cash generated total assets equity holders’ gearing interests rs …€¦ · hospitality...

Rs 1.6 bn(2016: Rs 1.6 bn)

Cash generated from operations

Rs 60 bn(2016: Rs 57 bn)

Total assets

32.2%(2016: 31.2%)

Gearing

Rs 17 bn(2016: Rs 16 bn)

Equity holders’ interests

key highlights

About ENL LimitedENL was incorporated in 1944 as a holding company to bring together the interests held by the Espitalier-Noël family. Over time, the ENL spirit of enterprise and its will to win grew tall and strong, to build a broad-based and diversified business group. Today, we are a versatile team of 7,350 women and men, actively engaged in most sectors of the national economy. A culture of hard work, a tradition for inclusive growth and an unwavering commitment to uphold our legacy of entrepreneurship have led us to be among the leading business groups of our country.

ENL’s main subsidiaries are ENL Land, ENL Commercial and Rogers. It also holds sizeable holdings in some of the major groups in Mauritius such as Eclosia and New Mauritius Hotels.

For greater insight on ENL Limited, we invite you to visit our online investor corner on www.enl.mu/investors/enl-limited/

About the performanceENL Limited’s preference shares are publicly traded on the second market of the Stock Exchange of Mauritius whilst the ordinary shares are privately held. At 30 June 2017, the market capitalisation stood at Rs 2.8bn. 5% of the preference shares were traded on the stock exchange during the year.

Both turnover and operating profit were comparable to last year at Rs 13.8bn and Rs 973m respectively. The Group recorded a profit after taxation of Rs 1.3bn, representing an increase of 47% compared to last year.

The Group’s profit attributable to the shareholders amounted to Rs 467m. This is reflected in the earnings per share of Rs 2.18 which yielded a price-earnings ratio of 12.60x based on the market price of preference share at year end.

The preference share price increased by 12% to reach Rs 27.50 as at 30 June 2017. A dividend of Rs 0.69 per share was paid for both ordinary and preference shares and represented a dividend yield of 2.5%, based on year-end share price. The dividend paid, coupled with the higher share price, yielded a total shareholder return of 15% for the year under review.

2013

2014

2015

2016

2017 0.69

0.78

0.78

0.74

0.70

Dividend per share (Re)

2013

2014

2015

2016

2017 2.18

1.11

2.51

2.59

8.89

Earnings per share (Rs)

2013

2014

2015

2016

2017 80.38

77.03

77.07

76.16

62.00

NAV per share (Rs)

2013

2014

2015

2016

2017 27.50

24.60

30.45

25.50

30.35

Market price per preference share (Rs)

Ordinary shares

3ENL Limited | Annual Report 2017

agro-industry

property

• land owner • venture capital • business incubator

• cane growing• farming• food crop• landscaping

• development • fund • management• services

Pantone 1585c

Pantone 295c

C 0 M 0 Y 0 K 40

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key

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commerce & industry

• automotive• construction• manufacturing• trading

• logistics solutions • corporate services• technology services• financial services

logistics fintechhospitality

• hotels • travel • leisure


business model for creating value, sustainably

The resources we use The activities that help us create value

We are actively engaged in most sectors of the national economy

The enablers that support the value creation process

We have chosen specific enablers to support us in our journey towards Vision 2020Land & investments

We are the owners of 23,000 arpents of land that we manage to maximise its return

Agro-industry We grow, transform and trade in farm produce

PropertyWe build and manage homes, offices,

shopping malls

Commerce & industryWe bring to the Mauritian resident a

bouquet of international and home-grown

brands

Hospitality We run hotels and sell premium holiday

experiences to the world

Logistics We connect Mauritius to other countries by

air, sea and land

FinTechWe deliver sophisticated services in the

fintech industry

Client centricity

Operational efficiency

Innovation

Management commitment

Financial • Debt• Equity• Reinvestment

Manufactured• Buildings• Machineries and

equipment

Human• Leadership team• Employees

Social & relationship • Business partners • Customer relationship

Intellectual• Licenses, softwares• Know-how• Systems

Natural• Land• Energy

The value we create for our stakeholders

Financial• We endeavour to deliver enhanced profitability, generate cash sustainably and contain

indebtedness to finance our growth• We strive to generate competitive returns for our shareholders

Manufactured• We engage in carefully selected and efficiently managed investments and operations• We offer quality products and services tailored to the needs of our customers • We nurture the relationship with our customers• We put operational efficiency at the heart of our preoccupations

Human• We actively promote the ENL culture and values in order to enhance employee engagement• We invest in the continuous improvement of competencies, development of skills and promote

personal growth of our employees• We align the employees’ goals with those of the business

Social and relationship• We support community development, protection of the environment and promotion of arts,

culture and sports

Intellectual• We develop and use innovative technologies to create new products and services• We develop strong systems supporting our operations• We nurture our brands, both in-house and represented

Natural• We endeavour to develop our land asset base in an eco-friendly manner• We conduct our agricultural activities sustainably in accordance with responsible practices• We produce renewable energy


busi

ness

revi

ew

The year just ended has been eventful. We continued on the dynamism that has been a hallmark of the Group by making significant investments and launching Moka Smart City. We have now embarked on our new 3 year plan, Vision 2020, which we are confident will bring the Group into a new dimension.

ceo’s review

Dear Shareholder,

2017 has been yet another year of bold decisions and dynamic entrepreneurship, a year during which we cleared new milestones in our strategy to leverage our significant land assets to bring in healthy, cash-generating businesses. Some of our most telling initiatives include the launch of the Moka Smart City, the increase of our equity stake in New Mauritius Hotels (NMH) and the official launch of our operations in the technology-empowered financial services sector. And all along, we have stayed on course in terms of performance.

Our operating results are on the increase:

• Turnover increased by 3% to Rs 13.8bn.

• At Rs 1bn, operating profit was at par with that of last year.

• Profit after tax (PAT) increased by 47% to reach Rs 1.3bn, and so despite a 65% decrease in the share of profits from associated companies due to losses suffered by NMH following significant negative adjustments in its annual accounts at 30 September 2016.

• At Rs 1.6bn, cash generated from operations was comparable with last year, most of it being ploughed back to sustain and expand our businesses.

The enhanced PAT is attributable to:

• a Rs 518m increase in fair value gains compared with last year, resulting from an increase in the value of our retail assets and of our land assets in Moka, and

• a Rs 78m profit on the sale of land and investments compared with a loss of Rs 32m last year

Rs 13.8 bnturnover(2016: Rs 13.4 bn)

Rs 1.3 bnprofit after tax(2016: Rs 875 m)

From Rs 875m to Rs 1,282m profit

875 17

(204)

110

518

(34) 1,282

FY

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BUSINESS REVIEW | CEO’S REVIEW

Rs 1 bnoperating profit(2016: Rs 957 m)


This performance favourably impacted shareholder value:

• Profit attributable to the shareholders reached Rs 467m.

• Earnings per share reached Rs 2.18, yielding a price-earnings ratio of 12.6x based on the year-end share price.

• The share price increased by 12% to reach Rs 27.50 at 30 June 2017, compared with the beginning of the year.

• Dividend paid settled at Rs 0.69 per ordinary share, equivalent to a yield of 2.5% based on the year-end share price.

The dividend paid coupled with the higher share price yielded a total shareholder return of 15% for the year.

Financial capitalTotal Group assets grew by 5% to reach Rs 60bn resulting from investments made, gains in fair value of our investment properties and the revaluation of our land and buildings, as set out in our triennial revaluation policy. Group net asset value per share increased by 4% to reach Rs 80.38.

Our main investments were as follows:

• Hospitality: During the financial year, the Group further increased its stake in NMH, thereby triggering a mandatory offer. As a result, we acquired an additional 5.27% stake in the hotel group for Rs 536m and brought our total shareholding to 35.29%.

The said NMH transactions were variously commented in the press and the Financial Services Commission has initiated an investigation. The Board reiterates that it has complied with all applicable rules and legislation when the group’s companies transacted in NMH shares in 2016 and 2017. We recommend that our shareholders continue to exercise caution when interpreting communications that do not emanate directly from our Company and/or the regulators.


34.0

31.2% 32.2%

17.2

36.1

15.4

Gearing

Net indebtedness (Rs'bn)

Gearing (%)

Equity (Rs'bn)

20172016

12 ENL Limited | Annual Report 2017

In addition to the investment in NMH, we further strengthened our stakes in the hospitality sector by acquiring a new hotel, Le Tamarin, during the year. We also renovated the Heritage Resorts hotels in Bel Ombre as well as Le Veranda Paul et Virginie. These outlays put us in a better position to benefit fully from the buoyancy of the tourism industry.

• Property: Ascencia completed the renovation of the Phoenix Mall and pursued with the construction of So’flo which is set to open in November 2017.

The investments made during the year were mainly financed by debt. As a result, net indebtedness increased by Rs 1.8bn to reach Rs 17bn. Nevertheless, we have been able to keep our gearing at a reasonable level of 32.2% (2016: 31.2%). We have also kept a tight rein on finance costs, notably by renegotiating terms with our banking partners. The Group’s pace of development relies on the readiness of the market to embrace our new products and services and we constantly monitor our indebtedness based on market conditions.

The year under review has also seen us continue to improve our ‘soft’ assets.


Manufactured capital The customer is constantly at the centre of our strategy for sustainable growth. We aim to provide a value for money proposition and a total quality experience to our customers. In this respect, we have invested significantly in improving our understanding of the markets in which we operate by gathering consumer insights and uncovering upcoming market trends. Based on this knowledge, we have crafted robust marketing strategies and plans for each of our subsidiaries. The ultimate aim is to nurture customers’ loyalty over time.

Human capitalOperational efficiency, customer experience and our capacity to innovate depend on the level of engagement of our teams towards our organisation and its objectives. Our workforce is made up of 7,350 persons. We monitor their performance through a rigorous process of objective setting followed upon during the year and appraised at year-end. We also measure the engagement levels of our employees through group-wide surveys. Further improvement of our score in this field remains a priority and training is an important lever to achieve this objective. This year, we invested Rs 44m to enhance the competencies of our employees, focusing on leadership and talent development as well as on sharpening their technical competencies. Learn more about how we create value from our Human capital on pages 51 to 55.


Intellectual capital Our take on innovation is to question our business models and to adapt them to market realities. Our businesses are exploring ways to incorporate digital communication technologies and big data to improve their service offerings.

This is particularly true in the FinTech segment which typically harnesses the power of technology to make financial and corporate services more agile, efficient and trustworthy. New innovative product offerings will be introduced on the local market before the end of 2017, coupling world-class financial expertise with cutting-edge technology to provide sophisticated business solutions tailored to customers’ needs.

Ascencia is also experimenting the use of big data to improve the shopping experience inside its malls. Last year it launched FATTI at Bagatelle and Phoenix. This web application collects data about shoppers visiting the malls thanks to free wifi coverage. Marketers then use this data to draw valuable insights which are shared with tenants to enable them to better serve the end customer.

The travel sector is transforming itself in order to adapt to the digital world. Rogers Travel is at the helm of this evolution, partnering with third parties to operate an online tour operating service. This service will be launched under the Islandian brand name during the second half of 2017. Likewise, ENL Property is embracing digital marketing and has created ‘Live in Mauritius’, an online platform positioned as a one-stop-shop for all residential properties developed and marketed by the Group.

Social, relationship and natural capital

We are now integrating the concept of sustainability into our strategy and business models at the level of Hospitality, Agro-industry and Property. We have enlisted the support of specialists in order to assist us in managing the economic, environmental and social impacts of all our business decisions.

We are a keen supporter and an active participant in sustainable nation building through initiatives to support local communities, protect the environment and to promote arts, culture and sports. Two dedicated instruments deliver the Group’s strategy in terms of corporate social responsibility: ENL Foundation which intervenes at the local community level, and Rogers Foundation which is currently focusing on the protection of the marine and coastal ecosystem in Bel Ombre. (read more on pages 56 to 59)

Let us now take a closer look at our segmental performance on pages 16 to 33.




Outlook

Over the years, we have grown into a natural leader in the Property and Hospitality markets and as Mauritius becomes increasingly attractive as a premium destination to live, work and play, we look forward to forge ahead with confidence, creativity and enthusiasm.

Our Logistics activities occupy a foremost position in the industry as does our Commerce & industry arm. We intend to carry on developing these sectors with continued vigour.

Agro-industry will remain a key contributor to our performance going forward, although our sugar operations will be challenged by prevailing market conditions.

The coming years will see us expanding our FinTech activities where we believe there is significant potential for growth.

Over the coming three years, growth within our Group will follow Vision 2020, our 3-Year Strategic Plan. This plan is the result of teamwork under the guidance of EY France: preparing this plan has been a participative, unifying exercise for our teams. We have chosen our destination together and have a common mind-set and language.

I am confident that Vision 2020 will enable the Group to reach new levels of excellence. We have chosen, for each served market, appropriate levers as guidance on the journey. We have developed tools to monitor our progress towards the Group’s objective of transforming its asset base to capture growth and generate cash sustainably.

Our motto underscoring the strategic plan will be:

• to be more efficient in the use of our asset base

• to engage in carefully selected and efficiently managed investments and operations, in Mauritius and abroad

• to put operational efficiency at the heart of our preoccupations

• to endeavour to generate cash sustainably to finance our growth, and

• to privilege initiatives capable of generating sustainable value creation

This has been an eventful year during which we have cleared many milestones and paved the way for the renewed growth of our Group. I thank my fellow directors and the ENL group team for their diligence and hard work. And thank you, dear shareholder, for your continued trust and support.

Hector Espitalier-NoëlCEO


We are the owner of 23,000 arpents of land that we manage to maximise its return The land & investments segment of ENL is the owner of 23,000 arpents of land belonging to the Group in Moka, Savannah, and Bel Ombre-Case Noyale. It is the backbone of the Group, fuelling and supporting its growth over time. The significant land asset base is managed strategically by:

• using land mainly for agriculture and farming,

• selling small portions of non-strategic land and other investments to generate short term cash,

• converting agricultural land with high development potential to other more remunerating purposes, and

Rs 83 mturnover(2016: Rs 40 m)

loss after tax(2016: Rs 352 m)

Rs 168 m

BUSINESS REVIEW | LAND & INVESTMENTS

• leveraging land assets to raise finance for investment into other segments.

In this way, we use our land base to create strong cash generating assets and operations. These are in turn leveraged to attract additional resources to fuel growth in new sectors. Thus is created a virtuous cycle which feeds upon itself to generate growth.

Segment revenue went up from Rs 40m to Rs 83m, with loss after tax being reduced from Rs 352m last year to Rs 168m. This is mainly attributable to the purchase of NMH shares which gave rise to a profit of Rs 124m on consolidation, as well as higher profits on sale of land and investments this year.

We are now seeding the next generation of growth drivers for our Group. We have pledged Rs 760m to entrepreneurship in sectors where we are not traditionally present. We have activated two main levers, namely, start-up incubation with Turbine, and corporate venturing with Compass, to pursue innovation, a key to sustainability. We aim at co-developing the innovation ecosystem by educating aspiring entrepreneurs about the benefits of venture capital financing and business incubation.

Compass is a venture capital firm supporting entrepreneurial talent in the Indian Ocean. The corporate venture fund brings strong industry, strategic and financial support to start-ups in


order to catalyse their growth. Compass invests in education, energy, health and tech start-ups venturing in Smart city sectors.

Two investments have been made to date, namely in Reuniwatt, a company specialising in solar forecasting and climatic information systems and ICT.io, an online publisher of technology industry news in the Indian Ocean region.

The team is constantly on the lookout for innovative companies which will contribute to expose the Group to new industries, whether adjacent or outside its core markets. To this effect, Compass assists ENL subsidiaries to innovate within their business models or strategies by exploring and monitoring new technologies, geographies, partnerships, products and services.

An innovation hub in Moka

Compass is positioned to co-fund the most innovative initiatives in Moka contributing to the emergence of a smarter city. The fund’s focus sectors are aligned with the future development of Moka Smart City.

Incubators and co-working spaces are emerging in Mauritius, along with the willingness to network and connect. Turbine is a government-accredited incubator which aims to be a reference in the field in the Indian Ocean region. In October 2016, we launched the Turbine co-working space in Vivéa Business Park. Turbine offers a physical place in Moka where entrepreneurs can meet and start-ups can get weekly support over an incubation period of 18 months. Turbine also contributes to the dynamism of Moka Smart City.

The Mauritian government has demonstrated a willingness to support innovation and Research & Development, and has taken actions to promote the development of incubators in Mauritius with the launch of the National SME Incubation Scheme. Turbine worked closely with the Mauritius Research Council to promote the Mauritian incubator scheme in Mauritius.

BUSINESS REVIEW | LAND & INVESTMENTS

Turbine in 2017


We grow, transform and tradein farm produce We are engaged in farming on some 15,000 arpents of land in Moka, Savannah and Bel Ombre, growing sugar cane as well as a diversified portfolio of products and services. We are also a key player in the agro-industrial sector through our 39% shareholding in the Eclosia Group.

Turnover increased from Rs 841m in 2016 to Rs 924m this year while profit after tax went down from Rs 236m to Rs 152m. The drop in profits is attributable to a fall in the value of standing canes following the anticipated drop in sugar price for crop 2017 and to a decrease in contribution to profits by Eclosia from Rs 287m last year to Rs 199m.

We had a better crop this year, with improved crop and sugar yields in both Moka and Savannah. Sugar prices were also superior to last year’s:

• Sugar accruing to ENL Agri amounted to 26,696 tonnes compared to 23,335 tonnes, and

• Sugar prices stood at Rs 15,572 per tonne compared to Rs 15,540 last year.

BUSINESS REVIEW | AGRO-INDUSTRY


Rs 152 mprofit after tax(2016: Rs 236 m)

An efficient use of resources together with improvements in the irrigation networks, further helped to enhance performance. However, the anticipated drop in sugar price for crop 2017 resulted in a negative impact of Rs 40m on the valuation of standing cane at year end, and on the results of this segment.

Given the recurring losses incurred by the cane cultivation in Bel Ombre and Case Noyale, we are implementing a plan to transform the business and to turn it around as a result. Our focus will be on increasing the food crop base, expanding livestock and implementing drastic cost cutting initiatives.


The diversification of agricultural activities remains a keystone of our strategy to complement revenue from sugar cane. Landscaping, nursery, food crop, farming, agro supplies and syndic services have all yielded positive results this year. This stems from,

• an increase in our poultry production capacity with the construction of an additional building of 1,100m2 in Savannah,

• the expansion of the foodcrop product range under the Field Good brand and production of 940 tonnes of potatoes,

• the growth of the landscaping maintenance business,

• a steady progression in existing agro supplies product lines and the trade in small agricultural equipment & horticultural containers, as well as

• Sygeco’s pursuit of a growth strategy aimed at establishing itself as a reference in the syndic services market

BUSINESS REVIEW | AGRO-INDUSTRY

Outlook

The efficiency level of the cane operations in the regions of Moka and Savannah has improved significantly at the term of the 2015-2017 strategic plan. We intend to maintain this position through our continuous improvement of agricultural practices. Investments in land de-rocking enabled us to further mechanise our operations. Today, 61% of cane harvesting is done mechanically, and the field mechanisation program is expected to be completed by 2020.

Sugar prices are currently at the low-end of the commodity price cycle. The Mauritius Sugar Syndicate is implementing a well thought-out strategy to improve producers’ revenues which includes seeking new niches for our sugar and diversifying away from the now liberalised European market. Furthermore, the industry is relentlessly seeking alternative sources of revenue from sugar cane by-products.

Additional value creation in the agro-industry cluster will come from non-cane operations. We expect to develop new and complementary activities geared towards the tourism and real estate markets in Mauritius, capturing growth opportunities on these markets which are promised for an upturn.


We build and manage homes, offices and shopping malls We build and manage homes, offices, and shopping malls, leading the real estate market with an integrated offer. We are passionate about creating sustainable neighbourhoods that are enabling and open to all. We have built a reputable brand on the real estate market which comforts us in our ability to differentiate our offer in a market that is becoming more competitive.

Segment profit reached Rs 1.2bn in 2017, up from Rs 801m last year. The better results mainly come from the increase in fair value gains of our retail assets following the five year renewal of tenants’ leases at Bagatelle, the renovation of Phoenix Mall and the revaluation of our ready-to-develop land assets in Moka.

Moka City. The Moka Smart City was officially launched in April 2017, spurring an increased demand for land, built up units and partnerships with ENL which has exceeded our expectations. Moka City ambitions to become an attractive city to live, work and play; a city that positions Mauritius as an international platform for businesses and investments.

The first phase of the smart city is being initially developed on some 464 arpents. We expect the development to be certified as a Smart City by November 2017; the Government has already granted us a Letter of Intent to this end. In the meantime, we have completed the administrative processes necessary to facilitate the creation of the Moka Smart City by amalgamating our different legal entities that have been driving the development of Moka.

BUSINESS REVIEW | PROPERTY


Rs 1.2 bnprofit after tax(2016: Rs 801 m)

The founding principles upon which Moka City is being built are: optimal use of resources, improvement of residents’ quality of life, active engagement with existing communities and creation of real economic opportunities.

We plan to undertake significant infrastructure works to unlock the value of our land bank in Moka and execute our land sales and development program that will enable us to generate cash and attract business partners. We are seeking an international green accreditation to raise development standards in the city to be. We are also collaborating with Belle Verte, a local organisation, to set up a solid waste sorting, recycling and treatment facility for Moka.


We have created ENvolt for the production of electricity powered by solar energy. This will initially see the setting up of roof top photovoltaic farms on our shopping malls and offices.

Offices. Our existing 15,500m2 portfolio is fully let out and has generated Rs 110m in terms of revenue for 2017 compared to Rs 94m in 2016. The office market is currently on a growth trend and we are taking this opportunity to increase our rental offer by building The Pod. Construction works for this new 4,800m2 building at Vivéa Business Park have started and we expect it to be on the rental market as from August 2018. At Telfair, Moka City’s central business district, the construction of a 4,700m2 building for PwC’s headquarters in Mauritius has started and is expected to be completed by August 2018. We are presently seeking a green building accreditation for both the PwC headquarters and ENL House.

We expect to maintain our development pace in the coming years on the back of strong demand, with the construction of new buildings at Telfair, Bagatelle and Vivéa business parks. This coming year, we intend to set up an office fund which will own all our office buildings. This should enable us to better focus our approach and to strengthen our capacity to support future developments.

Local residential. The market continues to be driven by a strong demand for plots of land and we are witnessing promising market conditions for built-up units in the Moka region. This year, we reached the following milestones:

• The second phase of Courchamps, a residential land development comprising 40 plots, was sold out shortly after being proposed to the market. We are launching its next phases shortly.

• Les Promenades d’Helvétia, our first residential project of 70 apartments and duplexes to be built under the Smart City Scheme was launched in April 2017 and almost all the units have been pre-sold. The next phases will be launched shortly, and will also include residential land plots.

We are busy working on a master plan to launch new phases in Les Vergers de Gros Bois.

Residential resort. Mauritius, as a destination for property investments, is affected by global competition. Locally, we are facing competition from the wider range of products now available to foreigners. As a response to the challenging market conditions, we have consolidated our marketing team and together with the Sotheby’s worldwide network, we are launching numerous initiatives to deliver our ambitious development plans.

We are reviewing our real estate concept for Bel Ombre with a view to improve the estate’s offering. We are also focusing on the design, development and value engineering of our existing products. We have stepped out of the Mauritian territory and are currently managing the residential development of Beachcomber at Royal Palm Marrakech.

We have decided to exit from the management and development of Saint Antoine Private Residence in order to focus our energy on the development of existing projects. Our partner, Red4, is finalising a partnership with another local operator to develop and manage the project. We will nonetheless remain a key sales and marketing partner on the project through Mauritius Sotheby’s International Realty.



Retail. Our property portfolio includes a 68% equity investment in Ascencia, the largest property fund listed on the Stock Exchange of Mauritius. The company delivered a strong financial and operational performance with average rentals going up by 8% and the percentage of unoccupied rental area going down to an all-time low of 1.75%. The renovated Phoenix Mall met with great success following its reopening in November 2016. During 2017, Ascencia sold some of its non-core assets in order to reinvest the funds in new projects. The debt of Ascencia was restructured during the year to free up cash to fund future projects and improve the company’s dividend pay-out.

The opening of So’flo Boutique Mall in November 2017 in Floreal will add 7,400m2 of rental space to the Ascencia portfolio. The upcoming year will see us investing into a 4,000m2 extension to Bagatelle Mall and the construction of a new 10,000m2 mall in the south of the island.

Outlook

Our ambition is to maintain our leadership in the real estate market in Mauritius in an increasingly competitive environment by continuing to upgrade our offers and propose innovative products. We have revisited our organisational structure accordingly, ensuring that we have clearly defined and specialised teams. Growth will be mainly driven by Ascencia, Moka Smart City and Bel Ombre.


Of�ces

Retail

10,698

10,082

9,148

1,2321,127

1,058

Assets under management (Rs m)

2017 2016 2015

Of�ces

Retail

1,096

1,044

952

11094

76

Income from assets under management (Rs m)

2017 2016 2015


We bring to the Mauritian resident a bouquet of international and home-grown brandsOur commerce & industry business segment regroups a number of activities including car dealership (Axess), eyewear manufacturing (Plastinax), fibre glass swimming pools production and supply of related accessories (Nabridas), supply of building materials (Grewals) and construction services (Cogir). Furthermore, we are associates of FRCI, IT solutions specialist, Superdist, hardware wholesaler and JMD, dealer in aluminium profiles.

The performance of the outgoing three year plan has been below expectations with some sectors in which we operate, namely the construction and hospitality industries, going through a prolonged contraction. Additionally, the performance of Axess has been below our expectations as a result of fierce competition in the automotive sector.

In this respect, we have put together a string of measures to redress the situation with a focus on operational efficiency, manpower quality and customer centricity. These have already started to bear fruits as losses were reduced from Rs 54m in 2016 to Rs 21m this year.

An improvement in the fiscal framework for the importation of vehicles led to a 22% growth in the market for new vehicles during the year. Axess benefitted from this expansion and registered an 11% increase in its sales volume. We are now in the process of strengthening this growth: Axess is investing in a brand new Jaguar and Land Rover showroom in Bagatelle with a view to further develop this brand on the island.

Nabridas aims to consolidate its leadership of the local fibre glass swimming pools and accessories market. Product innovation remains key to attracting new customers and to retaining old ones. Plastinax now aims to strengthen its

position in the United States and also increase its sales on the European market. It signed contracts with additional customers in these two target regions this year.

With the construction market showing signs of picking up, the focus of Cogir, Grewals and JMD will mainly be on instilling a better sales and service culture to increase revenues whilst maintaining efforts to improve operational efficiency. Our associates operating in the IT industry, namely Superdist and FRCI remained key contributors to our performance.

During the past three years, we have laid much emphasis on improving the efficiency of our operations. The adoption of the principles of lean enterprise by our teams is the backbone of our strategy. The initiative is already paying off.

Axess’ after sales services generated a profit after posting losses for several years, as a result of relentless efforts to restructure operations and to improve efficiency. These efforts gained national recognition this year when the National Productivity and Competitiveness Council selected Axess from within a number of Mauritian companies to be transformed into a model for Africa with the help of Japanese experts.

Plastinax aims to remain at the forefront of technological advances. It patented the self-developed “triple injection method” for the American market.

Outlook

Our focus for the three-year period ending 2020 will be on bringing each of our operations to perform to their full potential and to yield returns commensurate with the resources we have invested in them. Our renewed focus on efficiency and customer experience should enable us to grow our share of the markets in which we operate.

BUSINESS REVIEW | COMMERCE AND INDUSTRY

Rs 3 bnturnover(2016: Rs 3 bn)

Rs 21 mloss after tax(2016: Rs 54 m) 27ENL Limited | Annual Report 2017

We run hotels and sell premium holiday experiences to the worldThe hospitality segment offers an integrated holiday service that includes hotels, travel and leisure. We are a major player in the tourism industry accounting for more than 20% of total rooms available in Mauritius. Through VLH, we own and operate the Veranda and Heritage brands of hotels. We are also a 35.29% shareholder in NMH, the island’s leading hotel group.

At Rs 3bn, the segment’s revenue was comparable to that of last year. However, we recorded a loss of Rs 22m compared to a profit of Rs 90m the previous year. This was due mainly to the losses incurred by NMH (Rs 228m compared to Rs 89m last year) following significant negative adjustments in its annual accounts at 30 September 2016.

The travel sector performed similarly to last year and guest night spending improved by 3%, driven by an increase in room rates by the Heritage Resorts hotels. However, occupancy rates fell by 2 percentage points to 80%, and the unfavourable EUR and GBP exchange rates negatively impacted the results of the sector.

Significant renovations were undertaken between May and September 2017 at Domaine de Bel Ombre that included major beach erosion containment works, renovation of Heritage Resort hotels and Le Chateau de Bel Ombre. The Veranda Paul & Virginie was also renovated at the same time.

With regards to the travel sector, the corporate travel expertise was strengthened following substantial investment in technology and human capital.

Outlook

A strategy of organic growth and acquisitions is pursued in this market which should generate strong growth in the years to come. We regrouped all our operations in the leisure services sector under the new brand Island Living. It now oversees Voila Hotels, Ocean Basket, Savinia Bistrot, Moka’z, Le Chamarel Restaurant, the Seven Coloured Earth and Frederica Nature Reserve.

Our operations in the travel sector are embracing digital transformation. We are launching a new concept under the “Islandian” brand name with a view to improve our performance by taking our tour operating business online.

As far as our hotel operations are concerned, we are confident that the NMH management is steering the company back on a path of sustainable growth. VLH is investing in its products to reap the benefits from the improving demand that will be fully reflected in financial year 2019. We believe the refurbished hotels will enhance customer experience and will impact positively on results. Works on a second 18-hole championship golf course in Bel Ombre are planned to start in 2018.

BUSINESS REVIEW | HOSPITALITY

Rs 3 bnturnover(2016: Rs 3 bn)

Rs 22 mloss after tax(2016: Rs 90 m profit after tax)


We connect Mauritius to othercountries by air, sea and landWe operate an integrated logistics platform through Velogic, offering freight forwarding, customs clearing, domestic transport, warehousing, shipping, container handling, courier services and sugar packaging. This year, turnover grew by 12% to reach Rs 3.5bn whilst profit after tax progressed from Rs 83m to Rs 87m.

The segment performed slightly better than last year despite the difficult market conditions that have affected freight forwarding activities worldwide. Our operations in Reunion, Madagascar, India and Kenya were the main contributors to the good performance through customer retention and continuous growth in their activities.

Port services in Mauritius posted an increased profitability mainly due to an improved performance of the transport business as well as the discontinuation of certain loss-making activities. In Kenya, the transport activity performed better and a full year’s profit was recognised in respect of the business we acquired during the course of last year.

The improved profitability of the freight forwarding activities is attributable to:

• better results and full year consolidation of the newly acquired Kenyan activities,

• a turnaround of the Mozambique operations following a restructuring exercise, and

• business growth in Madagascar, India and Reunion.

However, in Mauritius, results were affected by a decline in textile exports following reduced sourcing from some major buyers and the delocalisation of local manufacturers to countries with lower production costs.

Globally, the sluggish economic growth in the Eurozone had a negative impact on the recovery of the French operations whilst the uncertainties surrounding Brexit resulted in a significant depreciation of the GBP against MUR, impacting negatively the sugar packaging activities.

On the shipping side, the bulk chartering investment struggled with shrinking margins due to the continuous increase in charter costs, given the unpredictability in world trade.

Outlook

The logistics segment is expected to perform better next year as growth is maintained mainly in Madagascar, India and Reunion.

BUSINESS REVIEW | LOGISTICS




Outlook

While the 2018 financial year will remain a year of capability building and enhanced market penetration, our FinTech served market will initiate a series of disruptive offerings that will fuel growth in the years to come.

The growth will be pursued organically and through acquisitions. Rogers Capital ambitions to maintain a leadership position in its traditional technology core business whilst new offerings around consumer credit and electronic payment are expected to become major drivers of profitability in the coming years. We will also continue to improve our service offering in the corporate services segment whilst pursuing an international diversification strategy.

We deliver sophisticated services in the fintech industryThe FinTech platform operating under the Rogers Capital brand provides corporate, technology and financial services to an international clientele. It delivers our ambition to combine world class financial expertise with leading edge technology to provide sophisticated solutions to corporates and individuals.

The segment recorded a revenue growth of 6% to reach Rs 665m. However, profit after tax decreased from Rs 124m last year to Rs 84m this year. The drop in profitability was due to:

• costs incurred to set up the new service offerings around consumer credit and electronic payment,

• reduced demand on the domestic market, and

• the termination of the management contract with AXA Customer Services in the technology business

The associates contributed Rs 85m to the results, with the SWAN Group accounting for Rs 89m.

This year, FinTech was focused on consolidating acquired capabilities, developing additional value added services and diversifying the geographical sources of revenue. Under corporate services, new value added services were launched together with the opening of new overseas desks in South Africa, France and India. The financial services geared up by hiring new skilled employees and is planning to introduce new offerings on the local market before the end of 2017.

BUSINESS REVIEW | FINTECH




Managing risk in delivering our strategy

“Risk management remains an important management tool that allows our teams to gauge and focus on the ‘risks that matter’ for the business in line with defined strategic enablers and objectives of delivering long-term value for our shareholders.”Hector Espitalier-NoëlCEO

Managing risks and strengthening our risk culture1How our principal risks evolved from last year?2Governance structure and framework to manage our risks3Our risk profileUpside and downside risks4

BUSINESS REVIEW | RISK MANAGEMENT



1. Managing risks and strengthening our risk culture

The success of any business rests on effective strategic planning and execution as well as proper management of risks and uncertainties. ENL Limited (referred to as ENL or the ‘Group’) cruises on 7 served markets ranging from the traditional sugar-based activity to more innovative services e.g. Fintech and thus, the diversification of its activities entails in spreading of business risks in different industries thereby providing cushion against sectorial downside risks.

The principal risks faced by ENL as compared to last financial year 30 June 2016 have evolved and further details are outlined in sub-section 2 of the risk management section. In spite of challenging economic and market conditions in localised sectors and fierce competition, the Group focuses on remaining agile in its operational execution to sustain attractive value propositions to customers and hence, profitability.

Taking risk management beyond compliance

Effective and sustainable risk management rests on a well-entrenched ‘Risk culture’. The Group’s philosophy and importance given to risk management together with the various initiatives undertaken over the years demonstrates the drive of the Board and Senior Management in taking risk management beyond compliance. A strong ‘Risk culture’ together with the right tone at the top from ENL’s Senior Management contribute in ensuring that business units perform effectively and sustainably thus, preserving and creating value for stakeholders.

Keep us out of trouble Make our business better

Manage risks to preserve value Create value

Balanced approach to risk and performanceSource: adapted from Ernst & Young - ‘Building an enterprise approach to risk and performance’

The Group seeks to continuously improve processes underpinning effective risk management be it in terms of initiatives and/or measures to strengthen risk awareness culture and risk ownership across entities of the Group.


01Managing risks and strengthening our risk culture


Embarking on the new 3-year strategic plan, Vision 2020

The end of the year for ENL also marks the beginning of a new 3-year plan. The Group is getting ready to boldly take up the strategic challenges of Vision 2020, placing at the heart of its plan its key enablers being: Customer centricity, Innovation, Operational efficiency, and Management commitment.

The strategic enablers will spur the Group in a new era of performance while at the same time, capitalising on the effective management of principal risks to drive operations.

“Enterprise risk management is about ensuring that our businesses are better managing their risk exposures through effective and sustainable mitigating measures while keeping informed of emergent challenges that may impact the business, its operations and performance.”

Hector Espitalier-Noël, CEO

Sharinginsightson risk

Workshopsand exchange

sessions Risk reporting

& oversight

To the ARMC members, C-suite team and Management of the Group on (i) Top Business Risks 2017 as per Allianz Risk Barometer and (ii) ‘Guide to Cyber risk’ published by Allianz.

Introducing an in-house newsletter referred to as ‘Insightful feed’ intended to share trends, global news and issues related to risk, opportunities and assurance.

Facilitating ‘risk awareness’ and ‘1-to-1’ sessions with the Management teams of the BUs as a refresher to sustain importance of effective management of risks.

Conducting ‘Fraud and corruption awareness’ workshop with the Leadership team and ARMC members facilitated by ‘ENSafrica (Mauritius) law �rm’.

Conducting mini-workshop via our in-house ‘Learning bytes’ forum on IT security with the Leadership team of the Group’s entities.

Introducing a ‘Risk Management Dashboard’ for Senior Management and ARMC members of the Group highlighting the Top 10 key residual business risks, risk trends and potential upsides of BUs.

Linking of risks to business objectives in the Group’s enterprise risk management framework to ensure risks and strategy are aligned.

Periodic review of ‘risk management registers’ of the Group’s BUs with the support of the GRC function at the group.



2. How did our principal risks evolve from last year?

The main risks of ENL, as at 30 June 2017, are highlighted in the snapshot table below which shows the linkage of risks with strategic enablers of Vision 2020, risk trend as compared to last year as well as capitals impacted. Accordingly, stakeholders and investors are encouraged to consider these risks and take cognisance of mitigating strategies in place to manage same. More details are in sub-section 4 of the risk management disclosures.

Strategic enablersRisk

categoryPrincipal risks

Risk trend ( from last FY)

Capital(s) impacted

Client centricity

Strategic

Market conditions and economic factors

Market intelligence - competition threats

Customer attractiveness and retention

Operational efficiency Financial

Financial performance sustainability

Liquidity risk

Operational efficiency

Innovation

Operational

Property development and land bank optimisation

Investments in associates, jointly-controlled entities and financial assets

Innovation

Management commitmentPeople and

systems

Talents attraction, retention and engagement

Cyber-threats and IT

Note: The ‘Risk trend’ is based on the current understanding of the risk environment and may change over time given the dynamism of the environment, business and evolving risks. The legend for the ‘Risk trend’ is set out below:

Key :

risk has increased risk has decreased risk has remained unchanged emergent risk reflects position of last year


02How did our principal risks evolve from last year?


Evolving from last year’s ‘Risk heatmap’, the risk profile of ENL as set out in the snapshot table, is translated on the ‘Risk radar’ which provides a bird’s eye view of the principal residual risks. The ‘Risk radar’, illustrated below, is divided in four risk categories: (i) Strategic, (ii) Financial, (iii) Operational and (iv) People and systems. The radar shows the likelihood of occurrence of risks, perceived impact as well as evolution of risks. As such, risks closer to the centre of the radar are risks that posed the greatest challenge during the year and risks positioned further from the centre are those showing lower likelihood of occurrence and impact but were nonetheless monitored by Senior Management.

Risk radar of ENL Limited

1Market conditions and economic factors

2Market intelligence - competition threats

3Customer attractiveness and retention

Cyber-threats and IT7 Investments in associates,

jointly-controlled entities and �nancial assets

8 Innovation

5 Liquidity risk

4 Financial performance sustainability

Strategic

Operational

Financial

People & systems

Talents attraction, retention and engagement

9

Perceived impact

Likelihood

6Property development and land bank optimisation10

Basis for identification and prioritisation of the principal risksThe radar is the outcome of the risk identification and assessment process, facilitated by the GRC function, which involved discussions with Senior Management. As such, the principal residual risks identified, at the Group level, is the outcome of a blend of: (i) bottom-up approach, i.e. whereby principal residual risks of each served market of ENL Limited, as identified through its main subsidiaries, are escalated to Senior Management; and (ii) top-down approach which takes on-board the key risks at the Group level.



3. Governance structure and framework to manage risks

Risk governance encompasses the tone at the top, strategic decision-making and risk oversight. At ENL, the risk governance structure in place, namely through the Audit and Risk Management Committees (ARMC) of the holding’s subsidiaries (ENL Land Ltd and ENL Commercial Limited), stresses on the responsibilities of the Lines of defences with regards to identifying, evaluating, responding and monitoring of risks that may impact business objectives, operations and performance. The “Three lines of defence” model as per below is applied to have a cohesive approach to reinforce the effectiveness of the risk governance structure.

Board of Directors

• Tone at the top and responsible for the total process of risk management and risk tolerance.

• Takes adequate measures to monitor effective management of risks and sound system of internal controls.

Senior Management Audit and Risk Management Committees

• Oversee implementation, embedding of risk management practices and regular monitoring of entities’ key residual risks via dashboards.

• Monitor and review the risk management process and internal controls systems with the support of the Governance, Risk and Compliance (GRC) function of ENL who tables the prominent, inherent and emergent risks.

First line of defence: Operational Management

Second line of defence: Support functions

Third line of defence: Internal Audit

• Accountable to the Board for the design, implementation and monitoring of the risk management processes and ensuring that internal controls are effective and adhered to.

• Risk management and compliance functions monitor the effectiveness of the first “Line of defence” in mitigating the occurrence and significance of risks.

• Independent assurance to the Audit and Risk Management Committee on risk management, controls and governance processes.

Embracing the new National Code of Corporate Governance (CG) 2016

The year 2016-17 also witnessed the launching of the second edition of the National Code of CG for Mauritius (2016), applicable as from the FY 2017-18. The Group embraces the new Code and views it as being a positive step forward aligned with ENL values and upholding of good corporate governance. The new Code brings forward eight basic CG principles and introduces the “apply and explain” concept with Principle 5 of the new Code dealing with ‘Risk Governance and Internal Control’. As such, the Group will initiate a readiness self-assessment of existing risk management practices against requirements of the new Code so as to be better prepared for migrating towards its application.


03Governance structure


Integrated Risk Management Framework at a glance

The ERM framework at ENL underpins the Group’s strategy and enables the identification, assessment, prioritisation, mitigation and monitoring of prominent risks associated with business operations. The integrated framework, as shown below, rests on 3 fundamental pillars namely: Risk governance, Risk culture and People. It facilitates a harmonised top-down approach to effective management of risks across the Group thus enabling entities of the Group to align their risk management practices with ENL Group’s methodology. Entities of the Group periodically review their risk management dashboards and Risk Management Registers (RMR) to assess evolution of their risks, effectiveness of controls and hence, set priorities on existing and emergent risks that require Senior Management attention.

Risk infrastructure and approach:

Establish the contextand

Risk identi�cation

Assess and prioritiserisks

(existing and emergent)

Mitigate risks(reinforce controls, action plans to reduce exposure)

Risk monitoring(risk dashboards reviewed

to capture trends and controls)

Risk culture Risk governance People

Strategic risks

Operational risks

Fina

ncia

l ris

ksP

eop

le & system

s risks

ENL Group and entities’ applicable policies, procedures, internal controls, code of ethics, amongst others and external legislations and regulations.

Integrated ERM Framework

Source: Adapted from Ernst & Young – an integrated approach towards effective and sustainable risk management


Risk appetite

Appetite towards risk is set at the Board level. Risk taking activities are managed within the risk appetite, which defines the amount and types of risks the business is willing to assume in the pursuits of its objectives. Risk appetite is unique to every business and setting the risk appetite takes into consideration factors such as:

o risk profile of the business in line with its business strategy and its corporate values, i.e., ‘what are the risks inherent to the business and those to be avoided’;

o risk capacity of the business, i.e., ‘how much risks can the organisation absorb’;

o risk assessment and analyses, i.e., ‘what is the ranking of risks and what are the boundaries within which Management can operate’.



4. Our risk profile – upside and downside risks

While the term ‘Risk’ is perceived as having undesirable impact on business operations and/or financial performance, risks can also create ‘Opportunities’ for improvement that can make businesses more efficient, or provide a competitive edge.

Upside riskSearch for opportunities

Mitigate negative eventsDownside risk

Upside risks

The Group’s philosophy is to view risk management as a management tool, not only to avoid and mitigate risks that can affect the Group, but also to view risks as potential opportunities that can create value for entities of ENL. The table below provides a glimpse of some key opportunities seized and/or sustained by the Group during the year.

‘Compass’, the corporate venture arm of ENL Land, has as primary objective to expose the Group to new industries, whether adjacent or outside its core markets. During the year, Compass invested in innovative start-ups in the fields of renewable energies (Reuniwatt) and media and technology (ICT.io).

Initiatives were taken to adopt lean management practices that resulted in desirable gains in productivity of employees, streamlining of operations and bridging efficiency gaps. The positive outcome of this initiative has encouraged replicating of these practices.

Nature of risks Upside

Increasing scale of non-sugar operations and product mix, in line with the diversification strategy, will further enable diluting revenue concentration and mitigating shortfall in sugar proceeds (revenue mix in agro-industry being 60% sugar and 40% non-sugar).

Seizing opportunities of ‘Smart City schemes’, as enunciated in the national budget, translated by the successful launch of ‘Moka City’ in April 2017. This brings up a new impetus to the residential property segment thereby creating buoyancy and future growth prospects.

Agro-industry: Combined effect of uncertainties regarding the world sugar price, end of EU export quotas and lower cane harvest

Residential property development: Risks related to expansion and development of the property sector in the country

Innovation: Risk of not leveraging innovation in the business model to sustain competitive edge

Commerce and industry: Risk of being impacted by increasing costs of operations that may impede on financial performance

04Our risk profile



Downside risks

The principal risks and uncertainties, as tabled below, reflect the residual positioning of such risks after taking into consideration the

o Risks’ rating: i.e., likelihood of occurrence of risks; and perceived impact on the Group’s operations;

o Risk control measures: i.e., mitigating strategies in place;

o Risk trend: i.e., how the risks have evolved in terms of significance, compared to the last financial year.

The following tables capture the risk profile of ENL highlighting the principal risks faced, mitigating strategies taken and also, outlook of risks.

I. Strategic

The success of the Group rests on effective strategic planning, choices and execution including the ability to adapt rapidly to evolving customer needs and delivering attractive value proposition. The table below depicts the key residual risks and controls:

(1) Market conditions and economic factors

What is the risk? Key measures to manage risks Risk outlookThe Group is exposed to downside risks that may impede on performance of served markets such as (i) challenging market conditions, (ii) appreciation of MUR against key currencies and (iii) risk of Mauritius not perceived as a sufficiently attractive property investment destination to boost property development.

Strategic enabler

Served markets

• Reinforce activities in buoyant and promising sectors e.g. Hospitality, Property, Fintech, and capitalise on synergies and diversification.

• Focus on ‘Client centricity’ by offering a portfolio of attractive offerings and capitalising on aggressive marketing to improve product visibility, client experience and sales potential.

• Treasury management at entity/ group level.

• Collective strategy with local stakeholders to further position Mauritius as a key international platform for business and investment.

• Anticipated fall in sugar prices.

• Changes in macro economic policies, the environment and fiscal regime may be threats/ opportunities.

• FX volatility may be accentuated by changes in the Eurozone/ Brexit.



(2) Market intelligence – competition threats

What is the risk? Key measures to manage risks Risk outlookIncreasing competition felt in different served markets, arising from existing players and new entrants reinventing or expanding their scale of activities may result in erosion of the market share and declining performance.

Strategic enabler

Served markets

• Revamped marketing strategy and increased use of digital marketing and social media to differentiate our brands, products and services.

• Providing high and middle-end offerings at different price-points, benchmarking with competitors and capitalising on our Unique Selling Points.

• Consolidate our position as an integrated player in Hospitality, Property and Logistics sectors through acquisitions and innovation.

Threat of growing presence of smaller-size players as well as increasing use of technology and digitalisation resulting in fiercer competition.

(3) Customer attractiveness and retention

What is the risk? Key measures to manage risks Risk outlookCustomers are at the heart of the business and risks may be with respect to:

• pricing of products/services not being appropriate; and/or

• product/ service quality not being at desired level thus affecting customer experience and hence, revenue streams.

Strategic enabler

Served markets The Group

• Invested to improve understanding of the served markets to uncover upcoming trends and seeking regular customer feedback.

• Increasing visibility of our offerings by leveraging on our distribution channels. For e.g. Property (combined offerings of Ascencia, ENL Property and Bel Ombre targeting different customer segments) and Hospitality.

Competitors may innovate in their business models to attract/ retain customers for e.g. aggressive pricing and low margins, introduce new offerings.

04Our risk profile



II. FinancialThe table below depicts the key residual risks and controls observed for the subset of risks falling under “Financial”. Details on financial risk management are supplemented in Note 3 of the Financial Statements, on pages 115 to 119.

(4) Financial performance sustainability

What is the risk? Key measures to manage risks Risk outlookRisk that financial performance may be impacted by several factors, such as pressure on selling prices and declining margins due to fierce competition, thereby impacting on sustainability of profits and dividend pay-out.

Strategic enabler


• Capitalise on products and services, generating mid to high-end margins (e.g. in Fintech, Hospitality, Property) to increase revenue mix, cash flows and profits.

• Combined effect of several measures support the Group in managing its cost base such as cost controls, working capital management, restructuring, automation and efficiency.

• Close monitoring of the performance by Executives of ENL via board meetings and strategic reviews.

Sustainability of performance and operations is likely to remain a key risk given challenging conditions and fierce competition.

(5) Liquidity risk

What is the risk? Key measures to manage risks Risk outlookRisk that the Group may encounter difficulty in meeting the obligations associated with its financial commitments that are honoured by delivery of cash.

Strategic enabler


• Monitor rolling forecasts of the Group’s liquidity reserve based on expected cash flows.

• Monitor obligations and maintain flexibility in funding by keeping committed credit lines available including financial restructurings.

Liquidity risk is likely to remain a key risk for the Group given the nature of activities.

III. OperationalOperational risks span across the business activities of entities and encompass areas pertaining to effectiveness and efficiency of operations, compliance and governance. The key risks and controls are summarised as follows:



(6) Property development and land bank optimisation

What is the risk? Key measures to manage risks Risk outlookExposed to the risk that potential projects contemplated in optimising the value of the land bank may not meet customer appeal and/or encounter significant delays/overruns.

Competitors may outpace the Group and opportunities/ revenue streams being missed.

Strategic enabler

Served markets

• Proper investment appraisal and market surveys prior to “go or no-go” of projects and monitoring of yield on projects against budget.

• Capitalise on key initiatives such as Moka City to maintain momentum in transforming land assets into sustainable revenue streams through sales and/or leasing. Regionally, remain open to opportunities in different sectors.

• In-house officials and third party professionals monitor the selection and performance of professionals/ contractors in achieving project milestones to minimise overruns.

Increase in local competition coupled with factors such as positioning of Mauritius as an attractive property investment destination are key determinants that will influence the risk level.

(7) Investments in associates, jointly-controlled entities and financial assets

What is the risk? Key measures to manage risks Risk outlookRisk that the Group’s interests’ within investees may not be adequately safeguarded thereby exposing to potential impairment and risk of sub-par returns of the investment portfolio.

Strategic enabler


• Securing seats at the Boards of Directors of associates and jointly-controlled entities to ensure that the Group has a say in the strategic direction and affairs.

• Investments held are kept for strategic and sustainable long-term objectives and are spread over several blue-chip/medium-sized companies operating in different industries.

Risk level with respect to investments is likely to remain unchanged.

(8) Innovation

What is the risk? Key measures to manage risks Risk outlookRisk that ENL may not leverage innovation, in its business model, to sustain competitive advantage thus resulting in missed opportunities.

Strategic enabler


• Innovation embedded within enterprises translated in terms of ability to continuously introduce/enhance our offerings.

• Higher risk appetite to identify and invest in sectors in which the Group is not traditionally present through (i) ‘Compass’ and (ii) ‘Turbine’.

• Embedding digitalisation in business models. e.g. going digital in malls, Fintech offerings, digitalisation of travel business to enhance customers’ experience.

Digital disruption is a growing threat especially as start-up companies or existing players innovate faster and increase their speed to market compared to others.

04Our risk profile




IV. People and systemsThe Group is highly dependent on its people and management information systems for the smooth running of its operations as well as for reporting and decision-making purposes. The Group benefits from support on a range of services such as Human Resource (HR), Business Process (BP) and Information System (IS) from ENL Limited thereby encouraging harmonisation across the Group. The residual people and systems risks and measures are set below:

(9) Talents attraction, retention and engagement

What is the risk? Key measures to manage risks Risk outlookThe Group may be exposed to the risk of not being able to :

• attract, retain and facilitate growth of its talents to support its ambitions.

• ensure high level of engagement of employees to deliver higher performance.

Strategic enabler


• Encourage dynamism and leadership of teams and aligning their objectives with corporate goals.

• Employee recognition and rewards as well as sustaining investment in personnel to reinforce commitment and achieve their potential.

• Engagement level of employees is regularly measured through surveys and measures are taken to increase engagement.

• Risk of mobility of talents is likely to remain a threat for businesses.

• Actions taken are likely to result in the risk decreasing going forward.

(10) Cyber threats and IT

What is the risk? Key measures to manage risks Risk outlook• Cyber threats, being rampant, expose

businesses to (i) paralysis and downtime of operations, (ii) ransom ware threats, (iii) loss of confidential data and BI.

• Risk of loss of critical and confidential data in the event of IT system failure or theft of data/piracy of electronic devices.

Strategic enabler


• Raising awareness of end users through IT policies and regular communications with respect to suspicious emails, attachments, password protection and ‘bring your own devices’.

• Implementation of business continuity plans and deployment of the IT Framework across the Group, in progress, to achieve desired level of IT governance maturity in line with ENL’s IT policies.

Cyber-attacks worldwide have left undeniable trace that such threats are likely to recur as the world becomes more digitally connected. Cyber risk is a key risk for which businesses may not be prepared.


Going forward At ENL, efforts and measures implemented in the scope of ERM during the year ended 30 June 2017 further helped in cementing risk management practices. Going forward, the Group would continue on its momentum, i.e.:

Risk management maturity of ENL Limited

Stages of risk management maturity

• Risk maturity of our entities, i.e., the Group will continue moving up along the risk maturity curve so as to reach an ‘Integrated’ maturity level, in line with Vision 2020, as illustrated below.

• In nurturing the risk culture and risk ownership with the support of the GRC function.• In maintaining periodic review of RMR of entities and oversight of existing and emergent risks.

• In �nalisation of the ERM policy, formalising new group policies to enhance governance and aligning with the new Code of CG (2016) to reinforce the risk governance.

Engage

Sustain

Improve

Fragmented

Top down

Integrated

Risk intelligence

Initial

Vision 2020

Source: Deloitte. Risk intelligent series. Creating Risk Intelligent infrastructure. Getting Risk Intelligence done.

04Our risk profile



BUSINESS REVIEW | HUMAN CAPITAL

ENL Limited’s human capital management is guided by our long-term vision of creating a work environment where employees are enabled to deliver sustainable organisational performance while achieving personal growth.

Our teams of HR professionals work in close collaboration with the ENL Group human resources department, except for Rogers which is overseen by its own corporate office. They implement the ENL Talent Management Framework which pursues three strategic priorities: human resources alignment, employee engagement and learning and development.

Human resources alignment

Transparent recruitment process

Our recruitment process is transparent. Vacancies are advertised internally on ENL Connect, and externally, on ENL Job’Fair which is our dedicated recruitment platform. In this way, existing employees are made aware of opportunities of internal mobility that crop up even while companies open up to talents from outside the Group. Both platforms were revamped during the year in order to adapt to new trends in digital communication.

We focus on employee integration and engagement from the very day a new recruit joins us. All new recruits follow an orientation session at company level on the day they join. They then participate in a one-day induction session at the ENL Group headquarters. The programme was recently updated to be more interactive and welcoming. It includes an introductory video from the CEO sharing his vision and expectations with the new team members.

We have a young and dynamic workforce

7,350employees

9%

13%

41%

37%

Baby boomers

Generation Y

Generation Z

Generation X

113,000visits on ENL Job’Fair in 2017


Performance management

We believe in employees whose goals are aligned to those of the business

This is why every employee has a role profile that stipulates how exactly he or she contributes to the success of the organisation. We believe that committed employees are those whose performances are monitored regularly. Employee’s performance is measured through a rigorous process of objectives setting at the start of the year, followed upon during the year and appraised at year-end.

Learning & development

We invest in the continuous improvement of competencies, in the development of skills and the promotion of personal growth of our team members.

We invested Rs 44m and 55,062 hours to strengthen the technical competencies of our employees and to enhance their leadership skills. We believe in a blended learning approach which is a combination of formal learning with workplace-based learning opportunities. Our training initiatives draw from the ‘70:20:10 Model for Learning and Development’. During the year, we introduced a more comprehensive measure of the training impact where employees who attended a training have been asked to commit to an action plan to apply the new skills they learned.


On-the-jobexperience

Informallearning

Formallearning

70% 20% 10%



ENL Limited’s subsidiaries contribute to the training of the next generation of Mauritian professionals by opening their doors to traineeships. The Group welcomed 325 trainees during the year, for an average of 7 months tenure, out of which 64 were offered a permanent position.

The health & safety of our employees is a key area of focus and during the year, 96 first aiders were trained.

325 trainees

7 Traineeship months in average

64 trainees were offered a job

55,062 hoursinvested in training

3%

3% of basic salaryTraining expenditure

Areas of focus

ICT & equipment Health, safety & welfare

3%

44%

34%

10%

9%

Leadership & talent

development

Team synergies & people focus

Technical competencies

96 First aiders


Employee engagement

We actively promote the ENL culture and values in order to enhance employee engagement

The Semaine de l’engagement is an annual gathering spanning over one week where all ENL employees are invited to take a step back to live the values and the culture of the Group through practical activities. This year saw a record participation with around 600 persons involved, twice more than the previous edition. The proposed activities enabled participants to experience some of the ways they could express their commitment towards:

• themselves, by taking care of their well-being;

• the customers, by being performing, innovative and nurturing a service culture;

• the community, by showing generosity and citizenship.

600

Semaine de l’engagement: participants


“I cherish the ideal of a deeply engaged team for ENL. When employees are engaged, it can be felt; it can be seen. They exude an energy and a dynamism that are contagious.”

Hector Espitalier-Noël, CEO

We measure the level of engagement of our employees every two years through a survey than spans the whole ENL Group. The results of the 2017 study show an improvement in our score. Employee engagement is a key area of focus and several actions have been taken to engage with them more deeply at each level of the organisation.

Way forwardThe strategic direction of the Group has been set for the three-year period ending June 2020. As far as the management of our human capital is concerned, our focus will continue to be on talent acquisition, retention and employee engagement. Specific emphasis will be placed on creating a “performing workplace”, one where higher levels of capability and efficiency are achieved and where people feel empowered, valued and respected.


BUSINESS REVIEW | SOCIAL, RELATIONSHIP AND NATURAL CAPITAL

The Group is a keen supporter and an active participant in sustainable nation building through initiatives to develop local communities, protect the environment and encourage arts, culture and sports. We pledge funds beyond the mandatory 2% Corporate Social Responsibility (CSR) spent to support corporate responsibility initiatives. The Group contributed Rs 20m to further selected causes this year through ENL Foundation and Rogers Foundation.

ENL Foundation works at grassroots level to bring to life the Group’s value of good corporate citizenship by taking and supporting initiatives that promote the growth of vibrant and sustainable local communities. Rogers Foundation maintains its commitment to reducing the impact of human activities on the coastal areas of the island through various ongoing programmes.

Both ENL Foundation and Rogers Foundation work under the guidance of their Board of Directors and in close collaboration with the public authorities and other members of the private sector. Their yearly plans of action are also shaped by legal requirements and national priorities as set out by the government.

The last budget 2017 amended the Income Tax Act and as a result, 50% of the CSR funds of all companies now needs to be remitted to the National CSR Foundation which, in turn, channels them to not-for-profit organisations. We are deeply concerned by this change to the CSR Framework which will stall progress on the field.

Focus on Moka ENL Foundation promotes social integration and community development through a participatory and integrated approach, with special focus on Moka-Saint Pierre, the cradle of ENL’s history.

The government has initiated a Marshall Plan against poverty, in collaboration with the United Nations Development Programme. ENL, HSBC and the District Council of Moka followed suit and joined forces to set up their own project for the Moka region. The project is aligned with the government’s ambition for the country which includes providing decent living conditions, improving academic performance and increasing employment opportunities and accessibility to training for the beneficiaries. The villages of Saint Pierre, Moka, Quartier Militaire, Dubreuil will host the first pilot projects.

Sainte Catherine community development program. At Sainte Catherine, we are working on an ongoing community enhancement project that is co-sponsored by Rogers and Eclosia over three years and led by the inhabitants of the locality. A closely monitored strategic plan has been designed with the following priority areas for the beneficiaries:

• Improvement of living conditions;

• Development of skills to enable financial autonomy;

• Promotion of a broader interest in education through greater access to educational opportunities; and

• Development of skills and knowledge that enable a better management of health and an improvement in the quality of life.



We are replicating the Sainte Catherine community development model in L’Escalier in partnership with Omnicane. Caritas, the program manager, and the villagers have already finalised the action plan for the next three years.

The smart city of Moka social plan. Our objective is to foster social integration of the existing Moka community with the newly launched smart city of Moka. Moka’mwad, a citizen’s platform, is being created to spearhead this initiative. It will be instrumental in bringing together the inhabitants of Moka to participate actively in building a vibrant, dynamic and culturally rich community.

Baz’Art Kreasion social enterprise. This initiative aims to empower vulnerable women from the Moka region by teaching them handicraft skills and helping them to earn a living through the sale of crafted products. We are actively looking at funding options to make the initiative become self-sustainable in the medium term. The Turbine, ENL’s business incubator, has offered free coaching sessions on social entrepreneurship.

Lovebridge. The ENL Group supports the private-sector-led Lovebridge programme. In addition to being a founding partner in the initiative, ENL currently houses the headquarters of the programme in Vivéa Business Park. ENL Foundation also nurtures strong relationships with the association’s management and its social workers.

Green initiativesConcerning sustainable agriculture, ENL Foundation partnered with Le Velo Vert to raise the awareness of 125 children of the Moka region on organic agricultural practices. This agro-ecology project lasted 6 months during which the children were trained and mentored to grow their own vegetables at school. ENL supports this initiative in line with its commitment to promote sustainable agriculture.

Moreover, ENL Foundation continues to run the Green spirit club where 65 children and teenagers are sensitised about the protection of the environment throughout the year.

The ENL Group is also a financial sponsor of the Mauritian Wildlife association, which protects the endemic fauna and flora of Mauritius.

Protection of coastal resources of MauritiusThrough Rogers Foundation, we focus on raising awareness around the protection of the coastal resources of Mauritius. A number of projects are conducted in partnership with Reef Conservation:

• Bis lamer, a classroom on wheels fitted with interactive tools and laboratory equipment reached its 4th year in operation.

• Eco-school project focuses on environmental education of school children. For the 2nd consecutive year, the schools that have implemented the most encouraging programmes have been rewarded.

• Sea-turtle preservation network, an educational booklet was produced and released to sensitise school children and coastal inhabitants on the need to protect endangered sea turtles.

• Bel Ombre pedia, biologists and zoologists are gathering comprehensive scientific and pedagogical information about fauna and flora species around the region of Bel Ombre, which will be soon available online and based on the Wikipedia model.

• Tikoulou, the 14th comic book in the collection, ‘La Légende de Bel Ombre’, was specifically designed to convey an essential ecological message to school children and adults.



Arts, culture, education and sports

This year we were also active in promoting arts, culture, education and sports.

Remedial classes. We promote education and an improvement in academic performance of primary school children in Pailles, Moka-Saint Pierre and L’Escalier. 90% of the children who attended the programme obtained their Certificate of Primary Education. In view of the reform in the national education system for primary schools, the teachers were trained to improve the level of service they provide.

Porlwi by people. For the second consecutive year, we sponsored the Porlwi festival and also encouraged our teams to participate in the festival. ENL extended its full support to Move for Art in its endeavour to transform and regenerate the city of Port Louis, sustainably.

Gender and Leadership. ENL sponsored the conference “Initiative for Gender Diversity in Leadership” created by the Mauritius Institute of Directors, to examine issues affecting the lack of gender diversity in leadership positions in Mauritian companies.

Réalise ton rev and Zenfans sourire. ENL Foundation continues to run both projects aiming at developing the creativity and the artistic skills of children.

The ENL Group is committed to encouraging the practice of sports. The Moka Rangers Sports Club, an ENL initiative, continues to promote the development of an elite in the fields of cycling, swimming, trail and football. Its members are making the club and Mauritius shine both locally and internationally. The club opened the Moka Bike Park, publicly and freely available facilities for the practice of mountain biking. The idea is to

broaden the sports and leisure offering in Moka. The ENL Group also sponsored a number of sports events during the year such as the Moka Trail, and numerous cycling contests.

Towards the futureWe started to better integrate the concept of sustainability into our strategy and business models at the level of Hospitality, Agro-industry and Property. We are showing greater interest at balancing the economic, environmental and social impacts of all our business decisions. This year, Heritage Awali Golf & Spa and Heritage Le Telfair Golf & Spa Resort were awarded the Green Key Label, in line with the sustainable development strategy in Bel Ombre.


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