mr. G.Y.H. LassémillanteisaMemberoftheMiddleTemple.HesatonthePoliceServiceCommission.Atpresent,heisBarrister-at-LawandhasbeenpracticingattheMauritianBarsince1982.Mr. I. GolamisamemberoftheCharteredInstituteofManagementAccountantsandalsoholdsanMBA.HeispresentlytheGroupFinanceManageroftheStateInvestmentCorporationLtd.HehasawiderangeofexperienceinthefieldofFinanceandAccounting,StockExchange,OffshoreSectorandprivatisationoftheCivilAviation.HeisalsomemberofvariousboardswithintheSICgroup.Mr. V. RambarassahisaFellowoftheAssociationofCharteredCertifiedAccountant(FCCA).HeiscurrentlyactingasFundManagerandFundAccountantoftheNationalPensionFundandNationalSavingsFund.HehaspreviouslybeenworkingintheGovernmentAuditOffice.Hehaswideexperienceinauditandfinancefields.

CompanySecretary

Mrs. S.L. NullatembyisafellowoftheInstituteofCharteredSecretariesandAdministrators(FCIS)andalsoaFellowoftheMauritiusInstituteofDirectors(MIoD).ShealsoholdsanMBAinFinance.Atpresent,sheistheCompanySecretaryofPortLouisFundLtd.ShehasbeenworkingattheStateInvestmentCorporationLtdforthepast22yearsandhaswiderangingexperienceinthefieldofFinanceandAccounting,AdministrativeandCorporatematters.SheisalsodirectorofvariouscompanieswithintheSICgroup.

Directors & Executive Management


Executivemanagement

Capital Asset Management LtdTheFundhasbeenmanagedbyCapitalAssetManagementLtd(CAM)sinceinception.CAMisawhollyownedsubsidiaryofTheStateInvestmentCorporationLtd(SIC)andis licensedbytheFinancialServicesCommission(FSC)asaCISManagerandInvestmentAdvisor(Unrestricted)undertheSecuritiesAct2005.CAMalsomanagestheSMEPartnershipFundLtdandprovidesadvisoryservicestotheCasinosofMauritiusPensionFund.ThefollowingkeypersonnelareemployedbyCAM:

Executive DirectorMr. V. Auckaloo isamemberoftheCFAinstituteandholdsanM.Sc. inFinancialManagement,aB.Sc.(Hons)inEconomicsandanLLB(Hons).Hehasmorethan14yearsofexperienceinthefinancialservicessectorandhadpreviouslyworkedintheGovernmentserviceandinthebankingsector.HejoinedCAMsince2001andiscurrentlytheExecutiveDirector.Finance ManagerMr. M. K. RamroopjoinedCAMsinceJanuary2006andiscurrentlytheFinanceManageroftheCompany.He is a Fellow of the Association of Chartered Certified Accountants (FCCA) and holds an MBA withspecialisationinFinancialManagement.Hehasworkedinthebankingsectorforover19years.BeforejoiningCAMheworkedwithintheSICGroupintheleisuresectorandfinancialservicessectors.

Senior Financial Analysts Mrs. S. BeehareejoinedCAMsinceJuly2007andcurrentlyholdsthepositionofSeniorFinancialAnalyst.SheholdsaB.A.(Hons.)inLawandManagementandisanaffiliateoftheAssociationofCharteredCertifiedAccountants.Shehasmorethan10yearsofexperienceinthefinancialandregulatorysectors.

Mr. S. Namah currentlyholds thepositionofSeniorFinancialAnalyst andheholds aB.Sc. (Hons.) inAccountingandFinanceandisamemberoftheAssociationofCharteredCertifiedAccountants.Hehasmorethan10yearsofexperienceinvariousfieldsoffinance,including6yearswithinprivateequityfinancing.

Assistant AnalystsMr. Ashley AppadujoinedCAMsinceOctober2011andholdsthepositionofAssistantAnalyst.HeholdsaB.ComAccounting&FinancefromCurtinUniversityofTechnology.HeiscurrentlyundertakingM.Sc.FinancefromtheEuropeanBusinessSchool.Mr. Jayvash NundooisaholderofanM.Sc.FinancialRiskManagement(distinction)fromtheUniversityofGlasgowandaB.Sc.EconomicsandFinance(Hons.)fromtheUniversityofMauritius.HejoinedtheteamasAssistantAnalystsinceMarch2012.

Mr. Pravish HalkhoreeisaholderofanM.Sc.Finance,InvestmentandRiskfromtheUniversityofKentandaB.Sc.EconomicsandFinance(Hons.)fromtheUniversityofMauritius.HejoinedtheteamasAssistantAnalystsinceOctober2012.

Directors & Executive Management


Compliance

TheFundiscommittedtoadhereinallmaterialrespectstotheprinciplesofgoodCorporateGovernance.Ithassettheappropriatepoliciesandpracticeswhichenableittomaintainthehigheststandardsofintegrityandaccountability.TheBoardhasalsoestablisheddifferentcommittees,namely,AuditandRiskCommittee,InvestmentCommitteeandCorporateGovernanceCommitteetoassistinexecutionofitsresponsibilitiesandtoensurecompliancewiththeprovisionssetoutintheCodeofCorporateGovernance.We,theDirectorsofPortLouisFundLtd (PLF), confirm that to thebest of ourknowledge,PLFhas compliedwithof itsobligationsandrequirementsundertheCodeofCorporateGovernance.WeunderstandthatwearecollectivelyaccountableandresponsiblefortheperformanceandaffairsoftheFund.WefurthercommittoensurethattheFund’sactivitiesarecarriedoutethicallyandinatransparentmanner.

Holding structureTheholdingstructureofthePortLouisFundLtdasat30June2013was:

Shareholders holding more than 5% share capital of the Company as at June 30, 2013

Shareholding Analysis as at June 30, 2013

Category of Shareholders as at June 30, 2013

Communication with shareholdersThe Fund communicates with its shareholders ona regularbasis.ThedailyNetAssetValueper shareof the Fund and monthly factsheet detailing theperformanceispublishedonthewebsiteat:www.portlouisfund.com

Theannual report containing the auditedaccounts,performance reviewandother essential informationaresenttoallshareholders.Thelatterarealsoinvitedtotheannualmeetingofshareholderswherebytheycan ask any relevant questions or seek clarificationsfrom the Board and Management regarding theFund.AnyindividualqueriescanbeaddressedtotheRegistryand/ortheFundManager.

Schedule of events

Corporate Governance Report

07



Dividend Policy

Dividends are payable out of distributable profits.Otherfactorswhichmayinfluencedividendsare;theFund’sperformance,itscashflowpositionandfutureinvestmentopportunities.

The Board of DirectorsAs per the Company’s constitution, the Board isconstituted with a minimum of five and up to amaximumofninedirectors.TheBoardMeetingswerechairedby,Mr.M.I.Mallam-Hasham.Theprofileofcurrentboardmembersisgivenonpage5.

TheBoardmonitorsandevaluatestheimplementationof strategies and policies. It maintains control overthe Fund and ensures that decisions are effectivelyexecutedbymanagement.

The Board met 4 times during the year and theindividualattendanceoftheDirectorsisdetailedonpage9.

TheBoarddeliberatedonvariousissuesincluding: • Examinationandendorsementofthe recommendationsofvariousboard committees. • Reviewoftheassetallocationandinvestment strategyoftheFund • PerformanceoftheFundinlightofvarious economicandfinancialmarketchallenges. • Governanceandinternalauditissues • ApprovalofauditedaccountsasatJune2012 • Valuationofunquotedsharesintheportfolio • Declarationandpaymentofdividends • AppointmentofNotarytoreviewthe ConstitutionoftheFund • Reviewedauditfee

TherewasnoExecutiveDirectorontheBoardduringthefinancialyearendedJune30,2013.

Investment CommitteeMembers

Mr.M.I.Mallam-Hasham,Chairman

Mr.V.Bhuguth

Mr.I.Golam

The Investment Committee has the main objectiveofadvisingtheBoardonassetallocation,investmentpolicies,processes,strategiesandoptimalrisk/returnlevel.The InvestmentCommitteemet twiceduringtheyear.

TheCommitteetooknoteoftheinvestmentstrategyrecommended by management and reviewed theassetallocationfortheyear2013.Onthelocalequityfront,itwasagreedtoincreaseexposureinsecuritiesbearing sounder financial fundamentals and tograduallydivestfromoverexposedstocks.Risk/returnopportunitiesinAfricanstockmarketswerediscussedand it recommended increasing exposure therein.Fixed incomesegment representeda lowportionofthe total portfolio and given prevailing low marketyields, the Committee recommended investingin Indian bonds. However this decision has beendeferredduetoprevalentmarketandcurrencyrisks.

Audit & Risk CommitteeMembers

Mr.V.Bhuguth,Chairman

Mr.Y.H.Aboobaker

Mr.G.Y.H.Lassémilliante

Mr.I.GolamThe Audit & Risk Committee has the objective toassist the board indischarging its duties relating tosafeguarding of assets, the operation of adequatesystems, control processes and the preparation offinancialreportsandstatements incompliancewithall applicable legal requirements and accountingstandards.TheCommitteemettwiceduringtheyearto approve the accounts of thefinancial year2012,halfyearlyaccountsandtotakenoteofthereportoftheinternalauditor.

The findings of the internal auditor were lengthilydiscussed and main recommendations were withregardtofurtherdetaileddisclosureofinvestmentstoboard,establishmentofan intermediate supervisorycontrol mechanism and invited the Committee toconsider available options to mitigate currency riskinherentinforeigninvestments.



Corporate Governance CommitteeMembers

Mr.Y.H.Aboobaker,Chairman


Mr.V.Rambarassah

The Corporate Governance Committee acts as auseful mechanism for making recommendations totheBoardonallcorporategovernanceissues,sothatthe Board remains effective and complies with theprevailinggoodgovernanceprinciples.

The Committee met once during the year andapprovedtheamendmentsmadetotheInitialPublicOffer Document of the Company so as to align itwith the Securities Act 2005 and the CollectiveInvestment Schemes Regulations. It was furtherrecommended to prepare a new Constitution ofthe Company which would include the obligationsundertheSecuritiesAct2005andrelatedregulations.ThenewConstitutionwouldalsoprovideamodernframeworkwhichwill enable theFund to invest innewfinancialinstrumentsamongothers.

Directorship of the Directors in Listed Companies

AgreementsManagement AgreementThe Company has entered into an investmentmanagement agreement with Capital AssetManagementLtd.

Registrar and Transfer OfficeTheCompanyhasanagreementwithPrimePartnersLimited to provide Registrar and Transfer Officeservices.

Custodian Services – LocalTheCompanyhasanagreementwithStandardBank(Mauritius)Ltdtoprovidecustodianservicesfor itslocalinvestments.

Custodian Services – ForeignThe Company has an agreement with ICICI BankLtd in India to provide custodian services for itsinvestmentsintheIndianstockmarket.

Liquidity contractIn 1997, the Company entered into a liquiditycontractwiththeSICtoensurethatthereissufficientliquiditytocompletetransactionsbasedondemandforandsupplyoftheCompany’sshares.

Contract with ShareholdersThe Company does not have any agreement withshareholdersexceptfortheonedescribedabove.

Statement of Remuneration PhilosophyDirectors are remunerated for their knowledge,experience and insight given. The remunerationphilosophy is to reward the collective contributionof Directors towards achievement of the Fund’sobjectives. The Directors’ remuneration in similarcompaniesarealsousedasaguide.

Board and Committee Meetings Attendance and Remuneration of Directors for the Year Ended June 30, 2013

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-

-

-

3 0



Share Price of the FundTheCompanyisanopen-endedfundanditssharesaretradableonadailybasisbasedontheNetAssetValuepershare.

Thechartdepicts thesharepricemovementofPortLouisFundLtdduringtheyear.FromMUR22.16attheendofJune2012,thesharepricehasevolvedtoMUR24.18ayearlaterafterpayingadividendofMUR0.80pershareinJune2013.

Internal Audit FunctionTheinternalauditfunctionhasbeenoutsourcedtoMessrsMcMillanWood.TheBoard,however,isultimatelyresponsible for the Company’s system of internal control and for reviewing its effectiveness. The internalauditorcarriesitsfunctionsindependentlyandreportstotheAuditandRiskCommittee.

Internal Auditor has established a risk control matrix giving due consideration to the probability ofmaterializationoftheriskfactorsandits impactontheoperationoftheFund.Majorriskareasaddressedrelatedmostlytoinvestmentandcurrencyriskandexistenceofsupervisorycontrol.

DuringthefinancialyearendedJune30,2013MessrsMcMillanWoodcarriedoutinternalauditworksonRegistryOperationsandonInvestments.WithregardtoRegistryOperationsageneralreviewwasperformedwhichcoveredpurchases,redemptions,paymentofdividends,monthlyinvestmentplans,transmissionsandissueofduplicatecertificates.OntheInvestmentsidetheareascoveredweretheauthorityanddiscretionoftheFundManager,supervisorycontrolonanalysts’reports,disclosuresofinvestmentexposure,foreignexchangeriskandquarterlymanagementreports.

Risk managementTheDirectorsareresponsibletoensurethemaintenanceofaneffectivesystemofinternalcontrolsothatassetsaresafeguarded,transactionsareproperlyauthorizedandrecordedandmaterialfraudsandotherirregularitiesareeitherpreventedordetectedwithinreasonabletime.

Operational RiskOperational risk is defined by the Basel Committee on Banking Supervision as “the risk of loss resultingfrom inadequateor failed internalprocesses,people and systemsor fromexternal events.”Themainareasofriskof losspertaintorisksrelatingto internal fraudduetounauthorizedactivity, theftor fraudduetotheft, systems’ security failureor tampering, employmentpractices andworkplace safetydue tounhealthyemployeesrelations,improperenvironment,improperbusinessormarketpractices,disputesoverperformanceandmanagementofmonies,damagetophysicalassetsduetodisasterandotherevents,businessdisruptionsandsystemsfailures,inaccuratereportingandothertaskmis-performance.

Whilst theFunddoesnothaveanyemployees, itsday todaymanagement is carriedoutbyCapital assetManagementLtd(CAM)whichhasadequatelogistics,experienceandtechnicalcapabilitiestocarryoutitscontractualobligationsvis-à-vistheFund.Inthisrespect,CAMabsorbsthemajorityofoperationalrisksoftheFund.CAMhasitsowninternalauditorandcontrolprocedurestomitigateoperationalrisksrelatedtothemanagementofPortLouisFundLtd.

Financial risk factorsPleaserefertonote3oftheNotestotheFinancialStatementsonpage44.

Share price of PLF

Jun-

30

Jul -

31

Aug-

31

Sep-

30

Oct

-31

Nov

-30

Dec

-31

Jan-

31

Feb-

28

Mar

-31

Apr

-30

May

-31

Jun

-30



Related Party TransactionsPleaserefertonote20oftheNotestotheFinancialStatementsonpage52.

Directors’ & Officers Liability InsuranceThe Company has contracted with Mauritius Union Assurance Ltd a Professional Indemnity, Crime andDirectors’&OfficersLiabilityInsurance.

Corporate social responsibility and donationsForitsCSR,theFundhadpaiddirectlyitscontributiontotheMauritiusRevenueAuthorityandtherewerenodonationsmadeduringtheyear.

Code of Ethics TheFundhasoutsourceditsmanagementtoCapitalAssetManagementLtd(CAM)whichisanestablishedmanagementcompanylicensedbytheFinancialServicesCommissionasaCISManager.ItisintheprocessofadoptingaCodeofConductforAssetManagement.

Environmental PolicyDuetothenatureofitsactivities,theCompany’soperationhasnomajorimpactonenvironment.

StatementofDirectors’Responsibilities

Directorsacknowledgetheirresponsibilitiesfor: • Adequateaccountingrecordsandmaintenanceofeffectiveinternalcontrolsystems; • Thepreparationoffinancialstatementswhichfairlypresentthestateofaffairsofthecompanyasat theendofthefinancialyearandthecashflowsforthatperiod,andwhichcomplywithInternational FinancialReportingStandards(IFRS); • Theuseofappropriateaccountingpoliciessupportedbyreasonableandprudentjudgmentsand estimates.

Theexternalauditorsareresponsibleforreportingonwhetherthefinancialstatementsarefairlypresented.

TheDirectorsreportthat: • Adequateaccountingrecordsandaneffectivesystemofinternalcontrolsandriskmanagementhave beenmaintained; • Appropriateaccountingpoliciessupportedbyreasonableandprudentjudgmentsandestimateshave beenusedconsistently; • InternationalFinancialReportingstandardshavebeenadheredto.Anydeparturehasbeendisclosed, explainedandquantifiedinthefinancialstatements;and • TheCodeofCorporateGovernancehasbeenadheredtoinallmaterialaspects.Reasonsfornon- compliancehavebeenprovidedwhereappropriate.

_________________ ________________Y.H. Aboobaker V. BhuguthChairman, DirectorCorporateGovernanceCommittee 30September2013 30September2013



StatementofCompliance

(Section75(3)oftheFinancialReportingAct)

NameofPIE: PortLouisFundLtdReportingperiod: June30,2013

We,theDirectorsofPortLouisFundLtd,confirmtothebestofourknowledgethatPortLouisFundLtdhascompliedwithitsobligationsandrequirementsundertheCodeofCorporateGovernance

SignedonbehalfoftheBoardofDirectors:

_________________ ________________Y.H. Aboobaker V. BhuguthChairman, DirectorCorporateGovernanceCommittee 30September2013 30September2013


Performancereview

Thefinancialyear2012-13provedtobeparticularlychallengingfromportfoliomanagementperspectivegiventhesubstantialdownsiderisksintheglobaleconomyandspill-overstovarioussectorsofthelocalmarket.Nonetheless,policyeffortsofcentralbanksaroundtheworldhelpedsparkingoptimisminfinancialmarketsalthough theBankofMauritius’s ability toacton the repo ratewas limitedbyconcernsover inflationarypressures.Thekeyreporatewasreducedby25basispointsto4.65percentinJune2013,representingonlyonecutoverthefinancialperiod.However,theSEMDEXwasquiteinsensitivetothepolicymoveasthelocaleconomiclandscapecontinuedtoweighoninvestordecisionswhichhavebeeninfavourofbluechips.

Fund performanceThe Fund delivered a laudable performance amidtheuncertainty that loomed in the local andglobaleconomyowingtoitsdiversifiedportfolio.Areturnof 12.7 percent was achieved for the financial yearended 30 June 2013. The Net Asset Value (NAV)movedtoMUR24.18againstMUR22.16ayearagoandadividendofMUR0.80persharewaspaidtoinvestors.

TheNAVpersharecloselymimickedthemovementof theSEMDEXandmajor foreignmarket indexesduringtheperiod.Withthemassiveeffortsofworldcentralbankstolifteconomicgrowthviaexpansionarymonetarypoliciesorquantitativeeasingprogrammes,investor optimism was boosted from August 2012onwards.Substantialimprovementswerenoticeablein the Fund’s value and investor return began to

navigateinthepositiveterritoryagain.Bymid-May2013,theFund’sNAVpersharereachedanall-timepeakofMUR24.89.Thisemanatedfromthegoodperformancesofthelocalandforeignmarketsaswellastheupwardrevaluationofunquotedshares.

Fund performance by asset classTheassetsoftheFundcanbebroadlyclassifiedinfourmainclasses:locallylistedequities,unquotedshares,foreign investments and fixed income securities &others. To assess the performance of the differentcategories, total return of the Fund is split. Theweighted return indicates the contribution of eachassetclasstotheFundaspertheirrespectiveaverageallocationovertheyear.

Locally listed equities carried an average weightof 42.8 percent during the year. This categoryproducedareturnof8.1percentandwhenweighed,itcontributed3.5percenttotheFund’stotalreturn.Incomparison,theSEMDEX,SEM-7andDEMEXpostedrespectivereturnsof7.8percent,10.2percentand3.3percent.

Unquotedsharesweighedanaverageof27.9percentin the portfolio. This segment registered a positivereturnof28.0percentovertheyearandcontributed7.8percenttothetotalreturnoftheFund.Thereturnis subject toregularvaluationexercisesofunquotedshares by an independent consultant. Majorrevaluationsincludedtherevisionofthevalue

Report of Directors

Growth of Rs 1000 over the year with dividend re-invested

MURMUR 1,126.71

Mar

-13

May

-13

Jun-

13Return by asset class

42.8

27.9

23.5

5.9

3.5

7.8

2.6

0.4

-1.6


Report of Directors

ofSICOMby21.2percentandthatofGrandCasinoduDomaineby47.4percent.

Foreign investments, which include investmentsin India, had an allocation of 23.5 percent in theportfolio. Total return in MUR terms amountedto 10.9 percent, analogous to a contribution of2.6percent to the returnof theFund.Asageneralindication, The MSCI World Index posted 16.0percent in USD terms which corresponds to 16.9percentinMURduetoadepreciationof0.7percentof the MUR against the USD over the interval.The MSCI Emerging Index advanced 0.3% inUSDterms, equivalent to1.1% inMURterms. Inpreceding years, the Fund had an over-exposure in

emerging markets which significantly enhanced itsperformance.However,thesemarketshavewitnessedsubstantialvolatilityduringthereportingperioddueto lower external demand and growth decelerationconcerns. Hence, the overall return of the Fund inthisparticularassetclasswasdraggeddown,thoughit was in between the MSCI World Index and theMSCIEmergingIndexperformances.Fixed income securities and others constitute long-term bonds, short-term deposits, foreign currencydepositsandnetcashbalances.Theassetclasshadanaverageallotmentof5.9percentinthetotalportfolio.Withatotalreturnof7.2percent,itcontributed0.4percenttotheFund’sreturn.

Financials

Financial resultsTotalincomeexcludinggainondisposalofinvestmentandfairvaluechangeoffinancialassetsamountedtoMUR41.7magainstlastyear’sMUR26.7m.DividendincomewasMUR32.4min2013comparedtoMUR20.7in2012.InterestincomeamountedtoMUR4.4mbackfromMUR5.1min2012mainlyonaccountofafallininterestratesandmaturityofsomefixedincomeinstruments.ThefairvalueoffinancialassetsthroughprofitorlossregisteredagainofMUR35.1mduetoageneralriseinmarketpricesasopposedtolastyear’slossofMUR13.4m.

Fund expenseTheTotalExpenseRatio(TER)givesan indicationof theexpenses incurred inrunninga fund.TheTERiscalculatedinlinewithInternationalStandardsandcoversprofessionalfeesandotheroperatingexpenses.Itstoodat1.2percentfortheFundfortheyearended30June2013whiletheindustry-weightedTERwasaround1.5percent.DividendThedividenddeclaredfortheyearwasMUR0.80persharecomparedtoMUR0.60pershareintheprecedingyear.Onaggregate,anamountofMUR41.0mwasdistributedtoshareholdersregisteredatcloseofbusinesson7June2013.Itistobenotedthatdividendpaidtoshareholdersisbasedonnetprofitandrealisedgainondisposalofinvestments.

Share capitalThe issued share capital of the Fund as at 30 June 2013 was 51,650,181 against last year’s 51,651,031.Redemption exceeded purchases during the year. The number of shares purchased amounted to 475,156whereas476,006shareswereredeemed.Thenumberofsharesoutstandingdecreasedby850relativetolastyear.


Report of Directors

Locally listed equitiesAsatendofthefinancialyear,thevalueoflocallylistedequitiesamountedtoMUR540.7msynonymoustoanincreaseofMUR16.3movertheprecedingyear.

During the year, acquisitions of stocks on the localstockmarketamountedtoMUR11.6m,50percentof which were in financial and investment sectorstocks.

Disposal of shares totalled MUR 24.0m and weremostlyinthefinancialsector.Holdingsinthesugarsector decreased by MUR 25.1M as a result of theamalgamation between Fuel and DRBC which wasthenlistedintheinvestmentsegmentoftheofficialmarket as Alteo Ltd. The decline in the commercesegment was the outcome of Rogers engaging in aspin-off and listing Cim Group on the SEM. TheGroup was then listed in the investment categorywhichfurtherraisedtheimportanceofthissectorintheportfolio.

Unquoted securitiesThevalueofunquotedsharesrosetoMUR380.4mduringtheyearbackfromMUR310.8m.

No trade transactions were effected for this assetclass.TherepresentationofthisthisassetclassintheportfolioincreasedfollowingtheupwardrevaluationsofSICOMandGrandCasinoduDomaine.

Foreign investmentsTheportionof foreign investments in theportfolioroseaftertherallyinmajormarketsandinvestmentsin this segment. Its value increased from MUR243.9min2012toMUR275.8min2013.

Assetallocation+

Charge in foreigh investment by asset class (%)

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Se toral change in locall listed qui ies (

Sectoral change in unquoted securities (%)

Sectoral change in locally listed equities (%)

Asset allocation and portfolio compositionTheFundallocatesitsassetssubjecttosomepre-definedgoals,risktoleranceandinvestmenthorizon.Theaim is to minimise risk while achieving the best possible return for shareholders. The asset allocation isperiodicallyreviewedandadjustedtoreflectchangesinmarketconditions.

Thetotalnetassetsasat30June2013stoodatMUR1,248.8mcomparedtotheprecedingperiod’svalueofMUR1,144.4m.


Report of Directors

Acquisitions totalling MUR 12.3m were made inAfrican funds. Disposals amounted to MUR 7.3mofwhichLondonCapitalEuropeanRealEstateandCBSolarFunds.AnetbalanceofMUR14.0mwasmovedfromcashtoequity-basedinvestmentssoasto

benefit from upswings in foreign financial markets.Giventherelativelylowyieldsonforeignfixedincomeinstruments,particularlyadvancedones,investmentswerereshuffledtoequity-basedfunds.

Fixed income securities and othersTheshareoffixedincomesecuritiesandothersintheportfoliodeclinedovertheyearwiththemarketvaluemovingtoMUR51.8mbackfromthepreviousyear’sMUR65.3m.

Segregatingtheassetclassintolong-termandshort-terminstruments,itisnotedthatthevalueoflong-termbondsfelltoMUR25.8maftersomesecuritiesmatured.Short-termbonds’valuemovedfromMUR27.8mtoMUR26.0m.

Local equity profileLocal equities constituted MUR 921.1m or 73.8percentof thetotalportfolioasatendofthefinancialyear.Stocksontheofficialmarketmadeupto53.3percentoflocalequitieswhileholdingsinunquotedsecurities and Development and Enterprise Marketwere41.3percentand5.4percentrespectively.

The top five holdings of the Fund comprised theinsurance, banking and leisure sectors. The topholdingsmadeup48.6percentoftheNetAssetValueand65.9percentofthetotalequityworth.

SICOMremainedtheFund’stopholdingsaccountingforthe25.2percentoftheNetAssetValueand34.2percent of total local equities. Other top holdingswereMCB,SBM,BBCandGCD.

State Insurance Company Ltd (SICOM)SICOMisaninsurancecompanyanditsportfolioofactivitiesconsistsofLifeAssurance,GeneralInsurance,GroupLifeandPensions,ActuarialServices,GroupMedical,Loans,FinancialServicesaswellasInvestmentManagement.Forthefinancialyearended30June2013,theGroup’stotalassetsescalatedby13.5percenttoreachMUR39.6bn.TotalgrossrevenueremainedmoreorlessstableatMUR3.5bn.Profitaftertaxroseby20.7percenttoMUR493m.

Mauritius Commercial Bank Ltd (MCB)TheMauritiusCommercialBankLtd(MCB)isoneoftheleadingdomesticbanks.ItislistedontheSEMsince 1989. The Group recently restructured its operations into ‘Banking’, ‘Non-Banking Financial’, and‘OtherInvestments’clusters.Asat30June2013,itsmarketcapitalisationwasMUR46.6bnrepresenting23.9percentoftheSEMDEX.TheGroupoperatingincomegrewby10.1percenttoMUR11bnwhilenetprofitroseby4.88percenttoMUR4.4bn.P/Eratioanddividendyieldfortheperiodendedwasat10.3timesand3.3percentrespectively.

Top five holdings - local equities

Local equity decomposition

41.3%

5.4%

53.3%

Sectoral change in fixed income securities andothers (%)

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Long

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Report of Directors

State Bank of Mauritius Ltd (SBM)TheStateBankofMauritiusGroup(SBM)isaleadingfinancialservicesgroupinMauritiuswithagrowinginternationalpresence.SBMstartedoperationsin1973andwaslistedontheStockExchangeofMauritiusin1995.Asat30June2013, itsmarketcapitalisationwasMUR31.3bnrepresenting16.1percentof theSEMDEX.Operatingincomegrewby15.7percenttoMUR5.9bnwhilePATroseby20.6percenttoMUR3.2bn.Fortheperiodended,theP/Eratiowas8.3timeswhilethedividendyieldwas3.9percent.

Grand Casino du Domaine (GCD)ThemainactivityofGCDistheoperationofacasinoatDomaineLesPailles.GCDisthelargestcasinointermsoftablegameoperationinMauritius.Itprovidesarangeoftopoflineamenitiesandpopulargames.ForthesixmonthsendedJune2013,CasinorevenueamountedtoMUR95.4MwhilenetprofitwasMUR26.8m.

Bramer Banking Corporation Ltd (BBC)BBLC was listed on the official market in 2012 following an amalgamation between Bramer BankingCorporation,BramerHoldingandMauritiusLeasing.Itoffersretail,privateandcommercialbanking,depositservices, loansandadvancesaswellasoffshorebanking.Asat30June2013, itsmarketcapitalisationwasMUR6.6bnrepresenting3.4percentofSEMDEX.Forthe6monthsendedJune2013,PATamountedtoMUR10.5MandtotalassetswasMUR13.4bn.

Foreign investment profileThetotalforeigninvestmentcomponentamountedtoMUR275.8mrepresenting22.1percentoftheFund’stotalportfolio.InvestmentinforeignfundsamountedtoMUR215.9m,accountingfor78.3percentoftheforeignportfolio.Theinvestmentswerespreadacross59fundscuttingacross81countries,5assetclasses,15sectorsand8currenciesasatJune30,2013.Fortheremainingportion,itentailedinvestmentinIndianstockswhichtotalledMUR59.9m.

Foreign investment - Currency profile Foreign investment - Sector profile

Foreign investment - Asset Class

Foreign investment Geogr phical p

F i st s

Foreign investment - Geographical profile

ndi n m rket in estm t Sector prof


Report of Directors

Investment in foreign fundsInvestment in the foreign funds is carried out viainternational fund managers, mostly, FranklinTempleton and Fidelity investments. The top fiveholdings in this particular category made up to15.0percentoftotalforeigninvestments.TheFundsubstantially raised its exposure in US equity-basedfunds,asisevidentfromthetopholdings,inordertoreapthebenefitsoftherallyinforeignmarketsfromthequantitativeeasingprogramme.

Investment in IndiaThe Fund’s total investment in India amountedto INR 116.4m (MUR 59.9m) as at the end ofthe reporting period representing 21.7 percent oftotal foreign portfolio. This particular segmentencompasses most of the stocks of the BombaySensitive Index (SENSEX)but indifferentweights.Thefinancialandconsumer stocksconstituted51.3percentoftheportfolioasat30June2013.

FID America FundTheaimofthefundistoprovidelong-termcapitalgrowthwiththelevelofincomeexpectedtobeLow.Atleast70%ofinvestmentinthesharesofUScompanies.ThefundemploystheS&P500indexasitsbenchmark.Overtheperiod,itdeliveredareturnof25.2percent.

FT US Opportunities FundThefund’sobjectiveiscapitalappreciation.ItinvestsprimarilyinequitysecuritiesofUS.issuersdemonstratingacceleratinggrowth,increasingprofitabilityandgrowthpotentialascomparedwiththeoveralleconomy.ThefundusesRussell 3000growth index as benchmark.Over theperiod the funddelivered a returnof17.5percent.

FT Mutual Beacon FundThefund’sobjectiveislong-termcapitalappreciation.ItinvestsinUSequityandconvertibledebtsecuritieswithnomorethan20%ofitsassetsinvestedinnon-USissuer.ItsreferencebenchmarkistheS&P500index.Thefunddeliveredareturnof20.0percentoverthereportingperiod.FID UK FundThefundinvestsprimarilyinsecuritiesinUK’scompanieswiththeobjectivetoachievecapitalgrowth.ItsbenchmarkistheFTSEAll-Shareindex.Thefunddeliveredareturnof25.8percentovertheone-yearinterval.FT Biotechnology FundAimingatachievinglong-termcapitalappreciation,thefundinvestsmostlyinequitysecuritiesofUS-basedbiotechnology and discovery research companies. The fund more or less mimicked the trend of NasdaqBiotechnologyindexovertheyear,deliveringareturnof17.8percent.

Top five holdings - foreign funds

g n e t A

o eign inves men graphical pr f e

Indian market investment - Sector profile


Forthefinancialyear,returnwas8.9percentinINRtermswhichtranslatedto2.6percentinMURtermsaftera6.3percentdepreciationoftheINRagainsttheMUR.Comparatively,theSENSEXregisteredreturnsof11.3percentand5.0percentwhendenominatedin INR and MUR terms respectively. The Fundwas underexposed in high-performing sectors likeConsumer and Financials while overexposed to theBasicMaterialsandIndustrial sectorsrelativetotheSENSEX.

TheIndianstockmarketexperiencedhighvolatilityin the fourth quarter of the reporting period overeconomicgrowthconcernsandthefinancingofthehighcurrentaccountdeficit.TheUSDwastradingatINR62.50nearendofJune.YettheIndianportfoliodelivered an honourable performance driven bythe consumer and financial sectors. The top pricegainersover theyearhavebeenSunPharmaceuticalIndustriesLtdandMahindra&MahindraLtdfromtheConsumersector.ThetoplosershavebeenJindalSteel&PowerLtdandTataSteelLtdwhicharefromtheBasicMaterialssector.

Sectorial changes in holdings were on account ofprice evolutions during the year and stock trading.

AcquisitionsanddisposalswerearoundINR28.0mand INR 27.4m respectively. The Fund raisedits exposure to the Financial, Technology andCommunicationandHealthcaresectors.

Indian Tobacco Corporation (ITC)ITCisoneoftheIndia’sforemostFMCGprivatesectorfirms.Ithasdiversifiedpresenceincigarettes,hotels,paperboards& specialtypapers,packaging, agribusiness andotherFMCGproducts.For itsfinancial yearended31March2013,thecompany’sincomestatementshowedanincreaseintotalrevenueof18.7percentwhilePATroseby20.4percent.AtendofJune2013,ITCwastradingataPEratioof34.8timesandatotalreturnof27.2percentwasregisteredinINRterms.

Reliance Industries Ltd (RIL)Reliance Industries Ltd is India’s largest private sector enterprise with business activities spanning acrossexplorationandproductionofoilandgas,petroleumrefiningandmarketing,petrochemicals,textiles,retail,telecomandspecialeconomiczones.Asat31March2013,thecompanyregisteredanincreaseinturnoverby9.2percentandPATby4.8percent.On30June2013,RILwastradingataPEratioof13.3timesanditreturned18.2percentinINRtermsovertheyear.

Infosys (INFO)InfosysisagloballeaderhavingpresenceintheITsector.Itprovidesawiderangeofconsultancyandsoftwareservices.Asat31March2013,thecompany’sturnoverincreasedby19.6percentwhilePATsurgedby13.3percent.ItsPEratiostood15.1timesatendofJune2013andtotalreturninINRtermswas1.4percent.Housing Development Finance Corporation (HDFC)HDFCisapioneerofhousingfinanceinIndiawithover34yearsoflendingexperienceandoffersawiderangeofhomeloananddepositproducts.HDFChasemergedasafinancialconglomeratewithitspresenceinthe

Report of Directors

Top five holding - Indian portfolio

MUR

Sectorial change in Indian equities (%)

ThetopfiveholdingsintheIndiaportfolioaccountedfor38.6percentofthecategory.


entirerangeoffinancialservices.Asat31March2013,thecompanyregisteredanincreaseinbothturnoverandPATofmagnitude21.9percentand17.6percentrespectively.HDFCtradedataPEratioof27.8timesattheendofthereportingperiodandone-yeartotalreturnwas35.4percentinINRterms.

HDFC Bank (HDFCB)HDFCBankisoneofIndia’spremierbanksbothonthedomesticandinternationalgrounds,providingawiderangeoffinancialproductsandservices.Thebankenjoysatrackrecordofhealthyprofitabilitygrowth,strongliabilityfranchiseandimpressiveriskappetite.Asat31March2013,thebankregisteredarobusttotalbusinessgrowthof21.2percentwhilePATgrewby30.9percent.ItsPEratiowas23.0timesattheendofJune2013andthestockreturned19.6percentinINRtermsovertheyear.

LocaleconomicreviewTheMauritianeconomyremainedresilienttotheon-goingEuropeandebtcrisisin2012withgrowthestimatedat3.4%comparedto3.6%in2011.RealGrossDomesticProduct(GDP)hasbeensupportedbythestrongperformances of the financial services, ICT and seafood sectors. In September 2013, Statistics Mauritiusprojected growth for the year tohover around3.2%.Nonetheless, substantial sources of risk continue tomenacetheeconomiclandscapeduetotheEurocentricnatureofsomesectors.

GrowthGrowth in household expenditure, like previousyears, contributed positively to GDP growth. In2012, public sector investment mostly through thePublicSector InvestmentProgrammeand theRoadDecongestionProgrammeaddedpositively toGDPgrowth.Onthedownside,privatesectorinvestmentfell relative to 2011 after the completion of majorprojects.

Major economic pillars posted honourableperformances amid the risks posed by the crisis. In2012,growthwaslargelyledbythefinancialservicessectorwhichgrewby5.7percent.Thetourismsectorwhich is still Eurocentric stagnated.Tourist arrivalsincreased a mere 0.1 percent over the calendaryear as growth in arrivals from other destinationsoutweighed the 8.0 percent drop from Europeanmarkets. The manufacturing sector grew by 2.2percentaidedbyhighgrowthinthe‘foodprocessing’category. On the other hand, the respective outputof the textile and sugar industries slumped by 1.1percent and 7.3 percent. The construction sectordisplayedacontractionof3.0percentattributabletothecompletionofmajorprojectsanddelayofsomegovernmentprojects.

Report of Directors

Growth statistics (% change Y-o-Y)

Contribution to GDP growth: Mauritius

In September, Statistics Mauritius revised its 2013growthprojectionto3.2percentbackfromitsJuneestimateof3.3percent.Thefinancialservicessector,

like previous years, is expected to continue addingsignificantly to the aggregate output of the localeconomywithaprojectedgrowthof5.3percentfor


Report of Directors

2013.Thesugarcane sector is expected togrowby2.0percentduetoahighersugaroutputof420,000tonnes. The manufacturing sector is anticipatedto advance by 2.7 percent on the basis of highersugar output and more demand for textile. The

tourismsectorshouldexpandby2.5percentontheassumptionofahighernumberofarrivalsof990,000in 2013 against 965,441 in 2012. Output in theconstructionsectorisprojectedtofallby9.4percent.

InflationStatisticsMauritiusupdateditsbasketofcommoditiesfortheconstructionofConsumerPriceIndex(CPI)in April 2013. The constituents’ weightages havebeen altered to reflect household consumptionexpenditure.Headlineinflationwas5.1percentatthestartofthefinancialyearandtumbledto3.6percentinJune2013.

Inflation remained subdued over the year owing tolower external price pressures from the weakenedglobal demand and a stable rupee. Over the year,‘alcoholicbeveragesandtobacco’ledtheinflationratefollowed by ‘food and non-alcoholic beverages’ and‘restaurantsandhotels’.

InitsApril2013report,theCentralBankforecastedheadlineinflationtobeintherange4.7-4.9percent

by end of 2013 on the ground of upside risks inthe global commodity prices and local demand-pull factors from the public sector wage revisionand the prospective adjustment of private sectorremunerations.

Balance of paymentsThecurrentaccountdeficitnarrowedin2012reachingMUR35.6bncomparedto2011’sMUR42.8bn.ThebalanceoftradedeficitamountedtoMUR80.6bnin2012againstMUR74.2in2011asaresultofhigherimports.Data for the second quarter of 2013 indicate anincreaseof8.4percentinthevalueofexportsrelativeto lastyear’sequivalentperiod.Imports tumbledby1.8percent.StatisticsMauritiusforecaststradedeficittostandatMUR88.0bnin2013.

Unemployment rateFor calendar year 2012, the unemployment rate was 8.1 percent. Over April – June 2013 interval, theunemploymentratewas8.2percentcomparedto8.7percentintheprecedingquarter.Thisrepresented49,700unemployedpersonsofwhich36percentweremalesand64percentwerefemales.StatisticsMauritiusexpectstheunemploymentratetogrowto8.3percentin2013.

Inflation

Current account

The balance of services surplus widened by 26.8percent in 2012 to reach MUR 29.0bn. For thesecond quarter of 2013, the surplus dampened by10.0 percent relative to last year’s correspondingperiod,ledbytransportation.

Thesurplus in thecapitalandfinancial sectionrosefrom MUR 35.0bn in 2011 to MUR 37.9bn in2012.Foreigndirectinvestments(excludingGBC1)advancedby89.0percent.ThiswaspartlydrivenbyanincreaseinFDIparticularlyfromUKandChina.


Report of Directors

The Stock MarketDuringtheinitialpartofthefinancialyear,thelocalstock market failed to follow the uptrend set byinternationalmarkets.TheSEMDEXtookadescentin the third quarter of 2012over growth concerns.Themomentum in foreignmarkets seemed tohaveenhanced investor confidence in the last quarter of2012 with local blue chip companies deliveringgood performances. Encouraging economic data,perceptionsof lowerdownside risksandhigher riskappetiteseemedtohaveboostedthelocalmarketinthefirst quarter of 2013. In June, the central bankcutthereporateby25basispointsto4.65percentbutthemovefailedtoprovideadditionalsupporttotheindex.

Theofficialmarketpostedareturnof7.8percentoverthe year, reflectingmoreor less the globaluptrend.AsfortheSEM-7,whichcomprisesthesevenlargestandmoreliquidcompanies,itreturned10.2percent.The main leading movers, that is, the companieswhichcontributedtothepositiveperformancewereSBM,MCBandENLLand.Onthedownside, thelagging movers were BBCL, SUN and GAMMA.Duringthefinancialyear,thetoppricegainerswereMEI(+42.9%),AML(+26.8%)andPAD(+20.3%).ThetoppriceloserswereMSM(-34.5%),POLICY(-20.7%)andSUN(-19.2%).

The price-earnings ratio of the official marketincreased from 10.6 as at June 2012 to 13.4 at asJune 2013. The increase resulted from the growthinmarket capitalisation following the rise in equityprices. Dividend yield fell from 3.3 percent to 2.8percentwithoverall stockpricesgrowingata fasterpacethanthedividendgrowthinmostsectors.

Total purchases by foreign investors on the localstock market fell from MUR 5,779.0m to MUR4,167.6movertheintervalJuly12–June13.Totalsale transactionsamountedtoMUR3,153.5moverthesameperiodasopposedtoMUR6,852.3mintheprecedingfinancialyear.NetpurchasestothetuneofMUR 1,014.1m were recorded against last period’snetsalesofMUR1,073.3m.

Localfinancialmarketreview

Overcalendaryear2012,theSEMDEXlost8.5percentmakingitoneoftheworstindexperformersfortheyear,accordingtoBloombergdata.Investorsonthedomesticmarketremainedcautiouswiththeon-goingrisksposedbytheEurodebtcrisisandlimitedexpansionarymonetarymeasuresinthelocaleconomy.Inthesecondhalfof2012,thecentralbank’sabilitytoactonthekeyreporatewasimpededbyfearofinflationarypressures.Progresswasnoticeablenearendoftheyearwhenthelocalequityindexstartedtomoveintandemwithinternationalmarketindexesoverthegrowingoptimismthatwasspurredbypolicysupportfromcentralbanksaroundtheworld.

Evolution of SEMDEX and SEM-7

Evoluti n of a vanced mar ets’ indices

FTSE 100

Dividend Yield & Price Earnings Ratio for the SEMDEX

Foreign investment on the SEM (Rs’M)

Net Purchases


Report of Directors

Government-backed securitiesYieldsonlocalgovernmentsecurities,includingshortto long-term ones, prolonged their downtrends in2013 with the prevailing low repo rate and excessliquidityinthemoneymarket.

The yield curve moved inward in June 2013. Thecorresponding weighted average yields for 91-dayand182-dayTreasurybillsdroppedto2.60percentand2.65percentback from3.04percent and3.29percentayearago.Thoseonthe273-dayand364-dayTreasury Bills moved to 2.81 percent and 2.91percentrespectively.Theyieldonlongertermbondsincluding10-yearand15-yearoneswere7.06percentand7.50percentrespectively.

The Foreign Exchange MarketThe MUR has been responsive to the internationaleconomic environment reflecting the broadweaknessesoreconomicrecoveryinforeignmarkets.Overtheyearended30June2013,itweakenedvis-à-vistheUSDaswellastheEURby0.71percentand4.16percentrespectively.AgainsttheGBP,theMURgained1.66percent.

During the second half of 2012, the MUR had atendency to appreciate against the USD which wassubject to weaknesses. Thereafter, improvements inthemacroeconomicfundamentalsoftheUSeconomyandmoreconfidenceinthecurrencyraiseditsvaluerelative to the local currency. The EUR-MUR rateremainedmoreor less stableover theyearalthoughthe ‘common’ currency gained the confidence of

investorsfollowingprogressesintheeconomichealthof the Eurozone. The pound sterling continued tosuffer from major macroeconomic setbacks andweakenedfundamentalstherebydepreciatingagainsttheMUR.

Yield curves of Government securities

Evolution of the MUR against major currencies

ForeigneconomicreviewTheyear2012wascharacterisedbyhighdegreeofvolatilityinfinancialmarketsfollowingslowingeconomicgrowth,electionsinkeydevelopedeconomies,theUSfiscalcliffanduncertaintyregardingtheEuroarea.ManydevelopedeconomiesintheEurozonewitnessedcontractioninaggregateoutputwithweakeneddemandandtheimplementationofausteritymeasures.UnemploymentratesoaredtorecordlevelsintheEUledbySpain’slabourmarket.Incontrast,emerginganddevelopingeconomiesfaredquitewellin2012achievingrelativelyhigh growth rates although they faced the pressure of lower external demand from advanced economies.Nonetheless,domesticconsumptionexpenditureremainedstronginthosecountries.

GrowthWeakened domestic demand in advanced economies and growth deceleration in many emerging marketscontinuetoweighontheglobaleconomicrecoveryin2013.Accordingly,theInternationalMonetaryFund(IMF)revieweditsworldeconomicgrowthprojectionfor2013from3.1percentinJulyto2.9percentinSeptember.


Report of Directors

Advanced economiesEconomic growth is expected to remain subduedin advanced economies.Whereas the US continuesto show signs of economic progress in 2013, theEuro area is still mired in recession. For advancedcountries,theIMFexpectsrealGDPtoadvance1.2percent in 2013 compared to 1.5 percent in 2012.TheUSeconomyisprojectedtogrowby1.6percentin the current year under the assumption that thesequesterprogramwilllastuntil2014whiletheEuroarea,-0.4percentbasedonweakerdemandandfiscaltightening.Japan’sgrowthisforecastedtoadvanceby2.0percentfollowingthevariouseconomicmeasuresimplementedbythenewgovernment.

United StatesThe US economy grew by 2.8 percent in 2012compared to the preceding year’s 1.8 percent.Private consumption provided strong support toeconomicactivityduringtheyeartogetherwithfixedinvestmentwhichindicatedapick-upintheendof2012. The manufacturing sector displayed signs ofimprovement with the Purchasing Managers’ Index(PMI) increasing to 50.9 in June 2013 relative to50.5ayearago.

Onthepolicyfront,theFederalReserveresumeditspolicyofinjectingmoneyintotheeconomythroughquantitativeeasinginanattempttoboosteconomicgrowth and employment. The federal funds ratewaskeptbetweentherangeof0.0percentand0.25

percent.Onthefiscalside,thefiscalcliffwasavoidedinJanuary2013overanagr ementonm asuresthatwouldenhancegovernmentrevenue.Nevertheless,asequestration programme was adopted in March tocutgovernmentexpenditure.

1ThePMIisanindicatoroftheeconomichealthofthemanufacturingsector.Areadinglessthan50representsacontractioninthemanufacturingsectorwhereasafiguregreaterthan50indicatesexpansioninthesector.Areadingof50issynonymoustonochange.

Growth statistics for advanced economies(% change Y-o-Y)

Growth stat s ics for emerging and develop ng economies % change o-Y)

Contribution to GDP growth: US

Euro areaGrowth in the Eurozone was -0.6 percent in 2012as austerity measures hit economic activity andemployment.TheGermaneconomygrew0.9percentin2012yet insufficienttosustainthearea’sgrowth.Real GDP of France stagnated while that of ItalyandSpaincontractedby2.4percentand1.6percentrespectively. The economic sentiment in Greeceremainedtensewiththeeconomyfacingtheharshnessofausteritymeasures.InMarch2013,Cypruswasthelatestcountrytoseekbailout;a€10bnpackagewasagreed. The manufacturing sector in the Eurozoneimprovedaftertheturnof2012withtheMarkitPMIreaching48.8inJunecomparedto45.1ayearago.

To deal with the poor indicators like depressedgrowth,retailsalesandconsumersentiment,theECB

loweredsomekeyratesonJuly5,2012:refinancingrate from1.0 percent to 0.75 percent, deposit ratefrom 0.25 percent to zero and marginal lendingrate from 1.75 percent to 1.5 percent. During thesecondquarterof2013,itreducedtheinterestonkeyrefinancingoperationsfrom0.75%to0.5%.

Contribution to GDP growth: Eurozone


Report of Directors

United KingdomTheUKregisteredagrowthof0.2percent in2012asopposedto1.1percentin2011.Outputhasbeenconstrained by weaker private and public spendingas well as limited exports. The manufacturing PMIroseto52.5inJune2013,back48.6inJune2012onaccount of better domestic conditions and strongerexternaldemand.

To tackle the economic challenges, policymakers intheUKenhanceditsquantitativeeasingprogrammeinJuly2012byincreasingthesizeofassetpurchasefrom£325bnto£375bn.Policyratewasmaintainedat0.5%overtheinterval.

JapanAfter contracting by 0.6 percent in 2011 in theaftermath of the tsunami and Fukushima nucleardisaster,theJapaneseeconomygrewby2.0percentin2012.RealGDPgrowthwasnegativeinthesecondandthirdquartersoftheyearonaccountofastrongeryen, territorial tensions with China, the sovereigndebtcrisis intheEuroareaandhigher importbills.ThePMIstayedbelowthe50markduringthesecondhalfof2012butimprovementsinthemanufacturingsector was observable after the election of the newgovernment.Theso-called‘Abenomics’whichentailsa combination of fiscal and monetary policies wassuccessful in boosting economic activity in Japan.As at end of June 2013, the PMI stood at 52.3 asopposedto49.9ayearago.

Stimulus efforts in Japancontinue toplayapivotalroleinboostinggrowth.Quantitativeeasinghasledtoamassivedepreciationoftheyenalthoughthishas

nottransmittedintocleargainsfortheexportsectorwhichcontinuedtofacethevulnerabilitiesofweakerexternal demand. Nevertheless, massive efforts havebeenmadeonthefiscalbasetoboosttheeconomy.¥200tnhasbeenallottedtopublicworksofwhichan“emergencyeconomicstimulusmeasures”packageof¥20.2tninanattempttocreate600,000jobsandtargeta2.0percentrealGDPgrowth.

Contribution to GDP growth: UK

Contribution to GDP growth: Japan

Emerging and Developing marketsEconomic activity in emerging and developingeconomies proved to be resilient in 2012 with realGDP growth estimated at 4.9 percent. For largeremergingeconomiesliketheBRICs,outputsofteninghasbeenobservedinthemanufacturingandservicessectors. On the basis of deceleration of growth inlargeemergingeconomies,theIMFhasprojectedrealGDPtoadvance4.5percentin2013.

RealoutputinChinaisexpectedtoadvanceby7.6percent,0.2percentlowerthanitspreviousestimate.The Russian economy should grow by 1.5 percentwhile IndiaandBrazil,3.8percentand2.5percentrespectively. Forecasts for India is over its �scal year

Growth statistics for emerging and developing economies (% change Y-o-Y)


ChinaTheChinese economygrewat a slowerpaceof7.7percentin2012comparedtothepreviousyear’s9.3percent.Growthinprivateconsumptionexpenditureandinvestmentslowedduringtheyear.Thecountry’sexportscontinuedtostruggleamidstsluggishgrowthintheUSandEuroareabutapick-upwasnoticeableinthelastquarterof2012whichboostedindustrialproduction. Hence, the manufacturing PMI roseabovethe50markinNovember2012butforJune2013,itfellto48.2raisingconcernsoverthehealthoftheeconomy.

To tackle the growth slowdown when inflationarypressuresweresoothing,thePeople’sBankofChinaeased monetary policy by cutting the bank reserve

requirement by 50 basis points. In July 2012, keyinterest rates were cut: the 1-year lending rate waslowered by 31 basis points to 6.0 percent whilethe 1-year deposit rate by 0.25 basis points to 3.0percent.Onthefiscalside,policymakersraisedstateinvestmentduringtheyearsoastoboostgrowth.

IndiaTheIndianeconomyshowedsubstantialweaknessesin2012as industrialproduction, consumptionandinvestment faced sluggish growth. Real GDP grewby3.2percent in 2012compared to6.3percent in2011.Likethemanufacturingsector,farmingoutputremained poor. Growth in private consumptionexpenditure considerably weakened while privateinvestment progression remained subdued. Themanufacturing PMI reached 50.3 in June 2013 asopposed to 55.0 a year ago. The major accountingfactors were lower output level amid unfavourabledomesticeconomicconditions.

Policydecision-makingremainedchallengingashighinflation rate together with high public debt weremajor setbacks.TheReserveBankof India engagedinmultiplecutsofthecashreserveratioduring2012:

theratiostoodat4.25percentattheendoftheyear.Thereporatewascutby50basispointsto8.0percentinApril.Inthefirsthalfof2013,thereporatewasslashedby25basispointson threeoccasions.Overthe same, the cash reserve ratio was lowered by 25basispoints.

Report of Directors

Contribution to GDP growth: China

AfricaAfrican economies showed resilience to externalfactors in 2012. Middle East and North AfricaexperiencedhighergrowthwithrealGDPadvancing4.6 percent vis-à-vis the preceding period’s 3.9percent. Sub-Saharan African countries’ growthdampenedto4.9percentbackfrom5.5percentayearago.Domesticdemandcontinuedtodrivegrowthinthe continent through combinations of private andpublicconsumptionandinvestments.However,this

did not outweigh the fall in exports that resultedfrom weakened global demand. In North Africa,therewerestillpoliticaltensionsinEgypt,LibyaandTunisia.Nevertheless,outputincreasedintheregionafterLibyaresumeditsproductionandexportofoil.AccordingtotheIMF,GDPgrowthwilldampento2.1percentforMiddleEastandNorthAfricain2013while5.0percentforSub-SaharanAfrica.

Contribution to GDP growth: India


Report of Directors

InflationGlobal inflationary pressure dampened in 2012on account of slower economic growth, weakerdemand and stable commodity prices. The Foodand Agricultural Organisation (FAO) Oils PriceIndex tumbled by 13.6 percent over Dec 2012-13 from 227.5 to 196.5. Over the same, the FAODairyPriceIndexandSugarPriceIndexdeclinedby2.4 percent and 16.2 percent respectively. Generalfood and meat prices depicted stability over theperiod as the FAO Food Price Index and FAOMeat Price Index rose marginally by 0.1 percentand0.4percent correspondingly.Only cerealpricesincreased significantly with the FAO Cereals PriceIndexadvancingby15.1percentin2012.Inthefirsthalf of 2013, food, meat and sugar prices depicteddownward trends. The Oils Price Index increasedmarginallywhereastheDairyPriceIndexexperiencedahikeof21.4percent.

Given the downtrend in energy and food prices,inflation remained subdued in many advanced andemerging economies. For advanced economies,inflation stoodat2.0percent in2012compared to2.7 percent in 2011. For emerging and developingeconomies, it was 6.1 percent in 2012 whereas 7.1percent a year ago. However, African economieswitnessedelevatedinflationin2012duetodemandpressures.

According to IMF projections for 2013, inflationin the US and Euro area should hover around 1.4percent and 1.5 percent respectively. Japan whichoperatedinadeflationaryenvironmentin2010and2011 is anticipated to have an inflation rate of 0.0percentin2013.TheBankofJapanhasadoptedaninflation target of 2.0 percent. In developing Asianeconomies, inflation is anticipated at 5.0 percenton the basis of higher aggregate demand pressures.Inflationary pressures in the African continent areexpectedtoremainhighin2013duetotheexpandingdomestic consumption. Middle East and NorthAfricacountriesshouldexperienceaninflationof12.3 percent in2013 while Sub-Saharan Africa, amarginallylowerrateof10.8percent.

Inflation statistics for advanced economies (% change CPI Y-o-Y)

Government debtThegovernmentgrossdebt-to-GDPratioforadvancedcountries increased to 108.7 percent in 2012 from104.4percent in2011.The indicator stoodat93.0percent for theEuroarea in2012compared to thepreviousyear’s88.2percentowingtothelowgrowthandhighinterestratedifferential.Largedeficitshaveincreased the corresponding ratio for the US andJapan to102.7percentand238.0percent in2012.For emerging economies, the gross debt-to-GDPratiofellby3.4percentastheborrowingcostswerelowrelativelytoGDPgrowthrate.

Austerity measures have hurt growth butsimultaneously helped governments reducing theirdeficits.TheIMFforecastsgrossdebtratioofadvancedcountries to fall to108.5 in2013.The indicator isexpectedtoriseto106.0percentfortheUSduetolargerfiscaldeficits.Inemergingeconomies,theratioisforecastedtofallto35.3percent.

Government Gross Debt (% of GDP)


ForeignfinancialmarketreviewDuringthefinancialyear,equitymarketsgainedmomentumaftercentralbanksaroundtheworldadoptedexpansionarypolicies toboost economic growth.TheFedpursued itsmonthly$85bnquantitative easingprogramme.TheBankof Japanextended itsassetpurchasingprogramme inOctober, raisingpurchasesofJapanesegovernmentsecuritiesandotherassetsplannedbeforetheendof2013by¥21trillion.PolicyrateswerecutinAustralia,Brazil,Colombia,theCzechRepublic,Hungary,Israel,Korea,thePhilippines,SwedenandThailand.

Byendof2012,perceptionsoflowerdownsideriskssubstantiallyimprovedworldequitymarkets.Thetrendextendedtothefirstquarterof2013aseconomicdataintheUSandChinawasencouraging.ThesecondquarterprovedtobemorechallengingwithgrowingspeculationsthattheFedwouldtaperitsbondpurchaseprogrammeearlierthanexpected.Developedequitymarketsmaintainedtheirimpetus,albeitataslowerpace,whereasemergingequitiesexperiencedhighervolatilityonthegroundoflowerexternaldemandandgrowthslowdown.

Report of Directors

Equities Equity prices, particularly advanced economies’,depictedgeneralupswingsduring thefinancial yearas central banks employed expansionary monetarypolicies to boost the economy. During the fourthquarter of 2012, stock prices were additionallysupported by beliefs that some downside risks hadlessened. Worries that China would experienceextended periods of low growth were wiped outafter the release of encouraging data which furtherfuelled stock price gains. Equity markets extendedgainsinthefirstquarterof2013onaccountofthehigher investor optimism. Concurrently, volatilityin many markets dampened - a sign that investorsperceivedlowerdegreeofdownsiderisks.EconomicdatainUSandChinawereencouragingduringthefirst two months of 2013 which further providedtonic to markets. Many equity indexes shedpoints in the second quarter of the year. Whereasdeveloped markets’ equities maintained some oftheirmomentum,volatilityinmanyemergingstocksheightened on the ground of growth deceleration.ConcernsthattheFedwouldtaperitsbondpurchaseprogramme earlier than expected caused volatilityspikesinfinancialmarkets.

In their respective domestic currency terms, theMSCI Europe Index excluding UK gained 16.9percentwhiletheFTSE100advanced11.6percentovertheperiodJune12-13.TheS&P500andNikkei225grew17.9percentand51.9percentrespectively.Inthesecondhalfof2013,growthdecelerationwasa key concern for emerging markets causing theirindexestoerasemostoftheirgains.

TheMSCIEmergingIndexgainedamere0.3percentovertheoneyearintervalastheMSCIBRICIndexfellby3.3percent.TheMSCIAfricaexcludingSouthAfricaIndexgained21.1percentledbystronggainsintheNigerianandKenyanmarkets.Onthedownside,politicalunrest inEgyptstartederasinggainsatthebeginningofJune2013whilegovernmentcrisisandpoor economicperformance inMoroccocontinuedtodampenequityperformance.

Evo ution of S MDEX and SEM-7

Evolution of advanced markets’ indices

MSCI EU excl. UK

FTSE 100 NIKKEI 225

S&P 500

Evol ion of EM EX and SEM-7 Evolution of emerging & frontier markets’ indices


Report of Directors

Government BondsYields in the US market remained low for most ofthe interval June 2012-13 following high demandforsafeassetsamidconcernsontheglobaleconomy.During the second quarter of 2013, improvingmacroeconomic fundamentals, perceptions of lowerrisk of default coupled with the possible retreat ofthe Fed from its quantitative easing programmeraised yields as investors sold government bonds.Downtrends were initially observable in the yieldsofEuropeangovernmentbondsbutborrowingcostsheightened in the secondhalfof2013overworriesthat the Fed and other central banks will cut theirstimulusprograms.

Commodities Goldprolonged itspricedecline in2013, shedding26.3percentinthefirsthalfoftheyear.Speculationsof prospective cuts in the Fed’s quantitative easingprogramreducedthedemandforthecommodityonthebasisoflessinflationconcerns.

Oilpricesspikedfromendof2012tothefirst twomonths of 2013 on account of higher seasonaldemandandgeopoliticaltensions.Unhealthyglobaleconomicfundamentalsweighedonthecommodity’spricethereafterfollowingweakereconomicstatisticsin the Euro area, growth slowdown in China andother large emerging economies, World Bank’s

downgradeofglobalgrowthandFed’spossiblecutinstimulus.

10-year Government bond yields

Commodity price evolution


Report of Directors

ProspectsAmidthedifficultmarketconditionsandvolatileenvironment,theperformanceoftheFundwascommendablewiththeNAVreachingarecordhighduringthefinancialyear.Giventhediversificationstrategy,volatilitywhetherfrominternalorexternalsourceswassuccessfullylimited.

WeareoptimisticovertheperformanceoftheFundinthecomingyearasdatainadvancedmarketshaverecentlybeenpositive.TheUSeconomycontinuestoshowsignsofimprovementasrealGDPgrewby2.5percentin13Q2.Therallyinequitymarketsislikelytoextendintheshort-termgiventhattheFedisnotexpectedtotaperitsbondpurchaseprogrammethisyear.TheeconomicconditionandfiscalpoliciesintheEurozoneseemtobestabilising.Apick-upinmanufacturingwasnoticeablewiththeEurozonePMIremainingabovethe50-markoverthethreemonthstoSeptember, indicatingthattherateofcontractioncouldslowduringthethirdquarterofthisyear.TheeconomiclandscapeofChina,whichhasbeenoneofthereasonsforthewiderisk-aversionofinvestors,hasimprovedwithameliorationinretailsalesandmanufacturing.ItsGDPgrowthacceleratedto7.8percentyear-on-yearin13Q3.

Nevertheless,weremainalertofdownsiderisksgiventhepostponementoftheUSdebtceiling,thepoliticaleventsinSpainandPortugal,thequitealarmingstateofthefinancialsectorandescalatingpropertypricesinChina,industrialwoesinadditiontotherupeevolatilityinIndiaandgrowthslowdowninseveralemergingAsian,LatinAmericanandEasternEuropeaneconomies.Likelastyear,foreignfundswitcheswillbefrequentlyentertainedonatacticalbasissoastomaximiseshort-termreturnsorreducelosses.

Thepresenceofdownside risks in theglobal economyand thehighdependenceon theEuropeanmarketaresourcesofrisktothelocalmarket.WithimprovementsintheeconomicconditionoftheEU,wemayupgradeourbusinessoutlookforthelocaleconomy.Wewillsticktoourtop-downinvestmentapproachaswecontinuetoconsiderthemacro-economyandattractiveindustries.Wewillseekoverexposureincompanieshavingsubstantialgrowthpotentials,sounderfundamentalsandlowbusinessaswellasfinancialrisks.

AcknowledgementsTheBoardwouldliketothankthemanagementteamandstafftowardenhancingthevalueoftheCompanyaswellastheshareholdersfortheircontinuedsupportandtrust.

M.I. Mallam-HashamChairman 5November2013

PORT LOUIS FUND LTD

FINANCIALSTATEMENTSYEARENDED30JUNE2013


Independent Auditors’ Report to the Members

ThisreportismadesolelytothemembersofPortLouisFundLtd(the“Company”),asabody,inaccordancewithSection205oftheCompaniesAct2001.OurauditworkhasbeenundertakensothatwemightstatetotheCompany’smembersthosematterswearerequiredtostatetotheminanauditors’reportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCompanyandtheCompany’smembersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.

ReportontheFinancialStatements

Wehaveaudited thefinancial statementsof PortLouisFundLtdonpages34to52whichcomprise thestatementoffinancialpositionat June30,2013, the statementofprofitor loss andother comprehensiveincome,statementofchangesinnetassetsattributabletoholdersofredeemablesharesandstatementofcashflowsfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatorynotes.

Directors’ Responsibility for the Financial Statements

ThedirectorsareresponsibleforthepreparationandfairpresentationofthesefinancialstatementsinaccordancewithInternationalFinancialReportingStandardsandincompliancewiththerequirementsoftheCompaniesAct2001,andforsuchinternalcontrolasthedirectorsdetermineisnecessarytoenablethepreparationofthefinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditors’ Responsibility

Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithInternationalStandardsonAuditing.ThoseStandardsrequirethatwe complywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassurancewhetherthefinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditors’judgement,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorsconsiderinternalcontrolrelevanttothecompany’spreparationandfairpresentationofthefinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheCompany’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebythedirectors,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.

Opinion

Inouropinion,thefinancialstatementsonpages34to52giveatrueandfairviewofthefinancialpositionoftheCompanyatJune30,2013,anditsfinancialperformanceanditscashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandardsandcomplywiththeCompaniesAct2001.


Independent Auditors’ Report to the Members

ReportonOtherLegalandRegulatoryRequirements

Companies Act 2001

Wehavenorelationshipwith,orinterestsin,theCompany,otherthaninourcapacityasauditors,taxandbusinessadvisersanddealingsintheordinarycourseofbusiness.

Wehaveobtainedallinformationandexplanationswehaverequired.

Inouropinion,proper accounting recordshavebeenkeptby theCompany as far as it appears fromourexaminationofthoserecords.

The Financial Reporting Act 2004

ThedirectorsareresponsibleforpreparingtheCorporateGovernanceReport.OurresponsibilityistoreportontheextentofcompliancewiththeCodeofCorporateGovernanceasdisclosedintheannualreportandonwhetherthedisclosureisconsistentwiththerequirementsoftheCode.

Inouropinion,thedisclosuresintheannualreportisconsistentwiththerequirementsoftheCode.

BDO&CO RookayaGhanty,FCCACharteredAccountants LicensedbyFRCPortLouis,Mauritius.

September30,2013


Financial Statements for the Year Ended June 30, 2013

M.I. Mallam HashamChairman Director

V. Bhuguth

30 September 2013.

38 to 5232 and 33.

Statementoffinancialposition-yearendedJune30,2013



Statementofprofitorlossandothercomprehensiveincome-yearendedJune30,2013

38 to 5232 and 33.



StatementofchangesinnetassetsattributabletoholdersofredeemablesharesfortheyearendedJune30,2013

38 to 5232 and 33.



Statementofcashflows-yearendedJune30,2013

38 to 5232 and 33.


Notes to the financial statements - year ended June 30, 2013

1. Generalinformation TheCompany’sregisteredofficeis15thFloor,AirMauritiusCentre,6PresidentJohnKennedy Street,PortLouis. Thesefinancialstatementswillbesubmittedforconsiderationandapprovalattheforthcoming AnnualMeetingofshareholdersoftheCompany.

2. Significantaccountingpolicies The principal accounting policies adopted in the preparation of these financial statements are set

outbelow.Thesepolicieshavebeenconsistentlyappliedtoalltheyearspresentedunlessotherwisestated.

(a) Basis of preparation

ThefinancialstatementsofPortLouisFundLtdcomplywiththeCompaniesAct2001andhavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(IFRS).Wherenecessary,comparativesfigureshavebeenamendedtoconformwithchangeinpresentationinthecurrentyear. Thefinancialstatementshavebeenpreparedunderthehistoricalcostconvention,exceptthatfinancialassetsandfinancialliabilitiesarecarriedatfairvalue. Standards,AmendmentstopublishedStandardsandInterpretationseffective inthereportingperiodDeferredTax:RecoveryofUnderlyingAssets(AmendmentstoIAS12), introducesapresumptionthatinvestmentpropertiesthataremeasuredusingthefairvaluemodelinaccordancewithIAS40 InvestmentPropertyarerecoveredentirelythroughsaleforthepurposesofmeasuringdeferredtaxes. This presumption is rebutted if the investment property is held within a business model whoseobjectiveistoconsumesubstantiallyalloftheeconomicbenefitsembodiedintheinvestmentpropertyovertime,ratherthanthroughsale.ThisamendmentisunlikelytohaveanimpactontheCompany’sfinancialstatements. AmendmenttoIAS1,‘Financialstatementpresentation’regardingothercomprehensiveincome.

Themainchangeresultingfromtheseamendmentsisarequirementforentitiestogroupitemspresentedin‘othercomprehensiveincome’(OCI)onthebasisofwhethertheyarepotentiallyreclassifiabletoprofitorlosssubsequently(reclassificationadjustments). Standards,AmendmentstopublishedStandardsandInterpretationsissuedbutnotyeteffective Certainstandards,amendmentstopublishedstandardsandinterpretationshavebeenissuedthataremandatoryforaccountingperiodsbeginningonorafter1January2013orlaterperiods,butwhichtheCompanyhasnotearlyadopted.



2. Significantaccountingpolicies(cont’d) (a) Basis of preparation (cont’d)

Standards, Amendments to Published Standards and Interpretations issued but not yet effective Atthereportingdateofthesefinancialstatements,thefollowingwereinissuebutnotyeteffective:

IFRS9FinancialInstruments

IAS27SeparateFinancialStatements

IAS28InvestmentsinAssociatesandJointVentures

IFRS10ConsolidatedFinancialStatements

IFRS11JointArrangements

IFRS12DisclosureofInterestsinOtherEntities

IFRS13FairValueMeasurement

IAS19EmployeeBenefits(Revised2011)

IFRIC20StrippingCostsintheProductionPhaseofasurfaceMine

Disclosures-OffsettingFinancialAssetsandFinancialLiabilities(AmendmentstoIFRS7)

IAS32OffsettingFinancialAssetsandFinancialLiabilities(AmendmentstoIAS32)

AmendmentstoIFRS1(Governmentloans)

AnnualImprovementstoIFRSs2009-2011Cycle

Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other

Entities:

TransitionGuidance

InvestmentEntities(AmendmentstoIFRS10,IFRS12andIAS27)

IFRIC21:Levies

RecoverableAmountDisclosuresforNon-financialAssets(AmendmentstoIAS36)

NovationofDerivativesandContinuationofHedgeAccounting(AmendmentstoIAS39) Where relevant, the Company is still evaluating the effect of these standards, amendments topublishedstandardsandinterpretationsissuedbutnotyeteffective,onthepresentationofitsfinancialstatements. ThepreparationoffinancialstatementsinconformitywithIFRSrequirestheuseofcertaincriticalaccountingestimates.ItalsorequiresmanagementtoexerciseitsjudgementintheprocessofapplyingtheCompany’saccountingpolicies.Theareasinvolvingahigherdegreeofjudgementorcomplexity,orareaswhereassumptionsandestimatesaresignificanttothefinancialstatements,aredisclosedinNote4.


2. Significantaccountingpolicies(cont’d)

(b) Financial instruments (i) Financial assets (A) Categories of financial assets

TheCompanyclassifiesitsfinancialassetsinthefollowingcategories:financialassetsthroughprofitorloss,held-to-maturityinvestments,andavailable-for-salefinancialassets. The classification depends on the purpose for which the investments were acquired. Managementdeterminestheclassificationofitsfinancialassetsatinitialrecognition. (a) Financial assets at fair value through profit or loss Thiscategoryhastwosub-categories:financialassetsheld-for-tradingandthose designatedatfairvaluethroughprofitorlossatinception. Afinancialassetisclassifiedinthiscategoryifacquiredprincipallyforthepurposeofselling intheshorttermorifsodesignatedbymanagement.Assetsinthiscategoryareclassifiedas currentassetsiftheyareeitherheldfortradingorareexpectedtoberealisedwithintwelve monthstotheendofthereportingperiod. (b) Held-to-maturity investments Held-to-maturityinvestmentsarenon-derivativefinancialassetswithfixedordeterminable paymentsandfixedmaturitiesthattheCompany’smanagementhasthepositiveintention andabilitytoholdtomaturity. (c) Available-for-sale financial assets Available-for-salefinancialassetsarenon-derivativesthatareeitherdesignatedinthiscategory ornotclassifiedinanyoftheothercategories.Theyareincludedinnon-currentassets unlessmanagementintendstodisposeoftheinvestmentwithintwelvemonthsoftheendof thereportingperiod.

(B) Recognition and measurement

Purchasesandsalesoffinancialassetsarerecognisedontrade-date,thedateonwhichtheCompanycommitstopurchaseorselltheasset.Investmentsareinitiallymeasuredatfairvalueplustransactioncostsforallfinancialassetsexceptthosethatarecarriedatfairvaluethroughprofitorloss. Financial assets carriedat fair value throughprofitor loss are initially recognisedat fair valueandtransactioncostsareexpensedinthestatementofprofitorlossandothercomprehensiveincome.



2. Significantaccountingpolicies(cont’d) (b) Financial instruments (cont’d) (i) Financial assets (cont’d) (B) Recognition and measurement (cont’d)

Financial assets are derecognised when the rights to receive cash flows from the investments haveexpiredorhavebeentransferredandtheCompanyhastransferredsubstantiallyallrisksandrewardsofownership. Available-for-salefinancialassetsandfinancialassetsatfairvaluethroughprofitorlossaresubsequentlycarried at their fair values. Held-to-maturity investments are carried at amortised cost using theeffectiveinterestmethod.

Treasury bills and bonds are classified as ‘Available-for-sale’ and value-based on mark to marketvalue.

Realisedandunrealisedgainsandlossesarisingfromchangesinthefairvalueofthefinancialassetsatfairvaluethroughprofitorlosscategoryareincludedinthestatementofprofitorlossandothercomprehensiveincomeintheperiodinwhichtheyarise.

Unrealised gains and losses arising from changes in the fair value of financial assets classified asavailable-for-salearerecognisedinothercomprehensiveincome. Whenfinancialassetsclassifiedasavailable-for-salearesoldorimpaired,theaccumulatedfairvalueadjustmentsareincludedinthestatementofprofitorlossandothercomprehensiveincomeasgainsandlossesonfinancialassets. Thefairvaluesofquotedinvestmentsarebasedoncurrentbidprices.Ifthemarketforafinancialassetisnotactive(andforunlistedsecurities),theCompanyestablishesfairvaluebyusingvaluationtechniques.Theseincludetheuseofcapitalisedearningsanddividendyieldandmakesassumptionsthatarebasedonmarketconditionsexistingatendofeachreportingdate.

(C) Impairment of financial assets TheCompanyassessesattheendofeachreportingperiodwhetherthereisobjectiveevidencethatafinancialassetoragroupoffinancialassetsisimpaired.Inthecaseoffinancialassetsclassifiedasavailable-for-sale, a significantorprolongeddecline in the fair valueof the securitybelow its costis considered in determining whether the securities are impaired. If any such evidence exists foravailable-for-salefinancialassets,thecumulativeloss,measuredasthedifferencebetweenacquisitioncostandthecurrentfairvalue,lessanyimpairmentlossonthatfinancialassetpreviouslyrecognisedinprofitorloss-isremovedfromequityandrecognisedinthestatementofprofitorlossandothercomprehensiveincome. Ifthefairvalueofapreviouslyimpaireddebtsecurityclassifiedasavailable-for-saleincreasesandtheincreasecanbeobjectivelyrelatedtoaneventoccurringaftertheimpairmentlosswasrecognised,theimpairment loss isreversedandthereversalrecognisedinthestatementofprofitor lossandothercomprehensiveincome.


port louis fund ltd annual report 2013 · 2013. 12. 5. · 2 annual report 2013 notice is hereby...

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