Corporate Governance

CORPORATE GOVERNANCE (NOMINATION AND REMUNERATION) COMMITTEE


Chairman Joël Harel
Members Marc Freismuth
Thierry Lagesse

As per the Code’s aspiration, the Corporate Governance Committee is chaired by an Independent Non-Executive Director whilst the members are Non-Executive Directors. The mandate of the Corporate Governance Committee is to devise the policy on Corporate Governance in accordance with the principles of the Code, to advise and make recommendations to the Board of Directors on all aspects of Corporate Governance and to report to shareholders on compliance with the provisions of the Code. The Corporate Governance Committee is also responsible for Nomination and Remuneration aspects of the Code and its functions are as follows:


  • In its role as Nomination Committee, it reviews the structure, size and composition of the Board, it ensures the right balance of independence, skills and expertise on the Board, it assesses and evaluates the role and independence of each current and potential Director and makes recommendations to the Board for the election and re-election of Directors and for matters relevant to succession planning.

  • In its role as Remuneration Committee, its terms of reference include inter alia the development of the Group’s general policy on executive and senior management remuneration including the definition of performance measurement criteria and specific remuneration packages for Executive Directors and senior management and the making of recommendations to the Board on all aspects of remuneration.

In accordance with the Code, the Committee considers an Independent Director as one who:


  • is not a representative or member of the immediate family of a shareholder who has the ability to control or significantly influence the Board or management;

  • has not been employed by the Company or the group of which the Company currently forms part in any executive capacity for the preceding three financial years;

  • is not a professional advisor to the Company or the group of which the Company currently forms part other than in a Director capacity;

  • is not a significant supplier to, debtor or creditor of, or customer of the Company or the group of which the Company currently forms part, or does not have a significant influence in any group related company in any one of the above roles;
  • has no significant contractual relationship with the Company or the group of which the Company currently forms part;

  • is free from any business or other relationship which could be seen to materially impede the individual’s capacity to act in an independent manner.


The Committee met seven times during the financial year 2016-2017 to, inter alia:


  • determine, discuss and approve the remuneration of the Chief Executive Officer, Senior Officers, Directors, Committee members and the staff in general;

  • examine and take decisions on corporate governance compliance issues;

  • consider the key issues applicable to the Company and to the Group under the new National Code of Corporate Governance 2016 and approve a work plan related thereto;

  • recommend a Board evaluation exercise;

  • follow-up claims made for constructive dismissal by exemployees of the Company;

  • consider and recommend to the Board for approval the Succession Planning Policy for executives and Directors, the Group Remuneration Policy and the Group Environmental and Community Policy;

  • consider and approve the position statements for key governance positions;

Risk Management

The composition of the Risk Monitoring Committee is as follows:


Chairman François Boullé
Members E.Jean Mamet
Christophe Quevauvilliers
Stéphane Ulcoq

As recommended by the Code, the Risk Monitoring Committee is chaired by an Independent Non-Executive Director. Its members comprise of an additional Independent Non-Executive Director and two Executive Directors, namely the Chief Executive Officer and the Group Finance Manager, the latter also acting as the Risk Officer.


The revised version of the Risk Monitoring Charter was approved by the Board in May 2017. The role of the Committee is to assist the Board in the discharge of its duties relating to the setting up and monitoring of the risk governance process, including setting the risk appetite and monitoring relevant risk portfolios and management’s performance against such risk appetite. The Committee is mainly responsible for the approval of risk management policies for recommendation to the Board, the review and assessment of the integrity of risk control systems and the assurance that the risk policies and strategies are effectively managed. The Committee shall also provide to the Board an independent and objective oversight of the financial, business and strategic risks of the Company and of the Group.


The key duties of the Risk Monitoring Committee include the monitoring of the Group’s risk portfolios against the risk appetite set by the Board, the review of the adequacy, implementation and overall effectiveness of the Group’s risk function including management and both internal and external auditors, the assessment of legal matters that could have a significant impact on the Group’s operations and the review of internal and external auditors’ reports on significant exposures to risk.


The Committee is also responsible for the review of key risks such as industry risks, operational risks, technology risks, country risks and financial risks. Operational risks include human resources risks, fraud risks, physical risks, business continuity risks and reputational risks.


The Committee has access to all relevant information it requires to fulfil its responsibilities and is authorized to seek professional advice, both inside and outside the Company, as considered necessary to perform its duties.


The Committee met four times during the financial year 2016-2017, mainly to:

  • define its Charter;
  • assess and review the Group’s risks;
  • receive and consider the report of Messrs BDO & Co. on the Group’s ‘Enterprise Risk Management’ and ‘Business Continuity Plan’ exercise; and
  • consider the risk heat maps for presentation to the Board.

The attendance record of Committee meetings for the year under review is as shown on page 63. A quorum of three members is currently required for a Committee meeting.


The remuneration of the Chairman and of each member of the Committee for the year ended June 30, 2017 amounted to Rs 75,000 (2016: Rs 75,000) and Rs 50,000 (2016: Rs 50,000) respectively

The internal audit function is responsible for providing independent, objective assurance to the Board regarding the implementation, operation and effectiveness of internal control systems and risk management. The objective is to ascertain the extent of compliance to procedures, policies, regulations and legislation, to facilitate proper risk management practices and to recommend improvements in control, performance and productivity within the Group.


In April 2015, Messrs BDO & Co. were engaged to assume the internal audit function within the Group. The 2-year internal audit plan, as approved by the Audit Committee, sets out the extent of coverage attributable to each business process cycle within the organisation depending on the degree of risk. The methodology used is based on the selection of specific business cycles, the identification of inherent risks, the verification of key controls in place in view of eliminating or reducing the risks to an acceptable level, the verification of the said controls to ensure they are operating satisfactorily, the performance of walkthrough tests on procedures and processes and the formulation of necessary recommendations.


This year again, no material financial problems were identified which would materially affect the figures reported in the financial statements. The recommendations are being implemented gradually by management under the close follow-up of our internal auditors.


Further to recommendations from the Audit Committee, the Board of Directors has reiterated its intention to have its own internal audit team to ensure a more extensive coverage of all business process cycles and better assess the effectiveness of recommended procedures and controls within the Group.


The Board of Directors recognises effective risk management as a core competency and is ultimately responsible for the setting up and monitoring of the risk governance process, including setting the risk appetite, and the adequacy and effectiveness of the internal control system which is designed to manage the risk of failure to achieve business objectives.


The Group promotes a risk culture, whereby the related set of objectives, policies and practices are shared across the organisation. The management is responsible for the implementation of internal control and risk management systems under the supervision of the Risk Monitoring Committee to ensure their effectiveness. Such systems must ensure that proper accounting records are maintained and that the strategies and policies adopted by the Board are being implemented. The Board relies on the internal and external audit functions to report on any weaknesses and to make recommendations via the Audit Committee and as relevant, to the Risk Monitoring Committee, the objective being to ensure the effective and efficient use of available resources and ascertaining the accuracy of information used in the preparation of financial statements.


The Board of Directors engaged Messrs BDO & Co. to implement an Enterprise Risk Management (ERM) framework and a Business Continuity Management (BCM) plan within the Group with a view to fully identify, measure, assess and mitigate our exposure to risks. The aim of this mission is to enable the Group to manage risks in an efficient and effective manner, to deliver increased shareholder value and to promote a performance culture and effective decision-making.


The Group followed “ISO 31000/2009 Risk Management Principles and Guidelines” in designing its ERM framework and strives to adopt a forward-looking, strategy-centric approach to managing the risks inherent in decision-making.


Messrs BDO & Co. conducted a strategic workshop with the Board of Directors and senior management to define the Group’s strategic objectives and determine a risk appetite for each of these objectives based on a group-wide approach by considering risks across all departments, functions and activities. A clearly defined risk appetite provides the Board, management and staff with a benchmark that facilitates the identification and management of both risks and opportunities. In so doing, a risk tolerance was determined on a scale of 1 to 25 for each of the five Board’s objectives as detailed below:



Healthy & Efficient Process
Ensuring Cost Optimisation & Competitiveness
Develop Human Capital
Market Expansion
International Expansion

Risk Hierarchy

Risk Board

3rd Line of Defence

Group Internal Audit

  • Carry out internal audits on a risk basis
  • Provide assurance on adequacy of controls across specific risk areas including risk management
Color Significance
Blue- Opportunities The Group/Company is either taking too little risk, which might represent missing out on potential opportunities, or overdoing it in terms of controls. If the pointer falls in the blue region, the Company needs to take more risks or relax on controls. The risk is tolerable.
Green- Comfort Zone/Acceptable The Group/Company is comfortable with the risks taken when in this region. The risk is acceptable.
Yellow/Amber- Warning Zone/ Tolerable The Group/Company is taking risks that are slightly outside its risk tolerance level and needs to start taking actions to bring back its risk exposure within the green region. The risk is tolerable but may need a treatment plan.
Red- No-go Zone/ Intolerable The Group/Company is adventuring far beyond its risk tolerance and needs to take immediate actions to get back in the yellow region. The risk is intolerable.

As such, our risk appetite represents the types and aggregate levels of risk the Group is willing and prepared to take on to actively pursue its strategic objectives.


The Group’s risk management process operates to ensure a comprehensive evaluation of risks is performed and is subject to continuous improvement. The risk management cycle operates as follows:



Risk Mgt Process


In line with the above, the Group’s risk register was completed through interactive working sessions where a comprehensive list of threats and opportunities were identified and discussed based on those events that might enhance, prevent, degrade, accelerate or delay the achievement of Board’s objectives. In so doing, the following factors were taken into consideration:

  • the nature and extent of risks facing the Group, including emerging risks;
  • the risk appetite and risk tolerance;
  • the likelihood of the risk materialising;
  • the impact in the event that the risk materialises;
  • the existing controls in place to mitigate the risks;
  • the risk treatment plans implemented; and
  • the monitoring processes in place to determine and respond to the effectiveness of existing controls.

Management was required to assess all risks which could have an impact on the current or future operation of their business and to document these risks in a standardised template. Risks are assessed in terms of their financial, operational, people and customer impacts should they occur and their likelihood of occurrence, using a defined risk scoring methodology.


Through the extensive risk identification and assessment phase, a list of 233 risks were identified for the Group. The key risks categories relevant to the Group, at this stage are as follows:

  • Health and safety risks: risks associated with all events that can cause serious injury and harm to the Group’s workforce and customers;
  • Operational risks: risks defined as risks of loss resulting from inadequate or failed internal processes and procedures, human error or system failure or from external events. They include all processes and sub processes from the time the raw materials are extracted and the manufacturing process up to the point of receipt by the customer;
  • Financial risks: risks linked to liquidity, interest rates, foreign currency exchange rates, capital structure and profitability;
  • Technology risks: risks that hardwares and softwares are not operating as intended thereby compromising the integrity and reliability of data and information and exposing significant assets to potential loss or misuse or exposing the Group’s ability to maintain a high standard in its main business processes. They include all IT and telephony systems and the use of latest technologically- prone equipments;

  • Business environment and market risks: risks relating to macro-economic evolution, politics, foreign investments and climatic conditions that are outside our control;
  • Marketing and customer risks: risks associated with maintaining the quality and reputation of our branded products and innovation in our offer to customers;
  • Strategic risks: risks associated with uncertainties and opportunities embedded in the Group’s strategic plan and the manner in which they are executed;
  • People risks: risks associated with recruitment and retirement, on-going talent management and succession planning, relations with trade unions and regulatory bodies and staff disciplinary issues; and
  • Legal and regulatory risks: risks linked to the legislations and regulations surrounding the operations and functioning of the Group e.g. competition laws, the Employment Rights Act, health and safety regulations and the Code of Corporate Governance.

The Risk Monitoring Committee and the Audit Committee via the internal audit function ensures that the significant risks above are managed and kept at an acceptable level as follows:

  • our health and safety function ensures that all necessary measures are taken to protect our employees and the environment;
  • the supply of our core business raw materials is partly ensured by our own quarrying services to avoid any threat from outside suppliers although we maintain very good relationships with them. In addition, we own several acres of land at Gros Cailloux and St Julien to ensure our own supplies;
  • our core business production is scheduled as per an adequate planning to avoid any disruption in production whilst our plant and machinery are regularly serviced by our workshop to avoid any breakdown;
  • our customer service staff are regularly trained and provided with best logistics to better serve our customers;
  • our internal auditors do regular testing aimed at detecting any potential weaknesses in our internal control systems and any likely risk of fraud and preventing same to recur through new procedures and controls;
  • our IT function ensures that latest technologies are used for our tailor-made ERP, that our systems are secured by latest versions of antivirus, that a complex password policy is in place, that daily back-ups are kept, that our database is secured via a disaster recovery plan and that our communication networks are duplicated;
  • our sales, marketing and operations staff follow closely the actions of our existing or potential competitors;
  • the quality of our core business products are tested daily in our laboratory to ensure that they are of the required standard whilst the majority of our plant and machinery are of latest technology;
  • our operational managers follow closely the political events in Madagascar and Sri Lanka to avoid any risk of business failure;
  • our assets are insured against fire and allied perils and other all risks insurance cover as relevant to the type of asset whilst our offices and operational sites are all equipped with fire extinguishers and security systems; and
  • our HR function manages human resources risks via proper and adequate recruitment, training, coaching, job reviews, performance evaluation and succession planning.

Risk Monitoring

In line with our ongoing focus on continuous process improvement, risks are assessed by management on an inherent basis (prior to existing controls) and a residual basis (post existing controls). Where the risk score is outside the Board’s tolerance level, appropriate mitigation strategies are implemented to bring the residual risk to a level which is within risk appetite. On a going forward basis, the Risk Monitoring Committee shall review the risk appetite and tolerance framework on an annual basis.


The Group acknowledges that risk management is a dynamic process resulting from the constantly changing external and internal environments. Consequently, the support of Messrs. BDO & Co. was sought for the initial ongoing monitoring and review of risks and the effectiveness and adequacy of existing controls, risk treatment plans and the implementation process management.


The Group’s monitoring and review processes encompass all aspects of the risk management process for the purposes of:

  • ensuring that controls are effective and efficient in both design and operation;
  • obtaining further information to improve risk assessment;
  • analysing and learning lessons from risk events, including near-misses, changes, trends, successes and failures;
  • detecting changes in the external and internal context, including changes to risk criteria and to the risks, which may require revision of risk treatments and priorities. For example, if there are changes to internal or external objectives or regulations, the risk owner will update the corresponding information in the risk registers and use this information to re-analyze all affected risks; and
  • identifying emerging risks.

Risk Reporting

In terms of reporting, a quarterly reporting will be tabled to the Risk Monitoring Committee by the Chief Risk Officer. The contents of the report shall detail the top risks for the Group and the key concerns for the different units, the resultant Group Matrix and the status of risk treatment plans.


Business Continuity Management Plan


Linked with its risk management framework, the Company recognises that it is vital that, as an organisation, it should be able to ensure that the most critical services and functions are maintained and that resources are protected at a reasonable level during incidents and disruptions. Thus, the Business Continuity Management (BCM) plan was designed to assist the Group through disruptions in order to protect its staff, customers, resources, infrastructure and intellectual property. As part of the implementation process, the following was achieved:

  • identifying, assessing and putting in place measures for the prudent management of threats to the continuity of the business;
  • identifying key business processes that are required for delivery of products and services to consumers, maintaining of reputation and ensuring continuity of income stream and, for each of these processes, agreeing the implications of failure in the hours, days and weeks following an incident;
  • identifying recovery time objectives (RTOs) for each of the key processes in the event of incidents, based on an understanding of the implications of downtime, together with the people, processes and technology required to achieve resumption of business;
  • identifying and assessing, on the basis of cost- effectiveness, the options available to allow resumption of key business processes;
  • defining procedures to be put in place, where appropriate, based on selected recovery strategies, to protect the interests of the Group and its stakeholders;
  • ensuring that key staffs are familiar with the BCM plan through induction training and their role, if applicable, within it;
  • ensuring compliance with both national and local legal business continuity requirements; and
  • defining the adequate business continuity in place, which will safeguard the interests of interested parties including customers, staff and suppliers.

Following its first cycle of Business Impact Analysis, the Group has developed a BCM plan and a Crisis Communication plan for each of the following functions/entities:

  • the Company’s Head Office and Production sites;
  • Espace Maison Limitée; and
  • Dry Mixed Products Ltd.

Recovery procedures were detailed with regards to two scenarios applied during the design of the BCM plans, namely, a complete loss of IT & telephony systems and the loss of our workshop services. Management is planning to test and validate the relevant plans in a near future.

Annual Report by NUMBERS