Download - SICOM Financial Services

SICOM General Fund 

Annual Report 

JUNE 2013 

1

SICOM UNIT TRUST – SICOM GENERAL FUND 

MANAGER’S REPORT AND FINANCIAL STATEMENTS 

CONTENTS 

Pages 

MANAGEMENT AND ADMINISTRATION 1 

MANAGER’S INVESTMENT REPORT 2 - 6 

INDEPENDENT AUDITORS’ REPORT TO THE UNITHOLDERS 

7 – 7(a) 

STATEMENT OF FINANCIAL POSITION 8 

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 9 

STATEMENT OF MOVEMENTS IN NET ASSETS 10 - 11 

STATEMENT OF CASH FLOWS 12 

NOTES TO THE FINANCIAL STATEMENTS 13 - 33

1 


MANAGEMENT AND ADMINISTRATION FOR THE YEAR ENDED 30 JUNE 2013 

MANAGER 

SICOM Financial Services Ltd 

Directors of SICOM Financial Services Ltd 

Gujadhur S K (Chairman) 

Bhoojedhur-Obeegadoo K G (Mrs) 

Chellapermal R 

Dabee D K 

Gopee G (Resigned on 6 November 2012) 

Lobine K 

Ramdewar N (Mrs) 

Registered Office 

SICOM Financial Services Ltd 

SICOM Building 

Sir Celicourt Antelme Street 

Port Louis 

Telephone: (230) 203 8420 

Fax: (230) 208 0874 

Email Address: sfsl@sicom.intnet.mu 

Website: www.sfsl.mu 

TRUSTEE 

The Mauritius Commercial Bank Limited 

9-15 Sir William Newton Street 

Port Louis 

REGISTRAR 

SICOM Registry & Secretarial Services Ltd 

SICOM Building 

Sir Celicourt Antelme Street 

Port Louis 

AUDITORS 

BDO & Co 

10, Frère Félix De Valois Street 

Port Louis 

BANKERS 

The Mauritius Commercial Bank Limited 

SBI (Mauritius) Limited

2 


MANAGER’S INVESTMENT REPORT 

We are pleased to present our report of the SICOM General Fund for the financial year ended 30 June 

2013. 

Investor Profile 

The SICOM General Fund is an open-ended Fund, which invests primarily in equities (local and 

overseas), government stocks/ bonds and cash/ short-term instruments. Investment in the Fund should 

be regarded as a long-term investment. 

The Fund is exposed to a certain number of risks such as fluctuations in the value of investments and 

currency risks. 

Investment Objectives & Approach 

The overall objectives of the SICOM General Fund are as follows: 

• To maximise returns whilst acting prudently at all times, and 

• Diversify its portfolio with a long-term view. 

SICOM Financial Services Ltd, the Manager of the Fund, has set up an Investment Committee, a sub- 

Committee of its Board of Directors, to define investment objectives and strategies of the Fund. 

Investment strategy and key investment decisions are made with reference to the overall objectives of the 

portfolio of the Fund as a whole, available investment opportunities and instruments on financial markets, 

cash flow availability and the need for diversification of a well-balanced portfolio. 

Governance 

SICOM General Fund is a Collective Investment Scheme with SICOM Financial Services Ltd carrying out 

the investment function as per the terms and conditions of the Trust Deed. The assets of the Fund are 

registered in the name of and held by the Trustee whose responsibility is to safeguard unit-holders and 

ensure that the Manager carries out its duties. Therefore, through this governance structure, the best 

interests of unit-holders are maintained.

3 


MANAGER’S INVESTMENT REPORT (CONT’D) 

Economic and Market Review 

Overseas 

The world economy grew by 3.1% in 2012 with advanced and emerging economies growing by 1.2% and 

4.9% respectively. There was a notable slowdown in emerging markets and developing economies due to 

the sharp deceleration in demand from key advanced economies, domestic policy tightening and the end 

of investment booms in some of the major emerging market economies. Nevertheless, emerging market 

and developing economies continued to grow faster than advanced economies. Growth in the United 

States picked up while the euro area lagged behind, slipping deeper into recession as low demand, 

depressed confidence, and weak balance sheets interacted to worsen the effect on growth. The 

Japanese economy posted positive growth in 2012 after receding in the previous year. 

During the financial year ended 30 June 2013, global markets picked up with the MSCI World Index, 

FTSE 100, CAC 40 and Nikkei 225 rising by 16.0%, 11.6%, 17.0% and 51.9% respectively. The MSCI 

Emerging Markets Index rose by only 0.3% during the same period. The USD appreciated against the 

GBP and AUD and fell vis-à-vis the EUR during the year under review. 

Local 

According to the Central Statistics Office (CSO), the growth rate for the Mauritian economy for 2012 was 

3.3%. Despite restrained activity in major export sectors and a loss of momentum in the last quarter of 

2012, the domestic economy withstood the external headwinds relatively well last year. Data for the last 

quarter showed that some sectors continued to record strong growth while certain external-oriented 

sectors struggled amid the difficult international environment and the construction sector lost steam due 

to the completion of major projects. While the labour market displayed fairly stable conditions, 

consumption and investment growth in the country continued to be subdued. 

The investment rate in 2012 was 23.0% while the saving rate reached 15.1%. The headline inflation rate 

was 3.6% for the twelve months ended June 2013 compared to 5.1% for the previous corresponding 

period. During the financial year ended June 2013, the Bank Rate decreased by 65 basis points as a 

result of the financial system being flush with cash. During the same period, there was an appreciation in 

the USD and EUR, compared to MUR while the GBP and AUD depreciated versus the local currency. 

After declining in the previous financial year, the SEMDEX rose by 7.8% during the financial year ended 

30 June 2013.

4 



Fund Review 

Total Value & Total Assets 

As at 30 June 2013, the total value of the SICOM General Fund stood at Rs 142.3 million as compared to 

Rs 134.0 million last year, while the total assets of the Fund stood at Rs 148.9 million as at 30 June 2013 

(2012: Rs 140.0 million) representing an increase of 6.4% from 30 June 2012. The return of the Fund was 

7.6% for the year under review, which is nearly in line with the SEMDEX. 

Performance of the Fund against SEMDEX 

115 

110 

105 

100 

95 

90 

Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 

SGF 

SEMDEX 

Asset Mix 

The asset mix of the investment portfolio of the Fund as at 30 June 2013 as compared to 30 June 2012 is 

illustrated below:

5 



Investment Income 

During the financial year under review, the gross investment income of SICOM General Fund reached Rs 

7.1 million, as compared to Rs 7.8 million last year mainly on the back of lower share disposals. 

Consequently, the net income from operating activities was Rs 5.3 million for the financial year ended 30 

June 2013 as compared to Rs 6.0 million last year.

9 

SICOM UNIT TRUST - SICOM GENERAL FUND 

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 

FOR THE YEAR ENDED 30 JUNE 2013 

2013 2012 

Notes Rs Rs 

GROSS INVESTMENT INCOME 14 7,122,107 7,820,441 

FUND EXPENSES 

Manager’s fees 15 (1,417,475) (1,381,352) 

Trustee’s fees 16 (212,621) (207,203) 

Auditors' remuneration (158,700) (155,016) 

Other operating expenses (11,626) (78,732) 

(1,800,422) (1,822,303) 

PROFIT FROM OPERATING ACTIVITIES 5,321,685 5,998,138 

EQUALISATION 

3(d) 

Add: Income received on units created 1,624 4,080 

Less: Income paid on units liquidated (32,601) (37,309) 

(30,977) (33,229) 

Profit before taxation 5,290,708 5,964,909 

Taxation 13(ii) (263,471) (247,325) 

Profit after taxation 5,027,237 5,717,584 

Income brought forward 760 875 

PROFIT FOR DISTRIBUTION 5,027,997 5,718,459 

Dividend - distribution to unitholders 12 (5,027,523) (5,717,699) 

PROFIT BEFORE NET UNREALISED GAINS ON 

INVESTMENTS 474 760 

Net increase/(decrease) in fair value of held-fortrading 

investments 10,589,843 (6,032,504) 

PROFIT/(LOSS) AFTER NET GAINS/(LOSSES) 

ON INVESTMENTS Rs 10,590,317 (6,031,744) 

The notes on pages 13 to 33 form an integral part of these financial statements. 

Auditors’ report on pages 7 and 7(a).

10 


STATEMENT OF MOVEMENTS IN NET ASSETS 


Income and 

Investments 

Other Net 

Assets 

Distribution 

Account Total 

Rs Rs Rs Rs 

NET ASSETS ATTRIBUTABLE TO 

UNITHOLDERS AT 1 JULY 2012 109,919,652 24,086,031 760 134,006,443 

MOVEMENT IN UNITS 

Cash receivable for units created - 3,214,582 - 3,214,582 

Cash payable for units liquidated - (3,361,942) - (3,361,942) 

Net cash movement from units - (147,360) - (147,360) 

MOVEMENT IN INVESTMENTS 

Cost of investments purchased 57,760,080 (57,760,080) - - 

Proceeds of investments sold/matured (33,599,145) 33,599,145 - - 

Net cash movement in investments 24,160,935 (24,160,935) - - 

GAINS ON DISPOSAL/MATURITY OF 

INVESTMENTS 

Gains on disposal of shares 2,697,591 (2,697,591) - - 

Transfer to gross investment income (2,158,743) - - (2,158,743) 

538,848 (2,697,591) - (2,158,743) 

Profit after net gains on investments - 10,589,843 474 10,590,317 

Transfer of net loss on investments 10,589,843 (10,589,843) - - 

10,589,843 - 474 10,590,317 

145,209,278 (2,919,855) 1,234 142,290,657 

Income and distribution account - - (760) (760) 


UNITHOLDERS AT 30 JUNE 2013 Rs 145,209,278 (2,919,855) 474 142,289,897 



11 


STATEMENT OF MOVEMENTS IN NET ASSETS (CONT’D) 


Income and 

Investments 

Other Net 

Assets 

Distribution 

Account Total 

Rs Rs Rs Rs 


UNITHOLDERS AT 1 JULY 2011 147,800,174 (2,111,264) 875 145,689,785 

MOVEMENT IN UNITS 

Cash receivable for units created - 3,557,207 - 3,557,207 

Cash payable for units liquidated - (4,218,511) - (4,218,511) 

Net cash movement from units - (661,304) - (661,304) 

MOVEMENT IN INVESTMENTS 

Cost of investments purchased 30,063,240 (30,063,240) - - 

Proceeds of investments sold/matured (60,978,090) 60,978,090 - - 

Net cash movement from investment 

(30,914,850) 30,914,850 - - 

GAINS ON DISPOSAL/MATURITY OF 

INVESTMENTS 

Gains on disposal of shares 4,056,251 (4,056,251) - - 

Transfer to gross investment income (4,989,419) - - (4,989,419) 

(933,168) (4,056,251) - (4,989,419) 

Loss after net losses on investments - (6,032,504) 760 (6,031,744) 

Transfer of net losses on investments (6,032,504) 6,032,504 - - 

(6,032,504) - 760 (6,031,744) 

109,919,652 24,086,031 1,635 134,007,318 

Income and distribution account - - (875) (875) 


UNITHOLDERSAT 30 JUNE 2012 Rs 109,919,652 24,086,031 760 134,006,443 



12 


STATEMENT OF CASH FLOWS 


CASH FLOWS FROM OPERATING ACTIVITIES 

2013 2012 

Rs 

Rs 

Profit/(loss) before taxation (after dividend and 

net gains on investments) 10,853,028 (5,785,294) 

Adjustments for: 

Gain on disposal of investments (2,697,591) (4,056,251) 

Net (increase)/decrease in fair value of HFT investments (10,589,843) 6,032,504 

Distributions to unitholders 5,027,523 5,717,699 

Operating profit before working capital changes 2,593,117 1,908,658 

(Increase)/decrease in other receivables (481,429) 512,305 

Increase/(decrease) in other payables 1,267,934 (185,676) 

CASH GENERATED FROM OPERATING ACTIVITIES 3,379,622 2,235,287 

Dividend paid (5,717,699) (6,635,448) 

Tax paid (215,114) (283,954) 

Cost of investments purchased (57,760,080) (30,063,240) 

Proceeds of investments sold/matured 33,599,145 60,978,090 

Net cash used in operating activities (26,714,126) 26,230,735 

CASH FLOWS FROM FINANCING ACTIVITIES 

Net proceeds on movement in units (147,360) (661,304) 

NET INCREASE IN CASH AND CASH EQUIVALENTS (26,861,486) 25,569,431 

CASH AND CASH EQUIVALENTS AT 1 JULY 29,748,818 4,179,387 

CASH AND CASH EQUIVALENTS AT 30 JUNE Rs 2,887,332 29,748,818 



13 


NOTES TO THE FINANCIAL STATEMENTS 


1. GENERAL INFORMATION 

SICOM General Fund is an open ended Collective Investment Scheme established as a Unit 

Trust with its registered office situated at SICOM Building, Sir Celicourt Antelme Street, Port 

Louis. It was authorised under Section 3(1)(a) of the Unit Trust Act 1989 and established by a 

Trust Deed dated 11 June 2001 between SICOM Financial Services Ltd (The Manager) and 

The Mauritius Commercial Bank Ltd (The Trustee). The SICOM General Fund is constituted 

under the SICOM Unit Trust. 

A Unit Trust is a Collective Investment Fund requiring two parties, a Manager to carry out the 

investment function, and a Trustee which performs a fiduciary role on behalf of the investors. 

The overall objective of the SICOM General Fund is to maximise returns whilst acting prudently 

at all times and diversifying its portfolio with a long term view. 

2. STANDARDS, AMENDMENTS TO PUBLISHED STANDARDS AND INTERPRETATIONS 

EFFECTIVE IN THE REPORTING PERIOD 

Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12), introduces a 

presumption that investment properties that are measured using the fair value model in 

accordance with IAS 40 Investment Property are recovered entirely through sale for the 

purposes of measuring deferred taxes. This presumption is rebutted if the investment property 

is held within a business model whose objective is to consume substantially all of the economic 

benefits embodied in the investment property over time, rather than through sale. This 

amendment is unlikely to have an impact on the financial statements. 

Amendment to IAS 1, ‘Financial statement presentation’ regarding other comprehensive 

income. The main change resulting from these amendments is a requirement for entities to 

group items presented in ‘other comprehensive income’ (OCI) on the basis of whether they are 

potentially reclassifiable to profit or loss subsequently (reclassification adjustments). 

Standards, Amendments to published Standards and Interpretations issued but not yet 

effective 

Certain standards, amendments to published standards and interpretations have been issued 

that are mandatory for accounting periods beginning on or after 1 January 2013 or later periods, 

but which the Company has not early adopted. 

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

effective: 

IFRS 9 Financial Instruments 

IAS 27 Separate Financial Statements 

IAS 28 Investments in Associates and Joint Ventures 

IFRS 10 Consolidated Financial Statements 

IFRS 11 Joint Arrangements 

IFRS 12 Disclosure of Interests in Other Entities 

IFRS 13 Fair Value Measurement 

IAS 19 Employee Benefits (Revised 2011) 

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine 

Disclosures — Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7)

14 


NOTES TO THE FINANCIAL STATEMENTS (CONT’D) 


2. STANDARDS, AMENDMENTS TO PUBLISHED STANDARDS AND INTERPRETATIONS 

EFFECTIVE IN THE REPORTING PERIOD (CONT’D) 

Standards, Amendments to published Standards and Interpretations issued but not yet 

effective (cont’d) 

IAS 32 Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) 

Amendment to IFRS 1 (Government Loans) 

Annual Improvements to IFRSs 2009-2011 Cycle 

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

Entities: Transition Guidance 

Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) 

IFRIC 21: Levies 

Recoverable Amount Disclosures for Non- financial Assets (Amendments to IAS 36) 

Novation of Derivatives and Continuation of Hedge Accounting (Amendments to IAS 39) 

Where relevant, the Fund is still evaluating the effect of these Standards, amendments to 

published Standards and Interpretations issued but not yet effective, on the presentation of its 

financial statements. 

3. SIGNIFICANT ACCOUNTING POLICIES 

The principal accounting policies adopted in the preparation of these financial statements are 

set out below. These policies have been consistently applied to all the years presented unless 

otherwise stated. 

(a) 

Basis of preparation 

The financial statements of SICOM General Fund comply with the Trust Deed and have been 

prepared in accordance with International Financial Reporting Standards (IFRS). Where 

necessary, comparative figures have been amended to conform with change in presentation in 

the current year. The financial statements are prepared under the historical cost convention 

except that held-for-trading financial assets are stated at their fair value and held-for-maturity 

securities are carried out at amortised cost. 

(b) 

Financial instruments 

Financial assets and financial liabilities are recognised in the statement of financial position 

when the Fund has become party to the contractual provisions of the financial instruments. 

Financial assets 

Financial assets are classified into the following specified categories: financial assets 'at fair 

value through profit or loss' (FVTPL) and ‘held-for-maturity’. The classification depends on the 

nature and purpose of the financial assets and is determined at the time of initial recognition.

15 




3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 

(b) 

Financial instruments (Cont’d) 

Financial assets (Cont’d) 

(i) 

Effective interest method 

The effective interest method is a method of calculating the amortised cost of a financial 

asset and of allocating interest income over the relevant year. The effective interest rate is 

the rate that exactly discounts estimated future cash receipts (including all fees on points 

paid or received that form an integral part of the effective interest rate, transaction costs 

and other premiums or discounts) through the expected life of the financial asset, or where 

appropriate, a shorter period. 

(ii) 

Financial assets at FVTPL 

Financial assets are classified as at FVTPL where the financial assets are either held for 

trading or are designated as at FVTPL. 

A financial asset is classified as held for trading if: 

it has been acquired principally for the purpose of selling in the near future; or 

 

on initial recognition it is a part of an identified portfolio of financial instruments 

that the Fund manages together and has any recent actual pattern of short-term 

profit-taking. 

A financial asset other than a financial asset held for trading may be designated as at 

FVTPL upon initial recognition if: 

 

 

such designation eliminates or significantly reduces a measurement or 

recognition inconsistency that would otherwise arise; or 

the financial asset forms part of a group of financial assets or financial liabilities 

or both, which is managed and its performance is evaluated on a fair value 

basis, in accordance with the Fund's documented risk management and 

investment strategy, and information about the grouping is provided internally on 

that basis. 

Financial assets at FVPTL are stated at fair value, with any resultant gain or loss 

recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates 

any dividend on the financial asset. Fair value is determined in the manner described in 

note 3(g). 

(iii) Held-to-maturity investments 

Held-to-maturity investments are non-derivative financial assets with fixed or determinable 

payments and fixed maturities that the Fund’s management has positive intention and 

ability to hold to maturity.

16 




3. SIGNIFICANT ACCOUNTING POLICIES (CONT'D) 

(b) 

Financial instruments (Cont'd) 

Financial assets (Cont’d) 

(iv) 

Impairment of financial assets 

Financial assets, other than those at FVTPL, are assessed for indicators of impairment 

at each reporting date. Financial assets are impaired where there is objective evidence 

that, as a result of one or more events that occurred after the initial recognition of the 

financial asset, the estimated future cash flows of the investment have been impacted. 

For financial assets carried at amortised cost, the amount of the impairment is the 

difference between the asset's carrying amount and the present value of the estimated 

future cash flows, discounted at the financial asset's original effective interest rate. 

The carrying amount of the financial asset is reduced by the impairment loss directly for 

all financial assets. If in a subsequent period, the amount of the impairment loss 

decreases and the decrease can be related objectively to an event occurring after the 

impairment was recognised, the previously recognised impairment loss is reversed 

through the statement of profit or loss and other comprehensive income to the extent 

that the carrying amount of the investment at the date the impairment is reversed does 

not exceed what the amortised cost would have been had the impairment not been 

recognised. 

(v) 

Derecognition of financial assets 

The Fund derecognises a financial asset only when the contractual rights to the cash 

flows from the asset expire; or it transfers the financial asset and substantially all the 

risks and rewards of ownership of the asset to another entity. If the Fund neither 

transfers nor retains substantially all the risks and rewards of ownership and continues 

to control the transferred asset, the Fund recognises its retained interest in the asset 

and an associated liability for amounts it may have to pay. If the Fund retains 

substantially all the risks and rewards of ownership of a transferred financial asset, the 

Fund continues to recognise the financial asset and also recognises a collateralised 

borrowing for the proceeds received. 

Financial liabilities 

Financial liabilities are classified other financial liabilities. 

Other financial liabilities 

Other financial liabilities, including borrowings, are initially measured at fair value, net of 

transaction costs. Subsequently they are measured at amortised cost using the effective 

interest method, with interest expense recognised on an effective yield basis. 

The effective interest method is a method of calculating the amortised cost of a financial liability 

and of allocating interest expense over the relevant period. The effective interest rate is the rate 

that exactly discounts estimated future cash payments through the expected life of the financial 

liability, or, where appropriate, a shorter period.

17 





Financial liabilities (Cont’d) 

(i) 

Derecognition of financial liabilities 

The Fund derecognises financial liabilities when, and only when, the Fund’s obligations 

are discharged, cancelled or they expire. 

(ii) 

Units 

Units issued by the Fund are recorded at the proceeds received net of direct issue 

costs. They are redeemable at any time at the option of the unitholder for cash and do 

not have a par value and an unlimited number of units may be issued. The units are 

financial liabilities and therefore the net assets attributable to unitholders are classified 

within liabilities in the statement of financial position and distributions to unitholders are 

included as dividend in the statement of profit or loss and other comprehensive income. 

(c) 

Dividend and interest income 

Interest receivable from bank, foreign deposits, loan and treasury bills are credited to the 

statement of profit or loss and other comprehensive income on an accrual basis. Dividends 

receivable from securities are accounted for in the statement of profit or loss and other 

comprehensive income when the right for payment is established. 

(d) 

Equalisation 

Accrued income included in the issue and repurchase prices of units are dealt with in the 

statement of profit or loss and other comprehensive income. 

(e) 

Taxation 

Current tax 

The tax currently payable is based on taxable profit for the year. Taxable profit differs from 

profit as reported in the statement of profit or loss and other comprehensive income because 

it excludes items of income or expense that are taxable or deductible in other years and it 

further excludes items that are never taxable or deductible. The Fund’s liability for current tax 

is calculated using tax rates that have been enacted or substantively enacted by the reporting 

date. 

(f) 

Foreign currency translation 

Monetary assets and monetary liabilities denominated in foreign currencies at the end of the 

reporting period are translated into Mauritian rupees at the rate of exchange ruling at that 

date. Any exchange gains or losses arising are recognised in the statement of profit or loss 

and other comprehensive income. Foreign currency transactions are converted into 

Mauritian rupees at the exchange rate ruling at the dates of the transactions.

18 





(g) 

Fair value 

Except where stated elsewhere, the carrying amounts of the Fund’s financial assets and 

financial liabilities approximate their fair values due to the short-term nature of the balances 

involved. 

The fair value of the financial instruments traded in active markets is based on quoted market 

prices at the reporting date. The quoted market price used for financial assets and financial 

liabilities is the current market price. 

(h) 

Provisions 

A provision is recognised when there is a present obligation (legal or constructive) as a result 

of a past event, and it is probable that an outflow of resources embodying economic benefits 

will be required to settle the obligation, and a reliable estimate can be made of the amount of 

the obligation. Provisions are reviewed at each financial reporting date and adjusted to reflect 

the current best estimate. 

(i) 

Cash and cash equivalents 

Cash and cash equivalents are short term, highly liquid investments that are readily 

convertible to known amounts of cash and which are subject to an insignificant risk of 

changes in value. They are measured at fair value, based on the relevant exchange rates at 

the reporting date. 

(j) 

Related parties 

Related parties are individuals and companies where the individual or company has the 

ability directly or indirectly, to control the other party or exercise significant influence over the 

other party in making operating and financial decisions. 

(k) 

Transaction costs 

Transaction costs are costs incurred to acquire financial assets or liabilities at fair value 

through profit or loss. They include fees and commissions paid to agents and brokers. 

Transaction costs, when incurred, are immediately recognised in profit or loss as an expense. 

(l) 

Distributions payable to unitholders 

Proposed distributions to unitholders are recognised in the statement of profit or loss and 

other comprehensive income when they are appropriately authorised and the decision is 

deemed irrevocable. The distribution on the units is recognised as dividend in the statement 

of profit or loss and other comprehensive income. 

(m) 

Increase/decrease in net assets attributable to unitholders 

Income not distributed is included in net assets attributable to unitholders. Movements in net 

assets attributable to unitholders are recognised in the statement of movements in net assets.

19 




4. ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY 

The preparation of financial statements in accordance with IFRS requires management to 

exercise judgement in the process of applying the accounting policies. It also requires the use 

of accounting estimates and assumptions that may affect the reported amounts and disclosures 

in the financial statements. Judgements and estimates are continuously evaluated and are 

based on historical experience and other factors, including expectations and assumptions 

concerning future events that are believed to be reasonable under the circumstances. The 

Fund makes estimates and assumptions concerning the future. The resulting accounting 

estimates will, by definition, seldom equal the related actual results. 

Where applicable, the notes to the financial statements set out areas where management has 

applied a higher degree of judgement that have a significant effect on the amounts recognised 

in the financial statements, or estimations and assumptions that have a significant risk of 

causing a material adjustment to the carrying amounts of assets and liabilities within the next 

financial year. 

(a) 

Units in issue 

The Fund has classified the units in issue as financial liabilities on the basis that apart the 

contractual obligation to redeem the units, the Fund has a contractual obligation to distribute 

income to the unitholders either by way of dividend, bonus issue or in whatever form the 

Manager may think fit. 

(b) 

Held-to-maturity investments 

The Fund follows the guidance of International Accounting Standards (IAS) 39 – “Recognition 

and Measurement” on classifying non-derivative financial assets with fixed or determinable 

payments and fixed maturity as held-to-maturity. This classification requires significant 

judgement. In making this judgement, the Fund evaluates its intention and ability to hold such 

investments to maturity. 

If the Company fails to keep these investments to maturity other than for specified circumstances 

explained in IAS 39, it will be required to reclassify the whole class as available-for-sale. The 

investments would therefore be measured at fair value not amortised cost.

20 




5. MAURITIAN QUOTED EQUITIES 

(a) 

The movement in investments is as follows: 

2013 2012 

Rs 

Rs 

Held for trading investments, carried at fair value 

At 1 July 41,262,379 50,002,983 

Additions 7,419,958 405,720 

Disposals (2,573,500) (1,184,191) 

Fair value gains/(losses) 1,693,470 (7,962,133) 

At 30 June Rs 47,802,307 41,262,379 

(b) 

(i) 

The Fund investments are summarised as follows: 

% of Fund 

2013 2012 2013 2012 

Rs 

Rs 

Official market 

Sector 

Banking and Insurance 23,526,427 19,747,946 16.53 14.74 

Leisure and Hotels 3,242,698 3,297,709 2.28 2.46 

Investment 7,423,147 6,004,996 5.22 4.48 

Industry 2,613,730 1,673,919 1.84 1.25 

Commerce 3,862,328 3,659,770 2.71 2.73 

Sugar 352,000 148,000 0.25 0.11 

41,020,330 34,532,340 28.83 25.77 

(ii) 

Development Enterprise Market 

Sector 

Investment 3,739,877 3,789,714 2.63 2.83 

Banking and Insurance 2,116,700 2,064,650 1.49 1.54 

Leisure and Hotels 498,960 502,675 0.35 0.37 

Sugar 66,000 371,000 0.05 0.28 

Industry 360,440 2,000 0.25 - 

TOTAL 6,781,977 6,730,039 4.77 5.02 

Rs 47,802,307 41,262,379 33.60 30.79 

The Mauritian quoted equities are stated at market value, based on values of the Stock 

Exchange of Mauritius at 30 June 2013.

21 




6. MAURITIAN UNQUOTED EQUITIES 

(a) 


2013 2012 

Rs 

Rs 


At 1 July 2,556,454 2,831,212 

Additions 32,388 32,724 

Fair value gains/(losses) 291,104 (307,482) 

At 30 June Rs 2,879,946 2,556,454 

The Mauritian unquoted equities are stated at market values, based on bid prices of the units of 

the funds published at 30 June 2013. 

7. OVERSEAS QUOTED EQUITIES 

(a) 


2013 2012 

Rs 

Rs 


At 1 July 49,020,533 59,256,833 

Additions 6,324,551 1,983,975 

Disposals (2,845,976) (14,457,386) 

Fair value gains 8,605,269 2,237,111 

At 30 June Rs 61,104,377 49,020,533 

(b) 

The Fund investments are summarised as follows: 

% of Fund 

2013 2012 2013 2012 

Rs 

Rs 

JP Morgan Fleming Fund 3,392,076 5,460,136 2.38 4.07 

LIM Asia Arbitrage Fund Inc 14,010,257 12,671,964 9.85 9.46 

St James's Place 34,687,251 28,595,599 24.37 21.34 

Merrill Lynch 

Morgan Stanley 

IPRO Fund 

5,421,084 

1,715,358 

1,878,351 

2,292,834 

- 

- 

3.81 

1.21 

1.32 

- 

- 

1.71 

Rs 61,104,377 49,020,533 42.94 36.58 

The overseas equities are stated at market value based on values of the overseas markets on 

30 June 2013.

22 




8. LOCAL CURRENCY DENOMINATED DEPOSITS 

Held-to-maturity financial assets 2013 2012 

Rs 

Rs 

At 1 July 17,080,286 35,709,146 

Additions 43,983,183 27,640,821 

Maturity (27,640,821) (46,269,681) 

At 30 June Rs 33,422,648 17,080,286 

These consist of deposits with local banks and other financial institutions with interest rates in 

the range of 4.50 % to 5.70% (2012: 5.25% to 5.70%) per annum maturing between July 2013 

to April 2014. 

9. OTHER RECEIVABLES 

% of Fund 

2013 2012 2013 2012 

Rs Rs 

Interest receivable on deposits 597,043 229,201 0.42 0.17 

Dividend receivable on equities 230,746 111,159 0.16 0.09 

Other receivables - 6,000 - - 

Rs 827,789 346,360 0.58 0.26 

The carrying amount of other receivables approximates their fair value and are denominated in 

Mauritian rupee. 

The classes within other receivables do not contain impaired assets. The maximum exposure to 

credit risk at the reporting date is the fair value of each class of receivable mentioned above. 

The Fund does not hold any collateral as security. 

10. FOREIGN CURRENCY DENOMINATED DEPOSITS 

These comprise of the following:- 

% of Fund 

2013 2012 2013 2012 

Rs Rs 


Call deposits denominated in 

USD and GBP Rs 1,041 1,032 0.00 0.00

23 




11. OTHER PAYABLES 

% of Fund 

2013 2012 2013 2012 

Rs Rs 

Management fees 229,861 105,054 0.16 0.08 

Trustee's fees 34,479 15,758 0.02 0.01 

Auditors’ remuneration 158,698 83,606 0.11 0.06 

Printing 39,000 75,000 0.03 0.06 

Other fees 

Payable to unitholders on liquidation 

4,143 

1,083,720 

2,549 

- 

0.00 

0.77 

0.00 

- 

Rs 1,549,901 281,967 1.09 0.21 

The carrying amount of other payables approximates their fair value. 

12. DIVIDEND - DISTRIBUTION TO UNITHOLDERS 

2013 2012 

Rs 

Rs 

Final distribution of Re 0.4566 (2012: Re 0.5192) per unit Rs 5,027,523 5,717,699 

Distribution is recognised as a liability because in terms of the Trust Deed, the Fund has to 

distribute its net income. 

13. TAXATION 

Income tax is calculated at the rate of 15% (2012: 15%) on net profit before taxation as 

adjusted for income tax purposes. 

(i) 

Tax liability 

2013 2012 

Rs 

Rs 

At 1 July 8,721 45,350 

Tax paid during the year (54,173) (92,261) 

Under provision in previous years - 46,911 

Provision for the year 263,471 200,414 

Tax paid under APS (160,941) (191,693) 

At 30 June Rs 57,078 8,721

24 




13. TAXATION (CONT’D) 

(ii) 

Tax expense 

2013 2012 

Rs 

Rs 

Provision for the year 263,471 200,414 

Under provision in previous years - 46,911 

Tax charge Rs 263,471 247,325 

(iii) 

The tax on the Fund’s profit before tax differs from the theoretical amount that would 

arise from using basic tax rates of the Fund as follows: 

2013 2012 

Rs 

Rs 

Profit before taxation Rs 5,290,708 5,964,909 

Tax calculated at 15% (2012: 15%) 793,606 894,736 

Tax effects of: 

- Expenses not deductible for tax purposes 

- Under provision in previous years 

93,742 

- 

90,258 

46,911 

- Income not subject to tax (623,877) (784,580) 

Tax charge Rs 263,471 247,325 

14. GROSS INVESTMENT INCOME 

2013 2012 

Rs 

Rs 

Loans and receivables 

Interest on deposits 1,311,150 1,421,239 


Interest and net exchange gains on bank balances 672,501 263,827 

Held for trading 

Gain on disposal of investments 2,697,591 4,056,251 

Dividend on Mauritian equities 1,561,688 1,174,281 

Dividend on overseas securities 879,177 904,843 

5,138,456 6,135,375 

Rs 7,122,107 7,820,441 

15. MANAGER’S FEES 

Manager’s fees are paid to SICOM Financial Services Ltd based on 1% p.a of the Net Asset 

Value of the Fund. The fees which are calculated on a daily basis are payable monthly in 

arrears.

25 




16. TRUSTEE'S FEES 

Trustee's fees are paid to the Mauritius Commercial Bank Limited based on 0.15% p.a of the 

Net Asset Value of the Fund. The fees are calculated on a daily basis and are payable monthly 

in arrears. 

17. UNITS 

(a) Movements in units during the year: 

2013 2012 

No. of Units Rs No. of Units Rs 

Net assets of the Fund at 1 July 11,012,517.88 134,006,443 11,070,150.45 145,689,785 

Units created 258,073.82 3,214,582 283,228.37 3,557,207 

Units liquidated (259,810.15) (3,361,942) (340,860.94) (4,218,511) 

Revaluation gain realised on 

disposal of investments - (2,158,743) - (4,989,419) 

Profit not distributed for the year - 10,590,317 - (6,031,744) 

Income and distribution account 

brought forward - (760) - (875) 

Net assets of the Fund at 

30 June 11,010,781.55 142,289,897 11,012,517.88 134,006,443 

(b) Net asset value per unit: 

2013 2012 

Rs 

Rs 

NAV per unit (cum-div) Rs 13.38 12.69 

NAV per unit (ex-div) Rs 12.92 12.17 

(c) Prices per unit 

2013 2012 

Rs 

Rs 

Issue price (cum-div) Rs 13.55 12.71 

Re-purchase price (cum-div) Rs 12.96 12.04

26 




18. RELATED PARTY TRANSACTIONS 

The Fund is making the following disclosures in accordance with IAS 24 (Related Party 

Disclosures): 

(a) Investment Manager’s Holding Company 

2013 2012 

Rs 

Rs 

Units in Fund held at end of year (fair value) Rs 45,618,965 41,755,933 

At 1 July (ex-div) 40,047,224 41,608,554 

Additions 1,475,461 1,625,785 

Change in fair value 4,096,280 (1,478,406) 

At 30 June (cum-div) 45,618,965 41,755,933 

Dividend payable (1,556,845) (1,708,709) 

At 30 June (ex-div) Rs 44,062,120 40,047,224 

(b) Investment Manager's shareholders (excluding the 

Holding Company) 

(i) Units in Fund held at end of year (fair value) Rs 2,675,876 2,537,551 

At 1 July (ex-div) 2,433,711 961,338 

Change in fair value 242,165 1,576,213 

At 30 June (cum-div) 2,675,876 2,537,551 

Dividend payable to the shareholders (91,320) (103,840) 

At 30 June (ex-div) Rs 2,584,556 2,433,711 

(ii) Interest income from the shareholders Rs 600,946 613,559 

(iii) Outstanding balance receivable 

Interest receivable Rs 64,318 64,318 

(c) Investment Manager 

(i) Units in Fund held at end of year (fair value) Rs 14,948,360 14,229,878 

(ii) Investment Manager’s fees Rs 1,417,475 1,381,352 

(iii) Dividend payable to the manager Rs 528,052 582,306 

(iv) Outstanding balances payable: 

- Manager’s fees 229,861 105,054 

- Entry and exit fees 4,143 2,549 

Rs 234,004 107,603

27 




18. RELATED PARTY TRANSACTIONS (CONT’D) 

(d) Trustee 

2013 2012 

Rs 

Rs 

(i) Balances with local bank (Trustee) Rs 2,886,201 29,713,759 

(ii) Trustee’s fees Rs 212,621 207,203 

(iii) Interest income from Trustee Rs 583,234 263,153 

(iv) Bank charges Rs 5,362 4,534 

(v) Outstanding balances payable: 

- Trustee’s fees Rs 34,479 15,758 

19. FINANCIAL RISK MANAGEMENT 

19.1 Financial risk factors 

The Fund’s activities expose it to a variety of financial risks: market risk (including foreign 

currency risk, interest rate risk and market price risk), credit and counterparty risk and liquidity 

risk. The Fund’s overall risk management programme focuses on the unpredictability of 

financial markets and seeks to minimise potential adverse effects on the Fund’s financial 

performance. 

A description of the significant risk factors is given below: 

(a) Market price risk 

The Fund trades in securities quoted on the Stock Exchange of Mauritius and overseas 

securities. 

All securities investment presents a risk of loss of capital. The Fund’s investment securities are 

susceptible to market price risk from uncertainties about future prices of the instruments. The 

Fund Manager moderates this risk through a careful selection of securities, investment 

diversification and by having investment limits. The maximum risk resulting from investment 

securities is determined by the fair value of the financial instruments. The Fund’s overall market 

positions are monitored on a regular basis by the Fund Manager. 

The following table details the Fund’s sensitivity to a 5% and 10% increase/decrease in prices 

of securities. 

Increase/decrease of 5% in the prices of securities 

2013 2012 

Rs 

Rs 

Increase/decrease in net assets attributable to 

Unitholders Rs 5,589,332 4,641,968

28 




19. FINANCIAL RISK MANAGEMENT (CONT’D) 

19.1 Financial risk factors (cont’d) 

(a) Market price risk (cont’d) 

Increase/decrease of 10% in prices of securities 

2013 2012 

Rs 

Rs 


Unitholders Rs 11,178,664 9,283,936 

(b) 

Foreign currency risk 

The Fund has deposits and overseas investments denominated in GBP and USD. The 

Manager monitors the Fund’s currency position on a regular basis. The carrying amount of the 

Fund’s foreign currency denominated assets and liabilities at the reporting date are as follows:- 

Assets 

2013 2012 

Rs 

Rs 

Concentration of assets under: 

US Dollars 26,418,206 14,999,805 

GBP 34,687,301 34,055,787 

Rs 61,105,507 49,055,592 

Liabilities 

The Fund has no foreign currency denominated liabilities. 

Consequently the fund is exposed to risks that the exchange rate of the Rupee relative to those 

other currencies may change in a manner which has an adverse effect on the reported value of 

that portion of the Fund’s assets which is denominated in currencies other than the Rupee. 

The following table details the Fund’s sensitivity to a 5% and 10% increase/decrease of the 

Rupee against the USD and GBP. 

2013 2012 

Rs 

Rs 

Increase/decrease of 5% in rate of exchange 


Unitholders Rs 3,055,275 2,452,780 

Increase/decrease of 10% in rate of exchange 


Unitholders Rs 6,110,550 4,905,560

29 






(c) 

Interest rate risk 

The Fund is exposed to interest rate fluctuations on the international and domestic markets. 

The Manager monitors closely interest rate trends and related impact on investment income for 

performance evaluation and better fund management. 

The interest rate profile of the Fund at 30 June was: 

Financial assets 

2013 2012 

% p.a % p.a 

Loans and receivables 

Fixed deposits 4.50 to 5.70 5.25 to 5.70 


Bank balances 3.40 3.65 

Financial liabilities 

None of the Fund's financial liabilities are interest bearing. 

The following table details the Fund's sensitivity to a 5% and 10% increase/decrease of the rate 

of interest of financial assets. 

Increase/decrease of 5% in interest rate 

2013 2012 

Rs 

Rs 


Unitholders Rs 4,907 54,228 

Increase/decrease in profit available for distribution to 


Increase/decrease of 10% in interest rate 



Increase/decrease in profit available for distribution to 


The increase or decrease in the interest rate sensitivity is due to fluctuations in bank balances 

at 30 June 2013 as compared to 30 June 2012. 

The interest rate sensitivity analysis excludes: 

Fixed deposits which have fixed interest rates and will not be affected by fluctuations in the 

level of interest rates. 

Foreign currency denominated deposits as no interest is paid by Banks for small foreign 

currency balances.

30 






(d) 

Liquidity risk 

Liquidity risk is the risk that the Fund will encounter difficulty in meeting the obligations 

associated with its financial liabilities that are settled by delivery of cash or another financial 

asset. 

The Fund is exposed to daily cash redemptions of units and to repayment of other financial 

liabilities. Redemptions of units are permitted weekly. The Fund's other financial liabilities have 

contractual repayment ranging from on demand to six months. It therefore invests mostly in 

assets that are easily convertible into cash. 

The Manager monitors the Fund’s liquidity position on a regular basis. The Fund does not 

anticipate any significant liquidity concerns in funding redemption requests and other liabilities. 

The Fund manages liquidity risk by continuously monitoring forecast and actual cash flows and 

matching the maturity profiles of the financial assets and liabilities. It includes the Fund’s 

financial assets and trading liabilities at fair values, categorised by the earlier of contractual repricing 

or maturity dates. 

The maturity profile of the financial instruments is summarised as follows: 

At 30 June 2013 

Less than 1 to 3 3 months 1 to 5 On- 

1 month months to 1 year years Demand Total 

Rs Rs Rs Rs Rs Rs 

Assets 


Mauritian quoted equities - - - - 47,802,307 47,802,307 

Mauritian unquoted equities - - - - 2,879,946 2,879,946 

Overseas quoted equities - - - - 61,104,377 61,104,377 

- - - - 111,786,630 111,786,630 

Local currency denominated deposits 8,000,000 - 25,422,648 - - 33,422,648 

Other receivables 160,767 230,746 436,276 - - 827,789 

8,160,767 230,746 25,858,924 - - 34,250,437 


Foreign currency denominated deposits 1,041 - - - - 1,041 

Bank balances 2,886,291 - - - - 2,886,291 

2,887,332 - - - - 2,887,332 

Total assets Rs 11,048,099 230,746 25,858,924 - 111,786,630 148,924,399 

Liabilities 

Other payables 1,549,901 - - - - 1,549,901 

Dividend payable - 5,027,523 - - - 5,027,523 

Net assets attributable to unitholders - - - - 142,289,897 142,289,897 

Total liabilities Rs 1,549,901 5,027,523 - - 142,289,897 148,867,321 

Total interest sensitivity gap Rs 9,498,198 (4,796,777) 25,858,924 - (30,503,267) (57,078)

31 






(d) 

Liquidity risk (cont’d) 

At 30 June 2012 

Less than 1 to 3 3 months 1 to 5 On- 

1 month months to 1 year years Demand Total 

Rs Rs Rs Rs Rs Rs 

Assets 


Mauritian quoted equities - - - - 41,262,379 41,262,379 

Mauritian unquoted equities - - - - 2,556,454 2,556,454 

Overseas quoted equities - - - - 49,020,533 49,020,533 

- - - - 92,839,366 92,839,366 

Local currency denominated deposits - - 17,080,286 - - 17,080,286 

Other receivables 6,000 111,159 229,201 - - 346,360 

6,000 111,159 17,309,487 - - 17,426,646 


Foreign currency denominated deposits 1,032 - - - - 1,032 

Bank balances 29,747,786 - - - - 29,747,786 

29,748,818 - - - - 29,748,818 

Total assets Rs 29,754,818 111,159 17,309,487 - 92,839,366 140,014,830 

Liabilities 

Other payables 281,967 - - - - 281,967 

Dividend payable - 5,717,699 - - - 5,717,699 

Net assets attributable to unitholders - - - - 134,006,443 134,006,443 

Total liabilities Rs 281,967 5,717,699 - - 134,006,443 140,006,109 

Total interest sensitivity gap Rs 29,472,851 (5,606,540) 17,309,487 - (41,167,077) 8,721

32 






(e) 

Credit and counterparty risk 

Credit risk is the risk of financial loss to the Fund if a customer or counterparty to a financial 

instrument fails to meet its contractual obligations. 

Financial instruments which potentially expose the Fund to credit and counterparty risk consist 

principally of cash and cash equivalents and investments in equity securities. The Fund seeks 

to mitigate its exposure to credit and counterparty risk by placing its cash and transacting its 

securities with reputable financial institutions. 

19.2 Fair value estimation 

The fair value of financial instruments traded in active markets is based on quoted market price 

at the end of the reporting period. A market is regarded as active if quoted prices are readily 

available from an exchange, dealer, broker, industry group, pricing service, or regulatory 

agency, and those prices represent actual and regularly occurring market transactions. The 

quoted market price used for financial assets held by the Fund is the last traded price. These 

instruments are included in level 1. Instruments included in level 1 comprise primarily quoted 

equity investments classified as held-for-trading. 

Financial instruments that trade in markets that are not considered to be active but are valued 

based on quoted market prices, dealer quotations or alternative pricing sources supported by 

observable inputs are classified within level 2. These include Mauritian unquoted equities. As 

level 2 investments include positions that are not traded in active markets and/or are subject to 

transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, 

which are generally based on available market information. 

The fair value hierarchy the Fund’s financial assets (by class) measured at fair value is 

analysed as follows: 

At 30 June 2013 Level 1 Level 2 Total 

Rs Rs Rs 

Assets 

Financial assets held-for-trading 

-Mauritian quoted equities 47,802,307 - 47,802,307 

-Mauritian unquoted equities - 2,879,946 2,879,946 

-Overseas quoted equities 61,104,377 - 61,104,377 

Rs 108,906,684 2,879,946 111,786,630 

At 30 June 2012 Level 1 Level 2 Total 

Rs Rs Rs 

Assets 

Financial assets held-for-trading 

-Mauritian quoted equities 41,262,379 - 41,262,379 

-Mauritian unquoted equities - 2,556,454 2,556,454 

-Overseas quoted equities 49,020,533 - 49,020,533 

Rs 90,282,912 2,556,454 92,839,366

33 





19.2 Fair value estimation (Cont’d) 

Investments whose values are based on quoted market prices in active markets, and therefore 

classified within level 1, include Mauritian quoted equities and Overseas quoted equities. The 

Fund does not adjust the quoted price for these instruments. 

During the year, the Fund has made no transfer from Level 1 to Level 2.

Download - SICOM Financial Services

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?